Discontinued Operations and Disposal Groups

6 Months Ended

Jun. 30, 2022

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure

Discontinued Operations

Sale of Highway Products Business

In the fourth quarter of 2021, we completed the sale of our highway products business, THP. The sale closed on December 31, 2021, and we received net proceeds of approximately $364.7 million, after certain adjustments and closing costs. During the three and six months ended June 30, 2022, we recorded a loss on sale of discontinued operations of $4.3 million ($3.3 million, net of income taxes) and $5.8 million ($4.4 million, net of income taxes), respectively, which included a $2.7 million payment to Rush Hour during the three months ended June 30, 2022 representing a final working capital adjustment, as well as additional transaction costs incurred during these periods. We concluded that the sale of THP represented a strategic shift that will have a major effect on the Company’s operations and financial results. Accordingly, we have presented the operating results and cash flows of THP as discontinued operations for all periods in this Quarterly Report on Form 10-Q.

In connection with the sale, Trinity and Rush Hour entered into various agreements to effect the transaction and provide a framework for their relationship after the separation, including a purchase and sale agreement, a transition services agreement, and a lease agreement. The transition services have various durations ranging between one and eighteen months. We have determined that the continuing cash flows generated by these agreements do not constitute significant continuing involvement in the operations of THP. The amounts billed for transition services were not material to our results of operations for the three and six months ended June 30, 2022. Additionally, in connection with the sale of THP, the Company has agreed to indemnify Rush Hour for certain liabilities related to the highway products business, including certain liabilities resulting from or arising out of the ET-Plus® System, a highway guardrail end-terminal system (the “ET Plus”). Consequently, results from discontinued operations below include certain legal expenses that were directly attributable to the highway products business, which were previously reported in continuing operations. Similar expenses related to these retained obligations incurred during the three and six months ended June 30, 2022, and that may be incurred in the future, will likewise be reported in discontinued operations. See Note 14 for further information regarding obligations retained in connection with the THP sale.

The following is a summary of THP's operating results included in income (loss) from discontinued operations for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(in millions)
Revenues	$	—	$	78.2	$	—	$	146.3
Cost of revenues	—		55.3		—		104.8
Selling, engineering, and administrative expenses	3.9		13.2		12.8		23.2
Income (loss) from discontinued operations before income taxes	(3.9)		9.7		(12.8)		18.3
Provision (benefit) for income taxes	(0.5)		2.1		(2.5)		4.0
Income (loss) from discontinued operations, net of income taxes	$	(3.4)	$	7.6	$	(10.3)	$	14.3

Other discontinued operations

In addition to the THP activities above, results for the three and six months ended June 30, 2022 include $1.3 million of loss on sale of discontinued operations associated with businesses previously disposed. Additionally, a loss of $0.4 million included in income (loss) from discontinued operations, net of income taxes for the six months ended June 30, 2021 related to the spin-off of Arcosa, Inc.