DALLAS--(BUSINESS WIRE)--
Trinity Industries, Inc. (NYSE:TRN) today announced earnings results for
the third quarter ended September 30, 2018, including the following
highlights:
-
Earnings per common diluted share of $0.19 compared with $0.43 in 2017
-
Adjusted earnings per common diluted share of $0.39, excluding $0.20
per share related to an impairment charge in the Energy Equipment
Group and transaction costs related to the planned spin-off of Arcosa,
Inc.
- Rail Group receives orders for 7,725 railcars with a total value of
$944.7 million and delivers approximately 4,000 railcars during the
third quarter
- Rail Group expects deliveries of between 20,000 and 21,000 railcars in
2018 and anticipates full year 2019 deliveries of between
approximately 22,500 and 24,000 railcars
- Inland Barge Group receives orders of $61.3 million during the third
quarter
-
Provides initial full year 2019 earnings guidance for Trinity
Industries post spin-off of Arcosa, Inc. of between $0.90 and $1.10
per common diluted share
Consolidated Results
Trinity Industries, Inc. reported net income attributable to Trinity
stockholders of $27.7 million, or $0.19 per common diluted share, for
the third quarter ended September 30, 2018. Net income for the same
quarter of 2017 was $66.9 million, or $0.43 per common diluted share.
Revenues for the third quarter of 2018 decreased to $930.9 million
compared with revenues of $973.6 million for the same quarter of 2017.
The Company recorded an impairment charge of $24.8 million, or $0.15 per
common diluted share, during the quarter related to the classification
of certain businesses in the Energy Equipment Group as held for sale.
Additionally, the Company incurred approximately $10.6 million of
corporate costs, or $0.05 per common diluted share, during the quarter
related to the expected spin-off transaction. Excluding these items, the
Company reported adjusted earnings per common diluted share of $0.39 for
the third quarter. Third quarter 2018 net income benefitted from a lower
effective tax rate of 27.4% compared with 36.9% in the same quarter of
2017 due primarily to the Tax Cut and Jobs Act (“the Act”), increasing
earnings per common diluted share by $0.03 in comparison to the third
quarter of 2017.
“I am pleased with the continued momentum in market demand experienced
by a number of our businesses during the quarter,” said Timothy R.
Wallace, Trinity’s Chairman, CEO and President. “Trinity’s consolidated
third quarter financial results reflect a variety of market conditions
in our businesses as well as activities associated with the anticipated
distribution of Arcosa, Inc. to Trinity shareholders on the first of
November.”
Mr. Wallace added, “This year marks Trinity’s 85th year as a company,
and its 60th year as a public company. As Trinity has grown through the
years, our dedicated employees have worked collaboratively to build a
strong portfolio of industry-leading businesses. We are proud of
Trinity’s history of success and rich corporate culture, which provides
an excellent foundation for both Trinity and Arcosa. Arcosa will
separate from Trinity with an established platform of leading businesses
in the construction, energy, and transportation markets, with
long-standing customer relationships and opportunities to grow in
attractive markets. Trinity will continue to be a premier provider of
rail transportation products and services. Both companies have strong
teams, strong balance sheets, and many opportunities for success. We are
very excited about the potential for both of these companies.”
Quarterly Business Group Results
In the third quarter of 2018, the Rail Group reported higher revenues of
$506.8 million compared with revenues of $492.4 million in the third
quarter of 2017. Operating profit and profit margin for the Rail Group
of $32.9 million and 6.5% in the third quarter of 2018 declined compared
with $50.5 million and 10.3% in the third quarter of 2017. The increase
in revenues was primarily due to higher volumes in the maintenance
services business, partially offset by lower railcar deliveries.
Operating profit declined primarily due to pricing pressures related to
certain railcar types as well as production inefficiencies related to
changes in the mix of railcars manufactured during the period and
activities undertaken in anticipation of higher production levels
expected in the fourth quarter. The decline in operating profit was
partially offset by higher volumes in the maintenance services business.
The Rail Group delivered approximately 4,000 railcars and received
orders for 7,725 railcars during the third quarter of 2018, compared
with deliveries of 4,420 railcars and orders for 3,045 railcars,
respectively, in the same quarter last year. The railcar backlog in the
Rail Group increased during the quarter to $3.2 billion as of
September 30, 2018, representing 28,315 railcars, compared with a
railcar backlog of $2.7 billion as of June 30, 2018, representing 24,580
railcars.
The Railcar Leasing and Management Services Group (“Leasing Group”)
reported revenues and operating profit of $227.5 million and $92.2
million, respectively, in the third quarter of 2018, compared with
$275.1 million and $120.6 million, respectively, in the same quarter of
2017. The decrease in revenues was primarily due to lower sales of
railcars owned one year or less and a decrease in asset management
advisory fees. Total proceeds from the sale of leased railcars,
including sales of railcars owned for more than one year that are not
reported as revenues, were $118.6 million in the third quarter of 2018
compared with $154.5 million of leased railcars in the third quarter of
2017. The decrease in operating profit for the third quarter was
primarily the result of lower average rental rates, lower asset
management advisory fees, and a change in the mix of railcars sold from
the lease fleet, partially offset by net growth in the lease fleet.
Supplemental information for the Leasing Group is provided in the
accompanying tables.
