Reports both quarterly GAAP and adjusted
earnings from continuing operations of $0.33 per diluted
share
Lease fleet utilization of 97.5% and Future
Lease Rate Differential ("FLRD") of positive 34.7% at
quarter-end
Generates operating and adjusted free cash
flow of $57 million and $12 million, respectively
Delivered 4,695 railcars in the quarter;
backlog of $2.9 billion at quarter-end
Trinity Industries, Inc. (NYSE:TRN) today announced earnings
results for the first quarter ended March 31, 2024.
Financial and Operational
Highlights
- Quarterly total company revenues of $810 million; 26%
improvement year over year
- Both quarterly income from continuing operations per common
diluted share ("EPS") and adjusted EPS of $0.33; $0.26 improvement
in adjusted EPS year over year
- Lease fleet utilization of 97.5% and FLRD of positive 34.7% at
quarter-end
- Railcar deliveries of 4,695 and new railcar orders of
1,880
- Year-to-date cash flow from continuing operations and adjusted
free cash flow after investments and dividends ("Adjusted Free Cash
Flow") were $57 million and $12 million, respectively
2024 Guidance
- Industry deliveries of approximately 40,000 railcars
- Net investment in the lease fleet of $300 million to $400
million
- Operating and administrative capital expenditures of $50
million to $60 million
- EPS of $1.35 to $1.55
- Excludes items outside of our core business operations
Management Commentary
“We are pleased with the progress exhibited in Trinity
Industries’ first quarter results,” said Trinity’s Chief Executive
Officer and President, Jean Savage. “Our results show strong
performance in both segments of our business, demonstrating the
strength of our platform.”
“In our Railcar Leasing and Services segment, our revenue is up
22% year over year, and we expect to continue to see growth as we
re-price the lease fleet upward. Furthermore, our FLRD in the first
quarter was 34.7%, representing a significant lift in market rates
over expiring rates.” Ms. Savage continued, “In the Rail Products
Group, we saw revenues up 14% and operating profit up 82% year over
year driven by higher deliveries and significantly improved
operational and labor efficiencies.”
Ms. Savage concluded, “Our first quarter performance shows the
momentum starting to flow through our business, resulting in better
operations and stronger financial results. This gives us confidence
in our 2024 performance, and we are raising our EPS guidance to a
range of $1.35 to $1.55. Furthermore, we look forward to our
Investor Day on June 25th, where we will share the evolution of our
strategy and update our long term targets."
Consolidated
Financial Summary
Three Months Ended
March 31,
2024
2023
Year over Year – Comparison
($ in millions, except per
share amounts)
Revenues
$
809.6
$
641.7
Higher external deliveries in the Rail
Products Group, and improved lease rates and a higher volume of
external repairs in the Leasing Group
Operating profit
$
115.2
$
69.0
Higher external deliveries in the Rail
Products Group and improved lease rates and a higher volume of
external repairs in the Leasing Group, partially offset by lower
lease portfolio sales volume
Interest expense, net
$
69.1
$
62.1
Higher overall average debt during
2024
Net income from continuing operations
attributable to Trinity Industries, Inc.
$
28.0
$
7.5
EBITDA (1)
$
188.2
$
144.1
Effective tax expense (benefit) rate
25.8
%
(217.0
)%
2023 includes benefits related to the
release of residual taxes out of AOCI and changes in valuation
allowances, offset by the remeasurement of net deferred tax
liabilities as a result of acquisition activity
Diluted EPS – GAAP
$
0.33
$
0.09
Diluted EPS – Adjusted (1)
$
0.33
$
0.07
Net cash provided by operating activities
– continuing operations
$
56.5
$
102.5
Higher receivables, partially offset by
lower inventories associated with railcar deliveries
Adjusted Free Cash Flow (1)
$
11.7
$
36.2
Net lease fleet investment
$
123.3
$
134.8
Returns of capital to stockholders
$
23.0
$
21.1
(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 $798.8 million as of March 31,
2024.
Business Group
Summary
Three Months Ended
March 31,
2024
2023
Year over Year – Comparison
($ in millions)
Railcar Leasing and Services
Group
Revenues
$
285.2
$
232.9
Higher volume of repairs completed for
third parties, improved lease rates, and net additions to the lease
fleet
Operating profit
$
100.3
$
84.6
Improved lease rates and a higher volume
of external repairs, partially offset by lower lease portfolio
sales volume. Includes insurance recoveries of $1.2 million in the
prior year period.
