Reports full year GAAP and adjusted earnings
from continuing operations of $1.43 and $1.38 per diluted share,
respectively
Lease fleet utilization of 97.5% and Future
Lease Rate Differential ("FLRD") of positive 23.7% at
quarter-end
Generates full year operating and adjusted
free cash flow of $309 million and $29 million,
respectively
Delivered 17,355 railcars in the year;
backlog of $3.2 billion at year-end
Trinity Industries, Inc. (NYSE:TRN) today announced earnings
results for the fourth quarter and year end ended December 31,
2023.
Financial and Operational Highlights –
Fourth Quarter
- Quarterly total company revenues of $798 million; 35%
improvement year over year
- Quarterly income from continuing operations per common diluted
share ("EPS") of $0.81 and quarterly adjusted EPS of $0.82
- Results include tax benefits related to state apportionment and
tax law changes
- Lease fleet utilization of 97.5% and FLRD of positive 23.7% at
quarter-end
- Quarterly railcar deliveries of 4,000 and new railcar orders of
840
Financial and Operational Highlights –
Full Year
- Full year total company revenues of $3.0 billion
- Full year reported EPS of $1.43 and adjusted EPS of $1.38
- Full year cash flow from continuing operations and adjusted
free cash flow after investments and dividends ("Adjusted Free Cash
Flow") were $309 million and $29 million, respectively
- Full year railcar deliveries of 17,355 and new railcar orders
of 11,500
2024 Guidance
- Industry deliveries of approximately 40,000 railcars
- Net investment in the lease fleet of $300 million to $400
million
- Manufacturing capital expenditures of $50 million to $60
million
- EPS of $1.30 to $1.50
- Excludes items outside of our core business operations
Management Commentary
“Trinity Industries ended the year with revenue up 51% over
2022, a backlog of $3.2 billion, and adjusted EPS of $1.38, up 47%
year over year,” stated Trinity’s Chief Executive Officer and
President, Jean Savage.
“In our Railcar Leasing and Management Services Group, we
maintained an impressive Future Lease Rate Differential through the
year, and rising lease rates drove our revenue up 13% over 2022.
Fleet utilization remains favorable at 97.5%,” Ms. Savage
continued. “The Rail Products Group faced challenges in the fourth
quarter with the border closure and related congestion impacting
deliveries and margins in the segment. Despite unexpected headwinds
through the year, this segment reported operating profit up 119%
over 2022.”
“In 2024, we expect to see continued improvement in our
business. We are introducing 2024 EPS annual guidance of $1.30 to
$1.50, which reflects improving margins in both our segments. This
is offset by significantly lower planned railcar sales, higher
elimination of profit from intercompany railcar sales, and a
normalized tax provision as compared to 2023.”
Ms. Savage concluded, “We view ourselves as a leasing company
that is enabled by our manufacturing and services businesses. As a
result, we are re-aligning our segments starting in 2024 and moving
our maintenance business into the Railcar Leasing & Services
segment. This allows us to better leverage our maintenance
capabilities to support lease fleet optimization and growth in our
services business.”
Consolidated Financial
Summary
Three Months Ended
December 31,
2023
2022
Year over Year – Comparison
($ in millions, except per
share amounts)
Revenues
$
797.9
$
591.2
Higher external deliveries and favorable
pricing in the Rail Products Group
Operating profit
$
148.7
$
113.5
Higher external deliveries in the Rail
Products Group, partially offset by lower lease portfolio sales
volume
Interest expense, net
$
67.7
$
59.4
Higher interest rates and higher overall
average debt during 2023
Net income from continuing operations
attributable to Trinity Industries, Inc.
$
68.1
$
37.9
EBITDA (1)
$
225.2
$
185.0
Effective tax expense rate
8.8
%
19.2
%
State apportionment and tax law changes
enacted in 2023
Diluted EPS – GAAP
$
0.81
$
0.46
Diluted EPS – Adjusted (1)
$
0.82
$
0.44
Year Ended
December 31,
2023
2022
Year over Year – Comparison
($ in millions, except per
share amounts)
Revenues
$
2,983.3
$
1,977.3
Higher external deliveries in the Rail
Products Group
Operating profit
$
417.0
$
334.0
Higher external deliveries in the Rail
Products Group and improved lease rates in the Leasing Group,
partially offset by lower lease portfolio sales volume and the
impact of foreign currency fluctuations in the Rail Products
Group
Interest expense, net
$
265.5
$
207.6
Higher interest rates and higher overall
average debt during 2023
Net income from continuing operations
attributable to Trinity Industries, Inc.
