Trinity Industries, Inc. (NYSE:TRN) today announced earnings
results for the first quarter ended March 31, 2015, including
the following significant highlights:
- First quarter earnings per common
diluted share of $1.13 compared to $1.42 for the first quarter of
2014
- Earnings in the first quarter
included $0.18 per common diluted share related to sales of leased
railcars compared to $0.75 per share in the same quarter last
year
- Rail, Inland Barge, and Energy
Equipment Groups reported higher year-over-year operating profit
during the first quarter
- Rail Group delivered a record 8,710
railcars and received orders for 4,865 new railcars during the
first quarter resulting in a backlog of 57,190 units with a
value of $6.81 billion
- Inland Barge Group received orders
of $280.6 million, elevating backlog to $565.4 million, its highest
level in over six years
- Company raised earnings guidance for
full year 2015 to between $4.10 and $4.45 per common diluted share
compared to previous guidance of between $4.00 and $4.40 per
share
Consolidated Results
Trinity Industries, Inc. reported net income attributable to
Trinity stockholders of $180.2 million, or $1.13 per common diluted
share, for the first quarter ended March 31, 2015, which
included earnings per common diluted share of $0.18 related to the
sale of leased railcars. Net income for the same quarter of 2014
was $226.4 million, or $1.42 per common diluted share, which
included earnings per common diluted share of $0.75 related to the
sale of leased railcars. Revenues for the first quarter of 2015
increased 11% to $1.63 billion compared to revenues of $1.46
billion for the same quarter of 2014.
“I am pleased with the Company’s performance during the first
quarter of 2015. Our businesses continue to create value by
utilizing their combined expertise, competencies, and manufacturing
capacity to produce quality products for a broad range of
industrial markets," said Timothy R. Wallace, Trinity’s
Chairman, CEO, and President.
Business Group Results
In the first quarter of 2015, the Rail Group reported record
revenues and operating profit of approximately $1.14 billion and
$212.7 million, respectively, resulting in year-over-year increases
compared to the first quarter of 2014 of 33% and 27%, respectively.
The increase in revenues and profit was due to higher deliveries,
improved pricing, and a more favorable product mix. The Rail Group
shipped a record 8,710 railcars and received orders for 4,865
railcars during the first quarter. The Rail Group had a backlog of
$6.81 billion as of March 31, 2015, representing 57,190
railcars, compared to a backlog of $7.21 billion as of
December 31, 2014, representing 61,035 railcars.
During the first quarter of 2015, the Railcar Leasing and
Management Services Group reported record leasing and management
revenues of $166.1 million compared to $150.2 million in the first
quarter of 2014 due to higher average rental rates and net fleet
additions. In addition, the Group recognized revenue of $78.7
million from sales of railcars from the lease fleet owned for less
than a year during the first quarter compared to $292.9 million in
the first quarter of 2014. Operating profit for this Group was
$122.8 million in the first quarter of 2015 compared to operating
profit of $230.3 million in the first quarter of 2014 due to a
record level of leasing and management operating profit offset by
fewer sales of railcars from the lease fleet in the first quarter
of 2015. Supplemental information for the Railcar Leasing and
Management Services Group is provided in the following tables.
During the first quarter, the Company sold $127.0 million of
railcars to Element Financial Corporation ("Element") under a
strategic alliance launched in 2013. Since the fourth quarter of
2013 when the alliance was announced, the Leasing Group has
completed $1.11 billion of leased railcar sales to Element and
anticipates fulfilling the $2 billion alliance by the end of
2015.
The Inland Barge Group reported increased revenues of $153.1
million for the first quarter of 2015 compared to revenues of
$136.9 million in the first quarter of 2014. Operating profit for
this Group was $27.5 million in the first quarter of 2015 compared
to $26.7 million in the first quarter of 2014. The increase in
revenues compared to the same quarter last year was due to higher
delivery volumes of hopper barges partially offset by lower
delivery volumes of tank barges. The Inland Barge Group received
orders of $280.6 million during the quarter, and as of
March 31, 2015 had a backlog of $565.4 million compared to a
backlog of $437.9 million as of December 31, 2014.
