Date of Report (Date of Earliest Event Reported): | July 23, 2015 |
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. | ||
July 24, 2015 | 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 July 23, 2015 with respect to the operating results for the three and six month periods ended June 30, 2015 | |
99.2 | Conference call script of July 24, 2015 of Gail M. Peck, Vice President, Finance and Treasurer | |
99.3 | Conference call script of July 24, 2015 of S. Theis Rice, Senior Vice President and Chief Legal Officer. | |
99.4 | Conference call script of July 24, 2015 of Timothy R. Wallace, Chairman, Chief Executive Officer, and President. | |
99.5 | Conference call script of July 24, 2015 of William A. McWhirter II, Senior Vice President and Group President of the Construction Products, Energy Equipment and Inland Barge Groups. | |
99.6 | Conference call script of July 24, 2015 of D. Stephen Menzies, Senior Vice President and Group President of the Rail and Railcar Leasing Groups. | |
99.7 | Conference call script of July 24, 2015 of James E. Perry, Senior Vice President and Chief Financial Officer. |
Investor Contact: | Media Contact: |
Jessica Greiner | Jack Todd |
Director of Investor Relations | Vice President, Public Affairs |
Trinity Industries, Inc. | Trinity Industries, Inc. |
214/631-4420 | 214/589-8909 |
• | Second quarter earnings per common diluted share of $1.33 compared to $1.01 for the second quarter of 2014, a 32% increase year-over-year |
• | Quarterly revenue and net income of $1.68 billion and $212.0 million, respectively, a year-over-year increase of 13% and 29%, respectively |
• | Rail and Inland Barge Groups reported record operating profit during the second quarter |
• | Rail Group delivered 8,530 railcars and received orders for 11,170 new railcars during the second quarter, increasing its backlog to $6.90 billion |
• | Structural wind towers business received orders totaling $183.9 million, increasing its backlog to $502.6 million |
• | Company raised earnings guidance for full year 2015 to between $4.45 and $4.75 per common diluted share compared to previous guidance of between $4.10 and $4.45 per share |
Three Months Ended June 30, | |||||||
2015 | 2014 | ||||||
Revenues | $ | 1,676.8 | $ | 1,485.3 | |||
Operating costs: | |||||||
Cost of revenues | 1,219.6 | 1,098.3 | |||||
Selling, engineering, and administrative expenses | 114.4 | 96.4 | |||||
Gains on dispositions of property: | |||||||
Net gains on lease fleet sales | (30.1 | ) | (9.7 | ) | |||
Other | (10.0 | ) | (1.7 | ) | |||
1,293.9 | 1,183.3 | ||||||
Operating profit | 382.9 | 302.0 | |||||
Interest expense, net | 50.1 | 46.2 | |||||
Other, net | (0.7 | ) | (1.2 | ) | |||
Income before income taxes | 333.5 | 257.0 | |||||
Provision for income taxes | 112.7 | 83.9 | |||||
Net income | 220.8 | 173.1 | |||||
Net income attributable to noncontrolling interest | 8.8 | 8.9 | |||||
Net income attributable to Trinity Industries, Inc. | $ | 212.0 | $ | 164.2 | |||
Net income attributable to Trinity Industries, Inc. per common share: | |||||||
Basic | $ | 1.36 | $ | 1.05 | |||
Diluted | $ | 1.33 | $ | 1.01 | |||
Weighted average number of shares outstanding: | |||||||
Basic | 150.7 | 151.0 | |||||
Diluted | 154.2 | 157.4 |
Six Months Ended June 30, | |||||||
2015 | 2014 | ||||||
