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
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Date of Report (Date of Earliest Event Reported): | | April 23, 2015 |
Trinity Industries, Inc.
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(Exact name of registrant as specified in its charter)
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Delaware | | 1-6903 | | 75-0225040 |
(State or other jurisdiction of incorporation | | (Commission File No.) | | (I.R.S. Employer Identification No.) |
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2525 N. Stemmons Freeway, Dallas, Texas | | | | 75207-2401 |
(Address of principal executive offices) | | | | (Zip Code) |
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Registrant's telephone number, including area code: | | 214-631-4420 |
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))
Item 2.02 Results of Operations and Financial Condition.
The Registrant hereby furnishes the information set forth in its News Release, dated April 23, 2015, announcing operating results for the three month period ended March 31, 2015, a copy of which is furnished as exhibit 99.1 and incorporated herein by reference. On April 24, 2015, the Registrant held a conference call and web cast with respect to its financial results for the three month period ended March 31, 2015. The conference call scripts of Gail M. Peck, Vice President, Finance and Treasurer; S. Theis Rice, Senior Vice President and Chief Legal Officer; Timothy R. Wallace, Chairman, Chief Executive Officer, and President; William A. McWhirter II, Senior Vice President and Group President of the Construction Products, Energy Equipment and Inland Barge Groups; D. Stephen Menzies, Senior Vice President and Group President of the Rail and Railcar Leasing Groups; and James E. Perry, Senior Vice President and Chief Financial Officer are furnished as exhibits 99.2, 99.3, 99.4, 99.5, 99.6, and 99.7, respectively, and incorporated herein by reference.
This information is not "filed" pursuant to the Securities Exchange Act of 1934 and is 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."
This information is not "filed" pursuant to the Securities Exchange Act of 1934 and is 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 9.01 Financial Statements and Exhibits.
(a) - (c) Not applicable.
(d) Exhibits:
Exhibit No. / Description
99.1 News Release dated April 23, 2015 with respect to the operating results for the three month period ended March 31, 2015.
99.2 Conference call script of April 24, 2015 of Gail M. Peck, Vice President, Finance and Treasurer.
99.3 Conference call script of April 24, 2015 of S. Theis Rice, Senior Vice President and Chief Legal Officer.
99.4 Conference call script of April 24, 2015 of Timothy R. Wallace, Chairman, Chief Executive Officer, and President.
99.5 Conference call script of April 24, 2015 of William A. McWhirter II, Senior Vice President and Group President of the Construction Products, Energy Equipment and Inland Barge Groups.
99.6 Conference call script of April 24, 2015 of D. Stephen Menzies, Senior Vice President and Group President of the Rail and Railcar Leasing Groups.
99.7 Conference call script of April 24, 2015 of James E. Perry, Senior Vice President and Chief Financial Officer.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| Trinity Industries, Inc. |
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April 24, 2015 | By: | /s/ James E. Perry |
| | Name: James E. Perry |
| | Title: Senior Vice President and Chief Financial Officer |
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Exhibit Index |
Exhibit No. | | Description |
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99.1 | | News Release dated April 23, 2015 with respect to the operating results for the three month period ended March 31, 2015 |
99.2 | | Conference call script of April 24, 2015 of Gail M. Peck, Vice President, Finance and Treasurer |
99.3 | | Conference call script of April 24, 2015 of S. Theis Rice, Senior Vice President and Chief Legal Officer. |
99.4 | | Conference call script of April 24, 2015 of Timothy R. Wallace, Chairman, Chief Executive Officer, and President. |
99.5 | | Conference call script of April 24, 2015 of William A. McWhirter II, Senior Vice President and Group President of the Construction Products, Energy Equipment and Inland Barge Groups. |
99.6 | | Conference call script of April 24, 2015 of D. Stephen Menzies, Senior Vice President and Group President of the Rail and Railcar Leasing Groups. |
99.7 | | Conference call script of April 24, 2015 of James E. Perry, Senior Vice President and Chief Financial Officer. |
Exhibit 99.1
NEWS RELEASE |
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Investor Contact: | Media Contact: |
Jessica Greiner | Jack Todd |
Director of Investor Relations | Trinity Industries, Inc. |
Trinity Industries, Inc. | 214/589-8909 |
214/631-4420 | |
FOR IMMEDIATE RELEASE
Trinity Industries, Inc. Announces First Quarter 2015 Results
DALLAS, Texas - April 23, 2015 - Trinity Industries, Inc. (NYSE:TRN) today announced earnings results for the first quarter ended March 31, 2015, including the following significant highlights:
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• | First quarter earnings per common diluted share of $1.13 compared to $1.42 for the first quarter of 2014 |
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• | 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 |
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• | Rail, Inland Barge, and Energy Equipment Groups reported higher year-over-year operating profit during the first quarter |
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• | 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 |
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• | Inland Barge Group received orders of $280.6 million, elevating backlog to $565.4 million, its highest level in over six years |
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• | 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.
