Date of Report (Date of Earliest Event Reported): | April 29, 2014 |
Delaware | 1-6903 | 75-0225040 | ||
(State or other jurisdiction of incorporation | (Commission File No.) | (I.R.S. Employer Identification No.) | ||
2525 N. Stemmons Freeway, Dallas, Texas | 75207-2401 | |||
(Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: | 214-631-4420 |
Trinity Industries, Inc. | ||
April 30, 2014 | By: | /s/ James E. Perry |
Name: James E. Perry | ||
Title: Senior Vice President and Chief Financial Officer |
Exhibit Index | ||
Exhibit No. | Description | |
99.1 | News Release dated April 29, 2014 with respect to the operating results for the three month period ended March 31, 2014 | |
99.2 | Conference call script of April 30, 2014 of Gail M. Peck, Vice President and Treasurer | |
99.3 | Conference call script of April 30, 2014 of Timothy R. Wallace, Chairman, Chief Executive Officer, and President. | |
99.4 | Conference call script of April 30, 2014 of William A. McWhirter II, Senior Vice President and Group President of the Construction Products, Energy Equipment and Inland Barge Groups. | |
99.5 | Conference call script of April 30, 2014 of D. Stephen Menzies, Senior Vice President and Group President of the Rail and Railcar Leasing Groups. | |
99.6 | Conference call script of April 30, 2014 of James E. Perry, Senior Vice President and Chief Financial Officer. |
Investor Contact: | Media Contact: |
Jessica Greiner | Jack Todd |
Director of Investor Relations | Trinity Industries, Inc. |
Trinity Industries, Inc. | 214/589-8909 |
214/631-4420 |
• | Record quarterly earnings per common diluted share of $2.85, a 188% increase year-over-year |
• | Record quarterly revenue and net income of $1.5 billion and $226.4 million, respectively, a year-over-year increase of 57% and 186%, respectively |
• | Anticipates full year 2014 earnings per common diluted share of between $7.00 and $7.50, compared to its previous full year 2014 earnings guidance of between $6.30 and $7.00 |
• | Rail Group receives orders for 9,625 new railcars during the first quarter resulting in a record backlog of 42,630 units with a record value of $5.2 billion |
• | Inland Barge Group receives orders with a value of $215 million, resulting in a backlog with a value of $508 million |
• | Receives total proceeds of $514 million from the sale of new and existing leased railcars to Element Financial Corporation under the Company’s strategic alliance formed last December |
• | Energy Equipment Group invests $118 million in three previously announced acquisitions of energy-related assets serving the cryogenic containers market and well-site and midstream production activities |
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Revenues | $ | 1,460.5 | $ | 932.9 | |||
Operating costs: | |||||||
Cost of revenues | 1,074.0 | 711.1 | |||||
Selling, engineering, and administrative expenses | 83.6 | 69.0 | |||||
(Gain)/loss on disposition of property, plant, and equipment: | |||||||
Net gains on lease fleet sales | (77.5 | ) | (6.8 | ) | |||
Other | (10.9 | ) | 0.1 | ||||
1,069.2 | 773.4 | ||||||
Operating profit | 391.3 | 159.5 | |||||
Interest expense, net | 45.9 | 48.8 | |||||
Other (income) expense | (0.4 | ) | (2.7 | ) | |||
Income before income taxes | 345.8 | 113.4 | |||||
Provision for income taxes | 112.5 | 41.2 | |||||
Net income from continuing operations | 233.3 | 72.2 | |||||
