Reports quarterly GAAP and adjusted earnings
from continuing operations of $0.46 and $0.44 per diluted share,
respectively
Received orders for 3,015 railcars and
delivered 4,400 railcars in the quarter; backlog of $3.9 billion at
year-end
Raised quarterly dividend by 13% to $0.26
per share and returned $154 million of capital to stockholders in
2022
Trinity Industries, Inc. (NYSE:TRN) today announced earnings
results for the fourth quarter and year end ended December 31,
2022.
Financial and Operational
Highlights – Fourth
Quarter
- Quarterly total company revenues of $591 million
- Quarterly income from continuing operations per common diluted
share ("EPS") of $0.46 and quarterly adjusted EPS of $0.44
- Lease fleet utilization of 97.9% and Future Lease Rate
Differential ("FLRD") of positive 25.1% at year end
- New railcar orders of 3,015 and railcar deliveries of
4,400
Financial and Operational
Highlights – Full
Year
- Full year total company revenues of $2.0 billion
- Reported EPS of $1.02 and adjusted EPS of $0.94
- Full year cash flow from continuing operations and adjusted
free cash flow after investments and dividends ("Adjusted Free Cash
Flow") were $9 million and $138 million, respectively
- Completed $254 million railcar sale to Wafra Inc. ("Wafra") in
the third quarter, recorded a gain of $25 million
2023 Guidance
- Industry deliveries of 40,000 to 45,000 railcars
- Net investment in the lease fleet of $250 million to $350
million
- Manufacturing capital expenditures of $40 million to $50
million
- EPS of $1.50 to $1.70
- Excludes items outside of our core business operations
Management Commentary
“We ended the year with revenue up 30% over 2021, a backlog of
$3.9 billion, and adjusted EPS of $0.94, up 176% over 2021 despite
unexpected headwinds in 2022,” stated Trinity’s Chief Executive
Officer and President, Jean Savage. “The Company completed two
acquisitions this year, both of which improve our position in
strategic growth areas of our business.”
“In our Railcar Leasing and Management Services Group, we
continue to see lease rate improvement and strong utilization. The
Future Lease Rate Differential ended the year at 25.1%, showing the
strength in current lease rates and our fleet utilization of 97.9%
also supports our positive views on the railcar leasing
market.”
“In the fourth quarter, the Rail Products Group again faced
labor and supply chain challenges, impacting deliveries and margins
in the segment,” Ms. Savage continued. “With market conditions
normalizing, combined with a steady run rate of deliveries, we
expect both revenue and margin improvement in 2023.”
Ms. Savage concluded, “I’m proud of our employees’ ability to
execute in an unpredictable year, and I look forward to sharing our
continued progress with you in 2023.”
Consolidated Financial
Summary
Three Months Ended
December 31,
2022
2021
Year over Year – Comparison
($ in millions, except per
share amounts)
Revenues
$
591.2
$
472.2
Higher volume of external deliveries and
improved pricing in the Rail Products Group
Operating profit
$
113.5
$
69.2
Higher lease portfolio sale activity
Interest expense, net
$
59.4
$
43.9
Higher interest rates associated with
variable rate debt and higher overall average debt in 2022
Net income from continuing operations
attributable to Trinity Industries, Inc.
$
37.9
$
15.8
EBITDA (1)
$
185.0
$
137.6
Higher lease portfolio sale activity
Effective tax expense rate
19.2
%
23.1
%
Current quarter tax rate impacted by state
tax rate changes and tax benefits associated with equity-based
compensation
Diluted EPS – GAAP
$
0.46
$
0.16
Primarily improved operating results and
the impact of lower diluted weighted average shares outstanding
Diluted EPS – Adjusted (1)
$
0.44
$
0.08
Year Ended
December 31,
2022
2021
Year over Year – Comparison
($ in millions, except per
share amounts)
Revenues
$
1,977.3
$
1,516.0
Higher volume of external deliveries and
improved pricing in the Rail Products Group
Operating profit
$
334.0
$
256.8
Higher lease portfolio sale activity
partially offset by higher fleet operating costs in the Leasing
Group
Interest expense, net
$
207.6
$
191.4
Higher interest rates associated with
variable rate debt and higher overall average debt in 2022,
partially offset by lower overall borrowing costs resulting from
refinancing activities during the second quarter of 2021
Net income from continuing operations
attributable to Trinity Industries, Inc.
