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Section 1: 8-K (8-K)

Document



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
 
April 25, 2018

393203110_trinityinclogoverticalhrblac.jpg
__________________________________________
(Exact name of registrant as specified in its charter)
 
 
 
 
 
Delaware
 
1-6903
 
75-0225040
(State or other jurisdiction
of incorporation
 
(Commission File No.)
 
(I.R.S. Employer
Identification No.)
  
 
 
 
 
2525 N. Stemmons Freeway, Dallas, Texas
 
 
 
75207-2401
(Address of principal executive offices)
 
 
 
(Zip Code)

 
 
 
Registrant's telephone number, including area code:
 
214-631-4420
Not Applicable
Former name or former address, if changed since last report
______________________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨






Item 2.02 Results of Operations and Financial Condition.
The Registrant hereby furnishes the information set forth in its News Release, dated April 25, 2018, announcing operating results for the three month period ended March 31, 2018, a copy of which is furnished as exhibit 99.1 and incorporated herein by reference. On April 26, 2018, the Registrant held a conference call and web cast with respect to its financial results for the three month period ended March 31, 2018. The conference call scripts of Gail M. Peck, Vice President, Finance and Treasurer; S. Theis Rice, Senior Vice President and Chief Legal Officer; Timothy R. Wallace, Chairman, Chief Executive Officer, and President; Melendy E. Lovett, Senior Vice President and Chief Administrative Officer; Scott C. Beasley, Chief Financial Officer of the Construction Products, Energy Equipment and Inland Barge Groups; Eric R. Marchetto, Executive Vice President and Chief Commercial Officer, TrinityRail; and James E. Perry, Senior Vice President and Chief Financial Officer are furnished as exhibits 99.2, 99.3, 99.4, 99.5, 99.6, 99.7, and 99.8, respectively, and incorporated herein by reference.
This information is not "filed" pursuant to the Securities Exchange Act of 1934 and is not incorporated by reference into any Securities Act of 1933 registration statements. Additionally, the submission of the report on Form 8-K is not an admission of the materiality of any information in this report that is required to be disclosed solely by Regulation FD.
Item 7.01 Regulation FD Disclosure.
See "Item 2.02 — Results of Operations and Financial Condition."
Additionally, the Registrant has made available on its website, certain information, furnished as exhibit 99.9 and incorporated herein by reference, regarding the anticipated alignment of its businesses after the expected spin-off of its infrastructure businesses. See the Investor Relations - Events & Presentations portion and the Trinity Spin-Off portion of the website at www.trin.net.
This information is not "filed" pursuant to the Securities Exchange Act of 1934 and is not incorporated by reference into any Securities Act of 1933 registration statements. Additionally, the submission of the report on Form 8-K is not an admission of the materiality of any information in this report that is required to be disclosed solely by Regulation FD.
Forward-Looking Statements
Some statements in this Form 8-K, 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 the Registrant's estimates, expectations, beliefs, intentions or strategies for the future, and the assumptions underlying these forward-looking statements, including, but not limited to, statements regarding the effect of the anticipated separation of the Registrant into two separate public companies, the expected timetable for completing the spin-off transaction, whether or not the spin-off transaction occurs, and any other statements regarding events or developments that the Registrant believes or anticipates will or may occur in the future. The Registrant uses the words “anticipates,” “assumes,” “believes,” “estimates,” “expects,” “intends,” “forecasts,” “may,” “will,” “should,” “guidance,” “outlook,” and similar expressions to identify these forward-looking statements. Forward-looking statements speak only as of the date of this Form 8-K, and the Registrant expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in the Registrant’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. There is no assurance that the proposed spin-off transaction will be completed, that the Registrant's Board of Directors will continue to pursue the proposed spin-off transaction (even if there are no impediments to completion), that the Registrant will be able to separate its businesses, or that the proposed spin-off transaction will be the most beneficial alternative considered. Forward looking statements involve risks and uncertainties that could cause actual results to differ materially from historical experience or the Registrant’s present expectations, including but not limited to risks and uncertainties regarding economic, competitive, governmental, and technological factors affecting the Registrant’s operations, markets, products, services and prices, as well as any changes in or abandonment of the proposed separation or the ability to effect the separation and satisfy the conditions to the proposed separation, 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 the Registrant’s Annual Report on Form 10-K for the most recent fiscal year, and as may be revised and updated by the Registrant’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Item 9.01 Financial Statements and Exhibits.

(a) - (c) Not applicable.

(d) Exhibits:
Exhibit No. / Description
99.1 News Release dated April 25, 2018 with respect to the operating results for the three month period ended March 31, 2018.
99.2 Conference call script of April 26, 2018 of Gail M. Peck, Vice President, Finance and Treasurer.
99.3 Conference call script of April 26, 2018 of S. Theis Rice, Senior Vice President and Chief Legal Officer.





99.4 Conference call script of April 26, 2018 of Timothy R. Wallace, Chairman, Chief Executive Officer, and President.
99.5 Conference call script of April 26, 2018 of Melendy E Lovett, Senior Vice President and Chief Administrative Officer.
99.6 Conference call script of April 26, 2018 of Scott C. Beasley, Chief Financial Officer of the Construction Products, Energy Equipment and Inland Barge Groups.
99.7 Conference call script of April 26, 2018 of Eric R. Marchetto, Executive Vice President and Chief Commercial Officer, TrinityRail.
99.8 Conference call script of April 26, 2018 of James E. Perry, Senior Vice President and Chief Financial Officer.
99.9 Investor Presentation regarding the anticipated alignment of Registrant's businesses after the expected spin-off of Registrant's infrastructure businesses






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
Trinity Industries, Inc.
 
 
 
April 26, 2018
By:
/s/ James E. Perry
 
 
Name: James E. Perry
 
 
Title: Senior Vice President and Chief Financial Officer



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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
Exhibit 99.1
NEWS RELEASE
                 393203110_logoa11.jpg

FOR IMMEDIATE RELEASE
Trinity Industries, Inc. Announces First Quarter 2018 Results

DALLAS, Texas - April 25, 2018 - Trinity Industries, Inc. (NYSE:TRN) today announced earnings results for the first quarter ended March 31, 2018, including the following highlights:
Earnings per common diluted share of $0.26 compared to $0.30 per share in 2017
Earnings per share includes $7.9 million, or $0.04 per share, of transaction costs incurred related to the planned spin-off transaction, resulting in adjusted earnings per common diluted share of $0.30
Railcar deliveries and orders totaling 5,725 and 4,705 railcars, respectively, in the Rail Group, compared to 3,770 and 970 railcars, respectively, in 2017
Inland Barge Group receives orders with a value of $57.1 million
Repurchases of common stock totaling $50.0 million under the current authorization
Issues notice to call $449.4 million convertible subordinated notes on June 1, 2018
Anticipates full year 2018 earnings per common diluted share of between $1.20 and $1.40, excluding spin-off related transaction costs of approximately $30 to $35 million, compared to previous earnings guidance of between $1.15 and $1.35 per share, excluding spin-off related transaction costs of approximately $25 million
Consolidated Results
Trinity Industries, Inc. reported net income attributable to Trinity stockholders of $40.2 million, or $0.26 per common diluted share, for the first quarter ended March 31, 2018. Net income for the same quarter of 2017 was $46.0 million, or $0.30 per common diluted share. Revenues for the first quarter of 2018 totaled $831.3 million compared to revenues of $877.3 million for the same quarter of 2017. In the first quarter, the Company incurred approximately $7.9 million of transaction costs, or $0.04 per share, related to the expected spin-off transaction. First quarter 2018 results benefitted from a lower effective tax rate of 26.2% due primarily to the Tax Cut and Jobs Act (“the Act”) compared to 28.7% in the same quarter of 2017 which benefitted from the settlement of certain tax audits. For the full year 2018, the Company continues to expect a 24.0% effective tax rate compared to 36.2% in full year 2017, excluding the positive one-time impact from the Act in the fourth quarter of 2017.
“We are off to a good start in 2018, in what will be a transformational year for our Company,” said Timothy R. Wallace, Trinity’s Chairman, CEO and President. “Our financial performance for the first quarter reflects varying conditions across our businesses. We achieved year-over-year increases in operating profit for the Rail and Construction Products Groups. Our railcar and inland barge manufacturing businesses received a moderate level of orders during the quarter, a positive outcome in what continues to be challenging, but improving, market conditions.”
Mr. Wallace added, “I continue to be pleased with the progress we are making on our planned spin-off of our infrastructure-related businesses to Trinity’s stockholders, and we remain on track for an expected transaction close in the fourth quarter of this year.”