Net gain on sale of discontinued operations | — | 7.0 | |||||
Net income (loss) from discontinued operations | (0.3 | ) | (0.4 | ) | |||
Net income | 233.0 | 78.8 | |||||
Net income (loss) attributable to noncontrolling interest | 6.6 | (0.3 | ) | ||||
Net income attributable to Trinity Industries, Inc. | $ | 226.4 | $ | 79.1 | |||
Net income attributable to Trinity Industries, Inc. per common share: | |||||||
Basic | |||||||
Continuing operations | $ | 2.91 | $ | 0.91 | |||
Discontinued operations | — | 0.08 | |||||
$ | 2.91 | $ | 0.99 | ||||
Diluted | |||||||
Continuing operations | $ | 2.85 | $ | 0.91 | |||
Discontinued operations | — | 0.08 | |||||
$ | 2.85 | $ | 0.99 | ||||
Weighted average number of shares outstanding: | |||||||
Basic | 75.1 | 76.9 | |||||
Diluted | 77.0 | 77.0 |
Three Months Ended March 31, | |||||||
Revenues: | 2014 | 2013 | |||||
Rail Group | $ | 857.4 | $ | 625.5 | |||
Construction Products Group | 113.1 | 103.8 | |||||
Inland Barge Group | 136.9 | 147.4 | |||||
Energy Equipment Group | 210.6 | 154.7 | |||||
Railcar Leasing and Management Services Group | 443.1 | 134.4 | |||||
All Other | 23.2 | 19.3 | |||||
Segment Totals before Eliminations | 1,784.3 | 1,185.1 | |||||
Eliminations - lease subsidiary | (249.1 | ) | (198.0 | ) | |||
Eliminations - other | (74.7 | ) | (54.2 | ) | |||
Consolidated Total | $ | 1,460.5 | $ | 932.9 | |||
Three Months Ended March 31, | |||||||
Operating profit (loss): | 2014 | 2013 | |||||
Rail Group | $ | 167.5 | $ | 102.9 | |||
Construction Products Group | 21.7 | 7.7 | |||||
Inland Barge Group | 26.7 | 24.3 | |||||
Energy Equipment Group | 22.9 | 14.9 | |||||
Railcar Leasing and Management Services Group | 230.3 | 61.6 | |||||
All Other | (5.4 | ) | (2.6 | ) | |||
Segment Totals before Eliminations and Corporate Expenses | 463.7 | 208.8 | |||||
Corporate | (23.1 | ) | (16.6 | ) | |||
Eliminations - lease subsidiary | (49.3 | ) | (32.4 | ) | |||
Eliminations - other | — | (0.3 | ) | ||||
Consolidated Total | $ | 391.3 | $ | 159.5 |
March 31, 2014 | December 31, 2013 | ||||||
Cash and cash equivalents | $ | 532.2 | $ | 428.5 | |||
Short-term marketable securities | 256.4 | 149.7 | |||||
Receivables, net of allowance | 421.4 | 372.7 | |||||
Inventories | 904.0 | 814.7 | |||||
Restricted cash | 231.4 | 260.7 | |||||
Net property, plant, and equipment | 4,620.6 | 4,770.6 | |||||
Goodwill | 360.3 | 278.2 | |||||
Other assets | 253.9 | 238.3 | |||||
$ | 7,580.2 | $ | 7,313.4 | ||||
Accounts payable | $ | 257.8 | $ | 216.3 | |||
Accrued liabilities | 614.7 | 567.4 | |||||
Debt, net of unamortized discount of $70.6 and $74.1 | 2,940.2 | 2,989.8 | |||||
Deferred income | 39.8 | 40.8 | |||||
Deferred income taxes | 654.6 | 650.7 | |||||
Other liabilities | 103.2 | 99.3 | |||||
Stockholders' equity | 2,969.9 | 2,749.1 | |||||
$ | 7,580.2 | $ | 7,313.4 |
March 31, 2014 | December 31, 2013 | ||||||
Property, Plant, and Equipment | |||||||
Corporate/Manufacturing: | |||||||
Property, plant, and equipment | $ | 1,464.5 | $ | 1,418.9 | |||
Accumulated depreciation | (764.1 | ) | (748.3 | ) | |||
700.4 | 670.6 | ||||||
Leasing: | |||||||
Wholly-owned subsidiaries: | |||||||
Machinery and other | 10.6 | 10.3 | |||||
Equipment on lease | 3,304.5 | 3,509.1 | |||||
Accumulated depreciation | (545.5 | ) | (554.8 | ) | |||
2,769.6 | 2,964.6 | ||||||
Partially-owned subsidiaries: | |||||||
