August 1, 2023August 1, 2023TRINITY INDUSTRIES INC0000099780false00000997802023-08-012023-08-01
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
| | | | | | | | |
| Date of Report (Date of Earliest Event Reported): | | August 1, 2023 |
_______________________________________
(Exact name of registrant as specified in its charter)
| | | | | | | | | | | | | | |
| | | | | |
| Delaware | | 1-6903 | | 75-0225040 |
(State or other jurisdiction
of incorporation) | | (Commission File No.) | | (I.R.S. Employer
Identification No.) |
14221 N. Dallas Parkway, Suite 1100,
Dallas, Texas 75254-2957
(Address of Principal Executive Offices, and Zip Code)
(214) 631-4420
Registrant's Telephone Number, Including Area Code
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
______________________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
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. ☐
Item 2.02 Results of Operations and Financial Condition.
Trinity Industries, Inc. ("Trinity") hereby furnishes the information set forth in its News Release, dated August 1, 2023, announcing operating results for the three month period ended June 30, 2023, a copy of which is furnished as Exhibit 99.1 and incorporated herein by reference. On August 1, 2023, Trinity held a conference call and webcast with respect to its financial results for the three month period ended June 30, 2023. The conference call scripts of Leigh Anne Mann, Vice President of Investor Relations; E. Jean Savage, Chief Executive Officer and President; and Eric R. Marchetto, Executive Vice President and Chief Financial Officer; are furnished as Exhibit 99.2, and incorporated herein by reference.
The conference call, News Release, and Supplemental Materials, described below, included references to Adjusted Operating Results and Adjusted Earnings Per Share, Pre-Tax Return on Equity, Adjusted Free Cash Flow, EBITDA and Adjusted EBITDA, which are not calculations based on generally accepted accounting principles (“GAAP”). Reconciliations of each of these non-GAAP measures to the most directly comparable GAAP measures have been included in the News Release and/or the Supplemental Materials. When forward-looking non-GAAP measures are provided, Trinity does not provide quantitative reconciliations of forward-looking non-GAAP measures to the most directly comparable GAAP measures because it 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 shareholders; and the amount and timing of certain other items outside the normal course of our core business operations.
This information and the materials described in Item 7.01 are not "filed" pursuant to the Securities Exchange Act of 1934 and are not incorporated by reference into any Securities Act of 1933 registration statements. Additionally, the submission of the report on Form 8-K is not an admission of the materiality of any information in this report that is required to be disclosed solely by Regulation FD.
Item 7.01 Regulation FD Disclosure.
See "Item 2.02 – Results of Operations and Financial Condition." Additionally, Trinity posted Supplemental Materials to its website to accompany the conference call; a copy of these materials is furnished as Exhibit 99.3 and incorporated herein by reference.
Forward-Looking Statements
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 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.
Item 9.01 Financial Statements and Exhibits.
(a) - (c) Not applicable.
(d) Exhibits:
| | | | | | | | |
| NO. | | DESCRIPTION |
| 99.1 | | | |
| 99.2 | | | |
| 99.3 | | | |
| | |
| 101.SCH | | Inline XBRL Taxonomy Extension Schema Document (filed electronically herewith). |
| | |
| 101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase Document (filed electronically herewith). |
| 101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed electronically herewith). |
| | |
| 104 | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| | | | | | | | |
| Trinity Industries, Inc. |
| | |
| August 1, 2023 | By: | /s/ Eric R. Marchetto |
| | Name: Eric R. Marchetto |
| | Title: Executive Vice President and Chief Financial Officer |
Exhibit 99.1
FOR IMMEDIATE RELEASE
Trinity Industries, Inc. Announces Second Quarter 2023 Results
Generates year-to-date operating and adjusted free cash flow of $140 million and $81 million, respectively
Reports both quarterly GAAP and adjusted earnings from continuing operations of $0.23 per diluted share
Lease fleet utilization of 97.9% and Future Lease Rate Differential ("FLRD") of positive 29.5% at quarter end
Delivered 4,985 railcars and received orders for 4,770 railcars in the quarter; backlog of $3.6 billion at quarter-end
DALLAS, Texas – August 1, 2023 – Trinity Industries, Inc. (NYSE:TRN) today announced earnings results for the second quarter ended June 30, 2023.
Financial and Operational Highlights
•Quarterly total company revenues of $722 million; 73% improvement year over year
•Quarterly income from continuing operations per common diluted share ("EPS") of $0.23; 64% improvement year over year
•Lease fleet utilization of 97.9% and FLRD of positive 29.5% at quarter end
•Railcar deliveries of 4,985 and new railcar orders of 4,770
•Year-to-date cash flow from continuing operations and adjusted free cash flow after investments and dividends ("Adjusted Free Cash Flow") were $140 million and $81 million, respectively
2023 Guidance
•Industry deliveries of approximately 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 $1.35 to $1.45
◦Excludes items outside of our core business operations
Management Commentary
“Our results this quarter reflect a favorable operating environment and significant positive trends in our business,” said Trinity’s Chief Executive Officer and President, Jean Savage. “We continue to see rising lease rates that reflect a balanced railcar fleet and railcar orders and deliveries to support replacement level demand, setting Trinity up for growth in the second half of the year.”
“The Future Lease Rate Differential once again remained elevated at 29.5%, and we are seeing the higher lease rates flow through at the segment level, resulting in higher revenues in our Railcar Leasing and Management Services Group, a trend we expect to continue." Ms. Savage continued, “The Rail Products Group's high revenue and deliveries reflect ramped up production. Margins increased year over year but were negatively impacted by foreign exchange headwinds and, to a lesser extent, labor inefficiencies and higher line changeovers in the quarter. I am pleased with the progress we are making in improving operational performance.”
Ms. Savage concluded, “We expect positive industry trends to continue in the back half of the year, with lease rate growth and consistent railcar deliveries driving up revenue. Additionally, while we expect marked margin improvement in the second half of the year, this will be partially offset by the strength of the Mexican peso, higher interest expense, and slower recovery than expected in efficiency and supply chain. However, we still plan for significant growth year over year, and expect a full year EPS of $1.35 to $1.45."
Consolidated Financial Summary
| | | | | | | | | | | | | | | | | |
| Three Months Ended
June 30, | | |
| 2023 | | 2022 | | Year over Year – Comparison |
| ($ in millions, except per share amounts) | | |
| Revenues | $ | 722.4 | | $ | 416.8 | | Higher volume of external deliveries in the Rail Products Group |
| | | | | |
| | | | | |
Operating profit | $ | 99.1 | | $ | 73.0 | | Higher external deliveries in the Rail Products Group and improved lease rates in the Leasing Group, partially offset by increased employee-related and other operating costs |
| | | | | |
| Interest expense, net | $ | 66.9 | | $ | 49.7 | | Higher interest rates associated with variable rate debt and higher overall average debt during Q2 2023 |
| Net income from continuing operations attributable to Trinity Industries, Inc. | $ | 19.3 | | $ | 11.7 | | |
| | | | | |
EBITDA (1) | $ | 173.3 | | $ | 143.6 | | |
| | | | | |
| Effective tax expense rate | 23.9 | % | | 26.0 | % | | |
| Diluted EPS – GAAP | $ | 0.23 | | $ | 0.14 | | Primarily improved operating results, partially offset by higher interest expense |
Diluted EPS – Adjusted (1) | $ | 0.23 | | $ | 0.14 | | |
| | | | | |
| | | |
| | | | | |
| | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| Six Months Ended
June 30, | | |
| 2023 | | 2022 | | Year over Year – Comparison |
| (in millions) | | |
| Net cash provided by (used in) operating activities – continuing operations | $ | 140.3 | | $ | (61.3) | | Working capital improvements relative to inventory build up in the prior year |
Adjusted Free Cash Flow (1) | $ | 80.8 | | $ | 42.5 | | |
| Net lease fleet investment | $ | 214.0 | | $ | 198.9 | | |
| Returns of capital to stockholders | $ | 43.3 | | $ | 89.6 | | 2022 included $50.3 million of share repurchase activity |
| | | | | |
(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
•Total committed liquidity of $699 million as of June 30, 2023.