$
119.4
$
86.1
EBITDA (1)
$
720.1
$
616.8
Effective tax expense rate
6.0
%
21.8
%
2023 tax rate includes benefits related to
the release of residual taxes out of AOCI, changes in state
apportionment and tax law changes, and changes in valuation
allowances
Diluted EPS – GAAP
$
1.43
$
1.02
Diluted EPS – Adjusted (1)
$
1.38
$
0.94
Year Ended
December 31,
2023
2022
Year over Year – Comparison
(in millions)
Net cash provided by operating activities
– continuing operations
$
309.0
$
9.2
Higher external deliveries and
stabilization of working capital levels relative to prior year
Adjusted Free Cash Flow (1)
$
28.5
$
138.3
Higher cash from operations offset by
lower lease portfolio sales and the timing of railcar financing
Net lease fleet investment
$
287.0
$
178.1
Returns of capital to stockholders
$
86.0
$
153.7
2022 included $77 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 $906.3 million as of December 31,
2023.
- In December 2023, our Board of Directors declared an increase
of approximately 8% to our quarterly dividend from $0.26 per share
to $0.28 per share.
- Effective January 1, 2024, the Company modified its
organizational structure to better leverage our maintenance
services capabilities to support lease fleet optimization and to
grow our services and parts businesses. In connection with this
organizational update, we will align the maintenance services
business, which is currently reported in the Rail Products Group,
to be presented within our leasing business. Consequently,
beginning January 1, 2024, we will report our operating results in
two reportable segments: (1) Railcar Leasing and Services Group,
formerly the Railcar Leasing and Management Services Group, and (2)
Rail Products Group. These changes will have no impact to our
previously reported consolidated results of operations, financial
position, or cash flows. All prior period segment results will be
recast to reflect these changes and present results on a comparable
basis in future filings, beginning with our Quarterly Report on
Form 10-Q for the three months ended March 31, 2024.
Business Group Summary
Three Months Ended
December 31,
2023
2022
Year over Year – Comparison
($ in millions)
Railcar Leasing and Management Services
Group
Leasing and management revenues
$
221.6
$
197.4
Improved lease rates and net additions to
the lease fleet, as well as acquisition-related revenues included
in the current year period
Leasing and management operating
profit
$
99.5
$
75.6
Improved lease rates and net additions to
the lease fleet
Operating profit on lease portfolio
sales
$
36.4
$
54.5
Lower lease fleet portfolio sales
volume
Fleet utilization (1)
97.5
%
97.9
%
Future Lease Rate Differential (2)
+23.7
%
+25.1
%
Continued strength in current lease
rates
Owned lease fleet (in units) (1)
109,295
108,440
Investor-owned lease fleet (in units)
33,005
33,235
Rail Products Group
Revenues
$
674.0
$
655.7
Favorable pricing, partially offset by
lower deliveries
Operating profit
$
41.2
$
18.6
Favorable pricing and improved
efficiencies, partially offset by lower deliveries and foreign
currency fluctuations. Includes insurance recoveries of $1.4
million in the current year period.
Operating profit margin
6.1
%
2.8
%
Revenues eliminations – Lease
subsidiary
$
(97.5
)
$
(261.7
)
Operating profit eliminations – Lease
subsidiary
$
(3.8
)
$
(16.5
)
New railcars:
Deliveries (in units)
4,000
4,400
Q4 2023 unfavorably impacted by
approximately 1,300 deliveries due to the U.S.-Mexico border
closure and congestion
Orders (in units)
840
3,015
Order value
$
156.1
$
350.8
Backlog value
$
3,200.9
$
3,903.0
Sustainable railcar conversions:
Deliveries (in units)
520
495
Backlog (in units)
1,015
1,965
Backlog value
$
81.9
$
166.5
Corporate and other
Selling, engineering, and administrative
expenses
$
26.6
$
24.5
$2.0 million from the change in estimated
fair value of additional contingent consideration associated with
an acquisition
Gains on dispositions of property
$
(1.1
)
$
(5.9
)
December 31, 2023
December 31, 2022
Loan-to-value ratio
Wholly-owned subsidiaries, excluding
corporate revolving credit facility
64.3
%
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
February 22, 2024 to discuss its fourth quarter and full year
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 "7787991".