$
86.1
$
39.5
EBITDA (1)
$
616.8
$
512.9
Primarily improved operating results
Effective tax expense rate
21.8
%
28.8
%
2021 included adjustments to CARES Act tax
benefits previously recognized
Diluted EPS – GAAP
$
1.02
$
0.38
Primarily improved operating results and
the impact of lower diluted weighted average shares outstanding
Diluted EPS – Adjusted (1)
$
0.94
$
0.34
Year Ended
December 31,
2022
2021
Year over Year – Comparison
(in millions)
Net cash provided by operating activities
– continuing operations
$
9.2
$
615.6
2022 impacted by elevated working capital
related to higher volumes of railcar deliveries and continued
supply chain challenges. 2021 benefited from the collection of $438
million in income tax refunds.
Adjusted Free Cash Flow (1)
$
138.3
$
538.9
Capital expenditures – leasing
$
928.8
$
547.2
Returns of capital to stockholders
$
153.7
$
895.1
Higher share repurchase activity in 2021,
including privately negotiated repurchase agreements totaling $473
million
(1) Non-GAAP financial measure. See the
Reconciliations of Non-GAAP Measures section within this Press
Release for a reconciliation to the most directly comparable GAAP
measure and why management believes this measure is useful to
management and investors.
Additional Business
Items
- In December 2022, we acquired Holden America, a manufacturer of
market-leading multi-level vehicle securement and protection
systems, gravity-outlet gates, and gate accessories for freight
rail in North America for an initial cash payment of $71 million,
with minimum additional consideration of $10 million, payable in
installments of $5 million per year for the next two years.
- Total committed liquidity of $398 million as of December 31,
2022.
- During the quarter, Trinity repurchased approximately $12
million of shares in the open market, under the Company's
authorized share repurchase program. Our Board of Directors
terminated this share repurchase program effective December 8,
2022, and the remaining authorization of $21 million under this
program expired unused.
- In December 2022, our Board of Directors authorized a new share
repurchase program effective December 9, 2022, with no expiration.
The new share repurchase program authorizes the Company to
repurchase up to $250 million of its common stock.
- In December 2022, our Board of Directors declared an increase
of approximately 13% to our quarterly dividend, from $0.23 per
share to $0.26 per share.
Business Group Summary
Three Months Ended
December 31,
2022
2021
Year over Year – Comparison
($ in millions)
Railcar Leasing and Management Services
Group
Leasing and management
revenues
$
197.4
$
181.2
Net lease fleet investment activities,
higher utilization, and improved renewal rates
Leasing and management operating
profit
$
75.6
$
73.8
Net lease fleet investment activities,
higher utilization, and improved renewal rates partially offset by
increased fleet operating costs
Operating profit on lease
portfolio sales
$
54.5
$
8.4
Increased lease fleet portfolio sales
Fleet utilization (1)
97.9
%
95.7
%
Future Lease Rate Differential
("FLRD") (2)
+25.1 %
+1.2 %
Improvement in current market lease rates
compared to the prior year period
Owned lease fleet (in units)
(1)
108,440
106,970
Growth in the lease fleet, partially
offset by lease fleet portfolio sales
Investor-owned lease fleet (in
units)
33,235
29,130
Additional sale to Wafra in Q3 2022
Rail Products Group
Revenues
$
655.7
$
402.1
Higher volume of deliveries and favorable
pricing and product mix
Revenues eliminations – Lease
subsidiary
$
(261.7
)
$
(110.9
)
Operating profit
$
18.6
$
13.4
Higher volume of deliveries and favorable
pricing and product mix, partially offset by labor inefficiencies;
prior year includes $3.1 million gain associated with storm related
recoveries
Operating profit eliminations – Lease
subsidiary
$
(16.5
)
$
(7.9
)
Operating profit margin
2.8
%
3.3
%
Operational inefficiencies associated with
supply chain disruptions and labor challenges; prior year includes
storm related recoveries
New railcars:
Deliveries (in units)
4,400
2,805
Orders (in units)
3,015
5,360
Order value
$
350.8
$
597.7
Backlog value
$
3,903.0
$
1,516.8
Sustainable railcar conversions:
Deliveries (in units)
495
290
Backlog (in units)
1,965
1,150
Backlog value
$
166.5
$
111.5
Corporate and other
Selling, engineering, and administrative
expenses
$
24.5
$
21.3
Higher compensation and
acquisition-related costs
Gains on dispositions of property
$
(5.9
)
$
(0.3
)
Gain on disposition of non-operating
facility
December 31,
December 31,
2022
2021
Loan-to-value ratio
Wholly-owned subsidiaries, excluding
corporate revolving credit facility
65.7
%
62.3
%
Increased leverage associated with leased
assets, partially offset by amortization of debt on encumbered
assets
(1) Includes wholly-owned railcars,
partially-owned railcars, and railcars under leased-in
arrangements.
