October 31, 2024October 31, 2024TRINITY INDUSTRIES INC0000099780false00000997802024-10-312024-10-31
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
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| Date of Report (Date of Earliest Event Reported): | | October 31, 2024 |
_______________________________________
(Exact name of registrant as specified in its charter)
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| Delaware | | 1-6903 | | 75-0225040 |
(State or other jurisdiction
of incorporation) | | (Commission File No.) | | (I.R.S. Employer
Identification No.) |
14221 N. Dallas Parkway, Suite 1100,
Dallas, Texas 75254-2957
(Address of Principal Executive Offices, and Zip Code)
(214) 631-4420
Registrant's Telephone Number, Including Area Code
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))
Securities registered pursuant to Section 12(b) of the Act:
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| 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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
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.
Trinity Industries, Inc. ("Trinity") hereby furnishes the information set forth in its News Release, dated October 31, 2024, announcing operating results for the three month period ended September 30, 2024, a copy of which is furnished as Exhibit 99.1 and incorporated herein by reference. On October 31, 2024, Trinity held a conference call and webcast with respect to its financial results for the three month period ended September 30, 2024. The conference call scripts of Leigh Anne Mann, Vice President of Investor Relations; E. Jean Savage, Chief Executive Officer and President; and Eric R. Marchetto, Executive Vice President and Chief Financial Officer are furnished as Exhibit 99.2, and incorporated herein by reference.
The conference call, News Release, and Presentation Materials, described below, included references to Adjusted Operating Results and Adjusted Earnings Per Share, Adjusted Return on Equity, Cash Flow from Operations with Net Gains on Lease Portfolio Sales, EBITDA and Adjusted EBITDA, which are not calculations based on generally accepted accounting principles (“GAAP”). Reconciliations of each of these non-GAAP measures to the most directly comparable GAAP measures have been included in the News Release and/or the Presentation Materials. When forward-looking non-GAAP measures are provided, Trinity does not provide quantitative reconciliations of forward-looking non-GAAP measures to the most directly comparable GAAP measures because it cannot, without unreasonable effort, predict the timing and amounts of certain items included in the computations of each of these measures. These factors include, but are not limited to: the product mix of expected railcar deliveries; the timing and amount of significant transactions and investments, such as lease portfolio sales, capital expenditures, and returns of capital to shareholders; and the amount and timing of certain other items outside the normal course of our core business operations.
This information and the materials described in Item 7.01 are not "filed" pursuant to the Securities Exchange Act of 1934 and are 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, Trinity posted its presentation for investors and interested parties to its website to accompany the conference call; a copy of these materials is furnished as Exhibit 99.3 and incorporated herein by reference.
Forward-Looking Statements
Some statements in this release, which are not historical facts, are “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements about Trinity's estimates, expectations, beliefs, intentions or strategies for the future, and the assumptions underlying these forward-looking statements, including, but not limited to, future financial and operating performance, future opportunities and any other statements regarding events or developments that Trinity believes or anticipates will or may occur in the future. Trinity uses the words “anticipates,” “assumes,” “believes,” “estimates,” “expects,” “intends,” “forecasts,” “may,” “will,” “should,” “guidance,” “projected,” “outlook,” and similar expressions to identify these forward-looking statements. Forward-looking statements speak only as of the date of this release, and Trinity expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in Trinity’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based, except as required by federal securities laws. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations, including but not limited to risks and uncertainties regarding economic, competitive, governmental, and technological factors affecting Trinity’s operations, markets, products, services and prices, and such forward-looking statements are not guarantees of future performance. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” and “Forward-Looking Statements” in Trinity’s Annual Report on Form 10-K for the most recent fiscal year, as may be revised and updated by Trinity’s Quarterly Reports on Form 10-Q, and Trinity’s Current Reports on Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(a) - (c) Not applicable.
(d) Exhibits:
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| NO. | | DESCRIPTION |
| 99.1 | | | |
| 99.2 | | | |
| 99.3 | | | |
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| 101.SCH | | Inline XBRL Taxonomy Extension Schema Document (filed electronically herewith). |
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| 101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase Document (filed electronically herewith). |
| 101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed electronically herewith). |
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| 104 | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
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.
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| Trinity Industries, Inc. |
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| October 31, 2024 | By: | /s/ Eric R. Marchetto |
| | Name: Eric R. Marchetto |
| | Title: Executive Vice President and Chief Financial Officer |
Exhibit 99.1
FOR IMMEDIATE RELEASE
Trinity Industries, Inc. Announces Third Quarter 2024 Results
Reports quarterly GAAP and adjusted earnings from continuing operations of $0.44 and $0.43 per diluted share, respectively
Lease fleet utilization of 96.6% and Future Lease Rate Differential ("FLRD") of positive 28.4% at quarter-end
Generates year-to-date operating cash flow of $384 million and net gains on lease portfolio sales of $36 million
Delivered 4,360 railcars in the quarter; backlog of $2.4 billion at quarter-end
DALLAS, Texas – October 31, 2024 – Trinity Industries, Inc. (NYSE:TRN) today announced earnings results for the third quarter ended September 30, 2024.
Financial and Operational Highlights
•Quarterly total company revenues of $799 million
•Quarterly income from continuing operations per common diluted share ("EPS") of $0.44 and adjusted EPS of $0.43; $0.17 improvement in adjusted EPS year over year
•Lease fleet utilization of 96.6% and FLRD of positive 28.4% at quarter-end
•Railcar deliveries of 4,360 and new railcar orders of 1,810
•Year-to-date cash flow from continuing operations of $384 million and net gains on lease portfolio sales of $36 million
•Last twelve months ("LTM") Return on Equity ("ROE") of 16.0% and Adjusted ROE of 18.3%
2024 Guidance
•Industry deliveries of approximately 40,000 railcars
•Net fleet investment of $200 million to $300 million
•Operating and administrative capital expenditures of $50 million to $60 million
•EPS of $1.70 to $1.80
◦Excludes items outside of our core business operations
Management Commentary
“Trinity’s third quarter results once again exhibit strong performance for our business. Year to date, we have generated $384 million in net cash from operating activities, and our LTM Adjusted ROE improved to an impressive 18.3%,” said Trinity’s Chief Executive Officer and President, Jean Savage. “We are especially pleased to see the benefits of aligning our leasing and maintenance businesses into the same segment as we are realizing lower costs and better performance.”
“In our Railcar Leasing and Services segment, revenues increased by 11% year over year, and our quarterly FLRD of 28.4% continues to show that we expect to consistently re-price renewing railcars significantly higher than expiring rates. Additionally, we booked gains on lease portfolio sales of $11 million in the quarter and saw a 20% improvement in segment operating profit as compared to a year ago.” Ms. Savage continued, “In the Rail Products Group, segment operating margin improved to 8.1% in the quarter due to enhanced labor and operational efficiencies."
Ms. Savage concluded, “This year's consistent performance and our team's dedication are evident in our financial results. We are raising our full year EPS guidance to a range of $1.70 to $1.80 and anticipate ending the year with continued solid execution and strong financial results.”
Consolidated Financial Summary
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| Three Months Ended
September 30, | | |
| 2024 | | 2023 | | Year over Year – Comparison |
| ($ in millions, except per share amounts) | | |
| Revenues | $ | 798.8 | | $ | 821.3 | | Lower external deliveries in the Rail Products Group, partially offset by favorable pricing and a higher volume of external repairs, as well as improved lease rates and net additions to the lease fleet in the Leasing Group |
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Operating profit | $ | 122.4 | | $ | 100.2 | | Improved lease rates and higher gains on lease portfolio sales in the Leasing Group, and improved efficiencies in the Rail Products Group, partially offset by lower external deliveries in the Rail Products Group |
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| Interest expense, net | $ | 67.4 | | $ | 68.8 | | |
| Net income from continuing operations attributable to Trinity Industries, Inc. | $ | 36.7 | | $ | 24.5 | | |
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EBITDA (1) | $ | 200.9 | | $ | 177.5 | | |
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| Effective tax expense rate | 27.7 | % | | 18.6 | % | | State tax law changes enacted in Q3 2023 |
| Diluted EPS – GAAP | $ | 0.44 | | $ | 0.29 | | |
Diluted EPS – Adjusted (1) | $ | 0.43 | | $ | 0.26 | | |
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| Nine Months Ended
September 30, | | |
| 2024 | | 2023 | | Year over Year – Comparison |
| (in millions) | | |
| Net cash provided by operating activities – continuing operations | $ | 383.5 | | $ | 215.8 | | Higher external deliveries and working capital improvements |
Cash flow from operations with net gains on lease portfolio sales (1) | $ | 419.7 | | $ | 262.2 | |
| Net fleet investment | $ | 86.5 | | $ | 237.5 | | Timing of fleet additions |
| Returns of capital to stockholders | $ | 77.2 | | $ | 64.7 | | |
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(1) Non-GAAP financial measure. See the Reconciliations of Non-GAAP Measures section within this Press Release for a reconciliation to the most directly comparable GAAP measure and why management believes this measure is useful to management and investors.
Additional Business Items
•Total committed liquidity of $924 million as of September 30, 2024.