1


Quarterly Business Group Results
In the first quarter of 2018, the Rail Group reported revenues of $598.5 million compared to revenues of $478.3 million in the first quarter of 2017. Operating profit and profit margin for the Rail Group were $58.9 million and 9.8% in the first quarter of 2018 compared to $50.5 million and 10.6% in the first quarter of 2017. The increases in revenues and operating profit were primarily due to higher railcar deliveries. The Rail Group delivered 5,725 railcars and received orders for 4,705 railcars during the first quarter of 2018 compared to 3,770 and 970 railcars, respectively, in the same quarter last year. The railcar backlog in the Rail Group was $2.1 billion as of March 31, 2018, representing 21,365 railcars, compared to a railcar backlog of $2.2 billion as of December 31, 2017, representing 22,585 railcars.
The Railcar Leasing and Management Services Group (“Leasing Group”) reported revenues and operating profit of $174.6 million and $71.1 million, respectively, in the first quarter of 2018, a decrease of 2.4% and 16.4%, respectively, compared to the same quarter of 2017. The decrease in revenues was primarily due to lower average lease rates and utilization partially offset by additions to the lease fleet. There were no revenues from sales of railcars owned one year or less reported in either period. The decrease in operating profit was primarily the result of lower revenues and higher fleet maintenance and compliance expenses partially offset by $2.1 million of profit from railcar sales owned for more than one year that are not included in revenues.
Total proceeds from the sale of leased railcars owned for more than one year were $15.5 million in the first quarter of 2018 compared to no sales of leased railcars in the first quarter of 2017. Supplemental information for the Leasing Group is provided in the accompanying tables.
The Inland Barge Group reported revenues of $30.8 million in the first quarter of 2018 compared to revenues of $62.7 million in the first quarter of 2017. Operating loss for this Group was $0.7 million in the first quarter of 2018 compared to a profit of $6.3 million in the first quarter of 2017. The decreases in revenues and operating profit compared to the same quarter last year were primarily due to significantly lower barge deliveries. The Inland Barge Group received orders of $57.1 million during the quarter and, as of March 31, 2018, had a backlog of $124.5 million compared to a backlog of $98.2 million as of December 31, 2017.
The Energy Equipment Group reported revenues of $226.7 million in the first quarter of 2018 compared to revenues of $255.4 million in the same quarter of 2017. Operating profit and profit margin for this Group were $21.3 million and 9.4% compared to $29.6 million and 11.6% in the same quarter last year. A decrease in volumes in the Group's structural wind towers product line was partially offset by improved pricing and increased volumes in the Group's utility structures product line. Additionally, the required adoption of new revenue accounting rules as of January 1, 2018 resulted in a decrease in the Group's revenues and operating profit in the first quarter of $18.0 million and $4.0 million, respectively. Prior periods were not required to be adjusted for the new rules. Also, in accordance with the new revenue rules, we are now reporting combined backlog for wind towers and utility structures, which represents open contracts at the end of the period that are either non-cancellable or contain penalties for termination. The backlog for wind towers and utility structures as of March 31, 2018 was $809.7 million compared to a backlog of $924.8 million as of December 31, 2017.
The Construction Products Group reported revenues of $125.0 million in the first quarter of 2018 compared to revenues of $123.1 million in the first quarter of 2017. Operating profit and profit margin were $19.4 million and 15.5% in the first quarter of 2018 compared to $15.5 million and 12.6% in the same quarter last year. The increases in revenues compared to the same quarter last year were primarily due to higher volumes in our construction aggregates business and other businesses, partially offset by lower volumes in our highway products business. The increase in revenues from other businesses was primarily a result of our trench shoring products acquisition in the third quarter of 2017. The increase in operating profit compared to the same quarter last year was related to volumes discussed, in addition to lower operating costs and $1.5 million in insurance proceeds related to a previously disclosed equipment failure at one of our highway products plants.

2


Share Repurchase
During the first quarter of 2018, the Company repurchased 1,519,503 shares of common stock at a cost of approximately $50.0 million, leaving $450 million remaining under its current authorization through December 31, 2019.
Proposed Spin-off
On December 12, 2017, the Company announced that its Board of Directors unanimously approved a plan to pursue a spin-off of the Company's infrastructure-related businesses to Trinity stockholders. The separation is planned as a tax-free spin-off transaction to the Company's stockholders for U.S. federal income tax purposes. The transaction is expected to result in two separate public companies: (1) Trinity, the currently existing company which will be comprised primarily of Trinity’s rail-related businesses and (2) a new infrastructure company focused on infrastructure-related products and services.
Completion of the spin-off will be subject to, among other things, the effectiveness of appropriate filings with the Securities and Exchange Commission, final approval from the Company's Board of Directors, and other customary conditions. The Company may, at any time and for any reason until the proposed transaction is complete, abandon the separation or modify or change its terms. The separation is expected to be completed in the fourth quarter of 2018, but there can be no assurance regarding the ultimate timing of the separation or that the separation will ultimately occur.
Company's $449.4 million Convertible Subordinated Notes
Pursuant to the terms of the indenture governing the Notes, the Notes are callable by the Company, in whole or part, beginning June 1, 2018. On April 23, 2018, the Company gave notice of its election to redeem all of the Notes on June 1, 2018 for cash equal to 100% of the principal amount of the Notes, plus accrued and unpaid interest. In addition, the Company notified the trustee that the Notes became convertible as a result of its election to redeem the Notes. As a result, holders may convert their Notes at any time until May 30, 2018. The current conversion price of the Notes is $24.13 per share as of April 13, 2018. Upon conversion, the Company will deliver to the holders in respect of each $1,000 principal amount of Notes being converted a “settlement amount,” as defined in the Indenture governing the Notes, equal to the sum of the daily settlement amounts for each of the 20 consecutive trading days of the cash settlement averaging period. Although the Company has the option to make the conversion payment in cash and shares of the Company's common stock (or cash in lieu of some or all of the shares of common stock), the Company intends to make the entire conversion payment with respect to all Notes converted solely in cash. The Company currently expects to fund the redemption and conversion payments through a combination of cash on hand and the proceeds from one or more debt financing transactions by the Company on a non-recourse basis.
Earnings Guidance for 2018
The 2018 earnings guidance reflects consolidated results for the Company and has not been adjusted to incorporate the completion of a potential spin-off transaction.
The Company expects full year 2018 earnings per common diluted share of between $0.95 and $1.20, including spin-off related transaction costs of approximately $30 to $35 million, compared to its previous earnings guidance of between $1.00 and $1.20 per share, including spin-off related transaction costs of approximately $25 million. Excluding transaction costs, the Company anticipates full year 2018 earnings per common diluted share of between $1.20 and $1.40 compared to its previous guidance of between $1.15 and $1.35 per share. Refer to the 2018 Full Year Guidance and Outlook table for further information regarding the spin-off related transaction costs and other supplemental guidance details.
Actual results in 2018 may differ from present expectations and could be impacted by a number of factors including, among others, the risk factors disclosed in "Risk Factors" and "Forward-Looking Statements" in the Company's Annual Report on Form 10-K for the most recent fiscal year.