Revenues | $ | 3,303.5 | $ | 2,945.8 | |||
Operating costs: | |||||||
Cost of revenues | 2,430.7 | 2,172.3 | |||||
Selling, engineering, and administrative expenses | 212.7 | 180.0 | |||||
Gains on dispositions of property: | |||||||
Net gains on lease fleet sales | (45.0 | ) | (87.2 | ) | |||
Other | (10.9 | ) | (12.6 | ) | |||
2,587.5 | 2,252.5 | ||||||
Operating profit | 716.0 | 693.3 | |||||
Interest expense, net | 101.1 | 92.1 | |||||
Other, net | (3.0 | ) | (1.3 | ) | |||
Income before income taxes | 617.9 | 602.5 | |||||
Provision for income taxes | 208.1 | 196.4 | |||||
Net income | 409.8 | 406.1 | |||||
Net income attributable to noncontrolling interest | 17.6 | 15.5 | |||||
Net income attributable to Trinity Industries, Inc. | $ | 392.2 | $ | 390.6 | |||
Net income attributable to Trinity Industries, Inc. per common share: | |||||||
Basic | $ | 2.52 | $ | 2.51 | |||
Diluted | $ | 2.46 | $ | 2.43 | |||
Weighted average number of shares outstanding: | |||||||
Basic | 151.0 | 150.5 | |||||
Diluted | 154.3 | 155.6 |
Three Months Ended June 30, | |||||||
Revenues: | 2015 | 2014 | |||||
Rail Group | $ | 1,110.3 | $ | 895.6 | |||
Construction Products Group | 151.3 | 151.7 | |||||
Inland Barge Group | 187.8 | 165.4 | |||||
Energy Equipment Group | 281.9 | 227.6 | |||||
Railcar Leasing and Management Services Group | 238.1 | 231.5 | |||||
All Other | 26.8 | 28.1 | |||||
Segment Totals before Eliminations | 1,996.2 | 1,699.9 | |||||
Eliminations - lease subsidiary | (215.5 | ) | (128.6 | ) | |||
Eliminations - other | (103.9 | ) | (86.0 | ) | |||
Consolidated Total | $ | 1,676.8 | $ | 1,485.3 | |||
Three Months Ended June 30, | |||||||
Operating profit (loss): | 2015 | 2014 | |||||
Rail Group | $ | 227.7 | $ | 176.0 | |||
Construction Products Group | 21.3 | 22.4 | |||||
Inland Barge Group | 40.7 | 30.9 | |||||
Energy Equipment Group | 36.3 | 28.3 | |||||
Railcar Leasing and Management Services Group | 137.7 | 102.4 | |||||
All Other | (0.1 | ) | (2.6 | ) | |||
Segment Totals before Eliminations and Corporate Expenses | 463.6 | 357.4 | |||||
Corporate | (32.3 | ) | (29.7 | ) | |||
Eliminations - lease subsidiary | (49.9 | ) | (26.9 | ) | |||
Eliminations - other | 1.5 | 1.2 | |||||
Consolidated Total | $ | 382.9 | $ | 302.0 |
Six Months Ended June 30, | |||||||
Revenues: | 2015 | 2014 | |||||
Rail Group | $ | 2,254.8 | $ | 1,753.0 | |||
Construction Products Group | 264.1 | 264.8 | |||||
Inland Barge Group | 340.9 | 302.3 | |||||
Energy Equipment Group | 582.0 | 438.2 | |||||
Railcar Leasing and Management Services Group | 482.9 | 674.6 | |||||
All Other | 54.9 | 51.3 | |||||
Segment Totals before Eliminations | 3,979.6 | 3,484.2 | |||||
Eliminations - lease subsidiary | (474.5 | ) | (377.7 | ) | |||
Eliminations - other | (201.6 | ) | (160.7 | ) | |||
Consolidated Total | $ | 3,303.5 | $ | 2,945.8 | |||
Six Months Ended June 30, | |||||||
Operating profit (loss): | 2015 | 2014 | |||||
Rail Group | $ | 440.4 | $ | 343.5 | |||
Construction Products Group | 29.6 | 44.1 | |||||
Inland Barge Group | 68.2 | 57.6 | |||||
Energy Equipment Group | 73.5 | 51.2 | |||||
Railcar Leasing and Management Services Group | 260.5 | 332.7 | |||||
All Other | (1.6 | ) | (8.0 | ) | |||
Segment Totals before Eliminations and Corporate Expenses | 870.6 | 821.1 | |||||
Corporate | (59.0 | ) | (52.8 | ) | |||
