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Trinity Industries, Inc. Reports Strong Second Quarter 2013 Results And Increases Full Year 2013 Earnings Guidance

Stocks in this article: TRN

Conference Call

Trinity will hold a conference call at 11:00 a.m. Eastern on August 1, 2013 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) 220-0116 until 11:59 p.m. Eastern on August 8, 2013.

Trinity Industries, Inc., headquartered in Dallas, Texas, is a diversified industrial company that owns market-leading businesses which provide products and services to the energy, transportation, chemical, 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,
  2013         2012  
Revenues $ 1,066.1 $ 995.5
Operating costs:
Cost of revenues 812.2 792.3
Selling, engineering, and administrative expenses 71.5 53.0
(Gain)/loss on disposition of property, plant, and equipment:
Net gains on lease fleet sales (1.2 ) (1.6 )
Other   0.2     (0.7 )
  882.7     843.0  
Operating profit 183.4 152.5
Interest expense, net 46.1 47.5
Other (income) expense   0.9     (0.1 )
Income before income taxes 136.4 105.1
Provision for income taxes   47.2     39.0  
Net income from continuing operations 89.2 66.1
Net gain on sale of discontinued operations 0.1
Net income (loss) from discontinued operations   (1.1 )   1.4  
Net income 88.2 67.5
Net income (loss) attributable to noncontrolling interest   4.2     (0.3 )
Net income attributable to Trinity Industries, Inc. $ 84.0   $ 67.8  
 
Net income attributable to Trinity Industries, Inc. per common share:
Basic
Continuing operations $ 1.07 $ 0.82
Discontinued operations   (0.01 )   0.02  
$ 1.06   $ 0.84  
Diluted
Continuing operations $ 1.07 $ 0.82
Discontinued operations   (0.01 )   0.02  
$ 1.06   $ 0.84  
Weighted average number of shares outstanding:
Basic 77.0 77.7
Diluted 77.1 77.9

Proceeds from the sales of railcars from the lease fleet owned more than one year at the time of sale were $8.5 million and $7.6 million for the three months ended June 30, 2013 and 2012, respectively. Operating profit from sales of railcars owned one year or less at the time of sale was $3.5 million and $13.5 million for the three months ended June 30, 2013 and 2012, respectively. Amounts previously reported have been adjusted to exclude discontinued operations resulting from the sale of the Company's ready-mix concrete operations.

 
 
Trinity Industries, Inc.
Condensed Consolidated Income Statements

(in millions, except per share amounts)

(unaudited)

 
    Six Months Ended June 30,
  2013         2012  
Revenues $ 1,999.0 $ 1,891.7
Operating costs:
Cost of revenues 1,523.3 1,522.5
Selling, engineering, and administrative expenses 140.5 103.7
(Gain)/loss on disposition of property, plant, and equipment:
Net gains on lease fleet sales (8.0 ) (5.3 )
Other   0.3     (4.4 )
  1,656.1     1,616.5  
Operating profit 342.9 275.2
Interest expense, net 94.9 95.0
Other (income) expense   (1.8 )   (3.0 )
Income before income taxes 249.8 183.2
Provision for income taxes   88.4     64.7  
Net income from continuing operations 161.4 118.5
Net gain on sale of discontinued operations 7.1
Net income (loss) from discontinued operations   (1.5 )   1.3  
Net income 167.0 119.8
Net income (loss) attributable to noncontrolling interest   3.9     (0.9 )
Net income attributable to Trinity Industries, Inc. $ 163.1   $ 120.7  
 
Net income attributable to Trinity Industries, Inc. per common share:
Basic
Continuing operations $ 1.98 $ 1.49
Discontinued operations   0.07     0.01  
$ 2.05   $ 1.50  
Diluted
Continuing operations $ 1.98 $ 1.49
Discontinued operations   0.07     0.01  
$ 2.05   $ 1.50  
Weighted average number of shares outstanding:
Basic 77.0 77.7
Diluted 77.1 77.9

Proceeds from the sales of railcars from the lease fleet owned more than one year at the time of sale were $39.1 million and $34.1 million for the six months ended June 30, 2013 and 2012, respectively. Operating profit from sales of railcars owned one year or less at the time of sale was $3.5 million and $16.4 million for the six months ended June 30, 2013 and 2012, respectively. Amounts previously reported have been adjusted to exclude discontinued operations resulting from the sale of the Company's ready-mix concrete operations.