•In June 2023, Trinity Rail Leasing 2023 LLC, a wholly-owned subsidiary of the Company, entered into a $340 million term loan agreement ("TRL-2023 term loan"). The TRL-2023 term loan bears interest at a variable rate of daily simple Secured Overnight Financing Rate plus (1) a benchmark adjustment of 10 basis points and (2) a facility margin of 1.80%, for an all-in interest rate of 6.96% as of June 30, 2023. The TRL-2023 term loan has a stated maturity date of June 12, 2028. Net proceeds received from the transaction were used to repay borrowings under Trinity Industries Leasing Company's warehouse loan facility and for general corporate purposes.
•In June 2023, we issued $400 million aggregate principal amount of 7.75% senior notes due July 2028 ("Senior Notes due 2028"). Interest on the Senior Notes due 2028 is payable semiannually commencing January 15, 2024. Net proceeds received from the issuance were used to repay outstanding borrowings under our revolving credit facility and to pay related fees, costs, premiums, and expenses in connection with the issuance. We intend to use the remainder of the net proceeds for general corporate purposes, which may include repayment of other debt, including our 4.55% senior notes due 2024.
Business Group Summary
| | | | | | | | | | | | | | | | | |
| Three Months Ended
June 30, | | |
| 2023 | | 2022 | | Year over Year – Comparison |
| ($ in millions) | | |
| Railcar Leasing and Management Services Group | | |
| Leasing and management revenues | $ | 223.2 | | $ | 195.3 | | Improved lease rates and higher utilization, as well as acquisition-related revenues included in the current year period |
| Leasing and management operating profit | $ | 88.7 | | $ | 78.6 | | Improved lease rates and higher utilization, partially offset by higher maintenance costs |
| Operating profit on lease portfolio sales | $ | 29.8 | | $ | 26.9 | | Higher profits on lease fleet portfolio sales |
Fleet utilization (1) | 97.9 | % | | 97.2 | % | | |
Future Lease Rate Differential (2) | +29.5 | % | | +14.7 | % | | Improvement in current market lease rates |
Owned lease fleet (in units) (1) | 109,060 | | 110,560 | | Lease fleet portfolio sales partially offset by growth in the lease fleet |
| Investor-owned lease fleet (in units) | 33,205 | | 30,115 | | Additional sale to Signal Rail in Q3 2022 |
| Rail Products Group | | | | | |
| Revenues | $ | 709.0 | | $ | 430.6 | | Higher volume of deliveries offset by the mix of railcars sold |
| Operating profit | $ | 23.7 | | $ | 13.7 | | Increased deliveries, partially offset by the mix of railcars sold, foreign currency fluctuations, and operational and labor inefficiencies |
| Operating profit margin | 3.3 | % | | 3.2 | % | |
| Revenues eliminations – Lease subsidiary | $ | (209.6) | | $ | (208.9) | | |
| Operating profit eliminations – Lease subsidiary | $ | (13.1) | | $ | (20.3) | | |
| New railcars: | | | | | |
| Deliveries (in units) | 4,985 | | 2,510 | | |
| Orders (in units) | 4,770 | | 4,335 | | |
| Order value | $ | 528.3 | | $ | 524.4 | |
|
| Backlog value | $ | 3,605.4 | | $ | 2,194.7 | |
|
| Sustainable railcar conversions: | | | | | |
| Deliveries (in units) | 45 | | 485 | | |
| Backlog (in units) | 2,160 | | 2,350 | | |
| Backlog value | $ | 179.9 | | $ | 188.6 | | |
| Corporate and other | | | | | |
| Selling, engineering, and administrative expenses | $ | 31.6 | | $ | 25.4 | | Higher employee-related costs and $2.0 million from the change in estimated fair value of additional contingent consideration associated with an acquisition |
| Gains on dispositions of property | $ | — | | $ | (0.3) | | |
| | | | | |
| June 30, 2023 | | December 31, 2022 | | |
| Loan-to-value ratio | | | | | |
| Wholly-owned subsidiaries, excluding corporate revolving credit facility | 65.1 | % | | 65.7 | % | | |
(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 leases 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.
Conference Call
Trinity will hold a conference call at 8:00 a.m. Eastern on August 1, 2023 to discuss its second 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 "8715911". 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 "7420400" until 11:59 p.m. Eastern on August 8, 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 Second 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 reported 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; railcar manufacturing, maintenance and modifications; and other railcar logistics products and services. 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.
| | |
| 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 |
- TABLES TO FOLLOW -
Trinity Industries, Inc.
Condensed Consolidated Statements of Operations
(in millions, except per share amounts)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended
June 30, | | Six Months Ended
June 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
| Revenues | $ | 722.4 | | | $ | 416.8 | | | $ | 1,364.1 | | | $ | 889.5 | |
| Operating costs: | | | | | | | |
| Cost of revenues | 601.2 | | | 325.6 | | | 1,139.7 | | | 724.1 | |
| Selling, engineering, and administrative expenses | 54.3 | | | 45.0 | | | 104.2 | | | 89.7 | |
| Gains on dispositions of property: | | | | | | | |
| Lease portfolio sales | 29.8 | | | 26.9 | | | 43.3 | | | 38.7 | |
| Other | 0.6 | | | 0.9 | | | 2.4 | | | 14.4 | |
| | | | | | | |
| Restructuring activities, net | (1.8) | | | 1.0 | | | (2.2) | | | 1.0 | |
| 623.3 | | | 343.8 | | | 1,196.0 | | | 761.7 | |
| Operating profit | 99.1 | | | 73.0 | | | 168.1 | | | 127.8 | |
| Interest expense, net | 66.9 | | | 49.7 | | | 129.0 | | | 93.2 | |
| Loss on extinguishment of debt | — | | | 1.5 | | | — | | | 1.5 | |
| | | | | | | |
| Other, net | 1.3 | | | (0.5) | | | 2.9 | | | (2.1) | |
| Income from continuing operations before income taxes | 30.9 | | | 22.3 | | | 36.2 | | | 35.2 | |
| Provision (benefit) for income taxes: | | | | | | | |
| Current | 3.1 | | | 2.0 | | | 4.0 | | | 3.8 | |
| Deferred | 4.3 | | | 3.8 | | | (8.1) | | | 5.0 | |
| 7.4 | | | 5.8 | | | (4.1) | | | 8.8 | |
| Income from continuing operations | 23.5 | | | 16.5 | | | 40.3 | | | 26.4 | |
| Loss from discontinued operations, net of income taxes | (2.3) | | | (3.4) | | | (5.4) | | | (10.3) | |
| Loss on sale of discontinued operations, net of income taxes | — | | | (4.6) | | | — | | | (5.7) | |
| Net income | 21.2 | | | 8.5 | | | 34.9 | | | 10.4 | |
| Net income attributable to noncontrolling interest | 4.2 | | | 4.8 | | | 13.5 | | | 7.4 | |
| Net income attributable to Trinity Industries, Inc. | $ | 17.0 | | | $ | 3.7 | | | $ | 21.4 | | | $ | 3.0 | |
| | | | | | | |
| Basic earnings per common share: | | | | | | | |
| Income from continuing operations | $ | 0.24 | | | $ | 0.14 | | | $ | 0.33 | | | $ | 0.23 | |
| Loss from discontinued operations | (0.03) | | | (0.10) | | | (0.07) | | | (0.19) | |
| Basic net income attributable to Trinity Industries, Inc. | $ | 0.21 | | | $ | 0.04 | | | $ | 0.26 | | | $ | 0.04 | |
| Diluted earnings per common share: | | | | | | | |