The Energy Equipment Group reported record revenues of $300.1
million in the first quarter of 2015 compared to revenues of $210.6
million in the same quarter of 2014. Operating profit for the first
quarter of 2015 increased to a record $37.2 million compared to
$22.9 million in the same quarter last year. The increase in
revenues and operating profit compared to the same quarter last
year was due primarily to acquisitions completed in 2014. The
backlog for structural wind towers as of March 31, 2015 was
$390.7 million compared to a backlog of $473.5 million as of
December 31, 2014.
Revenues in the Construction Products Group were $112.8 million
in the first quarter of 2015 compared to revenues of $113.1 million
in the first quarter of 2014. The Group recorded an operating
profit of $8.3 million in the first quarter of 2015 compared to an
operating profit of $21.7 million in the first quarter of 2014.
Revenues were substantially unchanged year-over-year while
operating profit decreased as a result of $11.2 million of property
disposition gains reported in the Aggregates business in the first
quarter of 2014 and higher legal expenses in the first quarter of
2015. In March 2015, the Group completed the acquisition of the
assets of a lightweight aggregates business with facilities located
in Louisiana, Alabama, and Arkansas.
Cash and Liquidity
At March 31, 2015, the Company had cash, cash equivalents,
and short-term marketable securities of $690.7 million. When
combined with capacity under committed credit facilities, the
Company had approximately $1.40 billion of available liquidity at
the end of the first quarter. Following the end of the first
quarter, Trinity Industries Leasing Company renewed its railcar
leasing warehouse facility through April 2018, and increased its
capacity from $475 million to $1 billion. Pro forma available
liquidity following the warehouse increase would have been
approximately $1.67 billion.
Share Repurchase
The Company repurchased 721,040 shares of common stock at a cost
of $25.0 million under its share repurchase authorization during
the quarter, leaving $193.6 million remaining under its current
authorization through December 31, 2015.
Earnings Outlook
For the full year of 2015, the Company anticipates earnings per
common diluted share of between $4.10 and $4.45 compared to its
previous 2015 earnings guidance of $4.00 to $4.40 per share. The
Company expects the level of quarterly earnings per share during
the remainder of 2015 to be relatively consistent.
The 2015 earnings guidance assumes an annual weighted average
diluted share count of 156 million shares, which includes 4.9
million shares from the convertible notes. The dilutive impact
of the convertible notes reduces full year 2015 earnings per share
by approximately $0.13 per share.
Actual results in 2015 may differ from present expectations and
could be impacted by a number of factors including, among others,
fluctuations in prices of commodities that our customers produce
and transport; potential costs or timing of pending tank car
regulatory changes; expenses related to current and potential
litigation involving our Highway Products business; the operating
leverage and efficiencies that can be achieved by the Company's
manufacturing businesses; the level of sales and profitability of
railcars; and the impact of weather conditions on our operations
and delivery schedules.
Conference Call
Trinity will hold a conference call at 11:00 a.m. Eastern on
April 24, 2015 to discuss its first quarter results. To listen
to the call, please visit the Investor Relations section of the
Trinity Industries website, www.trin.net. An audio replay may be
accessed through the Company’s website or by dialing (402) 220-0464
until 11:59 p.m. Eastern on May 1, 2015.
Trinity Industries, Inc., headquartered in Dallas, Texas, is a
diversified industrial company that owns market-leading businesses
providing products and services to the energy, transportation,
chemical, and construction sectors. Trinity reports its financial
results in five principal business segments: the Rail Group, the
Railcar Leasing and Management Services Group, the Inland Barge
Group, the Construction Products Group, and the Energy Equipment
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.
Trinity uses the words “anticipates,” “believes,” “estimates,”
“expects,” “intends,” “forecasts,” “may,” “will,” “should,”
“guidance” and similar expressions to identify these
forward-looking statements. Forward-looking statements involve
risks and uncertainties that could cause actual results to differ
materially from historical experience or our present expectations.
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 the Company's Annual Report on Form 10-K for the
most recent fiscal year.
