Reports significant year over year growth in
revenue, operating profit, and EPS
Generates year to date operating and free cash
flow before leasing investment of $164.0 million and $214.9
million, respectively
Returns $117 million of capital to stockholders
in the third quarter
Narrows 2019 earnings guidance range
Trinity Industries, Inc. (NYSE:TRN) today announced earnings
results for the third quarter ended September 30, 2019.
Financial and Operational Highlights -
Third Quarter 2019 (as of September 30, 2019):
- Quarterly total company revenue of $813.6 million, reflecting
growth of 34.1% year over year
- Quarterly earnings from continuing operations per common
diluted share ("EPS") of $0.39, an increase of 105% year over
year
- Quarterly revenues from leasing and management services of
$190.1 million with a 42.0% operating profit margin
- Growth of the wholly-owned and partially-owned lease fleet to
102,090 units, bringing the total value of net property, plant and equipment
for the lease fleet (before deferred profit) to $7.4
billion
- Lease fleet utilization of 96.7% at quarter-end
- Rail Products Group quarterly revenues of $723.0 million and a
9.0% operating profit margin
- Rail Products Group quarterly railcar orders and deliveries of
2,530 and 5,320, respectively, resulting in total railcar backlog
of $2.4 billion at quarter-end
- Repurchases of approximately 5.2 million shares at a cost of
$100.9 million
- Successful execution of a $386.5 million secured railcar
financing transaction with a blended coupon average of 2.98%
subsequent to quarter-end
“Trinity’s third quarter financial results significantly
improved year over year due to the growth of our railcar lease
fleet and increased deliveries of new railcars,” said Timothy R.
Wallace, Trinity’s Chief Executive Officer and President. “The 34%
increase in revenues and doubling of earnings per share
reflects TrinityRail’s
ability to improve our financial
performance.”
Mr. Wallace continued, “Demand continued at lower levels during
the third quarter due to economic uncertainty associated with
industrial production and global trade. These factors, combined
with pressure on railcar loading volumes, are impacting railcar
lease rates and utilization as well as orders for new railcars. Our
management team has responded accordingly and is being highly
selective in its originations of new railcar leases. The team has
shifted a portion of new railcar production from 2019 into the
first half of 2020 to facilitate the transition to lower railcar
production next year.”
“Trinity is positioned to successfully navigate through shifts
in market demand. We are highly experienced at both short- and
long-term cycles and are prepared to respond to the needs of our customers. The
recurring revenues associated with long-term leases in our railcar
leasing business provide the company with a predictable level of
steady cash flows. In addition, our management team has been highly
focused on lowering Trinity’s cost of capital and streamlining our operating
structure. We have made good progress in these areas, and
there are various other initiatives underway that we expect to have
a positive effect on the company’s performance in 2020,” Mr.
Wallace concluded.
Consolidated Results
Trinity Industries, Inc. reported net income from continuing
operations attributable to Trinity stockholders of $49.4 million,
or $0.39 per common diluted share, for the third quarter ended
September 30, 2019. Net income from continuing operations
attributable to Trinity stockholders for the same quarter of 2018
was $27.9 million, or $0.19 per common diluted share. Revenues for
the third quarter of 2019 increased to $813.6 million compared with
revenues of $606.9 million for the same quarter of 2018.
Quarterly Business Group
Results
Railcar Leasing and Management Services Group
In the third quarter of 2019, the Leasing Group increased its
revenues and operating profit to $326.4 million and $115.7 million,
respectively, when compared with $227.5 million and $92.2 million,
respectively, in the same quarter of 2018. The increase in the
Leasing Group's revenues was primarily due to a higher volume of
railcars sold from the lease fleet, growth in the lease fleet, and
higher average lease rates when compared to the third quarter of
2018. The wholly-owned and partially-owned lease fleet grew to
102,090 units as of September 30, 2019, an increase of
approximately 7.6% in comparison to September 30, 2018. The
total owned and managed lease
fleet now stands at 126,305 railcars at the end of the third
quarter. The increase in operating profit for the third
quarter was primarily due to higher profits from railcar sales,
growth in the lease fleet, and lower rent expense resulting from
our first quarter purchase of railcars that were previously
financed under a sale-leaseback arrangement. These increases in
profit were partially offset by higher depreciation expense
associated with lease fleet growth. Total sales of leased railcars
were $211.4 million in the third quarter of 2019 compared with
$118.6 million in the third quarter of 2018. These totals include
sales of railcars owned for more than one year that are not
reported as revenues, as well as railcars sold under sales-type
leases. Supplemental information for the Leasing Group is provided
in the accompanying tables.