| Income from continuing operations | $ | 0.23 | | | $ | 0.14 | | | $ | 0.32 | | | $ | 0.23 | |
| Loss from discontinued operations | (0.03) | | | (0.10) | | | (0.06) | | | (0.19) | |
| Diluted net income attributable to Trinity Industries, Inc. | $ | 0.20 | | | $ | 0.04 | | | $ | 0.26 | | | $ | 0.04 | |
| Weighted average number of shares outstanding: | | | | | | | |
| Basic | 81.2 | | | 82.4 | | | 81.0 | | | 82.7 | |
| Diluted | 83.4 | | | 84.4 | | | 83.5 | | | 84.9 | |
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)
| | | | | | | | | | | |
| June 30, 2023 | | December 31, 2022 |
| ASSETS | | | |
| Cash and cash equivalents | $ | 91.7 | | | $ | 79.6 | |
| | | |
| Receivables, net of allowance | 415.6 | | | 323.5 | |
| Income tax receivable | 15.3 | | | 7.8 | |
| Inventories | 622.2 | | | 629.4 | |
| Restricted cash | 204.9 | | | 214.7 | |
| Property, plant, and equipment, net: | | | |
| Manufacturing/Corporate | 347.0 | | | 340.7 | |
| Leasing: | | | |
| Wholly-owned subsidiaries | 5,945.2 | | | 5,788.1 | |
| Partially-owned subsidiaries | 1,500.8 | | | 1,521.3 | |
| Deferred profit on railcars sold to the Leasing Group | (763.8) | | | (763.3) | |
| 7,029.2 | | | 6,886.8 | |
| Goodwill | 222.1 | | | 195.9 | |
| | | |
| Other assets | 421.0 | | | 386.6 | |
| Total assets | $ | 9,022.0 | | | $ | 8,724.3 | |
| | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | |
| Accounts payable | $ | 330.8 | | | $ | 287.5 | |
| Accrued liabilities | 310.6 | | | 261.0 | |
| Debt: | | | |
| Recourse | 793.9 | | | 624.1 | |
| Non-recourse: | | | |
| Wholly-owned subsidiaries | 3,870.8 | | | 3,800.7 | |
| Partially-owned subsidiaries | 1,167.9 | | | 1,182.8 | |
| 5,832.6 | | | 5,607.6 | |
| Deferred income taxes | 1,138.6 | | | 1,134.7 | |
| | | |
| Other liabilities | 160.4 | | | 163.9 | |
| Stockholders' equity: | | | |
| Trinity Industries, Inc. | 994.6 | | | 1,012.4 | |
| Noncontrolling interest | 254.4 | | | 257.2 | |
| 1,249.0 | | | 1,269.6 | |
| Total liabilities and stockholders' equity | $ | 9,022.0 | | | $ | 8,724.3 | |
Trinity Industries, Inc.
Condensed Consolidated Statements of Cash Flows
(in millions)
(unaudited)
| | | | | | | | | | | |
| Six Months Ended
June 30, |
| 2023 | | 2022 |
| Operating activities: | | | |
| Net cash provided by (used in) operating activities – continuing operations | $ | 140.3 | | | $ | (61.3) | |
| Net cash used in operating activities – discontinued operations | (5.4) | | | (12.0) | |
| Net cash provided by (used in) operating activities | 134.9 | | | (73.3) | |
| | | |
| Investing activities: | | | |
| Proceeds from lease portfolio sales | 185.7 | | | 215.2 | |
| Proceeds from dispositions of property and other assets | 8.4 | | | 23.8 | |
| Capital expenditures – leasing | (399.7) | | | (414.1) | |
| Capital expenditures – manufacturing and other | (20.8) | | | (18.8) | |
| Acquisitions, net of cash acquired | (65.8) | | | (9.4) | |
| Proceeds from insurance recoveries | 1.2 | | | 4.8 | |
| Other | (1.1) | | | — | |
| Net cash used in investing activities – continuing operations | (292.1) | | | (198.5) | |
| Payments related to sale of discontinued operations | — | | | (2.7) | |
| | | |
| Net cash used in investing activities | (292.1) | | | (201.2) | |
| | | |
| Financing activities: | | | |
| Net proceeds from (repayments of) debt | 218.6 | | | 360.8 | |
| Shares repurchased | — | | | (22.4) | |
| Dividends paid to common shareholders | (43.3) | | | (39.3) | |
| Other | (15.8) | | | (20.5) | |
| | | |
| | | |
| Net cash provided by financing activities | 159.5 | | | 278.6 | |
| Net increase in cash, cash equivalents, and restricted cash | 2.3 | | | 4.1 | |
| Cash, cash equivalents, and restricted cash at beginning of period | 294.3 | | | 302.4 | |
| Cash, cash equivalents, and restricted cash at end of period | $ | 296.6 | | | $ | 306.5 | |
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 certain selling, engineering, and administrative expenses; gains on dispositions of other property; restructuring activities, net; interest expense, net; 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 reported results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures for other companies.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, 2023 |
| GAAP | | Selling, engineering, and administrative expenses (1) | | | | | | Restructuring activities, net | | Interest expense, net (2) | | | | Adjusted |
| Operating profit | $ | 99.1 | | | $ | 2.0 | | | | | | | $ | (1.8) | | | $ | — | | | | | $ | 99.3 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Income from continuing operations before income taxes | $ | 30.9 | | | $ | 2.0 | | | | | | | $ | (1.8) | | | $ | (0.3) | | | | | $ | 30.8 | |
| | | | | | | | | | | | | | | |
| Provision (benefit) for income taxes | $ | 7.4 | | | $ | 0.5 | | | | | | | $ | (0.5) | | | $ | (0.1) | | | | | $ | 7.3 | |
| | | | | | | | | | | | | | | |
| Income from continuing operations | $ | 23.5 | | | $ | 1.5 | | | | | | | $ | (1.3) | | | $ | (0.2) | | | | | $ | 23.5 | |
| | | | | | | | | | | | | | | |
| Net income from continuing operations attributable to Trinity Industries, Inc. | $ | 19.3 | | | $ | 1.5 | | | | | | | $ | (1.3) | | | $ | (0.2) | | | | | $ | 19.3 | |
| | | | | | | | | | | | | | | |
| Diluted weighted average shares outstanding | 83.4 | | | | | | | | | | | | | | 83.4 |
| | | | | | | | | | | | | | | |
| Diluted income from continuing operations per common share attributable to Trinity Industries, Inc. | $ | 0.23 | | | | | | | | | | | | | | | $ | 0.23 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, 2023 |
| GAAP | | Selling, engineering, and administrative expenses (1) | | Gains on dispositions of property – other (3) | | Restructuring activities, net | | | | Interest expense, net (2) | | | | | | Adjusted |
| Operating profit | $ | 168.1 | | | $ | 2.0 | | | $ | (1.2) | | | $ | (2.2) | | | | | $ | — | | | | | | | $ | 166.7 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Income from continuing operations before income taxes | $ | 36.2 | | | $ | 2.0 | | | $ | (1.2) | | | $ | (2.2) | | | | | $ | (0.7) | | | | | | | $ | 34.1 | |
| | | | | | | | | | | | | | | | | |
| Provision (benefit) for income taxes | $ | (4.1) | | | $ | 0.5 | | | $ | (0.4) | | | $ | (0.6) | | | | | $ | (0.2) | | | | | | | $ | (4.8) | |
| | | | | | | | | | | | | | | | | |
| Income from continuing operations | $ | 40.3 | | | $ | 1.5 | | | $ | (0.8) | | | $ | (1.6) | | | | | $ | (0.5) | | | | | | | $ | 38.9 | |
| | | | | | | | | | | | | | | | | |
| Net income from continuing operations attributable to Trinity Industries, Inc. | $ | 26.8 | | | $ | 1.5 | | | $ | (0.8) | | | $ | (1.6) | | | | | $ | (0.5) | | | | | | | $ | 25.4 | |
| | | | | | | | | | | | | | | | | |
| Diluted weighted average shares outstanding | 83.5 | | | | | | | | | | | | | | | | 83.5 |
| | | | | | | | | | | | | | | | | |
| Diluted income from continuing operations per common share attributable to Trinity Industries, Inc. | $ | 0.32 | | | | | | | | | | | | | | | | | $ | 0.30 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, 2022 |