 
 
Trinity Industries, Inc.
Condensed Segment Data

(in millions)

(unaudited)

 
    Three Months Ended June 30,
Revenues:   2013         2012  
Rail Group $ 668.0 $ 516.9
Construction Products Group 154.5 123.9
Inland Barge Group 150.0 173.9
Energy Equipment Group 152.5 130.7
Railcar Leasing and Management Services Group 169.6 194.2
All Other 21.7 20.8
Eliminations - lease subsidiary (189.5 ) (132.3 )
Eliminations - other   (60.7 )   (32.6 )
Consolidated Total $ 1,066.1   $ 995.5  
 
Three Months Ended June 30,
Operating profit (loss):   2013     2012  
Rail Group $ 107.9 $ 53.0
Construction Products Group 19.0 12.8
Inland Barge Group 20.9 36.6
Energy Equipment Group 14.3 4.0
Railcar Leasing and Management Services Group 75.7 76.4
All Other (3.8 ) (6.3 )
Corporate (15.5 ) (9.6 )
Eliminations - lease subsidiary (34.7 ) (12.2 )
Eliminations - other   (0.4 )   (2.2 )
Consolidated Total $ 183.4   $ 152.5  

Amounts previously reported have been adjusted to exclude discontinued operations resulting from the sale of the Company's ready-mix concrete operations.

 
 
Trinity Industries, Inc.
Condensed Segment Data

(in millions)

(unaudited)

 
    Six Months Ended June 30,
Revenues:   2013         2012  
Rail Group $ 1,293.5 $ 984.0
Construction Products Group 258.3 249.8
Inland Barge Group 297.4 343.3
Energy Equipment Group 307.2 255.7
Railcar Leasing and Management Services Group 304.0 336.5
All Other 41.0 36.5
Eliminations - lease subsidiary (387.5 ) (254.9 )
Eliminations - other   (114.9 )   (59.2 )
Consolidated Total $ 1,999.0   $ 1,891.7  
 
Six Months Ended June 30,
Operating profit (loss):   2013     2012  
Rail Group $ 210.8 $ 93.1
Construction Products Group 26.7 23.9
Inland Barge Group 45.2 66.6
Energy Equipment Group 29.2 0.2
Railcar Leasing and Management Services Group 137.3 142.9
All Other (6.4 ) (5.1 )
Corporate (32.1 ) (21.2 )
Eliminations - lease subsidiary (67.1 ) (23.1 )
Eliminations - other   (0.7 )   (2.1 )
Consolidated Total $ 342.9   $ 275.2  

Amounts previously reported have been adjusted to exclude discontinued operations resulting from the sale of the Company's ready-mix concrete operations.

 
 
Trinity Industries, Inc.
Condensed Consolidated Balance Sheets

(in millions)

(unaudited)

 
    June 30, 2013     December 31, 2012
Cash and cash equivalents $ 388.0 $ 573.0
Short-term marketable securities 59.9
Receivables, net of allowance 386.4 390.0
Inventories 738.9 667.7
Restricted cash 227.0 223.2
Net property, plant, and equipment 4,584.6 4,299.0
Goodwill 250.8 240.4
Assets held for sale and discontinued operations 27.9
Other assets   265.1   248.7
$ 6,900.7 $ 6,669.9
 
