Date of Report (Date of Earliest Event Reported): | October 25, 2017 |
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 26, 2017 | By: | /s/ James E. Perry |
Name: James E. Perry | ||
Title: Senior Vice President and Chief Financial Officer |
NEWS RELEASE | ![]() |
• | Quarterly revenues and net income of $973.6 million and $66.9 million, respectively, compared to $1.1 billion and $84.2 million, respectively, in 2016 |
• | Quarterly earnings per common diluted share of $0.43 compared to $0.55 per share in 2016 |
• | Quarterly deliveries and orders totaling 4,420 and 3,045 railcars, respectively, in the Rail Group, compared to 6,595 and 1,260 railcars, respectively, in 2016 |
• | Company completes sales of $154.5 million of leased railcars during the quarter with associated earnings per common diluted share of $0.15 compared to no sales in 2016 |
• | Increases full year 2017 earnings per common diluted share guidance to between $1.41 and $1.51 compared to its previous full year 2017 earnings guidance of between $1.10 and $1.30 per share |
• | Provides initial full year 2018 earnings guidance of between $0.90 and $1.25 per common diluted share |
• | U.S. Fifth Circuit Court of Appeals panel rules unanimously the Company did not violate the False Claims Act, reversing the District Court's $682.4 million judgment and rendering judgment in favor of the Company |
Investor Contact: |
Preston Bass |
Director, Investor Relations |
Trinity Industries, Inc. |
214/631-4420 |
Media Contact: |
Jack Todd |
Vice President, Public Affairs |
Trinity Industries, Inc. |
214/589-8909 |
Three Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Revenues | $ | 973.6 | $ | 1,111.7 | |||
Operating costs: | |||||||
Cost of revenues | 722.2 | 827.3 | |||||
Selling, engineering, and administrative expenses | 114.5 | 102.3 | |||||
Losses (gains) on dispositions of property: | |||||||
Net gains on lease fleet sales | (16.5 | ) | — | ||||
Other | 0.4 | (1.5 | ) | ||||
820.6 | 928.1 | ||||||
Operating profit | 153.0 | 183.6 | |||||
Interest expense, net | 43.7 | 43.9 | |||||
Other, net | 1.7 | 0.2 | |||||
Income before income taxes | 107.6 | 139.5 | |||||
Provision for income taxes | 39.7 | 49.9 | |||||
Net income | 67.9 | 89.6 | |||||
Net income attributable to noncontrolling interest | 1.0 | 5.4 | |||||
Net income attributable to Trinity Industries, Inc. | $ | 66.9 | $ | 84.2 | |||
Net income attributable to Trinity Industries, Inc. per common share: | |||||||
Basic | $ | 0.44 | $ | 0.55 | |||
Diluted | $ | 0.43 | $ | 0.55 | |||
Weighted average number of shares outstanding: | |||||||
Basic | 148.0 | 148.7 | |||||
Diluted | 151.3 | 148.7 |
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Revenues | $ | 2,756.4 | $ | 3,484.5 | |||
Operating costs: | |||||||
Cost of revenues | 2,063.8 | 2,614.9 | |||||
Selling, engineering, and administrative expenses | 329.6 | 305.5 | |||||
Losses (gains) on dispositions of property: | |||||||
Net gains on lease fleet sales | (40.2 | ) | (13.5 | ) | |||
Other | (1.6 | ) | (1.0 | ) | |||
2,351.6 | 2,905.9 | ||||||
Operating profit | 404.8 | 578.6 | |||||
Interest expense, net | 130.4 | 132.8 | |||||
Other, net | 3.0 | (5.4 | ) | ||||
Income before income taxes | 271.4 | 451.2 | |||||
Provision for income taxes | 97.8 | 160.7 | |||||
Net income | 173.6 | 290.5 | |||||