(2) FLRD calculates the implied change in
lease rates for railcar leases expiring over the next four
quarters. The FLRD assumes that these expiring rates will be
renewed at the most recent quarterly transacted lease rates for
each railcar type. We believe the FLRD is useful to both management
and investors as it provides insight into the near-term trend in
lease rates as well as the longer term impact of renewing rates on
future revenue.
Conference Call
Trinity will hold a conference call at 8:00 a.m. Eastern on
February 21, 2023 to discuss its fourth quarter results. To listen
to the call, please visit the Investor Relations section of the
Company's website at www.trin.net and access the Events &
Presentations webpage, or the live call can be accessed at
1-888-317-6003 with the conference passcode "1837958". Please call
at least 10 minutes in advance to ensure a timely connection. An
audio replay may be accessed through the Company’s website or by
dialing 1-877-344-7529 with passcode "8551226" until 11:59 p.m.
Eastern on February 28, 2023.
Additionally, the Company will provide Supplemental Materials to
accompany the earnings conference call. The materials will be
accessible both within the webcast and on Trinity's Investor
Relations website under the Events and Presentations portion of the
site along with the Fourth Quarter Earnings Call event weblink.
Non-GAAP Financial
Measures
We have included financial measures compiled in accordance with
generally accepted accounting principles ("GAAP") and certain
non-GAAP measures in this earnings press release to provide
management and investors with additional information regarding our
financial results. Non-GAAP measures should not be considered in
isolation or as a substitute for our reporting results prepared in
accordance with GAAP and, as calculated, may not be comparable to
other similarly titled measures for other companies. For each
non-GAAP financial measure, a reconciliation to the most comparable
GAAP measure has been included in the accompanying tables. When
forward-looking non-GAAP measures are provided, quantitative
reconciliations to the most directly comparable GAAP measures are
not provided because management cannot, without unreasonable
effort, predict the timing and amounts of certain items included in
the computations of each of these measures. These factors include,
but are not limited to: the product mix of expected railcar
deliveries; the timing and amount of significant transactions and
investments, such as lease portfolio sales, capital expenditures,
and returns of capital to stockholders; and the amount and timing
of certain other items outside the normal course of our core
business operations.
About Trinity Industries
Trinity Industries, Inc., headquartered in Dallas, Texas, owns
businesses that are leading providers of rail transportation
products and services in North America. Our businesses market their
railcar products and services under the trade name TrinityRail®.
The TrinityRail platform provides railcar leasing and management
services, as well as railcar manufacturing, maintenance and
modifications. Trinity reports its financial results in two
reportable segments: the Railcar Leasing and Management Services
Group and the Rail Products Group. For more information, visit:
www.trin.net.
Some statements in this release, which are not historical facts,
are “forward-looking statements” as defined by the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements include statements about Trinity's estimates,
expectations, beliefs, intentions or strategies for the future, and
the assumptions underlying these forward-looking statements,
including, but not limited to, future financial and operating
performance, future opportunities and any other statements
regarding events or developments that Trinity believes or
anticipates will or may occur in the future. Trinity uses the words
“anticipates,” “assumes,” “believes,” “estimates,” “expects,”
“intends,” “forecasts,” “may,” “will,” “should,” “guidance,”
“projected,” “outlook,” and similar expressions to identify these
forward-looking statements. Forward-looking statements speak only
as of the date of this release, and Trinity expressly disclaims any
obligation or undertaking to disseminate any updates or revisions
to any forward-looking statement contained herein to reflect any
change in Trinity’s expectations with regard thereto or any change
in events, conditions or circumstances on which any such statement
is based, except as required by federal securities laws.
