Date of Report (Date of Earliest Event Reported): | October 22, 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. | ||
October 23, 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 October 22, 2015 with respect to the operating results for the three and nine month periods ended September 30, 2015 | |
99.2 | Conference call script of October 23, 2015 of Gail M. Peck, Vice President, Finance and Treasurer | |
99.3 | Conference call script of October 23, 2015 of S. Theis Rice, Senior Vice President and Chief Legal Officer. | |
99.4 | Conference call script of October 23, 2015 of Timothy R. Wallace, Chairman, Chief Executive Officer, and President. | |
99.5 | Conference call script of October 23, 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 October 23, 2015 of D. Stephen Menzies, Senior Vice President and Group President of the Rail and Railcar Leasing Groups. | |
99.7 | Conference call script of October 23, 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 |
• | Third quarter earnings per common diluted share of $1.31 compared to $0.91 for the third quarter of 2014, a 44% increase year-over-year |
• | Increased earnings guidance for the Company for full year 2015 to between $4.65 and $4.90 per common diluted share compared to previous guidance of between $4.45 and $4.75 per share |
• | A record operating margin for the Rail Group during the third quarter of 20.8% compared to 18.7% last year |
• | Record operating profit of $44.8 million for the Energy Equipment Group during the third quarter |
Three Months Ended September 30, | |||||||
2015 | 2014 | ||||||
Revenues | $ | 1,542.2 | $ | 1,562.8 | |||
Operating costs: | |||||||
Cost of revenues | 1,109.4 | 1,172.2 | |||||
Selling, engineering, and administrative expenses | 126.6 | 113.0 | |||||
Gains on dispositions of property: | |||||||
Net gains on lease fleet sales | (57.8 | ) | (3.0 | ) | |||
Other | (0.9 | ) | (0.6 | ) | |||
1,177.3 | 1,281.6 | ||||||
Operating profit | 364.9 | 281.2 | |||||
Interest expense, net | 46.1 | 47.8 | |||||
Other, net | (1.0 | ) | (1.6 | ) | |||
Income before income taxes | 319.8 | 235.0 | |||||
Provision for income taxes | 107.6 | 78.1 | |||||
Net income | 212.2 | 156.9 | |||||
Net income attributable to noncontrolling interest | 7.9 | 7.5 | |||||
Net income attributable to Trinity Industries, Inc. | $ | 204.3 | $ | 149.4 | |||
Net income attributable to Trinity Industries, Inc. per common share: | |||||||
Basic | $ | 1.32 | $ | 0.96 | |||
Diluted | $ | 1.31 | $ | 0.91 | |||
Weighted average number of shares outstanding: | |||||||
Basic | 150.0 | 151.5 | |||||
Diluted | 150.9 | 159.6 |
Nine Months Ended September 30, | |||||||
2015 | 2014 | ||||||
Revenues | $ | 4,845.7 | $ | 4,508.6 | |||
Operating costs: | |||||||
Cost of revenues | 3,540.1 | 3,344.5 | |||||
Selling, engineering, and administrative expenses | 339.3 | 293.0 | |||||
Gains on dispositions of property: | |||||||
Net gains on lease fleet sales | (102.8 | ) | (90.2 | ) | |||
Other | (11.8 | ) | (13.2 | ) | |||
3,764.8 | 3,534.1 | ||||||
Operating profit | 1,080.9 | 974.5 | |||||
Interest expense, net | 147.2 | 139.9 | |||||
