Reports quarterly GAAP and Adjusted earnings
from continuing operations of $1.33 and $0.11 per diluted share,
respectively
Generates operating and free cash flow
before leasing investment of $174 million and $206 million,
respectively
Returns $58 million of capital to
stockholders
Total committed liquidity of $760 million at
the end of first quarter
Trinity Industries, Inc. (NYSE:TRN) today announced earnings
results for the first quarter ended March 31, 2020.
“Coming into 2020, Trinity was rapidly and effectively executing
on a number of optimization efforts to align with the Company’s
go-forward business strategy as well as responding to the decline
in railcar demand from the slowing industrial economy in the
preceding year,” said Jean Savage, Trinity Industries CEO and
President. “Our first quarter results reflect solid progress on a
number of actions taken to improve the performance of the business.
While we have not lost sight of our longer-term goals, the
disruption caused by the coronavirus pandemic is unprecedented, and
our first priority is the health and safety of our employees and
the residents of the communities in which we live and work. The
United States government cited the rail and highway industries as
critical infrastructure to our country’s response efforts to this
pandemic. I applaud our dedicated employees for their service and
commitment to business continuity and keeping critical supply
chains operational for essential goods and services to move across
North America.”
Ms. Savage continued, “We expect COVID-19 to have a negative
impact on demand for our products and services, clouding our
forecasting abilities and limiting visibility into our financial
performance for 2020. Trinity’s leadership team has stress tested
our business model in several scenarios, and we continue to expect
positive cash flow generation from our platform of businesses.
Based on our current knowledge and analysis of market conditions,
we believe the resiliency of Trinity’s rail platform, solid cash
flow generation, and strong liquidity and balance sheet position
the Company to withstand the volatile disruption from the global
pandemic and take advantage of potential opportunities that can
lead to long-term value creation.”
Financial and Operational Highlights —
First Quarter 2020
- Quarterly total company revenues of $615.2 million
- Quarterly earnings from continuing operations per common
diluted share ("EPS") of $1.33, an increase of $1.09 year over year
- Quarterly adjusted EPS was $0.11 and excludes $0.04 per share
related to restructuring activities, $0.03 per share related to the
early redemption of high coupon debt, and $1.29 per share related
to the effects of the Coronavirus Aid, Relief, and Economic
Security Act of 2020 (the "CARES Act")
- Cash flow from operations and free cash flow before leasing
investment of $174 million and $206 million, respectively
- Quarterly revenues from leasing and management services of
$192.0 million with a 43.0% operating profit margin
- Growth of the wholly-owned and partially-owned lease fleet to
103,815 units, with lease fleet utilization of 95.4% at
quarter-end
- Rail Products Group quarterly revenues of $509.4 million and a
4.9% operating profit margin
- Rail Products Group quarterly railcar orders and deliveries of
1,970 and 3,705, respectively, resulting in total railcar backlog
of $1.6 billion at quarter-end
- Repurchases of approximately 1.9 million shares at a cost of
$35.4 million
- Total committed liquidity of $760 million
- Potential additional liquidity of $200 million available under
corporate revolver, subject to certain conditions
Liquidity Update
As of March 31, 2020, we had total committed liquidity of $759.7
million, which includes $213.2 million of unrestricted cash and
cash equivalents, $284.5 million available under our revolving
credit facility, and $262.0 million unused and available under the
TILC warehouse facility. Our revolving credit facility also
contains a $200.0 million expansion feature that can be accessed
subject to certain conditions. Additionally, as a result of certain
provisions of the CARES Act, Trinity anticipates receiving tax
refunds in 2020 totaling approximately $303 million, further
bolstering the Company’s strong liquidity position.
2020 Business Update
The COVID-19 pandemic has had an unprecedented impact on global
and North American social and economic conditions, and the
situation surrounding the virus continues to be volatile and
widespread. Trinity’s manufacturing businesses operate within
critical infrastructure sectors as currently established by the
United States Department of Homeland Security and the Mexico
Federal Ministry of Health and Federal Ministry of Communications
and Transportation. Our rail manufacturing and maintenance
businesses in North America and highway products operations in the
United States continue to operate subject to significantly enhanced
voluntary and government mandated safety protocols designed to
protect the health of our operations workforce. We have taken and
will continue to implement measures to protect the safety of our
employees and closely monitor the impact of COVID-19 on all aspects
of our businesses.