Business Group Summary
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| Three Months Ended
September 30, | | |
| 2024 | | 2023 | | Year over Year – Comparison |
| ($ in millions) | | |
| Railcar Leasing and Services Group | | |
| Revenues | $ | 289.5 | | $ | 261.7 | | Favorable pricing and a higher volume of external repairs, as well as improved lease rates and net additions to the lease fleet |
| Operating profit | $ | 115.2 | | $ | 95.8 | | Improved lease rates and net additions to the lease fleet, higher gains on lease portfolio sales, as well as favorable pricing and a higher volume of external repairs |
| Operating profit margin | 39.8 | % | | 36.6 | % | |
| Gains on lease portfolio sales | $ | 11.4 | | $ | 3.1 | | |
Fleet utilization (1) | 96.6 | % | | 98.1 | % | | |
FLRD (2) | +28.4 | % | | +26.6 | % | | Continued strength in current lease rates |
Owned lease fleet (in units) (1) | 109,555 | | 109,055 | | |
| Investor-owned lease fleet (in units) | 34,285 | | 33,025 | | |
| Rail Products Group | | | | | |
| Revenues | $ | 603.2 | | $ | 624.1 | | Lower volume of sustainable railcar conversions, partially offset by the mix of railcars sold |
| Operating profit | $ | 48.9 | | $ | 29.4 | | Improved labor and operational efficiencies and the mix of railcars sold |
| Operating profit margin | 8.1 | % | | 4.7 | % | |
| New railcars: | | | | | |
| Deliveries (in units) | 4,360 | | 4,325 | | |
| Orders (in units) | 1,810 | | 3,200 | | |
| Order value | $ | 201.4 | | $ | 401.5 | | |
| Backlog value | $ | 2,364.5 | | $ | 3,598.4 | |
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| Sustainable railcar conversions: | | | | | |
| Deliveries (in units) | 170 | | 620 | | |
| Backlog (in units) | 75 | | 1,540 | | |
| Backlog value | $ | 6.5 | | $ | 124.4 | | |
| Eliminations | | | | | |
| Eliminations – revenues | $ | (93.9) | | $ | (64.5) | | |
| Eliminations – operating profit | $ | (8.6) | | $ | 0.2 | | |
| Corporate and other | | | | | |
| Selling, engineering, and administrative expenses | $ | 33.1 | | $ | 25.2 | | Higher employee-related costs, including higher incentive-based compensation |
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| September 30, 2024 | | December 31, 2023 | | |
| Loan-to-value ratio | | | | | |
| Wholly-owned subsidiaries | 68.2 | % | | 64.4 | % | | |
(1) Includes wholly-owned railcars, partially-owned railcars, and railcars under leased-in arrangements.
(2) FLRD calculates the implied change in lease rates for railcar leases expiring over the next four quarters. The FLRD assumes that these expiring leases will be renewed at the most recent quarterly transacted lease rates for each railcar type. We believe the FLRD is useful to both management and investors as it provides insight into the near-term trend in lease rates.
Conference Call
Trinity will hold a conference call at 8:00 a.m. Eastern on October 31, 2024 to discuss its third quarter results. To listen to the call, please visit the Investor Relations section of the Company's website at www.trin.net and access the Events & Presentations webpage, or the live call can be accessed at 1-888-317-6003 with the conference passcode "5489199". Please call at least 10 minutes in advance to ensure a proper connection. An audio replay may be accessed through the Company’s website or by dialing 1-877-344-7529 with passcode "9824947" until 11:59 p.m. Eastern on November 7, 2024.
Additionally, the Company will provide a quarterly investor presentation that will be accessible both within the webcast and on Trinity's Investor Relations website under the Events and Presentations portion of the site along with the Third Quarter Earnings Call event weblink.
Non-GAAP Financial Measures
We have included financial measures compiled in accordance with generally accepted accounting principles ("GAAP") and certain non-GAAP measures in this earnings press release to provide management and investors with additional information regarding our financial results. Non-GAAP measures should not be considered in isolation or as a substitute for our reported results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures for other companies. For each non-GAAP financial measure, a reconciliation to the most comparable GAAP measure has been included in the accompanying tables. When forward-looking non-GAAP measures are provided, quantitative reconciliations to the most directly comparable GAAP measures are not provided because management cannot, without unreasonable effort, predict the timing and amounts of certain items included in the computations of each of these measures. These factors include, but are not limited to: the product mix of expected railcar deliveries; the timing and amount of significant transactions and investments, such as lease portfolio sales, capital expenditures, and returns of capital to stockholders; and the amount and timing of certain other items outside the normal course of our core business operations.
About Trinity Industries
Trinity Industries, Inc., headquartered in Dallas, Texas, owns businesses that are leading providers of rail transportation products and services in North America. Our businesses market their railcar products and services under the trade name TrinityRail®. The TrinityRail platform provides railcar leasing and management services; railcar manufacturing; railcar maintenance and modifications; and other railcar logistics products and services. Beginning January 1, 2024, Trinity reports its financial results in two reportable business segments: (1) Railcar Leasing and Services Group, formerly the Railcar Leasing and Management Services Group, and (2) Rail Products Group. For more information, visit: www.trin.net.
Some statements in this release, which are not historical facts, are “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements about Trinity's estimates, expectations, beliefs, intentions or strategies for the future, and the assumptions underlying these forward-looking statements, including, but not limited to, future financial and operating performance, future opportunities and any other statements regarding events or developments that Trinity believes or anticipates will or may occur in the future. Trinity uses the words “anticipates,” “assumes,” “believes,” “estimates,” “expects,” “intends,” “forecasts,” “may,” “will,” “should,” “guidance,” “projected,” “outlook,” and similar expressions to identify these forward-looking statements. Forward-looking statements speak only as of the date of this release, and Trinity expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in Trinity’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based, except as required by federal securities laws. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from historical experience or our present expectations, including but not limited to risks and uncertainties regarding economic, competitive, governmental, and technological factors affecting Trinity’s operations, markets, products, services and prices, and such forward-looking statements are not guarantees of future performance. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” and “Forward-Looking Statements” in Trinity’s Annual Report on Form 10-K for the most recent fiscal year, as may be revised and updated by Trinity’s Quarterly Reports on Form 10-Q, and Trinity’s Current Reports on Form 8-K.
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| Investor Contact: |
| Leigh Anne Mann |
| Vice President, Investor Relations |
| Trinity Industries, Inc. |
| (Investors) 214/631-4420 |
|
| Media Contact: |
| Jack L. Todd |
| Vice President, Public Affairs |
| Trinity Industries, Inc. |
| (Media Line) 214/589-8909 |
- TABLES TO FOLLOW -
Trinity Industries, Inc.
Condensed Consolidated Statements of Operations
(in millions, except per share amounts)
(unaudited)
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| Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
| Revenues | $ | 798.8 | | | $ | 821.3 | | | $ | 2,449.8 | | | $ | 2,185.4 | |
| Operating costs: | | | | | | | |
| Cost of revenues | 629.3 | | | 679.5 | | | 1,936.6 | | | 1,819.2 | |
| Selling, engineering, and administrative expenses | 60.5 | | | 49.1 | | | 174.1 | | | 153.3 | |
| Gains on dispositions of property: | | | | | | | |
| Lease portfolio sales | 11.4 | | | 3.1 | | | 36.2 | | | 46.4 | |
| Other | 2.0 | | | 4.4 | | | 4.2 | | | 6.8 | |
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| Restructuring activities, net | — | | | — | | | — | | | (2.2) | |
| 676.4 | | | 721.1 | | | 2,070.3 | | | 1,917.1 | |
| Operating profit | 122.4 | | | 100.2 | | | 379.5 | | | 268.3 | |
| Interest expense, net | 67.4 | | | 68.8 | | | 206.6 | | | 197.8 | |
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| Other, net | (1.4) | | | (0.9) | | | (1.4) | | | 2.0 | |
| Income from continuing operations before income taxes | 56.4 | | | 32.3 | | | 174.3 | | | 68.5 | |
| Provision (benefit) for income taxes: | | | | | | | |
| Current | 18.3 | | | 22.2 | | | 45.2 | | | 26.2 | |
| Deferred | (2.7) | | | (16.2) | | | (1.5) | | | (24.3) | |
| 15.6 | | | 6.0 | | | 43.7 | | | 1.9 | |
| Income from continuing operations | 40.8 | | | 26.3 | | | 130.6 | | | 66.6 | |
| Loss from discontinued operations, net of income taxes | (5.3) | | | (2.7) | | | (11.3) | | | (8.1) | |
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| Net income | 35.5 | | | 23.6 | | | 119.3 | | | 58.5 | |
| Net income attributable to noncontrolling interest | 4.1 | | | 1.8 | | | 9.8 | | | 15.3 | |
| Net income attributable to Trinity Industries, Inc. | $ | 31.4 | | | $ | 21.8 | | | $ | 109.5 | | | $ | 43.2 | |
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| Basic earnings per common share: | | | | | | | |
| Income from continuing operations | $ | 0.45 | | | $ | 0.30 | | | $ | 1.48 | | | $ | 0.63 | |
| Loss from discontinued operations | (0.07) | | | (0.03) | | | (0.14) | | | (0.10) | |
| Basic net income attributable to Trinity Industries, Inc. | $ | 0.38 | | | $ | 0.27 | | | $ | 1.34 | | | $ | 0.53 | |
| Diluted earnings per common share: | | | | | | | |
| Income from continuing operations | $ | 0.44 | | | $ | 0.29 | | | $ | 1.44 | | | $ | 0.62 | |
| Loss from discontinued operations | (0.07) | | | (0.03) | | | (0.13) | | | (0.10) | |
| Diluted net income attributable to Trinity Industries, Inc. | $ | 0.37 | | | $ | 0.26 | | | $ | 1.31 | | | $ | 0.52 | |
| Weighted average number of shares outstanding: | | | | | | | |
| Basic | 82.2 | | | 81.6 | | | 81.9 | | | 81.2 | |
| Diluted | 84.1 | | | 83.5 | | | 83.9 | | | 83.5 | |
Trinity has certain unvested restricted stock awards that participate in dividends on a nonforfeitable basis and are therefore considered to be participating securities. Consequently, diluted net income attributable to Trinity Industries, Inc. per common share is calculated under both the two-class method and the treasury stock method, and the more dilutive of the two calculations is presented.
Trinity Industries, Inc.
