UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): | April 25, 2012 |
Trinity Industries, Inc.
__________________________________________
(Exact name of registrant as specified in its charter)
Delaware | 1-6903 | 75-0225040 |
_____________________ (State or other jurisdiction |
_____________ (Commission |
______________ (I.R.S. Employer |
of incorporation) | File Number) | Identification No.) |
2525 Stemmons Freeway, Dallas, Texas | 75207-2401 | |
_________________________________ (Address of principal executive offices) |
___________ (Zip Code) |
Registrants telephone number, including area code: | 214-631-4420 |
Not Applicable
______________________________________________
Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
The Registrant hereby furnishes the information set forth in its News Release, dated April 25, 2012, announcing operating results for the three month period ended March 31, 2012, a copy of which is furnished as exhibit 99.1 and incorporated herein by reference. On April 26, 2012, the Registrant held a conference call and web cast with respect to its financial results for the three month period ended March 31, 2012. The conference call scripts of Gail M. Peck, Vice President and Treasurer; Timothy R. Wallace, Chairman, Chief Executive Officer, and President; D. Stephen Menzies, Senior Vice President and Group President of the Rail and Railcar Leasing Groups; Antonio Carrillo, Senior Vice President and Group President of the Energy Equipment Group; William A. McWhirter II, Senior Vice President and Group President of the Construction Products and Inland Barge Groups and James E. Perry, Senior Vice President and Chief Financial Officer are furnished as exhibits 99.2, 99.3, 99.4, 99.5, 99.6 and 99.7, respectively, and incorporated herein by reference.
This information is not "filed" pursuant to the Securities Exchange Act of 1934 and is not incorporated by reference into any Securities Act of 1933 registration statements. Additionally, the submission of the report on Form 8-K is not an admission of the materiality of any information in this report that is required to be disclosed solely by Regulation FD.
Item 7.01 Regulation FD Disclosure.
See "Item 2.02 — Results of Operations and Financial Condition."
This information is not "filed" pursuant to the Securities Exchange Act of 1934 and is not incorporated by reference into any Securities Act of 1933 registration statements. Additionally, the submission of the report on Form 8-K is not an admission of the materiality of any information in this report that is required to be disclosed solely by Regulation FD.
Item 9.01 Financial Statements and Exhibits.
(a) - (c) Not applicable.
(d) Exhibits:
Exhibit No. / Description
99.1 News Release dated April 25, 2012 with respect to the operating results for the three month period ended March 31, 2012.
99.2 Conference call script of April 26, 2012 of Gail M. Peck, Vice President and Treasurer.
99.3 Conference call script of April 26, 2012 of Timothy R. Wallace, Chairman, Chief Executive Officer, and President.
99.4 Conference call script of April 26, 2012 of D. Stephen Menzies, Senior Vice President and Group President of the Rail and Railcar Leasing Groups.
99.5 Conference call script of April 26, 2012 of Antonio Carrillo, Senior Vice President and Group President of the Energy Equipment Group.
99.6 Conference call script of April 26, 2012 of William A. McWhirter II, Senior Vice President and Group President of the Construction Products and Inland Barge Groups.
99.7 Conference call script of April 26, 2012 of James E. Perry, Senior Vice President and Chief Financial Officer.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Trinity Industries, Inc. | ||||
April 26, 2012 | By: |
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 25, 2012 with respect to the operating results for the three month period ended March 31, 2012. | |
99.2
|
Conference call script of April 26, 2012 of Gail M. Peck, Vice President and Treasurer. | |
99.3
|
Conference call script of April 26, 2012 of Timothy R. Wallace, Chairman, Chief Executive Officer, and President. | |
99.4
|
Conference call script of April 26, 2012 of D. Stephen Menzies, Senior Vice President and Group President of the Rail and Railcar Leasing Groups. | |
99.5
|
Conference call script of April 26, 2012 of Antonio Carrillo, Senior Vice President and Group President of the Energy Equipment Group. | |
99.6
|
Conference call script of April 26, 2012 of William A. McWhirter II, Senior Vice President and Group President of the Construction Products and Inland Barge Groups. | |
99.7
|
Conference call script of April 26, 2012 of James E. Perry, Senior Vice President and Chief Financial Officer. |
Exhibit 99.1
NEWS RELEASE
Investor Contact:
Jessica Greiner
Director of Investor Relations
Trinity Industries, Inc.