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 "2184903" until
11:59 p.m. Eastern on February 29, 2024.
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 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.
- TABLES TO FOLLOW -
Trinity Industries, Inc.
Condensed Consolidated Statements of
Operations
(in millions, except per share
amounts)
(unaudited)
Three Months Ended
December 31,
Year Ended
December 31,
2023
2022
2023
2022
Revenues
$
797.9
$
591.2
$
2,983.3
$
1,977.3
Operating costs:
Cost of revenues
637.0
490.2
2,456.2
1,609.6
Selling, engineering, and administrative
expenses
48.6
47.7
201.9
185.4
Gains on dispositions of property:
Lease portfolio sales
36.4
54.5
82.8
127.5
Other
—
5.7
6.8
25.2
Restructuring activities, net
—
—
(2.2
)
1.0
649.2
477.7
2,566.3
1,643.3
Operating profit
148.7
113.5
417.0
334.0
Interest expense, net
67.7
59.4
265.5
207.6
Loss on extinguishment of debt
—
—
—
1.5
Other, net
0.5
1.1
2.5
(1.6
)
Income from continuing operations before
income taxes
80.5
53.0
149.0
126.5
Provision (benefit) for income taxes:
Current
24.3
11.7
50.5
12.9
Deferred
(17.2
)
(1.5
)
(41.5
)
14.7
7.1
10.2
9.0
27.6
Income from continuing operations
73.4
42.8
140.0
98.9
Loss from discontinued operations, net of
income taxes
(5.3
)
(6.6
)
(13.4
)
(20.3
)
Loss on sale of discontinued operations,
net of income taxes
—
—
—
(5.7
)
Net income
68.1
36.2
126.6
72.9
Net income attributable to noncontrolling
interest
5.3
4.9
20.6
12.8
Net income attributable to Trinity
Industries, Inc.
$
62.8
$
31.3
$
106.0
$
60.1
Basic earnings per common share:
Income from continuing operations
$
0.83
$
0.47
$
1.47
$
1.05
Loss from discontinued operations
(0.06
)
(0.08
)
(0.16
)
(0.32
)
Basic net income attributable to Trinity
Industries, Inc.
$
0.77
$
0.39
$
1.31
$
0.73
Diluted earnings per common share:
Income from continuing operations
$
0.81
$
0.46
$
1.43
$
1.02
Loss from discontinued operations
(0.06
)
(0.08
)
(0.16
)
(0.31
)
Diluted net income attributable to Trinity
Industries, Inc.
$
0.75
$
0.38
$
1.27
$
0.71
Weighted average number of shares
outstanding:
Basic
81.6
80.9
81.2
81.9
Diluted
83.5
83.1
83.4
84.2
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, 2023
December 31, 2022
ASSETS
Cash and cash equivalents
$
105.7
$
79.6
Receivables, net of allowance
363.5
323.5
Income tax receivable
5.2
7.8
Inventories
684.3
629.4
Restricted cash
129.4
214.7
Property, plant, and equipment, net:
Manufacturing/Corporate
341.1
340.7
Leasing:
Wholly-owned subsidiaries
5,940.7
5,788.1
Partially-owned subsidiaries
1,473.2
1,521.3
Deferred profit on railcars sold to the
Leasing Group
(750.2
)
(763.3
)
7,004.8
6,886.8
Goodwill
221.5
195.9
Other assets
392.1
386.6
Total assets
$
8,906.5
$
8,724.3
LIABILITIES AND STOCKHOLDERS'
EQUITY
Accounts payable
$
305.3
$
287.5
Accrued liabilities
302.3
261.0
Debt:
Recourse
794.6
624.1
Non-recourse:
Wholly-owned subsidiaries
3,819.2
3,800.7
Partially-owned subsidiaries
1,140.4
1,182.8
5,754.2
5,607.6
Deferred income taxes
1,103.5
1,134.7
Other liabilities
165.7
163.9
Stockholders' equity:
Trinity Industries, Inc.