Condensed Consolidated Balance Sheets
(in millions)
(unaudited)
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| September 30, 2024 | | December 31, 2023 |
| ASSETS | | | |
| Cash and cash equivalents | $ | 222.4 | | | $ | 105.7 | |
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| Receivables, net of allowance | 413.8 | | | 363.5 | |
| Income tax receivable | 5.0 | | | 5.2 | |
| Inventories | 549.1 | | | 684.3 | |
| Restricted cash | 110.0 | | | 129.4 | |
| Property, plant, and equipment, net: | | | |
| Railcars in our lease fleet: | | | |
| Wholly-owned subsidiaries | 5,878.1 | | | 5,931.8 | |
| Partially-owned subsidiaries | 1,432.0 | | | 1,473.2 | |
| Deferred profit on railcar products sold | (727.4) | | | (750.2) | |
| Operating and administrative assets | 345.9 | | | 350.0 | |
| 6,928.6 | | | 7,004.8 | |
| Goodwill | 221.5 | | | 221.5 | |
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| Other assets | 392.5 | | | 392.1 | |
| Total assets | $ | 8,842.9 | | | $ | 8,906.5 | |
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| LIABILITIES AND STOCKHOLDERS' EQUITY | | | |
| Accounts payable | $ | 270.2 | | | $ | 305.3 | |
| Accrued liabilities | 325.8 | | | 302.3 | |
| Debt: | | | |
| Recourse | 597.7 | | | 794.6 | |
| Non-recourse: | | | |
| Wholly-owned subsidiaries | 4,007.4 | | | 3,819.2 | |
| Partially-owned subsidiaries | 1,094.6 | | | 1,140.4 | |
| 5,699.7 | | | 5,754.2 | |
| Deferred income taxes | 1,096.8 | | | 1,103.5 | |
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| Other liabilities | 151.9 | | | 165.7 | |
| Stockholders' equity: | | | |
| Trinity Industries, Inc. | 1,057.4 | | | 1,037.1 | |
| Noncontrolling interest | 241.1 | | | 238.4 | |
| 1,298.5 | | | 1,275.5 | |
| Total liabilities and stockholders' equity | $ | 8,842.9 | | | $ | 8,906.5 | |
Trinity Industries, Inc.
Condensed Consolidated Statements of Cash Flows
(in millions)
(unaudited)
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| Nine Months Ended
September 30, |
| 2024 | | 2023 |
| Operating activities: | | | |
| Net cash provided by operating activities – continuing operations | $ | 383.5 | | | $ | 215.8 | |
| Net cash used in operating activities – discontinued operations | (11.3) | | | (8.1) | |
| Net cash provided by operating activities | 372.2 | | | 207.7 | |
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| Investing activities: | | | |
| Proceeds from lease portfolio sales | 253.7 | | | 245.8 | |
| Capital expenditures – lease fleet | (340.2) | | | (483.3) | |
| Capital expenditures – operating and administrative | (32.3) | | | (29.4) | |
| Acquisitions, net of cash acquired | — | | | (66.2) | |
| Other investing activities | 13.6 | | | 16.8 | |
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| Net cash used in investing activities | (105.2) | | | (316.3) | |
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| Financing activities: | | | |
| Net proceeds from (repayments of) debt | (68.6) | | | 165.3 | |
| Shares repurchased | (6.9) | | | — | |
| Dividends paid to common shareholders | (70.1) | | | (64.7) | |
| Other financing activities | (24.1) | | | (19.6) | |
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| Net cash provided by (used in) financing activities | (169.7) | | | 81.0 | |
| Net increase (decrease) in cash, cash equivalents, and restricted cash | 97.3 | | | (27.6) | |
| Cash, cash equivalents, and restricted cash at beginning of period | 235.1 | | | 294.3 | |
| Cash, cash equivalents, and restricted cash at end of period | $ | 332.4 | | | $ | 266.7 | |
Trinity Industries, Inc.
Reconciliations of Non-GAAP Measures
(in millions, except per share amounts)
(unaudited)
Adjusted Operating Results
We have supplemented the presentation of our reported GAAP operating profit, income from continuing operations before income taxes, provision (benefit) for income taxes, income from continuing operations, net income from continuing operations attributable to Trinity Industries, Inc., and diluted income from continuing operations per common share attributable to Trinity Industries, Inc. with non-GAAP measures that adjust the GAAP measures to exclude the impact of certain selling, engineering, and administrative expenses; gains on dispositions of other property; restructuring activities, net; interest expense, net; and certain other transactions or events (as applicable), described in the footnotes to the tables below. These non-GAAP measures are derived from amounts included in our GAAP financial statements and are reconciled to the most directly comparable GAAP financial measures in the tables below. Management believes that these measures are useful to both management and investors for analyzing the performance of our business without the impact of certain items that are not indicative of our normal business operations. Non-GAAP measures should not be considered in isolation or as a substitute for our reported results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures for other companies.
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| Three Months Ended September 30, 2024 |
| GAAP | | | | | | | | | | Interest expense, net (1) | | | | Adjusted |
| Operating profit | $ | 122.4 | | | | | | | | | | | $ | — | | | | | $ | 122.4 | |
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| Income from continuing operations before income taxes | $ | 56.4 | | | | | | | | | | | $ | (0.4) | | | | | $ | 56.0 | |
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| Provision (benefit) for income taxes | $ | 15.6 | | | | | | | | | | | $ | (0.1) | | | | | $ | 15.5 | |
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| Income from continuing operations | $ | 40.8 | | | | | | | | | | | $ | (0.3) | | | | | $ | 40.5 | |
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| Net income from continuing operations attributable to Trinity Industries, Inc. | $ | 36.7 | | | | | | | | | | | $ | (0.3) | | | | | $ | 36.4 | |
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| Diluted weighted average shares outstanding | 84.1 | | | | | | | | | | | | | | 84.1 |
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| Diluted income from continuing operations per common share attributable to Trinity Industries, Inc. | $ | 0.44 | | | | | | | | | | | | | | | $ | 0.43 | |
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| Nine Months Ended September 30, 2024 |
| GAAP | | | | | | | | | | Interest expense, net (1) | | | | | | Adjusted |
| Operating profit | $ | 379.5 | | | | | | | | | | | $ | — | | | | | | | $ | 379.5 | |
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| Income from continuing operations before income taxes | $ | 174.3 | | | | | | | | | | | $ | (1.2) | | | | | | | $ | 173.1 | |
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| Provision (benefit) for income taxes | $ | 43.7 | | | | | | | | | | | $ | (0.3) | | | | | | | $ | 43.4 | |
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| Income from continuing operations | $ | 130.6 | | | | | | | | | | | $ | (0.9) | | | | | | | $ | 129.7 | |
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| Net income from continuing operations attributable to Trinity Industries, Inc. | $ | 120.8 | | | | | | | | | | | $ | (0.9) | | | | | | | $ | 119.9 | |
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| Diluted weighted average shares outstanding | 83.9 | | | | | | | | | | | | | | | | 83.9 |
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| Diluted income from continuing operations per common share attributable to Trinity Industries, Inc. | $ | 1.44 | | | | | | | | | | | | | | | | | $ | 1.43 | |
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| Three Months Ended September 30, 2023 |
| GAAP | | | | Gains on dispositions of property – other (2) | | | | Interest expense, net (1) | | Adjusted |
| Operating profit | $ | 100.2 | | | | | $ | (3.7) | | | | | $ | — | | | $ | 96.5 | |
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| Income from continuing operations before income taxes | $ | 32.3 | | | | | $ | (3.7) | | | | | $ | (0.4) | | | $ | 28.2 | |
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| Provision (benefit) for income taxes | $ | 6.0 | | | | | $ | (0.8) | | | | | $ | (0.1) | | | $ | 5.1 | |
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| Income from continuing operations | $ | 26.3 | | | | | $ | (2.9) | | | | | $ | (0.3) | | | $ | 23.1 | |
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| Net income from continuing operations attributable to Trinity Industries, Inc. | $ | 24.5 | | | | | $ | (2.9) | | | | | $ | (0.3) | | | $ | 21.3 | |
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| Diluted weighted average shares outstanding | 83.5 | | | | | | | | | | 83.5 |
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| Diluted income from continuing operations per common share attributable to Trinity Industries, Inc. | $ | 0.29 | | | | | | | | | | | $ | 0.26 | |
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| Nine Months Ended September 30, 2023 |
| GAAP | | Selling, engineering, and administrative expenses (3) | | Gains on dispositions of property – other (2) | | Restructuring activities, net | | | | | | Interest expense, net (1) | | Adjusted |
| Operating profit | $ | 268.3 | | | $ | 2.0 | | | $ | (4.9) | | | $ | (2.2) | | | | | | | $ | — | | | $ | 263.2 | |
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| Income from continuing operations before income taxes | $ | 68.5 | | | $ | 2.0 | | | $ | (4.9) | | | $ | (2.2) | | | | | | | $ | (1.1) | | | $ | 62.3 | |
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| Provision (benefit) for income taxes | $ | 1.9 | | | $ | 0.5 | | | $ | (1.2) | | | $ | (0.6) | | | | | | | $ | (0.3) | | | $ | 0.3 | |
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| Income from continuing operations | $ | 66.6 | | | $ | 1.5 | | | $ | (3.7) | | | $ | (1.6) | | | | | | | $ | (0.8) | | | $ | 62.0 | |
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| Net income from continuing operations attributable to Trinity Industries, Inc. | $ | 51.3 | | | $ | 1.5 | | | $ | (3.7) | | | $ | (1.6) | | | | | | | $ | (0.8) | | | $ | 46.7 | |
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| Diluted weighted average shares outstanding | 83.5 | | | | | | | | | | | | | | 83.5 |
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| Diluted income from continuing operations per common share attributable to Trinity Industries, Inc. | $ | 0.62 | | | | | | | | | | | | | | | $ | 0.56 | |
(1) Represents interest income accretion related to a seller-financing agreement associated with the sale of certain non-operating assets.
(2) Represents insurance recoveries in excess of net book value for assets damaged by a tornado at the Company’s rail maintenance facility in Cartersville, Georgia in the first quarter of 2021.
(3) Represents the change in estimated fair value of additional contingent consideration associated with an acquisition.
Adjusted Return on Equity
Adjusted Return on Equity (“Adjusted ROE”) is defined as a ratio for which (i) the numerator is calculated as income or loss from continuing operations, adjusted to exclude the effects of net income or loss attributable to noncontrolling interest, and certain other adjustments (net of income taxes), described in the footnotes to the table below, which include certain selling, engineering, and administrative expenses; gains on dispositions of other property; and interest expense, net; and (ii) the denominator is calculated as average Trinity stockholders’ equity (which excludes noncontrolling interest). In the following table, the numerator and denominator of our Adjusted ROE calculation are reconciled to income from continuing operations and total stockholders’ equity, respectively, which are the most directly comparable GAAP financial measures. Management believes that Adjusted ROE is a useful measure to both management and investors as it provides an indication of the economic return on the Company’s investments over time. Non-GAAP measures should not be considered in isolation or as a substitute for our reported results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures for other companies.