3


Conference Call
Trinity will hold a conference call at 11:00 a.m. Eastern on April 26, 2018 to discuss its first quarter results. To listen to the call, please visit the Investor Relations section of the Trinity Industries website, www.trin.net and select the Events & Presentations menu link. An audio replay may be accessed through the Company’s website or by dialing (402) 220-2103 until 11:59 p.m. Eastern on May 3, 2018.
Company Description
Trinity Industries, Inc., headquartered in Dallas, Texas, is a diversified industrial company that owns complementary market-leading businesses providing products and services to the energy, chemical, agriculture, transportation, and construction sectors, among others. Trinity reports its financial results in five principal business segments: the Rail Group, the Railcar Leasing and Management Services Group, the Inland Barge Group, the Construction Products Group, and the Energy Equipment Group. For more information, visit: www.trin.net.
Some statements in this release, which are not historical facts, are “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements about Trinity's estimates, expectations, beliefs, intentions or strategies for the future, and the assumptions underlying these forward-looking statements, including, but not limited to, statements regarding the effect of the Tax Cuts and Jobs Act on Trinity's financial results, any non-cash tax benefits from the remeasurement of Trinity's net deferred tax liabilities, the anticipated separation of Trinity into two separate public companies, the expected timetable for completing the spin-off transaction, whether or not the spin-off transaction occurs, future financial and operating performance of each company, benefits and synergies of the spin-off transaction, strategic and competitive advantages of each company, future opportunities for each company 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,” “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. There is no assurance that the proposed spin-off transaction will be completed, that the Company's Board of Directors will continue to pursue the proposed spin-off transaction (even if there are no impediments to completion), that the Company will be able to separate its businesses, or that the proposed spin-off transaction will be the most beneficial alternative considered. 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, as well as any changes in or abandonment of the proposed separation or the ability to effect the separation and satisfy the conditions to the proposed separation, 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 the Company's Annual Report on Form 10-K for the most recent fiscal year, and as may be revised and updated by our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

4


Investor Contact:
Preston Bass
Director, Investor Relations
Trinity Industries, Inc.
214/631-4420
 
Media Contact:
Jack Todd
Vice President, Public Affairs
Trinity Industries, Inc.
214/589-8909
- TABLES TO FOLLOW -

5




Trinity Industries, Inc.
Condensed Consolidated Income Statements
(in millions, except per share amounts)
(unaudited)
 
Three Months Ended
March 31,
 
2018
 
2017
Revenues
$
831.3

 
$
877.3

Operating costs:
 
 
 
Cost of revenues
630.1

 
660.2

Selling, engineering, and administrative expenses
104.9

 
102.5

Losses (gains) on dispositions of property:
 
 
 
Net gains on lease fleet sales
(2.1
)
 

Other
(0.2
)
 
(1.3
)
 
732.7

 
761.4

Operating profit
98.6

 
115.9

Interest expense, net
42.4

 
43.3

Other, net
(0.2
)
 
0.1

Income before income taxes
56.4

 
72.5

Provision (benefit) for income taxes
14.8

 
20.8

Net income
41.6

 
51.7

Net income attributable to noncontrolling interest
1.4

 
5.7

Net income attributable to Trinity Industries, Inc.
$
40.2

 
$
46.0

 
 
 
 
Net income attributable to Trinity Industries, Inc. per common share:
 
 
Basic
$
0.27

 
$
0.30

Diluted
$
0.26

 
$
0.30

Weighted average number of shares outstanding:
 
 
 
Basic
147.4

 
148.7

Diluted
153.7

 
150.6

Trinity is required to utilize the two-class method of accounting when calculating earnings per share as a result of unvested restricted shares that have non-forfeitable rights to dividends and are, therefore, considered to be a participating security. The unvested restricted shares are excluded from the weighted average number of shares outstanding for the purposes of determining earnings per share. The two-class method results in a lower earnings per share than is calculated from the face of the income statement. See Earnings Per Share Calculation table below.
The Tax Cuts and Jobs Act (the "Act") was enacted on December 22, 2017. The Act reduces the U.S. federal corporate income tax rate from 35.0% to 21.0%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, and creates new taxes on certain foreign-sourced earnings. In December 2017, we recorded a tax benefit after the initial assessment of the tax effects of the Act, and we will continue refining this amount throughout 2018. During the quarter ended March 31, 2018, we adjusted our initial assessment of the tax effects of the Act to record an additional benefit related to the transition tax. We are still analyzing certain aspects of the Act and refining our calculations, which could potentially affect the measurement of our deferred tax balance or give rise to new deferred tax amounts in future periods of 2018. The impact of the Act may differ from our estimate due to changes in the regulations, rulings, guidance, and interpretations issued by the IRS and the FASB as well as interpretations and assumptions made by the Company. For the items for which we were able to determine a reasonable estimate, we recognized an additional provisional net benefit of $0.5 million for the three months ended March 31, 2018, which is included as a component of income tax expense.


6



Trinity Industries, Inc.
Condensed Segment Data
(in millions)
(unaudited)
 
Three Months Ended
March 31,
Revenues:
2018
 
2017
Rail Group
$
598.5

 
$
478.3

Construction Products Group
125.0

 
123.1

Inland Barge Group
30.8

 
62.7

Energy Equipment Group
226.7

 
255.4

Railcar Leasing and Management Services Group
174.6

 
178.9

All Other
24.8

 
22.8

Segment Totals before Eliminations
1,180.4

 
1,121.2

Eliminations - lease subsidiary
(296.1
)
 
(192.2
)
Eliminations - other
(53.0
)
 
(51.7
)
Consolidated Total
$
831.3

 
$
877.3

 
 
 
 
 
Three Months Ended
March 31,
Operating profit (loss):
2018
 
2017
Rail Group
$
58.9

 
$
50.5

Construction Products Group
19.4

 
15.5

Inland Barge Group
(0.7
)
 
6.3

Energy Equipment Group
21.3

 
29.6

Railcar Leasing and Management Services Group
71.1

 
85.0

All Other
(3.3
)
 
(4.6
)
Segment Totals before Eliminations and Corporate Expenses
166.7

 
182.3

Corporate
(39.5
)
 
(35.1
)
Eliminations - lease subsidiary
(28.7
)
 
(29.4
)
Eliminations - other
0.1

 
(1.9
)
Consolidated Total
$
98.6

 
$
115.9



7



Trinity Industries, Inc.
Leasing Group
Condensed Results of Operations (unaudited)
 
Three Months Ended
March 31,
 
2018
 
2017
 
($ in millions)
Revenues:
 
 
 
Leasing and management
$
174.6

 
$
178.9

Sales of railcars owned one year or less at the time of sale(1)

 

Total revenues
$
174.6

 
$
178.9

Operating profit:
 
 
 
Leasing and management
$
69.0

 
$
85.0

Railcar sales(1):
 
 
 
Railcars owned one year or less at the time of sale

 

Railcars owned more than one year at the time of sale
2.1

 

Total operating profit
$
71.1

 
$
85.0

Operating profit margin:
 
 
 
Leasing and management
39.5
%
 
47.5
%
Railcar sales
*

 
*

Total operating profit margin
40.7
%
 
47.5
%
Selected expense information(2):
 
 
 
Depreciation
$
45.1

 
$
42.1

Maintenance and compliance
$
26.4

 
$
20.5

Rent
$
10.1

 
$
10.1

Interest
$
31.5

 
$
30.6

 
March 31,
2018
 
March 31,
2017
Leasing portfolio information:
 
 
 
Portfolio size (number of railcars):
 
 
 
Wholly-owned
67,935

 
62,255

Partially-owned
24,660

 
24,665

 
92,595

 
86,920

Managed (third-party owned)
26,430

 
18,535

 
119,025

 
105,455

Portfolio utilization (Company-owned railcars)
96.1
%
 
97.5
%
 
Three Months Ended March 31,
 
2018
 
2017
 
(in millions)
Proceeds from sales of leased railcars:
 
 
 
Leasing Group:
 
 
 
Railcars owned one year or less at the time of sale
$

 
$

Railcars owned more than one year at the time of sale
15.5

 

Rail Group

 

 
$
15.5

 
$

* 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)Depreciation, maintenance and compliance, and rent expense are components of operating profit. Amortization of deferred profit on railcars sold from the Rail Group to the Leasing Group is included in the operating 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.

