DALLAS--(BUSINESS WIRE)--
Trinity Industries, Inc. (NYSE:TRN) today announced earnings results for
the fourth quarter and full year ended December 31, 2017, including the
following highlights:
Fourth Quarter 2017
-
Earnings per common diluted share of $3.42 compared to $0.44 per share
in 2016
-
Earnings per share include a one-time $3.03 per share benefit related
to the effects of the Tax Cuts and Jobs Act, partially offset by $0.04
per share of transaction costs incurred related to the Company's
planned spin-off transaction, resulting in an adjusted earnings per
common diluted share of $0.43
-
Railcar deliveries and orders totaling 6,150 and 3,180 railcars,
respectively, in the Rail Group, compared to 7,435 and 1,985 railcars,
respectively, in 2016
-
Completed sales of $206.3 million of leased railcars during the
quarter with associated earnings per common diluted share of $0.18
compared to no sales in 2016
-
Repurchased approximately 883,000 shares of common stock at a cost of
$33.0 million
-
Announced its Board of Directors approved a plan to pursue a spin-off
of the Company's infrastructure-related businesses to Trinity
stockholders
Full Year 2017
-
Earnings per common diluted share of $4.52 compared to $2.25 per share
in 2016
-
Earnings per share include a one-time $3.06 per share benefit related
to the effects of the Tax Cuts and Jobs Act, partially offset by $0.06
per share of transaction costs incurred related to the Company's
planned spin-off transaction, resulting in an adjusted earnings per
common diluted share of $1.52
-
Railcar deliveries of 18,395 with Rail Group backlog of $2.2 billion
as of December 31, 2017, compared to railcar deliveries of 27,240 in
2016 and Rail Group backlog of $3.0 billion as of December 31, 2016
-
Completed sales of $460.3 million leased railcars compared to sales of
$171.9 million in 2016 with associated earnings per common diluted
share of $0.43 and $0.21, respectively
-
Repurchased approximately 2.8 million shares of common stock at a cost
of $85.4 million
Consolidated Results
Trinity Industries, Inc. reported net income attributable to Trinity
stockholders of $538.5 million, or $3.42 per common diluted share, for
the fourth quarter ended December 31, 2017. Net income for the same
quarter of 2016 was $67.6 million, or $0.44 per common diluted share.
Revenues for the fourth quarter of 2017 totaled $906.4 million compared
to revenues of $1.1 billion for the same quarter of 2016. In the fourth
quarter, the Company incurred approximately $10.6 million of transaction
costs, or $0.04 per share, related to the expected spin-off transaction.
For the year ended December 31, 2017, the Company reported net income
attributable to Trinity stockholders of $702.5 million, or $4.52 per
common diluted share. In 2016, the Company reported net income of $343.6
million, or $2.25 per common diluted share. Revenues for the year ended
December 31, 2017 were $3.7 billion compared to revenues of $4.6 billion
in 2016. For the year ended December 31, 2017, the Company incurred
approximately $14.2 million of transaction costs, or $0.06 per share,
related to the expected spin-off transaction.
Results for the fourth quarter and year ended December 31, 2017 included
a non-cash tax benefit of $476.2 million, or $3.03 and $3.06 per common
diluted share, respectively, related to the effects of the Tax Cuts and
Jobs Act enacted in December 2017. This benefit resulted primarily from
the remeasurement of the Company's net deferred tax liabilities to
reflect the recently enacted 21% United States federal corporate income
tax rate. Excluding the effects of the Tax Cuts and Jobs Act, the
effective tax rate for the fourth quarter and year ended December 31,
2017 was 36.6% and 36.2%, respectively.
“2017 was an eventful year for our company, with a number of positive
events occurring. From a consolidated financial results standpoint, we
outperformed our original expectations heading into the year. Despite
persistent oversupply conditions throughout the year in the North
American railcar and inland barge markets, our teams were able to
maintain operational flexibility and adjust to demand fluctuations,”
said Timothy R. Wallace, Trinity’s Chairman, CEO and President.
Mr. Wallace continued, “In September, we were very pleased to receive
the reverse and render ruling from the U.S. Court of Appeals for the
Fifth Circuit in the Company’s federal False Claims Act litigation. Over
the course of 2017, Trinity’s management and Board of Directors
continued to spend a great deal of time evaluating a variety of
strategic options to create shareholder value, culminating in our recent
announcement to spin-off Trinity’s infrastructure-related businesses.
This year will be a transformational year for Trinity as we implement
our plan. We are enthusiastic about the opportunity to maximize
shareholder value through the creation of two strong, independent
companies.”
Quarterly Business Group Results
In the fourth quarter of 2017, the Rail Group reported revenues of
$647.2 million compared to revenues of $816.4 million in the fourth
quarter of 2016. Operating profit and profit margin for the Rail Group
were $77.8 million and 12.0% in the fourth quarter of 2017 compared to
$110.3 million and 13.5% in the fourth quarter of 2016. The decreases in
revenues and operating profit were primarily due to significantly lower
railcar deliveries. The Rail Group delivered 6,150 railcars and received
orders for 3,180 railcars during the fourth quarter of 2017 compared to
7,435 and 1,985 railcars, respectively, in the same quarter last year.
The Rail Group had a backlog of $2.2 billion as of December 31, 2017,
representing 22,585 railcars, compared to a backlog of $2.4 billion as
of September 30, 2017, representing 25,555 railcars.
The Railcar Leasing and Management Services Group (“Leasing Group”)
reported revenues and operating profit of $197.1 million and $128.1
million, respectively, in the fourth quarter of 2017, an increase of
10.6% and 46.1%, respectively, compared to the same quarter of 2016.
Included in these results are revenues and operating profit from
operations of $191.2 million and $84.5 million, respectively, compared
to $178.2 million and $87.7 million, respectively, for the fourth
quarter of 2016. The increase in revenues from operations was primarily
due to growth in the lease fleet and compensation received during the
quarter for an order cancellation for 650 railcars negotiated and agreed
to with a customer in October 2017. As previously indicated, the
cancellation fee increased earnings per share for the quarter by $0.07.