The Inland Barge Group reported higher revenues of $49.3 million in the
third quarter of 2018 compared with revenues of $28.1 million in the
third quarter of 2017. Operating profit for this Group also improved to
$3.0 million in the third quarter of 2018 compared with a loss of $0.7
million in the third quarter of 2017. The increases in revenues and
operating profit compared with the same quarter last year were primarily
due to higher barge deliveries. The Inland Barge Group received orders
of $61.3 million during the quarter and, as of September 30, 2018, the
backlog improved to $210.4 million compared with a backlog of $198.4
million as of June 30, 2018.
The Energy Equipment Group reported lower revenues of $218.2 million in
the third quarter of 2018 compared with revenues of $246.2 million in
the same quarter of 2017. Operating profit for this Group also declined
to a loss of $13.7 million compared with a profit of $26.3 million in
the same quarter last year. The decreases in revenues and operating
profit were primarily due to a decrease in volumes in the Group's wind
towers product line. Additionally, operating profit for this Group was
impacted by a $24.8 million impairment charge associated with the
write-down of the net assets of certain businesses classified as held
for sale and a $6.1 million reserve on finished goods inventory related
to an order for a single customer in our utility structures business.
The backlog for wind towers and utility structures as of September 30,
2018 was $700.3 million compared with a backlog of $780.1 million as of
June 30, 2018.
The Construction Products Group reported higher revenues of $152.0
million in the third quarter of 2018 compared with revenues of $131.9
million in the third quarter of 2017. Operating profit and profit margin
also improved to $29.1 million and 19.1% in the third quarter of 2018
compared with $16.8 million and 12.7% in the same quarter last year. The
increases in revenues compared with the same quarter last year were
primarily due to higher volumes in our highway products business and
other businesses. The increase in operating profit compared with the
same quarter last year was related to volume increases, $4.4 million in
additional insurance recoveries related to damages previously sustained
at two of our highway products manufacturing facilities, and a reduction
in legal expenses.
Share Repurchase
During the third quarter of 2018, the Company repurchased 1,356,484
shares of common stock at a cost of approximately $50.0 million,
bringing year to date repurchases to $150.0 million, excluding fees, and
leaving approximately $350.0 million remaining under its current
authorization through December 31, 2019.
Proposed Spin-off
In December 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 will 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,
Arcosa, Inc., focused on infrastructure-related products and services.
On September 25, 2018, Trinity’s Board of Directors formally approved
the separation of its infrastructure-related businesses from Trinity
through a distribution of all of the common stock of Arcosa held by
Trinity to Trinity stockholders. In connection with the approval, the
Board set the distribution ratio, record date, and distribution date for
the separation. The distribution is expected to be made at 12:01 a.m.
local New York City time on November 1, 2018 to Trinity stockholders of
record as of 5:00 p.m. local New York City time on October 17, 2018, the
record date for the distribution. On the distribution date, Trinity
stockholders will receive one share of Arcosa common stock for every
three shares of Trinity common stock held as of the record date. No
fractional shares of Arcosa’s common stock will be distributed.
Fractional shares of Arcosa’s common stock will be aggregated and sold
on the open market, and the aggregate net proceeds of the sales will be
distributed ratably in the form of cash payments to Trinity stockholders
who would otherwise be entitled to receive a fractional share of
Arcosa’s common stock.
The completion of the spin-off transaction is subject to the
satisfaction or waiver of a number of conditions, including certain
conditions described in the Information Statement included in Arcosa’s
Form 10 filed with the Securities and Exchange Commission and in the
form of the Separation and Distribution Agreement, which is filed as an
exhibit to the Form 10. Trinity and Arcosa expect all conditions to the
Arcosa distribution to be satisfied or waived on or before the
distribution date. Following the distribution, Arcosa will be an
independent, publicly-traded company on the New York Stock Exchange, and
Trinity will retain no ownership interest in Arcosa.
Earnings Guidance
2018 Guidance
For the full year 2018, the Rail Group expects deliveries of between
20,000 and 21,000 railcars. The delivery range incorporates potential
rail service and congestion issues and other weather-related delays. As
previously disclosed, the Company has withdrawn its full year 2018
earnings per share guidance as it is no longer relevant since it
includes full year anticipated earnings expectations for Arcosa. Unless
otherwise noted herein, full year 2018 segment guidance has also been
withdrawn as the businesses comprising Trinity’s current reporting
segments will change post spin.
2019 Guidance
For the full year 2019, the Company currently anticipates earnings for
Trinity Industries, post spin-off of Arcosa, of between $0.90 and $1.10
per common diluted share. Additionally, at this time, the Rail Group
expects full year 2019 deliveries of between approximately 22,500 and
24,000 railcars.