- TABLES TO FOLLOW -
Trinity Industries, Inc.
Condensed Consolidated Income Statements
(in millions, except per share amounts)
(unaudited)
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| Three Months Ended
March 31, |
| 2015 | | 2014 |
Revenues | $ | 1,626.7 |
| | $ | 1,460.5 |
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Operating costs: | | | |
Cost of revenues | 1,211.1 |
| | 1,074.0 |
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Selling, engineering, and administrative expenses | 98.3 |
| | 83.6 |
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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 |
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Operating profit | 333.1 |
| | 391.3 |
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Interest expense, net | 51.0 |
| | 45.9 |
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Other, net | (2.3 | ) | | (0.1 | ) |
Income before income taxes | 284.4 |
| | 345.5 |
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Provision for income taxes | 95.4 |
| | 112.5 |
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Net income | 189.0 |
| | 233.0 |
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Net income attributable to noncontrolling interest | 8.8 |
| | 6.6 |
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Net income attributable to Trinity Industries, Inc. | $ | 180.2 |
| | $ | 226.4 |
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Net income attributable to Trinity Industries, Inc. per common share: | | |
Basic | $ | 1.15 |
| | $ | 1.46 |
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Diluted | $ | 1.13 |
| | $ | 1.42 |
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Weighted average number of shares outstanding: | | | |
Basic | 151.2 |
| | 150.2 |
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Diluted | 154.3 |
| | 154.0 |
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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)
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| Three Months Ended
March 31, |
Revenues: | 2015 | | 2014 |
Rail Group | $ | 1,144.5 |
| | $ | 857.4 |
|
Construction Products Group | 112.8 |
| | 113.1 |
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Inland Barge Group | 153.1 |
| | 136.9 |
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Energy Equipment Group | 300.1 |
| | 210.6 |
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Railcar Leasing and Management Services Group | 244.8 |
| | 443.1 |
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All Other | 28.1 |
| | 23.2 |
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Segment Totals before Eliminations | 1,983.4 |
| | 1,784.3 |
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Eliminations - lease subsidiary | (259.0 | ) | | (249.1 | ) |
Eliminations - other | (97.7 | ) | | (74.7 | ) |
Consolidated Total | $ | 1,626.7 |
| | $ | 1,460.5 |
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| Three Months Ended
March 31, |
Operating profit (loss): | 2015 | | 2014 |
Rail Group | $ | 212.7 |
| | $ | 167.5 |
|
Construction Products Group | 8.3 |
| | 21.7 |
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Inland Barge Group | 27.5 |
| | 26.7 |
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Energy Equipment Group | 37.2 |
| | 22.9 |
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Railcar Leasing and Management Services Group | 122.8 |
| | 230.3 |
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All Other | (1.5 | ) | | (5.4 | ) |
Segment Totals before Eliminations and Corporate Expenses | 407.0 |
| | 463.7 |
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Corporate | (26.7 | ) | | (23.1 | ) |
Eliminations - lease subsidiary | (48.3 | ) | | (49.3 | ) |
Eliminations - other | 1.1 |
| | — |
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Consolidated Total | $ | 333.1 |
| | $ | 391.3 |
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Trinity Industries, Inc.