Lease portfolio sales
$
2.1
$
13.5
Fleet utilization (1)
97.5
%
98.2
%
FLRD (2)
+34.7
%
+44.3
%
Continued strength in current lease
rates
Owned lease fleet (in units) (1)
110,205
108,865
Investor-owned lease fleet (in units)
32,995
33,420
Rail Products Group
Revenues
$
667.4
$
587.6
Higher deliveries
Operating profit
$
43.8
$
24.1
Higher deliveries and improved operational
and labor efficiencies
Operating profit margin
6.6
%
4.1
%
New railcars:
Deliveries (in units)
4,695
4,045
2024 includes virtually all of the
railcars impacted by the Q4 2023 U.S.-Mexico border closure and
congestion
Orders (in units)
1,880
2,690
Order value
$
259.5
$
300.8
Backlog value
$
2,938.9
$
3,705.9
Sustainable railcar conversions:
Deliveries (in units)
675
590
Backlog (in units)
445
2,085
Backlog value
$
35.8
$
173.7
Eliminations
Revenues eliminations
$
(143.0
)
$
(178.8
)
Operating profit eliminations
$
(2.4
)
$
(14.1
)
Corporate and other
Selling, engineering, and administrative
expenses
$
26.5
$
26.0
March 31,
2024
December 31,
2023
Loan-to-value ratio
Wholly-owned subsidiaries
65.7
%
64.4
%
(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 May
1, 2024 to discuss its first quarter results. To listen to the
call, please visit the Investor Relations section of the Company's
website at www.trin.net and access the Events & Presentations
webpage, or the live call can be accessed at 1-888-317-6003 with
the conference passcode "1418632". 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 "2896186" until 11:59 p.m. Eastern on May 8,
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 First 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; railcar maintenance and
modifications; and other railcar logistics products and services.
Beginning January 1, 2024, Trinity reports its financial results in
two reportable business segments: (1) Railcar Leasing and Services
Group, formerly the Railcar Leasing and Management Services Group,
and (2) 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
March 31,
2024
2023
Revenues
$
809.6
$
641.7
Operating costs:
Cost of revenues
644.9
538.5
Selling, engineering, and administrative
expenses
52.3
49.9
Gains on dispositions of property:
Lease portfolio sales
2.1
13.5
Other
0.7
1.8
Restructuring activities, net
—
(0.4
)
694.4
572.7
Operating profit
115.2
69.0
Interest expense, net
69.1
62.1
Other, net
3.4
1.6
Income from continuing operations before
income taxes
42.7
5.3
Provision (benefit) for income taxes:
Current
13.1
0.9
Deferred
(2.1
)
(12.4
)
11.0
(11.5
)
Income from continuing operations
31.7
16.8
Loss from discontinued operations, net of
income taxes
(4.3
)
(3.1
)
Net income
27.4
13.7
Net income attributable to noncontrolling
interest
3.7
9.3
Net income attributable to Trinity
Industries, Inc.
$
23.7
$
4.4
Basic earnings per common share:
Income from continuing operations
$
0.34
$
0.09
Loss from discontinued operations
(0.05
)
(0.04
)
Basic net income attributable to Trinity
Industries, Inc.
$
0.29
$
0.05
Diluted earnings per common share:
Income from continuing operations
$
0.33
$
0.09
Loss from discontinued operations
(0.05
)
(0.04
)
Diluted net income attributable to Trinity
Industries, Inc.
$
0.28
$
0.05
Weighted average number of shares
outstanding:
Basic
81.6
80.8
Diluted
83.5
83.2
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)
March 31,
2024
December 31,
2023
ASSETS
Cash and cash equivalents
$
118.8
$
105.7
Receivables, net of allowance
484.0
363.5
Income tax receivable
4.9
5.2
Inventories
643.1
684.3
Restricted cash
116.3
129.4
Property, plant, and equipment, net:
Railcars in our lease fleet:
Wholly-owned subsidiaries
6,002.6
5,931.8
Partially-owned subsidiaries
1,458.0
1,473.2
Deferred profit on railcar products
sold
(743.1
)
(750.2
)
Operating and administrative assets
342.1
350.0
7,059.6
7,004.8
Goodwill
221.5
221.5
Other assets
431.6
392.1
Total assets
$
9,079.8
$
8,906.5
LIABILITIES AND STOCKHOLDERS'
EQUITY
Accounts payable
$
335.9
$
305.3
Accrued liabilities
328.3
302.3
Debt:
Recourse
795.0
794.6
Non-recourse:
Wholly-owned subsidiaries
3,946.0
3,819.2
Partially-owned subsidiaries
1,126.0
1,140.4
5,867.0
5,754.2
Deferred income taxes
1,104.1
1,103.5
Other liabilities
156.0
165.7
Stockholders' equity:
Trinity Industries, Inc.
