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<ACCESSION-NUMBER>0000099780-19-000101
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>96
<PERIOD>20190630
<FILING-DATE>20190725
<DATE-OF-FILING-DATE-CHANGE>20190725
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>TRINITY INDUSTRIES INC
<CIK>0000099780
<ASSIGNED-SIC>3743
<IRS-NUMBER>750225040
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>001-06903
<FILM-NUMBER>19973612
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>2525 STEMMONS FREEWAY
<CITY>DALLAS
<STATE>TX
<ZIP>75207-2401
<PHONE>214-631-4420
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>2525 N STEMMONS FREEWAY
<CITY>DALLAS
<STATE>TX
<ZIP>75207
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>TRINITY STEEL CO INC
<DATE-CHANGED>19720407
</FORMER-COMPANY>
</FILER>

Section 1: 10-Q (10-Q)

Document

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q



(Mark One)
☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2019



	OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________ .

Commission File Number 1-6903

(Exact name of registrant as specified in its charter)



Delaware		75-0225040
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
2525 N. Stemmons Freeway
Dallas,	Texas	75207-2401
(Address of principal executive offices)		(Zip Code)

(214) 631-4420

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	TRN	New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ Accelerated filer ¨ Non-accelerated filer ¨

Smaller reporting company ☐ 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. ¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

At July 18, 2019, the number of shares of common stock, $0.01 par value, outstanding was 127,874,316.

TRINITY INDUSTRIES, INC.

FORM 10-Q

TABLE OF CONTENTS



Caption	Page

PART I FINANCIAL INFORMATION
Item 1. Financial Statements	3
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3. Quantitative and Qualitative Disclosures About Market Risk	49
Item 4. Controls and Procedures	49

PART II OTHER INFORMATION
Item 1. Legal Proceedings	50
Item 1A. Risk Factors	50
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	50
Item 3. Defaults Upon Senior Securities	50
Item 4. Mine Safety Disclosures	50
Item 5. Other Information	50
Item 6. Exhibits	51

SIGNATURES	52

Table of Contents

PART I

Item 1. Financial Statements

Trinity Industries, Inc. and Subsidiaries

Consolidated Statements of Operations

(unaudited)



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
	(in millions, except per share amounts)
Revenues:
Manufacturing	$	459.1		$	420.8		$	863.7		$	779.7
Leasing	276.9			213.2			477.1			387.5
	736.0			634.0			1,340.8			1,167.2
Operating costs:
Cost of revenues:
Manufacturing	399.6			363.4			751.2			669.9
Leasing	178.9			118.5			290.7			211.9
	578.5			481.9			1,041.9			881.8
Selling, engineering, and administrative expenses:
Manufacturing	26.5			23.1			49.7			46.6
Leasing	12.7			12.6			25.5			24.8
Other	30.6			39.9			54.2			77.6
	69.8			75.6			129.4			149.0
Gains on dispositions of property:
Net gains on railcar lease fleet sales owned more than one year at the time of sale	18.7			9.5			26.6			11.6
Other	0.6			2.0			2.7			2.1
	19.3			11.5			29.3			13.7
Total operating profit	107.0			88.0			198.8			150.1
Other (income) expense:
Interest income	(1.6		)	(3.7		)	(2.9		)	(7.6		)
Interest expense	57.0			43.8			109.7			90.1
Other, net	(0.1		)	(1.9		)	0.2			(3.1		)
	55.3			38.2			107.0			79.4
Income from continuing operations before income taxes	51.7			49.8			91.8			70.7
Provision for income taxes	14.1			12.5			23.0			18.2
Income from continuing operations	37.6			37.3			68.8			52.5
Income (loss) from discontinued operations, net of provision (benefit) for income taxes of $(0.3), $8.1, $(0.5), and $17.2	(0.8		)	28.2			(1.9		)	54.6
Net income	36.8			65.5			66.9			107.1
Net income (loss) attributable to noncontrolling interest	0.4			1.4			(0.1		)	2.8
Net income attributable to Trinity Industries, Inc.	$	36.4		$	64.1		$	67.0		$	104.3