The increase in revenues from operations was offset by lower
utilization, a decline in average rental rates and an increase in fleet
maintenance and compliance expenses resulting in lower operating profit.
The Leasing Group also reported revenues and operating profit from the
sale of leased railcars from the lease fleet of $5.9 million and $43.6
million, respectively, in the fourth quarter of 2017. There were no
sales of leased railcars in the fourth quarter of 2016. Total proceeds
from the sale of leased railcars including the sale of railcars owned
for more than one year that are not included in revenues, were $206.3
million for the fourth quarter of 2017. Supplemental information for the
Leasing Group is provided in the accompanying tables.
The Inland Barge Group reported revenues of $33.6 million in the fourth
quarter of 2017 compared to revenues of $75.1 million in the fourth
quarter of 2016. Operating profit for this Group was $0.2 million in the
fourth quarter of 2017 compared to a profit of $6.7 million in the
fourth quarter of 2016. The decreases in revenues and operating profit
compared to the same quarter last year were primarily due to
significantly lower barge deliveries. The Inland Barge Group received
orders of $5.8 million during the quarter and, as of December 31, 2017,
had a backlog of $98.2 million compared to a backlog of $126.0 million
as of September 30, 2017.
The Energy Equipment Group reported revenues of $234.8 million in the
fourth quarter of 2017 compared to revenues of $257.0 million in the
same quarter of 2016. Operating profit and profit margin for this Group
were $20.5 million and 8.7% compared to $29.6 million and 11.5% in the
same quarter last year. A decrease in volumes in the Group's structural
wind towers product line was partially offset by higher revenues in the
Group's utility structures product line. The backlog for structural wind
towers as of December 31, 2017 was $780.8 million compared to a backlog
of $847.3 million as of September 30, 2017.
The Construction Products Group reported revenues of $118.3 million in
the fourth quarter of 2017 compared to revenues of $112.7 million in the
fourth quarter of 2016. Operating profit and profit margin were $11.6
million and 9.8% in the fourth quarter of 2017 compared to $11.4 million
and 10.1% in the same quarter last year. The increases in revenues and
operating profit compared to the same quarter last year were primarily
due to the acquisition of a trench shoring business during the third
quarter of 2017, partially offset by lower volumes in our highway
products and construction aggregates businesses.
Cash and Liquidity
At December 31, 2017, the Company had cash, cash equivalents, and
short-term marketable securities of $1.1 billion. When combined with
capacity under committed credit facilities, the Company had
approximately $2.5 billion of available liquidity at the end of the
fourth quarter.
Share Repurchase
In December 2017, the Company's Board of Directors authorized a new $500
million share repurchase program effective January 1, 2018 through
December 31, 2019, replacing the previous share repurchase program which
expired on December 31, 2017. During the fourth quarter of 2017, the
Company repurchased 883,200 shares of common stock at a cost of $33.0
million under the expiring program. During 2017, the Company repurchased
2,825,400 shares of common stock at a cost of $85.4 million.
Proposed Spin-off
On December 12, 2017, the Company announced that its Board of Directors
unanimously approved a plan to pursue a spin-off of the Company's
infrastructure-related businesses to Trinity stockholders. The
separation is planned as a tax-free spin-off transaction to the
Company's stockholders for U.S. federal income tax purposes. The
transaction is expected to result in two separate public companies: (1)
Trinity, the currently existing company, which will be comprised
primarily of Trinity’s rail-related businesses and (2) a new
infrastructure company, focused on infrastructure-related products and
services.
Completion of the spin-off will be subject to, among other things, the
effectiveness of appropriate filings with the Securities and Exchange
Commission, final approval from the Company's Board of Directors, and
other customary conditions. The Company may, at any time and for any
reason until the proposed transaction is complete, abandon the
separation or modify or change its terms. The separation is expected to
be completed in the fourth quarter of 2018, but there can be no
assurance regarding the ultimate timing of the separation or that the
separation will ultimately occur.
Earnings Guidance for 2018
The 2018 earnings guidance reflects consolidated results for the Company
and has not been adjusted to incorporate the completion of a potential
spin-off transaction.
For the full year 2018, the Company anticipates earnings of between
$1.15 and $1.35 per common diluted share, excluding transaction costs of
approximately $25 million that the Company expects to incur related to
the potential spin-off and with a revised effective tax rate of 24% as a
result of the Tax Cuts and Jobs Act. Total earnings for the full year
2018, including the additional transaction costs, are anticipated to be
between $1.00 and $1.20 per common diluted share. This compares to the
Company's previous guidance of between $0.90 and $1.25 per share which
did not include any spin-off related costs and assumed an effective tax
rate of 36%.
The Company now anticipates 2018 railcar deliveries of 20,500, compared
to deliveries of 18,395 railcars in 2017. The Company also anticipates
sales of leased railcars of approximately $350 million in 2018.
Supplemental information for the Company’s 2018 full year guidance and
outlook is provided at the end of the accompanying tables.
Actual results in 2018 may differ from present expectations and could be
impacted by a number of factors including, among others, the risk
factors disclosed in "Risk Factors" and "Forward-Looking Statements" in
the Company's Annual Report on Form 10-K for the most recent fiscal year.
Conference Call
Trinity will hold a conference call at 11:00 a.m. Eastern on
February 22, 2018 to discuss its fourth quarter and full year results.
To listen to the call, please visit the Investor Relations section of
the Trinity Industries website, www.trin.net
and select the Events & Presentations menu link. An audio replay may be
accessed through the Company’s website or by dialing (402) 220-0459
until 11:59 p.m. Eastern on March 1, 2018.
Company Description
Trinity Industries, Inc., headquartered in Dallas, Texas, is a
diversified industrial company that owns complementary market-leading
businesses providing products and services to the energy, chemical,
agriculture, transportation, and construction sectors, among others.