Net income attributable to noncontrolling interest | 9.6 | 14.5 | |||||
Net income attributable to Trinity Industries, Inc. | $ | 164.0 | $ | 276.0 | |||
Net income attributable to Trinity Industries, Inc. per common share: | |||||||
Basic | $ | 1.08 | $ | 1.81 | |||
Diluted | $ | 1.06 | $ | 1.81 | |||
Weighted average number of shares outstanding: | |||||||
Basic | 148.6 | 148.3 | |||||
Diluted | 151.1 | 148.3 |
Three Months Ended September 30, | |||||||
Revenues: | 2017 | 2016 | |||||
Rail Group | $ | 492.4 | $ | 720.8 | |||
Construction Products Group | 131.9 | 139.8 | |||||
Inland Barge Group | 28.1 | 98.9 | |||||
Energy Equipment Group | 246.2 | 241.7 | |||||
Railcar Leasing and Management Services Group | 275.1 | 173.7 | |||||
All Other | 25.7 | 26.7 | |||||
Segment Totals before Eliminations | 1,199.4 | 1,401.6 | |||||
Eliminations - lease subsidiary | (160.5 | ) | (206.7 | ) | |||
Eliminations - other | (65.3 | ) | (83.2 | ) | |||
Consolidated Total | $ | 973.6 | $ | 1,111.7 | |||
Three Months Ended September 30, | |||||||
Operating profit (loss): | 2017 | 2016 | |||||
Rail Group | $ | 50.6 | $ | 103.6 | |||
Construction Products Group | 16.9 | 23.8 | |||||
Inland Barge Group | (0.7 | ) | 11.7 | ||||
Energy Equipment Group | 26.3 | 31.2 | |||||
Railcar Leasing and Management Services Group | 120.6 | 80.5 | |||||
All Other | (4.7 | ) | (3.5 | ) | |||
Segment Totals before Eliminations and Corporate Expenses | 209.0 | 247.3 | |||||
Corporate | (41.5 | ) | (35.6 | ) | |||
Eliminations - lease subsidiary | (13.6 | ) | (27.7 | ) | |||
Eliminations - other | (0.9 | ) | (0.4 | ) | |||
Consolidated Total | $ | 153.0 | $ | 183.6 |
Nine Months Ended September 30, | |||||||
Revenues: | 2017 | 2016 | |||||
Rail Group | $ | 1,436.6 | $ | 2,260.9 | |||
Construction Products Group | 386.3 | 410.5 | |||||
Inland Barge Group | 124.3 | 328.0 | |||||
Energy Equipment Group | 740.1 | 755.7 | |||||
Railcar Leasing and Management Services Group | 646.1 | 648.8 | |||||
All Other | 71.2 | 68.3 | |||||
Segment Totals before Eliminations | 3,404.6 | 4,472.2 | |||||
Eliminations - lease subsidiary | (457.4 | ) | (742.1 | ) | |||
Eliminations - other | (190.8 | ) | (245.6 | ) | |||
Consolidated Total | $ | 2,756.4 | $ | 3,484.5 | |||
Nine Months Ended September 30, | |||||||
Operating profit (loss): | 2017 | 2016 | |||||
Rail Group | $ | 138.3 | $ | 349.6 | |||
Construction Products Group | 54.8 | 61.2 | |||||
Inland Barge Group | 6.2 | 38.6 | |||||
Energy Equipment Group | 80.4 | 103.5 | |||||
Railcar Leasing and Management Services Group | 316.4 | 272.4 | |||||
All Other | (15.0 | ) | (13.8 | ) | |||
Segment Totals before Eliminations and Corporate Expenses | 581.1 | 811.5 | |||||
Corporate | (114.8 | ) | (95.0 | ) | |||
Eliminations - lease subsidiary | (56.1 | ) | (139.1 | ) | |||
Eliminations - other | (5.4 | ) | 1.2 | ||||
Consolidated Total | $ | 404.8 | $ | 578.6 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
($ in millions) | |||||||||||||||
Revenues: | |||||||||||||||
Leasing and management | $ | 188.5 | $ | 173.7 | $ | 552.4 | $ | 522.7 | |||||||
Sales of railcars owned one year or less at the time of sale(1) | 86.6 | — | 93.7 | 126.1 | |||||||||||
Total revenues | $ | 275.1 | $ | 173.7 | $ | 646.1 | $ | 648.8 | |||||||
Operating profit: | |||||||||||||||
Leasing and management | $ | 86.2 | $ | 80.5 | $ | 256.8 | $ | 224.8 | |||||||
