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TheStreet Open House

Trinity Industries, Inc. Reports Strong Growth In Second Quarter Of 2012 And Increases Full Year 2012 Earnings Guidance

Conference Call

Trinity will hold a conference call at 11:00 a.m. Eastern on July 26, 2012 to discuss its second quarter results. To listen to the call, please visit the Investor Relations section of the Trinity Industries website, www.trin.net. An audio replay may be accessed through the Company’s website or by dialing (402) 220-0121 until 11:59 p.m. Eastern on August 2, 2012.

Trinity Industries, Inc., headquartered in Dallas, Texas, is a multi-industry company that owns a variety of market-leading businesses which provide products and services to the industrial, energy, transportation, and construction sectors. 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. Trinity uses the words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “forecasts,” “may,” “will,” “should,” and similar expressions to identify these forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from historical experience or our present expectations. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see “Forward-Looking Statements” in the Company’s Annual Report on Form 10-K for the most recent fiscal year.

 
Trinity Industries, Inc.
Condensed Consolidated Income Statements

(in millions, except per share amounts)

(unaudited)

 
 
Three Months Ended June 30,
  2012       2011  
 

Revenues (1)

$ 1,028.4 $ 708.3
 
Operating costs:
Cost of revenues 821.4 568.9
Selling, engineering, and administrative expenses 56.0 47.5
(Gain)/loss on disposition of property, plant, and equipment:

Net gains on lease fleet sales (1)

(1.6 ) (0.4 )
Other   (2.3 )   (3.1 )
  873.5     612.9  
 
Operating profit 154.9 95.4
 
Interest expense, net 47.6 43.4
 

Other (income) expense

  (0.0 )   (0.6 )
 
Income before income taxes 107.3 52.6
 
Provision for income taxes   39.8     21.0  
 
Net income 67.5 31.6
 
Net income (loss) attributable to noncontrolling interest   (0.3 )   1.6  
 
Net income attributable to Trinity Industries, Inc. $ 67.8   $ 30.0  
 
Net income attributable to Trinity Industries, Inc. per common share:
Basic $ 0.84 $ 0.37
Diluted $ 0.84 $ 0.37
 
Weighted average number of shares outstanding:
Basic 77.7 77.4
Diluted 77.9 77.7

(1) In 2011, the Company adopted the emerging industry policy of recognizing sales of railcars from the lease fleet which have been owned by the lease fleet for more than one year as a net gain or loss from the disposal of a long-term asset. Proceeds from the sales of railcars owned more than one year at the time of sale were $7.6 million and $2.2 million for the three months ended June 30, 2012 and 2011, respectively. There is no change in accounting treatment for sales of railcars from the lease fleet which have been owned by the lease fleet for one year or less which continue to be reported in revenues and cost of revenues. Operating profit from sales of railcars owned one year or less at the time of sale was $13.5 million and $3.0 million for the three months ended June 30, 2012 and 2011, respectively. Prior year reported amounts have been reclassified to conform to this policy.

 
Trinity Industries, Inc.
Condensed Consolidated Income Statements

(in millions, except per share amounts)

(unaudited)

 
Six Months Ended June 30,
  2012       2011  
 

Revenues (1)

$ 1,953.7 $ 1,342.5
 
Operating costs:
Cost of revenues 1,577.9 1,069.2
Selling, engineering, and administrative expenses 109.9 97.8
(Gain)/loss on disposition of property, plant, and equipment:

Net gains on lease fleet sales (1)

(5.3 ) (1.5 )
Other   (6.1 )   (3.9 )
  1,676.4     1,161.6  
 
Operating profit 277.3 180.9
 
Interest expense, net 95.1 87.6
 
Other (income) expense   (3.0 )   (1.1 )
 
Income before income taxes 185.2 94.4
 
Provision for income taxes   65.4     37.2  
 
Net income 119.8 57.2
 
Net income (loss) attributable to noncontrolling interest   (0.9 )   3.0  
 
Net income attributable to Trinity Industries, Inc. $ 120.7   $ 54.2  
 
Net income attributable to Trinity Industries, Inc. per common share:
Basic $ 1.50 $ 0.68
Diluted $ 1.50 $ 0.67
 
Weighted average number of shares outstanding:
Basic 77.7 77.2
Diluted 77.9 77.5

(1) In 2011, the Company adopted the emerging industry policy of recognizing sales of railcars from the lease fleet which have been owned by the lease fleet for more than one year as a net gain or loss from the disposal of a long-term asset. Proceeds from the sales of railcars owned more than one year at the time of sale were $34.1 million and $12.2 million for the six months ended June 30, 2012 and 2011, respectively. There is no change in accounting treatment for sales of railcars from the lease fleet which have been owned by the lease fleet for one year or less which continue to be reported in revenues and cost of revenues. Operating profit from sales of railcars owned one year or less at the time of sale was $16.4 million and $3.0 million for the six months ended June 30, 2012 and 2011, respectively. Prior year reported amounts have been reclassified to conform to this policy.