8



Trinity Industries, Inc.
Condensed Consolidated Balance Sheets
(in millions)
(unaudited)
 
March 31,
2018
 
December 31,
2017
Cash and cash equivalents
$
625.4

 
$
778.6

Short-term marketable securities
220.8

 
319.5

Receivables, net of allowance
342.5

 
369.7

Income tax receivable
30.6

 
29.0

Inventories
599.4

 
640.6

Restricted cash
177.3

 
195.2

Net property, plant, and equipment
6,393.5

 
6,134.7

Goodwill
789.8

 
780.3

Other assets
297.7

 
295.6

 
$
9,477.0

 
$
9,543.2

 
 
 
 
Accounts payable
$
183.4

 
$
175.4

Accrued liabilities
396.4

 
440.0

Debt, net of unamortized discount of $3.6 and $8.5
3,223.4

 
3,242.4

Deferred income
19.8

 
20.5

Deferred income taxes
757.0

 
743.2

Other liabilities
66.4

 
63.7

Stockholders' equity:
 
 
 
Trinity Industries, Inc.
4,477.7

 
4,501.1

Noncontrolling interest
352.9

 
356.9

 
4,830.6

 
4,858.0

 
$
9,477.0

 
$
9,543.2



9



Trinity Industries, Inc.
Additional Balance Sheet Information
(in millions)
(unaudited)


March 31,
2018
 
December 31,
2017
Property, Plant, and Equipment
 
 
 
Corporate/Manufacturing:
 
 
 
Property, plant, and equipment
$
2,064.5

 
$
2,046.4

Accumulated depreciation
(1,092.3
)
 
(1,073.7
)
 
972.2

 
972.7

Leasing:
 
 
 
Wholly-owned subsidiaries:
 
 
 
Machinery and other
10.7

 
10.7

Equipment on lease
5,310.9

 
4,995.7

Accumulated depreciation
(893.9
)
 
(858.9
)
 
4,427.7

 
4,147.5

Partially-owned subsidiaries:
 
 
 
Equipment on lease
2,331.5

 
2,317.7

Accumulated depreciation
(508.7
)
 
(493.1
)
 
1,822.8

 
1,824.6

 
 
 
 
Deferred profit on railcars sold to the Leasing Group
(1,011.6
)
 
(985.2
)
Accumulated amortization
182.4

 
175.1

 
(829.2
)
 
(810.1
)
 
$
6,393.5

 
$
6,134.7



10



Trinity Industries, Inc.
Additional Balance Sheet Information
(in millions)
(unaudited)
 
March 31,
2018
 
December 31,
2017
Debt
 
 
 
Corporate - Recourse:
 
 
 
Revolving credit facility
$

 
$

Senior notes due 2024, net of unamortized discount of $0.3 and $0.3
399.7

 
399.7

Convertible subordinated notes, net of unamortized discount of $3.3 and $8.2
446.1

 
441.2

Other
0.5

 
0.5

 
846.3

 
841.4

Less: unamortized debt issuance costs
(2.7
)
 
(2.9
)
 
843.6

 
838.5

Leasing:
 
 
 
Wholly-owned subsidiaries:
 
 
 
Recourse:
 
 
 
Capital lease obligations
27.4

 
28.3

 
27.4

 
28.3

Non-recourse:
 
 
 
Secured railcar equipment notes
581.9

 
591.6

Warehouse facility
154.5

 
150.7

Promissory notes
289.8

 
293.6

 
1,026.2

 
1,035.9

Less: unamortized debt issuance costs
(13.9
)
 
(11.1
)
 
1,012.3

 
1,024.8

Partially-owned subsidiaries - non-recourse:
 
 
 
Secured railcar equipment notes
1,354.1

 
1,365.3

Less: unamortized debt issuance costs
(14.0
)
 
(14.5
)
 
1,340.1

 
1,350.8

 
$
3,223.4

 
$
3,242.4



11



Trinity Industries, Inc.
Additional Balance Sheet Information
($ in millions)
(unaudited)
 
March 31,
2018
 
December 31,
2017
Leasing Debt Summary
 
 
 
Total Recourse Debt
$
27.4

 
$
28.3

Total Non-Recourse Debt
2,352.4

 
2,375.6

 
$
2,379.8

 
$
2,403.9

Total Leasing Debt
 
 
 
Wholly-owned subsidiaries
$
1,039.7

 
$
1,053.1

Partially-owned subsidiaries
1,340.1

 
1,350.8

 
$
2,379.8

 
$
2,403.9

Equipment on Lease(1)
 
 
 
Wholly-owned subsidiaries
$
4,427.7

 
$
4,147.5

Partially-owned subsidiaries
1,822.8

 
1,824.6

 
$
6,250.5

 
$
5,972.1

Total Leasing Debt as a % of Equipment on Lease
 
 
 
Wholly-owned subsidiaries
23.5
%
 
25.4
%
Partially-owned subsidiaries
73.5
%
 
74.0
%
Combined
38.1
%
 
40.3
%
(1) Excludes net deferred profit on railcars sold to the Leasing Group.


12



Trinity Industries, Inc.
Condensed Consolidated Cash Flow Statements
(in millions)
(unaudited)
 
Three Months Ended
March 31,
 
2018
 
2017
Operating activities:
 
 
 
Net income
$
41.6

 
$
51.7

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
75.3

 
72.8

Provision (benefit) for deferred income taxes
14.4

 
55.3

Net gains on railcar lease fleet sales owned more than one year at the time of sale
(2.1
)
 

Other
15.2

 
13.7

Changes in assets and liabilities:
 
 
 
(Increase) decrease in receivables
49.4

 
24.1

(Increase) decrease in inventories
13.1

 
33.7

Increase (decrease) in accounts payable and accrued liabilities
(34.6
)
 
(26.3
)
Other
1.4

 
(4.9
)
Net cash provided by operating activities
173.7

 
220.1

Investing activities:
 
 
 
Proceeds from railcar lease fleet sales owned more than one year at the time of sale
15.5

 

Proceeds from dispositions of property
2.5

 
3.6

Capital expenditures - leasing
(318.2
)
 
(162.9
)
Capital expenditures - manufacturing and other
(15.8
)
 
(24.3
)
(Increase) decrease in short-term marketable securities
98.7

 
42.6

Acquisitions
(25.0
)
 

Other
0.8

 
0.5

Net cash required by investing activities
(241.5
)
 
(140.5
)
Financing activities:
 
 
 
Payments to retire debt
(26.5
)
 
(26.7
)
Proceeds from issuance of debt
0.9

 

Shares repurchased
(49.3
)
 

Dividends paid to common shareholders
(19.5
)
 
(16.7
)
Purchase of shares to satisfy employee tax on vested stock
(0.1
)
 

Distributions to noncontrolling interest
(5.8
)
 
(7.3
)
Other
(3.0
)
 

Net cash required by financing activities
(103.3
)
 
(50.7
)
Net increase (decrease) in cash, cash equivalents, and restricted cash
(171.1
)
 
28.9

Cash, cash equivalents, and restricted cash at beginning of period
973.8

 
741.6

Cash, cash equivalents, and restricted cash at end of period
$
802.7

 
$
770.5



13



Trinity Industries, Inc.
Earnings per Share Calculation
(in millions, except per share amounts)
(unaudited)

Basic net income attributable to Trinity Industries, Inc. per common share is computed by dividing net income attributable to Trinity remaining after allocation to unvested restricted shares by the weighted average number of basic common shares outstanding for the period.
 