Railcar sales(1): | |||||||||||||||
Railcars owned one year or less at the time of sale | 17.9 | — | 19.4 | 34.1 | |||||||||||
Railcars owned more than one year at the time of sale | 16.5 | — | 40.2 | 13.5 | |||||||||||
Total operating profit | $ | 120.6 | $ | 80.5 | $ | 316.4 | $ | 272.4 | |||||||
Operating profit margin: | |||||||||||||||
Leasing and management | 45.7 | % | 46.3 | % | 46.5 | % | 43.0 | % | |||||||
Railcar sales | * | * | * | * | |||||||||||
Total operating profit margin | 43.8 | % | 46.3 | % | 49.0 | % | 42.0 | % | |||||||
Selected expense information(2): | |||||||||||||||
Depreciation | $ | 43.3 | $ | 39.4 | $ | 128.5 | $ | 115.5 | |||||||
Maintenance and compliance | $ | 25.0 | $ | 21.3 | $ | 69.4 | $ | 84.7 | |||||||
Rent | $ | 10.0 | $ | 9.9 | $ | 30.0 | $ | 29.3 | |||||||
Interest | $ | 32.1 | $ | 31.2 | $ | 94.0 | $ | 94.4 |
September 30, 2017 | December 31, 2016 | ||||
Leasing portfolio information: | |||||
Portfolio size (number of railcars): | |||||
Wholly-owned | 62,910 | 60,440 | |||
Partially-owned | 24,680 | 24,670 | |||
87,590 | 85,110 | ||||
Managed | 20,830 | 18,730 | |||
108,420 | 103,840 | ||||
Portfolio utilization (owned railcars) | 97.3 | % | 97.6 | % |
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
(in millions) | |||||||
Proceeds from sales of leased railcars: | |||||||
Leasing Group: | |||||||
Railcars owned one year or less at the time of sale | $ | 93.7 | $ | 126.1 | |||
Railcars owned more than one year at the time of sale | 160.3 | 37.7 | |||||
Rail Group | — | 8.1 | |||||
$ | 254.0 | $ | 171.9 |
September 30, 2017 | December 31, 2016 | ||||||
Cash and cash equivalents | $ | 874.7 | $ | 563.4 | |||
Short-term marketable securities | 150.0 | 234.7 | |||||
Receivables, net of allowance | 399.1 | 378.7 | |||||
Income tax receivable | 181.2 | 102.1 | |||||
Inventories | 661.8 | 665.8 | |||||
Restricted cash | 176.3 | 178.2 | |||||
Net property, plant, and equipment | 6,070.1 | 5,966.8 | |||||
Goodwill | 770.2 | 754.1 | |||||
Other assets | 281.5 | 281.5 | |||||
$ | 9,564.9 | $ | 9,125.3 | ||||
Accounts payable | $ | 194.5 | $ | 156.1 | |||
Accrued liabilities | 418.2 | 426.1 | |||||
Debt, net of unamortized discount of $13.2 and $27.1 | 3,276.4 | 3,056.6 | |||||
Deferred income | 21.3 | 23.5 | |||||
Deferred income taxes | 1,247.4 | 1,072.9 | |||||
Other liabilities | 57.0 | 79.0 | |||||
Stockholders' equity: | |||||||
Trinity Industries, Inc. | 3,987.9 | 3,918.5 | |||||
Noncontrolling interest | 362.2 | 392.6 | |||||
4,350.1 | 4,311.1 | ||||||
$ | 9,564.9 | $ | 9,125.3 |
September 30, 2017 | December 31, 2016 | ||||||
Property, Plant, and Equipment | |||||||
Corporate/Manufacturing: | |||||||
Property, plant, and equipment | $ | 2,003.8 | $ | 1,936.1 | |||
Accumulated depreciation | (1,048.1 | ) | (974.4 | ) | |||
955.7 | 961.7 | ||||||
Leasing: | |||||||
Wholly-owned subsidiaries: | |||||||
Machinery and other | 10.7 | 10.7 | |||||
Equipment on lease | 4,912.3 | 4,673.0 | |||||
Accumulated depreciation | (849.5 | ) | (760.1 | ) | |||
4,073.5 | 3,923.6 | ||||||
Partially-owned subsidiaries: | |||||||
Equipment on lease | 2,313.5 | 2,309.4 | |||||
Accumulated depreciation | (477.0 | ) | (429.8 | ) | |||
1,836.5 | 1,879.6 | ||||||
Deferred profit on railcars sold to the Leasing Group | (965.5 | ) | (948.2 | ) | |||