Trinity reports its financial results in five principal business
segments: the Rail Group, the Railcar Leasing and Management Services
Group, the Inland Barge Group, the Construction Products Group, and the
Energy Equipment Group. For more information, visit: www.trin.net.
Some statements in this release, which are not historical facts, are
“forward-looking statements” as defined by the Private Securities
Litigation Reform Act of 1995. Forward-looking statements include
statements about Trinity's estimates, expectations, beliefs, intentions
or strategies for the future, and the assumptions underlying these
forward-looking statements, including, but not limited to, statements
regarding the effect ofthe Tax Cuts and Jobs Act on Trinity's
financial results, any non-cash tax benefits from the remeasurement of
Trinity's net deferred tax liabilities, the anticipated separation of
Trinity into two separate public companies, the expected timetable for
completing the spin-off transaction, whether or not the spin-off
transaction occurs, future financial and operating performance of each
company, benefits and synergies of the spin-off transaction, strategic
and competitive advantages of each company, future opportunities for
each company and any other statements regarding events or developments
that Trinity believes or anticipates will or may occur in the future.
Trinity uses the words “anticipates,” “assumes,” “believes,”
“estimates,” “expects,” “intends,” “forecasts,” “may,” “will,” “should,”
“guidance,” “outlook,” and similar expressions to identify these
forward-looking statements. Forward-looking statements speak only as of
the date of this release, and Trinity expressly disclaims any obligation
or undertaking to disseminate any updates or revisions to any
forward-looking statement contained herein to reflect any change in
Trinity’s expectations with regard thereto or any change in events,
conditions or circumstances on which any such statement is based. There
is no assurance that the proposed spin-off transaction will be
completed, that the Company's Board of Directors will continue to pursue
the proposed spin-off transaction (even if there are no impediments to
completion), that the Company will be able to separate its businesses,
or that the proposed spin-off transaction will be the most beneficial
alternative considered. Forward looking statements involve risks and
uncertainties that could cause actual results to differ materially from
historical experience or our present expectations, including but not
limited to risks and uncertainties regarding economic, competitive,
governmental, and technological factors affecting Trinity’s operations,
markets, products, services and prices, as well as any changes in or
abandonment of the proposed separation or the ability to effect the
separation and satisfy the conditions to the proposed separation, and
such forward-looking statements are not guarantees of future
performance. For a discussion of such risks and uncertainties, which
could cause actual results to differ from those contained in the
forward-looking statements, see “Risk Factors” and “Forward-Looking
Statements” in the Company's Annual Report on Form 10-K for the most
recent fiscal year, and as may be revised and updated by our Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K.
| Trinity Industries, Inc. |
| Condensed Consolidated Income Statements |
(in millions, except per share amounts)
|
(unaudited)
|
|
|
|
| Three Months Ended
December 31, |
| | 2017 |
| 2016 |
|
Revenues
| |
$
|
906.4
| | |
$
|
1,103.8
| |
|
Operating costs:
| | | | |
|
Cost of revenues
| |
681.7
| | |
841.2
| |
|
Selling, engineering, and administrative expenses
| |
125.2
| | |
101.9
| |
|
Losses (gains) on dispositions of property:
| | | | |
|
Net gains on lease fleet sales
| |
(43.3
|
)
| |
—
| |
|
Other
| |
(1.5
|
)
| |
(2.9
|
)
|
| |
762.1
|
| |
940.2
|
|
|
Operating profit
| |
144.3
| | |
163.6
| |
|
Interest expense, net
| |
43.0
| | |
43.7
| |
|
Other, net
| |
0.7
|
| |
4.3
|
|
|
Income before income taxes
| |
100.6
| | |
115.6
| |
|
Provision (benefit) for income taxes
| |
(439.4
|
)
| |
41.4
|
|
|
Net income
| |
540.0
| | |
74.2
| |
|
Net income attributable to noncontrolling interest
| |
1.5
|
| |
6.6
|
|
|
Net income attributable to Trinity Industries, Inc. | |
$
|
538.5
|
| |
$
|
67.6
|
|
| | | |
|
|
Net income attributable to Trinity Industries, Inc. per common share:
| | |
|
Basic
| |
$
|
3.56
| | |
$
|
0.44
| |
|
Diluted
| |
$
|
3.42
| | |
$
|
0.44
| |
|
Weighted average number of shares outstanding:
| | | | |
|
Basic
| |
148.4
| | |
148.7
| |
|
Diluted
| |
154.7
| | |
149.4
| |
| | | | | |
|
Trinity is required to utilize the two-class method of accounting when
calculating earnings per share as a result of unvested restricted shares
that have non-forfeitable rights to dividends and are, therefore,
considered to be a participating security. The unvested restricted
shares are excluded from the weighted average number of shares
outstanding for the purposes of determining earnings per share. The
two-class method results in a lower earnings per share than is
calculated from the face of the income statement. See Earnings Per Share
Calculation table below.
The Tax Cuts and Jobs Act (the "Act”) was enacted on December 22, 2017.
The Act reduces the U.S. federal corporate income tax rate from 35% to
21%, requires companies to pay a one-time transition tax on earnings of
certain foreign subsidiaries that were previously tax deferred and
creates new taxes on certain foreign-sourced earnings. As of December
31, 2017, we have completed an initial assessment of the tax effects of
the Act, and have made a reasonable estimate of the effects on our
existing deferred tax balances. We remeasured certain deferred tax
assets and liabilities based on the rates at which they are expected to
impact future tax returns. However, we are still analyzing certain
aspects of the Act and refining our calculations, which could
potentially affect the measurement of these balances or potentially give
rise to new deferred tax amounts resulting in adjustments in future
periods in 2018. The impact of the Act may differ from our estimate due
to changes in the regulations, rulings, guidance, and interpretations
issued by the IRS and the Financial Accounting Standards Board ("FASB")
as well as interpretations and assumptions made by the Company. For the
items for which we were able to determine a reasonable estimate, we
recognized a provisional net benefit of $476.2 million or $3.03 per
common diluted share for the three months ended December 31, 2017, which
is included as a component of provision (benefit) for income taxes.