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| LTM September 30, 2024 | | September 30, 2023 |
| ($ in millions) |
| Numerator: | | | |
| Income from continuing operations | $ | 204.0 | | | |
| Net income attributable to noncontrolling interest | (15.1) | | | |
| Net income from continuing operations attributable to Trinity Industries, Inc. | 188.9 | | | |
| Adjustments (net of income taxes): | | | |
Selling, engineering, and administrative expenses (1) | 1.5 | | | |
Gains on dispositions of property – other (2) | (1.0) | | | |
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Interest expense, net (3) | (1.2) | | | |
| Adjusted Net Income | $ | 188.2 | | | |
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| Denominator: | | | |
| Total stockholders' equity | $ | 1,298.5 | | | $ | 1,253.4 | |
| Noncontrolling interest | (241.1) | | | (252.6) | |
| Trinity stockholders' equity | $ | 1,057.4 | | | $ | 1,000.8 | |
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| Average total stockholders' equity | $ | 1,276.0 | | | |
Return on Equity (4) | 16.0 | % | | |
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| Average Trinity stockholders' equity | $ | 1,029.1 | | | |
Adjusted Return on Equity (5) | 18.3 | % | | |
(1) Represents the change in estimated fair value of additional contingent consideration associated with an acquisition.
(2) Represents insurance recoveries in excess of net book value for assets damaged by a tornado at the Company’s rail maintenance facility in Cartersville, Georgia in the first quarter of 2021.
(3) Represents interest income accretion related to a seller-financing agreement associated with the sale of certain non-operating assets.
(4) Return on Equity is calculated as income from continuing operations divided by average total stockholders' equity.
(5) Adjusted Return on Equity is calculated as adjusted net income divided by average Trinity stockholders' equity, each as defined and reconciled above.
Cash Flow from Operations with Net Gains on Lease Portfolio Sales
Cash flow from operations with net gains on lease portfolio sales is a non-GAAP financial measure. We believe this measure is useful to both management and investors as it provides a relevant measure of liquidity and a useful basis for assessing the breadth of the cash flow generation capabilities across our operating platform, as well as our ability to fund our operations and repay our debt. This measure is defined as net cash provided by operating activities from continuing operations as computed in accordance with GAAP, plus net gains on lease portfolio sales and is reconciled to net cash provided by operating activities from continuing operations, the most directly comparable GAAP financial measure, in the following table. Non-GAAP measures should not be considered in isolation or as a substitute for our reported results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures for other companies.
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| Nine Months Ended
September 30, |
| 2024 | | 2023 |
| Net cash provided by operating activities – continuing operations | $ | 383.5 | | | $ | 215.8 | |
| Net gains on lease portfolio sales | 36.2 | | | 46.4 | |
Cash flow from operations with net gains on lease portfolio sales | $ | 419.7 | | | $ | 262.2 | |
EBITDA and Adjusted EBITDA
“EBITDA” is defined as income from continuing operations plus interest expense, income taxes, and depreciation and amortization expense. Adjusted EBITDA is defined as EBITDA plus certain selling, engineering, and administrative expenses; gains on dispositions of other property; restructuring activities, net; and interest income. EBITDA and Adjusted EBITDA are non-GAAP financial measures; however, the amounts included in these calculations are derived from amounts included in our GAAP financial statements. EBITDA and Adjusted EBITDA are reconciled to net income, the most directly comparable GAAP financial measure, in the following table. This information is provided to assist management and investors in making meaningful comparisons of our operating performance between periods. We believe EBITDA is a useful measure for analyzing the performance of our business. We also believe that EBITDA is commonly reported and widely used by investors and other interested parties as a measure of a company’s operating performance and debt servicing ability because it assists in comparing performance on a consistent basis without regard to capital structure, depreciation or amortization (which can vary significantly depending on many factors). EBITDA and Adjusted EBITDA should not be considered as alternatives to net income as indicators of our operating performance, or as alternatives to operating cash flows as measures of liquidity. Non-GAAP measures should not be considered in isolation or as a substitute for our reported results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures for other companies.
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| Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
| Net income | $ | 35.5 | | | $ | 23.6 | | | $ | 119.3 | | | $ | 58.5 | |
| Less: Loss from discontinued operations, net of income taxes | (5.3) | | | (2.7) | | | (11.3) | | | (8.1) | |
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| Income from continuing operations | 40.8 | | | 26.3 | | | 130.6 | | | 66.6 | |
| Interest expense | 71.5 | | | 72.1 | | | 218.5 | | | 206.5 | |
| Provision (benefit) for income taxes | 15.6 | | | 6.0 | | | 43.7 | | | 1.9 | |
| Depreciation and amortization expense | 73.0 | | | 73.1 | | | 220.2 | | | 219.9 | |
EBITDA | 200.9 | | | 177.5 | | | 613.0 | | | 494.9 | |
| Selling, engineering, and administrative expenses | — | | | — | | | — | | | 2.0 | |
| Gains on dispositions of property – other | — | | | (3.7) | | | — | | | (4.9) | |
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| Restructuring activities, net | — | | | — | | | — | | | (2.2) | |
| Interest income | (0.4) | | | (0.4) | | | (1.2) | | | (1.1) | |
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| Adjusted EBITDA | $ | 200.5 | | | $ | 173.4 | | | $ | 611.8 | | | $ | 488.7 | |
Exhibit 99.2
Trinity Industries, Inc.
Earnings Release Conference Call – Q3 2024
October 31, 2024
Leigh Anne Mann
Vice President, Investor Relations
Thank you, operator. Good morning everyone. We appreciate you joining us for the Company’s third quarter 2024 financial results conference call.
Our prepared remarks will include comments from Jean Savage, Trinity’s Chief Executive Officer and President, and Eric Marchetto, the Company’s Chief Financial Officer. We will hold a Q&A session following the prepared remarks from our leaders.
During the call today, we will reference certain non-GAAP financial metrics. The reconciliations of the non-GAAP metrics to comparable GAAP measures are provided in the appendix of the quarterly investor slides, which are accessible on our investor relations website at www.trin.net. These slides are under the Events and Presentations portion of the website, along with the Third Quarter Earnings Conference Call event link.
A replay of today’s call will be available after 10:30 a.m. Eastern time through midnight on November 7, 2024. Replay information is available under the Events and Presentations page on our Investor Relations website.
It is now my pleasure to turn the call over to Jean.
E. Jean Savage
Chief Executive Officer and President
Thank you, Leigh Anne, and good morning everyone. Trinity’s third quarter results once again demonstrate strong performance across our business. Our quarterly adjusted EPS of $0.43 represents a $0.17 increase year over year, and operating profit has risen by 22% compared to the previous year. These impressive results are driven by steady progress and consistent performance throughout 2024, which we expect to continue in the fourth quarter. Consequently, we are raising and tightening our full year EPS guidance to a range of $1.70 to $1.80. Eric will provide more details on fourth quarter expectations in his prepared remarks.
Before talking about Trinity’s segment results, I’d like provide an overview of the current market conditions.
Market Update
With just two months remaining in the year, we are confident in our forecast of roughly 40,000 industry deliveries in 2024.
Carloads increased in the third quarter as compared to the third quarter of the previous year, primarily driven by the agriculture and chemical end markets. We expect a large corn and soybean crop harvest, which is also contributing to this carload growth.
Fleet expansion and improvements in railroad service have been key themes in 2024. Rail service continues to trend positively, and as the railroads sustain this type of performance, it should encourage shippers to incorporate more rail shipments in their supply chain management.
And now let’s pivot to the performance of our business in the third quarter.
Segment Performance
Trinity’s business consists of two main segments – the Railcar Leasing and Services Group and the Rail Products Group. I’ll start my comments in the Leasing and Services segment, which includes our leasing, maintenance, and logistics services businesses. I’d like to note that we are particularly pleased with the benefits of aligning our leasing and maintenance businesses into the same segment. This move has resulted in better performance with lower costs.
Leasing and Services
For the segment, revenues increased by approximately 11% compared to the previous year, driven by favorable pricing and a higher volume of external repairs, as well as improved lease rates and net additions to the lease fleet. Additionally, segment operating profit is 20% higher than a year ago. Segment operating margin, including gains, was 39.8% in the quarter, which aligns with our forecasted guidance. Fleet utilization remains favorable at 96.6% for the quarter. We have observed an improvement in utilization so far in the fourth quarter and anticipate concluding the year with a higher utilization rate.
We completed $67 million of lease portfolio sales in the quarter, resulting in gains of $11 million. Our quarterly net fleet investment was $41 million, and year-to-date, we have invested $87 million in our lease fleet.
The Future Lease Rate Differential, or FLRD, was 28.4% for the quarter, marking ten consecutive quarters of double-digit positive FLRD. During these ten quarters, we have re-priced 48% of our fleet,
and the impact of the re-pricing is becoming more evident in our top-line results. We expect this trend to continue as we are consistently re-pricing our fleet upward to market rates, and the North American fleet remains in balance supporting these rates.
The renewal success rate was 78% for the quarter, highlighting that railcar demand remains high and end market economics are supportive of higher lease rates.
As we continue to expand our service offerings, we are encouraged by the progress we are making. Our efforts are gaining traction with our customers as they recognize the value our services bring to their operational efficiency.
Rail Products
Moving to the Rail Products segment, our third quarter operating margin of 8.1% reflects year over year improvement in labor and operational efficiencies and favorable railcar mix. Revenues in the segment were $603 million. This quarter, we observed a slight shift toward tank car deliveries, though production still continues to be significantly led by freight cars. Additionally, as we expected, we shifted more of our production into our fleet as compared to the second quarter. We anticipate these trends to continue in the fourth quarter.
We expect to finish the year with an operating margin in the high end of the forecasted range of 6% to 8% in the Rail Products segment.
During the quarter, we successfully delivered 4,360 new railcars and received 1,810 new railcar orders, ending the quarter with a backlog of $2.4 billion. In the third quarter, we saw several customers deferring their order decisions to the fourth quarter. As a result, we are experiencing strong order activity in the fourth quarter to date. Additionally, customers are expanding their existing orders with tack-on orders.