Accumulated amortization | 169.9 | 150.1 | |||||
(795.6 | ) | (798.1 | ) | ||||
$ | 6,070.1 | $ | 5,966.8 |
September 30, 2017 | December 31, 2016 | ||||||
Debt | |||||||
Corporate - Recourse: | |||||||
Revolving credit facility | $ | — | $ | — | |||
Senior notes due 2024, net of unamortized discount of $0.3 and $0.4 | 399.7 | 399.6 | |||||
Convertible subordinated notes, net of unamortized discount of $12.9 and $26.7 | 436.5 | 422.7 | |||||
Other | 0.5 | — | |||||
836.7 | 822.3 | ||||||
Less: unamortized debt issuance costs | (3.1 | ) | (3.7 | ) | |||
833.6 | 818.6 | ||||||
Leasing: | |||||||
Wholly-owned subsidiaries: | |||||||
Recourse: | |||||||
Capital lease obligations, net of unamortized debt issuance costs of $0.1 and $0.1 | 29.3 | 32.0 | |||||
29.3 | 32.0 | ||||||
Non-recourse: | |||||||
Secured railcar equipment notes | 602.0 | 647.3 | |||||
Warehouse facility | 166.7 | 204.1 | |||||
Promissory notes | 297.4 | — | |||||
1,066.1 | 851.4 | ||||||
Less: unamortized debt issuance costs | (12.0 | ) | (11.4 | ) | |||
1,054.1 | 840.0 | ||||||
Partially-owned subsidiaries - Non-recourse: | |||||||
Secured railcar equipment notes | 1,374.4 | 1,381.0 | |||||
Less: unamortized debt issuance costs | (15.0 | ) | (15.0 | ) | |||
1,359.4 | 1,366.0 | ||||||
$ | 3,276.4 | $ | 3,056.6 |
September 30, 2017 | December 31, 2016 | ||||||
Leasing Debt Summary | |||||||
Total Recourse Debt | $ | 29.3 | $ | 32.0 | |||
Total Non-Recourse Debt | 2,413.5 | 2,206.0 | |||||
$ | 2,442.8 | $ | 2,238.0 | ||||
Total Leasing Debt | |||||||
Wholly-owned subsidiaries | $ | 1,083.4 | $ | 872.0 | |||
Partially-owned subsidiaries | 1,359.4 | 1,366.0 | |||||
$ | 2,442.8 | $ | 2,238.0 | ||||
Equipment on Lease(1) | |||||||
Wholly-owned subsidiaries | $ | 4,073.5 | $ | 3,923.6 | |||
Partially-owned subsidiaries | 1,836.5 | 1,879.6 | |||||
$ | 5,910.0 | $ | 5,803.2 | ||||
Total Leasing Debt as a % of Equipment on Lease | |||||||
Wholly-owned subsidiaries | 26.6 | % | 22.2 | % | |||
Partially-owned subsidiaries | 74.0 | % | 72.7 | % | |||
Combined | 41.3 | % | 38.6 | % |
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Operating activities: | |||||||
Net income | $ | 173.6 | $ | 290.5 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 220.7 | 210.6 | |||||
Net gains on railcar lease fleet sales owned more than one year at the time of sale | (40.2 | ) | (13.5 | ) | |||
Other | 196.0 | 207.7 | |||||
Changes in assets and liabilities: | |||||||
(Increase) decrease in receivables | (94.3 | ) | 37.7 | ||||
(Increase) decrease in inventories | 10.6 | 73.5 | |||||
Increase (decrease) in accounts payable and accrued liabilities | 50.9 | (32.2 | ) | ||||
Other | (29.1 | ) | 17.8 | ||||
Net cash provided by operating activities | 488.2 | 792.1 | |||||
Investing activities: | |||||||
Proceeds from railcar lease fleet sales owned more than one year at the time of sale | 160.3 | 37.7 | |||||
Proceeds from dispositions of property | 8.1 | 8.9 | |||||
Capital expenditures - leasing, net of sold lease fleet railcars owned one year or less with a net cost of $74.3 and $92.0 | (360.4 | ) | (555.2 | ) | |||
Capital expenditures - manufacturing and other | (61.9 | ) | (101.1 | ) | |||
(Increase) decrease in short-term marketable securities | 84.7 | (199.8 | ) | ||||
Acquisitions | (47.5 | ) | — | ||||
Other | (0.3 | ) | 4.0 | ||||