| GAAP | | Restructuring activities, net | | | | | | | | Interest expense, net (2) | | | | Adjusted |
| Operating profit | $ | 73.0 | | | $ | 1.0 | | | | | | | | | $ | — | | | | | $ | 74.0 | |
| | | | | | | | | | | | | | | |
| Income from continuing operations before income taxes | $ | 22.3 | | | $ | 1.0 | | | | | | | | | $ | (0.4) | | | | | $ | 22.9 | |
| | | | | | | | | | | | | | | |
| Provision (benefit) for income taxes | $ | 5.8 | | | $ | 0.3 | | | | | | | | | $ | (0.1) | | | | | $ | 6.0 | |
| | | | | | | | | | | | | | | |
| Income from continuing operations | $ | 16.5 | | | $ | 0.7 | | | | | | | | | $ | (0.3) | | | | | $ | 16.9 | |
| | | | | | | | | | | | | | | |
| Net income from continuing operations attributable to Trinity Industries, Inc. | $ | 11.7 | | | $ | 0.7 | | | | | | | | | $ | (0.3) | | | | | $ | 12.1 | |
| | | | | | | | | | | | | | | |
| Diluted weighted average shares outstanding | 84.4 | | | | | | | | | | | | | | 84.4 |
| | | | | | | | | | | | | | | |
| Diluted income from continuing operations per common share attributable to Trinity Industries, Inc. | $ | 0.14 | | | | | | | | | | | | | | | $ | 0.14 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, 2022 |
| GAAP | | | | Gains on dispositions of property – other (3) | | Restructuring activities, net | | | | | | Interest expense, net (2) | | | | Adjusted |
| Operating profit | $ | 127.8 | | | | | $ | (6.4) | | | $ | 1.0 | | | | | | | $ | — | | | | | $ | 122.4 | |
| | | | | | | | | | | | | | | | | |
| Income from continuing operations before income taxes | $ | 35.2 | | | | | $ | (6.4) | | | $ | 1.0 | | | | | | | $ | (0.7) | | | | | $ | 29.1 | |
| | | | | | | | | | | | | | | | | |
| Provision (benefit) for income taxes | $ | 8.8 | | | | | $ | (1.6) | | | $ | 0.3 | | | | | | | $ | (0.2) | | | | | $ | 7.3 | |
| | | | | | | | | | | | | | | | | |
| Income from continuing operations | $ | 26.4 | | | | | $ | (4.8) | | | $ | 0.7 | | | | | | | $ | (0.5) | | | | | $ | 21.8 | |
| | | | | | | | | | | | | | | | | |
| Net income from continuing operations attributable to Trinity Industries, Inc. | $ | 19.0 | | | | | $ | (4.8) | | | $ | 0.7 | | | | | | | $ | (0.5) | | | | | $ | 14.4 | |
| | | | | | | | | | | | | | | | | |
| Diluted weighted average shares outstanding | 84.9 | | | | | | | | | | | | | | | | 84.9 |
| | | | | | | | | | | | | | | | | |
| Diluted income from continuing operations per common share attributable to Trinity Industries, Inc. | $ | 0.23 | | | | | | | | | | | | | | | | | $ | 0.17 | |
(1) Represents the change in estimated fair value of additional contingent consideration associated with an acquisition.
(2) Represents interest income accretion related to a seller-financing agreement associated with the sale of certain non-operating assets.
(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.
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) recourse and non-recourse debt. Non-GAAP measures should not be considered in isolation or as a substitute for our reported results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures for other companies.
| | | | | | | | | | | |
| Six Months Ended
June 30, |
| 2023 | | 2022 |
| Net cash provided by (used in) operating activities – continuing operations | $ | 140.3 | | | $ | (61.3) | |
| Proceeds from lease portfolio sales | 185.7 | | | 215.2 | |
| Capital expenditures – manufacturing and other | (20.8) | | | (18.8) | |
| Dividends paid to common stockholders | (43.3) | | | (39.3) | |
| Equity CapEx for leased railcars | (181.1) | | | (53.3) | |
| Adjusted Free Cash Flow After Investments and Dividends | $ | 80.8 | | | $ | 42.5 | |
| | | |
| Capital expenditures – leasing | $ | 399.7 | | | $ | 414.1 | |
| Less: | | | |
| Payments to retire debt | (1,035.3) | | | (833.3) | |
| Proceeds from issuance of debt | 1,253.9 | | | 1,194.1 | |
| Net proceeds from (repayments of) debt | 218.6 | | | 360.8 | |
| Equity CapEx for leased railcars | $ | 181.1 | | | $ | 53.3 | |
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 certain selling, engineering, and administrative expenses; gains on dispositions of other property; restructuring activities, net; and interest income. 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 reported results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures for other companies.
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended
June 30, | | Six Months Ended
June 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
| Net income | $ | 21.2 | | | $ | 8.5 | | | $ | 34.9 | | | $ | 10.4 | |
| Less: Loss from discontinued operations, net of income taxes | (2.3) | | | (3.4) | | | (5.4) | | | (10.3) | |
| Less: Loss on sale of discontinued operations, net of income taxes | — | | | (4.6) | | | — | | | (5.7) | |
| Income from continuing operations | $ | 23.5 | | | $ | 16.5 | | | $ | 40.3 | | | $ | 26.4 | |
| Interest expense | 69.6 | | | 52.0 | | | 134.4 | | | 96.1 | |
| Provision (benefit) for income taxes | 7.4 | | | 5.8 | | | (4.1) | | | 8.8 | |
| Depreciation and amortization expense | 72.8 | | | 69.3 | | | 146.8 | | | 136.2 | |
EBITDA | $ | 173.3 | | | $ | 143.6 | | | $ | 317.4 | | | $ | 267.5 | |
| Selling, engineering, and administrative expenses | 2.0 | | | — | | | 2.0 | | | — | |
| Gains on dispositions of property – other | — | | | — | | | (1.2) | | | (6.4) | |
| | | | | | | |
| Restructuring activities, net | (1.8) | | | 1.0 | | | (2.2) | | | 1.0 | |
| Interest income | (0.3) | | | (0.4) | | | (0.7) | | | (0.7) | |
| | | | | | | |
| | | | | | | |
| Adjusted EBITDA | $ | 173.2 | | | $ | 144.2 | | | $ | 315.3 | | | $ | 261.4 | |
Exhibit 99.2
Trinity Industries, Inc.
Earnings Release Conference Call – Q2 2023
August 1, 2023
Leigh Anne Mann
Vice President, Investor Relations
Thank you, operator. Good morning everyone. We appreciate you joining us for the Company’s second quarter 2023 financial results conference call.
Our prepared remarks will include comments from Jean Savage, Trinity’s Chief Executive Officer and President, and Eric Marchetto, the Company’s Chief Financial Officer. We will hold a Q&A session following the prepared remarks from our leaders.
During the call today, we will reference slides highlighting key points of discussion and certain non-GAAP financial metrics. The reconciliations of the non-GAAP metrics to comparable GAAP measures are provided in the appendix of the supplemental slides, which are accessible on our investor relations website at www.trin.net. These slides are under the Events and Presentations portion of the website, along with the Second Quarter Earnings Conference Call event link.
A replay of today’s call will be available after 10:30 a.m. Eastern time through midnight on August 8, 2023. Replay information is available under the Events and Presentations page on our Investor Relations website.
It is now my pleasure to turn the call over to Jean.
E. Jean Savage
Chief Executive Officer and President
Thank you, Leigh Anne, and good morning everyone.