Conclusion
In conclusion, I am pleased with our business performance this quarter and throughout 2024. Our leasing business continues to operate consistently and favorably, bolstered by a more efficient production operation, a robust maintenance network, and a growing parts and services business that supports our fleet of 144,000 owned and managed railcars.
I will now turn to Eric to discuss the financial statements and provide an update to our outlook for the remainder of the year.
Eric R. Marchetto
Executive Vice President and Chief Financial Officer
Thank you, Jean, and good morning everyone. In the third quarter, our Last Twelve Months Adjusted ROE was 18.3%, above our target range introduced at our Investor Day in June. This reflects consistent operations driving strong net income, balanced with a disciplined approach to managing our balance sheet. I will begin my quarterly comments with the income statement.
Income Statement
In the quarter, we earned revenues of $799 million. External deliveries were slightly lower both sequentially and year over year, but this was partially offset by favorable pricing and mix of maintenance work, improved lease rates, fleet growth, and a favorable mix of railcar deliveries. Quarterly GAAP EPS was $0.44, and adjusted EPS was $0.43.
Balance Sheet
We maintain a positive outlook on our balance sheet position. Our loan-to-value ratio stands at 68.2%, within our target range of 60% to 70%. Additionally, we benefit from a favorable average cost of debt, with our next debt maturity scheduled for late 2025. This strategic positioning allows us to increase the spread over our cost of capital as we continue to re-price our leased assets.
Cash Flow Statement
Moving to the cash flow statement, year-to-date cash flow from continuing operations was $384 million, and we currently have liquidity of $924 million. Trinity’s ability to generate significant cash flow is evident in our 2024 cash performance. Year-to-date, we have returned $77 million through dividends paid and share repurchases, reflecting our commitment to returning capital to shareholders.
We continue to believe that our best use of cash is the investment in, and optimization of, our lease fleet. Year-to-date, we have added $340 million of new railcar builds, secondary market additions, and modifications to our lease fleet. Conversely, we have taken advantage of a strong secondary market to optimize our fleet and have sold $254 million out of our fleet to improve its composition. This includes a $143 million sale in the second quarter to an RIV partner, and those railcars remain under our management. We remain active as a buyer and a seller in the secondary market, and we believe we have capitalized on favorable market conditions to optimize our business returns.
Guidance
I will conclude my remarks with our expectations for the last quarter of the year. As Jean mentioned, we expect industry deliveries of approximately 40,000 railcars in 2024.
Given my prior comments on net lease fleet investment, we are lowering our net fleet investment guidance by $100 million for the year to a range of $200 million to $300 million. The secondary market has proven more attractive than initially expected, and we have realized strong returns from secondary market sales. Consequently, we expect to end the year with approximately $55 million in gains on lease portfolio sales, up from our prior full year expectation of about $40 million. Some of these secondary market sales come from our partially-owned fleet, which will result in the elimination of gains due to minority interest. We anticipate the impact to minority interest to be about $4 million over the third quarter run rate. We continue to expect about 20% to 25% of our new railcar deliveries to go into our lease fleet for the full year, which implies higher eliminations in the fourth quarter.
Our outlook for operating and administrative capital expenditures remains unchanged at $50 million to $60 million.
Finally, with nine months of results now in, we are raising and tightening our EPS guidance. We anticipate ending the year with EPS from continuing operations of $1.70 to $1.80. In February, we introduced our 2024 initial guidance of $1.30 to $1.50, and we have exceeded our starting expectations with the current midpoint of guidance being $0.35 higher than initially projected. This improvement is attributed to our Rail Products Group’s operating margins, which have ramped well this year due to enhanced operational and labor efficiencies, a more favorable mix of maintenance work, higher than expected gains on railcar sales, and a consistently performing core leasing business. In summary, we are pleased to have driven favorable outcomes across our lines of business and expect to conclude 2024 on a positive note. We look forward to updating you during our year-end call in February and providing guidance for 2025 at that time.
Operator, we are now ready to take our first question.
(after Q&A)
E. Jean Savage
Chief Executive Officer and President
Thank you, and I would like to extend my gratitude to the Trinity team for their hard work in driving outstanding results for our business. I am encouraged by our performance, and I look forward to speaking with you again in February, where we will report on our full year 2024 results and outline our plans and guidance for 2025. Thank you all for your continued support of Trinity.
Q3 2024 Investor Presentation Exhibit 99.3 October 31, 2024 – based on financial results as of September 30, 2024
2Investor Presentation 2 Forward Looking Statements 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 Trinity's estimates, expectations, beliefs, intentions or strategies for the future, and the assumptions underlying these forward-looking statements, including, but not limited to, future financial and operating performance, future opportunities and any other statements regarding events or developments that Trinity believes or anticipates will or may occur in the future. Trinity uses the words “anticipates,” “assumes,” “believes,” “estimates,” “expects,” “intends,” “forecasts,” “may,” “will,” “should,” “guidance,” “projected,” “outlook,” and similar expressions to identify these forward-looking statements. Forward-looking statements speak only as of the date of this material, and Trinity expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in Trinity’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based, except as required by federal securities laws. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from historical experience or our present expectations, including but not limited to risks and uncertainties regarding economic, competitive, governmental, and technological factors affecting Trinity’s operations, markets, products, services and prices, and such forward-looking statements are not guarantees of future performance. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” and “Forward-Looking Statements” in Trinity’s Annual Report on Form 10-K for the most recent fiscal year, as may be revised and updated by Trinity’s Quarterly Reports on Form 10-Q, and Trinity’s Current Reports on Form 8-K. This presentation also includes references to calculations that are not based on generally accepted accounting principles (“GAAP”). Reconciliations of each of these non-GAAP measures to the most directly comparable GAAP measures have been included in the Appendix. When forward-looking non-GAAP measures are provided, Trinity does not provide quantitative reconciliations of forward-looking non-GAAP measures to the most directly comparable GAAP measures because it cannot, without unreasonable effort, predict the timing and amounts of certain items included in the computations of each of these measures. These factors include, but are not limited to: the product mix of expected railcar deliveries; the timing and amount of significant transactions and investments, such as lease portfolio sales, capital expenditures, and returns of capital to shareholders; and the amount and timing of certain other items outside the normal course of our core business operations. Except where noted, financial data is presented as of the Company’s most recent fiscal quarter ending September 30, 2024. “LTM” represents Last Twelve Months(1) financial information from October 1, 2023 to September 30, 2024. See appendix for footnotes
3Investor Presentation I. Quarter Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 II. Company Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 III. Financial Positioning and Strategic Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 IV. Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Investor Presentation – Q3 2024
4Investor Presentation Quarter Results
5Investor Presentation Key Takeaways from Q3 2024 Third quarter adjusted EPS from continuing operations of $0.43*, up $0.17 year over year on an adjusted basis; quarterly operating profit up 22% year over year Continued strength in lease rates; FLRD +28.4%, utilization 96.6% LTM Adjusted Return on Equity (ROE) of 18.3%* Updating 2024 EPS guidance to a range of $1.70 to $1.80 based on YTD improvement * See appendix for reconciliation of non-GAAP measures
6Investor Presentation Financial Results Highlights Cash Flow from Cont. Operations $84M $+8M Revenues $799M (3)% Adjusted EPS* $0.43 $+0.17 Q3 2024 – Year over Year Adjusted ROE* 18.3% LTM Q3-24 * See appendix for reconciliation of non-GAAP measures
7Investor Presentation North American Railcar Market In Balance C ha ng e in N or th A m er ic an R ai lc ar F le et (r ai lc ar s Y /Y ) S hare of R ailcars in S torage (M onthly % ) Change in Fleet Size (Y/Y) Percent in storage 1/1/2021 1/1/2022 1/1/2023 1/1/2024 -30,000 -20,000 -10,000 0 10,000 20,000 —% 5% 10% 15% 20% 25% North American Railcar Fleet and Railcars in Storage Source: Association of American Railroads (“AAR”) RAILCAR FLEET The industry fleet continues to expand, but the rate of expansion has slowed. Industry deliveries expected to be ~40K for 2024, offset by attrition to keep fleet at replacement level. Fleet expansion and railroad service improvements have been key themes in 2024. RAILCARS IN STORAGE Industry storage rates have dropped to ~19% in Q3 and stable service metrics allow railroads to operate more efficiently with fewer railcars, providing longer term incentive for shippers to switch to rail.