1,037.1
1,012.4
Noncontrolling interest
238.4
257.2
1,275.5
1,269.6
Total liabilities and stockholders'
equity
$
8,906.5
$
8,724.3
Trinity Industries, Inc.
Condensed Consolidated Statements of
Cash Flows
(in millions)
(unaudited)
Year Ended
December 31,
2023
2022
Operating activities:
Net cash provided by operating activities
– continuing operations
$
309.0
$
9.2
Net cash used in operating activities –
discontinued operations
(13.4
)
(22.0
)
Net cash provided by (used in) operating
activities
295.6
(12.8
)
Investing activities:
Proceeds from lease portfolio sales
381.8
750.7
Proceeds from dispositions of property and
other assets
19.9
44.0
Capital expenditures – lease fleet
(668.8
)
(928.8
)
Capital expenditures – manufacturing and
other
(41.3
)
(38.0
)
Acquisitions, net of cash acquired
(62.2
)
(80.4
)
Proceeds from insurance recoveries
5.1
10.0
Equity investments
(1.1
)
(15.5
)
Other
3.6
—
Net cash used in investing activities –
continuing operations
(363.0
)
(258.0
)
Payments related to sale of discontinued
operations
—
(2.7
)
Net cash used in investing activities
(363.0
)
(260.7
)
Financing activities:
Net proceeds from (repayments of) debt
133.8
422.1
Shares repurchased
—
(51.8
)
Dividends paid to common shareholders
(86.0
)
(76.9
)
Other financing activities
(39.6
)
(28.0
)
Net cash provided by financing
activities
8.2
265.4
Net decrease in cash, cash equivalents,
and restricted cash
(59.2
)
(8.1
)
Cash, cash equivalents, and restricted
cash at beginning of period
294.3
302.4
Cash, cash equivalents, and restricted
cash at end of period
$
235.1
$
294.3
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; the income
tax effects of the CARES Act; and certain other transactions or
events (as applicable), described in the footnotes to the table
below. 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 December
31, 2023
GAAP
Selling, engineering, and
administrative expenses (1)
Gains on dispositions of
property – other (2)
Interest expense, net
(3)
Adjusted
Operating profit
$
148.7
$
2.0
$
(1.4
)
$
—
$
149.3
Income from continuing operations before
income taxes
$
80.5
$
2.0
$
(1.4
)
$
(0.4
)
$
80.7
Provision (benefit) for income taxes
$
7.1
$
0.5
$
(0.4
)
$
(0.1
)
$
7.1
Income from continuing operations
$
73.4
$
1.5
$
(1.0
)
$
(0.3
)
$
73.6
Net income from continuing operations
attributable to Trinity Industries, Inc.
$
68.1
$
1.5
$
(1.0
)
$
(0.3
)
$
68.3
Diluted weighted average shares
outstanding
83.5
83.5
Diluted income from continuing operations
per common share attributable to Trinity Industries, Inc.
$
0.81
$
0.82
Year Ended December 31,
2023
GAAP
Selling, engineering, and
administrative expenses (1)
Gains on dispositions of
property – other (2)
Restructuring activities,
net
Interest expense, net
(3)
Adjusted
Operating profit
$
417.0
$
4.0
$
(6.3
)
$
(2.2
)
$
—
$
412.5
Income from continuing operations before
income taxes
$
149.0
$
4.0
$
(6.3
)
$
(2.2
)
$
(1.5
)
$
143.0
Provision (benefit) for income taxes
$
9.0
$
1.0
$
(1.6
)
$
(0.6
)
$
(0.4
)
$
7.4
Income from continuing operations
$
140.0
$
3.0
$
(4.7
)
$
(1.6
)
$
(1.1
)
$
135.6
Net income from continuing operations
attributable to Trinity Industries, Inc.
$
119.4
$
3.0
$
(4.7
)
$
(1.6
)
$
(1.1
)
$
115.0
Diluted weighted average shares
outstanding
83.4
83.4
Diluted income from continuing operations
per common share attributable to Trinity Industries, Inc.