Our second quarter results reflect positive trends in our business despite some downside in our broader operating environment. We will provide more details on how those factors impacted our financial performance. Still, we remain confident in our business’s continued momentum and growth as we enter the year’s second half. We have line of sight to higher revenues on both sides of our business with increased deliveries, rising lease rates, and continued improvement in our operating margins.
Please turn with me to Slide 3 to discuss today’s key messages.
We are reporting second quarter consolidated revenue of $722 million, a 73% year over year improvement. Our second quarter EPS from continuing operations was $0.23, up $0.16 sequentially and $0.09 year over year on an adjusted basis. Our leading indicators for our business, namely the FLRD on the leasing side and the manufacturing side backlog, are favorable and give us visibility into strong revenues in 2023 and beyond.
Despite these favorable indicators, we are reducing and tightening our 2023 adjusted EPS guidance to $1.35 to $1.45. This adjustment is primarily due to the outsized impact of the strengthening Mexican peso on our manufacturing business, higher interest expense, and continued inefficiencies. Our revised guidance assumes a substantial improvement in the back half of the year from better efficiency. However, we do not have line of sight to our previously issued guidance range without a significant pullback in the strength of the Mexican peso, which we are not anticipating in 2023.
Let’s turn to Slide 4 and discuss the rail market and a commercial overview.
Like last quarter, overall rail traffic trends are negatively impacted by intermodal volumes. Through the first 26 weeks of the year, rail carload volumes improved just 2% year over year, outperforming the 4% decline in total traffic shown in the slide.
While the increase in railcar storage in the quarter is consistent with expected seasonal trends, the North American fleet ended June with the lowest active rate since early 2022. Fleet storage levels remain well below the five-year average, but improving network fluidity prompts some normalization. We are willing to take this trade-off as we believe a more efficient rail network will benefit from gaining modal share and driving longer term, sustainable growth.
Moving to the bottom of the slide, we continue to see high fleet utilization and a very strong Future Lease Rate Differential, or FLRD, which are good predictors for rising lease rates in the future. Our fleet utilization was 97.9%, and the FLRD was 29.5% with lease rate strength, especially in pressure tank cars and large covered hoppers. While rail traffic trends are important in our business, the critical driver is lease fleet utilization and rising lease rates, which have seen significant improvement. Put more directly, the strength in our business has been supply-led, which provides confidence in the durability of cash flows.
On the manufacturing side, orders and deliveries were strong in the quarter. We delivered 4,985 railcars in the quarter and booked orders for another 4,770. These numbers and new railcar inquiry
levels align with expectations and are consistent with our view of replacement-level demand. Our backlog of $3.6 billion and current inquiry levels give us confidence in our expectations well into 2024.
Moving to Slide 5, I’ll briefly discuss the cash flow with Eric providing more details later in the call. Our quarterly cash flow from continuing operations was $38 million, up $128 million year over year. Additionally, our adjusted free cash flow was $45 million, up $50 million year over year. Our business can consistently and predictably generate a lot of cash, which is evident in today’s results as we see the effect of increased production and higher lease rates flowing through our cash balance.
Let’s turn to Slide 6 and talk a little bit more about the drivers of our business segments.
Starting with leasing, I’ve already talked about our FLRD and fleet utilization, which indicate momentum in increasing lease rates and revenue. Because it takes a while to re-price the fleet, revenue increases are slower but more durable. We are starting to see several quarters of increased rates take effect, and we are encouraged to see the top line rising. Our renewals are coming in about 30% higher than expiring rates year-to-date, and when considering the whole fleet, our average lease rate for the quarter was the highest since 2018 and 9% higher than a year ago. It’s worth noting that we have only re-priced about 30% of our fleet since the FLRD hit double digits in the second quarter of 2022, so we expect to see this number continue to rise as we re-price more of the fleet upward. While lease rates are still growing, the growth rate is starting to moderate. Our renewal success rate was an impressive 91% in the quarter, the highest since 2018, showing a sign of a healthy and balanced lease fleet. And year-to-date, our average renewal term is 55 months, which allows us to hold onto higher lease rates longer.
Our leasing and management operating margin was 39.7% in the quarter, up 430 basis points sequentially but down year over year due to increased maintenance expense and depreciation expense. Additionally, as we have begun integrating some of our recent acquisitions, those businesses have a different margin profile and slightly decreased the overall leasing margin. Overall, we are incredibly pleased with the performance of the leasing business and expect to see continued strength in both revenue and margin through 2023.
Moving to Rail Products at the bottom of the slide, quarterly revenue was up sequentially and year over year due to a higher volume of railcar deliveries. Our operating margin of 3.3% in the second quarter was down slightly, which was disappointing. In the second quarter, foreign exchange, persistent rail service issues, and efficiency negatively impacted our Rail Products’ margin.
Rail Products’ efficiency has not gotten where we want it as quickly as we would like. We are seeing improvement in the metrics we track, but we still plan to continue the improvement. Supply chain issues have eased, but there are still negative surprises more frequently than we have expected. The strength of the Mexican peso impacted Rail Products’ operating margins by approximately 90 basis points in the quarter. Although we hedge a portion of our peso spending, our revenue is in the U.S. dollar, but we pay our Mexican workforce, and several suppliers, in pesos. We are evaluating options to reduce our exposure to the peso. Still, a persistently high exchange rate will be an ongoing drag on Rail Products’ margins until we can adjust our pricing and cost structure.
While the challenges persist, many indicators give us optimism. Labor attrition has reached a much more manageable level in Mexico, and the second half of the year requires fewer and less complex changeovers. This will lead to the resumption of production more quickly with the additional benefit of longer runs. To give some context on the progression of improvement, our Rail Products’ June operating profit was above 5% in the segment, the highest this year. This included the foreign exchange impact.
As we said on our call last quarter, we can still expect to exit the year with our Rail Products’ margin in the high single-digit range, even after accounting for the impact of exchange rates. This has been a focus of mine, and we have been aggressive in taking the necessary steps to improve the business’s overall efficiency and financial results.
I’ll conclude my remarks on Slide 7 and turn the call to Eric. Trinity’s Pre-Tax ROE for the last twelve months has improved to 10.6%, progressing toward our long-term goal of a mid-teen ROE.
We announced our third acquisition last quarter and are focused on integrating these businesses into Trinity. Across the board, we are pleased with the performance of our acquisitions. Holden continues to outperform our expectations with solid demand for autoracks and supporting parts. We are early in the integration of our recent acquisition of RSI Logistics. By combining our equipment expertise and innovation with RSI’s customer-centric, well-respected logistics services, we can make rail a more approachable mode of transportation. These integrated service offerings will be an important step in our strategy to position the industry for modal share growth with our railroad partners.
And before I turn the call to Eric, I wanted to quickly congratulate the team for successfully completing the financing of our senior notes and our TRL-2023 term loan this quarter. I’ll let Eric provide more details on these events. Eric.
Eric R. Marchetto
Executive Vice President and Chief Financial Officer
Good morning everyone.
I’ll start my comments on Slide 8 discussing our income statement and cash flows.
Starting with the income statement, our revenue in the quarter of $722 million reflects higher external railcar deliveries and improved lease rates. Our earnings per share from continuing operations were $0.23 in the quarter, a $0.16 increase over the first quarter on an adjusted basis. We benefited from $129 million in lease portfolio sales in the second quarter. Year-to-date, our net lease fleet investment is $214 million, and our lease portfolio sales allow us to optimize our fleet and achieve our target for lease fleet investment.
Year-to-date, cash flow from continuing operations is $140 million, and adjusted free cash flow is $81 million after investments and dividends. We have returned $43 million to shareholders through our dividend.
Turning to Slide 9, as Jean just mentioned, we have seen a $225 million increase in our outstanding debt this year from the completion of a new corporate senior notes offering and the TRL-2023 term loan, offset by reductions in the revolver and warehouse, as well as normal amortization.