8Investor Presentation8 Leasing & Services Revenue and Operating Profit Margin (1) (in m ill io ns ) Leasing & Management Revenue Maintenance Services Revenue Digital & Logistics Services Revenue OP Margin (1) Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 $— $120 $240 $360 20% 40% 60%Leasing & Services Segment Revenue Drivers • Revenue higher year over year due to favorable pricing and a higher volume of external repairs, as well as improved lease rates and net additions to the lease fleet Leasing & Services Margin Performance Drivers • Margin up year over year due to improved lease rates and net additions to the lease fleet, higher gains on lease portfolio sales, as well as favorable pricing and a higher volume of external repairs • Completed $67M of lease portfolio sales in the quarter, resulting in gains of $11M • Segment margin includes gains from insurance recoveries in Q3 2023 and Q4 2023 Leasing & Services Business Highlights • Quarterly net fleet investment of $41 million • Owned fleet of 109,555 railcars • Total owned and investor-owned fleet of 143,840 railcars • Fleet utilization of 96.6% • Renewal success rate of 78% for Q3 2024 • FLRD remains strong at +28.4% See appendix for footnotes Segment Performance: Railcar Leasing & Services Group Fl ee t U til iz at io n FLR D Fleet Utilization FLRD (2) Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 80% 90% 100% —% 25% 50% FLRD and Utilization Remain Favorable
9Investor Presentation9 Rail Products Segment Revenue Drivers • Quarterly revenue down year over year due to a lower volume of sustainable railcar conversions, partially offset by the mix of railcars sold Rail Products Margin Performance Drivers • Operating margin of 8.1% in the quarter reflects year over year improvement in labor and operational efficiencies and the mix of railcars sold Rail Products Business Highlights • 1,810 new railcar orders in the quarter and 4,360 new railcar deliveries in the quarter • Backlog of $2.4 billion at quarter-end Rail Products OP Margin Reflects Significant Improvement (in m ill io ns ) Rail Products Revenue Parts & Components Revenue OP Margin Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 $— $250 $500 $750 4% 6% 8% 10% Segment Performance: Rail Products Group Orders Deliveries Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 0 2,500 5,000 Backlog and Order Volume Support Replacement-Level Demand
10Investor Presentation Consistent Revenue Performance Q3 2024 Financial Summary: Income Statement: • Total revenues of $799M reflect lower external deliveries in the Rail Products Group, partially offset by favorable pricing and a higher volume of external repairs, as well as improved lease rates and net additions to the lease fleet in the Leasing Group • GAAP EPS from continuing operations of $0.44 • Adjusted EPS of $0.43* • Lease portfolio sales proceeds of $67M in the quarter 10 Cash Flow From Ops Reflects Working Capital Improvement * See appendix for reconciliation of non-GAAP measures (in m ill io ns ) Leasing & Services Rail Products Adj EPS, Cont Ops (Diluted) * Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 $— $450 $900 $— $0.50 $1.00 (in m ill io ns ) Cash Flow from Cont Ops Net Gains on Lease Portfolio Sales Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 $— $100 $200 $300 Total Company Results Year-to-Date Cash Flow: • Cash flow from continuing operations of $384M • Net gains on lease portfolio sales of $36M • Net fleet investment of $87M • Investment of $32M in operating and administrative capex • Shareholder returns of $77M through dividends paid and share repurchases
11Investor Presentation Unencumbered Railcars $291M LTV of 68.2% for the wholly-owned lease portfolio as of Q3-24 Pledge to warehouse and additional assets can be sold or financed CAPITAL LEVERS Recourse Debt $598M @ ~7.8%(1) Non-recourse Debt $5.1B @ ~4.3%(1) Favorable average cost of debt with flexible term structures DEBT STRUCTURE Cash & Equivalents $222M Revolver Availability $596M Warehouse Availability $106M LIQUIDITY Solid Liquidity of $924M(1) Attractive Debt Structures Conservative Capitalization See appendix for footnotes Balance Sheet Positioning Strategically Positioned for Value Creation
12Investor Presentation C ap ita l A llo ca tio n FY 2024 Summary Detail Industry Deliveries Approximately 40K Does not include sustainable railcar conversions Net Fleet Investment $200M — $300M Includes deliveries to our lease fleet, sustainable railcar conversions, railcar modifications and betterments, and secondary market purchases; offset by proceeds from lease portfolio sales Operating and Administrative Capital Expenditures $50M — $60M Investments in automation, technology, and modernization of facilities and processes EPS from Continuing Operations $1.70 — $1.80 Excludes items outside of our normal business operations Any forward-looking statements made by the Company speak only as of the date on which they are made. Except as required by federal securities law, the Company is under no obligation to update or alter its forward-looking statements, whether as a result of new information, subsequent events or otherwise. Management Outlook for Business Performance
13Investor Presentation Company Overview
14Investor Presentation Trinity Industries, Inc. is a market leading railcar leasing business that provides rail transportation products and services in North America – Top 5 Leasing company ~ 109,555 railcars under ownership ~ 34,285 additional investor-owned railcars – Leading railcar manufacturer with 37% of industry deliveries in FY 2023 – Railcar maintenance network and growing railcar logistics products and services Unique rail platform provides single source for comprehensive rail transportation solutions • LTM Q3-24 total revenues of $3.2 billion • LTM Q3-24 Adjusted EBITDA* of $837 million • Current dividend yield of 3.2%(1) – 242 consecutive quarterly dividend payments External Revenue by Business Segment(2) *All specified data as of September 30, 2024; See appendix for footnotes and reconciliation of non-GAAP measures $8.3 billion* Enterprise Value $99 million* LTM Q3-24 Stockholder Returns $477 million* LTM Q3-24 Cash Flow from Cont. Ops $2.9 billion* Market Cap Leasing & Services Rail Products Adj EPS, Cont Ops (Diluted) * 2022 2023 LTM Q3-24 $— $1,000 $2,000 $3,000 $4,000 $0.80 $1.20 $1.60 $2.00 $2.40 (in $mms) Trinity Industries, Inc. Overview
15Investor Presentation Optimize customers’ ownership and usage of railcar equipment Cross-sell to deliver innovative solutions and differentiated experience Create an unmatched rail platform that provides a full suite of customer solutions to make a Trinity leased railcar the “railcar of choice” for our shipper customers for higher fleet utilization, more value streams per railcar, and higher shareholder returns Trinity’s Platform Built for Superior Performance
16Investor Presentation Platform Capabilities Support Optimized Lease Fleet Returns Lease Originations Captive Maintenance Parts and Services Manufacturing excellence and new product development Market data and leading market view Asset Management / RIV Partnerships Dual role as owner and builder creates a feedback loop reinforcing asset differentiation Complementary lines of business give us a broad industry view and early visibility to industry trends Lease origination capabilities give customer flexibility and unlock multiple monetization options for each asset Fee income from Rail Investment Vehicle partnerships worth an average of 100bp to Adjusted ROE over last 5 years Captive maintenance and Mobile Repair Units allow for more time on rent Parts and services reduce cyclicality of earnings stream and enhance customer experience
17Investor Presentation Establishing New Value Streams Across Railcar Life Cycle
18Investor Presentation Diversified Portfolio of Railcar Equipment ~ 900 Different Commodities ~ 270 Different Railcar Designs Refined Products & Chemicals Energy Agriculture Construction & Metals Consumer Products Fr ei gh t C ar s 53 % Open Hoppers & Gondolas Coal Aggregates, Steel and Metals 11% Small Covered Hopper (< 5k cu/ft) Frac Sand Fertilizer Cement, Construction Materials, Steel and Metals 12% Large Covered Hopper (< 5k cu/ft) Other Chemical (Soda Ash) DDG and Feeds, Grain Mill Products, Grains, Food and Other Ag, Fertilizer Lumber (Wood Chips) 12% Specialty Covered Hopper Plastics Coal (Fly Ash) Grain Mill Products Aggregates, Cement 7% Other Freight Other Chemicals Food Lumber, Steel and Metals, Cement Autos, Paper, Intermodal 11% Ta nk C ar s 47 % Pressure Tank Cars NGL, Chlor Alkali, Petro- chemical, Other Chemicals Fertilizer 9% Gen. Service Tank Cars (< 20k. Gal) Sulfur Products, Chlor Alkali, Other Chemicals Grain Mill Products Aggregates (Clay Slurry) 3% Gen. Service Tank Cars (20k. - 25k Gal.) Refined Products, Petro- chemicals, Other Chemicals Fertilizer, Food, Animal Feed 5% Gen. Service Tank Cars (25k. - 30k Gal.) Refined Products, Petro- chemicals, Other Chemicals Crude Oil, Biofuels Grain Mill Products, Food 12% Gen. Service Tank Cars (> 30k. Gal) Refined Products, Petrochemicals, Other Chemicals, NGL's Biofuels, Crude Oil 13% Specialty Tank Chlor Alkali, Other Chemicals, Sulfur Products Fertilizer 5% 34% 27% 20% 10% 9% Commercial End Markets / Commodities M aj or R ai lc ar C at eg or y r l ll r r (< 5k cu/ft) Large overed opper (> 5k cu/ft) i lt r r t r r i t r r r . r i r (< 20k. Gal) . r i r (20k. - 25k Gal.) . r i r (25k. - 30k Gal.) . r i r (> 30k. Gal) i lt *All percentage information reflects Company-owned fleet assets as of December 31, 2023
19Investor Presentation 13% 13% 9% 26% 12% 13% TRN, 14% TRN UnionTank GATX All other * ITE CIT Wells Fargo The TrinityRail platform has grown at a 11% CAGR since 2003 Lessors Make Up A Growing Share of the North American Fleet Railcar Lessor Ownership Profile Presents Consolidation Opportunity Operating Lessors *Over 100 lessors own 242K railcars in “All other” 19 Financial Lessors 55% 19% 16% 10% Lessor Railroad Shipper TTX See appendix for source information Capitalizing on Structural Change in the Rail Market
20Investor Presentation20 Operating our business in a way that minimizes impact on natural resources and the environment • Leveraged Green Financing Framework, for financing of green-eligible railcars assets, supported by Sustainalytics • Sustainable railcar conversions allow for re-use of railcar components while still addressing a changing demand environment • Innovative products and services that enhance the rail modal supply chain advantage and reduce GHG emissions Attracting and retaining a diverse and empowered workforce • Fostering an inclusive and collaborative workplace • Hiring and retaining the best talent and providing opportunities for continuing professional development • Improving the well being of our employees and stakeholders • Contributing to the communities in which we operate Promoting the long-term interests of stakeholders, strengthening accountability and inspiring trust • Independent Chairman and Board of Directors with diverse backgrounds and experienced oversight • Incentive compensation programs aligned with shareholder interests • Board of Directors and Executive Leadership Team oversight of ESG initiatives Strong track record of operational excellence • All Trinity Rail manufacturing facilities and Trinity HQ achieved ISO 14001 (Environmental) and ISO 45001 (Safety) certification, the only railcar manufacturer in North America certified to both rigorous standards • Actively engage stakeholders in environmental, health, and safety (EHS) initiatives and continually improve EHS processes, practices, and operational performance Commitment to Premier Performance and Sustainability Environmental Commitment Social Responsibility Governance Excellence Risk Management
21Investor Presentation • 1.7 million railcars in North America(1) • 1.4 trillion ton miles moved by rail in 2023(2) • 3,500+ commodities moved by rail(3) • Annual railcar loadings of 17 million in 2023(4), highly correlated to U.S. GDP U.S. Freight Ton Miles by Mode of Transportation(2) See appendix for footnotes 21 Truck, 48% Rail, 26% Water, 9% Pipe, 17% 5.4 trillion total ton miles Integral Part of North American Supply Chain 26% of U.S. Freight Ton Miles move by rail
22Investor Presentation Financial Positioning and Strategic Initiatives
23Investor Presentation Fleet investment generates highest returns for Trinity Strong FLRD and growing end market demand supports our conviction in the return opportunities from fleet investment Requires diligence, but strategic M&A around Parts and Services can drive meaningful returns Committed to dividend growth and will be opportunistic around share repurchases Current debt profile supports ROE outlook Committed to maintaining appropriate liquidity Capital Allocation Strategy Focused on Returns HIGHER RETURNS LOWER RETURNS Fleet InvestmentCapital Investments and M&AReturn of CapitalDebt RepaymentHold Cash
24Investor Presentation • Long-term leases • High renewal success rates • Low credit defaults and bad debt expense • Active secondary market Stable and Predictable Cash Flows • 35-50 year useful life • Positive yield relationship to inflation • Low volatility for residuals • Low technological obsolescence Hard Asset Value with Inflation Benefits • Integral component of North American supply chain • Multiple market sectors with varying demand drivers Strong Correlation with GDP • Rent yields highly correlate to interest rates Natural Interest Rate Hedge • Accelerated depreciation for tax purposes • Bonus depreciation allowed under current tax law • Superior risk-adjusted returns Tax-advantaged Investment • Accounts for 1/3 of U.S. freight, but only 0.5% of greenhouse emissions • Up to 95% recyclable through scrap and salvage Environmental Profile* *See appendix for source information 24 Railcars are Sustainable Long-Term Investments