Rail Products Group
The Rail Products Group reported revenues of $723.0 million
during the quarter compared with revenues of $497.6 million in the
third quarter of 2018. Operating profit and operating profit margin
for the Rail Products Group increased to $65.4 million and 9.0%,
respectively, in the third quarter of 2019 compared with $28.0
million and 5.6%, respectively, in the third quarter of 2018. The
increase in revenues and operating profit primarily resulted from
higher railcar deliveries, favorable railcar pricing, and product
mix changes, as well as growth in our maintenance services
business compared to the prior
year period. As a result of softening railcar demand, as
well as operational disruptions and capacity expansion delays
during the quarter, the Company
reduced its production schedule for the third quarter and
the year and shifted these railcar deliveries to 2020. The Rail
Products Group received orders for 2,530 railcars with a value of
$259.2 million and delivered 5,320 railcars during the third
quarter of 2019, compared with orders for 7,725 railcars and
deliveries of 3,990 railcars, respectively, in the same quarter
last year. In addition, the Rail Products Group reported negative
adjustments to the railcar backlog of 430 railcars reflecting a
cancellation due to the financial condition of a Leasing customer,
as well as a negotiated removal of railcars from backlog in which
the Company received compensation for terminating the agreement.
The railcar backlog in the Rail Products Group decreased during the
quarter to $2.4 billion as of September 30, 2019, representing
19,950 railcars, compared with a railcar backlog of $2.9 billion as
of June 30, 2019, representing 23,170 railcars.
All Other Group
In the third quarter of 2019, the All Other Group, which
primarily includes the results of our highway products and
logistics businesses, reported revenues of $90.4 million compared
with revenues of $102.4 million in the third quarter of 2018. The
decrease in revenues was primarily due to decreased demand and
lower shipping volumes in our highway products business. Operating
profit for the All Other Group was $3.9 million for the third
quarter of 2019, compared with operating profit of $9.5 million in
the third quarter of 2018. The decline in operating profit was
primarily related to insurance recoveries and gains on dispositions
of property recognized in the prior year.
Progress on Other 2019
Priorities
Cost Optimization
Throughout 2019, Trinity has implemented various cost-saving
initiatives and has identified actions to further reduce total
spend, with a focus on selling, engineering, and administrative
expenses. Year to date, Corporate
expenses are down $36.9 million, a decrease of 32% year over year,
primarily due to lower litigation-related expenses and cost
optimization efforts. In the fourth quarter, in connection
with the Company's assessment of future needs to support its
go-forward business strategy, the Company anticipates recognizing a
restructuring charge of approximately $10 million to $20 million,
primarily from write-downs related to underutilized assets in our
manufacturing footprint, and employee transition costs. Trinity
currently anticipates that these specific changes will generate
approximately $8 million to $10 million in future cost savings on
an annualized basis. As the Company continues to reposition the
organization to better support the operating structure of
Trinity's rail-focused
strategy and drive innovation and platform efficiency, we
anticipate identifying further cost savings opportunities in
2020.
Balance Sheet Optimization
Subsequent to quarter-end, wholly-owned subsidiaries, Trinity
Industries Leasing Company ("TILC") and Trinity Rail Leasing 2019
LLC, ("TRL-2019”) closed a two-tranche railcar asset-backed
securitization (“Series 2019-2”) in the aggregate amount of $386.5
million with a blended fixed interest rate of approximately 2.98%
and a blended weighted average life of approximately 6.1 years.
This transaction, combined with the initial TRL-2019 Series 2019-1
transaction of $528.3 million which TILC closed in April of this
year, is secured by 13,426 railcars with an appraised fair-market
value of $1,177.0 million, and their associated operating leases.