Forward-looking statements involve risks and uncertainties that
could cause actual results to differ materially from historical
experience or our present expectations, including but not limited
to risks and uncertainties regarding economic, competitive,
governmental, and technological factors affecting Trinity’s
operations, markets, products, services and prices, and such
forward-looking statements are not guarantees of future
performance. For a discussion of such risks and uncertainties,
which could cause actual results to differ from those contained in
the forward-looking statements, see “Risk Factors” and
“Forward-Looking Statements” in Trinity’s Annual Report on Form
10-K for the most recent fiscal year, as may be revised and updated
by Trinity’s Quarterly Reports on Form 10-Q, and Trinity’s Current
Reports on Form 8-K.
Trinity Industries, Inc.
Condensed Consolidated Statements of
Operations
(in millions, except per share
amounts)
(unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2022
2021
2022
2021
Revenues
$
591.2
$
472.2
$
1,977.3
$
1,516.0
Operating costs:
Cost of revenues
490.2
375.7
1,609.6
1,161.5
Selling, engineering, and administrative
expenses
47.7
42.9
185.4
179.6
Gains on dispositions of property:
Lease portfolio sales
54.5
8.4
127.5
54.1
Other
5.7
4.6
25.2
24.1
Restructuring activities, net
—
(2.6
)
1.0
(3.7
)
477.7
403.0
1,643.3
1,259.2
Operating profit
113.5
69.2
334.0
256.8
Interest expense, net
59.4
43.9
207.6
191.4
Loss on extinguishment of debt
—
—
1.5
11.7
Pension plan settlement
—
(2.8
)
—
(0.6
)
Other, net
1.1
—
(1.6
)
(0.9
)
Income from continuing operations before
income taxes
53.0
28.1
126.5
55.2
Provision (benefit) for income taxes:
Current
11.7
(2.9
)
12.9
2.8
Deferred
(1.5
)
9.4
14.7
13.1
10.2
6.5
27.6
15.9
Income from continuing operations
42.8
21.6
98.9
39.3
Income (loss) from discontinued
operations, net of income taxes
(6.6
)
(13.2
)
(20.3
)
11.1
Gain (loss) on sale of discontinued
operations, net of income taxes
—
131.4
(5.7
)
131.4
Net income
36.2
139.8
72.9
181.8
Net income (loss) attributable to
noncontrolling interest
4.9
5.8
12.8
(0.2
)
Net income attributable to Trinity
Industries, Inc.
$
31.3
$
134.0
$
60.1
$
182.0
Basic earnings per common share:
Income from continuing operations
$
0.47
$
0.16
$
1.05
$
0.39
Income (loss) from discontinued
operations
(0.08
)
1.23
(0.32
)
1.40
Basic net income attributable to Trinity
Industries, Inc.
$
0.39
$
1.39
$
0.73
$
1.79
Diluted earnings per common share:
Income from continuing operations
$
0.46
$
0.16
$
1.02
$
0.38
Income (loss) from discontinued
operations
(0.08
)
1.21
(0.31
)
1.37
Diluted net income attributable to Trinity
Industries, Inc.
$
0.38
$
1.37
$
0.71
$
1.75
Weighted average number of shares
outstanding:
Basic
80.9
96.0
81.9
101.5
Diluted
83.1
98.0
84.2
103.8
Trinity has certain unvested restricted stock awards that
participate in dividends on a nonforfeitable basis and are
therefore considered to be participating securities. Consequently,
diluted net income attributable to Trinity Industries, Inc. per
common share is calculated under both the two-class method and the
treasury stock method, and the more dilutive of the two
calculations is presented.
Trinity Industries, Inc.