25Investor Presentation Trinity’s Operating Model and Company Purpose Purpose Business Strategy Values
26Investor Presentation Appendix
27Investor Presentation 27 Three Months Ended September 30, 2024 (in millions, except per share amounts) GAAP Interest expense, net (1) Adjusted Operating profit $ 122.4 $ — $ 122.4 Income from continuing operations before income taxes $ 56.4 $ (0.4) $ 56.0 Provision (benefit) for income taxes $ 15.6 $ (0.1) $ 15.5 Income from continuing operations $ 40.8 $ (0.3) $ 40.5 Net income from continuing operations attributable to Trinity Industries, Inc. $ 36.7 $ (0.3) $ 36.4 Diluted weighted average shares outstanding 84.1 84.1 Diluted income from continuing operations per common share attributable to Trinity Industries, Inc. $ 0.44 $ 0.43 (1) Represents interest income accretion related to a seller-financing agreement associated with the sale of certain non-operating assets. We have supplemented the presentation of our reported GAAP operating profit, income from continuing operations before income taxes, provision (benefit) for income taxes, income from continuing operations, net income from continuing operations attributable to Trinity Industries, Inc., and diluted income from continuing operations per common share attributable to Trinity Industries, Inc. with non-GAAP measures that adjust the GAAP measures to exclude the impact of certain interest expense, net; and certain other transactions or events (as applicable), described in the footnotes to the table above. These non-GAAP measures are derived from amounts included in our GAAP financial statements and are reconciled to the most directly comparable GAAP financial measures in the table above. Management believes that these measures are useful to both management and investors for analyzing the performance of our business without the impact of certain items that are not indicative of our normal business operations. Non-GAAP measures should not be considered in isolation or as a substitute for our reported results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures for other companies. Reconciliation: Adjusted Operating Results
28Investor Presentation 28 Nine Months Ended September 30, 2024 (in millions, except per share amounts) GAAP Interest expense, net (1) Adjusted Operating profit $ 379.5 $ — $ 379.5 Income from continuing operations before income taxes $ 174.3 $ (1.2) $ 173.1 Provision (benefit) for income taxes $ 43.7 $ (0.3) $ 43.4 Income from continuing operations $ 130.6 $ (0.9) $ 129.7 Net income from continuing operations attributable to Trinity Industries, Inc. $ 120.8 $ (0.9) $ 119.9 Diluted weighted average shares outstanding 83.9 83.9 Diluted income from continuing operations per common share attributable to Trinity Industries, Inc. $ 1.44 $ 1.43 (1) Represents interest income accretion related to a seller-financing agreement associated with the sale of certain non-operating assets. We have supplemented the presentation of our reported GAAP operating profit, income from continuing operations before income taxes, provision (benefit) for income taxes, income from continuing operations, net income from continuing operations attributable to Trinity Industries, Inc., and diluted income from continuing operations per common share attributable to Trinity Industries, Inc. with non-GAAP measures that adjust the GAAP measures to exclude the impact of certain interest expense, net; and certain other transactions or events (as applicable), described in the footnotes to the table above. These non-GAAP measures are derived from amounts included in our GAAP financial statements and are reconciled to the most directly comparable GAAP financial measures in the table above. Management believes that these measures are useful to both management and investors for analyzing the performance of our business without the impact of certain items that are not indicative of our normal business operations. Non-GAAP measures should not be considered in isolation or as a substitute for our reported results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures for other companies. Reconciliation: Adjusted Operating Results
29Investor Presentation 29 Reconciliation: Adjusted Operating Results (1) Represents the change in estimated fair value of additional contingent consideration associated with an acquisition. (2) Represents insurance recoveries in excess of net book value for assets damaged by a tornado at the Company’s rail maintenance facility in Cartersville, Georgia in the first quarter of 2021. (3) Represents interest income accretion related to a seller-financing agreement associated with the sale of certain non-operating assets. We have supplemented the presentation of our reported GAAP operating profit, income from continuing operations before income taxes, provision (benefit) for income taxes, income from continuing operations, net income from continuing operations attributable to Trinity Industries, Inc., and diluted income from continuing operations per common share attributable to Trinity Industries, Inc. with non-GAAP measures that adjust the GAAP measures to exclude the impact of certain selling, engineering, and administrative expenses; gains on dispositions of other property; restructuring activities, net; interest expense, net; and certain other transactions or events (as applicable), described in the footnotes to the table above. These non-GAAP measures are derived from amounts included in our GAAP financial statements and are reconciled to the most directly comparable GAAP financial measures in the table above. Management believes that these measures are useful to both management and investors for analyzing the performance of our business without the impact of certain items that are not indicative of our normal business operations. Non-GAAP measures should not be considered in isolation or as a substitute for our reported results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures for other companies. Nine Months Ended September 30, 2023 (in millions, except per share amounts) GAAP Selling, engineering, and administrative expenses (1) Gains on dispositions of property – other (2) Restructuring activities, net Interest expense, net (3) Adjusted Operating profit $ 268.3 $ 2.0 $ (4.9) $ (2.2) $ — $ 263.2 Income from continuing operations before income taxes $ 68.5 $ 2.0 $ (4.9) $ (2.2) $ (1.1) $ 62.3 Provision (benefit) for income taxes $ 1.9 $ 0.5 $ (1.2) $ (0.6) $ (0.3) $ 0.3 Income from continuing operations $ 66.6 $ 1.5 $ (3.7) $ (1.6) $ (0.8) $ 62.0 Net income from continuing operations attributable to Trinity Industries, Inc. $ 51.3 $ 1.5 $ (3.7) $ (1.6) $ (0.8) $ 46.7 Diluted weighted average shares outstanding 83.5 83.5 Diluted income from continuing operations per common share attributable to Trinity Industries, Inc. $ 0.62 $ 0.56
30Investor Presentation 30 (1) Represents the change in estimated fair value of additional contingent consideration associated with an acquisition. (2) Represents insurance recoveries in excess of net book value for assets damaged by a tornado at the Company’s rail maintenance facility in Cartersville, Georgia in the first quarter of 2021. (3) Represents interest income accretion related to a seller-financing agreement associated with the sale of certain non-operating assets. We have supplemented the presentation of our reported GAAP operating profit, income from continuing operations before income taxes, provision (benefit) for income taxes, income from continuing operations, net income from continuing operations attributable to Trinity Industries, Inc., and diluted income from continuing operations per common share attributable to Trinity Industries, Inc. with non-GAAP measures that adjust the GAAP measures to exclude the impact of certain selling, engineering, and administrative expenses; gains on dispositions of other property; restructuring activities, net; interest expense, net; and certain other transactions or events (as applicable), described in the footnotes to the table above. These non-GAAP measures are derived from amounts included in our GAAP financial statements and are reconciled to the most directly comparable GAAP financial measures in the table above. Management believes that these measures are useful to both management and investors for analyzing the performance of our business without the impact of certain items that are not indicative of our normal business operations. Non-GAAP measures should not be considered in isolation or as a substitute for our reported results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures for other companies. Year Ended December 31, 2023 (in millions, except per share amounts) GAAP Selling, engineering, and administrative expenses (1) Gains on dispositions of property – other (2) Restructuring activities, net Interest expense, net (3) Adjusted Operating profit $ 417.0 $ 4.0 $ (6.3) $ (2.2) $ — $ 412.5 Income from continuing operations before income taxes $ 149.0 $ 4.0 $ (6.3) $ (2.2) $ (1.5) $ 143.0 Provision (benefit) for income taxes $ 9.0 $ 1.0 $ (1.6) $ (0.6) $ (0.4) $ 7.4 Income from continuing operations $ 140.0 $ 3.0 $ (4.7) $ (1.6) $ (1.1) $ 135.6 Net income from continuing operations attributable to Trinity Industries, Inc. $ 119.4 $ 3.0 $ (4.7) $ (1.6) $ (1.1) $ 115.0 Diluted weighted average shares outstanding 83.4 83.4 Diluted income from continuing operations per common share attributable to Trinity Industries, Inc. $ 1.43 $ 1.38 Reconciliation: Adjusted Operating Results
31Investor Presentation (1) The effective tax rate for gains on dispositions of other property; restructuring activities, net; and interest expense, net is before consideration of the CARES Act. (2) Represents insurance recoveries in excess of net book value for assets damaged by a tornado at the Company’s rail maintenance facility in Cartersville, Georgia in the first quarter of 2021. (3) Represents interest income accretion related to a seller-financing agreement associated with the sale of certain non-operating assets. We have supplemented the presentation of our reported GAAP operating profit, income (loss) from continuing operations before income taxes, provision (benefit) for income taxes, income (loss) from continuing operations, net income from continuing operations attributable to Trinity Industries, Inc., and diluted income from continuing operations per common share attributable to Trinity Industries, Inc. with non-GAAP measures that adjust the GAAP measures to exclude the impact of certain gains on dispositions of other property; restructuring activities, net; interest expense, net; the income tax effects of the CARES Act; and certain other transactions or events (as applicable), described in the footnotes to the table above. These non-GAAP measures are derived from amounts included in our GAAP financial statements and are reconciled to the most directly comparable GAAP financial measures in the table above. Management believes that these measures are useful to both management and investors for analyzing the performance of our business without the impact of certain items that are not indicative of our normal business operations. Non-GAAP measures should not be considered in isolation or as a substitute for our reported results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures for other companies. 31 Year Ended December 31, 2022 (in millions, except per share amounts) GAAP Gains on dispositions of property – other (1)(2) Restructuring activities, net (1) Interest expense, net (1)(3) Income tax effect of CARES Act Adjusted Operating profit $ 334.0 $ (7.5) $ 1.0 $ — $ — $ 327.5 Income (loss) from continuing operations before income taxes $ 126.5 $ (7.5) $ 1.0 $ (1.4) $ — $ 118.6 Provision (benefit) for income taxes $ 27.6 $ (1.9) $ 0.3 $ (0.3) $ 0.6 $ 26.3 Income (loss) from continuing operations $ 98.9 $ (5.6) $ 0.7 $ (1.1) $ (0.6) $ 92.3 Net income from continuing operations attributable to Trinity Industries, Inc. $ 86.1 $ (5.6) $ 0.7 $ (1.1) $ (0.6) $ 79.5 Diluted weighted average shares outstanding 84.2 84.2 Diluted income from continuing operations per common share attributable to Trinity Industries, Inc. $ 1.02 $ 0.94 Reconciliation: Adjusted Operating Results
32Investor Presentation Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 (in millions) Net cash provided by operating activities – continuing operations $ 75.5 $ 93.2 $ 56.5 $ 243.2 $ 83.8 Net gains on lease portfolio sales 3.1 36.4 2.1 22.7 11.4 Cash flow from operations with net gains on lease portfolio sales $ 78.6 $ 129.6 $ 58.6 $ 265.9 $ 95.2 Reconciliation: Cash Flow from Operations with Net Gains on Lease Portfolio Sales Cash flow from operations with net gains on lease portfolio sales is a non-GAAP financial measure. We believe this measure is useful to both management and investors as it provides a relevant measure of liquidity and a useful basis for assessing the breadth of the cash flow generation capabilities across our operating platform, as well as our ability to fund our operations and repay our debt. This measure is defined as net cash provided by operating activities from continuing operations as computed in accordance with GAAP, plus net gains on lease portfolio sales and is reconciled to net cash provided by operating activities from continuing operations, the most directly comparable GAAP financial measure, in the table above. Non-GAAP measures should not be considered in isolation or as a substitute for our reported results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures for other companies.