Accounts payable $ 187.2 $ 188.2
Accrued liabilities 590.5 583.1
Debt, net of unamortized discount of $81.0 and $87.5 2,884.2 3,055.0
Deferred income 42.6 44.5
Deferred income taxes 627.8 572.4
Liabilities held for sale and discontinued operations 3.7
Other liabilities 94.1 85.4
Stockholders' equity   2,474.3   2,137.6
$ 6,900.7 $ 6,669.9
 
 
Trinity Industries, Inc.
Additional Balance Sheet Information

(in millions)

(unaudited)

 

 

   

June 30, 2013

    December 31, 2012
Property, Plant, and Equipment
Corporate/Manufacturing:
Property, plant, and equipment $ 1,362.9 $ 1,260.1
Accumulated depreciation   (752.5 )   (720.8 )
  610.4     539.3  
Leasing:
Wholly-owned subsidiaries:
Machinery and other 9.8 9.6
Equipment on lease 3,563.3 3,231.9
Accumulated depreciation   (512.3 )   (468.4 )
  3,060.8     2,773.1  
Partially-owned subsidiaries:
Equipment on lease 1,703.0 1,703.1
Accumulated depreciation   (177.0 )   (153.8 )
  1,526.0     1,549.3  
Net deferred profit on railcars sold to the Leasing Group:
Sold to wholly-owned subsidiaries (376.5 ) (381.8 )
Sold to partially-owned subsidiaries   (236.1 )   (180.9 )
  (612.6 )   (562.7 )
$ 4,584.6   $ 4,299.0  
Leasing portfolio information:
Portfolio size (number of railcars) 74,065 71,455
Portfolio utilization 98.7 % 98.6 %

Certain prior year balances with respect to RIV 2013 have been reclassified as pertaining to a partially-owned subsidiary to conform to the 2013 presentation.

 
 
Trinity Industries, Inc.
Additional Balance Sheet Information

(in millions)

(unaudited)

 
    June 30, 2013     December 31, 2012
Debt
Corporate/Manufacturing - Recourse:
Revolving credit facility $ $
Convertible subordinated notes 450.0 450.0
Less: unamortized discount   (81.0 )   (87.5 )
369.0 362.5
Other   1.0     1.2  
  370.0     363.7  
Leasing:
Wholly-owned subsidiaries:
Recourse:
Capital lease obligations 43.7 45.8
Term loan       48.6  
  43.7     94.4  
Non-recourse:
Secured railcar equipment notes 786.9 806.5
Warehouse facility 167.4 173.6
Promissory notes   411.8     424.1  
  1,366.1     1,404.2  
Partially-owned subsidiaries - Non-recourse:
Senior secured notes 170.0
Less: Owned by Trinity       (108.8 )
61.2
Secured railcar equipment notes   1,104.4     1,131.5  
  1,104.4     1,192.7  
$ 2,884.2   $ 3,055.0  

Certain prior year balances with respect to RIV 2013 have been reclassified as pertaining to a partially-owned subsidiary to conform to the 2013 presentation.

 
 
Trinity Industries, Inc.
Additional Balance Sheet Information

(in millions)

(unaudited)

 
    June 30, 2013     December 31, 2012
Leasing Debt Summary
Total Recourse Debt $ 43.7 $ 94.4
Total Non-Recourse Debt (1)   2,470.5     2,596.9  
$ 2,514.2   $ 2,691.3  
Total Leasing Debt
Wholly-owned subsidiaries $ 1,409.8 $ 1,498.6
Partially-owned subsidiaries (1)   1,104.4     1,192.7  
$ 2,514.2   $ 2,691.3  
Equipment on Lease (2)
Wholly-owned subsidiaries $ 3,060.8 $ 2,773.1
Partially-owned subsidiaries   1,526.0     1,549.3  
$ 4,586.8   $ 4,322.4  
Total Leasing Debt as a % of Equipment on Lease
Wholly-owned subsidiaries 46.1 % 54.0 %
Partially-owned subsidiaries 72.4 % 77.0 %
Combined 54.8 % 62.3 %

Certain prior year balances with respect to RIV 2013 have been reclassified as pertaining to a partially-owned subsidiary to conform to the 2013 presentation.