Basic earnings per common share:
Income from continuing operations	$	0.29		$	0.24		$	0.53		$	0.33
Income (loss) from discontinued operations	(0.01		)	0.19			(0.02		)	0.37
Basic net income attributable to Trinity Industries, Inc.	$	0.28		$	0.43		$	0.51		$	0.70
Diluted earnings per common share:
Income from continuing operations	$	0.29		$	0.24		$	0.52		$	0.32
Income (loss) from discontinued operations	(0.01		)	0.19			(0.01		)	0.36
Diluted net income attributable to Trinity Industries, Inc.	$	0.28		$	0.43		$	0.51		$	0.68
Weighted average number of shares outstanding:
Basic	127.6			146.2			129.0			146.7
Diluted	129.2			147.0			130.7			150.2

See accompanying notes to Consolidated Financial Statements.

Table of Contents

Trinity Industries, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(unaudited)



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
	(in millions)
Net income	$	36.8		$	65.5		$	66.9		$	107.1
Other comprehensive income (loss):
Derivative financial instruments:
Unrealized losses arising during the period, net of tax benefit of $2.4, $0.2, $4.2, and $-	(8.0		)	(0.9		)	(13.5		)	(0.1		)
Reclassification adjustments for losses included in net income, net of tax expense (benefit) of $-, $(0.2), $(0.4), and $0.1	1.0			0.3			1.9			1.3
Currency translation adjustment	—			(0.8		)	—			(1.5		)
Defined benefit plans:
Amortization of net actuarial losses, net of tax benefit of $0.3, $0.2, $0.6, and $0.6	0.8			0.9			1.6			1.7
	(6.2		)	(0.5		)	(10.0		)	1.4
Comprehensive income	30.6			65.0			56.9			108.5
Less: comprehensive income attributable to noncontrolling interest	0.7			1.8			0.5			3.6
Comprehensive income attributable to Trinity Industries, Inc.	$	29.9		$	63.2		$	56.4		$	104.9

See accompanying notes to Consolidated Financial Statements.

Table of Contents

Trinity Industries, Inc. and Subsidiaries

Consolidated Balance Sheets



	June 30, 2019			December 31, 2018
	(unaudited)
	(in millions)
ASSETS
Cash and cash equivalents	$	102.8		$	179.2
Receivables, net of allowance	351.7			276.6
Income tax receivable	21.0			40.4
Inventories:
Raw materials and supplies	333.7			342.5
Work in process	194.2			119.3
Finished goods	72.6			62.9
	600.5			524.7
Restricted cash, including partially-owned subsidiaries of $30.8 and $36.6	113.7			171.6
Property, plant, and equipment, at cost, including partially-owned subsidiaries of $2,048.3 and $2,032.0	8,882.5			8,253.4
Less accumulated depreciation, including partially-owned subsidiaries of $499.8 and $472.0	(2,012.9		)	(1,919.0		)
	6,869.6			6,334.4
Goodwill	208.8			208.8
Other assets	307.8			253.5
	$	8,575.9		$	7,989.2
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	$	217.7		$	212.1
Accrued liabilities	346.3			368.3
Debt:
Recourse	397.6			397.4
Non-recourse:
Wholly-owned subsidiaries	2,919.4			2,316.6
Partially-owned subsidiaries	1,298.9			1,315.2
	4,615.9			4,029.2
Deferred income	—			17.7
Deferred income taxes	769.0			743.1
Other liabilities	97.4			56.8
	6,046.3			5,427.2
Stockholders’ equity:
Preferred stock – 1.5 shares authorized and unissued	—			—
Common stock – 400.0 shares authorized	1.3			1.3
Capital in excess of par value	—			1.2
Retained earnings	2,305.8			2,326.1
Accumulated other comprehensive loss	(127.4		)	(116.8		)
Treasury stock	(0.9		)	(1.0		)
	2,178.8			2,210.8
Noncontrolling interest	350.8			351.2
	2,529.6			2,562.0
	$	8,575.9		$	7,989.2

See accompanying notes to Consolidated Financial Statements.