$
1.43
$
1.38
Three Months Ended December
31, 2022
GAAP
Interest expense, net
(3)(4)
Income tax effect of CARES
Act
Adjusted
Operating profit
$
113.5
$
—
$
—
$
113.5
Income from continuing operations before
income taxes
$
53.0
$
(0.4
)
$
—
$
52.6
Provision (benefit) for income taxes
$
10.2
$
—
$
0.6
$
10.8
Income 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)(4)
Restructuring activities, net
(4)
Interest expense, net
(3)(4)
Income tax effect of CARES
Act
Adjusted
Operating profit
$
334.0
$
(7.5
)
$
1.0
$
—
$
—
$
327.5
Income 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 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
(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.
(4) The effective tax rate for gains on
dispositions of other property; restructuring activities, net; and
interest expense, net is before consideration of the CARES Act.
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, described in the footnotes to the table below, which
include certain selling, engineering, and administrative expenses;
gains on dispositions of other property; restructuring activities,
net; and interest expense, net; 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. 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.
December 31, 2023
December 31, 2022
December 31, 2021
($ in millions)
Numerator:
Income from continuing operations
$
140.0
$
98.9
Provision (benefit) for income taxes
9.0
27.6
Income from continuing operations before
income taxes
149.0
126.5
Net income attributable to noncontrolling
interest
(20.6
)
(12.8
)
Adjustments:
Selling, engineering, and administrative
expenses (1)
4.0
—
Gains on dispositions of property – other
(2)
(6.3
)
(7.5
)
Restructuring activities, net
(2.2
)
1.0
Interest expense, net (3)
(1.5
)
(1.4
)
Adjusted Profit Before Tax
$
122.4
$
105.8
Denominator:
Total stockholders' equity
$
1,275.5
$
1,269.6
$
1,296.8
Noncontrolling interest
(238.4
)
(257.2
)
(267.0
)
Accumulated other comprehensive (income)
loss
(11.0
)
(19.7
)
17.0
Adjusted Stockholders' Equity
$
1,026.1
$
992.7
$
1,046.8
Average total stockholders' equity
$
1,272.6
$
1,283.2
Return on Equity (4)
11.0
%
7.7
%
Average Adjusted Stockholders' Equity
$
1,009.4
$
1,019.8
Pre-Tax Return on Equity (5)
12.1
%
10.4
%
(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.
(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 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
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 capital expenditures for our lease fleet,
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.
Year Ended
December 31,
2023
2022
Net cash provided by operating activities
– continuing operations
$
309.0
$
9.2
Proceeds from lease portfolio sales
381.8
750.7
Capital expenditures – manufacturing and
other
(41.3
)
(38.0
)
Dividends paid to common stockholders
(86.0
)
(76.9
)
Equity CapEx for leased railcars
(535.0
)
(506.7
)
Adjusted Free Cash Flow After Investments
and Dividends
$
28.5
$
138.3
Capital expenditures – lease fleet
$
668.8
$
928.8
Less:
Payments to retire debt
(1,518.9
)
(1,578.5
)
Proceeds from issuance of debt
1,652.7
2,000.6
Net proceeds from (repayments of) debt
133.8
422.1
Equity CapEx for leased railcars
$
535.0
$
506.7
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
December 31,
Year Ended
December 31,
2023
2022
2023
2022
Net income
$
68.1
$
36.2
$
126.6
$
72.9
Less: Loss from discontinued operations,
net of income taxes
(5.3
)
(6.6
)
(13.4
)
(20.3
)
Less: Loss on sale of discontinued
operations, net of income taxes
—
—
—
(5.7
)
Income from continuing operations
$
73.4
$
42.8
$
140.0
$
98.9
Interest expense
71.4
61.6
277.9
213.9
Provision (benefit) for income taxes
7.1
10.2
9.0
27.6
Depreciation and amortization expense
73.3
70.4
293.2
276.4
EBITDA
$
225.2
$
185.0
$
720.1
$
616.8
Selling, engineering, and administrative
expenses
2.0
—
4.0
—
Gains on dispositions of property –
other
(1.4
)
—
(6.3
)
(7.5
)
Restructuring activities, net
—
—
(2.2
)
1.0
Interest income
(0.4
)
(0.4
)
(1.5
)
(1.4
)
Adjusted EBITDA
$
225.4
$
184.6
$
714.1
$
608.9
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240222259728/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
Trinity Industries (NYSE:TRN)
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