Condensed Consolidated Balance
Sheets
(in millions)
(unaudited)
December 31,
December 31,
2022
2021
ASSETS
Cash and cash equivalents
$
79.6
$
167.3
Receivables, net of allowance
323.5
227.6
Income tax receivable
7.8
5.4
Inventories
629.4
432.9
Restricted cash
214.7
135.1
Property, plant, and equipment, net:
Manufacturing/Corporate
340.7
349.3
Leasing:
Wholly-owned subsidiaries
5,788.1
5,706.1
Partially-owned subsidiaries
1,521.3
1,570.6
Deferred profit on railcars sold to the
Leasing Group
(763.3
)
(779.1
)
6,886.8
6,846.9
Goodwill
195.9
154.2
Other assets
386.6
266.5
Total assets
$
8,724.3
$
8,235.9
LIABILITIES AND STOCKHOLDERS'
EQUITY
Accounts payable
$
287.5
$
206.4
Accrued liabilities
261.0
307.4
Debt:
Recourse (1)
624.1
398.7
Non-recourse:
Wholly-owned subsidiaries
3,800.7
3,555.8
Partially-owned subsidiaries
1,182.8
1,216.1
5,607.6
5,170.6
Deferred income taxes
1,134.7
1,106.8
Other liabilities
163.9
147.9
Stockholders' equity:
Trinity Industries, Inc.
1,012.4
1,029.8
Noncontrolling interest
257.2
267.0
1,269.6
1,296.8
Total liabilities and stockholders'
equity
$
8,724.3
$
8,235.9
(1) Recourse debt as of December 31, 2022
includes $225.0 million outstanding associated with our corporate
revolving credit facility.
Trinity Industries, Inc.
Condensed Consolidated Statements of
Cash Flows
(in millions)
(unaudited)
Year Ended
December 31,
2022
2021
Operating activities:
Net cash provided by operating activities
– continuing operations
$
9.2
$
615.6
Net cash provided by (used in) operating
activities – discontinued operations
(22.0
)
(3.8
)
Net cash provided by (used in) operating
activities
(12.8
)
611.8
Investing activities:
Proceeds from lease portfolio sales
750.7
454.3
Proceeds from dispositions of property and
other assets
44.0
40.5
Capital expenditures – leasing
(928.8
)
(547.2
)
Capital expenditures – manufacturing and
other
(38.0
)
(23.6
)
Acquisitions, net of cash acquired
(80.4
)
(16.6
)
Proceeds from insurance recoveries
10.0
9.5
Equity investments
(15.5
)
0.1
Net cash used in investing activities –
continuing operations
(258.0
)
(83.0
)
Proceeds (payments) related to sale of
discontinued operations
(2.7
)
364.7
Net cash used in investing activities –
discontinued operations
—
(5.4
)
Net cash provided by (used in) investing
activities
(260.7
)
276.3
Financing activities:
Net proceeds from (repayments of) debt
422.1
128.3
Shares repurchased
(51.8
)
(833.4
)
Dividends paid to common shareholders
(76.9
)
(88.5
)
Other
(28.0
)
(20.5
)
Net cash provided by (used in) financing
activities
265.4
(814.1
)
Net increase (decrease) in cash, cash
equivalents, and restricted cash
(8.1
)
74.0
Cash, cash equivalents, and restricted
cash at beginning of period
302.4
228.4
Cash, cash equivalents, and restricted
cash at end of period
$
294.3
$
302.4
Trinity Industries, Inc. Reconciliations of Non-GAAP
Measures (in millions, except per share amounts)
(unaudited)
Adjusted Operating Results
We have supplemented the presentation of our reported GAAP
operating profit, income from continuing operations before income
taxes, provision (benefit) for income taxes, income from continuing
operations, net income from continuing operations attributable to
Trinity Industries, Inc., and diluted income from continuing
operations per common share attributable to Trinity Industries,
Inc. with non-GAAP measures that adjust the GAAP measures to
exclude the impact of gains on dispositions of other property,
restructuring activities, interest expense, net, loss on
extinguishment of debt, pension plan settlement, the income tax
effects of the CARES Act, and certain other transactions or events
(as applicable). These non-GAAP measures are derived from amounts
included in our GAAP financial statements and are reconciled to the
most directly comparable GAAP financial measures in the tables
below. Management believes that these measures are useful to both
management and investors for analyzing the performance of our
business without the impact of certain items that are not
indicative of our normal business operations. Non-GAAP measures
should not be considered in isolation or as a substitute for our
reporting results prepared in accordance with GAAP and, as
calculated, may not be comparable to other similarly titled
measures for other companies.
Three Months Ended December
31, 2022
GAAP
Interest expense, net
(1)(2)
Income tax effect of CARES
Act
Adjusted
Operating profit
$
113.5
$
—
$
—
$
113.5
Income (loss) from continuing operations
before income taxes
$
53.0
$
(0.4
)
$
—
$
52.6
Provision (benefit) for income taxes
$
10.2
$
—
$
0.6
$
10.8
Income (loss) from continuing
operations
$
42.8
$
(0.4
)
$
(0.6
)
$
41.8
Net income from continuing operations
attributable to Trinity Industries, Inc.