Conference Call
Trinity will hold a conference call at 11:00 a.m. Eastern on October 25,
2018 to discuss its third quarter results. To listen to the call, please
visit the Investor Relations section of the Trinity Industries website, www.trin.net
and select the Events & Presentations menu link. An audio replay may be
accessed through the Company’s website or by dialing (402) 220-7219
until 11:59 p.m. Eastern on November 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, except
as required by federal securities laws. There is no assurance that the
proposed spin-off transaction will be completed, that the Company's
Board of Directors will continue to pursue theproposed 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
September 30, |
| | | 2018 |
|
| 2017 |
|
Revenues
| | |
$
|
930.9
| | | |
$
|
973.6
| |
|
Operating costs:
| | | | | | |
|
Cost of revenues
| | | |
752.0
| | | | |
722.7
| |
|
Selling, engineering, and administrative expenses
| | | |
111.1
| | | | |
114.6
| |
|
Losses (gains) on dispositions of property:
| | | | | | |
|
Net gains on lease fleet sales
| | | |
(9.4
|
)
| | | |
(16.5
|
)
|
|
Other
| | |
|
(1.7
|
)
| | |
|
0.4
|
|
| | |
|
852.0
|
| | |
|
821.2
|
|
|
Operating profit
| | | |
78.9
| | | | |
152.4
| |
|
Interest expense, net
| | | |
40.4
| | | | |
43.7
| |
|
Other, net
| | |
|
(0.5
|
)
| | |
|
1.1
|
|
|
Income before income taxes
| | | |
39.0
| | | | |
107.6
| |
|
Provision for income taxes
| | |
|
10.7
|
| | |
|
39.7
|
|
|
Net income
| | | |
28.3
| | | | |
67.9
| |
|
Net income attributable to noncontrolling interest
| | |
|
0.6
|
| | |
|
1.0
|
|
|
Net income attributable to Trinity Industries, Inc. | | |
$
|
27.7
|
| | |
$
|
66.9
|
|
| | | | | |
|
|
Net income attributable to Trinity Industries, Inc. per common share:
| | | | | | |
|
Basic
| | |
$
|
0.19
| | | |
$
|
0.44
| |
|
Diluted
| | |
$
|
0.19
| | | |
$
|
0.43
| |
|
Weighted average number of shares outstanding:
| | | | | | |
|
Basic
| | | |
145.0
| | | | |
148.0
| |
|
Diluted
| | | |
145.8
| | | | |
151.3
| |
| | | | | | | | | |
|
Results for the three months ended September 30, 2017 have been revised
to reflect the retrospective adoption of Accounting Standards Update No.
2017-07, Compensation - Retirement Benefits: Improving the Presentation
of Net Periodic Pension Cost and Net Periodic Postretirement Cost ("ASU
2017-07"). The adoption of ASU 2017-07 on January 1, 2018 resulted in a
net decrease to previously reported Operating Profit of $0.6 million and
a corresponding decrease to Other, net of $0.6 million for the three
months ended September 30, 2017, with no impact to net income or
earnings per share.
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, enacted in December 2017, reduced the U.S. federal corporate
income tax rate from 35.0% to 21.0%. In December 2017, we recorded a tax
benefit after the initial assessment of the tax effects of the Act, and
we will continue refining this amount throughout 2018, which could
potentially affect the measurement of our deferred tax balance or give
rise to new deferred tax amounts resulting in a final adjustment in the
fourth quarter of 2018. The impact of the Act may differ from our
estimate due to changes in the regulations, rulings, guidance, and
interpretations issued by the IRS and the FASB as well as
interpretations and assumptions made by the Company. For the items for
which we were able to determine a reasonable estimate, we recognized an
additional provisional net benefit of $1.0 million for the three months
ended September 30, 2018, which is included as a component of income tax
expense.
|
|
| |
| | |
|
| Trinity Industries, Inc. |
| Condensed Consolidated Income Statements |
(in millions, except per share amounts)
|
(unaudited)
|
| | |
|
| | | Nine Months Ended
September 30, |
| | | 2018 |
|
| 2017 |
|
Revenues
| | |
$
|
2,704.5
| | | |
$
|
2,756.4
| |
|
Operating costs:
| | | | | | |
|
Cost of revenues
| | | |
2,100.2
| | | | |
2,065.2
| |
|
Selling, engineering, and administrative expenses
| | | |
326.4
| | | | |
330.1
| |
|
Losses (gains) on dispositions of property:
| | | | | | |
|
Net gains on lease fleet sales
| | | |
(21.0
|
)
| | | |
(40.2
|
)
|
|
Other
| | |
|
(4.1
|
)
| | |
|
(1.6
|
)
|
| | |
|
2,401.5
|
| | |
|
2,353.5
|
|
|
Operating profit
| | | |
303.0
| | | | |
402.9
| |
|
Interest expense, net
| | | |
122.9
| | | | |
130.4
| |
|
Other, net
| | |
|
(1.4
|
)
| | |
|
1.1
|
|
|
Income before income taxes
| | | |
181.5
| | | | |
271.4
| |
|
Provision for income taxes
| | |
|
46.1
|
| | |
|
97.8
|
|
|
Net income
| | | |
135.4
| | | | |
173.6
| |
|
Net income attributable to noncontrolling interest
| | |
|
3.4
|
| | |
|
9.6
|
|
|
Net income attributable to Trinity Industries, Inc. | | |
$
|
132.0
|
| | |
$
|
164.0
|
|
| | | | | |
|
|
Net income attributable to Trinity Industries, Inc. per common share:
| | | | | | |
|
Basic
| | |
$
|
0.89
| | | |
$
|
1.08
| |
|
Diluted
| | |
$
|
0.87
| | | |
$
|
1.06
| |
|
Weighted average number of shares outstanding:
| | | | | | |
|
Basic
| | | |
146.1
| | | | |
148.6
| |
|
Diluted
| | | |
148.8
| | | | |
151.1
| |
| | | | | | | | | |
|
Results for the nine months ended September 30, 2017 have been revised
to reflect the retrospective adoption of ASU 2017-07. The adoption of
ASU 2017-07 on January 1, 2018 resulted in a net decrease to previously
reported Operating Profit of $1.9 million and a corresponding decrease
to Other, net of $1.9 million for the nine months ended September 30,
2017, with no impact to net income or earnings per share.