Both Standard & Poor's Global Ratings and Kroll Bond Rating
Agency rated the Series 2019-2 senior notes with a single “A”
rating. The obligations of the equipment notes are non-recourse to
Trinity and TILC. Net proceeds received from the transaction are
being used to repay approximately $167 million in outstanding
borrowings under the Leasing Group's secured warehouse credit
facility, to repay approximately $125 million in outstanding
borrowings under the Company's revolving credit facility, and for
general corporate purposes.
“Series 2019-2 is the second securitization issuance Trinity has
completed this year and is aligned with our near-term priority of
recapitalizing our balance sheet to lower our cost of capital,”
said Melendy E. Lovett, Senior Vice President and Chief Financial
Officer for Trinity Industries, Inc. “With this securitization, our
loan-to-value ratio on Trinity’s wholly-owned lease fleet increases
to 56%, nearing our short term target of 60-65%. Interest from
investors in Trinity’s securitizations continues to exceed our
expectations and reflects the strong financial performance of these
railcar portfolios over the financing term. Railcar assets are an
attractive long-term investment given the stable and predictable
cash flows from long-term leases. I am pleased that the bond
ratings and investor interest in Trinity’s securitizations continue
to reflect the strength of our diversified portfolio of railcar
assets and strong portfolio management.”
Capital Allocation - Business Investment
Year to date, Trinity
has invested $679.3 million in railcars for the growth of the
leased railcar portfolio, net of proceeds from the sales of leased
railcars. Additionally, Trinity has invested $63.3 million in
manufacturing and other capital expenditures for both maintenance
and expansion.
Return of Capital to Stockholders
During the third quarter of 2019, the Company repurchased
approximately 5.2 million shares at a cost of $100.9 million,
bringing year to date share repurchases to approximately 10.8
million shares at a cost of $233.9 million. The year to date total
includes approximately 2.6 million shares that were delivered to
the Company in the first quarter of 2019 upon final settlement of
the previously announced accelerated share repurchase program,
which was funded in November 2018. As of September 30, 2019, the
Company had a remaining authorization to repurchase up to $186.1
million, not to exceed 5.5 million shares, of its common stock
under the current repurchase program.
When combining capital returned to stockholders in the form of
dividends and share repurchases, Trinity has returned over $294.7
million to stockholders year to date in 2019.
Planned Pension Plan Termination
On September 4, 2019, our Board of Directors approved the
termination of the Trinity Industries, Inc. Consolidated Pension
Plan (the "Pension Plan"), effective December 31, 2019. Except for
retirees currently receiving payments under the Pension Plan,
participants will have the choice of receiving a single lump sum
payment or an annuity from a highly-rated insurance company that
will pay and administer future benefit payments. The Pension Plan
is currently fully funded and
is expected to be settled between late 2020 and early 2021,
subject to required governmental approvals, and would then result
in the Company no longer having any remaining funded pension plan
obligations.
Upon settlement, we expect to recognize pre-tax pension
settlement charges totaling between $145 million and $195 million.
This range includes: (1) a non-cash charge for the recognition of
all pre-tax actuarial losses accumulated in Accumulated Other
Comprehensive Loss, which totaled approximately $140.4 million
($107.2 million, net of tax) as of December 31, 2018; and (2) a
potential additional cash contribution to settle all of the Pension
Plan’s obligations, which is not expected to exceed $25 million.
The actual amount of the settlement charges and any potential cash
contribution will depend on interest rates, Pension Plan asset
returns, the lump-sum election rate, and other factors.
2019 Guidance
For the full year 2019, the Company has narrowed its annual
guidance range to between $1.17 and $1.27 per common diluted share.
The change in guidance primarily reflects fewer railcar deliveries
expected in 2019, some of which were expected to be added to the
lease fleet, partially offset by a higher level of railcar sales
from the lease fleet. Railcar deliveries for 2019 are now expected
to be between 21,500 and 22,000 railcars. The Leasing Group now
expects a net lease fleet investment of between $850 million and $950 million in 2019.
Additional guidance information is included in the accompanying
tables.
Conference Call
Trinity will hold a conference call at 11:00 a.m. Eastern on
October 24, 2019 to discuss its third 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. An audio replay may be accessed through the
Company’s website or by dialing (402) 220-7205 until 11:59 p.m.
Eastern on October 31, 2019.