| Trinity Industries, Inc. |
| Condensed Consolidated Income Statements |
(in millions, except per share amounts)
|
(unaudited)
|
|
|
|
| Year Ended
December 31, |
| | 2017 |
| 2016 |
|
Revenues
| |
$
|
3,662.8
| | |
$
|
4,588.3
| |
|
Operating costs:
| | | | |
|
Cost of revenues
| |
2,745.5
| | |
3,456.1
| |
|
Selling, engineering, and administrative expenses
| |
454.8
| | |
407.4
| |
|
Losses (gains) on dispositions of property:
| | | | |
|
Net gains on lease fleet sales
| |
(83.5
|
)
| |
(13.5
|
)
|
|
Other
| |
(3.1
|
)
| |
(3.9
|
)
|
| |
3,113.7
|
| |
3,846.1
|
|
|
Operating profit
| |
549.1
| | |
742.2
| |
|
Interest expense, net
| |
173.4
| | |
176.5
| |
|
Other, net
| |
3.7
|
| |
(1.1
|
)
|
|
Income before income taxes
| |
372.0
| | |
566.8
| |
|
Provision (benefit) for income taxes
| |
(341.6
|
)
| |
202.1
|
|
|
Net income
| |
713.6
| | |
364.7
| |
|
Net income attributable to noncontrolling interest
| |
11.1
|
| |
21.1
|
|
|
Net income attributable to Trinity Industries, Inc. | |
$
|
702.5
|
| |
$
|
343.6
|
|
| | | |
|
|
Net income attributable to Trinity Industries, Inc. per common share:
| | |
|
Basic
| |
$
|
4.62
| | |
$
|
2.25
| |
|
Diluted
| |
$
|
4.52
| | |
$
|
2.25
| |
|
Weighted average number of shares outstanding:
| | | | |
|
Basic
| |
148.6
| | |
148.4
| |
|
Diluted
| |
152.0
| | |
148.6
| |
| | | | | |
|
Trinity is required to utilize the two-class method of accounting when
calculating earnings per share as a result of unvested restricted shares
that have non-forfeitable rights to dividends and are, therefore,
considered to be a participating security. The unvested restricted
shares are excluded from the weighted average number of shares
outstanding for the purposes of determining earnings per share. The
two-class method results in a lower earnings per share than is
calculated from the face of the income statement. See Earnings Per Share
Calculation table below.
The Act was enacted on December 22, 2017. The Act reduces the U.S.
federal corporate income tax rate from 35% to 21%, requires companies to
pay a one-time transition tax on earnings of certain foreign
subsidiaries that were previously tax deferred and creates new taxes on
certain foreign-sourced earnings. As of December 31, 2017, we have
completed an initial assessment of the tax effects of the Act, and have
made a reasonable estimate of the effects on our existing deferred tax
balances. We remeasured certain deferred tax assets and liabilities
based on the rates at which they are expected to impact future tax
returns. However, we are still analyzing certain aspects of the Act and
refining our calculations, which could potentially affect the
measurement of these balances or potentially give rise to new deferred
tax amounts resulting in adjustments in future periods in 2018. The
impact of the Act may differ from our estimate due to changes in the
regulations, rulings, guidance, and interpretations issued by the IRS
and the Financial Accounting Standards Board ("FASB") as well as
interpretations and assumptions made by the Company. For the items for
which we were able to determine a reasonable estimate, we recognized a
provisional net benefit of $476.2 million or $3.06 per common diluted
share for the year ended December 31, 2017, which is included as a
component of provision (benefit) for income taxes.
| Trinity Industries, Inc. |
| Condensed Segment Data |
(in millions)
|
(unaudited)
|
|
|
|
| Three Months Ended
December 31, |
| Revenues: | | 2017 |
| 2016 |
| Rail Group | |
$
|
647.2
| | |
$
|
816.4
| |
| Construction Products Group | |
118.3
| | |
112.7
| |
| Inland Barge Group | |
33.6
| | |
75.1
| |
| Energy Equipment Group | |
234.8
| | |
257.0
| |
| Railcar Leasing and Management Services Group | |
197.1
| | |
178.2
| |
|
All Other
| |
26.7
|
| |
23.9
|
|
|
Segment Totals before Eliminations
| |
1,257.7
| | |
1,463.3
| |
|
Eliminations - lease subsidiary
| |
(274.6
|
)
| |
(279.8
|
)
|
|
Eliminations - other
| |
(76.7
|
)
| |
(79.7
|
)
|
|
Consolidated Total
| |
$
|
906.4
|
| |
$
|
1,103.8
|
|
| | | |
|
| | Three Months Ended
December 31, |
| Operating profit (loss): | | 2017 | | 2016 |
| Rail Group | |
$
|
77.8
| | |
$
|
110.3
| |
| Construction Products Group | |
11.6
| | |
11.4
| |
| Inland Barge Group | |
0.2
| | |
6.7
| |
| Energy Equipment Group | |
20.5
| | |
29.6
| |
| Railcar Leasing and Management Services Group | |
128.1
| | |
87.7
| |
|
All Other
| |
(4.3
|
)
| |
(5.1
|
)
|
|
Segment Totals before Eliminations and Corporate Expenses