Eliminations - lease subsidiary | (98.2 | ) | (76.2 | ) | |||
Eliminations - other | 2.6 | 1.2 | |||||
Consolidated Total | $ | 716.0 | $ | 693.3 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
($ in millions) | |||||||||||||||
Revenues: | |||||||||||||||
Leasing and management | $ | 178.2 | $ | 160.7 | $ | 344.3 | $ | 310.9 | |||||||
Sales of railcars owned one year or less at the time of sale | 59.9 | 70.8 | 138.6 | 363.7 | |||||||||||
Total revenues | $ | 238.1 | $ | 231.5 | $ | 482.9 | $ | 674.6 | |||||||
Operating profit: | |||||||||||||||
Leasing and management | $ | 90.6 | $ | 75.5 | $ | 172.9 | $ | 139.4 | |||||||
Railcar sales: | |||||||||||||||
Railcars owned one year or less at the time of sale | 17.0 | 17.2 | 42.6 | 106.1 | |||||||||||
Railcars owned more than one year at the time of sale | 30.1 | 9.7 | 45.0 | 87.2 | |||||||||||
Total operating profit | $ | 137.7 | $ | 102.4 | $ | 260.5 | $ | 332.7 | |||||||
Operating profit margin: | |||||||||||||||
Leasing and management | 50.8 | % | 47.0 | % | 50.2 | % | 44.8 | % | |||||||
Railcar sales | * | * | * | * | |||||||||||
Total operating profit margin | 57.8 | % | 44.2 | % | 53.9 | % | 49.3 | % | |||||||
Selected expense information(1): | |||||||||||||||
Depreciation | $ | 35.8 | $ | 32.2 | $ | 69.9 | $ | 64.7 | |||||||
Maintenance | $ | 21.4 | $ | 20.0 | $ | 41.3 | $ | 41.0 | |||||||
Rent | $ | 9.6 | $ | 13.3 | $ | 21.4 | $ | 26.6 | |||||||
Interest | $ | 36.4 | $ | 38.1 | $ | 74.3 | $ | 75.4 |
June 30, 2015 | December 31, 2014 | ||||
Leasing portfolio information: | |||||
Portfolio size (number of railcars) | 76,440 | 75,930 | |||
Portfolio utilization | 98.9 | % | 99.5 | % |
Six Months Ended June 30, | |||||||
2015 | 2014 | ||||||
(in millions) | |||||||
Proceeds from sale of leased railcars to Element Financial Corporation: | |||||||
Leasing Group: | |||||||
Railcars owned one year or less at the time of sale | $ | 110.0 | $ | 331.4 | |||
Railcars owned more than one year at the time of sale | 127.5 | 222.7 | |||||
Rail Group | 111.7 | 81.6 | |||||
$ | 349.2 | $ | 635.7 |
June 30, 2015 | December 31, 2014 | ||||||
Cash and cash equivalents | $ | 583.8 | $ | 887.9 | |||
Short-term marketable securities | — | 75.0 | |||||
Receivables, net of allowance | 557.5 | 405.3 | |||||
Income tax receivable | 35.3 | 58.6 | |||||
Inventories | 989.9 | 1,068.4 | |||||
Restricted cash | 197.3 | 234.7 | |||||
Net property, plant, and equipment | 5,193.9 | 4,902.9 | |||||
Goodwill | 754.2 | 773.2 | |||||
Other assets | 320.3 | 327.8 | |||||
$ | 8,632.2 | $ | 8,733.8 | ||||
Accounts payable | $ | 273.4 | $ | 295.4 | |||
Accrued liabilities | 529.5 | 709.6 | |||||
Debt, net of unamortized discount of $52.3 and $60.0 | 3,340.3 | 3,553.0 | |||||
Deferred income | 28.3 | 36.4 | |||||
Deferred income taxes | 645.3 | 632.6 | |||||
Other liabilities | 114.1 | 109.4 | |||||
Stockholders' equity | 3,701.3 | 3,397.4 | |||||
$ | 8,632.2 | $ | 8,733.8 |
June 30, 2015 | December 31, 2014 | ||||||
Property, Plant, and Equipment | |||||||
Corporate/Manufacturing: | |||||||
Property, plant, and equipment | $ | 1,780.1 | $ | 1,681.7 | |||
Accumulated depreciation | (860.9 | ) | (820.7 | ) | |||
919.2 | 861.0 | ||||||
Leasing: | |||||||
Wholly-owned subsidiaries: | |||||||
Machinery and other | 10.7 | 10.7 | |||||
Equipment on lease | 3,516.7 | 3,189.6 | |||||