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 rail-related businesses
market their railcar products and services under the trade name
TrinityRail®. The TrinityRail integrated platform provides railcar
leasing and management services, as well as railcar manufacturing,
maintenance and modifications. Trinity also owns businesses engaged
in the manufacture of products used on the nation’s roadways and in
traffic control, as well as logistical and transportation
businesses that provide support services to a variety of industrial
manufacturers. Trinity reports its financial results in three
principal business segments: the Railcar Leasing and Management
Services Group, the Rail Products Group, and the All Other 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 September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Revenues
$
813.6
$
606.9
$
2,154.4
$
1,774.1
Operating costs:
Cost of revenues
649.1
466.5
1,691.0
1,348.3
Selling, engineering, and administrative
expenses
62.1
75.6
191.5
224.6
Gains (losses) on dispositions of
property:
Net gains on railcar lease fleet sales
owned more than one year at the time of sale
18.1
9.4
44.7
21.0
Other
(0.2
)
1.0
2.5
3.1
693.3
531.7
1,835.3
1,548.8
Operating profit
120.3
75.2
319.1
225.3
Interest expense, net
54.0
40.4
160.8
122.9
Other, net
—
(0.4
)
0.2
(3.5
)
Income from continuing operations before
income taxes
66.3
35.2
158.1
105.9
Provision for income taxes
18.2
6.7
41.2
24.9
Income from continuing operations
48.1
28.5
116.9
81.0
Income (loss) from discontinued
operations, net of income taxes
(0.4
)
(0.2
)
(2.3
)
54.4
Net income
47.7
28.3
114.6
135.4
Net income (loss) attributable to
noncontrolling interest
(1.3
)
0.6
(1.4
)
3.4
Net income attributable to Trinity
Industries, Inc.
$
49.0
$
27.7
$
116.0
$
132.0
Basic earnings per common share:
Income from continuing operations
$
0.39
$
0.19
$
0.91
$
0.52
Income (loss) from discontinued
operations
—
—
(0.02
)
0.37
Basic net income attributable to Trinity
Industries, Inc.
$
0.39
$
0.19
$
0.89
$
0.89
Diluted earnings per common share:
Income from continuing operations
$
0.39
$
0.19
$
0.90
$
0.51
Income (loss) from discontinued
operations
—
—
(0.02
)
0.36
Diluted net income attributable to Trinity
Industries, Inc.
$
0.39
$
0.19
$
0.88
$
0.87
Weighted average number of shares
outstanding:
Basic
124.7
145.0
127.6
146.1
Diluted
126.0
145.8
129.2
148.8
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; therefore, the two-class method may
result in a lower earnings per share than is calculated from the
face of the income statement.
Trinity Industries, Inc.
Condensed Segment Data
(in millions)
(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
Revenues:
2019
2018
2019
2018
Railcar Leasing and Management Services
Group
$
326.4
$
227.5
$
803.9
$
615.5
Rail Products Group
723.0
497.6
2,038.9
1,651.9
All Other
90.4
102.4
265.3
271.9
Segment Totals before Eliminations
1,139.8
827.5
3,108.1
2,539.3
Eliminations - Lease subsidiary
(314.0
)
(207.4
)
(913.0
)
(732.0
)
Eliminations - Other
(12.2
)
(13.2
)
(40.7
)
(33.2
)
Consolidated Total
$
813.6
$
606.9
$
2,154.4
$
1,774.1
Three Months Ended September
30,
Nine Months Ended September
30,
Operating profit (loss):
2019
2018
2019
2018
Railcar Leasing and Management Services
Group
$
115.7
$
92.2
$
306.3
$
255.1
Rail Products Group
65.4
28.0
184.0
128.0
All Other
3.9
9.5
16.7
27.7
Segment Totals before Eliminations and
Corporate Expenses
185.0
129.7
507.0
410.8
Corporate
(23.9
)
(37.4
)
(78.1
)
(115.0
)
Eliminations - Lease subsidiary
(40.7
)
(18.1
)
(109.5
)
(71.3
)
Eliminations - Other
(0.1
)
1.0
(0.3
)
0.8
Consolidated Total
$
120.3
$
75.2
$
319.1
$
225.3
Trinity Industries, Inc.