Because Trinity was able to respond to the pandemic without
significant interruptions to the Company’s daily operations, the
pandemic did not materially impact our financial results for the
first quarter of 2020. To date, our Railcar Leasing and Management
Services Group ("Leasing Group") has not experienced any
significant increase in lease payment delinquencies, and has
granted rent payment extensions to a relatively small number of
railcar lessees upon a credit review. We expect there to be
adjustments to our 2020 production plans as customers may need to
defer new railcar equipment investments based on specific business
needs.
In March 2020, Trinity performed a comprehensive review of
potential operational and financial impacts that could stem from
the COVID-19 pandemic, and has taken appropriate measures to
preserve cash and further bolster liquidity. We also reviewed our
goodwill and long-lived assets for potential impairment, and
concluded that no such impairment charges were necessary at the
time. In addition to cost savings initiatives already underway, the
Company eliminated many non-essential expenditures where possible
and rightsized our workforce in response to current operating
conditions. Trinity believes the Company is in a strong liquidity
position with sufficient resources to fund the operating
requirements of the business and other capital allocation and
investment activities planned for 2020.
The Company expects that the economic impacts of the COVID-19
pandemic will negatively impact our financial results in the near
term. Given the uncertainty in the market about the ultimate impact
of COVID-19 on the North American economy, the Company cannot
reasonably estimate the likelihood of the financial impact on
performance. Trinity is closely monitoring business conditions and
will make appropriate adjustments to our operations and related
financial scenarios as necessary.
Consolidated Results
Trinity Industries, Inc. reported net income from continuing
operations attributable to Trinity stockholders of $161.9 million,
or $1.33 per common diluted share, for the first quarter ended
March 31, 2020. Net income from continuing operations attributable
to Trinity stockholders for the same quarter of 2019 was $31.7
million, or $0.24 per common diluted share. On an adjusted basis,
earnings per common diluted share for the first quarter of 2020
decreased year over year to $0.11, which excludes the impacts of
restructuring activities, early redemption of debt, and the tax
impact of the CARES Act. Revenues for the first quarter of 2020
increased slightly to $615.2 million compared with revenues of
$604.8 million for the same quarter of 2019 primarily due to a
higher volume of railcars sold from our lease fleet.
In connection with our assessment of future needs to support our
rail-focused strategy, the Company recognized net pre-tax
restructuring charges of $5.5 million, or approximately $0.04 per
common diluted share, in the first quarter of 2020. The charge was
primarily attributable to write-downs related to our corporate
headquarters and employee transition costs, partially offset by a
gain on the disposition of a non-operating facility.
As a result of the reinstatement of the tax-loss carryback
provisions under the CARES Act, the Company recognized a tax
benefit of $154.7 million, or $1.29 per common diluted share,
during the first quarter. The CARES Act includes loss carryback
provisions that will allow the Company to utilize tax losses
generated in recent years (primarily due to accelerated tax
depreciation associated with our investment in the lease fleet) to
recover taxes paid for the 2013 - 2015 tax years, which were years
of elevated Company performance. The Company's effective tax rates,
excluding the impact of the CARES Act, were 47.7% and 22.2% for the
three months ended March 31, 2020 and 2019, respectively.
Quarterly Business Group
Results
Railcar Leasing and Management Services Group
In the first quarter of 2020, the Leasing Group increased its
revenues and operating profit to $236.3 million and $92.9 million,
respectively, compared with $200.4 million and $85.8 million,
respectively, in the same quarter of 2019. 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, partially offset by lower utilization
when compared to the first quarter of 2019. The company-owned lease
fleet, which includes wholly-owned, partially-owned, and railcars
under sale-leaseback arrangements, grew to 103,815 units as of
March 31, 2020, an increase of approximately 2.8% in comparison to
March 31, 2019. The total owned and managed lease fleet now stands
at 129,655 railcars at the end of the first quarter.