Other, net | (4.0 | ) | (2.9 | ) | |||
Income before income taxes | 937.7 | 837.5 | |||||
Provision for income taxes | 315.7 | 274.5 | |||||
Net income | 622.0 | 563.0 | |||||
Net income attributable to noncontrolling interest | 25.5 | 23.0 | |||||
Net income attributable to Trinity Industries, Inc. | $ | 596.5 | $ | 540.0 | |||
Net income attributable to Trinity Industries, Inc. per common share: | |||||||
Basic | $ | 3.84 | $ | 3.46 | |||
Diluted | $ | 3.78 | $ | 3.33 | |||
Weighted average number of shares outstanding: | |||||||
Basic | 150.6 | 150.9 | |||||
Diluted | 153.1 | 157.0 |
Three Months Ended September 30, | |||||||
Revenues: | 2015 | 2014 | |||||
Rail Group | $ | 1,073.4 | $ | 996.4 | |||
Construction Products Group | 154.8 | 170.4 | |||||
Inland Barge Group | 164.8 | 168.4 | |||||
Energy Equipment Group | 289.5 | 269.7 | |||||
Railcar Leasing and Management Services Group | 249.2 | 205.7 | |||||
All Other | 29.1 | 28.9 | |||||
Segment Totals before Eliminations | 1,960.8 | 1,839.5 | |||||
Eliminations - lease subsidiary | (308.4 | ) | (186.5 | ) | |||
Eliminations - other | (110.2 | ) | (90.2 | ) | |||
Consolidated Total | $ | 1,542.2 | $ | 1,562.8 | |||
Three Months Ended September 30, | |||||||
Operating profit (loss): | 2015 | 2014 | |||||
Rail Group | $ | 223.3 | $ | 186.4 | |||
Construction Products Group | 19.9 | 21.6 | |||||
Inland Barge Group | 28.1 | 31.0 | |||||
Energy Equipment Group | 44.8 | 30.0 | |||||
Railcar Leasing and Management Services Group | 158.2 | 87.0 | |||||
All Other | (3.0 | ) | (3.3 | ) | |||
Segment Totals before Eliminations and Corporate Expenses | 471.3 | 352.7 | |||||
Corporate | (39.7 | ) | (36.7 | ) | |||
Eliminations - lease subsidiary | (65.6 | ) | (34.3 | ) | |||
Eliminations - other | (1.1 | ) | (0.5 | ) | |||
Consolidated Total | $ | 364.9 | $ | 281.2 |
Nine Months Ended September 30, | |||||||
Revenues: | 2015 | 2014 | |||||
Rail Group | $ | 3,328.2 | $ | 2,749.4 | |||
Construction Products Group | 418.9 | 435.2 | |||||
Inland Barge Group | 505.7 | 470.7 | |||||
Energy Equipment Group | 871.5 | 707.9 | |||||
Railcar Leasing and Management Services Group | 732.1 | 880.3 | |||||
All Other | 84.0 | 80.2 | |||||
Segment Totals before Eliminations | 5,940.4 | 5,323.7 | |||||
Eliminations - lease subsidiary | (782.9 | ) | (564.2 | ) | |||
Eliminations - other | (311.8 | ) | (250.9 | ) | |||
Consolidated Total | $ | 4,845.7 | $ | 4,508.6 | |||
Nine Months Ended September 30, | |||||||
Operating profit (loss): | 2015 | 2014 | |||||
Rail Group | $ | 663.7 | $ | 529.9 | |||
Construction Products Group | 49.5 | 65.7 | |||||
Inland Barge Group | 96.3 | 88.6 | |||||
Energy Equipment Group | 118.3 | 81.2 | |||||
Railcar Leasing and Management Services Group | 418.7 | 419.7 | |||||
All Other | (4.6 | ) | (11.3 | ) | |||
Segment Totals before Eliminations and Corporate Expenses | 1,341.9 | 1,173.8 | |||||
Corporate | (98.7 | ) | (89.5 | ) | |||
Eliminations - lease subsidiary | (163.8 | ) | (110.5 | ) | |||
Eliminations - other | 1.5 | 0.7 | |||||
Consolidated Total | $ | 1,080.9 | $ | 974.5 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
($ in millions) | |||||||||||||||