As you are all aware, the debt market has changed significantly, which is reflected in higher interest expense. Ultimately, we executed these deals effectively given the current environment. For our senior notes, we used the proceeds to repay outstanding borrowings under our revolver credit facility. We intend to use the remainder of the net proceeds for general corporate purposes, which may include repayment of other debt, including the senior notes due in 2024.
Moving to Slide 10 for an update on our guidance.
We remain confident that North American railcar deliveries will be approximately 45 thousand this year. This supports our ongoing view of replacement-level demand. As mentioned, we have a backlog that gives us visibility into future deliveries and are now receiving orders well into 2024 for most railcar types.
We are affirming our net lease fleet investment guidance of $250 million to $350 million for the full year, supporting our three-year outlook. Year-to-date, our net lease fleet investment is $214 million,
and along with investment in the fleet in the second half of the year, we also expect to complete a significant railcar sale in the fourth quarter of this year.
Our guidance for manufacturing capex for the year remains unchanged at $40 to $50 million.
Moving to our EPS guidance, as Jean mentioned, we are lowering our full year guidance range to $1.35 to $1.45 driven by the economic headwinds Jean outlined – namely the strength of the Mexican peso and a higher interest expense, and slower than expected improvement in efficiency, partially offset by better than expected leasing profits.
We set our operating plan assuming an exchange rate based on rates in the fourth quarter of 2022. Since then, the peso has strengthened by about 17% against the dollar and continues to gain momentum. Given the nature of our business, we have no other material currency exposure except for the Mexican peso. We do have hedges in place, but even after accounting for the hedges, the exchange rate variance impact has been about $10 million in the first half of the year and pulls down our full year forecast by an additional $18 million, for a combined impact of $28 million to the downside. This flows through our Rail Products margin and will impact our margin as compared to our original guidance. We have limited our downside exposure to the peso for the balance of the year.
We are also reducing our guidance to account for higher than expected interest expense given the higher levels of working capital and higher borrowing costs.
Finally, while improvement in efficiency is evident, it has been slower than we anticipated. We expect to exit the year with Rail Group margins in the 8 to 9 percent range, our full year Rail Products margin average is forecast to be between 6 and 7 percent after considering year-to-date performance, exchange rate impact, and expectations in the second half of the year. As Jean said, we expect significantly stronger performance in the second half as compared to the first half on the manufacturing side of our business.
Year-to-date, we have earned adjusted earnings per share of $0.30. In the back half of the year, assuming the midpoint of our adjusted guidance, this still implies significant EPS growth in the second half of the year, aided by improving margins, continued top line growth, and railcar portfolio sales in the fourth quarter. We are confident this is achievable given the strength of our forward-looking metrics in both of our businesses.
Please turn to Slide 11. Before we open the call for Q&A, I want to emphasize the positive trends we see in our business. Our leasing business continues to improve, and we believe there is room for
growth. We expect continued revenue growth in our leasing business as we re-price more of our lease fleet and extend the term so we can retain the higher lease rates longer. This will also drive up the margin in the business. The supply and demand dynamics of the North American fleet remain very positive.
On the manufacturing side, we have increased production over the last year, evident in the growth in deliveries and revenue, with margin growth soon to follow as this business continues to improve.
And now, operator, we are ready for our first question.
(after Q&A)
E. Jean Savage
Chief Executive Officer and President
Thank you for joining us today. Despite some downside factors in the quarter, we continue to feel positively about the operating environment and our company’s ability to execute on substantial revenue, margin, and EPS growth in the back half of the year. We look forward to sharing our progress with you.
DELIVERING GOODS for THE GOOD of ALL TRINITY INDUSTRIES, INC. Investor Contact: TrinityInvestorRelations@trin.net Website: www.trin.net Q2 2023 – Earnings Conference Call Supplemental Materials August 1, 2023 – based on financial results as of June 30, 2023 Exhibit 99.3
DELIVERING GOODS for THE GOOD of ALL /// 2 Some statements in this presentation, 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. Forward Looking Statements
DELIVERING GOODS for THE GOOD of ALL /// Key Messages from Q2-23 Conference Call 3 Continued strength in lease rates; FLRD +29.5%, utilization 97.9% Revenues of $722 million, 73% improvement year over year Expect 2023 EPS of $1.35 to $1.45 due to FX impact, higher interest expense, and slower than expected manufacturing efficiency gains and supply chain recovery * See appendix for reconciliation of non-GAAP measures EPS from continuing operations of $0.23, up $0.16 sequentially and $0.09 YoY on an adjusted basis
DELIVERING GOODS for THE GOOD of ALL /// Rail Market Update and Commercial Overview 4 Intermodal is Driving Down Rail Traffic (1) Overall Fleet Storage Rates are Low (2) FLRD and Utilization Remain Favorable Received Large Multi-Year Order in Q3 2022 Fl ee t U ti liz at io n FLR D Fleet Utilization FLRD (3) Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 90% 95% 100% —% 10% 20% 30% 40% 50% Orders Deliveries Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 0 5,000 10,000 15,000 20,000 See appendix for footnotes 2020 2021 2022 2023 Five-Year Average 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 500,000 625,000 750,000 Storage Rate Five-Year Average Jan- 20 May- 20 Sep- 20 Jan- 21 May- 21 Sep- 21 Jan- 22 May- 22 Sep- 22 Jan- 23 May- 23 15% 20% 25% 30% 35%
DELIVERING GOODS for THE GOOD of ALL /// Q2-23 Financial Results Summary – Year over Year 5 Q2-23 Revenue $722M Q2-23 Cash Flow, Continuing Ops $38M Q2-23 EPS, Adjusted* $0.23 Q2-23 Adjusted Free Cash Flow* $45M * See appendix for reconciliation of non-GAAP measures +64% +73% $+128M $+50M
DELIVERING GOODS for THE GOOD of ALL /// Trinity Business Segment Performance Trends 6 Rail Products Segment Revenue Drivers ◦ Quarterly revenue up due to higher volume of deliveries Rail Products Margin Performance Drivers ◦ Operating margin of 3.3% in the quarter reflects the impact of foreign currency fluctuations, operational inefficiencies, and challenging labor market conditions ▪ Segment margin includes gains from insurance recoveries in Q3 2022 and Q1 2023 Leasing Operations Revenue and Operating Profit Margin (1) Rail Products Segment Revenue and Operating Profit Margin See appendix for footnotes (i n m ill io n s) Leasing Operations Revenue OP Margin Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 $— $125 $250 —% 20% 40% 60% (i n m ill io n s) Rail Products Revenue Maintenance Services Revenue Other Revenue OP Margin Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 $— $250 $500 $750 2% 4% 6% Leasing Segment Revenue Drivers ◦ Fleet utilization of 97.9%, renewal success rate of 91% ◦ FLRD remains strong at +29.5% ◦ Revenue higher due to improved lease rates and higher utilization, as well as acquisition-related revenues in Q2 2023 Leasing Margin Performance Drivers ◦ Margin slightly down year over year due to increased maintenance expense and depreciation expense and margin profile of acquisitions