Table of Contents

Trinity Industries, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(unaudited)



	Six Months Ended June 30,
	2019			2018
	(in millions)
Operating activities:
Net income	$	66.9		$	107.1
(Income) loss from discontinued operations, net of income taxes	1.9			(54.6		)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	138.1			119.7
Stock-based compensation expense	13.0			14.2
Provision for deferred income taxes	22.8			19.0
Net gains on railcar lease fleet sales owned more than one year at the time of sale	(26.6		)	(11.6		)
Gains on dispositions of property and other assets	(2.7		)	(2.1		)
Non-cash interest expense	7.2			12.6
Other	(1.9		)	(0.6		)
Changes in operating assets and liabilities:
(Increase) decrease in receivables	(55.7		)	11.0
(Increase) decrease in inventories	(75.8		)	41.9
(Increase) decrease in other assets	(33.0		)	(26.8		)
Increase (decrease) in accounts payable	5.6			14.4
Increase (decrease) in accrued liabilities	(51.7		)	(25.9		)
Increase (decrease) in other liabilities	(5.2		)	1.5
Net cash provided by operating activities - continuing operations	2.9			219.8
Net cash provided by operating activities - discontinued operations	—			128.5
Net cash provided by operating activities	2.9			348.3

Investing activities:
Decrease in short-term marketable securities	—			294.5
Proceeds from dispositions of property and other assets	14.3			4.4
Proceeds from railcar lease fleet sales owned more than one year at the time of sale	99.9			56.4
Capital expenditures – leasing, net of sold lease fleet railcars owned one year or less with a net cost of $91.8 and $24.8	(690.9		)	(503.2		)
Capital expenditures – manufacturing and other	(34.0		)	(13.5		)
Other	(1.2		)	1.3
Net cash used in investing activities - continuing operations	(611.9		)	(160.1		)
Net cash used in investing activities - discontinued operations	—			(44.3		)
Net cash used in investing activities	(611.9		)	(204.4		)

Financing activities:
Payments to retire debt	(1,044.9		)	(674.5		)
Proceeds from issuance of debt	1,626.9			478.0
Shares repurchased	(59.0		)	(102.2		)
Dividends paid to common shareholders	(39.5		)	(39.3		)
Purchase of shares to satisfy employee tax on vested stock	(7.9		)	(11.3		)
Distributions to noncontrolling interest	(0.9		)	(10.3		)
Other	—			(3.2		)
Net cash provided by (used in) financing activities	474.7			(362.8		)
Net decrease in cash, cash equivalents, and restricted cash	(134.3		)	(218.9		)
Cash, cash equivalents, and restricted cash at beginning of period	350.8			973.8
Cash, cash equivalents, and restricted cash at end of period	$	216.5		$	754.9

See accompanying notes to Consolidated Financial Statements.

Table of Contents

Trinity Industries, Inc. and Subsidiaries

Consolidated Statements of Stockholders' Equity

(unaudited)