(1)   Excludes 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)(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. Amounts previously reported have been adjusted to exclude discontinued operations resulting from the sale of the Company's ready-mix concrete operations.

    Three Months Ended June 30, 2013     Three Months Ended June 30, 2012
Income (Loss)     Average Shares     EPS Income (Loss)     Average

Shares

    EPS
Net income from continuing operations $ 89.2 $ 66.1
Less: net income (loss) from continuing operations attributable to noncontrolling interest   4.2     (0.3 )
Net income from continuing operations attributable to Trinity Industries, Inc. 85.0 66.4
Unvested restricted share participation   (2.7 )   (2.3 )
Net income from continuing operations attributable to Trinity Industries, Inc. - basic 82.3 77.0 $ 1.07   64.1 77.7 $ 0.82
Effect of dilutive securities:
Stock options     0.1     0.2
Net income from continuing operations attributable to Trinity Industries, Inc. - diluted $ 82.3   77.1 $ 1.07   $ 64.1   77.9 $ 0.82
Net income (loss) from discontinued operations, net of taxes $ (1.0 ) $ 1.4
Unvested restricted share participation        
Net income (loss) from discontinued operations, net of taxes - basic (1.0 ) 77.0 $ (0.01 ) 1.4 77.7 $ 0.02
Effect of dilutive securities:
Stock options     0.1     0.2
Net income (loss) from discontinued operations, net of taxes - diluted $ (1.0 ) 77.1 $ (0.01 ) $ 1.4   77.9 $ 0.02
 
Six Months Ended June 30, 2013 Six Months Ended June 30, 2012
Income (Loss) Average Shares EPS Income (Loss) Average

Shares

EPS
Net income from continuing operations $ 161.4 $ 118.5
Less: net income (loss) from continuing operations attributable to noncontrolling interest   3.9     (0.9 )
Net income from continuing operations attributable to Trinity Industries, Inc. 157.5 119.4
Unvested restricted share participation   (5.0 )   (3.7 )
Net income from continuing operations attributable to Trinity Industries, Inc. - basic 152.5 77.0 $ 1.98   115.7 77.7 $ 1.49
Effect of dilutive securities:
Stock options     0.1     0.2
Net income from continuing operations attributable to Trinity Industries, Inc. - diluted $ 152.5   77.1 $ 1.98   $ 115.7   77.9 $ 1.49
Net income (loss) from discontinued operations, net of taxes $ 5.6 $ 1.3
Unvested restricted share participation   (0.2 )   (0.3 )
Net income (loss) from discontinued operations, net of taxes - basic 5.4 77.0 $ 0.07   1.0 77.7 $ 0.01
Effect of dilutive securities:
Stock options     0.1     0.2
Net income (loss) from discontinued operations, net of taxes - diluted $ 5.4   77.1 $ 0.07   $ 1.0   77.9 $ 0.01
 
 

Trinity Industries, Inc. Reconciliation of EBITDA(in millions)(unaudited)

“EBITDA” is defined as income (loss) from continuing operations 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 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 June 30,
2013     2012
 
Net income from continuing operations $ 89.2 $ 66.1
Add:
Interest expense 46.5 47.9
Provision for income taxes 47.2 39.0
Depreciation and amortization expense   52.4   48.2
Earnings from continuing operations before interest expense, income taxes, and depreciation and amortization expense $ 235.3 $ 201.2
 
Six Months Ended June 30,
2013 2012
 
Net income from continuing operations $ 161.4 $ 118.5
Add:
Interest expense 95.7 95.8
Provision for income taxes 88.4 64.7
Depreciation and amortization expense   102.4   95.8
Earnings from continuing operations before interest expense, income taxes, and depreciation and amortization expense $ 447.9 $ 374.8

Amounts previously reported have been adjusted to exclude discontinued operations resulting from the sale of the Company's ready-mix concrete operations.

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