Net cash required by investing activities | (217.0 | ) | (805.5 | ) | |||
Financing activities: | |||||||
Payments to retire debt | (334.9 | ) | (106.0 | ) | |||
Proceeds from issuance of debt | 534.1 | — | |||||
Shares repurchased | (52.4 | ) | (34.7 | ) | |||
Dividends paid to common shareholders | (53.0 | ) | (50.0 | ) | |||
Purchase of shares to satisfy employee tax on vested stock | (14.1 | ) | (16.4 | ) | |||
Distributions to noncontrolling interest | (41.4 | ) | (18.4 | ) | |||
(Increase) decrease in restricted cash | 1.9 | 11.9 | |||||
Other | (0.1 | ) | (1.2 | ) | |||
Net cash provided (required) by financing activities | 40.1 | (214.8 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 311.3 | (228.2 | ) | ||||
Cash and cash equivalents at beginning of period | 563.4 | 786.0 | |||||
Cash and cash equivalents at end of period | $ | 874.7 | $ | 557.8 |
Three Months Ended September 30, 2017 | Three Months Ended September 30, 2016 | ||||||||||||||||||||
Income | Average Shares | EPS | Income | Average Shares | EPS | ||||||||||||||||
Net income attributable to Trinity Industries, Inc. | $ | 66.9 | $ | 84.2 | |||||||||||||||||
Unvested restricted share participation | (1.3 | ) | (2.2 | ) | |||||||||||||||||
Net income attributable to Trinity Industries, Inc. - basic | 65.6 | 148.0 | $ | 0.44 | 82.0 | 148.7 | $ | 0.55 | |||||||||||||
Effect of dilutive securities: | |||||||||||||||||||||
Nonparticipating unvested restricted shares and stock options | — | 0.5 | — | — | |||||||||||||||||
Convertible subordinated notes | — | 2.8 | — | — | |||||||||||||||||
Net income attributable to Trinity Industries, Inc. - diluted | $ | 65.6 | 151.3 | $ | 0.43 | $ | 82.0 | 148.7 | $ | 0.55 |
Nine Months Ended September 30, 2017 | Nine Months Ended September 30, 2016 | ||||||||||||||||||||
Income | Average Shares | EPS | Income | Average Shares | EPS | ||||||||||||||||
Net income attributable to Trinity Industries, Inc. | $ | 164.0 | $ | 276.0 | |||||||||||||||||
Unvested restricted share participation | (3.6 | ) | (7.7 | ) | |||||||||||||||||
Net income attributable to Trinity Industries, Inc. - basic | 160.4 | 148.6 | $ | 1.08 | 268.3 | 148.3 | $ | 1.81 | |||||||||||||
Effect of dilutive securities: | |||||||||||||||||||||
Nonparticipating unvested restricted shares and stock options | — | 0.4 | — | — | |||||||||||||||||
Convertible subordinated notes | — | 2.1 | — | — | |||||||||||||||||
Net income attributable to Trinity Industries, Inc. - diluted | $ | 160.4 | 151.1 | $ | 1.06 | $ | 268.3 | 148.3 | $ | 1.81 |
Three Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Net income | $ | 67.9 | $ | 89.6 | |||
Add: | |||||||
Interest expense | 46.8 | 45.3 | |||||
Provision for income taxes | 39.7 | 49.9 | |||||
Depreciation and amortization expense | 74.2 | 70.7 | |||||
Earnings before interest expense, income taxes, and depreciation and amortization expense | $ | 228.6 | $ | 255.5 |
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Net income | $ | 173.6 | $ | 290.5 | |||
Add: | |||||||
Interest expense | 137.5 | 136.7 | |||||
Provision for income taxes | 97.8 | 160.7 | |||||
Depreciation and amortization expense | 220.7 | 210.6 | |||||
Earnings before interest expense, income taxes, and depreciation and amortization expense | $ | 629.6 | $ | 798.5 |
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