Generates operating and adjusted free cash
flow of $103 million and $36 million, respectively
Reports quarterly GAAP and adjusted earnings
from continuing operations of $0.09 and $0.07 per diluted share,
respectively
Lease fleet utilization of 98.2% and Future
Lease Rate Differential ("FLRD") of positive 44.3% at quarter
end
Delivered 4,045 railcars and received orders
for 2,690 railcars in the quarter; backlog of $3.7 billion at
quarter-end
Trinity Industries, Inc. (NYSE:TRN) today announced earnings
results for the first quarter ended March 31, 2023.
Financial and Operational
Highlights
- Quarterly total company revenues of $642 million; 36%
improvement year over year
- Quarterly income from continuing operations per common diluted
share ("EPS") of $0.09 and quarterly adjusted EPS of $0.07
- Lease fleet utilization of 98.2% and FLRD of positive 44.3% at
quarter end
- Railcar deliveries of 4,045 and new railcar orders of
2,690
- Year-to-date cash flow from continuing operations and adjusted
free cash flow after investments and dividends ("Adjusted Free Cash
Flow") were $103 million and $36 million, respectively
2023 Guidance
- Industry deliveries of 40,000 to 45,000 railcars
- Net investment in the lease fleet of $250 million to $350
million
- Manufacturing capital expenditures of $40 million to $50
million
- Confirming EPS of $1.50 to $1.70
- Excludes items outside of our core business operations
Management Commentary
“The start of 2023 was busy at Trinity as we continued to ramp
up production and optimize our business,” said Trinity’s Chief
Executive Officer and President, Jean Savage. “We also completed
the acquisition of RSI Logistics in the first quarter and have been
very encouraged by customer feedback that reinforces our strategy
to grow this business.”
“In our Railcar Leasing and Management Services Group, lease
rates and utilization improved again. The Future Lease Rate
Differential improved sequentially to 44.3% giving us optimism
about lease rates continuing to increase this year. Additionally,
our lease fleet utilization of 98.2% shows customer demand remains
robust, further supporting strength in this market.”
“While the margins in the Rail Products group continue to
reflect headwinds, we are seeing improvement in hiring and
retention, rail service levels, and supply chain challenges,” Ms.
Savage continued. "This gives us confidence that we will continue
to see margin improvement through the year, and Trinity will take
advantage of the operating leverage in this business.”
Ms. Savage concluded, “We are maintaining our EPS guidance of
$1.50 to $1.70, which reflects revenue and margin improvement
through the year, and we continue to feel optimistic about what
Trinity can accomplish in 2023.”
Consolidated Financial
Summary
Three Months Ended
March 31,
2023
2022
Year over Year – Comparison
($ in millions, except per
share amounts)
Revenues
$
641.7
$
472.7
Higher volume of, and improved pricing on,
external deliveries in the Rail Products Group
Operating profit
$
69.0
$
54.8
Higher external deliveries in the Rail
Products Group and improved lease rates in the Leasing Group,
partially offset by increased employee-related and other operating
costs
Interest expense, net
$
62.1
$
43.5
Higher interest rates associated with
variable rate debt and higher overall average debt during Q1
2023
Net income from continuing operations
attributable to Trinity Industries, Inc.
$
7.5
$
7.3
EBITDA (1)
$
144.1
$
123.9
Effective tax (benefit) expense rate
(217.0
)%
23.3
%
Current quarter tax rate includes benefits
related to release of residual taxes out of AOCI and changes in
valuation allowances, offset by re-measurement of net deferred tax
liabilities as a result of RSI acquisition
Diluted EPS – GAAP
$
0.09
$
0.09
Diluted EPS – Adjusted (1)
$
0.07
$
0.03
Net cash provided by operating activities
– continuing operations
$
102.5
$
28.5
Working capital improvements relative to
inventory build-up in the prior year
Adjusted Free Cash Flow (1)
$
36.2
$
47.8
Net lease fleet investment
$
134.8
$
13.5
Higher lease fleet investment in the
current year in response to improved market conditions
Returns of capital to stockholders
$
21.1
$
19.1
(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 $452 million as of March 31,
2023.
- Acquired RSI Logistics, a data-centric provider of proprietary
software and logistics and terminal management solutions to the
North American rail industry, for an aggregate purchase price of
$72 million.