The increase in operating profit for the first quarter was
primarily due to growth in the lease fleet, lower rent expense, and
higher profits from railcar sales. Additionally, operating profit
for the first quarter of 2020 benefited from lower depreciation
expense associated with the previously disclosed revisions to the
estimated useful lives and salvage values of certain railcar types
in our lease fleet, which became effective January 1, 2020. The
decrease in depreciation expense was partially offset by higher
depreciation associated with growth in the lease fleet.
Total sales of leased railcars were $112.8 million in the first
quarter of 2020 compared with $42.7 million in the first quarter of
2019. These totals include sales of railcars owned for more than
one year that are not reported as revenues. Supplemental
information for the Leasing Group is provided in the accompanying
tables.
Rail Products Group
The Rail Products Group reported revenues of $509.4 million
during the quarter, a decrease when compared with revenues of
$627.9 million in the first quarter of 2019. Operating profit and
operating profit margin for the Rail Products Group decreased to
$25.1 million and 4.9%, respectively, in the first quarter of 2020
compared with $47.1 million and 7.5%, respectively, in the first
quarter of 2019. The decrease in revenues and operating profit
primarily resulted from lower railcar deliveries and operational
inefficiencies related to reduced production volumes compared to
the prior year period.
In connection with the implementation of our rail-focused
strategy, in the first quarter of 2020, we realigned certain
logistics and central maintenance support activities previously
reported in the All Other segment to now be presented within the
Rail Products Group. The prior period results have been recast to
reflect these changes and present results on a comparable
basis.
The Rail Products Group received orders for 1,970 railcars with
a value of $227.5 million and delivered 3,705 railcars during the
first quarter of 2020, compared with orders for 3,000 railcars and
deliveries of 4,505 railcars, respectively, in the same quarter
last year. In addition, the Rail Products Group reported first
quarter backlog reductions of 540 railcars because of a change in
the customers' underlying financial condition. These adjustments
remove any remaining exposure in the ending backlog associated with
the crude oil and frac sand markets. The railcar backlog in the
Rail Products Group decreased during the quarter to $1.6 billion as
of March 31, 2020, representing 12,810 railcars, compared with a
railcar backlog of $1.8 billion as of December 31, 2019,
representing 15,085 railcars.
All Other Group
In the first quarter of 2020, the All Other Group, which now
primarily includes the results of our highway products business,
reported revenues of $63.4 million, a slight increase when compared
to revenues of $62.1 million in the first quarter of 2019. The
increase in revenues was primarily due to higher demand and
resulting shipping volumes in our highway products business.
Operating profit for the All Other Group was $9.3 million for the
first quarter of 2020, compared with $10.1 million in the first
quarter of 2019. The decline in operating profit was primarily
related to insurance recoveries recognized in the prior year.
Corporate
Corporate costs for the quarter ended March 31, 2020 were $28.1
million, compared to $23.6 million in the first quarter of 2019.
The increase was primarily the result of consulting costs
associated with realigning our corporate structure to support our
rail-focused strategy. Additionally, corporate costs for the first
quarter of 2019 benefited from a favorable litigation-related
recovery.
Progress on Other 2020
Priorities
Cost Optimization
In the first quarter, in connection with the Company's continued
assessment of future needs to support our rail-focused strategy and
to optimize the performance of the business, the Company recognized
a pre-tax restructuring charge of $5.5 million, primarily from the
write-down of our corporate headquarters campus and employee
transition costs, partially offset by a gain on the sale of a
non-operating facility. Trinity currently anticipates that the
headcount reductions completed in the first quarter of 2020 will
generate approximately $9 million to $10 million in future cost
savings on an annualized basis. These activities, in addition to a
number of actions the Company is taking, will achieve the
previously provided SE&A and other cost reductions goal of $25
million to $30 million for 2020. As the Company continues to
reposition the organization to better support Trinity's
rail-focused strategy and drive innovation and platform efficiency,
we anticipate identifying further cost savings opportunities.