Selected Financial Information -
Leasing Group
(in millions, except lease portfolio
data)
(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Revenues:
Leasing and management
$
190.1
$
175.9
$
566.6
$
534.7
Sales of railcars owned one year or less
at the time of sale(1) (2)
136.3
51.6
237.3
80.8
Total revenues
$
326.4
$
227.5
$
803.9
$
615.5
Operating profit(3):
Leasing and management
$
79.8
$
69.7
$
234.6
$
216.6
Railcar sales(1):
Railcars owned one year or less at the
time of sale
17.8
13.1
27.0
17.5
Railcars owned more than one year at the
time of sale
18.1
9.4
44.7
21.0
Total operating profit
$
115.7
$
92.2
$
306.3
$
255.1
Operating profit margin:
Leasing and management operating
margin
42.0
%
39.6
%
41.4
%
40.5
%
Railcar sales
*
*
*
*
Total operating profit margin
35.4
%
40.5
%
38.1
%
41.4
%
Selected expense information:
Depreciation
$
59.4
$
48.8
$
171.6
$
140.9
Maintenance and compliance
$
24.9
$
24.1
$
79.2
$
75.5
Rent
$
3.8
$
9.7
$
13.6
$
29.7
Selling, engineering, and administrative
expenses
$
10.7
$
11.9
$
36.2
$
36.7
Interest
$
50.0
$
37.4
$
146.4
$
101.2
September 30, 2019
September 30, 2018
Number of railcars:
Wholly-owned
77,485
70,220
Partially-owned
24,605
24,650
102,090
94,870
Managed (third-party owned)
24,215
27,160
126,305
122,030
Fleet utilization (Company-owned
railcars)
96.7
%
97.6
%
Nine Months Ended September
30,
2019
2018
Proceeds from sales of leased
railcars:
Railcars owned one year or less at the
time of sale (2)
$
237.3
$
80.8
Railcars owned more than one year at the
time of sale
175.0
123.4
$
412.3
$
204.2
* Not meaningful
(1)
The Company recognizes sales of railcars
from the lease fleet which have been owned by the lease fleet for
one year or less as revenue. Sales of railcars from the lease fleet
which have been owned by the lease fleet for more than one year are
recognized as a net gain or loss from the disposal of a long-term
asset.
(2)
Includes revenues associated with
sales-type leases of $26.3 million and $60.5 million, respectively,
for the three and nine months ended September 30, 2019.
(3)
Operating profit includes: depreciation;
maintenance and compliance; rent; and selling, engineering, and
administrative expenses. Amortization of deferred profit on
railcars sold from the Rail Group to the Leasing Group is included
in the operating profit 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)
September 30, 2019
December 31, 2018
ASSETS
Cash and cash equivalents
$
97.6
$
179.2
Receivables, net of allowance
304.7
276.6
Income tax receivable
21.1
40.4
Inventories
632.9
524.7
Restricted cash
117.5
171.6
Property, plant, and equipment, net
6,916.7
6,334.4
Goodwill
208.8
208.8
Other assets
343.8
253.5
Total assets
$
8,643.1
$
7,989.2
LIABILITIES AND STOCKHOLDERS'
EQUITY
Accounts payable
$
250.8
$
212.1
Accrued liabilities
368.9
368.3
Debt
4,685.2
4,029.2
Deferred income
—
17.7
Deferred income taxes
784.1
743.1
Other liabilities
94.8
56.8
Stockholders' equity:
Trinity Industries, Inc.
2,110.6
2,210.8
Noncontrolling interest
348.7
351.2
2,459.3
2,562.0
Total liabilities and stockholders'
equity
$
8,643.1
$
7,989.2
Trinity Industries, Inc.