Three Months Ended
March 31, 2018
 
Three Months Ended
March 31, 2017
 
Income
 
Average Shares
 
EPS
 
Income
 
Average Shares
 
EPS
Net income attributable to Trinity Industries, Inc.
$
40.2

 
 
 
 
 
$
46.0

 
 
 
 
Unvested restricted share participation
(0.7
)
 
 
 
 
 
(1.2
)
 
 
 
 
Net income attributable to Trinity Industries, Inc. - basic
39.5

 
147.4

 
$
0.27

 
44.8

 
148.7

 
$
0.30

Effect of dilutive securities:
 
 
 
 
 
 
 
 
 
 
 
Nonparticipating unvested restricted shares and stock options

 
0.9

 
 
 

 

 
 
  Convertible subordinated notes

 
5.4

 
 
 

 
1.9

 
 
Net income attributable to Trinity Industries, Inc. - diluted
$
39.5

 
153.7

 
$
0.26

 
$
44.8

 
150.6

 
$
0.30









14



Trinity Industries, Inc.
Reconciliation of EBITDA
(in millions)
(unaudited)

“EBITDA” is defined as net income plus interest expense, income taxes, and depreciation and amortization including goodwill impairment charges. EBITDA is not a calculation based on generally accepted accounting principles. The amounts included in the EBITDA calculation are, however, derived from amounts included in the historical consolidated statements of operations data. In addition, EBITDA should not be considered as an alternative to net income or operating income as an indicator of our operating performance, or as an alternative to operating cash flows as a measure of liquidity. We believe EBITDA assists investors in comparing a company’s performance on a consistent basis without regard to depreciation and amortization, which can vary significantly depending upon many factors. However, the EBITDA measure presented in this press release may not always be comparable to similarly titled measures by other companies due to differences in the components of the calculation.

 
Three Months Ended
March 31,
 
2018
 
2017
Net income
$
41.6

 
$
51.7

Add:
 
 
 
Interest expense
46.3

 
45.0

Provision (benefit) for income taxes
14.8

 
20.8

Depreciation and amortization expense
75.3

 
72.8

Earnings before interest expense, income taxes, and depreciation and amortization expense
$
178.0

 
$
190.3





15



Trinity Industries, Inc.
2018 Full Year Guidance and Outlook
(unaudited)
Total Company:
 
Total earnings per share(1)
$0.95 - $1.20 per share

Earnings per share, excluding spin-off transaction costs(1)
$1.20 - $1.40 per share

Corporate expense, excluding spin-off transaction costs
$130 - $150 million

Spin-off transaction costs
$30 - $35 million

Interest expense, net
$165 million

Tax rate, excluding spin-off transaction costs
24
%
 
 
Rail Group:
 
Revenue
$2.2 billion

Operating margin
8.0%

Railcar deliveries
20,500 railcars

Revenue elimination from sales to Leasing Group(2)
$860 million

Operating profit elimination from sales to Leasing Group(2)
$95 million

 
 
Railcar Leasing and Management Services Group:
 
Leasing and management revenues(3)
$720 million

Leasing and management operating profit(4)
$290 million

Proceeds from sales of leased railcars
$350 million

 
 
Inland Barge Group:
 
Revenue
$155 million

Operating profit margin
0.0%

 
 
Construction Products Group:
 
Revenue
$545 million

Operating profit margin
13.0%

 
 
Energy Equipment Group:
 
Revenue
$875 million

Operating profit margin
8.5%

(1) The range for earnings per share guidance reflects variability in the point estimates provided above for each business segment. (2) Revenue and operating profit elimination from sales to the Leasing Group include maintenance services in addition to railcar sales.
(3) Excludes sales of railcars owned one year or less at time of sale.
(4) Excludes operating profit from railcar sales.

- END -

16
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Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit


Exhibit 99.2
Trinity Industries, Inc.
Earnings Release Conference Call
Comments of Gail M. Peck
Vice President, Finance and Treasurer
April 26, 2018
Thank you, Aaron. Good morning everyone. Welcome to the Trinity Industries’ first quarter 2018 results conference call. I am Gail Peck, Vice President, Finance and Treasurer of Trinity. Thank you for joining us this morning.
Today, we will follow the format we used on our last earnings call, which included a brief update on the progress we are making on our planned spin-off transaction. On this morning’s call, you will hear more detail regarding the anticipated business alignment for the two stand-alone public companies. Following the call, slides covering today’s business alignment discussion will be filed in an 8K as well as posted on our website, www.trin.net, under the “Trinity Spin-Off” tab and the “Events & Presentations” tab of the Investors Relations section.
We are pleased to announce that Antonio Carrillo, the future President and Chief Executive Officer of the new infrastructure company, officially joined Trinity this week as Senior Vice President and Group President over the Construction, Energy, Marine and Components Group, and he is in the room with us today. Antonio will serve in this role throughout the period in which Trinity continues to pursue the spin-off.
Scott Beasley, the future Chief Financial Officer of the new company, will provide today’s commentary for the Construction Products, Energy Equipment, and Inland Barge Groups. Scott joined Trinity in 2014 and is currently serving as CFO for these business groups and previously held the role of Vice President of Corporate Strategic Planning for Trinity.
Today’s speakers also include:
Theis Rice, our Senior Vice President and Chief Legal Officer
Tim Wallace our Chairman, Chief Executive Officer and President;
Melendy Lovett, our Senior Vice President and Chief Administrative Officer;
Eric Marchetto, our Executive Vice President and Chief Commercial Officer for TrinityRail; and
James Perry, our Senior Vice President and Chief Financial Officer
Following prepared remarks, we will move to the Q&A session. Mary Henderson, our Vice President and Chief Accounting Officer, is also in the room with us today.
I will now turn the call over to Theis Rice.
Theis
Tim
Melendy
Scott
Eric
James
Q&A Session
Thank you, Aaron. That concludes today's conference call. A replay of today’s call will be available after one o'clock eastern standard time through midnight on May 3, 2018. The access number is (402) 220-2103. Also the replay will be available on our website located at www.trin.net.






We look forward to visiting with you again on our next conference call. Thank you for joining us this morning.



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Section 4: EX-99.3 (EXHIBIT 99.3)

Exhibit


Exhibit 99.3
Trinity Industries, Inc.
Earnings Release Conference Call
Comments of S. Theis Rice
Senior Vice President and Chief Legal Officer
April 26, 2018
Thank you Gail and good morning.
In our last call I reported on the status of the Joshua Harman False Claims Act litigation pertaining to the Company’s ET Plus guardrail end terminal system. As noted, the United States Court of Appeals for the Fifth Circuit reversed the trial court’s judgment and rendered judgment for Trinity as a matter of law. Following the ruling, the Fifth Circuit also denied Mr. Harman’s Petition for Rehearing. Mr. Harman thereafter filed an appellate petition with the United States Supreme Court requesting review of the Fifth Circuit’s reverse and render ruling.
Harman’s petition was initially distributed to the Supreme Court for consideration at its April 13, 2018 internal conference. The Court has since noted on its public docket that Harman’s petition would be rescheduled for a future conference. The Supreme Court reviews petitions over the course of its annual term and can rule at any time depending on multiple factors. Ultimately, whether Mr. Harman’s petition for review is granted or denied is wholly discretionary with the Court. Historically, the Supreme Court grants approximately 1 percent of the hearing requests it receives.
I have also reported previously on lawsuits regarding the ET Plus that were filed in the wake of the original jury verdict in the Harman case. While we continue to incur costs associated with our defense in these cases, we are supported in that defense by the Fifth Circuit’s unanimous panel opinion in which the Court recognized that the ET Plus end terminal system meets all applicable federal safety standards and the government has never wavered in its approval of the product.
For a more detailed disclosure of the False Claims Act case and the Company’s other litigation, please see Note 18 to the financial statements in Trinity’s Form 10-Q for the period ended March 31, 2018, which will be filed today. Additional information on the False Claims Act case and a copy of the Fifth Circuit’s opinion can be found at www.etplusfacts.com.
I will now turn the call over to Tim.