DELIVERING GOODS for THE GOOD of ALL /// Executing on Strategic Initiatives to Improve Pre-Tax ROE 7 LTV of 65.1% Successfully completed financing of TRL-2023 term loan and Senior Notes due 2028 Balance Sheet Optimization Early in integration of RSI Logistics’ customer-centric logistics services New Products & Services Initiatives Continued focus on lower breakeven points Enhance value of outsourced fabrication activities Manufacturing Cost Improvement Published 2022 CSR Report, and tied executive compensation to energy reduction and water usage targets Sustainable Growth Second quarter net investment in lease fleet of $214M Fleet utilization of 97.9% Lease Fleet Optimization *See appendix for footnotes and reconciliation of non-GAAP measures Lower Cost of Capital | Reduce Cyclicality | Improve Rail Supply Chain LTM Q2-23* LT Goal 9.6% 10.6% Mid-Teen Pre-Tax ROE Goal
DELIVERING GOODS for THE GOOD of ALL /// Revenue and EPS Improved Year over Year Q2 2023 Financial Summary: Income Statement: • Total revenues of $722M reflect higher external railcar deliveries and improved lease rates • Earnings per share from continuing operations of $0.23 • Benefited from $129M in lease portfolio sales Year-to-date Cash Flow: • Cash flow from continuing operations of $140M • Adjusted free cash flow of $81M* after investments and dividends • Net lease fleet investment of $214M • Investment of $21M in manufacturing and general capex • Shareholder returns of $43M through dividends paid Strong Performance Trends and Key Highlights 8 Cash Flow Reflects Supply Chain Challenges and Timing * See appendix for reconciliation of non-GAAP measures (i n m ill io n s) Leasing Rail Products Adj EPS, Cont Ops (Diluted) * Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 $— $250 $500 $750 $— $0.25 $0.50 (i n m ill io n s) Cash Flow from Cont Ops Adjusted Free Cash Flow * Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 $(100) $(50) $— $50 $100 $150
DELIVERING GOODS for THE GOOD of ALL /// 9 Unencumbered Railcars $292M • Pledge to warehouse • Additional assets can be sold or financed • LTV of 65.1% for the wholly-owned lease portfolio as of Q2-23 CAPITAL LEVERS Recourse Debt $794M @ ~6.2%(1) Non-recourse Debt $5.0B @ ~4.2%(1) • Favorable average cost of debt • Flexible term structures • No maturities until 2024 DEBT STRUCTURE Cash & Equivalents $92M Revolver Availability $477M Warehouse Availability $130M LIQUIDITY Solid Liquidity of $699M(1) Attractive Debt Structures Conservative Capitalization See appendix for footnotes Healthy Balance Sheet Strategically Positioned for Opportunistic Deployment and Value Creation
DELIVERING GOODS for THE GOOD of ALL /// Management Outlook for Business Performance 10 C ap it al A llo ca ti on FY 2023 Summary Detail Industry Deliveries Approximately 45K Does not include sustainable railcar conversions Net Fleet Investment $250M — $350M Supports 3 year net fleet investment target of $500M — $600M Manufacturing and General Capital Expenditures $40M — $50M Investments in safety, efficiency, and automation EPS from Continuing Operations $1.35 — $1.45 Excludes items outside of our normal business operations Any forward-looking statements made by the Company speak only as of the date on which they are made. Except as required by federal securities law, the Company is under no obligation to update or alter its forward-looking statements, whether as a result of new information, subsequent events or otherwise.
DELIVERING GOODS for THE GOOD of ALL /// Key Messages from Q2-23 Conference Call 11 Continued strength in lease rates; FLRD +29.5%, utilization 97.9% Revenues of $722 million, 73% improvement year over year * See appendix for reconciliation of non-GAAP measures EPS from continuing operations of $0.23, up $0.16 sequentially and $0.09 YoY on an adjusted basis Expect 2023 EPS of $1.35 to $1.45 due to FX impact, higher interest expense, and slower than expected manufacturing efficiency gains and supply chain recovery
DELIVERING GOODS for THE GOOD of ALL /// Trinity Q2-23 Earnings Conference Call 12 Q&A
DELIVERING GOODS for THE GOOD of ALL /// Reconciliation: Adjusted Operating Results 13 Three Months Ended June 30, 2023 (in millions, except per share amounts) GAAP Selling, engineering, and administrative expenses (1) Restructuring activities, net Interest expense, net (2) Adjusted Operating profit $ 99.1 $ 2.0 $ (1.8) $ — $ 99.3 Income from continuing operations before income taxes $ 30.9 $ 2.0 $ (1.8) $ (0.3) $ 30.8 Provision (benefit) for income taxes $ 7.4 $ 0.5 $ (0.5) $ (0.1) $ 7.3 Income from continuing operations $ 23.5 $ 1.5 $ (1.3) $ (0.2) $ 23.5 Net income from continuing operations attributable to Trinity Industries, Inc. $ 19.3 $ 1.5 $ (1.3) $ (0.2) $ 19.3 Diluted weighted average shares outstanding 83.4 83.4 Diluted income from continuing operations per common share attributable to Trinity Industries, Inc. $ 0.23 $ 0.23 (1) Represents the change in estimated fair value of additional contingent consideration associated with an acquisition. (2) Represents interest income accretion related to a seller-financing agreement associated with the sale of certain non-operating assets. 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 certain selling, engineering, and administrative expenses; restructuring activities, net; interest expense, net; 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 table above. 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 reported results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures for other companies.
DELIVERING GOODS for THE GOOD of ALL /// Reconciliation: Adjusted Operating Results 14 (1) Represents the change in estimated fair value of additional contingent consideration associated with an acquisition. (2) 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. (3) Represents interest income accretion related to a seller-financing agreement associated with the sale of certain non-operating assets. 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 certain selling, engineering, and administrative expenses; gains on dispositions of other property; restructuring activities, net; interest expense, net; 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 table above. 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 reported results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures for other companies. Six Months Ended June 30, 2023 (in millions, except per share amounts) GAAP Selling, engineering, and administrative expenses (1) Gains on dispositions of property – other (2) Restructuring activities, net Interest expense, net (3) Adjusted Operating profit $ 168.1 $ 2.0 $ (1.2) $ (2.2) $ — $ 166.7 Income from continuing operations before income taxes $ 36.2 $ 2.0 $ (1.2) $ (2.2) $ (0.7) $ 34.1 Provision (benefit) for income taxes $ (4.1) $ 0.5 $ (0.4) $ (0.6) $ (0.2) $ (4.8) Income from continuing operations $ 40.3 $ 1.5 $ (0.8) $ (1.6) $ (0.5) $ 38.9 Net income from continuing operations attributable to Trinity Industries, Inc. $ 26.8 $ 1.5 $ (0.8) $ (1.6) $ (0.5) $ 25.4 Diluted weighted average shares outstanding 83.5 83.5 Diluted income from continuing operations per common share attributable to Trinity Industries, Inc. $ 0.32 $ 0.30
DELIVERING GOODS for THE GOOD of ALL /// Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 (in millions) Net cash provided by (used in) operating activities – continuing operations $ (89.8) $ 8.7 $ 61.8 $ 102.5 $ 37.8 Proceeds from lease portfolio sales 144.1 299.6 235.9 56.7 129.0 Capital expenditures – manufacturing and other (16.5) (6.9) (12.3) (7.1) (13.7) Dividends paid to common shareholders (20.2) (19.0) (18.6) (21.1) (22.2) Equity CapEx for leased railcars (from table below) (22.9) (324.8) (128.6) (94.8) (86.3) Adjusted Free Cash Flow After Investments and Dividends $ (5.3) $ (42.4) $ 138.2 $ 36.2 $ 44.6 Capital expenditures – leasing $ 329.5 $ 277.0 $ 237.7 $ 191.5 $ 208.2 Less: Payments to retire debt (760.3) (518.2) (227.0) (149.6) (885.7) Proceeds from issuance of debt 1,066.9 470.4 336.1 246.3 1,007.6 Net proceeds from (repayments of) debt 306.6 (47.8) 109.1 96.7 121.9 Equity CapEx for leased railcars $ 22.9 $ 324.8 $ 128.6 $ 94.8 $ 86.3 Reconciliation: Walking Adjusted FCF Beyond Lease Investment 15 Adjusted Free Cash Flow After Investments and Dividends (“Adjusted Free Cash Flow”) is a non-GAAP financial measure. 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) recourse and non-recourse debt. 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 table above. Non-GAAP measures should not be considered in isolation or as a substitute for our reported results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures for other companies.