 
Trinity Industries, Inc.
Condensed Segment Data

(in millions)

(unaudited)

 
Three Months Ended June 30,
Revenues:   2012       2011  
 
Rail Group $ 516.9 $ 280.7
 
Construction Products Group 156.8 149.3
 
Inland Barge Group 173.9 117.8
 
Energy Equipment Group 130.7 117.5
 
Railcar Leasing and Management Services Group (1) 194.2 128.2
 
All Other 20.8 14.3
 
Eliminations – lease subsidiary (132.3 ) (79.5 )
 
Eliminations – other   (32.6 )   (20.0 )
 
Consolidated Total $ 1,028.4   $ 708.3  
 
Three Months Ended June 30,
Operating profit (loss):   2012     2011  
 
Rail Group $ 53.0 $ 15.4
 
Construction Products Group 15.2 16.1
 
Inland Barge Group 36.6 19.1
 
Energy Equipment Group 4.0 1.2
 
Railcar Leasing and Management Services Group (1) 76.4 59.7
 
All Other (6.3 ) (0.2 )
 
Corporate (9.6 ) (8.4 )
 
Eliminations – lease subsidiary (12.2 ) (7.1 )
 
Eliminations – other   (2.2 )   (0.4 )
 
Consolidated Total $ 154.9   $ 95.4  

(1) In 2011, the Company adopted the emerging industry policy of recognizing sales of railcars from the lease fleet which have been owned by the lease fleet for more than one year as a net gain or loss from the disposal of a long-term asset. There is no change in accounting treatment for sales of railcars from the lease fleet which have been owned by the lease fleet for one year or less which continue to be reported in revenues and cost of revenues. Prior year reported amounts have been reclassified to conform to this policy.

 
Trinity Industries, Inc.
Condensed Segment Data

(in millions)

(unaudited)

 
Six Months Ended June 30,
Revenues:   2012       2011  
 
Rail Group $ 984.0 $ 500.5
 
Construction Products Group 311.8 282.9
 
Inland Barge Group 343.3 255.7
 
Energy Equipment Group 255.7 236.2
 
Railcar Leasing and Management Services Group (1) 336.5 248.0
 
All Other 36.5 27.4
 
Eliminations – lease subsidiary (254.9 ) (164.9 )
 
Eliminations – other   (59.2 )   (43.3 )
 
Consolidated Total $ 1,953.7   $ 1,342.5  
 
Six Months Ended June 30,
Operating profit (loss):   2012     2011  
 
Rail Group $ 93.1 $ 24.7
 
Construction Products Group 26.0 24.4
 
Inland Barge Group 66.6 40.8
 
Energy Equipment Group 0.2 11.7
 
Railcar Leasing and Management Services Group (1) 142.9 114.4
 
All Other (5.1 ) (0.5 )
 
Corporate (21.2 ) (19.1 )
 
Eliminations – lease subsidiary (23.1 ) (15.2 )
 
Eliminations – other   (2.1 )   (0.3 )
 
Consolidated Total $ 277.3   $ 180.9  

(1) In 2011, the Company adopted the emerging industry policy of recognizing sales of railcars from the lease fleet which have been owned by the lease fleet for more than one year as a net gain or loss from the disposal of a long-term asset. There is no change in accounting treatment for sales of railcars from the lease fleet which have been owned by the lease fleet for one year or less which continue to be reported in revenues and cost of revenues. Prior year reported amounts have been reclassified to conform to this policy.