| |
233.9
| | |
240.6
| |
|
Corporate
| |
(52.5
|
)
| |
(36.0
|
)
|
|
Eliminations - lease subsidiary
| |
(35.9
|
)
| |
(39.1
|
)
|
|
Eliminations - other
| |
(1.2
|
)
| |
(1.9
|
)
|
|
Consolidated Total
| |
$
|
144.3
|
| |
$
|
163.6
|
|
| | | | | | | |
|
| Trinity Industries, Inc. |
| Condensed Segment Data |
(in millions)
|
(unaudited)
|
|
|
|
| Year Ended
December 31, |
| Revenues: | | 2017 |
| 2016 |
| Rail Group | |
$
|
2,083.8
| | |
$
|
3,077.3
| |
| Construction Products Group | |
504.6
| | |
523.2
| |
| Inland Barge Group | |
157.9
| | |
403.1
| |
| Energy Equipment Group | |
974.9
| | |
1,012.7
| |
| Railcar Leasing and Management Services Group | |
843.2
| | |
827.0
| |
|
All Other
| |
97.9
|
| |
92.2
|
|
|
Segment Totals before Eliminations
| |
4,662.3
| | |
5,935.5
| |
|
Eliminations - lease subsidiary
| |
(732.0
|
)
| |
(1,021.9
|
)
|
|
Eliminations - other
| |
(267.5
|
)
| |
(325.3
|
)
|
|
Consolidated Total
| |
$
|
3,662.8
|
| |
$
|
4,588.3
|
|
| | | |
|
| | Year Ended
December 31, |
| Operating profit (loss): | | 2017 | | 2016 |
| Rail Group | |
$
|
216.1
| | |
$
|
459.9
| |
| Construction Products Group | |
66.4
| | |
72.6
| |
| Inland Barge Group | |
6.4
| | |
45.3
| |
| Energy Equipment Group | |
100.9
| | |
133.1
| |
| Railcar Leasing and Management Services Group | |
444.5
| | |
360.1
| |
|
All Other
| |
(19.3
|
)
| |
(18.9
|
)
|
|
Segment Totals before Eliminations and Corporate Expenses
| |
815.0
| | |
1,052.1
| |
|
Corporate
| |
(167.3
|
)
| |
(131.0
|
)
|
|
Eliminations - lease subsidiary
| |
(92.0
|
)
| |
(178.2
|
)
|
|
Eliminations - other
| |
(6.6
|
)
| |
(0.7
|
)
|
|
Consolidated Total
| |
$
|
549.1
|
| |
$
|
742.2
|
|
| Trinity Industries, Inc. |
| Leasing Group |
| Condensed Results of Operations (unaudited) |
|
|
|
| Three Months Ended
December 31, |
| Year Ended
December 31, |
| | 2017 |
| 2016 | | 2017 |
| 2016 |
| | ($ in millions) |
|
Revenues:
| | | | | | | | |
|
Leasing and management
| |
$
|
191.2
| | |
$
|
178.2
| | |
$
|
743.6
| | |
$
|
700.9
| |
|
Sales of railcars owned one year or less at the time of sale(1) | |
5.9
|
| |
—
|
| |
99.6
|
| |
126.1
|
|
|
Total revenues
| |
$
|
197.1
| | |
$
|
178.2
| | |
$
|
843.2
| | |
$
|
827.0
| |
|
Operating profit:
| | | | | | | | |
|
Leasing and management
| |
$
|
84.5
| | |
$
|
87.7
| | |
$
|
341.3
| | |
$
|
312.5
| |
|
Railcar sales(1):
| | | | | | | | |
|
Railcars owned one year or less at the time of sale
| |
0.3
| | |
—
| | |
19.7
| | |
34.1
| |
|
Railcars owned more than one year at the time of sale
| |
43.3
|
| |
—
|
| |
83.5
|
| |
13.5
|
|
|
Total operating profit
| |
$
|
128.1
| | |
$
|
87.7
| | |
$
|
444.5
| | |
$
|
360.1
| |
|
Operating profit margin:
| | | | | | | | |
|
Leasing and management
| |
44.2
|
%
| |
49.2
|
%
| |
45.9
|
%
| |
44.6
|
%
|
|
Railcar sales
| |
*
| |
*
| |
*
| |
*
|
|
Total operating profit margin
| |
65.0
|
%
| |
49.2
|
%
| |
52.7
|
%
| |
43.5
|
%
|
|
Selected expense information(2):
| | | | | | | | |
|
Depreciation
| |
$
|
43.8
| | |
$
|
40.7
| | |
$
|
172.3
| | |
$
|
156.2
| |
|
Maintenance and compliance
| |
$
|
27.0
| | |
$
|
19.6
| | |
$
|
96.4
| | |
$
|
104.3
| |
|
Rent
| |
$
|
9.9
| | |
$
|
10.0
| | |
$
|
39.9
| | |
$
|
39.3
| |
|
Interest
| |
$
|
31.8
| | |
$
|
30.8
| | |
$
|
125.8
| | |
$
|
125.2
| |
| | | | | | | | | | | | | | | |
|
|
| December 31,
2017 |
| December 31,
2016 |
|
Leasing portfolio information:
| | | | | |
|
Portfolio size (number of railcars):
| | | | | |
|
Wholly-owned
| |
63,915
| | |
60,440
| |
|
Partially-owned
| |
24,675
|
| |
24,670
|
|
| |
88,590
| | |
85,110
| |
|
Managed (third-party owned)
| |
25,460
|
| |
18,730
|
|
| |
114,050
| | |
103,840
| |
|
Portfolio utilization (Company-owned railcars)
| |
96.8
|
%
| |
97.6
|
%
|
| | | | | |
|
|
| Year Ended December 31, |
| | 2017 |
| 2016 |
| | (in millions) |
|
Proceeds from sales of leased railcars:
| | | | |
|
Leasing Group:
| | | | |
|
Railcars owned one year or less at the time of sale
| |
$
|
99.6
| |
$
|
126.1
|
|
Railcars owned more than one year at the time of sale
| |
360.7
| |
37.7
|
| Rail Group | |
—
| |
8.1
|
| |
$
|
460.3
| |
$
|
171.9
|
| | | | | |
|
|
* Not meaningful
|
|
|
| (1) The Company recognizes sales of railcars from the
lease fleet which have been owned by the lease fleet for one year or
less as revenue. Sales of railcars from the lease fleet which have
been owned by the lease fleet for more than one year are recognized
as a net gain or loss from the disposal of a long-term asset.