Leasing Group
Condensed Results of Operations
(unaudited)
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| | | | | | | |
| Three Months Ended
March 31, |
| 2015 | | 2014 |
| ($ in millions) |
Revenues: | | | |
Leasing and management | $ | 166.1 |
| | $ | 150.2 |
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Sales of railcars owned one year or less at the time of sale | 78.7 |
| | 292.9 |
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Total revenues | $ | 244.8 |
| | $ | 443.1 |
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Operating profit: | | | |
Leasing and management | $ | 82.3 |
| | $ | 63.9 |
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Railcar sales: | | | |
Railcars owned one year or less at the time of sale | 25.6 |
| | 88.9 |
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Railcars owned more than one year at the time of sale | 14.9 |
| | 77.5 |
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Total operating profit | $ | 122.8 |
| | $ | 230.3 |
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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 |
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Maintenance | $ | 19.9 |
| | $ | 21.0 |
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Rent | $ | 11.8 |
| | $ | 13.3 |
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Interest | $ | 37.9 |
| | $ | 37.3 |
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| March 31,
2015 | | December 31,
2014 |
Leasing portfolio information: | | | |
Portfolio size (number of railcars) | 76,170 |
| | 75,930 |
Portfolio utilization | 99.3 | % | | 99.5 | % |
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| 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 |
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Railcars owned more than one year at the time of sale | 61.7 |
| | 222.7 |
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Rail Group | 15.2 |
| | 13.7 |
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| $ | 127.0 |
| | $ | 514.3 |
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* 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,
2015 | | December 31,
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,
2015 | | December 31,
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,
2015 | | December 31,
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,
2015 | | December 31,
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
March 31, 2015 | | Three Months Ended
March 31, 2014 |
| Income | | Average Shares | | EPS | | Income | | Average
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 |
|
- END -
Exhibit 99.2
Trinity Industries, Inc.
Earnings Release Conference Call
Comments of Gail M. Peck
Vice President, Finance and Treasurer
April 23, 2015
Thank you, Tony. Good morning everyone. Welcome to the Trinity Industries’ first quarter 2015 results conference call. I am Gail Peck, Vice President, Finance and Treasurer of Trinity. Thank you for joining us today.
Similar to the format we used on our last earnings call, we are going to have two parts to our conference call remarks. First, we will begin with an update on the highway litigation matter. We will then follow with our normal quarterly earnings conference call format.
Today’s speakers are:
•Theis Rice, Senior Vice President and Chief Legal Officer;
•Tim Wallace our Chairman, Chief Executive Officer and President;
•Bill McWhirter, Senior Vice President and Group President of the Construction Products, Energy Equipment, and Inland Barge Groups;
•Steve Menzies, Senior Vice President and Group President of the Rail and Railcar Leasing Groups; and
•James Perry, our Senior Vice President and Chief Financial Officer
Following their comments, we will then move to the Q&A session. Mary Henderson, our Vice President and Chief Accounting Officer, is also in the room with us today. I will now turn the call over to Theis Rice.
Theis
Tim
Bill
Steve
James
Q&A Session
That concludes today's conference call. A replay of this call will be available after one o'clock eastern standard time today through midnight on May 1, 2015. The access number is (402) 220-0464. Also the replay will be available on the website located at www.trin.net. We look forward to visiting with you again on our next conference call. Thank you for joining us this morning.
Exhibit 99.3
Trinity Industries, Inc.
Earnings Release Conference Call
Comments of S. Theis Rice
Senior Vice President and Chief Legal Officer
April 24, 2015
Thank you, Gail. Good morning everyone.
Trinity Highway Products manufactures and markets the ET Plus® Guardrail System pursuant to an exclusive license agreement granted by The Texas A&M University System. As previously reported, Trinity and Trinity Highway Products received an adverse jury verdict in October 2014 in a False Claims Act case involving the ET Plus. Following the verdict, the Federal Highway Administration, or FHWA, requested that Trinity conduct eight additional crash tests on the ET Plus. These tests were completed in January of this year. Following analysis of the crash test data by the FHWA and their independent expert, the FHWA reported that the ET Plus met the required criteria for all eight tests.