Early Redemption of Leasing Securitization
In late February 2020, Trinity Rail Leasing V, L.P., a limited
partnership (“TRL V”) and a limited purpose, indirect wholly-owned
subsidiary of the Company owned through Trinity Industries Leasing
Company, issued a redemption notice for its 2006 Secured Railcar
Equipment Notes due May 2036, of which $104.7 million was
outstanding at the redemption date. We completed the redemption of
this securitization in March 2020. In connection with the early
redemption, we recognized a loss on extinguishment of debt of $5.0
million, which included a $4.7 million early redemption premium and
$0.3 million in unamortized debt issuance costs. The loss on
extinguishment of debt is included in interest expense in our
Consolidated Statement of Operations. The interest coupon for this
securitization was at 5.9%. The net book value of the assets
securing TRL V at the time of redemption was $303.3 million.
Capital Allocation - Business Investment
During the first quarter of 2020, Trinity invested $60.7 million
in railcars for the growth of the leased railcar portfolio, net of
all proceeds from the sales of leased railcars. Additionally,
Trinity has invested $14.0 million in manufacturing and other
capital expenditures for both maintenance of our ongoing operations
and to support construction in progress for expansion primarily
within our maintenance services business and specialty lining
capacity.
Return of Capital to Stockholders
During the first quarter of 2020, the Company repurchased
approximately 1.9 million shares at a cost of $35.4 million. As of
March 31, 2020, the Company had a remaining authorization to
repurchase up to $89.9 million of its common stock under the
current repurchase program, which expires at the end of 2020.
When combining capital returned to stockholders in the form of
dividends and share repurchases, Trinity returned $58.1 million to
stockholders in the first quarter of 2020.
Conference Call
Trinity will hold a conference call at 12:00 p.m. Eastern on
April 30, 2020 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
203-518-9797 with the conference ID "Trinity". Please call at least
10 minutes in advance to ensure proper connection. An audio replay
may be accessed through the Company’s website or by dialing (402)
220-1111 until 11:59 p.m. Eastern on May 7, 2020.
Additionally, the Company will provide Supplemental Materials to
accompany the earnings conference call. The materials will be
accessible 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.
Quantitative reconciliations of forward-looking non-GAAP measures
to the most directly comparable GAAP measures have not been
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 railcar sales from the lease fleet, capital expenditures,
and returns of capital to shareholders; and the amount and timing
of certain other items outside the normal course of our core
business operations, such as restructuring activities and pension
plan termination charges.
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 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. 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, including the
potential financial and operational impacts of the COVID-19
pandemic. 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,
2020
2019
Revenues
$
615.2
$
604.8
Operating costs:
Cost of revenues
482.0
463.4
Selling, engineering, and administrative
expenses
64.3
59.6
Gains on dispositions of property:
Net gains on railcar lease fleet sales
owned more than one year at the time of sale
8.7
7.9
Other
0.9
2.1
Restructuring activities, net
5.5
—
542.2
513.0
Operating profit
73.0
91.8
Interest expense, net
58.9
51.4
Other, net
(0.8
)
0.3
Income from continuing operations before
income taxes
14.9
40.1
Provision (benefit) for income taxes:
Current
(372.8
)
(0.8
)
Deferred
225.2
9.7
(147.6
)
8.9
Income from continuing operations
162.5
31.2
Loss from discontinued operations, net of
income taxes
(0.2
)
(1.1
)
Net income
162.3
30.1
Net income (loss) attributable to
noncontrolling interest
0.6
(0.5
)
Net income attributable to Trinity
Industries, Inc.
$
161.7
$
30.6
Basic earnings per common share:
Income from continuing operations
$
1.36
$
0.24
Income (loss) from discontinued
operations
—
(0.01
)
Basic net income attributable to Trinity
Industries, Inc.
$
1.36
$
0.23
Diluted earnings per common share:
Income from continuing operations
$
1.33
$
0.24
Income (loss) from discontinued
operations
—
(0.01
)
Diluted net income attributable to Trinity
Industries, Inc.