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, enacted in December 2017, reduced the U.S. federal corporate
income tax rate from 35.0% to 21.0%. In December 2017, we recorded a tax
benefit after the initial assessment of the tax effects of the Act, and
we will continue refining this amount throughout 2018, which could
potentially affect the measurement of our deferred tax balance or give
rise to new deferred tax amounts resulting in a final adjustment in the
fourth quarter of 2018. The impact of the Act may differ from our
estimate due to changes in the regulations, rulings, guidance, and
interpretations issued by the IRS and the FASB as well as
interpretations and assumptions made by the Company. For the items for
which we were able to determine a reasonable estimate, we recognized an
additional provisional net benefit of $1.3 million for the nine months
ended September 30, 2018, which is included as a component of income tax
expense.
|
|
| |
| | |
|
| Trinity Industries, Inc. |
| Condensed Segment Data |
(in millions)
|
(unaudited)
|
| | |
|
| | | Three Months Ended
September 30, |
| Revenues: | | | 2018 |
|
| 2017 |
| Rail Group | | |
$
|
506.8
| | | |
$
|
492.4
| |
| Construction Products Group | | | |
152.0
| | | | |
131.9
| |
| Inland Barge Group | | | |
49.3
| | | | |
28.1
| |
| Energy Equipment Group | | | |
218.2
| | | | |
246.2
| |
| Railcar Leasing and Management Services Group | | | |
227.5
| | | | |
275.1
| |
|
All Other
| | |
|
27.2
|
| | |
|
25.7
|
|
|
Segment Totals before Eliminations
| | | |
1,181.0
| | | | |
1,199.4
| |
|
Eliminations - lease subsidiary
| | | |
(207.4
|
)
| | | |
(175.0
|
)
|
|
Eliminations - other
| | |
|
(42.7
|
)
| | |
|
(50.8
|
)
|
|
Consolidated Total
| | |
$
|
930.9
|
| | |
$
|
973.6
|
|
| | | | | |
|
| | | Three Months Ended
September 30, |
| Operating profit (loss): | | | 2018 | | | 2017 |
| Rail Group | | |
$
|
32.9
| | | |
$
|
50.5
| |
| Construction Products Group | | | |
29.1
| | | | |
16.8
| |
| Inland Barge Group | | | |
3.0
| | | | |
(0.7
|
)
|
| Energy Equipment Group | | | |
(13.7
|
)
| | | |
26.3
| |
| Railcar Leasing and Management Services Group | | | |
92.2
| | | | |
120.6
| |
|
All Other
| | |
|
(5.9
|
)
| | |
|
(4.9
|
)
|
|
Segment Totals before Eliminations and Corporate Expenses
| | | |
137.6
| | | | |
208.6
| |
|
Corporate
| | | |
(41.5
|
)
| | | |
(41.4
|
)
|
|
Eliminations - lease subsidiary
| | | |
(18.1
|
)
| | | |
(14.6
|
)
|
|
Eliminations - other
| | |
|
0.9
|
| | |
|
(0.2
|
)
|
|
Consolidated Total
| | |
$
|
78.9
|
| | |
$
|
152.4
|
|
| | | | | | | | | |
|
|
|
| |
| Trinity Industries, Inc. |
| Condensed Segment Data |
(in millions)
|
(unaudited)
|
| | |
|
| | | Nine Months Ended
September 30, |
| Revenues: | | | 2018 |
|
| 2017 |
| Rail Group | | |
$
|
1,680.5
| | | |
$
|
1,436.6
| |
| Construction Products Group | | | |
432.6
| | | | |
386.3
| |
| Inland Barge Group | | | |
123.0
| | | | |
124.3
| |
| Energy Equipment Group | | | |
644.2
| | | | |
740.1
| |
| Railcar Leasing and Management Services Group | | | |
615.5
| | | | |
646.1
| |
|
All Other
| | |
|
75.3
|
| | |
|
71.2
|
|
|
Segment Totals before Eliminations
| | | |
3,571.1
| | | | |
3,404.6
| |
|
Eliminations - lease subsidiary
| | | |
(731.8
|
)
| | | |
(497.8
|
)
|
|
Eliminations - other
| | |
|
(134.8
|
)
| | |
|
(150.4
|
)
|
|
Consolidated Total
| | |
$
|
2,704.5
|
| | |
$
|
2,756.4
|
|
| | | | | |
|
| | | Nine Months Ended
September 30, |
| Operating profit (loss): | | | 2018 | | | 2017 |
| Rail Group | | |
$
|
149.5
| | | |
$
|
137.7
| |
| Construction Products Group | | | |
79.9
| | | | |
54.5
| |
| Inland Barge Group | | | |
5.2
| | | | |
6.1
| |
