- New Infrastructure Company to Focus on Infrastructure Products and
Services in North America
- Trinity Industries to Operate Industry-Leading Integrated Rail
Leasing, Manufacturing, and Services Business, Providing Single Source
for Comprehensive Rail Transportation Solutions and Services in North
America
- Standalone Companies to Pursue Distinct Business Strategies and
Investment Decisions Best Suited to Enhance Long-Term Growth and
Shareholder Value Creation
- Announces Substantial Increase in Share Repurchase Authorization
from $250 Million to $500 Million over Two Years
- Announces Quarterly Dividend of 13 Cents Per Share
DALLAS--(BUSINESS WIRE)--
Trinity Industries, Inc. (NYSE: TRN) (“Trinity”) today announced that
its Board of Directors has unanimously approved a plan to pursue a
spin-off of the Company’s infrastructure-related businesses to Trinity
shareholders. The separation is planned as a tax-free spin-off
transaction to the Company's shareholders for U.S. federal income tax
purposes and is expected to be completed in the second half of 2018.
The transaction is expected to result in two separate public companies
that will benefit from leading positions in their respective industries,
strong free cash flow generation, and compelling growth opportunities.
Following the transaction, each company will have distinct corporate
strategies and capital allocation priorities:
-
Trinity’s portfolio of businesses will be comprised primarily of
Trinity’s industry-leading rail-related businesses which are marketed
under the trade name TrinityRail®. TrinityRail’s
integrated business model consisting of rail manufacturing, leasing,
and services provides customers with a comprehensive offering of rail
transportation solutions, products, and services. TrinityRail’s financial
profile is expected to generate stable cash flows and earnings growth
opportunities throughout the manufacturing cycle, giving the company
an ability to pursue an optimized capital structure, efficiently
allocate capital, and effectively leverage its multiple rail platforms.
-
The new infrastructure company will be a growth-oriented company that
is focused on infrastructure-related products and services. Trinity’s
infrastructure businesses have leading positions in construction,
energy, and marine markets throughout North America and are also
positioned to grow free cash flows. The new infrastructure company
will have the balance sheet strength and capital allocation
flexibility to pursue growth through acquisitions and to capitalize on
the large and growing market opportunity in North American
infrastructure spending.
Timothy R. Wallace, Trinity’s Chairman, CEO and President, said: “We
believe establishing two separate, independently focused public
companies will allow each company to more closely align its strategic
objectives and capital allocation priorities. This will also give the
investment community better insight into the potential value our
businesses can continue to create. We expect the two companies to be
strong, high-performing businesses with the operating acumen and culture
to thrive, creating employment opportunities while continuing to provide
customers with the high quality products and services they have always
expected from Trinity’s businesses.”
“I am very excited about the opportunities and potential shareholder
value we are creating by reconfiguring our portfolio of market-leading
industrial companies,” added Mr. Wallace. “While there is still
significant work to be done before we can complete the spin-off
transaction, we are confident that we can set each business on the path
to create long-term shareholder value.”
Mr. Wallace continued, “The $500 million share repurchase program we
announced today is an important step in investing our capital for
long-term value creation and emphasizes our commitment to disciplined
capital allocation policies to enhance growth, liquidity, and total
shareholder returns.”
Mr. Wallace concluded, “In 2018, Trinity will reach its 85th year as a
company, and its 60th year as a public company. As Trinity has grown
through the years, we have attracted incredible teams of dedicated
employees who have worked together to build an unparalleled portfolio of
industry-leading businesses. Trinity’s senior leadership and Board,
along with a team of external advisors have spent a great deal of time
analyzing our portfolio of companies. We are proud of Trinity
Industries’ breadth, scale, and strength and believe that our success to
date establishes an excellent foundation for our businesses to continue
to build upon our rich legacy. We will continue to update our
stakeholders as we progress through this process.”
Benefits of the Spin-off Transaction
Enhances Overall Growth Potential through Focused Companies
Trinity
believes that both the growth potential and overall valuation of its
businesses will be enhanced as a result of separating its current
portfolio into two separate companies. Trinity Industries and the new
infrastructure company will each be more focused and competitive as
leading standalone companies in their respective industries.
Enables Each Company to Optimize Balance Sheet and Capital Allocation
Priorities
Each company plans to pursue distinct investment
decisions with capital structures based on their needs and potential
opportunities, and will be able to create value by allocating capital to
the alternatives that achieve the best returns for their respective
shareholders.
Allows Businesses to Advance Differentiated Investment Theses
Each
company will be positioned to focus attention on a distinct investment
thesis, enabling investors to more clearly evaluate the inherent value
of each company's portfolio of assets and invest accordingly.
Maintains Benefits of TrinityRail’sVertically Integrated
Railcar Leasing and Manufacturing Structure
As a premier
provider of rail products and services in North America, TrinityRail’s
integrated business model offers an unparalleled value proposition for
customers, creating a “one-stop-shop” experience and a comprehensive
range of railcar services for industrial producers, railroads, lessors,
and institutional investors. The structure of the spin-off will preserve
the TrinityRail integrated business model and its expansive
market platforms, allowing Trinity to continue to deliver valuable
products and solutions to customers.