Revenues: | |||||||||||||||
Leasing and management | $ | 176.6 | $ | 158.3 | $ | 520.9 | $ | 469.2 | |||||||
Sales of railcars owned one year or less at the time of sale | 72.6 | 47.4 | 211.2 | 411.1 | |||||||||||
Total revenues | $ | 249.2 | $ | 205.7 | $ | 732.1 | $ | 880.3 | |||||||
Operating profit: | |||||||||||||||
Leasing and management | $ | 81.8 | $ | 74.4 | $ | 254.7 | $ | 213.8 | |||||||
Railcar sales: | |||||||||||||||
Railcars owned one year or less at the time of sale | 18.6 | 9.6 | 61.2 | 115.7 | |||||||||||
Railcars owned more than one year at the time of sale | 57.8 | 3.0 | 102.8 | 90.2 | |||||||||||
Total operating profit | $ | 158.2 | $ | 87.0 | $ | 418.7 | $ | 419.7 | |||||||
Operating profit margin: | |||||||||||||||
Leasing and management | 46.3 | % | 47.0 | % | 48.9 | % | 45.6 | % | |||||||
Railcar sales | * | * | * | * | |||||||||||
Total operating profit margin | 63.5 | % | 42.3 | % | 57.2 | % | 47.7 | % | |||||||
Selected expense information(1): | |||||||||||||||
Depreciation | $ | 35.9 | $ | 32.4 | $ | 105.8 | $ | 97.1 | |||||||
Maintenance | $ | 24.6 | $ | 17.8 | $ | 65.9 | $ | 58.8 | |||||||
Rent | $ | 9.9 | $ | 13.1 | $ | 31.3 | $ | 39.7 | |||||||
Interest | $ | 32.5 | $ | 39.1 | $ | 106.8 | $ | 114.5 |
September 30, 2015 | December 31, 2014 | ||||
Leasing portfolio information: | |||||
Portfolio size (number of railcars) | 77,140 | 75,930 | |||
Portfolio utilization | 98.5 | % | 99.5 | % |
Nine Months Ended September 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 | $ | 182.7 | $ | 378.8 | |||
Railcars owned more than one year at the time of sale | 258.0 | 235.7 | |||||
Rail Group | 175.8 | 153.4 | |||||
$ | 616.5 | $ | 767.9 |
September 30, 2015 | December 31, 2014 | ||||||
Cash and cash equivalents | $ | 677.8 | $ | 887.9 | |||
Short-term marketable securities | — | 75.0 | |||||
Receivables, net of allowance | 481.7 | 405.3 | |||||
Income tax receivable | 26.2 | 58.6 | |||||
Inventories | 1,020.9 | 1,068.4 | |||||
Restricted cash | 211.8 | 234.7 | |||||
Net property, plant, and equipment | 5,308.4 | 4,902.9 | |||||
Goodwill | 754.3 | 773.2 | |||||
Other assets | 324.2 | 327.8 | |||||
$ | 8,805.3 | $ | 8,733.8 | ||||
Accounts payable | $ | 294.6 | $ | 295.4 | |||
Accrued liabilities | 557.5 | 709.6 | |||||
Debt, net of unamortized discount of $48.3 and $60.0 | 3,284.5 | 3,553.0 | |||||
Deferred income | 27.4 | 36.4 | |||||
Deferred income taxes | 665.8 | 632.6 | |||||
Other liabilities | 115.2 | 109.4 | |||||
Stockholders' equity | 3,860.3 | 3,397.4 | |||||
$ | 8,805.3 | $ | 8,733.8 |
September 30, 2015 | December 31, 2014 | ||||||
Property, Plant, and Equipment | |||||||
Corporate/Manufacturing: | |||||||
Property, plant, and equipment | $ | 1,819.4 | $ | 1,681.7 | |||
Accumulated depreciation | (885.7 | ) | (820.7 | ) | |||
933.7 | 861.0 | ||||||
Leasing: | |||||||
Wholly-owned subsidiaries: | |||||||
Machinery and other | 10.7 | 10.7 | |||||
Equipment on lease | 3,661.7 | 3,189.6 | |||||
Accumulated depreciation | (608.1 | ) | (601.1 | ) | |||
3,064.3 | 2,599.2 | ||||||
Partially-owned subsidiaries: | |||||||
Equipment on lease | 2,261.3 | 2,261.2 | |||||