Trinity Industries, Inc. Condensed
Consolidated Income Statements
(in millions, except per share
amounts)
(unaudited)
Three Months Ended March 31,
2015 2014
Revenues $ 1,626.7 $ 1,460.5 Operating costs: Cost of revenues
1,211.1 1,074.0 Selling, engineering, and administrative expenses
98.3 83.6 Gains on disposition of property, plant, and equipment:
Net gains on lease fleet sales (14.9 ) (77.5 ) Other (0.9 )
(10.9 ) 1,293.6 1,069.2
Operating profit 333.1 391.3 Interest expense, net 51.0 45.9 Other,
net (2.3 ) (0.1 ) Income before income taxes 284.4
345.5 Provision for income taxes 95.4 112.5
Net income 189.0 233.0 Net income attributable to
noncontrolling interest 8.8 6.6 Net
income attributable to Trinity Industries, Inc. $ 180.2 $
226.4 Net income attributable to Trinity Industries,
Inc. per common share: Basic $ 1.15 $ 1.46 Diluted $ 1.13 $ 1.42
Weighted average number of shares outstanding: Basic 151.2 150.2
Diluted 154.3 154.0
All share and per share information has been retroactively
adjusted to reflect the 2-for-1 stock split completed during the
quarter ended June 30, 2014. Trinity is required to utilize the
two-class method of accounting when calculating earnings per share
as a result of unvested restricted shares that have non-forfeitable
rights to dividends and are, therefore, considered to be a
participating security. The unvested restricted shares are
excluded from the weighted average number of shares outstanding for
the purposes of determining earnings per share. The two-class
method results in a lower earnings per share than is calculated
from the face of the income statement. See Earnings Per Share
Calculation table below.
Trinity Industries, Inc. Condensed Segment
Data
(in millions)
(unaudited)
Three Months Ended March 31,
Revenues: 2015
2014 Rail Group $ 1,144.5 $ 857.4 Construction
Products Group 112.8 113.1 Inland Barge Group 153.1 136.9 Energy
Equipment Group 300.1 210.6 Railcar Leasing and Management Services
Group 244.8 443.1 All Other 28.1 23.2
Segment Totals before Eliminations 1,983.4 1,784.3 Eliminations -
lease subsidiary (259.0 ) (249.1 ) Eliminations - other
(97.7 ) (74.7 ) Consolidated Total $ 1,626.7 $
1,460.5
Three Months Ended March 31,
Operating profit (loss): 2015
2014 Rail Group $ 212.7 $ 167.5 Construction Products
Group 8.3 21.7 Inland Barge Group 27.5 26.7 Energy Equipment Group
37.2 22.9 Railcar Leasing and Management Services Group 122.8 230.3
All Other (1.5 ) (5.4 ) Segment Totals before
Eliminations and Corporate Expenses 407.0 463.7 Corporate (26.7 )
(23.1 ) Eliminations - lease subsidiary (48.3 ) (49.3 )
Eliminations - other 1.1 — Consolidated
Total $ 333.1 $ 391.3
Trinity Industries, Inc.
Leasing Group
Condensed Results of Operations
(unaudited)
Three Months Ended March 31,
2015 2014 ($ in
millions) Revenues: Leasing and management $ 166.1 $ 150.2
Sales of railcars owned one year or less at the time of sale
78.7 292.9 Total revenues $ 244.8 $ 443.1
Operating profit: Leasing and management $ 82.3 $ 63.9 Railcar
sales: Railcars owned one year or less at the time of sale 25.6
88.9 Railcars owned more than one year at the time of sale
14.9 77.5 Total operating profit $ 122.8 $
230.3 Operating profit margin: Leasing and management 49.5 % 42.5 %
Railcar sales * * Total operating profit margin 50.2 % 52.0 %
Selected expense information(1): Depreciation $ 34.1 $ 32.5
Maintenance $ 19.9 $ 21.0 Rent $ 11.8 $ 13.3 Interest $ 37.9 $ 37.3
March 31, December 31, 2015 2014
Leasing portfolio information: Portfolio size (number of railcars)
76,170 75,930 Portfolio utilization 99.3 % 99.5 %
Three
Months Ended March 31, 2015
2014 (in millions) Proceeds from sale of
leased railcars to Element Financial Corporation: Leasing Group:
Railcars owned one year or less at the time of sale $ 50.1 $ 277.9
Railcars owned more than one year at the time of sale 61.7 222.7
Rail Group 15.2 13.7 $ 127.0 $
514.3
* Not meaningful
(1) Depreciation, maintenance, and rent expense are components
of operating profit. Amortization of deferred profit on railcars
sold from the Rail Group to the Leasing Group is included in the
operating profits of the Leasing Group resulting in the recognition
of depreciation expense based on the Company's original
manufacturing cost of the railcars. Interest expense is not a
component of operating profit and includes the effect of
hedges.