Accumulated depreciation | (607.7 | ) | (601.1 | ) | |||
2,919.7 | 2,599.2 | ||||||
Partially-owned subsidiaries: | |||||||
Equipment on lease | 2,258.9 | 2,261.2 | |||||
Accumulated depreciation | (292.9 | ) | (261.3 | ) | |||
1,966.0 | 1,999.9 | ||||||
Net deferred profit on railcars sold to the Leasing Group | (611.0 | ) | (557.2 | ) | |||
$ | 5,193.9 | $ | 4,902.9 |
June 30, 2015 | December 31, 2014 | ||||||
Debt | |||||||
Corporate - Recourse: | |||||||
Revolving credit facility | $ | — | $ | — | |||
Senior notes due 2024, net of unamortized discount of $0.4 and $0.4 | 399.6 | 399.6 | |||||
Convertible subordinated notes, net of unamortized discount of $51.9 and $59.6 | 397.6 | 389.9 | |||||
Other | 0.7 | 0.7 | |||||
797.9 | 790.2 | ||||||
Leasing: | |||||||
Wholly-owned subsidiaries: | |||||||
Recourse: | |||||||
Capital lease obligations | 37.5 | 39.1 | |||||
37.5 | 39.1 | ||||||
Non-recourse: | |||||||
Secured railcar equipment notes | 701.9 | 723.3 | |||||
Warehouse facility | 322.1 | 120.6 | |||||
Promissory notes | — | 363.9 | |||||
1,024.0 | 1,207.8 | ||||||
Partially-owned subsidiaries - Non-recourse: | |||||||
Secured railcar equipment notes | 1,480.9 | 1,515.9 | |||||
1,480.9 | 1,515.9 | ||||||
$ | 3,340.3 | $ | 3,553.0 |
June 30, 2015 | December 31, 2014 | ||||||
Leasing Debt Summary | |||||||
Total Recourse Debt | $ | 37.5 | $ | 39.1 | |||
Total Non-Recourse Debt | 2,504.9 | 2,723.7 | |||||
$ | 2,542.4 | $ | 2,762.8 | ||||
Total Leasing Debt | |||||||
Wholly-owned subsidiaries | $ | 1,061.5 | $ | 1,246.9 | |||
Partially-owned subsidiaries | 1,480.9 | 1,515.9 | |||||
$ | 2,542.4 | $ | 2,762.8 | ||||
Equipment on Lease(1) | |||||||
Wholly-owned subsidiaries | $ | 2,919.7 | $ | 2,599.2 | |||
Partially-owned subsidiaries | 1,966.0 | 1,999.9 | |||||
$ | 4,885.7 | $ | 4,599.1 | ||||
Total Leasing Debt as a % of Equipment on Lease | |||||||
Wholly-owned subsidiaries | 36.4 | % | 48.0 | % | |||
Partially-owned subsidiaries | 75.3 | % | 75.8 | % | |||
Combined | 52.0 | % | 60.1 | % |
Six Months Ended June 30, | |||||||
2015 | 2014 | ||||||
Operating activities: | |||||||
Net income | $ | 409.8 | $ | 406.1 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 130.4 | 111.0 | |||||
Net gains on railcar lease fleet sales owned more than one year at the time of sale | (45.0 | ) | (87.2 | ) | |||
Other | 19.3 | (19.4 | ) | ||||
Changes in assets and liabilities: | |||||||
(Increase) decrease in receivables | (128.8 | ) | (136.5 | ) | |||
(Increase) decrease in inventories | 81.7 | (176.4 | ) | ||||
Increase (decrease) in accounts payable and accrued liabilities | (172.7 | ) | 52.6 | ||||
Other | (12.7 | ) | 7.2 | ||||
Net cash provided by operating activities | 282.0 | 157.4 | |||||
Investing activities: | |||||||
Proceeds from railcar lease fleet sales owned more than one year at the time of sale | 167.4 | 242.1 | |||||
Proceeds from disposition of property, plant, and equipment | 4.8 | 21.0 | |||||
Capital expenditures - leasing, net of sold lease fleet railcars owned one year or less with a net cost of $96.0 and $257.6 | (419.4 | ) | (49.5 | ) | |||
Capital expenditures - manufacturing and other | (100.7 | ) | (107.5 | ) | |||
(Increase) decrease in short-term marketable securities | 75.0 | (68.8 | ) | ||||
Acquisitions | (46.2 | ) | (118.8 | ) | |||