Earlier this year, the FHWA and the American Association of State Highway and Transportation Officials, or AASHTO, together formed two task forces to examine some of the allegations about the ET Plus guardrail system. AASHTO is an association representing highway and transportation departments in all 50 states. The first joint task force investigated allegations of multiple versions of the ET Plus and whether the ET Plus devices used in the eight additional crash tests were representative of the ET Plus devices installed on the roadways.
On March 11, 2015, the FHWA and AASHTO released the findings of the first joint task force that evaluated field measurement data collected by FHWA engineers from more than 1,000 ET Plus devices installed on roadways throughout the country. The joint task force concluded there was no evidence to suggest there are multiple versions of the ET Plus on our nation’s roadways. The joint task force also concluded that the end terminals crash tested at Southwest Research Institute between December 2014 and January 2015 were representative of the ET Plus devices installed across the country. The FHWA has publicly reported that the second joint task force evaluating the ET Plus should complete its work early this summer. Upon release of this task force’s findings, we will perform a thorough analysis regarding the resumption of shipments of the ET Plus to our customers.
On another note, recent news articles have reported the commencement of an investigation out of the Boston, MA office of the U.S. Department of Justice. We intend to cooperate in this investigation.
Trinity’s post-trial motions continue to emphasize that the allegations in the False Claims Act case are without merit. The District Court has ordered the parties to mediate. We are complying with the mediation order in good faith. In the meantime, we are preparing our appeal to the 5th Circuit Court of Appeals should the District Court enter a judgment on the verdict. We will continue our approach of providing the facts and data that support the strength of our positions.
Our first quarter 10-Q will be filed today, in which we provide additional information on this litigation in Note 18. If you would like more details relating to my comments, please refer to Trinity Highway’s website at www.etplusfacts.com where my February 19, 2015 conference call comments and my April 1, 2015 Stakeholder Overview are posted.
I will now turn the call over to Tim.
Exhibit 99.4
Trinity Industries, Inc.
Earnings Release Conference Call
Comments of Timothy R. Wallace
Chairman, Chief Executive Officer, and President
April 24, 2015
Thank you, Theis and good morning everyone. Trinity’s financial performance during the first quarter continued to build upon the momentum we established last year. The winter weather provided some unique challenges for our facilities during the quarter. Our businesses responded really well to the weather issues. During the quarter, our company continued to utilize the strengths of our backlogs to drive operating leverage and efficiencies to the bottom line. We are creating value by leveraging our combined expertise, competencies, and manufacturing capacity to produce quality products for a broad range of industrial customers.
Our Rail Group generated record quarterly financial results, reporting strong revenues and operating profit during the first quarter. I remain pleased with this Group’s ability to profitably increase production levels while making line changeovers.
Our railcar leasing company delivered another quarter of solid results. Last year, in the first quarter, a large portion of the Group’s earnings resulted from the sale of leased railcars from our lease fleet. This year, in addition to a healthy level of earnings from sales of leased railcars, the earnings from our leasing operations increased in the first quarter.
I am pleased with our Inland Barge Group’s performance during the first quarter. The Group increased its profit levels from the previous quarter on a lower volume of revenue. In addition, the barge backlog increased during the quarter as a result of the Group’s manufacturing flexibility.
The first quarter financial performance of our Energy Equipment Group continued to improve and our Construction Products Group returned to profitability during the quarter. Overall, I am pleased with our financial performance during the lst quarter.
During the short term, we are focused on generating higher earnings this year than the record level we established last year. We are continuing to operate our company on lean principles as we look for opportunities to conduct railcar leasing and other asset transactions that generate cash and provide earnings. From a longer term growth point of view, we continue to search for acquisition opportunities in markets that have products, services, technology, and competencies that fit within our portfolio of industrial manufacturing businesses. Trinity’s corporate business model is designed to generate value through our ownership and management of industrial companies that benefit by being part of Trinity. Our 2014 asset acquisition of Meyer Steel Structures is a good example of a company that fits well within our portfolio.