|
| (2) Depreciation, maintenance and compliance, and rent
expense are components of operating profit. Amortization of deferred
profit on railcars sold from the Rail Group to the Leasing Group is
included in the operating profit of the Leasing Group resulting in
the recognition of depreciation expense based on the Company's
original manufacturing cost of the railcars. Interest expense is not
a component of operating profit and includes the effect of hedges.
|
|
|
| Trinity Industries, Inc. |
| Condensed Consolidated Balance Sheets |
(in millions)
|
(unaudited)
|
|
| |
| |
| | December 31,
2017 | | December 31,
2016 |
|
Cash and cash equivalents
| |
$
|
778.6
| | |
$
|
563.4
|
|
Short-term marketable securities
| |
319.5
| | |
234.7
|
|
Receivables, net of allowance
| |
369.7
| | |
378.7
|
|
Income tax receivable
| |
29.0
| | |
102.1
|
|
Inventories
| |
640.6
| | |
665.8
|
|
Restricted cash
| |
195.2
| | |
178.2
|
|
Net property, plant, and equipment
| |
6,134.7
| | |
5,966.8
|
| Goodwill | |
780.3
| | |
754.1
|
|
Other assets
| |
295.6
|
| |
281.5
|
| |
$
|
9,543.2
|
| |
$
|
9,125.3
|
| | | |
|
|
Accounts payable
| |
$
|
175.4
| | |
$
|
156.1
|
|
Accrued liabilities
| |
440.0
| | |
426.1
|
|
Debt, net of unamortized discount of $8.5 and $27.1 | |
3,242.4
| | |
3,056.6
|
|
Deferred income
| |
20.5
| | |
23.5
|
|
Deferred income taxes
| |
743.2
| | |
1,072.9
|
|
Other liabilities
| |
63.7
| | |
79.0
|
|
Stockholders' equity:
| | | | |
| Trinity Industries, Inc. | |
4,501.1
| | |
3,918.5
|
|
Noncontrolling interest
| |
356.9
|
| |
392.6
|
| |
4,858.0
|
| |
4,311.1
|
| |
$
|
9,543.2
|
| |
$
|
9,125.3
|
| | | | | | |
|
| Trinity Industries, Inc. |
| Additional Balance Sheet Information |
(in millions)
|
(unaudited)
|
|
|
|
| December 31,
2017 |
| December 31,
2016 |
| Property, Plant, and Equipment | | | | |
|
Corporate/Manufacturing:
| | | | |
|
Property, plant, and equipment
| |
$
|
2,046.4
| | |
$
|
1,936.1
| |
|
Accumulated depreciation
| |
(1,073.7
|
)
| |
(974.4
|
)
|
| |
972.7
|
| |
961.7
|
|
|
Leasing:
| | | | |
|
Wholly-owned subsidiaries:
| | | | |
|
Machinery and other
| |
10.7
| | |
10.7
| |
|
Equipment on lease
| |
4,987.6
| | |
4,673.0
| |
|
Accumulated depreciation
| |
(858.3
|
)
| |
(760.1
|
)
|
| |
4,140.0
|
| |
3,923.6
|
|
|
Partially-owned subsidiaries:
| | | | |
|
Equipment on lease
| |
2,315.5
| | |
2,309.4
| |
|
Accumulated depreciation
| |
(492.8
|
)
| |
(429.8
|
)
|
| |
1,822.7
|
| |
1,879.6
|
|
| | | |
|
|
Deferred profit on railcars sold to the Leasing Group | |
(974.9
|
)
| |
(948.2
|
)
|
|
Accumulated amortization
| |
174.2
|
| |
150.1
|
|
| |
(800.7
|
)
| |
(798.1
|
)
|
| |
$
|
6,134.7
|
| |
$
|
5,966.8
|
|
| | | | | | | |
|
| Trinity Industries, Inc. |
| Additional Balance Sheet Information |
(in millions)
|
(unaudited)
|
|
|
|
| December 31,
2017 |
| December 31,
2016 |
| Debt | | | | |
|
Corporate - Recourse:
| | | | |
|
Revolving credit facility
| |
$
|
—
| | |
$
|
—
| |
|
Senior notes due 2024, net of unamortized discount of $0.3 and $0.4 | |
399.7
| | |
399.6
| |
|
Convertible subordinated notes, net of unamortized discount of $8.2
and $26.7 | |
441.2
| | |
422.7
| |
|
Other
| |
0.5
|
| |
—
|
|
| |
841.4
| | |
822.3
| |
|
Less: unamortized debt issuance costs
| |
(2.9
|
)
| |
(3.7
|
)
|
| |
838.5
|
| |
818.6
|
|
|
Leasing:
| | | | |
|
Wholly-owned subsidiaries:
| | | | |
|
Recourse:
| | | | |
|
Capital lease obligations, net of unamortized debt issuance costs of
$- and $0.1 | |
28.3
|
| |
32.0
|
|
| |
28.3
|
| |
32.0
|
|
|
Non-recourse:
| | | | |
|
Secured railcar equipment notes
| |
591.6
| | |
647.3
| |
|
Warehouse facility
| |
150.7
| | |
204.1
| |
|
Promissory notes
| |
293.6
|
| |
—
|
|
| |
1,035.9
| | |
851.4
| |
|
Less: unamortized debt issuance costs
| |
(11.1
|
)
| |
(11.4
|
)
|
| |
1,024.8
|
| |
840.0
|
|
|
Partially-owned subsidiaries - Non-recourse:
| | | | |
|
Secured railcar equipment notes
| |
1,365.3
| | |
1,381.0
| |
|
Less: unamortized debt issuance costs
| |
(14.5
|
)
| |
(15.0
|
)
|
| |
1,350.8
|
| |
1,366.0
|
|
| |
$
|
3,242.4
|
| |
$
|
3,056.6
|
|
| | | | | | | |
|
| Trinity Industries, Inc. |
| Additional Balance Sheet Information |
($ in millions)
|
(unaudited)
|
|
|
|
| December 31,
2017 |
| December 31,
2016 |
| Leasing Debt Summary | | | | |
|
Total Recourse Debt
| |
$
|
28.3
| | |
$
|
32.0
| |
|
Total Non-Recourse Debt
| |
2,375.6
|
| |
2,206.0
|
|
| |
$
|
2,403.9
|
| |
$
|
2,238.0
|
|
|
Total Leasing Debt
| | | | |
|
Wholly-owned subsidiaries
| |
$
|
1,053.1
| | |
$
|
872.0
| |
|
Partially-owned subsidiaries
| |
1,350.8
|
| |
1,366.0
|
|
| |
$
|
2,403.9
|
| |
$
|
2,238.0
|
|
|
Equipment on Lease(1) | | | | |
|
Wholly-owned subsidiaries
| |
$
|
4,140.0
| | |
$
|
3,923.6
| |
|
Partially-owned subsidiaries
| |
1,822.7
|
| |
1,879.6
|
|
| |
$
|
5,962.7
|
| |
$
|
5,803.2
|
|
|
Total Leasing Debt as a % of Equipment on Lease
| | | | |
|
Wholly-owned subsidiaries
| |
25.4
|
%
| |
22.2
|
%
|
|
Partially-owned subsidiaries
| |
74.1
|
%
| |
72.7
|
%
|
|
Combined
| |
40.3
|
%
| |
38.6
|
%
|
| | | | | |
|
| (1) Excludes net deferred profit on railcars sold to the
Leasing Group.