214/631-4420
FOR IMMEDIATE RELEASE
Trinity Industries, Inc. Reports First Quarter 2012 Results
DALLAS April 25, 2012 Trinity Industries, Inc. (NYSE:TRN) today reported net income attributable to Trinitys stockholders of $52.9 million, or $0.66 per common diluted share, for the first quarter ended March 31, 2012. Net income for the same quarter of 2011 was $24.2 million, or $0.30 per common diluted share. Revenues for the first quarter of 2012 were $925.3 million compared to revenues of $634.2 million for the same quarter of 2011. The Company reported an operating profit of $122.4 million in the first quarter of 2012, a 43% increase compared to an operating profit of $85.5 million for the same quarter last year. The Company also benefitted from a lower effective tax rate of 32.9% in the first quarter due to the settlement of certain tax audits.
I am pleased with our consolidated financial performance in the first quarter, said Timothy R. Wallace, Trinitys Chairman, CEO and President. Our revenues increased by 46% over the same period in 2011 and our net income increased by 119%. Our strong first quarter results were driven by a significant increase in railcar shipments compared to last year, along with improved profitability and a higher level of railcar sales from the Railcar Leasing business. In addition, deliveries in our Inland Barge Group increased during the quarter compared to the prior year. While all of our business segments reported increases in revenues for the first quarter of 2012 compared to the same quarter last year, our Energy Equipment Groups operating performance during the quarter reflects continued challenges in our structural wind towers business. The balance of our business segments reported increases in operating margins due to higher volumes and improved operating leverage.
In the first quarter of 2012, the Rail Group reported revenues of $467.1 million and an operating profit of $40.1 million. This compares to revenues of $219.8 million and an operating profit of $9.3 million in the first quarter of 2011. The Rail Group shipped approximately 5,010 railcars and received orders for approximately 3,255 railcars with a value of $393.2 million during the first quarter. As a result, the value of the Rail Group backlog remained stable during the quarter at $2.6 billion, representing approximately 27,245 railcars as of March 31, 2012, compared to a backlog of approximately $2.6 billion as of December 31, 2011, representing approximately 29,000 railcars.
During the first quarter of 2012, the Railcar Leasing and Management Services Group reported leasing and management revenues of $127.4 million compared to $119.8 million in the first quarter of 2011 due to continued growth in the lease fleet, higher rental rates, and improved utilization. In addition, the Railcar Leasing business recognized revenue of $14.9 million in sales of railcars from the lease fleet during the first quarter. Operating profit for this group was $66.5 million for the first quarter of 2012 compared to operating profit of $54.7 million during the first quarter of 2011. Included in the operating results for the first quarter of 2012 were $6.6 million of profits from railcar sales. For the same period last year, the operating results included $1.1 million of profits from railcar sales. The increase in operating profit for the segment was due to increased railcar sales from the lease fleet, additions to the lease fleet, improved utilization, and higher rental rates.
The Inland Barge Group reported revenues of $169.4 million and an operating profit of $30.0 million in the first quarter of 2012 which included a $3.4 million net gain from the sale of 15 of the 17 barges in the barge lease fleet. This compares to revenues of $137.9 million and an operating profit of $21.7 million in the first quarter of 2011. During the first quarter of 2012, the Inland Barge Group received orders of approximately $187 million, and as of March 31, 2012 had a backlog of approximately $512 million compared to a backlog of approximately $495 million as of December 31, 2011.