As we begin the 2nd quarter, Trinity’s financial and operational health remains solid. Our 2015 earnings outlook reflects the positive momentum we are experiencing within our company as well as the benefits of having solid backlogs in our primary businesses. Our accomplishments are due to the capabilities and expertise of our dedicated employees, our ability to respond effectively to shifts in demand, and our ongoing commitment to quality and customer service.
I’ll now turn it over to Bill for his comments.
Exhibit 99.5
Trinity Industries, Inc.
Earnings Release Conference Call
Comments of William A. McWhirter II,
Senior Vice President and Group President
Construction Products, Energy Equipment and Inland Barge Groups
April 24, 2015
Thank you Tim and good morning everyone.
During the first quarter, the Inland Barge Group reported a 12% year-over-year increase in revenues and a slight increase in operating profit. I am pleased with the Group’s performance in the first quarter.
During the first quarter, we received orders for new barges totaling approximately $280 million, resulting in a backlog of $565 million at the end of March. This is the highest backlog reported by the Group in more than 6 years. Our ability to capture a large number of orders during the quarter is due to our operational flexibility. Order patterns in the industry shifted from liquid barges to dry barges. Our Barge Group’s operational flexibility is a key differentiator, enabling the group to enhance profitability while responding to customers’ needs.
Inquiries for hopper barges continued at steady levels during the first quarter due to the strong harvest last year and expectations for another solid harvest this year. Demand for 30,000 barrel tank barges which carry crude oil remains weak at this time. Demand for 10,000 barrel tank barges continues to reflect expectations for expansion in the chemical market along the Gulf Coast. As a result of the shifting market demand we anticipate lower margins as we move through the year.
Moving to the Construction Products Group
I am pleased that this Group returned to profitability in the first quarter. Year over year, revenues were essentially flat. As a reminder the first quarter of last year included a gain of $11.2 million related to an asset disposition. Theis provided an update of our highway litigation matters, which continue to impact results in our highway products business.
In addition, our highway business is also affected by the pending expiration of the current Federal Highway Bill in May. Partially offsetting these negative headwinds is the strong performance of our aggregates business, which is benefitting from a robust southern U.S. market. In the first quarter, we completed another acquisition of lightweight aggregates assets. The acquisition strengthens our ability to serve our customers.
The Energy Equipment Group reported another record level of revenues and profit during the first quarter. We are pleased with the performance of the segment, but do expect some variability within the segment’s performance from quarter to quarter as a result of product mix and volume. The integration of the businesses we acquired in 2014 continues to progress smoothly. The Meyer purchase is a great example of an acquisition that is generating synergies and enrichment value, has tremendous cultural fit, and positive long-term demand drivers.
Market conditions within the segment vary by product. Lower oil prices have created headwinds for several of our business units. We remain positioned to respond to changes in demand should we see an increase in oil prices.
The current market for utility structures remains competitive, but long-term investment projections for this industry show positive fundamentals. We are well positioned to respond to increased transmission infrastructure spending in North America. Our wind towers business is performing at a high level due to long production backlogs. The wind industry continues to make advancements in reducing the installed cost for wind power.
In closing, our businesses are responding effectively to mixed demand conditions in a number of their markets. Our long-term outlook for energy and infrastructure investment in North America remains positive.
And now, I will turn the presentation over to Steve.
Exhibit 99.6
Trinity Industries, Inc.
Earnings Release Conference Call
Comments of D. Stephen Menzies
Senior Vice President and Group President
Rail and Railcar Leasing Groups
April 24, 2015
Thank you, Bill, good morning!
I continue to be very pleased with the strong operating results generated by our dedicated TrinityRail team and the benefits of our integrated business model. I am also excited about our operating and financial flexibility which allows us to meet shifting market and customer demand. Our achievements in these areas drove record performance levels during the first quarter in our Rail and Leasing Groups. Going forward, broadening railcar demand, continued expansion in downstream energy and chemical markets and an aging North American railcar fleet support solid long term railcar demand fundamentals. The pending new tank car regulations, we believe, will also contribute to increased demand for tank cars and maintenance services.