Trinity Industries, Inc. Condensed
Consolidated Balance Sheets
(in millions)
(unaudited)
March 31, December
31, 2015 2014 Cash and cash equivalents $ 590.7 $
887.9 Short-term marketable securities 100.0 75.0 Receivables, net
of allowance 544.9 405.3 Income tax receivable — 58.6 Inventories
1,045.3 1,068.4 Restricted cash 211.1 234.7 Net property, plant,
and equipment 5,148.9 4,902.9 Goodwill 771.7 773.2 Other assets
309.8 327.8 $ 8,722.4 $ 8,733.8 Accounts
payable $ 299.6 $ 295.4 Accrued liabilities 612.3 709.6 Debt, net
of unamortized discount of $56.2 and $60.0 3,485.9 3,553.0 Deferred
income 29.1 36.4 Deferred income taxes 630.6 632.6 Other
liabilities 113.5 109.4 Stockholders' equity 3,551.4
3,397.4 $ 8,722.4 $ 8,733.8
Trinity Industries,
Inc. Additional Balance Sheet Information
(in millions)
(unaudited)
March 31, December
31, 2015 2014 Property, Plant, and
Equipment Corporate/Manufacturing: Property, plant, and
equipment $ 1,755.0 $ 1,681.7 Accumulated depreciation
(838.6 ) (820.7 ) 916.4 861.0
Leasing: Wholly-owned subsidiaries: Machinery and other 10.7 10.7
Equipment on lease 3,428.2 3,189.6 Accumulated depreciation
(605.6 ) (601.1 ) 2,833.3 2,599.2
Partially-owned subsidiaries: Equipment on lease 2,260.6
2,261.2 Accumulated depreciation (277.2 ) (261.3 )
1,983.4 1,999.9 Net deferred
profit on railcars sold to the Leasing Group (584.2 )
(557.2 ) $ 5,148.9 $ 4,902.9
Trinity
Industries, Inc. Additional Balance Sheet Information
(in millions)
(unaudited)
March 31, December
31, 2015 2014 Debt Corporate - Recourse:
Revolving credit facility $ — $ — Senior notes due 2024, net of
unamortized discount of $0.4 and $0.4 399.6 399.6 Convertible
subordinated notes, net of unamortized discount of $55.8 and $59.6
393.7 389.9 Other 0.7 0.7 794.0 790.2
Leasing: Wholly-owned subsidiaries: Recourse: Capital lease
obligations 38.3 39.1 38.3 39.1
Non-recourse: Secured railcar equipment notes 712.7 723.3 Warehouse
facility 101.4 120.6 Promissory notes 341.3 363.9
1,155.4 1,207.8 Partially-owned subsidiaries -
Non-recourse: Secured railcar equipment notes 1,498.2
1,515.9 1,498.2 1,515.9 $ 3,485.9 $ 3,553.0
Trinity Industries, Inc. Additional Balance Sheet
Information
(in millions)
(unaudited)
March 31, December
31, 2015 2014 Leasing Debt Summary Total
Recourse Debt $ 38.3 $ 39.1 Total Non-Recourse Debt 2,653.6
2,723.7 $ 2,691.9 $ 2,762.8
Total Leasing Debt Wholly-owned subsidiaries $ 1,193.7 $ 1,246.9
Partially-owned subsidiaries 1,498.2 1,515.9
$ 2,691.9 $ 2,762.8
Equipment on Lease(1)
Wholly-owned subsidiaries $ 2,833.3 $ 2,599.2 Partially-owned
subsidiaries 1,983.4 1,999.9 $ 4,816.7
$ 4,599.1 Total Leasing Debt as a % of Equipment on
Lease Wholly-owned subsidiaries 42.1 % 48.0 % Partially-owned
subsidiaries 75.5 % 75.8 % Combined 55.9 % 60.1 %
(1) Excludes net deferred profit on railcars sold to the Leasing
Group.