$
37.9
$
(0.4
)
$
(0.6
)
$
36.9
Diluted weighted average shares
outstanding
83.1
83.1
Diluted income from continuing operations
per common share attributable to Trinity Industries, Inc.
$
0.46
$
0.44
Year Ended December 31,
2022
GAAP
Gains on dispositions of
property – other (2)(3)
Restructuring activities, net
(2)
Interest expense, net
(1)(2)
Income tax effect of CARES
Act
Adjusted
Operating profit
$
334.0
$
(7.5
)
$
1.0
$
—
$
—
$
327.5
Income (loss) from continuing operations
before income taxes
$
126.5
$
(7.5
)
$
1.0
$
(1.4
)
$
—
$
118.6
Provision (benefit) for income taxes
$
27.6
$
(1.9
)
$
0.3
$
(0.3
)
$
0.6
$
26.3
Income (loss) from continuing
operations
$
98.9
$
(5.6
)
$
0.7
$
(1.1
)
$
(0.6
)
$
92.3
Net income from continuing operations
attributable to Trinity Industries, Inc.
$
86.1
$
(5.6
)
$
0.7
$
(1.1
)
$
(0.6
)
$
79.5
Diluted weighted average shares
outstanding
84.2
84.2
Diluted income from continuing operations
per common share attributable to Trinity Industries, Inc.
$
1.02
$
0.94
Three Months Ended December
31, 2021
GAAP
Gains on dispositions of
property – other (2)(3)
Restructuring activities, net
(2)
Pension plan settlement
(2)
Income tax effect of CARES
Act
Adjusted
Operating profit
$
69.2
$
(3.1
)
$
(2.6
)
$
—
$
—
$
63.5
Income (loss) from continuing operations
before income taxes
$
28.1
$
(3.1
)
$
(2.6
)
$
(2.8
)
$
—
$
19.6
Provision (benefit) for income taxes
$
6.5
$
(0.8
)
$
(0.6
)
$
0.2
$
0.7
$
6.0
Income (loss) from continuing
operations
$
21.6
$
(2.3
)
$
(2.0
)
$
(3.0
)
$
(0.7
)
$
13.6
Net income from continuing operations
attributable to Trinity Industries, Inc.
$
15.8
$
(2.3
)
$
(2.0
)
$
(3.0
)
$
(0.7
)
$
7.8
Diluted weighted average shares
outstanding
98.0
98.0
Diluted income from continuing operations
per common share attributable to Trinity Industries, Inc.
$
0.16
$
0.08
Year Ended December 31,
2021
GAAP
Gains on dispositions of
property – other (2)(3)
Restructuring activities,
net(2)
Loss on extinguishment of debt
– Controlling Interest (2)(4)
Loss on extinguishment of debt
– Noncontrolling Interest (5)
Pension plan settlement
(2)
Income tax effect of CARES
Act
Adjusted
Operating profit
$
256.8
$
(7.8
)
$
(3.7
)
$
—
$
—
$
—
$
—
$
245.3
Income (loss) from continuing operations
before income taxes
$
55.2
$
(7.8
)
$
(3.7
)
$
4.6
$
7.1
$
(0.6
)
$
—
$
54.8
Provision (benefit) for income taxes
$
15.9
$
(2.0
)
$
(0.8
)
$
1.1
$
—
$
0.7
$
(2.5
)
$
12.4
Income (loss) from continuing
operations
$
39.3
$
(5.8
)
$
(2.9
)
$
3.5
$
7.1
$
(1.3
)
$
2.5
$
42.4
Net income from continuing operations
attributable to Trinity Industries, Inc.
$
39.5
$
(5.8
)
$
(2.9
)
$
3.5
$
—
$
(1.3
)
$
2.5
$
35.5
Diluted weighted average shares
outstanding
103.8
103.8
Diluted income from continuing operations
per common share attributable to Trinity Industries, Inc.
$
0.38
$
0.34
(1) Represents interest income accretion
related to a seller-financing agreement associated with the sale of
certain non-operating assets.