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Section 5: EX-99.4 (EXHIBIT 99.4)

Exhibit


Exhibit 99.4
Trinity Industries, Inc.
Earnings Release Conference Call
Comments of Timothy R. Wallace
Chairman, Chief Executive Officer, and President
April 26, 2018
Thank you, Theis, and good morning everyone.
We are off to a good start this year. Our consolidated financial results for the first quarter reflect the weak business conditions that persisted during the last few years. Today, market fundamentals in several of our businesses are encouraging. We see positive momentum with respect to the level of order inquiries for some of our products. Historically when this occurs for an extended period of time, it tends to be an early sign of an eventual increase in demand. It is difficult to precisely predict when a market is making a sustainable recovery; however, the current atmosphere reminds me of previous downturns when demand began moving in a more positive direction. We are closely monitoring this situation and will respond accordingly.
I am pleased to report that we are making good progress toward achieving our goal of a seamless and efficient spin-off of our infrastructure businesses to our shareholders. Having Antonio on board at this stage of the process is very helpful. He will immediately begin to add value as well as provide input to the pre-spin activities. Before Melendy gives her update on spin-off related matters, I will provide some insight regarding the alignment of our businesses between Trinity and the infrastructure company.
Following the spin-off, the businesses that will comprise the infrastructure company include our construction aggregates, trench shoring, wind towers, utilities structures, tank containers for gas and liquid products, inland barge, our forging and casting components businesses. It will also include our businesses in Mexico that manufacture these types of products.
Post spin-off, Trinity will be comprised primarily of our rail-related businesses, including our railcar leasing and management services business, our railcar manufacturing businesses in the U.S. and Mexico, our railcar maintenance business, our railcar after-market parts business, as well as our tank car heads business.
As we reviewed several potential alignments of our businesses and discussed a number of key factors, we decided that our highway products business should remain with Trinity. Keeping highway products within Trinity will provide continuity for ongoing litigation management.
We also spent time discussing the placement of our forging and casting businesses that manufacture a number of products, including railcar axles and couplers as well as other industrial products for customers that serve infrastructure markets. We believe these businesses will be well-positioned for growth as part of the infrastructure company.
Antonio and I are enthusiastic about our respective opportunities to lead these organizations.
Trinity’s achievements during the first quarter reflect the skills and talents of our people. Our organization has a performance-driven culture that is characterized by flexibility, collaboration, and responsiveness. These attributes have contributed to our success during the past several years as our businesses have responded to challenging market conditions. These same characteristics are proving highly beneficial as we move through the spin-off process.
I am excited about the future of our company and the potential opportunities for both Trinity and our new infrastructure company.
I will now turn it over to Melendy.



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Section 6: EX-99.5 (EXHIBIT 99.5)

Exhibit


Exhibit 99.5
Trinity Industries, Inc.
Earnings Release Conference Call
Comments of Melendy E. Lovett
Senior Vice President and Chief Administrative Officer
April 26, 2018
Thank you Tim and good morning everyone.     
Planning and execution of the spin-off of Trinity’s infrastructure-related businesses has continued to progress well following our 4th quarter earnings call in February. Our teams are working together alongside our advisors to create what we anticipate will be two strong and valuable public companies. At this time, we remain on track to complete the spin-off in the fourth quarter of this year.
Since our last call, we have continued to work with the IRS regarding our Private Letter Ruling filed in February. We have made additional progress in finalizing key elements of the initial Form 10, which we plan to file with the SEC in the second quarter. (As a reminder, the Form 10 is the primary public filing describing the infrastructure businesses that are being spun off.) The business segment alignment that Tim discussed is an important milestone for this filing. We are also in the process of preparing the new infrastructure company’s historical financials, which are also a key part of the Form 10; these financials will reflect the last three year’s financial performance for the new company as if it were a stand-alone entity during that time. We also expect to finalize the name of the new company by the time we file our Form 10.
The strategic direction and capital allocation priorities set by each executive management team and Board of Directors will be critical elements in establishing their new capital structures once the spin-off is complete. We look forward to sharing this information with you in due course.
Numerous other matters related to Day 1 separation and transitional services requirements are underway and proceeding well. Trinity’s cross-functional team of leaders assisting with the transaction and separation is doing a tremendous job and has been very successful at minimizing disruptions to our day to day business operations.
The effort the spin-off team is undertaking is significant, and the spirit in which they are approaching this effort embodies our core values of flexibility, collaboration, and dedication to excellence. We are grateful to all of our employees who are continuing to deliver quality business results to both internal and external stakeholders as we work through the spin-off process. While we are focused on a successful spin-off, we are also focused on operating as one Trinity company until the spin-off is complete.
We will continue to update our stakeholders on our quarterly earnings calls, and at other times as appropriate. I will now turn the call over to Scott.



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Section 7: EX-99.6 (EXHIBIT 99.6)

Exhibit


Exhibit 99.6
Trinity Industries, Inc.
Earnings Release Conference Call
Comments of Scott C. Beasley,
Chief Financial Officer
Construction Products, Energy Equipment and Inland Barge Groups
April 26, 2018
Thank you Melendy, and good morning everyone. Over the years, Trinity has built a strong platform of market-leading businesses to serve infrastructure markets. I am honored to be part of the new company’s exciting future. We are working well together as a leadership team, and Antonio and I look forward to sharing more details about the company and our strategy in the upcoming months. Today, I will provide commentary on the Energy Equipment, Inland Barge, and Construction Products groups, and you will hear directly from Antonio on future earnings calls.
Turning to results for the first quarter….the Energy Equipment Group reported lower revenues and operating profit compared to last year. Overall, our results continue to reflect mixed market conditions for our Energy Equipment businesses. Additionally, our wind towers business experienced a one-time impact from new revenue recognition rules that will be detailed in our 10-Q filed later today.
One factor driving our year-over-year decline in Energy Equipment revenues was the amendment of a long-term wind tower agreement that we discussed on our last earnings call. This agreement extended deliveries into 2020, but reduced expected volumes in 2018. We continue to anticipate a relatively stable level of wind tower production throughout this year. As we have indicated on many of our previous calls, the scheduled phase out of the production tax credit for wind power continues to put pressure on wind tower margins.
On a positive note, our utility structures business improved its year-over-year performance during the first quarter, driven by increased volumes and pricing. Project sizes remain small, but bidding activity continues to be strong. We remain optimistic about long-term market fundamentals. The country’s need to replace aging infrastructure, to improve the reliability of the grid, and to connect renewables and other new sources of generation, continue to support our positive long-term view of this business.
In our Inland Barge Group, our first quarter revenues and operating profit were down significantly year-over-year. An oversupply of barges in dry and liquid markets has persisted, although utilization levels for our customers appear to be improving.
We received orders for new barges totaling $57 million during the quarter. Our quarter-end backlog totaled $125 million, increasing 27% since year end. We were pleased to extend our backlog. The orders received during the quarter largely reflected strategic buying decisions by our customers, and inquiries in the 2nd quarter have been encouraging, particularly on the liquids side. At our current low level of production, we remain focused on cost-control and finding opportunities to generate operating leverage.
In our Construction Products Group, on a similar level of revenues, first quarter operating profit increased year-over-year to $19.4 million. The increase reflects higher volumes in our construction aggregates and trench shoring businesses. The increase was offset in part, by reduced volumes in our highway products business. This was largely due to lost capacity at one of our facilities from a previously disclosed equipment failure.
In our Construction Aggregates business, overall market conditions remain favorable, and we continue to seek opportunities to grow this business.
Finally, the trench shoring acquisition that we made in the 3rd quarter of 2017 continues to contribute to the positive year-over-year performance of the rest of our Construction Products Group.