Additional Balance Sheet
Information
(in millions)
(unaudited)
September 30, 2019
December 31, 2018
Property, Plant, and Equipment
Manufacturing/Corporate:
Property, plant, and equipment
$
1,013.8
$
963.2
Accumulated depreciation
(617.5
)
(592.3
)
396.3
370.9
Leasing:
Wholly-owned subsidiaries:
Machinery and other
13.8
13.5
Equipment on lease
6,677.9
5,934.8
Accumulated depreciation
(1,094.7
)
(971.8
)
5,597.0
4,976.5
Partially-owned subsidiaries:
Equipment on lease
2,401.0
2,371.9
Accumulated depreciation
(606.5
)
(557.2
)
1,794.5
1,814.7
Deferred profit on railcars sold to the
Leasing Group
(1,094.7
)
(1,030.0
)
Accumulated amortization
223.6
202.3
(871.1
)
(827.7
)
$
6,916.7
$
6,334.4
September 30, 2019
December 31, 2018
Debt
Corporate - Recourse:
Revolving credit facility
$
75.0
$
—
Senior notes, net of unamortized discount
of $0.2 and $0.3
399.8
399.7
474.8
399.7
Less: unamortized debt issuance costs
(2.1
)
(2.3
)
472.7
397.4
Leasing:
Wholly-owned subsidiaries:
Non-recourse:
Secured railcar equipment notes
1,763.5
1,301.3
TILC warehouse facility
545.8
374.8
Promissory notes
635.4
660.2
2,944.7
2,336.3
Less: unamortized debt issuance costs
(21.5
)
(19.7
)
2,923.2
2,316.6
Partially-owned subsidiaries -
non-recourse:
Secured railcar equipment notes
1,300.6
1,327.9
Less: unamortized debt issuance costs
(11.3
)
(12.7
)
1,289.3
1,315.2
$
4,685.2
$
4,029.2
Trinity Industries, Inc.
Additional Balance Sheet
Information
($ in millions)
(unaudited)
September 30, 2019
December 31, 2018
Leasing Debt Summary
Total Recourse Debt
$
—
$
—
Total Non-Recourse Debt
4,212.5
3,631.8
$
4,212.5
$
3,631.8
Total Leasing Debt
Wholly-owned subsidiaries
$
2,923.2
$
2,316.6
Partially-owned subsidiaries
1,289.3
1,315.2
$
4,212.5
$
3,631.8
Equipment on Lease(1)
Wholly-owned subsidiaries
$
5,597.0
$
4,976.5
Partially-owned subsidiaries
1,794.5
1,814.7
$
7,391.5
$
6,791.2
Total Leasing Debt as a % of Equipment on
Lease
Wholly-owned subsidiaries
52.2
%
46.6
%
Partially-owned subsidiaries
71.8
%
72.5
%
Combined
57.0
%
53.5
%
(1) Excludes net deferred profit on
railcars sold to the Leasing Group.
Trinity Industries, Inc.
Condensed Consolidated Statements of
Cash Flows
(in millions)
(unaudited)
Nine Months Ended September
30,
2019
2018
Operating activities:
Net income
$
114.6
$
135.4
(Income) loss from discontinued
operations, net of income taxes
2.3
(54.4
)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
210.5
184.3
Provision for deferred income taxes
38.5
36.4
Net gains on railcar lease fleet sales
owned more than one year at the time of sale
(44.7
)
(21.0
)
Other
25.0
32.4
Changes in operating assets and
liabilities:
(Increase) decrease in receivables,
inventories, and other assets
(185.6
)
(169.4
)
Increase (decrease) in accounts payable,
accrued liabilities, and other liabilities
3.4
35.8
Net cash provided by operating activities
– continuing operations
164.0
179.5
Net cash provided by operating activities
– discontinued operations
—
140.4
Net cash provided by operating
activities
164.0
319.9
Investing activities:
Proceeds from railcar lease fleet sales
owned more than one year at the time of sale
175.0
123.4
Proceeds from disposition of property and
other assets
19.5
6.9
Capital expenditures – leasing, net of
sold lease fleet railcars owned one year or less with a net cost of
$210.3 and $63.2
(854.3
)
(675.8
)
Capital expenditures – manufacturing and
other
(63.3
)
(30.0
)
Decrease in short-term marketable
securities
—
319.5
Other
(0.2
)
(1.9
)
Net cash used in investing activities –
continuing operations
(723.3
)
(257.9
)
Net cash used in investing activities –
discontinued operations
—
(53.1
)
Net cash used in investing activities
(723.3
)
(311.0
)
Financing activities:
Net proceeds (payments) from debt
649.4
(177.6
)
Shares repurchased
(154.9
)
(156.1
)
Dividends paid to common shareholders
(60.8
)
(58.1
)
Other
(10.1
)
(25.0
)
Net cash provided by (used in) financing
activities
423.6
(416.8
)
Net decrease in cash, cash equivalents,
and restricted cash
(135.7
)
(407.9
)
Cash, cash equivalents, and restricted
cash at beginning of period
350.8
973.8
Cash, cash equivalents, and restricted
cash at end of period
$
215.1
$
565.9
Trinity Industries, Inc.