|
|
|
| Trinity Industries, Inc. |
| Condensed Consolidated Cash Flow Statements |
(in millions)
|
(unaudited)
|
|
|
|
| Year Ended
December 31, |
| | 2017 |
| 2016 |
| Operating activities: | | | | |
|
Net income
| |
$
|
713.6
| | |
$
|
364.7
| |
|
Adjustments to reconcile net income to net cash provided by
operating activities:
| | | | |
|
Depreciation and amortization
| |
295.4
| | |
283.0
| |
|
Provision (benefit) for deferred income taxes
| |
(337.4
|
)
| |
321.4
| |
|
Net gains on railcar lease fleet sales owned more than one year at
the time of sale
| |
(83.5
|
)
| |
(13.5
|
)
|
|
Other
| |
58.6
| | |
61.5
| |
|
Changes in assets and liabilities:
| | | | |
|
(Increase) decrease in receivables
| |
88.1
| | |
(16.0
|
)
|
|
(Increase) decrease in inventories
| |
32.6
| | |
273.3
| |
|
Increase (decrease) in accounts payable and accrued liabilities
| |
33.1
| | |
(165.6
|
)
|
|
Other
| |
(38.9
|
)
| |
(18.6
|
)
|
|
Net cash provided by operating activities
| |
761.6
|
| |
1,090.2
|
|
| Investing activities: | | | | |
|
Proceeds from railcar lease fleet sales owned more than one year at
the time of sale
| |
360.7
| | |
37.7
| |
|
Proceeds from dispositions of property
| |
11.3
| | |
16.0
| |
|
Capital expenditures - leasing, net of sold lease fleet railcars
owned one year or less with a net cost of $79.9 and $92.0 | |
(608.3
|
)
| |
(799.1
|
)
|
|
Capital expenditures - manufacturing and other
| |
(104.4
|
)
| |
(134.3
|
)
|
|
(Increase) decrease in short-term marketable securities
| |
(84.8
|
)
| |
(149.8
|
)
|
|
Acquisitions
| |
(47.5
|
)
| |
—
| |
|
Other
| |
0.3
|
| |
6.8
|
|
|
Net cash required by investing activities
| |
(472.7
|
)
| |
(1,022.7
|
)
|
| Financing activities: | | | | |
|
Payments to retire debt
| |
(375.4
|
)
| |
(162.5
|
)
|
|
Proceeds from issuance of debt
| |
534.1
| | |
—
| |
|
Shares repurchased
| |
(79.4
|
)
| |
(34.7
|
)
|
|
Dividends paid to common shareholders
| |
(72.6
|
)
| |
(66.7
|
)
|
|
Purchase of shares to satisfy employee tax on vested stock
| |
(14.4
|
)
| |
(16.3
|
)
|
|
Distributions to noncontrolling interest
| |
(48.7
|
)
| |
(26.4
|
)
|
|
(Increase) decrease in restricted cash
| |
(17.0
|
)
| |
17.6
| |
|
Other
| |
(0.3
|
)
| |
(1.1
|
)
|
|
Net cash required by financing activities
| |
(73.7
|
)
| |
(290.1
|
)
|
|
Net increase (decrease) in cash and cash equivalents
| |
215.2
| | |
(222.6
|
)
|
|
Cash and cash equivalents at beginning of period
| |
563.4
|
| |
786.0
|
|
|
Cash and cash equivalents at end of period
| |
$
|
778.6
|
| |
$
|
563.4
|
|
| | | | | | | |
|
Trinity Industries, Inc. |
Earnings per Share Calculation |
|
(in millions, except per share amounts)
|
|
(unaudited)
|
|
|
Basic net income attributable to Trinity Industries, Inc. per common
share is computed by dividing net income attributable to Trinity
remaining after allocation to unvested restricted shares by the weighted
average number of basic common shares outstanding for the period.