| Energy Equipment Group | | | |
20.7
| | | | |
80.0
| |
| Railcar Leasing and Management Services Group | | | |
255.1
| | | | |
316.4
| |
|
All Other
| | |
|
(12.2
|
)
| | |
|
(15.2
|
)
|
|
Segment Totals before Eliminations and Corporate Expenses
| | | |
498.2
| | | | |
579.5
| |
|
Corporate
| | | |
(124.4
|
)
| | | |
(114.9
|
)
|
|
Eliminations - lease subsidiary
| | | |
(71.3
|
)
| | | |
(58.4
|
)
|
|
Eliminations - other
| | |
|
0.5
|
| | |
|
(3.3
|
)
|
|
Consolidated Total
| | |
$
|
303.0
|
| | |
$
|
402.9
|
|
| | | | | | | | | |
|
|
|
| |
|
|
| |
| Trinity Industries, Inc. |
| Leasing Group |
| Condensed Results of Operations (unaudited) |
| | | | | | |
|
| | | Three Months Ended
September 30, | | | | Nine Months Ended
September 30, |
| | | 2018 |
|
| 2017 | | | | 2018 |
|
| 2017 |
| | | ($ in millions) |
|
Revenues:
| | | | | | | | | | | | | |
|
Leasing and management
| | |
$
|
175.9
| | | |
$
|
188.5
| | | | |
$
|
534.7
| | | |
$
|
552.4
| |
|
Sales of railcars owned one year or less at the time of sale(1) | | |
|
51.6
|
| | |
|
86.6
|
| | | |
|
80.8
|
| | |
|
93.7
|
|
|
Total revenues
| | |
$
|
227.5
| | | |
$
|
275.1
| | | | |
$
|
615.5
| | | |
$
|
646.1
| |
|
Operating profit:
| | | | | | | | | | | | | |
|
Leasing and management
| | |
$
|
69.7
| | | |
$
|
86.2
| | | | |
$
|
216.6
| | | |
$
|
256.8
| |
|
Railcar sales(1):
| | | | | | | | | | | | | |
|
Railcars owned one year or less at the time of sale
| | | |
13.1
| | | | |
17.9
| | | | | |
17.5
| | | | |
19.4
| |
|
Railcars owned more than one year at the time of sale
| | |
|
9.4
|
| | |
|
16.5
|
| | | |
|
21.0
|
| | |
|
40.2
|
|
|
Total operating profit
| | |
$
|
92.2
| | | |
$
|
120.6
| | | | |
$
|
255.1
| | | |
$
|
316.4
| |
|
Operating profit margin:
| | | | | | | | | | | | | |
|
Leasing and management
| | | |
39.6
|
%
| | | |
45.7
|
%
| | | | |
40.5
|
%
| | | |
46.5
|
%
|
|
Railcar sales
| | | * | | |
*
| | | |
*
| | |
*
|
|
Total operating profit margin
| | | |
40.5
|
%
| | | |
43.8
|
%
| | | | |
41.4
|
%
| | | |
49.0
|
%
|
|
Selected expense information(2):
| | | | | | | | | | | | | |
|
Depreciation
| | |
$
|
48.8
| | | |
$
|
43.3
| | | | |
$
|
140.9
| | | |
$
|
128.5
| |
|
Maintenance and compliance
| | |
$
|
24.1
| | | |
$
|
25.0
| | | | |
$
|
75.5
| | | |
$
|
69.4
| |
|
Rent
| | |
$
|
9.7
| | | |
$
|
10.0
| | | | |
$
|
29.7
| | | |
$
|
30.0
| |
|
Interest
| | |
$
|
37.4
| | | |
$
|
32.1
| | | | |
$
|
101.2
| | | |
$
|
94.0
| |
| | | | | | | | | | | | | | | | | | | | |
|
|
|
| |
|
| |
| | | September 30,
2018 | | | September 30,
2017 |
|
Leasing portfolio information:
| | | | | | |
|
Portfolio size (number of railcars):
| | | | | | |
|
Wholly-owned
| | | |
70,220
| | | | |
62,910
| |
|
Partially-owned
| | |
|
24,650
|
| | |
|
24,680
|
|
| | | |
94,870
| | | | |
87,590
| |
|
Managed (third-party owned)
| | |
|
27,160
|
| | |
|
20,830
|
|
| | |
|
122,030
|
| | |
|
108,420
|
|
|
Portfolio utilization (Company-owned railcars)
| | | |
97.6
|
%
| | | |
97.3
|
%
|
| | |
|
| | |
|
| | | Nine Months Ended September 30, |
| | | 2018 | | | 2017 |
| | | (in millions) |
|
Proceeds from sales of leased railcars:
| | | | | | |
|
Leasing Group:
| | | | | | |
|
Railcars owned one year or less at the time of sale
| | |
$
|
80.8
| | | |
$
|
93.7
| |
|
Railcars owned more than one year at the time of sale
| | |
|
123.4
|
| | |
|
160.3
|
|
| | |
$
|
204.2
|
| | |
$
|
254.0
|
|
| | | | | | | | | |
|
* 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)
|
| | | | | |
|
| | | September 30,
2018 | | | December 31,
2017 |
|
Cash and cash equivalents
| | |
$
|
427.4
| | |
$
|
778.6
|
|
Short-term marketable securities
| | | |
—
| | | |
319.5
|
|
Receivables, net of allowance