Accumulated depreciation | (308.8 | ) | (261.3 | ) | |||
1,952.5 | 1,999.9 | ||||||
Net deferred profit on railcars sold to the Leasing Group | (642.1 | ) | (557.2 | ) | |||
$ | 5,308.4 | $ | 4,902.9 |
September 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 $47.9 and $59.6 | 401.6 | 389.9 | |||||
Other | 0.5 | 0.7 | |||||
801.7 | 790.2 | ||||||
Leasing: | |||||||
Wholly-owned subsidiaries: | |||||||
Recourse: | |||||||
Capital lease obligations | 36.6 | 39.1 | |||||
36.6 | 39.1 | ||||||
Non-recourse: | |||||||
Secured railcar equipment notes | 690.4 | 723.3 | |||||
Warehouse facility | 291.7 | 120.6 | |||||
Promissory notes | — | 363.9 | |||||
982.1 | 1,207.8 | ||||||
Partially-owned subsidiaries - Non-recourse: | |||||||
Secured railcar equipment notes | 1,464.1 | 1,515.9 | |||||
1,464.1 | 1,515.9 | ||||||
$ | 3,284.5 | $ | 3,553.0 |
September 30, 2015 | December 31, 2014 | ||||||
Leasing Debt Summary | |||||||
Total Recourse Debt | $ | 36.6 | $ | 39.1 | |||
Total Non-Recourse Debt | 2,446.2 | 2,723.7 | |||||
$ | 2,482.8 | $ | 2,762.8 | ||||
Total Leasing Debt | |||||||
Wholly-owned subsidiaries | $ | 1,018.7 | $ | 1,246.9 | |||
Partially-owned subsidiaries | 1,464.1 | 1,515.9 | |||||
$ | 2,482.8 | $ | 2,762.8 | ||||
Equipment on Lease(1) | |||||||
Wholly-owned subsidiaries | $ | 3,064.3 | $ | 2,599.2 | |||
Partially-owned subsidiaries | 1,952.5 | 1,999.9 | |||||
$ | 5,016.8 | $ | 4,599.1 | ||||
Total Leasing Debt as a % of Equipment on Lease | |||||||
Wholly-owned subsidiaries | 33.2 | % | 48.0 | % | |||
Partially-owned subsidiaries | 75.0 | % | 75.8 | % | |||
Combined | 49.5 | % | 60.1 | % |
Nine Months Ended September 30, | |||||||
2015 | 2014 | ||||||
Operating activities: | |||||||
Net income | $ | 622.0 | $ | 563.0 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 197.9 | 171.5 | |||||
Net gains on railcar lease fleet sales owned more than one year at the time of sale | (102.8 | ) | (90.2 | ) | |||
Other | 57.1 | (41.7 | ) | ||||
Changes in assets and liabilities: | |||||||
(Increase) decrease in receivables | (43.9 | ) | (155.5 | ) | |||
(Increase) decrease in inventories | 50.7 | (226.3 | ) | ||||
Increase (decrease) in accounts payable and accrued liabilities | (129.5 | ) | 117.7 | ||||
Other | (21.2 | ) | (5.9 | ) | |||
Net cash provided by operating activities | 630.3 | 332.6 | |||||
Investing activities: | |||||||
Proceeds from railcar lease fleet sales owned more than one year at the time of sale | 313.4 | 257.4 | |||||
Proceeds from dispositions of property | 6.1 | 21.9 | |||||
Capital expenditures - leasing, net of sold lease fleet railcars owned one year or less with a net cost of $150.0 and $295.4 | (642.2 | ) | (170.4 | ) | |||
Capital expenditures - manufacturing and other | (145.1 | ) | (170.0 | ) | |||
(Increase) decrease in short-term marketable securities | 75.0 | 149.7 | |||||
Acquisitions | (46.2 | ) | (711.8 | ) | |||
Divestitures | 51.3 | — | |||||
Other | 4.8 | 2.0 | |||||
Net cash required by investing activities | (382.9 | ) | (621.2 | ) | |||
Financing activities: | |||||||
Payments to retire debt | (530.8 | ) | (140.2 | ) | |||