|
| Three Months Ended
December 31, 2017 |
| Three Months Ended
December 31, 2016 |
| |
Income
|
|
Average Shares
|
|
EPS
| |
Income
|
|
Average Shares
|
|
EPS
|
|
Net income attributable to Trinity Industries, Inc. | |
$
|
538.5
| | | | | | |
$
|
67.6
| | | | | |
|
Unvested restricted share participation
| |
(10.5
|
)
| | | | | |
(1.8
|
)
| | | | |
|
Net income attributable to Trinity Industries, Inc. - basic
| |
528.0
| | |
148.4
| | |
$
|
3.56
|
| |
65.8
| | |
148.7
| | |
$
|
0.44
|
|
Effect of dilutive securities:
| | | | | | | | | | | | |
|
Nonparticipating unvested restricted shares and stock options
| |
—
| | |
0.8
| | | | |
—
| | |
—
| | | |
|
Convertible subordinated notes
| |
0.4
|
| |
5.5
|
| | | |
—
|
| |
0.7
|
| | |
|
Net income attributable to Trinity Industries, Inc. - diluted
| |
$
|
528.4
|
| |
154.7
|
| |
$
|
3.42
|
| |
$
|
65.8
|
| |
149.4
|
| |
$
|
0.44
|
| | | | | | | | | | | | | | | | | | | | |
|
|
| Year Ended
December 31, 2017 |
| Year Ended
December 31, 2016 |
| |
Income
|
|
Average Shares
|
|
EPS
| |
Income
|
|
Average Shares
|
|
EPS
|
|
Net income attributable to Trinity Industries, Inc. | |
$
|
702.5
| | | | | | |
$
|
343.6
| | | | | |
|
Unvested restricted share participation
| |
(15.4
|
)
| | | | | |
(9.4
|
)
| | | | |
|
Net income attributable to Trinity Industries, Inc. - basic
| |
687.1
| | |
148.6
| | |
$
|
4.62
|
| |
334.2
| | |
148.4
| | |
$
|
2.25
|
|
Effect of dilutive securities:
| | | | | | | | | | | | |
|
Nonparticipating unvested restricted shares and stock options
| |
—
| | |
0.5
| | | | |
—
| | |
—
| | | |
|
Convertible subordinated notes
| |
0.3
|
| |
2.9
|
| | | |
—
|
| |
0.2
|
| | |
|
Net income attributable to Trinity Industries, Inc. - diluted
| |
$
|
687.4
|
| |
152.0
|
| |
$
|
4.52
|
| |
$
|
334.2
|
| |
148.6
|
| |
$
|
2.25
|
| | | | | | | | | | | | | | | | | | | | |
|
Trinity Industries, Inc. |
Reconciliation of EBITDA |
|
(in millions)
|
(unaudited)
|
|
|
“EBITDA” is defined as net income plus interest expense, income taxes,
and depreciation and amortization including goodwill impairment charges.
EBITDA is not a calculation based on generally accepted accounting
principles. The amounts included in the EBITDA calculation are, however,
derived from amounts included in the historical consolidated statements
of operations data. In addition, EBITDA should not be considered as an
alternative to net income or operating income as an indicator of our
operating performance, or as an alternative to operating cash flows as a
measure of liquidity. We believe EBITDA assists investors in comparing a
company’s performance on a consistent basis without regard to
depreciation and amortization, which can vary significantly depending
upon many factors. However, the EBITDA measure presented in this press
release may not always be comparable to similarly titled measures by
other companies due to differences in the components of the calculation.
|
| Three Months Ended
December 31, |
| | 2017 |
| 2016 |
|
Net income
| |
$
|
540.0
| | |
$
|
74.2
|
|
Add:
| | | | |
|
Interest expense
| |
46.5
| | |
45.2
|
|
Provision (benefit) for income taxes
| |
(439.4
|
)
| |
41.4
|
|
Depreciation and amortization expense
| |
74.7
|
| |
72.4
|
|
Earnings before interest expense, income taxes, and depreciation and
amortization expense
| |
$
|
221.8
|
| |
$
|
233.2
|
| | | | | | |
|
|
| Year Ended
December 31, |
| | 2017 |
| 2016 |
|
Net income
| |
$
|
713.6
| | |
$
|
364.7
|
|
Add:
| | | | |
|
Interest expense
| |
184.0
| | |
181.9
|
|
Provision (benefit) for income taxes
| |
(341.6
|
)
| |
202.1
|
|
Depreciation and amortization expense
| |
295.4
|
| |
283.0
|
|
Earnings before interest expense, income taxes, and depreciation and
amortization expense
| |
$
|
851.4
|
| |
$
|
1,031.7
|
| | | | | | |
|
| Trinity Industries, Inc. |
2018 Full Year Guidance and Outlook |
(unaudited)
|
|
|
| Total Company:
|
|
|
|
|
| |
|
Earnings per share, excluding spin-off transaction costs
| | | | | | $1.15 - $1.35 per share
|
|
Total earnings per share
| | | | | | $1.00 - $1.20 per share
|
|
Corporate expense, excluding spin-off transaction costs
| | | | | | $130 - $150 million |
|
Spin-off transaction costs
| | | | | | $25 million |
|
Tax rate, excluding spin-off transaction costs
| | | | | |
24%
|
| | | | | |
|
| Rail Group:
| | | | | | |
|
Revenue
| | | | | | $2.2 billion |
|
Operating margin
| | | | | |
8.0%
|
|
Railcar deliveries
| | | | | |
20,500 railcars
|
|
Revenue elimination from sales to Leasing Group | | | | | | $845 million |
|
Operating profit elimination from sales to Leasing Group | | | | | | $95 million |
| | | | | |
|
| Railcar Leasing and Management Services Group:
| | | | | | |
|
Leasing and management revenues
| | | | | | $715 million |
|
Leasing and management operating profit
| | | | | | $290 million |
|
Proceeds from sales of leased railcars
| | | | | | $350 million |
| | | | | |
|
| Inland Barge Group:
| | | | | | |
|
Revenue
| | | | | | $155 million |
|
Operating profit margin
| | | | | |
0.0%
|
| | | | | |
|
| Construction Products Group:
| | | | | | |
|
Revenue
| | | | | | $550 million |
|
Operating profit margin
| | | | | |
12.5%
|
| | | | | |
|
| Energy Equipment Group:
| | | | | | |
|
Revenue
| | | | | | $865 million |
|
Operating profit margin
| | | | | |
8.5%
|
The range for earnings per share guidance reflects variability in the
point estimates provided above for each business segment.
Revenue and operating profit elimination from sales to the Leasing Group
include maintenance services in addition to railcar sales.
View source version on businesswire.com: http://www.businesswire.com/news/home/20180221006287/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.