| | | |
396.2
| | | |
369.7
|
|
Income tax receivable
| | | |
46.3
| | | |
29.0
|
|
Inventories
| | | |
707.0
| | | |
640.6
|
|
Restricted cash
| | | |
138.5
| | | |
195.2
|
|
Net property, plant, and equipment
| | | |
6,538.0
| | | |
6,134.7
|
| Goodwill | | | |
787.8
| | | |
780.3
|
|
Other assets
| | |
|
363.8
| | |
|
295.6
|
| | |
$
|
9,405.0
| | |
$
|
9,543.2
|
| | | | | |
|
|
Accounts payable
| | |
$
|
219.5
| | |
$
|
175.4
|
|
Accrued liabilities
| | | |
411.0
| | | |
440.0
|
|
Debt
| | | |
3,275.7
| | | |
3,242.4
|
|
Deferred income
| | | |
18.4
| | | |
20.5
|
|
Deferred income taxes
| | | |
755.9
| | | |
743.2
|
|
Other liabilities
| | | |
85.1
| | | |
63.7
|
|
Stockholders' equity:
| | | | | | |
| Trinity Industries, Inc. | | | |
4,288.3
| | | |
4,501.1
|
|
Noncontrolling interest
| | |
|
351.1
| | |
|
356.9
|
| | |
|
4,639.4
| | |
|
4,858.0
|
| | |
$
|
9,405.0
| | |
$
|
9,543.2
|
| | | | | | | |
|
|
|
| |
|
| |
| Trinity Industries, Inc. |
| Additional Balance Sheet Information |
(in millions)
|
(unaudited)
|
| | | | | |
|
| | | September 30,
2018 | | | December 31,
2017 |
| Property, Plant, and Equipment | | | | | | |
|
Corporate/Manufacturing:
| | | | | | |
|
Property, plant, and equipment
| | |
$
|
2,081.3
| | | |
$
|
2,046.4
| |
|
Accumulated depreciation
| | |
|
(1,136.2
|
)
| | |
|
(1,073.7
|
)
|
| | |
|
945.1
|
| | |
|
972.7
|
|
|
Leasing:
| | | | | | |
|
Wholly-owned subsidiaries:
| | | | | | |
|
Machinery and other
| | | |
12.8
| | | | |
10.7
| |
|
Equipment on lease
| | | |
5,555.1
| | | | |
4,995.7
| |
|
Accumulated depreciation
| | |
|
(959.5
|
)
| | |
|
(858.9
|
)
|
| | |
|
4,608.4
|
| | |
|
4,147.5
|
|
|
Partially-owned subsidiaries:
| | | | | | |
|
Equipment on lease
| | | |
2,356.7
| | | | |
2,317.7
| |
|
Accumulated depreciation
| | |
|
(540.8
|
)
| | |
|
(493.1
|
)
|
| | |
|
1,815.9
|
| | |
|
1,824.6
|
|
| | | | | |
|
|
Deferred profit on railcars sold to the Leasing Group | | | |
(1,027.8
|
)
| | | |
(985.2
|
)
|
|
Accumulated amortization
| | |
|
196.4
|
| | |
|
175.1
|
|
| | |
|
(831.4
|
)
| | |
|
(810.1
|
)
|
| | |
$
|
6,538.0
|
| | |
$
|
6,134.7
|
|
| | | | | | | | | |
|
|
|
| |
|
| |
| Trinity Industries, Inc. |
| Additional Balance Sheet Information |
(in millions)
|
(unaudited)
|
| | | | | |
|
| | | September 30,
2018 | | | December 31,
2017 |
| Debt | | | | | | |
|
Corporate - Recourse:
| | | | | | |
|
Revolving credit facility
| | |
$
|
—
| | | |
$
|
—
| |
|
Senior notes due 2024, net of unamortized discount of $0.3 and $0.3 | | | |
399.7
| | | | |
399.7
| |
|
Convertible subordinated notes, net of unamortized discount of $-
and $8.2 | | | |
—
| | | | |
441.2
| |
|
Other
| | |
|
0.4
|
| | |
|
0.5
|
|
| | | |
400.1
| | | | |
841.4
| |
|
Less: unamortized debt issuance costs
| | |
|
(2.4
|
)
| | |
|
(2.9
|
)
|
| | |
|
397.7
|
| | |
|
838.5
|
|
|
Leasing:
| | | | | | |
|
Wholly-owned subsidiaries:
| | | | | | |
|
Recourse:
| | | | | | |
|
Capital lease obligations
| | |
|
26.5
|
| | |
|
28.3
|
|
| | |
|
26.5
|
| | |
|
28.3
|
|
|
Non-recourse:
| | | | | | |
|
Secured railcar equipment notes
| | | |
1,037.3
| | | | |
591.6
| |
|
Warehouse facility
| | | |
228.7
| | | | |
150.7
| |
|
Promissory notes
| | |
|
282.3
|
| | |
|
293.6
|
|
| | | |
1,548.3
| | | | |
1,035.9
| |
|
Less: unamortized debt issuance costs
| | |
|
(17.3
|
)
| | |
|
(11.1
|
)
|
| | |
|
1,531.0
|
| | |
|
1,024.8
|
|
|
Partially-owned subsidiaries - non-recourse:
| | | | | | |
|
Secured railcar equipment notes
| | | |
1,333.6
| | | | |
1,365.3
| |
|
Less: unamortized debt issuance costs
| | |
|
(13.1
|
)
| | |
|
(14.5
|
)
|
| | |
|
1,320.5
|
| | |
|
1,350.8
|
|
| | |
$
|
3,275.7
|
| | |