Trinity Industries, Inc. Condensed
Consolidated Cash Flow Statements
(in millions)
(unaudited)
Three Months Ended March 31,
2015 2014
Operating activities: Net income $ 189.0 $ 233.0 Adjustments
to reconcile net income to net cash provided by operating
activities: Depreciation and amortization 64.0 55.3 Net gains on
sales of railcars owned more than one year at the time of sale
(14.9 ) (77.5 ) Other 20.7 8.2 Changes in assets and liabilities:
(Increase) decrease in receivables (76.6 ) (43.3 ) (Increase)
decrease in inventories 31.7 (57.9 ) Increase (decrease) in
accounts payable and accrued liabilities (99.3 ) 69.2 Other
(5.2 ) 18.3 Net cash provided by operating activities
109.4 205.3
Investing
activities: Proceeds from sales of railcars owned more than one
year at the time of sale 78.5 224.3 Proceeds from disposition of
property, plant, and equipment 1.6 17.2 Capital expenditures -
leasing, net of sold railcars owned one year or less with a net
cost of $53.1 and $204.0 (283.4 ) 0.4 Capital expenditures -
manufacturing and other (53.5 ) (49.1 ) (Increase) decrease in
short-term marketable securities (25.0 ) (106.7 ) Acquisitions
(45.5 ) (112.6 ) Other 4.2 2.9 Net cash
required by investing activities (323.1 ) (23.6 )
Financing activities: Payments to retire debt (70.9 ) (53.1
) Shares repurchased(1) (18.0 ) (12.5 ) Dividends paid to common
shareholders (15.6 ) (11.6 ) Purchase of shares to satisfy employee
tax on vested stock (0.4 ) (0.1 ) Distributions to noncontrolling
interest (11.3 ) (5.4 ) (Increase) decrease in restricted cash 33.0
4.3 Other (0.3 ) 0.4 Net cash required by
financing activities (83.5 ) (78.0 ) Net increase
(decrease) in cash and cash equivalents (297.2 ) 103.7 Cash and
cash equivalents at beginning of period 887.9
428.5 Cash and cash equivalents at end of period $ 590.7
$ 532.2
(1) Reflects shares of stock cash settled during the period
Trinity Industries, Inc.
Earnings per Share Calculation
(in millions, except per share amounts,
unaudited)
Basic net income attributable to Trinity Industries, Inc. per
common share is computed by dividing net income attributable to
Trinity remaining after allocation to unvested restricted shares by
the weighted average number of basic common shares outstanding for
the period. All share and per share information has been
retroactively adjusted to reflect the 2-for-1 stock split completed
during the quarter ended June 30, 2014.
Three Months Ended Three
Months Ended March 31, 2015 March 31, 2014
Average Average
Income Shares EPS Income Shares EPS Net income attributable to
Trinity Industries, Inc. $ 180.2 $ 226.4 Unvested restricted share
participation (5.7 ) (7.8 ) Net income attributable
to Trinity Industries, Inc. - basic 174.5 151.2 $ 1.15 218.6 150.2
$ 1.46 Effect of dilutive securities: Stock options — — — 0.1
Convertible subordinated notes 0.1 3.1 0.2
3.7 Net income attributable to Trinity Industries, Inc. -
diluted $ 174.6 154.3 $ 1.13 $ 218.8 154.0 $ 1.42
Trinity Industries, Inc.
Reconciliation of EBITDA
(in millions) (unaudited)
“EBITDA” is defined as income (loss) from continuing operations
plus interest expense, income taxes, and depreciation and
amortization including goodwill impairment charges. EBITDA is not a
calculation based on generally accepted accounting principles. The
amounts included in the EBITDA calculation are, however, derived
from amounts included in the historical consolidated statements of
operations data. In addition, EBITDA should not be considered as an
alternative to net income or operating income as an indicator of
our operating performance, or as an alternative to operating cash
flows as a measure of liquidity. We believe EBITDA assists
investors in comparing a company’s performance on a consistent
basis without regard to depreciation and amortization, which can
vary significantly depending upon many factors. However, the EBITDA
measure presented in this press release may not always be
comparable to similarly titled measures by other companies due to
differences in the components of the calculation.
Three Months Ended March 31,
2015 2014 Net income $ 189.0 $
233.0 Add: Interest expense 51.5 46.3 Provision for income taxes
95.4 112.5 Depreciation and amortization expense 64.0
55.3 Earnings before interest expense, income taxes, and
depreciation and amortization expense $ 399.9 $ 447.1
Trinity Industries, Inc.Investor Contact:Jessica Greiner,
214-631-4420Director of Investor RelationsorMedia
Contact:Jack Todd, 214-589-8909
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