From a market perspective, demand fundamentals for our Construction Products Group remain strong. We believe our platform of businesses is well positioned to benefit from economic growth in our key markets and long-term infrastructure spending.
I will now turn the presentation over to Eric.



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Section 8: EX-99.7 (EXHIBIT 99.7)

Exhibit


Exhibit 99.7
Trinity Industries, Inc.
Earnings Release Conference Call
Comments of Eric R. Marchetto,
Executive Vice President and Chief Commercial Officer
TrinityRail
April 26, 2018
Thank you, Scott, and good morning everyone!
The first quarter performance for the business segments within TrinityRail reflects both the scale and strength of the integrated business model which differentiate our railcar leasing, manufacturing, and service platforms. I will provide comments on the rail market, our commercial activity, and operating performance of our TrinityRail platforms.
North American rail traffic volumes were positive during the first quarter as compared to last year’s first quarter, despite weather and service-related challenges that negatively impacted rail system fluidity. As industrial production gains momentum and new business investments continue, we believe demand for railcars is also improving. We are experiencing increased demand for railcars across many commodity markets and available railcar equipment in these markets is tightening in response. The North American railcar active fleet grew during the first quarter, as over 25,000 previously idle railcars were placed into service. We remain encouraged by improving railcar fundamentals.
We remain active within the railcar secondary market, with two transactions completed during the first quarter. We sold a small portfolio of railcars to an RIV partner to complement their previous portfolio acquisition from TrinityRail. Institutional investors continue to show interest in investing in railcar lease portfolios. As referenced during our last call, we acquired a portfolio in the secondary market of approximately 1,100 tank cars at a discount to replacement value. Many of these railcars were off lease at the time of purchase, negatively impacting our quarterly utilization statistic. We have placed some of these railcars into service already and, based on our recent commercial activity, we are optimistic we will be able to place the majority of these railcars into service in the near-term. We are watching the market closely, and planning additional portfolio purchases in the secondary market this year.
We continue to grow the TrinityRail lease fleet. At the end of the first quarter, our owned and managed fleet was approximately 119,000 railcars, representing growth of 13% year-over-year. Lease fleet utilization at the end of the quarter was 96.1%, this was negatively impacted by the railcar portfolio purchase I referenced and the early termination of a group of railcar leases related to a customer bankruptcy. We expect the utilization decline to be short-term, with improved levels to follow.
Railcar lease rates are beginning to improve from recent low levels. Generally speaking, current lease rates remain below those of expiring leases, which will impact our year-over-year revenue comparisons. Historically, growth in North American Industrial production has led to improvement in the rail market. In addition, rising interest rates and higher domestic steel prices have usually increased lease pricing on new railcars.
New railcar order activity in the first quarter is encouraging. We received orders for approximately 4,700 new railcars serving select growth and replacement end markets, many of which were for 2019 delivery. Approximately 40% of the orders received during the first quarter are for delivery to customers within our lease fleet. The remainder are direct sales to 3rd parties. The new railcar order received during the first quarter reflect a diverse mix of railcars including a number of specialty railcars which have a higher selling prices.
I am pleased with our Rail Group’s results which reflect various cost control efforts specific to operating expenses. Our backlog provides good visibility of our new railcar production schedule. We expect to deliver approximately 20,500 railcars in 2018. The Rail Group executed upon a moderating delivery schedule of





5,725 railcars in the first quarter. While year over year quarterly revenue and operating profit performance improved due to higher volume of deliveries, operating profit margin declined due to lower pricing on delivered railcars. Based on our current production capacity and material lead times, we have the ability to increase our 2018 deliveries above the guidance with incremental orders and drive operating leverage within the business.
Our maintenance business has focused on meeting additional demand to serve the needs of our owned lease fleet and those of key customers. We made a significant investment in the last few years to expand our service capabilities and geographic footprint. These service expansions were due to demand for HM 251 modifications, auto-rack recertifications, and other regulatory compliance requirements. We continue to see opportunities for growth within this business by providing additional service offerings related to the railcar products we manufacture and lease.
In closing, TrinityRail continues to demonstrate the effectiveness of its integrated leasing, manufacturing, and services business model. Our scale positions us to grow our market leading platform in a cost-effective manner. The quality of our products and ability to respond quickly to customer needs, differentiate us in the market place. Our broad participation in the railcar value chain, combined with our operational flexibility, enables us to quickly adjust to shifts in market demand. We are well-positioned to respond as demand for railcars improves.
I will now turn it over to James for his remarks.



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Section 9: EX-99.8 (EXHIBIT 99.8)

Exhibit


Exhibit 99.8
Trinity Industries, Inc.
Earnings Release Conference Call
Comments of James E. Perry
Senior Vice President and Chief Financial Officer
April 26, 2018
Thank you, Eric, and good morning everyone.
Yesterday, we announced our results for the first quarter of 2018. For the quarter, the Company reported revenues of $831 million and earnings per share of $0.26, including transaction expenses of $0.04 per share related to the Company’s planned spin-off. This resulted in adjusted first quarter EPS of $0.30 for core earnings for the first quarter, matching last year’s earnings level for the same quarter.
During the first quarter, we invested $318 million in our wholly-owned lease fleet - including new railcars, secondary market purchases, and modifications - and invested $41 million at the corporate level and across our businesses.
During the first quarter, we also invested $50 million in share repurchases with the purchase over 1.5 million shares of Trinity stock under our new program. We will provide updates on any additional share repurchase program activity as we report each quarter’s financial results.
Earlier this week, we provided a notice to call our $450 million of convertible notes at par on June 1st. This is our first opportunity to call these notes since issuance in 2006. A call of the notes will likely force holders to convert since the current stock price is above the current conversion price of $24.13 per share.
We are required to settle the par amount of a conversion in cash, and we have the option to settle the “in-the-money,” premium above $450 million, in cash, stock, or a combination. We intend to settle the conversion fully in cash; therefore, beginning in the second quarter, we will no longer carry any EPS dilution related to the premium. At yesterday’s closing stock price, the premium amount would equate to 4.5 million shares of dilution, and the aggregate cash payable amount upon conversion would total approximately $590 million. The aggregate amount payable cannot be determined at this time however, as it will depend on the aggregated payout following each conversion notice, using the average closing stock price for the 20-day trading period following each note holder’s redemption.
The Company currently expects to fund the redemption and conversion payments through a combination of cash on hand and the proceeds from one or more debt financing transactions on a non-recourse basis. We will provide further information about the financing transactions once they have been completed, which we expect to occur in late second quarter or early third quarter. The call of the convertible notes and associated re-financing are important steps as we continue to analyze and refine capital structures for the two companies in preparation for the spin-off.
Regarding our 2018 guidance, let me remind you that our EPS guidance reflects consolidated results for Trinity and has not been adjusted to incorporate the completion of the planned spin-off in the fourth quarter. We will provide as much detail on the financial impacts of the spin-off as we are able to during our earnings calls throughout the year.
In the tables that accompanied our press release yesterday, we provided updated 2018 detailed guidance - including segment details - that reflects anticipated market conditions and the impact of the lower tax rate. We now anticipate core 2018 EPS of between $1.20 and $1.40, excluding what we now expect to be approximately $30 million to $35 million, or $0.20 to $0.25 per share, of transaction costs associated with the planned spin-off. These transaction costs are reported in Corporate Expenses. The EPS range, including these transaction costs, is expected to be between $0.95 and $1.20. Our updated guidance includes interest