33Investor Presentation (1) Represents the change in estimated fair value of additional contingent consideration associated with an acquisition. (2) Represents insurance recoveries in excess of net book value for assets damaged by a tornado at the Company’s rail maintenance facility in Cartersville, Georgia in the first quarter of 2021. (3) Represents interest income accretion related to a seller-financing agreement associated with the sale of certain non-operating assets. (4) Return on Equity is calculated as income from continuing operations divided by average total stockholders' equity. (5) Adjusted Return on Equity is calculated as adjusted net income divided by average Trinity stockholders' equity, each as defined below and reconciled above. Adjusted Return on Equity (“Adjusted ROE”) is a non-GAAP measure that is derived from amounts included in our GAAP financial statements. We define Adjusted ROE as a ratio for which (i) the numerator is calculated as income or loss from continuing operations, adjusted to exclude the effects of net income or loss attributable to noncontrolling interest, and certain other adjustments (net of income taxes), described in the footnotes to the table above, which include certain selling, engineering, and administrative expenses; gains on dispositions of other property; and interest expense, net; and (ii) the denominator is calculated as average Trinity stockholders’ equity (which excludes noncontrolling interest). In the table above, the numerator and denominator of our Adjusted ROE calculation are reconciled to income from continuing operations and total stockholders’ equity, respectively, which are the GAAP financial measures used in the computation of ROE. Management believes that Adjusted ROE is a useful measure to both management and investors as it provides an indication of the economic return on the Company’s investments over time. Non-GAAP measures should not be considered in isolation or as a substitute for our reported results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures for other companies. LTM September 30, 2024 September 30, 2023 ($ in millions) Numerator: Income from continuing operations $ 204.0 Net income attributable to noncontrolling interest (15.1) Net income from continuing operations attributable to Trinity Industries, Inc. 188.9 Adjustments (net of income taxes): Selling, engineering, and administrative expenses (1) 1.5 Gains on dispositions of property – other (2) (1.0) Interest expense, net (3) (1.2) Adjusted Net Income $ 188.2 Denominator: Total stockholders' equity $ 1,298.5 $ 1,253.4 Noncontrolling interest (241.1) (252.6) Trinity stockholders' equity $ 1,057.4 $ 1,000.8 Average total stockholders' equity $ 1,276.0 Return on Equity (4) 16.0 % Average Trinity stockholders' equity $ 1,029.1 Adjusted Return on Equity (5) 18.3 % Reconciliation: Adjusted Return on Equity
34Investor Presentation “EBITDA” is defined as income from continuing operations plus interest expense, income taxes, and depreciation and amortization expense. Adjusted EBITDA is defined as EBITDA plus certain selling, engineering, and administrative expenses; gains on dispositions of other property; and interest income. EBITDA and Adjusted EBITDA are non-GAAP financial measures; however, the amounts included in these calculations are derived from amounts included in our GAAP financial statements. EBITDA and Adjusted EBITDA are reconciled to net income, the most directly comparable GAAP financial measure, in the table above. This information is provided to assist management and investors in making meaningful comparisons of our operating performance between periods. We believe EBITDA is a useful measure for analyzing the performance of our business. We also believe that EBITDA is commonly reported and widely used by investors and other interested parties as a measure of a company’s operating performance and debt servicing ability because it assists in comparing performance on a consistent basis without regard to capital structure, depreciation or amortization (which can vary significantly depending on many factors). EBITDA and Adjusted EBITDA should not be considered as alternatives to net income as indicators of our operating performance, or as alternatives to operating cash flows as measures of liquidity. Non-GAAP measures should not be considered in isolation or as a substitute for our reported results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures for other companies. LTM September 30, 2024 ($ in millions) Net income $ 187.4 Less: Loss from discontinued operations, net of income taxes (16.6) Income from continuing operations 204.0 Interest expense 289.9 Provision (benefit) for income taxes 50.8 Depreciation and amortization expense 293.5 EBITDA 838.2 Selling, engineering, and administrative expenses 2.0 Gains on dispositions of property – other (1.4) Interest income (1.6) Adjusted EBITDA $ 837.2 Reconciliation: EBITDA and Adjusted EBITDA
35Investor Presentation Slide 2 – Forward Looking Statements (1) LTM is calculated as the year ended December 31, 2023, less the nine months ended September 30, 2023, plus the nine months ended September 30, 2024, representing the financial information from October 1, 2023 to September 30, 2024. Slide 8 – Segment Performance: Railcar Leasing & Services Group (1) OP margin for the Railcar Leasing and Services Group includes gains from insurance recoveries of $3.7M in Q3-23 and $1.4M in Q4-23. (2) Future Lease Rate Differential (FLRD) calculates the implied change in lease rates for railcar leases expiring over the next four quarters. The FLRD assumes that these expiring leases will be renewed at the most recent quarterly transacted lease rates for each railcar type. We believe the FLRD is useful to both management and investors as it provides insight into the near-term trend in lease rates. The FLRD is calculated as follows: (New Lease Rates – Expiring Lease Rates) x Expiring Railcar Leases (Expiring Lease Rates x Expiring Railcar Leases) Slide 10 – Total Company Results Adjusted EPS includes the following adjustments reported by the Company (each per common diluted share): • Reported Q3-23 GAAP EPS was $0.29; Adjusted EPS excludes $0.03 related to the insurance recoveries in excess of net book value for assets damaged by a tornado at the Company’s rail maintenance facility in Cartersville, Georgia in the first quarter of 2021. • Reported Q4-23 GAAP EPS was $0.81; Adjusted EPS excludes $0.02 related to the change in estimated fair value of additional contingent consideration associated with an acquisition and $0.01 related to the insurance recoveries in excess of net book value for assets damaged by a tornado at the Company’s rail maintenance facility in Cartersville, Georgia in the first quarter of 2021. • Reported Q1-24 GAAP EPS and Adjusted EPS were both $0.33. • Reported Q2-24 GAAP EPS was $0.67; Adjusted EPS excludes $0.01 related to interest income accretion related to a seller-financing agreement associated with the sale of certain non-operating assets. • Reported Q3-24 GAAP EPS was $0.44; Adjusted EPS excludes $0.01 related to interest income accretion related to a seller-financing agreement associated with the sale of certain non-operating assets. Slide 11 – Balance Sheet Positioning (1) Balances and blended average interest rate (including the effect of interest rate hedges, as applicable) as of September 30, 2024 Slide 14 – Trinity Industries, Inc. Overview (1) Current dividend yield represents the Company’s most recent quarterly dividend, annualized, and the stock price (NYSE: TRN) as of September 30, 2024. (2) Intersegment revenues are eliminated. Slide 19 – Capitalizing on Structural Change in the Rail Market Umler® North American fleet ownership data as of January 1, 2024 Slide 21 – Integral Part of North American Supply Chain (1) Umler® source data, January 1, 2024 report (2) FTR Associates 12/31/2023 (3) Association of American Railroads (“AAR”), accessed on March 1, 2022 with data as of February 20, 2022 (4) Association of American Railroads (“AAR”) 12/31/2023 Slide 24 – Railcars are Sustainable Long-Term Investments https://www.aar.org/wp-content/uploads/2023/06/AAR-Climate-Change-Fact-Sheet.pdf Presentation Footnotes
36Investor Presentation Leigh Anne Mann, Vice President of Investor R elations 214-631-4420 TrinityInvestorR elations@ trin.net Investor Website: www.trin.net/investor-relations Contact Information
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