(2) The effective tax rate for gain on
dispositions of other property, restructuring activities, interest
expense, net, the loss on extinguishment of debt, and pension plan
settlement is before consideration of the CARES Act.
(3) Represents insurance recoveries in
excess of net book value for assets damaged by a tornado at the
Company’s rail maintenance facility in Cartersville, Georgia in the
first quarter of 2021.
(4) Excludes $7.1 million of loss on
extinguishment of debt associated with the noncontrolling interest
recorded in the second quarter of 2021.
(5) Represents the portion of loss on
extinguishment of debt attributable to the noncontrolling interest,
for which Trinity does not provide income taxes.
Pre-Tax Return on Equity
Pre-Tax Return on Equity (“Pre-Tax ROE”) is defined as a ratio
for which (i) the numerator is calculated as income or loss from
continuing operations, adjusted to exclude the effects of the
provision or benefit for income taxes, net income or loss
attributable to noncontrolling interest, and certain other
adjustments, which include gains on dispositions of other property,
restructuring activities, the controlling interest portion of loss
on extinguishment of debt, interest expense, net and pension plan
settlement; and (ii) the denominator is calculated as average
stockholders’ equity (which excludes noncontrolling interest),
adjusted to exclude accumulated other comprehensive income or loss.
In the following table, the numerator and denominator of our
Pre-Tax ROE calculation are reconciled to income from continuing
operations and total stockholders’ equity, respectively, which are
the most directly comparable GAAP financial measures. Management
believes that Pre-Tax ROE is a useful measure to both management
and investors as it provides an indication of the economic return
on the Company’s investments over time. Pre-Tax ROE is used in
consideration of the Company’s expected tax position in the
near-term.
December 31,
December 31,
December 31,
2022
2021
2020
($ in millions)
Numerator:
Income from continuing operations
$
98.9
$
39.3
Provision for income taxes
27.6
15.9
Income from continuing operations before
income taxes
126.5
55.2
Net (income) loss attributable to
noncontrolling interest
(12.8
)
0.2
Adjustments:
Gains on dispositions of property – other
(1)
(7.5
)
(7.8
)
Restructuring activities, net
1.0
(3.7
)
Loss on extinguishment of debt –
controlling interest (2)
—
4.6
Interest expense, net (3)
(1.4
)
—
Pension plan settlement
—
(0.6
)
Adjusted Profit Before Tax
$
105.8
$
47.9
Denominator:
Total stockholders' equity
$
1,269.6
$
1,296.8
$
2,016.0
Noncontrolling interest
(257.2
)
(267.0
)
(277.2
)
Accumulated other comprehensive (income)
loss
(19.7
)
17.0
30.9
Adjusted Stockholders' Equity
$
992.7
$
1,046.8
$
1,769.7
Average total stockholders' equity
$
1,283.2
$
1,656.4
Return on Equity (4)
7.7
%
2.4
%
Average Adjusted Stockholders' Equity
$
1,019.8
$
1,408.3
Pre-Tax Return on Equity (5)
10.4
%
3.4
%
(1) Represents insurance recoveries in
excess of net book value received for assets damaged by a tornado
at the Company’s rail maintenance facility in Cartersville, Georgia
in the first quarter of 2021.
(2) Excludes $7.1 million of loss on extinguishment of debt
associated with the noncontrolling interest recorded in the second
quarter of 2021.
(3) Represents interest income accretion
related to a seller-financing agreement associated with the sale of
certain non-operating assets.
(4) Return on Equity is calculated as
income from continuing operations divided by average total
stockholders' equity.
(5) Pre-Tax Return on Equity is calculated
as adjusted profit before tax divided by average adjusted
stockholders' equity, each as defined and reconciled above.
Adjusted Free Cash Flow
Adjusted Free Cash Flow After Investments and Dividends
("Adjusted Free Cash Flow") is a non-GAAP financial measure. We
believe Adjusted Free Cash Flow is useful to both management and
investors as it provides a relevant measure of liquidity and a
useful basis for assessing our ability to fund our operations and
repay our debt. Adjusted Free Cash Flow is reconciled to net cash
provided by (used in) operating activities from continuing
operations, the most directly comparable GAAP financial measure, in
the following table. Adjusted Free Cash Flow is defined as net cash
provided by (used in) operating activities from continuing
operations as computed in accordance with GAAP, plus cash proceeds
from lease portfolio sales, less capital expenditures for
manufacturing, dividends paid, and Equity CapEx for leased
railcars. Equity CapEx for leased railcars is defined as leasing
capital expenditures, adjusted to exclude net proceeds from
(repayments of) debt. Non-GAAP measures should not be considered in
isolation or as a substitute for our reporting results prepared in
accordance with GAAP and, as calculated, may not be comparable to
other similarly titled measures for other companies.