$
|
3,242.4
|
|
| | | | | | | | | |
|
|
|
| |
|
| |
| Trinity Industries, Inc. |
| Additional Balance Sheet Information |
($ in millions)
|
(unaudited)
|
| | | | | |
|
| | | September 30,
2018 | | | December 31,
2017 |
| Leasing Debt Summary | | | | | | |
|
Total Recourse Debt
| | |
$
|
26.5
| | | |
$
|
28.3
| |
|
Total Non-Recourse Debt
| | |
|
2,851.5
|
| | |
|
2,375.6
|
|
| | |
$
|
2,878.0
|
| | |
$
|
2,403.9
|
|
|
Total Leasing Debt
| | | | | | |
|
Wholly-owned subsidiaries
| | |
$
|
1,557.5
| | | |
$
|
1,053.1
| |
|
Partially-owned subsidiaries
| | |
|
1,320.5
|
| | |
|
1,350.8
|
|
| | |
$
|
2,878.0
|
| | |
$
|
2,403.9
|
|
|
Equipment on Lease(1) | | | | | | |
|
Wholly-owned subsidiaries
| | |
$
|
4,608.4
| | | |
$
|
4,147.5
| |
|
Partially-owned subsidiaries
| | |
|
1,815.9
|
| | |
|
1,824.6
|
|
| | |
$
|
6,424.3
|
| | |
$
|
5,972.1
|
|
|
Total Leasing Debt as a % of Equipment on Lease
| | | | | | |
|
Wholly-owned subsidiaries
| | | |
33.8
|
%
| | | |
25.4
|
%
|
|
Partially-owned subsidiaries
| | | |
72.7
|
%
| | | |
74.0
|
%
|
|
Combined
| | | |
44.8
|
%
| | | |
40.3
|
%
|
| | | | | | | | | |
|
(1) Excludes net deferred profit on railcars sold to the
Leasing Group.
|
|
| |
| | |
|
| Trinity Industries, Inc. |
| Condensed Consolidated Cash Flow Statements |
(in millions)
|
(unaudited)
|
| | |
|
| | | Nine Months Ended
September 30, |
| | | 2018 |
|
| 2017 |
| Operating activities: | | | | | | |
|
Net income
| | |
$
|
135.4
| | | |
$
|
173.6
| |
|
Adjustments to reconcile net income to net cash provided by
operating activities:
| | | | | | |
|
Depreciation and amortization
| | | |
234.0
| | | | |
220.7
| |
|
Provision (benefit) for deferred income taxes
| | | |
57.8
| | | | |
151.7
| |
|
Net gains on railcar lease fleet sales owned more than one year at
the time of sale
| | | |
(21.0
|
)
| | | |
(40.2
|
)
|
|
Impairment of disposal group held for sale
| | | |
24.8
| | | | |
—
| |
|
Other
| | | |
45.0
| | | | |
44.3
| |
|
Changes in assets and liabilities:
| | | | | | |
|
(Increase) decrease in receivables
| | | |
(23.5
|
)
| | | |
(94.3
|
)
|
|
(Increase) decrease in inventories
| | | |
(110.1
|
)
| | | |
10.6
| |
|
Increase (decrease) in accounts payable and accrued liabilities
| | | |
31.2
| | | | |
50.9
| |
|
Other
| | |
|
(53.7
|
)
| | |
|
(29.1
|
)
|
|
Net cash provided by operating activities
| | |
|
319.9
|
| | |
|
488.2
|
|
| Investing activities: | | | | | | |
|
Proceeds from railcar lease fleet sales owned more than one year at
the time of sale
| | | |
123.4
| | | | |
160.3
| |
|
Proceeds from dispositions of property
| | | |
11.8
| | | | |
8.1
| |
|
Capital expenditures - leasing, net of sold lease fleet railcars
owned one year or less with a net cost of $63.2 and $74.3 | | | |
(675.8
|
)
| | | |
(360.4
|
)
|
|
Capital expenditures - manufacturing and other
| | | |
(63.0
|
)
| | | |
(61.9
|
)
|
|
(Increase) decrease in short-term marketable securities
| | | |
319.5
| | | | |
84.7
| |
|
Acquisitions
| | | |
(25.0
|
)
| | | |
(47.5
|
)
|
|
Other
| | |
|
(1.9
|
)
| | |
|
(0.3
|
)
|
|
Net cash required by investing activities
| | |
|
(311.0
|
)
| | |
|
(217.0
|
)
|
| Financing activities: | | | | | | |
|
Payments to retire debt
| | | |
(739.0
|
)
| | | |
(334.9
|
)
|
|
Proceeds from issuance of debt
| | | |
561.3
| | | | |
534.1
| |
|
Shares repurchased
| | | |
(156.1
|
)
| | | |
(52.4
|
)
|
|
Dividends paid to common shareholders
| | | |
(58.1
|
)
| | | |
(53.0
|
)
|
|
Purchase of shares to satisfy employee tax on vested stock
| | | |
(11.5
|
)
| | | |
(14.1
|
)
|
|
Distributions to noncontrolling interest
| | | |
(10.3
|
)
| | | |
(41.4
|
)
|
|
Other
| | |
|
(3.1
|
)
| | |
|
(0.1
|
)
|
|