	Common Stock				Capital in Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock					Trinity Stockholders’ Equity			Noncontrolling Interest			Total Stockholders’ Equity
	Shares		$0.01 Par Value		Capital in Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Loss			Shares		Amount			Trinity Stockholders’ Equity			Noncontrolling Interest			Total Stockholders’ Equity
	(in millions, except par value and per common share amounts)
Balances at December 31, 2018	133.3		$	1.3	$	1.2		$	2,326.1		$	(116.8	)	(0.1	)	$	(1.0	)	$	2,210.8		$	351.2		$	2,562.0
Net income	—		—		—			30.6			—			—		—			30.6			(0.5		)	30.1
Other comprehensive (loss) income	—		—		—			—			(4.1		)	—		—			(4.1		)	0.3			(3.8		)
Cash dividends declared on common stock ($0.17 per common share)	—		—		—			(22.3		)	—			—		—			(22.3		)	—			(22.3		)
Stock-based compensation expense	—		—		5.5			—			—			—		—			5.5			—			5.5
Shares repurchased	—		—		70.0			—			—			(3.5	)	(89.0		)	(19.0		)	—			(19.0		)
Other restricted share activity	—		—		0.6			—			—			—		(1.1		)	(0.5		)	—			(0.5		)
Distributions to noncontrolling interest	—		—		—			—			—			—		—			—			(0.4		)	(0.4		)
Cumulative effect of adopting new accounting standard	—		—		—			13.7			—			—		—			13.7			—			13.7
Other	—		—		—			(0.2		)	—			—		—			(0.2		)	—			(0.2		)
Balances at March 31, 2019	133.3		$	1.3	$	77.3		$	2,347.9		$	(120.9	)	(3.6	)	$	(91.1	)	$	2,214.5		$	350.6		$	2,565.1
Net income	—		—		—			36.4			—			—		—			36.4			0.4			36.8
Other comprehensive (loss) income	—		—		—			—			(6.5		)	—		—			(6.5		)	0.3			(6.2		)
Cash dividends declared on common stock ($0.17 per common share)	—		—		—			(21.6		)	—			—		—			(21.6		)	—			(21.6		)
Stock-based compensation expense	—		—		7.5			—			—			—		—			7.5			—			7.5
Shares repurchased	—		—		—			—			—			(2.1	)	(44.0		)	(44.0		)	—			(44.0		)
Other restricted share activity	0.7		—		1.0			—			—			(0.5	)	(8.5		)	(7.5		)	—			(7.5		)
Distributions to noncontrolling interest	—		—		—			—			—			—		—			—			(0.5		)	(0.5		)
Retirement of treasury stock	(6.1	)	—		(85.8		)	(56.9		)	—			6.1		142.7			—			—			—
Balances at June 30, 2019	127.9		$	1.3	$	—		$	2,305.8		$	(127.4	)	(0.1	)	$	(0.9	)	$	2,178.8		$	350.8		$	2,529.6

Table of Contents



	Common Stock			Capital in Excess of Par Value		Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock					Trinity Stockholders’ Equity			Noncontrolling Interest			Total Stockholders’ Equity
	Shares	$0.01 Par Value		Capital in Excess of Par Value		Retained Earnings			Accumulated Other Comprehensive Loss			Shares		Amount			Trinity Stockholders’ Equity			Noncontrolling Interest			Total Stockholders’ Equity
	(in millions, except par value and per common share amounts)
Balances at December 31, 2017	150.9	$	1.6	$	482.5	$	4,123.4		$	(104.8	)	(0.1	)	$	(1.6	)	$	4,501.1		$	356.9		$	4,858.0
Net income	—	—		—		40.2			—			—		—			40.2			1.4			41.6
Other comprehensive income	—	—		—		—			1.5			—		—			1.5			0.4			1.9
Cash dividends declared on common stock ($0.13 per common share)	—	—		—		(19.4		)	—			—		—			(19.4		)	—			(19.4		)
Stock-based compensation expense	—	—		6.2		—			—			—		—			6.2			—			6.2
Shares repurchased	—	—		—		—			—			(1.5	)	(50.0		)	(50.0		)	—			(50.0		)
Stock options exercised	—	—		0.1		—			—			—		—			0.1			—			0.1
Other restricted share activity	—	—		3.9		—			—			(0.1	)	(1.9		)	2.0			—			2.0
Distributions to noncontrolling interest	—	—		—		—			—			—		—			—			(5.8		)	(5.8		)
Cumulative effect of adopting new accounting standard	—	—		—		18.7			(18.7		)	—		—			—			—			—
Balances at March 31, 2018	150.9	$	1.6	$	492.7	$	4,162.9		$	(122.0	)	(1.7	)	$	(53.5	)	$	4,481.7		$	352.9		$	4,834.6
Net income	—	—		—		64.1			—			—		—			64.1			1.4			65.5
Other comprehensive income	—	—		—		—			(0.9		)	—		—			(0.9		)	0.4			(0.5		)
Cash dividends declared on common stock ($0.13 per common share)	—	—		—		(19.6		)	—			—		—			(19.6		)	—			(19.6		)
Stock-based compensation expense	—	—		8.0		—			—			—		—			8.0			—			8.0
Shares repurchased	—	—		—		—			—			(1.5	)	(50.1		)	(50.1		)	—			(50.1		)
Other restricted share activity	0.2