Year Ended
December 31,
2022
2021
Net cash provided by operating activities
– continuing operations (1)
$
9.2
$
615.6
Proceeds from lease portfolio sales
750.7
454.3
Capital expenditures – manufacturing and
other
(38.0
)
(23.6
)
Dividends paid to common stockholders
(76.9
)
(88.5
)
Equity CapEx for leased railcars
(506.7
)
(418.9
)
Adjusted Free Cash Flow After Investments
and Dividends
$
138.3
$
538.9
Capital expenditures – leasing
$
928.8
$
547.2
Less:
Payments to retire debt
(1,578.5
)
(2,315.8
)
Proceeds from issuance of debt
2,000.6
2,444.1
Net proceeds from (repayments of) debt
422.1
128.3
Equity CapEx for leased railcars
$
506.7
$
418.9
(1) Amounts for the year ended December
31, 2021 include the collection of approximately $438 million of
income tax refunds associated with the loss carryback provisions
included in the CARES Act.
EBITDA and Adjusted EBITDA
“EBITDA” is defined as income from continuing operations plus
interest expense, income taxes, and depreciation and amortization
expense. Adjusted EBITDA is defined as EBITDA plus gains on
dispositions of other property, restructuring activities, interest
income, loss on extinguishment of debt, and pension plan
settlement. EBITDA and Adjusted EBITDA are non-GAAP financial
measures; however, the amounts included in these calculations are
derived from amounts included in our GAAP financial statements.
EBITDA and Adjusted EBITDA are reconciled to net income, the most
directly comparable GAAP financial measure, in the following table.
This information is provided to assist management and investors in
making meaningful comparisons of our operating performance between
periods. We believe EBITDA is a useful measure for analyzing the
performance of our business. We also believe that EBITDA is
commonly reported and widely used by investors and other interested
parties as a measure of a company’s operating performance and debt
servicing ability because it assists in comparing performance on a
consistent basis without regard to capital structure, depreciation
or amortization (which can vary significantly depending on many
factors). EBITDA and Adjusted EBITDA should not be considered as
alternatives to net income as indicators of our operating
performance, or as alternatives to operating cash flows as measures
of liquidity. Non-GAAP measures should not be considered in
isolation or as a substitute for our reporting results prepared in
accordance with GAAP and, as calculated, may not be comparable to
other similarly titled measures for other companies.
Three Months Ended
Year Ended
December 31,
December 31,
2022
2021
2022
2021
Net income
$
36.2
$
139.8
$
72.9
$
181.8
Less: Income (loss) from discontinued
operations, net of income taxes
(6.6
)
(13.2
)
(20.3
)
11.1
Less: Gain (loss) on sale of discontinued
operations, net of income taxes
—
131.4
(5.7
)
131.4
Income from continuing operations
$
42.8
$
21.6
$
98.9
$
39.3
Interest expense
61.6
44.3
213.9
192.0
Provision (benefit) for income taxes
10.2
6.5
27.6
15.9
Depreciation and amortization expense
70.4
65.2
276.4
265.7
EBITDA
$
185.0
$
137.6
$
616.8
$
512.9
Gains on dispositions of property –
other
—
(3.1
)
(7.5
)
(7.8
)
Restructuring activities, net
—
(2.6
)
1.0
(3.7
)
Interest income
(0.4
)
—
(1.4
)
—
Loss on extinguishment of debt
—
—
—
11.7
Pension plan settlement
—
(2.8
)
—
(0.6
)
Adjusted EBITDA
$
184.6
$
129.1
$
608.9
$
512.5
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230221005321/en/
Investor Contact: Leigh Anne Mann Vice President,
Investor Relations Trinity Industries, Inc. (Investors)
214/631-4420
Media Contact: Jack L. Todd Vice President, Public
Affairs Trinity Industries, Inc. (Media Line) 214/589-8909
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