DELIVERING GOODS for THE GOOD of ALL /// Reconciliation: Total Company Pre-Tax ROE 16 (1) Represents the change in estimated fair value of additional contingent consideration associated with an acquisition. (2) 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. (3) Excludes $7.1 million of loss on extinguishment of debt associated with the noncontrolling interest recorded in the second quarter of 2021. (4) Represents interest income accretion related to a seller-financing agreement associated with the sale of certain non-operating assets. (5) Return on Equity is calculated as income from continuing operations divided by average total stockholders' equity. (6) Pre-Tax Return on Equity is calculated as adjusted profit before tax divided by average adjusted stockholders' equity, each as defined below and reconciled above. Pre-Tax Return on Equity (“Pre-Tax ROE”) is a non-GAAP measure that is derived from amounts included in our GAAP financial statements. We define Pre-Tax ROE 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 certain selling, engineering, and administrative expenses; gains on dispositions of other property; restructuring activities, net; 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 table above, 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 GAAP financial measures used in the computation of ROE. 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. Non-GAAP measures should not be considered in isolation or as a substitute for our reported results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures for other companies. LTM June 30, 2023 December 31, 2022 December 31, 2021 ($ in millions) Numerator: Income from continuing operations $ 112.8 $ 98.9 $ 39.3 Provision for income taxes 14.7 27.6 15.9 Income from continuing operations before income taxes 127.5 126.5 55.2 Net (income) loss attributable to noncontrolling interest (18.9) (12.8) 0.2 Adjustments: Selling, engineering, and administrative expenses (1) 2.0 — — Gains on dispositions of property – other (2) (2.3) (7.5) (7.8) Restructuring activities, net (2.2) 1.0 (3.7) Loss on extinguishment of debt – controlling interest (3) — — 4.6 Interest expense, net (4) (1.4) (1.4) — Pension plan settlement — — (0.6) Adjusted Profit Before Tax $ 104.7 $ 105.8 $ 47.9 Denominator: Total stockholders' equity $ 1,249.0 $ 1,269.6 $ 1,296.8 Noncontrolling interest (254.4) (257.2) (267.0) Accumulated other comprehensive (income) loss (17.6) (19.7) 17.0 Adjusted Stockholders' Equity $ 977.0 $ 992.7 $ 1,046.8 Average total stockholders' equity $ 1,259.3 $ 1,283.2 $ 1,656.4 Return on Equity (5) 9.0 % 7.7 % 2.4 % Average Adjusted Stockholders' Equity $ 984.9 $ 1,019.8 $ 1,408.3 Pre-Tax Return on Equity (6) 10.6 % 10.4 % 3.4 %
DELIVERING GOODS for THE GOOD of ALL /// Footnotes and Reconciliations 17 Slide 4 - Rail Market Update and Commercial Overview (1) Association of American Railroads (AAR) Weekly Railcar Loadings (2) AAR Rail Time Indicators – July 1, 2023 (3) Future Lease Rate Differential (FLRD) calculates the implied change in lease rates for railcar leases expiring over the next four quarters. The FLRD assumes that these expiring leases 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. The FLRD is calculated as follows: (New Lease Rates — Expiring Lease Rates) x Expiring Railcar Leases (Expiring Lease Rates x Expiring Railcar Leases) Slide 6 - Trinity Business Segment Performance Trends (1) Leasing Operations Profit Margin calculated using only revenues and operating profit from Leasing Operations including partially-owned subsidiaries and excluding lease portfolio sales. Leasing Operations is specific to revenue and operating profit reported under “Leasing and management” within the Railcar Leasing and Management Services Group. Slide 8 - Strong Performance Trends and Key Highlights Adjusted EPS includes the following adjustments reported by the Company (each per common diluted share): ◦ Reported Q2-22 GAAP EPS and Adjusted EPS was $0.14. ◦ Reported Q3-22 GAAP EPS was $0.35. Adjusted EPS excludes $0.01 related to the 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. ◦ Reported Q4-22 GAAP EPS was $0.46; Adjusted EPS excludes $0.01 of interest income accretion related to a seller-financing agreement associated with the sale of certain non-operating assets and $0.01 related to prior year carryback claims as permitted under recent tax legislation. ◦ Reported Q1-23 GAAP EPS was $0.09; Adjusted EPS excludes $0.01 related to the 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 and $0.01 from interest income accretion related to a seller-financing agreement associated with the sale of certain non-operating assets and restructuring activities. ◦ Reported Q2-23 GAAP EPS was $0.23; Adjusted EPS excludes $0.02 related to the change in estimated fair value of additional contingent consideration associated with an acquisition and $0.02 related to gains associated with restructuring activities. Slide 9 - Healthy Balance Sheet Strategically Positioned for Opportunistic Deployment and Value Creation (1) Balances and blended average interest rate as of June 30, 2023
v3.23.2
| X |
- DefinitionBoolean flag that is true when the XBRL content amends previously-filed or accepted submission.
| Name: |
dei_AmendmentFlag |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionFor the EDGAR submission types of Form 8-K: the date of the report, the date of the earliest event reported; for the EDGAR submission types of Form N-1A: the filing date; for all other submission types: the end of the reporting or transition period. The format of the date is YYYY-MM-DD.
| Name: |
dei_DocumentPeriodEndDate |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:dateItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionThe type of document being provided (such as 10-K, 10-Q, 485BPOS, etc). The document type is limited to the same value as the supporting SEC submission type, or the word 'Other'.
| Name: |
dei_DocumentType |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:submissionTypeItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionAddress Line 1 such as Attn, Building Name, Street Name
| Name: |
dei_EntityAddressAddressLine1 |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- Definition
+ References
+ Details
| Name: |
dei_EntityAddressCityOrTown |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionCode for the postal or zip code
| Name: |
dei_EntityAddressPostalZipCode |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionName of the state or province.
| Name: |
dei_EntityAddressStateOrProvince |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:stateOrProvinceItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionA unique 10-digit SEC-issued value to identify entities that have filed disclosures with the SEC. It is commonly abbreviated as CIK. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
| Name: |
dei_EntityCentralIndexKey |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:centralIndexKeyItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionIndicate if registrant meets the emerging growth company criteria. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
| Name: |
dei_EntityEmergingGrowthCompany |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionCommission file number. The field allows up to 17 characters. The prefix may contain 1-3 digits, the sequence number may contain 1-8 digits, the optional suffix may contain 1-4 characters, and the fields are separated with a hyphen.
| Name: |
dei_EntityFileNumber |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:fileNumberItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionTwo-character EDGAR code representing the state or country of incorporation.
| Name: |
dei_EntityIncorporationStateCountryCode |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:edgarStateCountryItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionThe exact name of the entity filing the report as specified in its charter, which is required by forms filed with the SEC. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
| Name: |
dei_EntityRegistrantName |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionThe Tax Identification Number (TIN), also known as an Employer Identification Number (EIN), is a unique 9-digit value assigned by the IRS. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
| Name: |
dei_EntityTaxIdentificationNumber |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:employerIdItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionLocal phone number for entity.
| Name: |
dei_LocalPhoneNumber |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 13e
-Subsection 4c
| Name: |
dei_PreCommencementIssuerTenderOffer |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 14d
-Subsection 2b
| Name: |
dei_PreCommencementTenderOffer |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionTitle of a 12(b) registered security. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b
| Name: |
dei_Security12bTitle |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:securityTitleItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionName of the Exchange on which a security is registered. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection d1-1
| Name: |
dei_SecurityExchangeName |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:edgarExchangeCodeItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as soliciting material pursuant to Rule 14a-12 under the Exchange Act. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Section 14a
-Number 240
-Subsection 12
| Name: |
dei_SolicitingMaterial |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionTrading symbol of an instrument as listed on an exchange.
| Name: |
dei_TradingSymbol |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:tradingSymbolItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as written communications pursuant to Rule 425 under the Securities Act. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Securities Act
-Number 230
-Section 425
| Name: |
dei_WrittenCommunications |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
Trinity Industries (NYSE:TRN)
Historical Stock Chart
Von Apr 2024 bis Mai 2024
Trinity Industries (NYSE:TRN)
Historical Stock Chart
Von Mai 2023 bis Mai 2024