Our industry leading backlog, comprised of a broad mix of railcars enabled extended production runs that positioned our Rail Group to generate high levels of productivity and efficiencies. This contributed to our outstanding financial performance during the first quarter. Our Rail Group set another record, our 9th consecutive, for quarterly revenues and operating profit. We also delivered a record 8,710 railcars during the quarter. As a result of productivity improvements, we now expect to deliver between 33,000 and 34,500 railcars in 2015.
TrinityRail is also well positioned and prepared to meet increased demand for newly built tank cars and modifications to existing tank cars once HM 251 regulations are finalized. During the last two years, we invested significantly in our business to handle the regulatory compliance requirements and anticipated modification requirements of our fleet and those of key customers. Our current expectation is that we will have regulatory clarity in mid-May. We continue to believe HM-251 regulations will be a demand catalyst for tank cars. However, it may take some time for customers to evaluate the impacts of the ruling and assess their business needs. As a result, while it is certainly possible that some orders may be imminent pending finalization of the rule, we think it is more likely that industry orders will be placed over several subsequent quarters as our customers complete their assessments.
As we mentioned last quarter, the tank cars destined for crude oil service comprise a nominal portion of our backlog and most are scheduled for delivery in 2015. A number of these tank cars are being built to a higher standard than is currently required and may closely align with the anticipated standard in the new regulations.
Industry orders in the first quarter reflect broad-based market demand, downstream petrochemical & chemicals market growth, and fleet replacement demand. TrinityRail received orders for 4,865 new railcars resulting in a backlog at quarter end of 57,190 railcars with a value of $6.8 billion. We are pleased with the diversification of our order backlog and the orders we received in the first quarter, both of which reflect a broad mix of railcars for the energy, chemical, agricultural, and other consumer-related industries. Given the healthy relative pace of inquiries the last few quarters, which has continued into the 2nd quarter of 2015, we remain confident in the current railcar market fundamentals. TrinityRail’s backlog at the end of the first quarter gives us excellent visibility to plan our operations for the next few years.
The strength of the railcar market continues to have a positive effect on our Leasing Group. Revenue and profit from operations, which excludes railcar sales, increased year-over-year by 11% and 29%, respectively. New additions to the wholly-owned lease fleet, high fleet utilization levels, and strong increases in lease rate pricing during the first quarter all contributed to a record quarterly performance. Our lease fleet continues to experience strong demand with good renewal success. Fleet utilization remains over 99%.
Our total lease fleet now stands at 76,170 railcars after taking delivery of 2,240 railcars offset by the sale of 2,000 leased railcars during the first quarter. At the end of March, 33% of the railcars in our order backlog were committed to customers of our leasing business, bringing our leased railcar backlog to a record $2.3 billion.
Our strong lease origination capabilities combined with our position as a leading railcar manufacturer and owner of a large, diverse lease fleet make us an attractive partner for institutional investors who consider leased railcars to be good long term investments. The recent three-year extension and increase in the size of our leasing warehouse facility to $1 billion provides additional financial flexibility to expand new lease originations and enhances our commercial positioning. We continue to have ongoing conversations with institutional investors interested in owning leased railcars and having Trinity manage and service their investments.
In summary, TrinityRail’s integrated business platform is well positioned and responding effectively to healthy railcar demand. The Rail Group and Leasing and Management Services Group delivered exceptional results during the first quarter. I expect our performance to be strong throughout the balance of 2015, as well. Our operating and financial flexibility continue to differentiate TrinityRail, enhancing our position as a premier provider of railcar products and services.
I will now turn it over to James for his remarks.
Exhibit 99.7
Trinity Industries, Inc.
Earnings Release Conference Call
Comments of James E. Perry
Senior Vice President and Chief Financial Officer
April 24, 2015
Thank you, Steve and good morning everyone.
Yesterday, we announced our results for the first quarter of 2015. For the quarter, the Company reported revenues of more than $1.6 billion and Earning per Share of $1.13, compared to revenues and EPS of $1.5 billion and $1.42 last year. Last year’s first quarter results included $0.75 per share of earnings from the sale of leased railcars, compared to $0.18 per share from the sale of leased railcars in this year’s first quarter results. During the first quarter, our EPS excluding the sales of leased railcars reflected strong operating performance across most of our businesses.