1,049.3
1,037.1
Noncontrolling interest
239.2
238.4
1,288.5
1,275.5
Total liabilities and stockholders'
equity
$
9,079.8
$
8,906.5
Trinity Industries, Inc. Condensed
Consolidated Statements of Cash Flows (in millions)
(unaudited)
Three Months Ended
March 31,
2024
2023
Operating activities:
Net cash provided by operating activities
– continuing operations
$
56.5
$
102.5
Net cash used in operating activities –
discontinued operations
(4.3
)
(3.1
)
Net cash provided by operating
activities
52.2
99.4
Investing activities:
Proceeds from lease portfolio sales
24.2
56.7
Capital expenditures – lease fleet
(147.5
)
(191.5
)
Capital expenditures – operating and
administrative
(4.6
)
(7.1
)
Acquisitions, net of cash acquired
—
(66.2
)
Other investing activities
3.9
5.0
Net cash used in investing activities
(124.0
)
(203.1
)
Financing activities:
Net proceeds from (repayments of) debt
106.1
96.7
Dividends paid to common shareholders
(23.0
)
(21.1
)
Other financing activities
(11.3
)
(3.2
)
Net cash provided by financing
activities
71.8
72.4
Net increase (decrease) in cash, cash
equivalents, and restricted cash
—
(31.3
)
Cash, cash equivalents, and restricted
cash at beginning of period
235.1
294.3
Cash, cash equivalents, and restricted
cash at end of period
$
235.1
$
263.0
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 gains on dispositions of other
property; restructuring activities, net; interest expense, net; 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 March 31,
2024
GAAP
Interest
expense, net (1)
Adjusted
Operating profit
$
115.2
$
—
$
115.2
Income from continuing operations before
income taxes
$
42.7
$
(0.4
)
$
42.3
Provision (benefit) for income taxes
$
11.0
$
(0.1
)
$
10.9
Income from continuing operations
$
31.7
$
(0.3
)
$
31.4
Net income from continuing operations
attributable to Trinity Industries, Inc.
$
28.0
$
(0.3
)
$
27.7
Diluted weighted average shares
outstanding
83.5
83.5
Diluted income from continuing operations
per common share attributable to Trinity Industries, Inc.
$
0.33
$
0.33
Three Months Ended March 31,
2023
GAAP
Gains on
dispositions
of property –
other (2)
Restructuring
activities, net
Interest
expense,
net (1)
Adjusted
Operating profit
$
69.0
$
(1.2
)
$
(0.4
)
$
—
$
67.4
Income from continuing operations before
income taxes
$
5.3
$
(1.2
)
$
(0.4
)
$
(0.4
)
$
3.3
Provision (benefit) for income taxes
$
(11.5
)
$
(0.4
)
$
(0.1
)
$
(0.1
)
$
(12.1
)
Income from continuing operations
$
16.8
$
(0.8
)
$
(0.3
)
$
(0.3
)
$
15.4
Net income from continuing operations
attributable to Trinity Industries, Inc.
$
7.5
$
(0.8
)
$
(0.3
)
$
(0.3
)
$
6.1
Diluted weighted average shares
outstanding
83.2
83.2
Diluted income from continuing operations
per common share attributable to Trinity Industries, Inc.
$
0.09
$
0.07
(1)
Represents interest income accretion
related to a seller-financing agreement associated with the sale of
certain non-operating assets.
(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.
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 operating and administrative
activities, 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.
Three Months Ended
March 31,
2024
2023
Net cash provided by operating activities
– continuing operations
$
56.5
$
102.5
Proceeds from lease portfolio sales
24.2
56.7
Capital expenditures – operating and
administrative
(4.6
)
(7.1
)
Dividends paid to common shareholders
(23.0
)
(21.1
)
Equity CapEx for leased railcars
(41.4
)
(94.8
)
Adjusted Free Cash Flow After Investments
and Dividends
$
11.7
$
36.2
Capital expenditures – lease fleet
$
147.5
$
191.5
Less:
Payments to retire debt
(803.8
)
(149.6
)
Proceeds from issuance of debt
909.9
246.3
Net proceeds from (repayments of) debt
106.1
96.7
Equity CapEx for leased railcars
$
41.4
$
94.8
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 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
March 31,
2024
2023
Net income
$
27.4
$
13.7
Less: Loss from discontinued operations,
net of income taxes
(4.3
)
(3.1
)
Income from continuing operations
31.7
16.8
Interest expense
72.1
64.8
Provision (benefit) for income taxes
11.0
(11.5
)
Depreciation and amortization expense
73.4
74.0
EBITDA
188.2
144.1
Gains on dispositions of property –
other
—
(1.2
)
Restructuring activities, net
—
(0.4
)
Interest income
(0.4
)
(0.4
)
Adjusted EBITDA
$
187.8
$
142.1
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240501919156/en/
Investor Contact: Leigh Anne Mann Vice President,
Investor Relations Trinity Industries, Inc. (Investors)
214/631-4420
Media Contact: Jack L. Todd Vice President, Public
Affairs Trinity Industries, Inc. (Media Line) 214/589-8909
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