Additional Details and Next Steps
The separation process
will include a thorough review of the necessary Board membership,
executive leadership, and management teams in order to provide the
optimal management structure for each business. Specific details about
Board members, executive leadership, and management teams will be made
available in due course.
The spin-off will be subject to finalization of the entity structure of
the spun-off business, assurance that the separation will be tax-free to
the Company’s shareholders for U.S. federal income tax purposes,
finalization of the capital structure of the two companies, the
effectiveness of appropriate filings with the Securities and Exchange
Commission, final approval from the Company’s Board of Directors, and
other customary conditions. The Company may, at any time and for any
reason until the proposed transaction is complete, abandon the
separation or modify or change its terms, including the individual
businesses and components of each of the two companies. The separation
is expected to be completed in the second half of 2018, but there can be
no assurance regarding the ultimate timing of the separation or that the
separation will ultimately occur.
Share Repurchase Program and Quarterly Dividend
The Company
also announced that its Board of Directors has authorized a new $500
million share repurchase program, doubling the size of the Company’s
existing authorization which expires on December 31, 2017. The new $500
million program will be effective January 1, 2018 through December 31,
2019.
The Company also declared its quarterly dividend to be 13 cents per
share on its $0.01 par value common stock. The quarterly cash dividend,
representing Trinity’s 215th consecutively paid dividend, is payable
January 31, 2018 to stockholders of record on January 12, 2018.
Advisors
J.P. Morgan Securities, LLC is serving as financial
advisor to Trinity Industries; Skadden, Arps, Slate Meagher & Flom LLP
is serving as legal counsel; and KPMG LLP is serving as tax advisor.
Evercore Group L.L.C. is also advising the Company in this process.
About Trinity Industries, Inc.
Trinity Industries, Inc.,
headquartered in Dallas, Texas, is a diversified industrial company that
owns complementary market-leading businesses providing products and
services to the energy, chemical, agriculture, transportation, and
construction sectors, among others. Trinity reports its financial
results in five principal business segments: the Rail Group, the Railcar
Leasing and Management Services Group, the Inland Barge Group, the
Construction Products Group, and the Energy Equipment Group. For more
information, visit: www.trin.net.
Some statements in this release, which are not historical facts, are
“forward-looking statements” as defined by the Private Securities
Litigation Reform Act of 1995.Forward-looking statements include
statements about Trinity's estimates, expectations, beliefs, intentions
or strategies for the future, and the assumptions underlying these
forward-looking statements. Forward-looking statements may include, but
are not limited to, statements regarding the anticipated separation of
Trinity into two separate public companies, the expected timetable for
completing the transaction, future financial and operating performance
of each company, benefits and synergies of the transaction, strategic
and competitive advantages of each company, future opportunities for
each company and any other statements regarding events or developments
that Trinity believes or anticipates will or may occur in the future.Trinity uses the words “anticipates,” “assumes,” “believes,”
“estimates,” “expects,” “intends,” “forecasts,” “may,” “will,” “should,”
“guidance,” “outlook,” and similar expressions to identify these
forward-looking statements.Forward-looking statements speak only
as of the date of this release, and Trinity expressly disclaims any
obligation or undertaking to disseminate any updates or revisions to any
forward-looking statement contained herein to reflect any change in
Trinity’s expectations with regard thereto or any change in events,
conditions or circumstances on which any such statement is based. There
is no assurance that the proposed transaction will be completed, that
the Company's Board of Directors will continue to pursue a proposed
transaction (even if there are no impediments to completion), that the
Company will be able to separate its businesses, or that the proposed
transaction will be the most beneficial alternative considered.Forward-looking
statements involve risks and uncertainties that could cause actual
results to differ materially from historical experience or our present
expectations, including but not limited to risks and uncertainties
regarding economic, competitive, governmental, and technological factors
affecting Trinity’s operations, markets, products, services and prices,
as well as any changes in or abandonment of the proposed separation or
the ability to effect the separation and satisfy the conditions to the
proposed separation, and such forward-looking statements are not
guarantees of future performance.
For a discussion of such risks and uncertainties, which could cause
actual results to differ from those contained in the forward-looking
statements, see “Risk Factors” and “Forward-Looking Statements” in the
Company's Annual Report on Form 10-K for the most recent fiscal year,
and as may be revised and updated by our Quarterly Reports on Form 10-Q
and Current Reports on Form 8-K.
View source version on businesswire.com: http://www.businesswire.com/news/home/20171212005712/en/
Trinity Industries, Inc.
Investor Contact:
Preston
Bass, 214-631-4420
Director, Investor Relations
or
Media
Contact:
Jack Todd, 214-589-8909
Vice President, Public
Affairs
Source: Trinity Industries, Inc.