expense of $165 million for the year. This is relatively unchanged from what was included in the EPS guidance we provided in February.
Across our businesses with larger backlogs, expected operating margins during the year reflect orders we took in time periods with weaker market conditions. There is a lag effect of when we take orders and when we see the pricing and margins in our financial results due to the size of the backlogs. As a result of this, while we are encouraged by the increasing level of demand in several of our markets, pricing trends we see for some of the orders this year will generally not be reflected in this year’s results. However, our teams are working diligently on achieving operating efficiencies to improve upon our expectations, and we will update you on our progress throughout the year.
In the Rail Group, we continue to expect deliveries of 20,500 railcars this year. Approximately 85% of our 2018 production plan has been delivered in the first quarter or was in the quarter-end backlog. At the end of the quarter, the backlog was 21,365 railcars with a value of $2.1 billion. We currently anticipate approximately 45% of our total 2018 deliveries will go into our lease fleet.
In our Railcar Leasing Group, we expect to grow our wholly owned lease fleet again this year, while continuing to sell leased railcars to the RIV platform. We continue to expect proceeds from sales of leased railcars of approximately $350 million, with $16 million completed in the first quarter. We now anticipate the remainder to be spread over the second, third and fourth quarters, though the cadence may not be even as we are still determining the schedule for these transactions. As a reminder, the guidance for proceeds from sales of leased railcars is separate from and is not included in the segment guidance for revenue from operations. As Eric mentioned, lease rates for renewals are generally lower than their expiring leases, impacting Leasing revenue and profit from operations. Rates are beginning to improve slightly as compared to recent quarters.
In the Energy Equipment Group, we expect a step down in revenues and profits in 2018, primarily due to reduced volumes and lower contractual pricing on the long-term supply agreement in our wind towers business. We are optimistic about our utility structures business in 2018 as market demand has continued to improve.
In the Construction Products Group, revenue and profit guidance reflects the acquisitions we made last year in our aggregates and shoring businesses. We will see the full year financial impact from these acquisitions in 2018. An increased focus on infrastructure spending at both the state and federal levels could position this Group to gain momentum beyond 2018 as projects come to fruition.
In the Inland Barge Group, we had a number of strategic orders placed in the first quarter. We remain flexible to respond to improvement in market demand, though the timing of a sustained market recovery is difficult to gauge. Our expectation remains for a breakeven year as barge operators continue to rationalize their fleets.
Regarding our corporate expenses, our guidance assumes that legal costs will remain at levels similar to 2017 as we continue to work through our docket of highway products cases. We are optimistic that these costs will decrease in the near future, as we work through these items.
From a leasing capital expenditures standpoint, we currently expect to add railcars with a value of $905 million to our lease fleet in 2018, primarily from our manufacturing lines, but also from secondary market purchases. In addition, we will invest approximately $60 million in our owned and partially-owned lease fleets to modify certain tank cars to meet the new regulatory standards for flammable service - the investment will also make these railcars available to carry a wider range of commodities. After taking into account deferred profit on new railcar additions and planned modifications to our lease fleet, as well as the proceeds from sales of leased railcars, we anticipate a net lease fleet investment of approximately $520 million in 2018.





In 2018, we expect capital expenditures for our businesses and at the corporate level of between $100 million and $150 million. We may have additional capital expenditures related to the proposed spin-off that are not yet included in this range.
As we indicated in our press release yesterday, actual results in 2018 may differ from present expectations and could be impacted by a number of factors including, among others, the “Risk Factors” and “Forward-Looking Statements” disclosed in our 10-K.
Our operator will now prepare us for the question and answer session.
-- Q&A Session --



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Section 10: EX-99.9 (EXHIBIT 99.9)

q12018ccbusinesssegmenta
Trinity Industries, Inc. Spin-off Update Anticipated Alignment of Businesses April 26, 2018 Investor Contact: TrinityInvestorRelations@trin.net Website: www.trin.net Exhibit 99.9


 
2570002 https://dealworks.ny.jpmorgan.com/dw/drl/objectId/0b0096158b96941a 55.96.146 167.168.167 62.62.62 149.55.53 196.189.151 87.81.77 221.217.195 172.151.100 Forward Looking Statement 1 Some statements in this presentation, 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 the Registrant's estimates, expectations, beliefs, intentions or strategies for the future, and the assumptions underlying these forward- looking statements, including, but not limited to, statements regarding the effect of the anticipated separation of the Registrant into two separate public companies, the expected timetable for completing the spin-off transaction, whether or not the spin-off transaction occurs, and any other statements regarding events or developments that the Registrant believes or anticipates will or may occur in the future. The Registrant uses the words “anticipates,” “assumes,” “believes,” “estimates,” “expects,” “intends,” “forecasts,” “may,” “will,” “should,” “guidance,” “outlook,” and similar expressions to identify these forward-looking statements. Forward-looking statements speak only as of the date of this presentation, and the Registrant expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward- looking statement contained herein to reflect any change in the Registrant’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. There is no assurance that the proposed spin-off transaction will be completed, that the Registrant's Board of Directors will continue to pursue the proposed spin-off transaction (even if there are no impediments to completion), that the Registrant will be able to separate its businesses, or that the proposed spin-off transaction will be the most beneficial alternative considered. Forward looking statements involve risks and uncertainties that could cause actual results to differ materially from historical experience or the Registrant’s present expectations, including but not limited to risks and uncertainties regarding economic, competitive, governmental, and technological factors affecting the Registrant’s operations, markets, products, services and prices, as well as any changes in or abandonment of the proposed separation or the ability to effect the separation and satisfy the conditions to the proposed separation, 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 the Registrant’s Annual Report on Form 10-K for the most recent fiscal year, and as may be revised and updated by the Registrant’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.


 
2570002 https://dealworks.ny.jpmorgan.com/dw/drl/objectId/0b0096158b96941a 55.96.146 167.168.167 62.62.62 149.55.53 196.189.151 87.81.77 221.217.195 172.151.100 Anticipated Alignment of Businesses post Spin-off 2 Trinity Industries, Inc. (post spin-off) Infrastructure Company Rail Leasing and Management Services Rail Manufacturing and Maintenance Services All Other ■ TrinityRail® leasing services ■ Asset management ■ Railcar Investment Vehicle (RIV) sales ■ Tank and freight railcars ■ Maintenance services ■ Railcar parts and heads 1 Construction Products Transportation Products ■ Inland hopper and tank barges (includes deck marine hardware) 3 ■ Steel components (includes axles and couplers, and other industrial steel components) 4 ■ Wind towers and utility structures ■ Containers for gas and liquid products Energy Equipment ■ Highway products ■ Corporate ■ Segment Revenue/Operating Profit Eliminations 2 ■ All Other ■ Construction materials (includes lightweight and natural aggregates) ■ Trench shoring equipment All Other ■ Corporate ■ Segment Revenue/Operating Profit Eliminations 5 ■ All Other Associated footnotes are located on page 3


 
2570002 https://dealworks.ny.jpmorgan.com/dw/drl/objectId/0b0096158b96941a 55.96.146 167.168.167 62.62.62 149.55.53 196.189.151 87.81.77 221.217.195 172.151.100 Footnotes 3 1 For financial reporting purposes, a portion of this business (heads product line) is currently included within the financial results of the Energy Equipment Group. 2 Eliminations include manufactured railcars sold to the leasing company. 3 Inland Barge is currently its own segment within Trinity Industries for financial reporting purposes. 4 For financial reporting purposes, Components, including couplers and axles, is currently included with the financial results for the Rail Group but will transfer to the Transportation Products Group of the new Infrastructure Company following the spin-off. 5 Eliminations and All Other pending finalization of company financial statements.


 
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