Net cash (required) provided for financing activities
| | |
|
(416.8
|
)
| | |
|
38.2
|
|
|
Net increase (decrease) in cash, cash equivalents, and restricted
cash
| | | |
(407.9
|
)
| | | |
309.4
| |
|
Cash, cash equivalents, and restricted cash at beginning of period
| | |
|
973.8
|
| | |
|
741.6
|
|
|
Cash, cash equivalents, and restricted cash at end of period
| | |
$
|
565.9
|
| | |
$
|
1,051.0
|
|
| | | | | | | | | |
|
|
|
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
September 30, 2018 |
|
|
| Three Months Ended
September 30, 2017 |
| | |
Income
|
|
|
Average Shares
|
|
|
EPS
| | | |
Income
|
|
|
Average Shares
|
|
|
EPS
|
|
Net income attributable to Trinity Industries, Inc. | | |
$
|
27.7
| | | | | | | | | | |
$
|
66.9
| | | | | | | |
|
Unvested restricted share participation
| | |
|
(0.6
|
)
| | | | | | | | | |
|
(1.3
|
)
| | | | | | |
|
Net income attributable to Trinity Industries, Inc. - basic
| | | |
27.1
| | | |
145.0
| | |
$
|
0.19
| | | | |
65.6
| | | |
148.0
| | |
$
|
0.44
|
|
Effect of dilutive securities:
| | | | | | | | | | | | | | | | | | | |
|
Nonparticipating unvested restricted shares and stock options
| | | |
—
| | | |
0.8
| | | | | | | |
—
| | | |
0.5
| | | |
|
Convertible subordinated notes
| | |
|
—
|
| | |
—
| | | | | | |
|
—
|
| | |
2.8
| | | |
|
Net income attributable to Trinity Industries, Inc. - diluted
| | |
$
|
27.1
|
| | |
145.8
| | |
$
|
0.19
| | | |
$
|
65.6
|
| | |
151.3
| | |
$
|
0.43
|
| | | | | | |
|
| | | | | | |
|
| | | Nine Months Ended
September 30, 2018 | | | | Nine Months Ended
September 30, 2017 |
| | |
Income
| | |
Average Shares
| | |
EPS
| | | |
Income
| | |
Average Shares
| | |
EPS
|
|
Net income attributable to Trinity Industries, Inc. | | |
$
|
132.0
| | | | | | | | | | |
$
|
164.0
| | | | | | | |
|
Unvested restricted share participation
| | |
|
(2.4
|
)
| | | | | | | | | |
|
(3.6
|
)
| | | | | | |
|
Net income attributable to Trinity Industries, Inc. - basic
| | | |
129.6
| | | |
146.1
| | |
$
|
0.89
| | | | |
160.4
| | | |
148.6
| | |
$
|
1.08
|
|
Effect of dilutive securities:
| | | | | | | | | | | | | | | | | | | |
|
Nonparticipating unvested restricted shares and stock options
| | | |
—
| | | |
0.9
| | | | | | | |
—
| | | |
0.4
| | | |
|
Convertible subordinated notes
| | |
|
—
|
| | |
1.8
| | | | | | |
|
—
|
| | |
2.1
| | | |
|
Net income attributable to Trinity Industries, Inc. - diluted
| | |
$
|
129.6
|
| | |
148.8
| | |
$
|
0.87
| | | |
$
|
160.4
|
| | |
151.1
| | |
$
|
1.06
|
| | | | | | | | | | | | | | | | | | | | | | | | |
|
|
|
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
September 30, |
| | | 2018 |
|
| 2017 |
|
Net income
| | |
$
|
28.3
| | |
$
|
67.9
|
|
Add:
| | | | | | |
|
Interest expense
| | | |
42.8
| | | |
46.8
|
|
Provision for income taxes
| | | |
10.7
| | | |
39.7
|
|
Depreciation and amortization expense
| | |
|
81.4
| | |
|
74.2
|
|
Earnings before interest expense, income taxes, and depreciation and
amortization expense
| | |
$
|
163.2
| | |
$
|
228.6
|
| | |
|
| | |
|
| | | Nine Months Ended
September 30, |
| | | 2018 | | | 2017 |
|
Net income
| | |
$
|
135.4
| | |
$
|
173.6
|
|
Add:
| | | | | | |
|
Interest expense
| | | |
132.9
| | | |
137.5
|
|
Provision for income taxes
| | | |
46.1
| | | |
97.8
|
|
Depreciation and amortization expense
| | |
|
234.0
| | |
|
220.7
|
|
Earnings before interest expense, income taxes, and depreciation and
amortization expense
| | |
$
|
548.4
| | |
$
|
629.6
|
| | | | | | | |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20181024005785/en/
Trinity Industries, Inc.
Jessica Greiner
Investors:
214-631-4420
Media Line: 214-589-8909
Source: Trinity Industries, Inc.