   
Trinity Industries, Inc.
Condensed Consolidated Balance Sheets

(in millions)

(unaudited)

 
June 30,

2012

December 31,

2011

Cash and cash equivalents $ 294.1 $ 351.1
 
Receivables, net of allowance 334.9 384.3
 
Income tax receivable 5.2 1.6
 
Inventories 649.9 549.9
 
Restricted cash 218.9 240.3
 
Net property, plant, and equipment 4,251.2 4,179.5
 
Goodwill 226.6 225.9
 
Other assets   216.7   188.4
$ 6,197.5 $ 6,121.0
 
 
Accounts payable $ 234.6 $ 207.4
 
Accrued liabilities 394.1 421.3
 
Debt, net of unamortized discount of $93.8 and $99.8 2,910.5 2,974.9
 
Deferred income 37.9 38.7
 
Deferred income taxes 504.5 434.7
 
Other liabilities 87.7 95.7
 
Stockholders’ equity   2,028.2   1,948.3
$ 6,197.5 $ 6,121.0
   
Trinity Industries, Inc.
Additional Balance Sheet Information

(in millions)

(unaudited)

 

 

June 30,2012

December 31,2011

 
 
Property, Plant, and Equipment
 
Corporate/Manufacturing:
 
Property, plant, and equipment $ 1,252.8 $ 1,242.8
 
Accumulated depreciation   (749.1 )   (732.8 )
  503.7     510.0  
Leasing:
 
Wholly-owned subsidiaries:
 
Machinery and other 9.5 9.6
 
Equipment on lease 3,561.1 3,429.3
 
Accumulated depreciation   (422.6 )   (372.9 )
  3,148.0     3,066.0  
TRIP Holdings:
 
Equipment on lease 1,271.3 1,257.7
 
Accumulated depreciation   (137.3 )   (122.7 )
  1,134.0     1,135.0  
 
Net deferred profit on railcars sold to the Leasing Group:
 
Sold to wholly-owned subsidiaries (349.7 ) (344.5 )
 
Sold to TRIP Holdings   (184.8 )   (187.0 )
  (534.5 )   (531.5 )
 
$ 4,251.2   $ 4,179.5  
 
Leasing portfolio information:
 
Portfolio size (number of railcars):
 
Wholly-owned subsidiaries 56,220 54,595
 
TRIP Holdings 14,470 14,350
 
Total fleet   70,690     68,945  
 
Portfolio utilization:
 
Wholly-owned subsidiaries 99.0 % 99.3 %
 
TRIP Holdings
99.8 % 99.9 %
 
Total fleet 99.1 % 99.5 %
   
Trinity Industries, Inc.
Additional Balance Sheet Information

(in millions)

(unaudited)

 
June 30,

2012

December 31,

2011

Debt
 
Corporate/Manufacturing – Recourse:
 
Revolving credit facility

$

$
 
Convertible subordinated notes 450.0 450.0
 
Less: unamortized discount   (93.8 )   (99.8 )
356.2 350.2
 
 
Other   5.7     4.2  
  361.9     354.4  
Leasing:
 
Wholly-owned subsidiaries:
 
Recourse:
 
Capital lease obligations 47.2 48.6
 
Term loan   52.4     54.7  
  99.6     103.3  
Non-recourse:
 
Secured railcar equipment notes 824.7 842.0
 
Warehouse facility 291.4 308.5
 
Promissory notes   452.6     465.5  
  1,568.7     1,616.0  
TRIP Holdings — Non-recourse:
 
 
Senior secured notes 170.0 170.0
 
Less: Held by Trinity   (108.8 )   (108.8 )
 
61.2 61.2
 
Secured railcar equipment notes   819.1     840.0  
  880.3     901.2  
 
$ 2,910.5   $ 2,974.9  
   
Trinity Industries, Inc.
Additional Balance Sheet Information

(in millions)

(unaudited)

 
June 30,

2012

December 31,

2011

Leasing Debt Summary
 
Total Recourse Debt $ 99.6 $ 103.3
 
Total Non-Recourse Debt (1)   2,449.0     2,517.2  
$ 2,548.6   $ 2,620.5  
 
Total Leasing Debt
 
Wholly-owned subsidiaries $ 1,668.3 $ 1,719.3
 
TRIP Holdings (1)  

880.3

 

  901.2  
$ 2,548.6   $ 2,620.5  
Equipment on Lease (2)
 
Wholly-owned subsidiaries $ 3,148.0 $ 3,066.0
 
TRIP Holdings   1,134.0     1,135.0  
$ 4,282.0   $ 4,201.0  
Total Leasing Debt as a % of Equipment on Lease
 
Wholly-owned subsidiaries 53.0 % 56.1 %
 
TRIP Holdings 77.6 % 79.4 %
 
Combined 59.5 % 62.4 %
 

(1) Excludes $108.8 million in TRIP Holdings’ Senior Secured Notes owned by Trinity and eliminated in consolidation.

(2) Excludes net deferred profit on railcars sold to the Leasing Group

 

Trinity Industries, Inc.

Earnings per Share Calculation

(in millions, except per share amounts)

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