$
1.33
$
0.23
Weighted average number of shares
outstanding:
Basic
118.0
130.4
Diluted
119.9
132.2
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 participating
securities. The calculation of earnings per share using the
two-class method excludes income attributable to these
participating securities from the numerator and excludes the
dilutive impact of those shares from the denominator; 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 March
31,
Revenues:
2020
2019
Railcar Leasing and Management Services
Group
$
236.3
$
200.4
Rail Products Group
509.4
627.9
All Other
63.4
62.1
Segment Totals before Eliminations
809.1
890.4
Eliminations – Lease Subsidiary
(190.4
)
(270.1
)
Eliminations – Other
(3.5
)
(15.5
)
Consolidated Total
$
615.2
$
604.8
Three Months Ended March
31,
Operating profit (loss):
2020
2019
Railcar Leasing and Management Services
Group
$
92.9
$
85.8
Rail Products Group
25.1
47.1
All Other
9.3
10.1
Segment Totals before Eliminations,
Corporate Expenses, and Restructuring activities
127.3
143.0
Corporate
(28.1
)
(23.6
)
Restructuring activities, net
(5.5
)
—
Eliminations – Lease Subsidiary
(19.9
)
(27.2
)
Eliminations – Other
(0.8
)
(0.4
)
Consolidated Total
$
73.0
$
91.8
Trinity Industries, Inc.
Selected Financial Information –
Leasing Group
($ in millions)
(unaudited)
Three Months Ended March
31,
2020
2019
Revenues:
Leasing and management
$
192.0
$
187.1
Sales of railcars owned one year or less
at the time of sale (1)
44.3
13.3
Total revenues
$
236.3
$
200.4
Operating profit(2):
Leasing and management
$
82.5
$
77.1
Railcar sales(1):
Railcars owned one year or less at the
time of sale
1.7
0.8
Railcars owned more than one year at the
time of sale
8.7
7.9
Total operating profit
$
92.9
$
85.8
Total operating profit margin
39.3
%
42.8
%
Leasing and management operating profit
margin
43.0
%
41.2
%
Selected expense information:
Depreciation (3)
$
53.6
$
54.4
Maintenance and compliance
$
25.9
$
27.8
Rent
$
3.0
$
5.5
Selling, engineering, and administrative
expenses
$
14.3
$
12.8
Interest
$
55.1
$
46.0
Three Months Ended March
31,
2020
2019
Sales of leased railcars:
Railcars owned one year or less at the
time of sale
$
44.3
$
13.3
Railcars owned more than one year at the
time of sale
68.5
29.4
$
112.8
$
42.7
Operating profit on sales of leased
railcars:
Railcars owned one year or less at the
time of sale
$
1.7
$
0.8
Railcars owned more than one year at the
time of sale
8.7
7.9
$
10.4
$
8.7
Operating profit margin on sales of leased
railcars:
Railcars owned one year or less at the
time of sale
3.8
%
6.0
%
Railcars owned more than one year at the
time of sale
12.7
%
26.9
%
Weighted average operating profit margin
on sales of leased railcars
9.2
%
20.4
%
(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) Operating profit includes: depreciation; maintenance and
compliance; rent; and selling, engineering, and administrative
expenses. Amortization of deferred profit on railcars sold from the
Rail Products 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.
(3) Effective January 1, 2020, we revised the estimated useful
lives and salvage values of certain railcar types in our lease
fleet. This change in estimate resulted in a decrease in
depreciation expense in the three months ended March 31, 2020 of
approximately $7.7 million. This decrease was partially offset by
higher depreciation associated with growth in the lease fleet.
March 31, 2020
March 31, 2019
Number of railcars:
Wholly-owned
79,245
76,365
Partially-owned
24,570
24,640
103,815
101,005
Managed (third-party owned)
25,840
21,725
129,655
122,730
Fleet utilization (Company-owned
railcars)
95.4
%
98.4
%
Trinity Industries, Inc.
Condensed Consolidated Balance
Sheets
(in millions)
(unaudited)
March 31, 2020
December 31, 2019
ASSETS
Cash and cash equivalents
$
213.2
$
166.2
Receivables, net of allowance
297.8
260.1
Income tax receivable
389.1
14.7
Inventories
442.0
433.4
Restricted cash
96.3
111.4
Property, plant, and equipment, net
7,118.7
7,110.6
Goodwill
208.8
208.8
Other assets
237.0
396.2
Total assets
$
9,002.9
$
8,701.4
LIABILITIES AND STOCKHOLDERS'
EQUITY
Accounts payable
$
208.5
$
203.9
Accrued liabilities
348.5
342.1
Debt
4,870.2
4,881.9
Deferred income taxes
1,016.1
798.3
Other liabilities
93.5
96.3
Stockholders' equity:
Trinity Industries, Inc.