Reconciliations of Non-GAAP Measures
(in millions)
(unaudited)
Free Cash Flow
Free Cash Flow is a non-GAAP financial measure and is defined as
Net Cash Provided by Operating Activities from Continuing
Operations as computed in accordance with GAAP, plus cash proceeds
from sales of leased railcars owned more than one year at the time
of sale, less cash payments for manufacturing capital expenditures
and dividends. We believe 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. 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. 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.
Nine Months Ended September
30,
2019
2018
Net cash provided by operating activities
– continuing operations
$
164.0
$
179.5
Add:
Proceeds from railcar lease fleet sales
owned more than one year at the time of sale
175.0
123.4
Adjusted Net Cash Provided by Operating
Activities
$
339.0
$
302.9
Less:
Capital expenditures - manufacturing and
other
(63.3
)
(30.0
)
Dividends paid to common shareholders
(60.8
)
(58.1
)
Free Cash Flow (before Capital
expenditures – leasing)
$
214.9
$
214.8
EBITDA
“EBITDA” is defined as income from continuing operations plus
interest expense, income taxes, and depreciation and amortization
expense. EBITDA is a non-GAAP financial measure; however, the
amounts included in the EBITDA calculation are derived from amounts
included in our GAAP financial statements. EBITDA is reconciled to
net income, the most directly comparable GAAP financial measure, in
the following table. This information is provided to assist
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 should not be
considered as an alternative to net income as an indicator of our
operating performance, or as an alternative to operating cash flows
as a measure of liquidity. The EBITDA measure presented in this
press release may not be comparable to similarly titled measures by
other companies due to differences in the components of the
calculation.
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Net income
$
47.7
$
28.3
$
114.6
$
135.4
Less: income (loss) from discontinued
operations, net of income taxes
(0.4
)
(0.2
)
(2.3
)
54.4
Income from continuing operations
$
48.1
$
28.5
$
116.9
$
81.0
Add:
Interest expense
55.8
42.8
165.5
132.9
Provision for income taxes
18.2
6.7
41.2
24.9
Depreciation and amortization expense
72.4
64.6
210.5
184.3
EBITDA
$
194.5
$
142.6
$
534.1
$
423.1
Trinity Industries,
Inc.
2019 Full Year Guidance and
Outlook
(unaudited)
Total Company:
Total earnings per share(1)
$1.17 - $1.27 per share
Corporate expense
$105 - $110 million
Interest expense, net
$210 - $220 million
Estimated tax rate
26.5%
Railcar Leasing and Management
Services Group:
Leasing and Management
revenues(2)
$760 - $765 million
Leasing and Management operating
profit(3)
$320 - $325 million
Proceeds from sales of leased
railcars to RIV partners and secondary market(4)
$400 million
Rail Products Group:
Revenue
$3.0 billion
Operating margin
9.0%
Railcar deliveries
21,500 to 22,000 railcars
Revenue elimination from sales to
Leasing Group(5)
$1.4 billion
Operating profit elimination from
sales to Leasing Group(5)
$165 million
All Other Group Operating Profit
(6)
$10 - $15 million
(1)
The range for earnings per share guidance
reflects variability in the point estimates provided above for each
business segment.
(2)
Excludes sales of railcars owned one year
or less at time of sale.
(3)
Excludes operating profit from railcar
sales.
(4)
Excludes approximately $160 million of
sales from transactions that are being accounted for as sales-type
leases; however, the operating profit impact of these transactions
has been factored into our full year 2019 EPS guidance.
(5)
Revenue and operating profit eliminations
from sales to the Leasing Group include maintenance services in
addition to railcar sales.
(6)
Includes Highway Products and Logistics
businesses, as well as facilities engineering and non-operating
plant expenses.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191023005857/en/
Investor & Media Contact: Jessica Greiner Vice
President, Investor Relations and Communications Trinity
Industries, Inc. (Investors) 214/631-4420 (Media Line)
214/589-8909
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