During the first quarter, we invested approximately $300 million of net capital into several areas that we believe will produce attractive returns for the Company. We used our cash on hand to make these investments, resulting in a lower cash balance at the end of the quarter than at year-end. I will highlight a few of these investments now.
During the first quarter, the company repurchased 720,000 shares of its common stock for $25 million. This leaves $193.6 million of availability under our current authorization.
During the quarter, we exercised an early purchase option for one of our sale-leaseback transactions called TRL I, which was originally executed in 2001. This portfolio of leased railcars was previously reported off balance sheet. We paid approximately $120 million to acquire the portfolio of 2,800 railcars. The market value of these railcars, should we sell or secure them against future indebtedness, is well in excess of our purchase price, or their net book value. This investment reduces our financing costs, and increases our flexibility to refinance, or sell, the railcars at a later date. The purchase of these railcars is reflected in our leasing capital expenditures for the quarter. The reduction in rent expense associated with this purchase was included in our previous 2015 earnings guidance.
In addition to the purchase of the TRL I portfolio, we invested approximately $210 million in leased railcar additions to our own lease fleet during the quarter. This investment was partially offset by $157 million of leased railcar sales. Leased railcars remain a very good investment for us, offering attractive returns with strong cash flow while the railcars are in our fleet, and the opportunity for additional profit recognition from sales to third parties, including institutional investors.
Also during the first quarter, we acquired the assets of three lightweight aggregates plants in the Southern United States for $46 million. We continue to build out the lightweight aggregates platform within our Construction Products Group and now have an expanded presence in this market, extending from California to Alabama.
Finally, we invested $54 million in capex during the quarter across a number of our manufacturing businesses and at the corporate level.
We did not add any debt during the first quarter, and in fact, repaid approximately $70 million.
At the end of the first quarter, our available liquidity stood at approximately $1.40 billion. Shortly after the close of the quarter, our liquidity position was further enhanced to $1.67 billion with the increase in our leasing warehouse facility from $475 million to $1 billion. In addition to increasing the facility, we extended its maturity to three years, a year longer than the traditional two years, providing us enhanced flexibility to finance our record $2.3 billion backlog of leased railcars and future lease originations. Our warehouse facility provides us with a low-cost and flexible source of financing between the time of production and the ultimate sale or financing of the leased railcars.
As provided in our press release yesterday, our updated guidance for 2015 annual EPS is $4.10 to $4.45. We expect the level of quarterly EPS to be relatively consistent throughout the remainder of the year.
Our earnings outlook for 2015 reflects the positive momentum we are experiencing in our businesses. We remain very well positioned with a combined $7.8 billion backlog in our railcar, inland barge, and wind towers businesses. At the same time, our businesses are navigating through some uncertainties that could impact our performance in 2015, one of which is the price of oil.
Our guidance also includes earnings from the sale of leased railcars. As I said previously, these earnings totaled $0.18 per share during the first quarter, and includes profit recorded in the Rail and Leasing Groups. Earnings generation from the sale of leased railcars is expected to be a normal part of our business model going forward.
In 2015, as Steve mentioned, we expect our Rail Group to deliver between 33,000 and 34,500 railcars during the year, an increase from our previous guidance range. This will result in total revenues for the Rail Group of between $4.3 billion and $4.5 billion and an expected operating margin of 18% to 19%.
We expect our Leasing Group to record 2015 operating revenues, which excludes leased railcar sales, of $690 million to $710 million, with operating profit from operations of $315 million to $335 million.
Our 2015 guidance includes approximately $1 billion of sales of leased railcars to Element, which will fulfill the $2 billion strategic railcar alliance that we began in December 2013. This total was $127 million in the first quarter, bringing the cumulative total to $1.1 billion. As we previously stated, we expect the timing of the sales to Element to be more weighted toward the second half of the year.