Equipment on lease | 1,889.1 | 1,887.2 | |||||
Accumulated depreciation | (215.3 | ) | (202.1 | ) | |||
1,673.8 | 1,685.1 | ||||||
Net deferred profit on railcars sold to the Leasing Group | (523.2 | ) | (549.7 | ) | |||
$ | 4,620.6 | $ | 4,770.6 | ||||
Leasing portfolio information: | |||||||
Portfolio size (number of railcars) | 73,545 | 75,685 | |||||
Portfolio utilization | 99.5 | % | 99.5 | % |
March 31, 2014 | December 31, 2013 | ||||||
Debt | |||||||
Corporate - Recourse: | |||||||
Revolving credit facility | $ | — | $ | — | |||
Convertible subordinated notes | 450.0 | 450.0 | |||||
Less: unamortized discount | (70.6 | ) | (74.1 | ) | |||
379.4 | 375.9 | ||||||
Other | 0.9 | 0.9 | |||||
380.3 | 376.8 | ||||||
Leasing: | |||||||
Wholly-owned subsidiaries: | |||||||
Recourse: | |||||||
Capital lease obligations | 41.4 | 42.2 | |||||
41.4 | 42.2 | ||||||
Non-recourse: | |||||||
Secured railcar equipment notes | 756.9 | 766.6 | |||||
Warehouse facility | 133.2 | 152.0 | |||||
Promissory notes | 389.1 | 396.1 | |||||
1,279.2 | 1,314.7 | ||||||
Partially-owned subsidiaries - Non-recourse: | |||||||
Secured railcar equipment notes | 1,239.3 | 1,256.1 | |||||
1,239.3 | 1,256.1 | ||||||
$ | 2,940.2 | $ | 2,989.8 |
March 31, 2014 | December 31, 2013 | ||||||
Leasing Debt Summary | |||||||
Total Recourse Debt | $ | 41.4 | $ | 42.2 | |||
Total Non-Recourse Debt(1) | 2,518.5 | 2,570.8 | |||||
$ | 2,559.9 | $ | 2,613.0 | ||||
Total Leasing Debt | |||||||
Wholly-owned subsidiaries | $ | 1,320.6 | $ | 1,356.9 | |||
Partially-owned subsidiaries | 1,239.3 | 1,256.1 | |||||
$ | 2,559.9 | $ | 2,613.0 | ||||
Equipment on Lease(1) | |||||||
Wholly-owned subsidiaries | $ | 2,769.6 | $ | 2,964.6 | |||
Partially-owned subsidiaries | 1,673.8 | 1,685.1 | |||||
$ | 4,443.4 | $ | 4,649.7 | ||||
Total Leasing Debt as a % of Equipment on Lease | |||||||
Wholly-owned subsidiaries | 47.7 | % | 45.8 | % | |||
Partially-owned subsidiaries | 74.0 | % | 74.5 | % | |||
Combined | 57.6 | % | 56.2 | % |
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Operating activities: | |||||||
Net income | $ | 233.0 | $ | 78.8 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Income from discontinued operations | 0.3 | (6.6 | ) | ||||
Depreciation and amortization | 55.3 | 50.0 | |||||
Net gains on sales of railcars owned more than one year at the time of sale | (77.5 | ) | (6.8 | ) | |||
Other | 7.9 | 47.0 | |||||
Changes in assets and liabilities: | |||||||
(Increase) decrease in receivables | (43.3 | ) | (22.9 | ) | |||
(Increase) decrease in inventories | (57.9 | ) | (26.3 | ) | |||
Increase (decrease) in accounts payable and accrued liabilities | 69.2 | 2.7 | |||||
Other | 18.3 | (14.1 | ) | ||||
Net cash provided by operating activities | 205.3 | 101.8 | |||||
Investing activities: | |||||||
Proceeds from sales of railcars owned more than one year at the time of sale | 224.3 | 30.6 | |||||
Proceeds from disposition of property, plant, and equipment | 17.2 | 0.6 | |||||
Capital expenditures - leasing, net of sold railcars owned one year or less with a net cost of $204.0 and $0.1 | 0.4 | (166.8 | ) | ||||
Capital expenditures - manufacturing and other | (49.1 | ) | (25.8 | ) | |||
(Increase) decrease in short-term marketable securities | (106.7 | ) | (59.9 | ) | |||
Acquisitions | (112.6 | ) | (9.1 | ) | |||
Other | 2.9 | (1.2 | ) | ||||