Business Group Summary
Three Months Ended
March 31,
2023
2022
Year over Year – Comparison
($ in millions)
Railcar Leasing and Management Services
Group
Leasing and management revenues
$
203.5
$
183.1
Improved lease rates and higher
utilization
Leasing and management operating
profit
$
72.0
$
68.0
Improved lease rates and higher
utilization, partially offset by higher maintenance costs and
increased depreciation
Operating profit on lease portfolio sales
(1)
$
13.5
$
10.5
Higher profits on lease fleet portfolio
sales
Fleet utilization (2)
98.2
%
96.5
%
Future Lease Rate Differential (3)
+44.3
%
+2.4
%
Improvement in current market lease
rates
Owned lease fleet (in units) (2)
108,865
107,090
Growth in the lease fleet, partially
offset by lease fleet portfolio sales
Investor-owned lease fleet (in units)
33,420
29,740
Additional sale to Signal Rail in Q3
2022
Rail Products Group
Revenues
$
637.8
$
391.1
Higher volume of deliveries and favorable
pricing, partially offset by the mix of railcars sold
Revenues eliminations – Lease
subsidiary
$
(199.4
)
$
(101.3
)
Operating profit
$
25.3
$
0.8
Increased deliveries and favorable
pricing, partially offset by higher labor-related costs and the mix
of railcars sold. Includes insurance recoveries of $1.2 million and
$6.4 million in the current and prior year quarters,
respectively
Operating profit eliminations – Lease
subsidiary
$
(16.8
)
$
(8.8
)
Operating profit margin
4.0
%
0.2
%
New railcars:
Deliveries (in units)
4,045
2,470
Orders (in units)
2,690
5,055
Order value
$
300.8
$
634.7
Backlog value
$
3,705.9
$
1,895.4
Sustainable railcar conversions:
Deliveries (in units)
590
445
Backlog (in units)
2,085
1,275
Backlog value
$
173.7
$
128.2
Corporate and other
Selling, engineering, and administrative
expenses
$
26.0
$
22.2
Higher employee-related costs
Gains on dispositions of property
$
—
$
(6.5
)
Prior year quarter includes gain on
disposition of non-operating facilities
March 31, 2023
December 31, 2022
Loan-to-value ratio
Wholly-owned subsidiaries, excluding
corporate revolving credit facility
65.0
%
65.7
%
(1) Excludes $1.3 million selling profit
associated with sales-type leases for the three months ended March
31, 2022.
(2) Includes wholly-owned railcars,
partially-owned railcars, and railcars under leased-in
arrangements.
(3) FLRD calculates the implied change in
lease rates for railcar leases expiring over the next four
quarters. The FLRD assumes that these expiring rates 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
2, 2023 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 "4840816". 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 "2259191" until 11:59 p.m. Eastern on May 9,
2023.
Additionally, the Company will provide Supplemental Materials to
accompany the earnings conference call. The materials will be
accessible both within the webcast and on Trinity's Investor
Relations website under the Events and Presentations portion of the
site along with the 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 reporting results prepared in
accordance with GAAP and, as calculated, may not be comparable to
other similarly titled measures for other companies. For each
non-GAAP financial measure, a reconciliation to the most comparable
GAAP measure has been included in the accompanying tables. When
forward-looking non-GAAP measures are provided, quantitative
reconciliations to the most directly comparable GAAP measures are
not provided because management cannot, without unreasonable
effort, predict the timing and amounts of certain items included in
the computations of each of these measures. These factors include,
but are not limited to: the product mix of expected railcar
deliveries; the timing and amount of significant transactions and
investments, such as lease portfolio sales, capital expenditures,
and returns of capital to stockholders; and the amount and timing
of certain other items outside the normal course of our core
business operations.
About Trinity Industries
Trinity Industries, Inc., headquartered in Dallas, Texas, owns
businesses that are leading providers of rail transportation
products and services in North America. Our businesses market their
railcar products and services under the trade name TrinityRail®.
The TrinityRail platform provides railcar leasing and management
services; railcar manufacturing, maintenance and modifications; and
other railcar logistics products and services. Trinity reports its
financial results in two reportable segments: the Railcar Leasing
and Management Services Group and the Rail Products Group. For more
information, visit: www.trin.net.
Some statements in this release, which are not historical facts,
are “forward-looking statements” as defined by the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements include statements about Trinity's estimates,
expectations, beliefs, intentions or strategies for the future, and
the assumptions underlying these forward-looking statements,
including, but not limited to, future financial and operating
performance, future opportunities and any other statements
regarding events or developments that Trinity believes or
anticipates will or may occur in the future. Trinity uses the words
“anticipates,” “assumes,” “believes,” “estimates,” “expects,”
“intends,” “forecasts,” “may,” “will,” “should,” “guidance,”
“projected,” “outlook,” and similar expressions to identify these
forward-looking statements. Forward-looking statements speak only
as of the date of this release, and Trinity expressly disclaims any
obligation or undertaking to disseminate any updates or revisions
to any forward-looking statement contained herein to reflect any
change in Trinity’s expectations with regard thereto or any change
in events, conditions or circumstances on which any such statement
is based, except as required by federal securities laws.