2,116.4
2,030.1
Noncontrolling interest
349.7
348.8
2,466.1
2,378.9
Total liabilities and stockholders'
equity
$
9,002.9
$
8,701.4
Trinity Industries, Inc.
Additional Balance Sheet
Information
(in millions)
(unaudited)
March 31, 2020
December 31, 2019
Property, Plant, and Equipment
Manufacturing/Corporate:
Property, plant, and equipment
$
1,045.5
$
1,040.4
Accumulated depreciation
(641.2
)
(631.6
)
404.3
408.8
Leasing:
Wholly-owned subsidiaries:
Machinery and other
13.7
13.7
Equipment on lease
7,000.0
6,944.2
Accumulated depreciation
(1,176.2
)
(1,139.0
)
5,837.5
5,818.9
Partially-owned subsidiaries:
Equipment on lease
2,415.0
2,410.0
Accumulated depreciation
(638.4
)
(623.3
)
1,776.6
1,786.7
Deferred profit on railcars sold to the
Leasing Group
(1,138.5
)
(1,135.8
)
Accumulated amortization
238.8
232.0
(899.7
)
(903.8
)
$
7,118.7
$
7,110.6
March 31, 2020
December 31, 2019
Debt
Corporate – Recourse:
Revolving credit facility
$
130.0
$
125.0
Senior notes, net of unamortized discount
of $0.2 and $0.2
399.8
399.8
529.8
524.8
Less: unamortized debt issuance costs
(1.9
)
(2.0
)
527.9
522.8
Leasing – Non-recourse:
Wholly-owned subsidiaries:
Secured railcar equipment notes, net of
unamortized discount of $1.7 and $2.0
1,994.2
2,124.1
TILC warehouse facility
488.0
353.4
Promissory notes
618.8
627.1
3,101.0
3,104.6
Less: unamortized debt issuance costs
(22.2
)
(23.9
)
3,078.8
3,080.7
Partially-owned subsidiaries:
Secured railcar equipment notes
1,273.9
1,289.3
Less: unamortized debt issuance costs
(10.4
)
(10.9
)
1,263.5
1,278.4
Total debt
$
4,870.2
$
4,881.9
Trinity Industries, Inc.
Additional Balance Sheet
Information
($ in millions)
(unaudited)
March 31, 2020
December 31, 2019
Leasing Group Debt
Wholly-owned subsidiaries
$
3,078.8
$
3,080.7
Partially-owned subsidiaries
1,263.5
1,278.4
$
4,342.3
$
4,359.1
Corporate – Revolving credit facility
$
130.0
$
125.0
Equipment on Lease(1)
Wholly-owned subsidiaries
$
5,837.5
$
5,818.9
Partially-owned subsidiaries
1,776.6
1,786.7
$
7,614.1
$
7,605.6
Total Leasing Debt as a % of Equipment on
Lease ("Loan-to-value ratio")
Wholly-owned subsidiaries
52.7
%
52.9
%
Wholly-owned subsidiaries, including
corporate revolving credit facility(2)
55.0
%
55.1
%
Partially-owned subsidiaries
71.1
%
71.6
%
Combined
57.0
%
57.3
%
(1) Excludes net deferred profit on railcars sold to the Leasing
Group.
(2) The corporate revolving credit facility was primarily used
to finance growth of the lease fleet. Accordingly, the outstanding
balance has been included in this computation of the loan-to-value
ratio.
Trinity Industries, Inc.