Net cash required by investing activities | (23.6 | ) | (231.6 | ) | |||
Financing activities: | |||||||
Payments to retire debt | (53.1 | ) | (83.5 | ) | |||
Shares repurchased | (12.5 | ) | — | ||||
Dividends paid to common shareholders | (11.6 | ) | (8.7 | ) | |||
Distributions to noncontrolling interest | (5.4 | ) | — | ||||
(Increase) decrease in restricted cash | 4.3 | 7.9 | |||||
Other | 0.3 | 1.6 | |||||
Net cash provided by financing activities | (78.0 | ) | (82.7 | ) | |||
Net increase (decrease) in cash and cash equivalents | 103.7 | (212.5 | ) | ||||
Cash and cash equivalents at beginning of period | 428.5 | 573.0 | |||||
Cash and cash equivalents at end of period | $ | 532.2 | $ | 360.5 |
Three Months Ended March 31, 2014 | Three Months Ended March 31, 2013 | ||||||||||||||||||||
Income (Loss) | Average Shares | EPS | Income (Loss) | Average Shares | EPS | ||||||||||||||||
Net income from continuing operations | $ | 233.3 | $ | 72.2 | |||||||||||||||||
Less: net income (loss) from continuing operations attributable to noncontrolling interest | 6.6 | (0.3 | ) | ||||||||||||||||||
Net income from continuing operations attributable to Trinity Industries, Inc. | 226.7 | 72.5 | |||||||||||||||||||
Unvested restricted share participation | (7.8 | ) | (2.3 | ) | |||||||||||||||||
Net income from continuing operations attributable to Trinity Industries, Inc. - basic | 218.9 | 75.1 | $ | 2.91 | 70.2 | 76.9 | $ | 0.91 | |||||||||||||
Effect of dilutive securities: Stock options | — | — | — | 0.1 | |||||||||||||||||
Convertible subordinated notes | 0.2 | 1.9 | — | — | |||||||||||||||||
Net income from continuing operations attributable to Trinity Industries, Inc. - diluted | $ | 219.1 | 77.0 | $ | 2.85 | $ | 70.2 | 77.0 | $ | 0.91 | |||||||||||
Net income (loss) from discontinued operations, net of taxes | $ | (0.3 | ) | $ | 6.6 | ||||||||||||||||
Unvested restricted share participation | — | (0.2 | ) | ||||||||||||||||||
Net income (loss) from discontinued operations, net of taxes - basic | (0.3 | ) | 75.1 | $ | — | 6.4 | 76.9 | $ | 0.08 | ||||||||||||
Effect of dilutive securities: Stock options | — | — | — | 0.1 | |||||||||||||||||
Convertible subordinated notes | — | 1.9 | — | — | |||||||||||||||||
Net income (loss) from discontinued operations, net of taxes - diluted | $ | (0.3 | ) | 77.0 | $ | — | $ | 6.4 | 77.0 | $ | 0.08 |
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Net income from continuing operations | $ | 233.3 | $ | 72.2 | |||
Add: | |||||||
Interest expense | 46.3 | 49.2 | |||||
Provision for income taxes | 112.5 | 41.2 | |||||
Depreciation and amortization expense | 55.3 | 50.0 | |||||
Earnings from continuing operations before interest expense, income taxes, and depreciation and amortization expense | $ | 447.4 | $ | 212.6 | |||
• | Bill McWhirter, Senior Vice President and Group President of the Construction Products, Energy Equipment, and Inland Barge Groups; and |
• | Steve Menzies, Senior Vice President and Group President of the Rail and Railcar Leasing Groups |
• | operate our company on lean principles while providing superior products and services to our customers |
• | create shareholder value through a variety of organic initiatives |
• | acquire and successfully integrate industrial manufacturing businesses into our portfolio and |
• | conduct railcar leasing and other asset transactions that provide incremental earnings |