Forward-looking statements involve risks and uncertainties that
could cause actual results to differ materially from historical
experience or our present expectations, including but not limited
to risks and uncertainties regarding economic, competitive,
governmental, and technological factors affecting Trinity’s
operations, markets, products, services and prices, and such
forward-looking statements are not guarantees of future
performance. For a discussion of such risks and uncertainties,
which could cause actual results to differ from those contained in
the forward-looking statements, see “Risk Factors” and
“Forward-Looking Statements” in Trinity’s Annual Report on Form
10-K for the most recent fiscal year, as may be revised and updated
by Trinity’s Quarterly Reports on Form 10-Q, and Trinity’s Current
Reports on Form 8-K.
Trinity Industries, Inc.
Condensed Consolidated Statements of
Operations
(in millions, except per share
amounts)
(unaudited)
Three Months Ended
March 31,
2023
2022
Revenues
$
641.7
$
472.7
Operating costs:
Cost of revenues
538.5
398.5
Selling, engineering, and administrative
expenses
49.9
44.7
Gains on dispositions of property:
Lease portfolio sales
13.5
11.8
Other
1.8
13.5
Restructuring activities, net
(0.4
)
—
572.7
417.9
Operating profit
69.0
54.8
Interest expense, net
62.1
43.5
Other, net
1.6
(1.6
)
Income from continuing operations before
income taxes
5.3
12.9
Provision (benefit) for income taxes:
Current
0.9
1.8
Deferred
(12.4
)
1.2
(11.5
)
3.0
Income from continuing operations
16.8
9.9
Loss from discontinued operations, net of
income taxes
(3.1
)
(6.9
)
Loss on sale of discontinued operations,
net of income taxes
—
(1.1
)
Net income
13.7
1.9
Net income attributable to noncontrolling
interest
9.3
2.6
Net income (loss) attributable to Trinity
Industries, Inc.
$
4.4
$
(0.7
)
Basic earnings per common share:
Income from continuing operations
$
0.09
$
0.09
Loss from discontinued operations
(0.04
)
(0.10
)
Basic net income (loss) attributable to
Trinity Industries, Inc.
$
0.05
$
(0.01
)
Diluted earnings per common share:
Income from continuing operations
$
0.09
$
0.09
Loss from discontinued operations
(0.04
)
(0.10
)
Diluted net income (loss) attributable to
Trinity Industries, Inc.
$
0.05
$
(0.01
)
Weighted average number of shares
outstanding:
Basic
80.8
82.9
Diluted
83.2
85.5
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 (loss) 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, 2023
December 31, 2022
ASSETS
Cash and cash equivalents
$
81.9
$
79.6
Receivables, net of allowance
333.2
323.5
Income tax receivable
10.1
7.8
Inventories
632.7
629.4
Restricted cash
181.1
214.7
Property, plant, and equipment, net:
Manufacturing/Corporate
341.9
340.7
Leasing:
Wholly-owned subsidiaries
5,888.1
5,788.1
Partially-owned subsidiaries
1,509.9
1,521.3
Deferred profit on railcars sold to the
Leasing Group
(763.4
)
(763.3
)
6,976.5
6,886.8
Goodwill
222.3
195.9
Other assets
401.4
386.6
Total assets
$
8,839.2
$
8,724.3
LIABILITIES AND STOCKHOLDERS'
EQUITY
Accounts payable
$
314.5
$
287.5
Accrued liabilities
273.7
261.0
Debt:
Recourse
704.3
624.1
Non-recourse:
Wholly-owned subsidiaries
3,826.9
3,800.7
Partially-owned subsidiaries
1,176.4
1,182.8
5,707.6
5,607.6
Deferred income taxes
1,133.2
1,134.7
Other liabilities
159.8
163.9
Stockholders' equity:
Trinity Industries, Inc.
994.2
1,012.4
Noncontrolling interest
256.2
257.2
1,250.4
1,269.6
Total liabilities and stockholders'
equity
$
8,839.2
$
8,724.3
Trinity Industries, Inc.