Divestitures | 51.3 | — | |||||
Other | 5.2 | 0.3 | |||||
Net cash required by investing activities | (262.6 | ) | (81.2 | ) | |||
Financing activities: | |||||||
Payments to retire debt | (471.0 | ) | (90.1 | ) | |||
Proceeds from issuance of debt | 242.4 | 332.1 | |||||
Shares repurchased(1) | (75.0 | ) | (17.5 | ) | |||
Dividends paid to common shareholders | (31.1 | ) | (23.2 | ) | |||
Purchase of shares to satisfy employee tax on vested stock | (27.2 | ) | (38.1 | ) | |||
Contributions from noncontrolling interest | — | 49.6 | |||||
Distributions to noncontrolling interest | (19.9 | ) | (12.3 | ) | |||
(Increase) decrease in restricted cash | 46.8 | (12.8 | ) | ||||
Other | 11.5 | 22.9 | |||||
Net cash (required) provided by financing activities | (323.5 | ) | 210.6 | ||||
Net (decrease) increase in cash and cash equivalents | (304.1 | ) | 286.8 | ||||
Cash and cash equivalents at beginning of period | 887.9 | 428.5 | |||||
Cash and cash equivalents at end of period | $ | 583.8 | $ | 715.3 |
Three Months Ended June 30, 2015 | Three Months Ended June 30, 2014 | ||||||||||||||||||||
Income | Average Shares | EPS | Income | Average Shares | EPS | ||||||||||||||||
Net income attributable to Trinity Industries, Inc. | $ | 212.0 | $ | 164.2 | |||||||||||||||||
Unvested restricted share participation | (6.5 | ) | (5.5 | ) | |||||||||||||||||
Net income attributable to Trinity Industries, Inc. - basic | 205.5 | 150.7 | $ | 1.36 | 158.7 | 151.0 | $ | 1.05 | |||||||||||||
Effect of dilutive securities: | |||||||||||||||||||||
Stock options | — | — | — | 0.1 | |||||||||||||||||
Convertible subordinated notes | 0.1 | 3.5 | 0.2 | 6.3 | |||||||||||||||||
Net income attributable to Trinity Industries, Inc. - diluted | $ | 205.6 | 154.2 | $ | 1.33 | $ | 158.9 | 157.4 | $ | 1.01 |
Six Months Ended June 30, 2015 | Six Months Ended June 30, 2014 | ||||||||||||||||||||
Income | Average Shares | EPS | Income | Average Shares | EPS | ||||||||||||||||
Net income attributable to Trinity Industries, Inc. | $ | 392.2 | $ | 390.6 | |||||||||||||||||
Unvested restricted share participation | (12.2 | ) | (13.3 | ) | |||||||||||||||||
Net income attributable to Trinity Industries, Inc. - basic | 380.0 | 151.0 | $ | 2.52 | 377.3 | 150.5 | $ | 2.51 | |||||||||||||
Effect of dilutive securities: | |||||||||||||||||||||
Stock options | — | — | — | 0.1 | |||||||||||||||||
Convertible subordinated notes | 0.2 | 3.3 | 0.4 | 5.0 | |||||||||||||||||
Net income attributable to Trinity Industries, Inc. - diluted | $ | 380.2 | 154.3 | $ | 2.46 | $ | 377.7 | 155.6 | $ | 2.43 |
Three Months Ended June 30, | |||||||
2015 | 2014 | ||||||
Net income | $ | 220.8 | $ | 173.1 | |||
Add: | |||||||
Interest expense | 50.6 | 46.9 | |||||
Provision for income taxes | 112.7 | 83.9 | |||||
Depreciation and amortization expense | 66.4 | 55.7 | |||||
Earnings before interest expense, income taxes, and depreciation and amortization expense | $ | 450.5 | $ | 359.6 |
Six Months Ended June 30, | |||||||
2015 | 2014 | ||||||
Net income | $ | 409.8 | $ | 406.1 | |||
Add: | |||||||
Interest expense | 102.1 | 93.2 | |||||
Provision for income taxes | 208.1 | 196.4 | |||||
Depreciation and amortization expense | 130.4 | 111.0 | |||||
Earnings before interest expense, income taxes, and depreciation and amortization expense | $ | 850.4 | $ | 806.7 | |||