Condensed Consolidated Statements of
Cash Flows
(in millions)
(unaudited)
Three Months Ended March
31,
2020
2019
Operating activities:
Net income
$
162.3
$
30.1
Loss from discontinued operations, net of
income taxes
0.2
1.1
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization
66.9
67.5
Provision for deferred income taxes
225.2
9.7
Net gains on railcar lease fleet sales
owned more than one year at the time of sale
(8.7
)
(7.9
)
Restructuring activities
5.2
—
Other
13.3
7.0
Changes in operating assets and
liabilities:
(Increase) decrease in receivables,
inventories, and other assets
113.0
(182.8
)
(Increase) decrease in income tax
receivable
(374.4
)
24.3
Increase (decrease) in accounts payable,
accrued liabilities, and other liabilities
(29.2
)
(73.8
)
Net cash provided by (used in) operating
activities – continuing operations
173.8
(124.8
)
Net cash used in operating activities –
discontinued operations
(0.2
)
(1.1
)
Net cash provided by (used in) operating
activities
173.6
(125.9
)
Investing activities:
Proceeds from railcar lease fleet sales
owned more than one year at the time of sale
68.5
29.4
Proceeds from disposition of property and
other assets
9.8
7.3
Capital expenditures – leasing, net of
sold lease fleet railcars owned one year or less with a net cost of
$42.5 and $12.5
(129.2
)
(465.0
)
Capital expenditures – manufacturing and
other
(14.0
)
(11.5
)
Other
0.3
1.3
Net cash used in investing activities
(64.6
)
(438.5
)
Financing activities:
Net (repayments of) proceeds from debt
(19.0
)
434.9
Shares repurchased
(35.4
)
(15.0
)
Dividends paid to common shareholders
(22.7
)
(17.3
)
Other
—
(0.9
)
Net cash provided by (used in) financing
activities
(77.1
)
401.7
Net increase (decrease) in cash, cash
equivalents, and restricted cash
31.9
(162.7
)
Cash, cash equivalents, and restricted
cash at beginning of period
277.6
350.8
Cash, cash equivalents, and restricted
cash at end of period
$
309.5
$
188.1
Trinity Industries, Inc.
Reconciliations of Non-GAAP
Measures
(unaudited)
Adjusted Operating Results
We have supplemented the presentation of our reported GAAP
operating profit, interest expense, net, provision (benefit) for
income taxes, income from continuing operations and diluted income
from continuing operations per common share with non-GAAP measures
that adjust the GAAP measures to exclude the impact of
restructuring activities, asset write-downs, early redemption of
debt, the income tax effects of the CARES Act and certain other
non-recurring 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 non-recurring items. 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,
2020
GAAP
Restructuring activities
(1)
Early redemption of debt
(1)
Income Tax
Adjusted
(in millions, except per share
amounts)
Operating profit
$
73.0
$
5.5
$
—
$
—
$
78.5
Interest expense, net
$
58.9
$
—
$
(5.0
)
$
—
$
53.9
Provision (benefit) for income taxes
$
(147.6
)
$
1.3
$
(1.2
)
$
154.7
$
7.2
Income (loss) from continuing
operations
$
162.5
$
4.2
$
3.8
$
(154.7
)
$
15.8
Diluted income (loss) from continuing
operations per common share
$
1.33
$
0.04
$
0.03
$
(1.29
)
$
0.11
(1) The effective tax rate for restructuring activities and the
early redemption of debt is before consideration of the CARES
Act.
Free Cash Flow
Free Cash Flow before Capital expenditures – leasing ("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.
Three Months Ended March
31,
2020
2019
(in millions)
Net cash provided by (used in) operating
activities – continuing operations
$
173.8
$
(124.8
)
Add:
Proceeds from railcar lease fleet sales
owned more than one year at the time of sale
68.5
29.4
Adjusted Net Cash Provided by (Used In)
Operating Activities
$
242.3
$
(95.4
)
Less:
Capital expenditures – manufacturing and
other
(14.0
)
(11.5
)
Dividends paid to common shareholders
(22.7
)
(17.3
)
Free Cash Flow (before Capital
expenditures – leasing)
$
205.6
$
(124.2
)
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
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 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. 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,
2020
2019
(in millions)
Net income
$
162.3
$
30.1
Less: loss from discontinued operations,
net of income taxes
(0.2
)
(1.1
)
Income from continuing operations
$
162.5
$
31.2
Add:
Interest expense
61.3
52.7
Provision (benefit) for income taxes
(147.6
)
8.9
Depreciation and amortization expense
66.9
67.5
EBITDA
$
143.1
$
160.3
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200429005787/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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