In 2015, we anticipate the Leasing Group will report proceeds from sales of leased railcars from the lease fleet of approximately $685 million to $710 million with profit of $160 million to $175 million. This compares to our previous annual guidance ranges of $430 million to $450 million and $115 million to $130 million, respectively. Our guidance includes sales of leased railcars to Element and other third parties. While the guidance for the level of leased railcar sale activity reported in the Leasing Group has increased, the total level of leased railcar sales and profit in 2015, which includes leased railcars sold directly from the Rail Group, is substantially unchanged from our previous guidance. The level of interest in acquiring leased railcars remains high among institutional investors.
We expect our Construction Products Group to record 2015 revenues of $540 million to $560 million with an operating margin of 8.5% to 9.5%. We continue to experience headwinds associated with ongoing ET-Plus litigation and uncertainty around highway funding at the federal and state levels, but are pleased with the performance and opportunities within our aggregates businesses. Our 2015 guidance now incorporates the lightweight aggregates acquisition that we made in the first quarter.
Our Inland Barge Group is expected to report 2015 revenues of $675 million to $700 million with an operating margin of 14% to 15%. As Bill mentioned, there is softness in demand for tank barges, but a strengthening in demand for hopper barges, which has increased the backlog and provided better production visibility through the end of 2015.
We expect our Energy Equipment Group to generate 2015 revenues of $1.1 billion to $1.2 billion with an operating margin of 11% to 12%. This includes a full year of operating results from the 2014 acquisition of the assets of Meyer Steel Structures.
Corporate expenses are expected to range from $110 million to $125 million during 2015, which includes ongoing expenses related to the federal highway litigation and related matters.
In 2015, we now expect to eliminate between $820 million and $870 million of revenue and defer between $150 million and $170 million of operating profit due to the addition of new railcars to our lease fleet, and the timing of new leased railcars manufactured by the Rail Group that are expected to be sold to institutional investors. We expect these eliminations to be slightly more weighted toward the first half of the year. As a reminder, we eliminated $259 million of revenue and deferred $48 million of profit in the first quarter. We expect to eliminate between $375 million and $395 million of revenues from other intercompany transactions during the year.
Our annual EPS guidance also includes the following assumptions:
•A tax rate of approximately 33.5%, though this rate could vary quarter-to-quarter;
•The deduction of between $30 million and $35 million of non-controlling earnings due to our partial ownership in TRIP and RIV 2013;
•A reduction of 15 cents per share due to the two class method of accounting, compared to calculating Trinity’s EPS directly from the face of the income statement; and
•The dilutive impact from the convertible notes as disclosed in yesterday’s press release
As it pertains to cash flow, we expect the annual net cash investment in new railcars in our lease fleet to be between $105 million and $125 million in 2015, after considering the expected proceeds received from leased railcar sales during the year and the purchase of TRL I. During the second quarter, we expect to pre-pay in full approximately $340 million of leasing debt that we issued in 2008, known as TRL VI, which is secured by a diversified portfolio of 8,700 railcars. As a result, we will lower financing costs and create flexibility to use this portfolio of railcars in future financings or sales to institutional investors. The market value of the railcars in this portfolio is well above the loan amount. This loan repayment was included in our previous earnings guidance.
Full-year manufacturing and corporate capital expenditures for 2015 are expected to be between $250 million and $300 million.
We have significant cash on hand and access to capital through our committed lines of credit at both the corporate and leasing levels. As we have said previously, current economic conditions could present opportunities to make acquisitions at favorable valuations that add long-term value to the company.
The upper end of our EPS guidance range reflects our goal of achieving a higher level of earnings in 2015. We recognize the importance of sustainable earnings growth and the Company’s business model is aligned with that goal. Our firm backlogs provide us with production visibility in our major businesses and our balance sheet is strong. We are well positioned in 2015.
As we prepare for our question and answer session, please note that Theis’ remarks today pertaining to the ET Plus litigation were very thorough. More detail can be found in Note 18 of our Form 10-Q that we will file later today. We will not comment further on the litigation, so we ask that your questions today focus on our operations.
Our operator will now prepare us for the question and answer session.
-- Q&A Session --
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