Condensed Consolidated Statements of
Cash Flows
(in millions)
(unaudited)
Three Months Ended
March 31,
2023
2022
Operating activities:
Net cash provided by operating activities
– continuing operations
$
102.5
$
28.5
Net cash used in operating activities –
discontinued operations
(3.1
)
(8.0
)
Net cash provided by operating
activities
99.4
20.5
Investing activities:
Proceeds from lease portfolio sales
56.7
71.1
Proceeds from dispositions of property and
other assets
4.9
15.6
Capital expenditures – leasing
(191.5
)
(84.6
)
Capital expenditures – manufacturing and
other
(7.1
)
(2.3
)
Acquisitions, net of cash acquired
(66.2
)
—
Proceeds from insurance recoveries
1.2
—
Other
(1.1
)
—
Net cash used in investing activities
(203.1
)
(0.2
)
Financing activities:
Net proceeds from (repayments of) debt
96.7
54.2
Dividends paid to common shareholders
(21.1
)
(19.1
)
Other
(3.2
)
(6.4
)
Net cash provided by financing
activities
72.4
28.7
Net increase (decrease) in cash, cash
equivalents, and restricted cash
(31.3
)
49.0
Cash, cash equivalents, and restricted
cash at beginning of period
294.3
302.4
Cash, cash equivalents, and restricted
cash at end of period
$
263.0
$
351.4
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). 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 reporting 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,
2023
GAAP
Gains on dispositions of
property – other (1)
Restructuring activities,
net
Interest expense, net
(2)
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
Three Months Ended March 31,
2022
GAAP
Gains on dispositions of
property – other (1)
Interest expense, net
(2)
Adjusted
Operating profit
$
54.8
$
(6.4
)
$
—
$
48.4
Income from continuing operations before
income taxes
$
12.9
$
(6.4
)
$
(0.3
)
$
6.2
Provision (benefit) for income taxes
$
3.0
$
(1.6
)
$
(0.1
)
$
1.3
Income from continuing operations
$
9.9
$
(4.8
)
$
(0.2
)
$
4.9
Net income from continuing operations
attributable to Trinity Industries, Inc.
$
7.3
$
(4.8
)
$
(0.2
)
$
2.3
Diluted weighted average shares
outstanding
85.5
85.5
Diluted income from continuing operations
per common share attributable to Trinity Industries, Inc.
$
0.09
$
0.03
(1) 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.
(2) Represents interest income accretion
related to a seller-financing agreement associated with the sale of
certain non-operating assets.
Adjusted Free Cash Flow
Adjusted Free Cash Flow After Investments and Dividends
("Adjusted Free Cash Flow") is a non-GAAP financial measure. We
believe Adjusted Free Cash Flow is useful to both management and
investors as it provides a relevant measure of liquidity and a
useful basis for assessing our ability to fund our operations and
repay our debt. Adjusted Free Cash Flow is reconciled to net cash
provided by operating activities from continuing operations, the
most directly comparable GAAP financial measure, in the following
table. Adjusted Free Cash Flow is defined as net cash provided by
operating activities from continuing operations as computed in
accordance with GAAP, plus cash proceeds from lease portfolio
sales, less capital expenditures for manufacturing, dividends paid,
and Equity CapEx for leased railcars. Equity CapEx for leased
railcars is defined as leasing capital expenditures, adjusted to
exclude net proceeds from (repayments of) recourse and non-recourse
debt. Non-GAAP measures should not be considered in isolation or as
a substitute for our reporting 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,
2023
2022
Net cash provided by operating activities
– continuing operations
$
102.5
$
28.5
Proceeds from lease portfolio sales
56.7
71.1
Capital expenditures – manufacturing and
other
(7.1
)
(2.3
)
Dividends paid to common stockholders
(21.1
)
(19.1
)
Equity CapEx for leased railcars
(94.8
)
(30.4
)
Adjusted Free Cash Flow After Investments
and Dividends
$
36.2
$
47.8
Capital expenditures – leasing
$
191.5
$
84.6
Less:
Payments to retire debt
(149.6
)
(73.0
)
Proceeds from issuance of debt
246.3
127.2
Net proceeds from (repayments of) debt
96.7
54.2
Equity CapEx for leased railcars
$
94.8
$
30.4
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 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 reporting 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,
2023
2022
Net income
$
13.7
$
1.9
Less: Loss from discontinued operations,
net of income taxes
(3.1
)
(6.9
)
Less: Loss on sale of discontinued
operations, net of income taxes
—
(1.1
)
Income from continuing operations
$
16.8
$
9.9
Interest expense
64.8
44.1
Provision (benefit) for income taxes
(11.5
)
3.0
Depreciation and amortization expense
74.0
66.9
EBITDA
$
144.1
$
123.9
Gains on dispositions of property –
other
(1.2
)
(6.4
)
Restructuring activities, net
(0.4
)
—
Interest income
(0.4
)
(0.3
)
Adjusted EBITDA
$
142.1
$
117.2
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230502005370/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
Grafico Azioni Trinity Industries (NYSE:TRN)
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