Proceeds from issuance of debt | 242.4 | 727.4 | |||||
Shares repurchased(1) | (107.5 | ) | (36.5 | ) | |||
Dividends paid to common shareholders | (48.0 | ) | (38.7 | ) | |||
Purchase of shares to satisfy employee tax on vested stock | (27.4 | ) | (38.5 | ) | |||
Contributions from noncontrolling interest | — | 49.6 | |||||
Distributions to noncontrolling interest | (30.4 | ) | (19.3 | ) | |||
(Increase) decrease in restricted cash | 32.3 | (2.2 | ) | ||||
Other | 11.9 | 22.2 | |||||
Net cash (required) provided by financing activities | (457.5 | ) | 523.8 | ||||
Net (decrease) increase in cash and cash equivalents | (210.1 | ) | 235.2 | ||||
Cash and cash equivalents at beginning of period | 887.9 | 428.5 | |||||
Cash and cash equivalents at end of period | $ | 677.8 | $ | 663.7 |
Three Months Ended September 30, 2015 | Three Months Ended September 30, 2014 | ||||||||||||||||||||
Income | Average Shares | EPS | Income | Average Shares | EPS | ||||||||||||||||
Net income attributable to Trinity Industries, Inc. | $ | 204.3 | $ | 149.4 | |||||||||||||||||
Unvested restricted share participation | (6.0 | ) | (4.7 | ) | |||||||||||||||||
Net income attributable to Trinity Industries, Inc. - basic | 198.3 | 150.0 | $ | 1.32 | 144.7 | 151.5 | $ | 0.96 | |||||||||||||
Effect of dilutive securities: | |||||||||||||||||||||
Stock options | — | — | — | 0.1 | |||||||||||||||||
Convertible subordinated notes | — | 0.9 | 0.2 | 8.0 | |||||||||||||||||
Net income attributable to Trinity Industries, Inc. - diluted | $ | 198.3 | 150.9 | $ | 1.31 | $ | 144.9 | 159.6 | $ | 0.91 |
Nine Months Ended September 30, 2015 | Nine Months Ended September 30, 2014 | ||||||||||||||||||||
Income | Average Shares | EPS | Income | Average Shares | EPS | ||||||||||||||||
Net income attributable to Trinity Industries, Inc. | $ | 596.5 | $ | 540.0 | |||||||||||||||||
Unvested restricted share participation | (18.2 | ) | (17.8 | ) | |||||||||||||||||
Net income attributable to Trinity Industries, Inc. - basic | 578.3 | 150.6 | $ | 3.84 | 522.2 | 150.9 | $ | 3.46 | |||||||||||||
Effect of dilutive securities: | |||||||||||||||||||||
Stock options | — | — | — | 0.1 | |||||||||||||||||
Convertible subordinated notes | 0.3 | 2.5 | 0.6 | 6.0 | |||||||||||||||||
Net income attributable to Trinity Industries, Inc. - diluted | $ | 578.6 | 153.1 | $ | 3.78 | $ | 522.8 | 157.0 | $ | 3.33 |
Three Months Ended September 30, | |||||||
2015 | 2014 | ||||||
Net income | $ | 212.2 | $ | 156.9 | |||
Add: | |||||||
Interest expense | 46.7 | 48.2 | |||||
Provision for income taxes | 107.6 | 78.1 | |||||
Depreciation and amortization expense | 67.5 | 60.5 | |||||
Earnings before interest expense, income taxes, and depreciation and amortization expense | $ | 434.0 | $ | 343.7 |
Nine Months Ended September 30, | |||||||
2015 | 2014 | ||||||
Net income | $ | 622.0 | $ | 563.0 | |||
Add: | |||||||
Interest expense | 148.8 | 141.4 | |||||
Provision for income taxes | 315.7 | 274.5 | |||||
Depreciation and amortization expense | 197.9 | 171.5 | |||||
Earnings before interest expense, income taxes, and depreciation and amortization expense | $ | 1,284.4 | $ | 1,150.4 |