The Energy Equipment Group reported revenues of $125.0 million in the first quarter of 2012 compared to revenues of $118.7 million in the same quarter of 2011. Revenues increased compared to the same period in 2011 as a result of higher demand for tank containers, tank heads, and utility structures offsetting lower structural wind tower shipments. The group incurred an operating loss of $3.8 million in the first quarter of 2012 compared to an operating profit of $10.5 million in the first quarter of 2011. The decrease in operating profit for the three month period ended March 31, 2012 was due to a number of issues related to the structural wind tower business, including product mix, lower shipments, and competitive pricing on structural wind towers. The backlog for structural wind towers as of March 31, 2012 was approximately $885 million compared to approximately $934 million as of December 31, 2011. Approximately $413 million of this backlog is subject to litigation with a structural wind tower customer for the customers breach of a long-term supply contract for the manufacture of towers.
Revenues in the Construction Products Group were $155.0 million in the first quarter of 2012 compared to revenues of $133.6 million in the first quarter of 2011. The group recorded an operating profit of $10.8 million in the first quarter of 2012 compared to an operating profit of $8.3 million in the first quarter of 2011. The increase in revenues for the three month period ended March 31, 2012 compared to the same period in 2011 was primarily attributable to higher volumes in the Highway Products business and other product lines partially offset by lower revenues in the Concrete and Aggregates business resulting from the divestiture of several ready mix concrete facilities located in Central Texas in April 2011. The increase in operating profit was primarily the result of acquisitions made in our Highway Products business in prior years and the divestitures of the Central Texas ready mix facilities along with improved efficiencies in our Concrete and Aggregates business and higher volumes in other product lines.
The Company reported a 32.9% effective tax rate in the first quarter of 2012 compared to 38.8% in the first quarter of 2011. The decrease in the effective tax rate was primarily due to the recognition of an approximately $3.5 million tax benefit resulting from the settlement of a U.S. federal tax audit for the 2004-2005 tax years.
Earnings Outlook
The Company anticipates earnings per common diluted share of between $0.70 and $0.75 for the second
quarter of 2012 compared to earnings per common diluted share of $0.37 in the second quarter of
2011. For the full year 2012, the Company anticipates earnings per common diluted share of between
$2.55 and $2.70 compared to full year earnings per common diluted share of $1.77 in 2011. Full year
2011 results included a cumulative net gain of $0.12 per common diluted share, related to flood
settlement claims arising from two separate flood events that occurred in our Inland Barge Group in
2010 and 2011.
Results for the second quarter and full year 2012 could be impacted by a number of factors, including: the level of operating leverage we achieve as our rail business continues to operate at a relatively steady level of production; additional prospective sales of railcars from the leasing portfolio; the amount of profit eliminations due to railcar additions to our Leasing Group; the impact of weather conditions on our Construction Products businesses; and the impact of product mix changes as well as the outcome of pending litigation in our structural wind towers business.
Conference Call
Trinity will hold a conference call at 11:00 a.m. Eastern on April 26, 2012 to discuss its first
quarter results. To listen to the call, please visit the Investor Relations section of the Trinity
Industries website, www.trin.net. An audio replay may be accessed through the Companys website or
by dialing (402) 220-2669 until 11:59 p.m. Eastern on May 3, 2012.
Trinity Industries, Inc., headquartered in Dallas, Texas, is a multi-industry company that owns a variety of market-leading businesses which provide products and services to the industrial, energy, transportation, and construction sectors. Trinity reports its financial results in five principal business segments: the Rail Group, the Railcar Leasing and Management Services Group, the Inland Barge Group, the Construction Products Group, and the Energy Equipment Group. For more information, visit: www.trin.net.
Some statements in this release, which are not historical facts, are forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements about Trinitys estimates, expectations, beliefs, intentions or strategies for the future, and the assumptions underlying these forward-looking statements. Trinity uses the words anticipates, believes, estimates, expects, intends, forecasts, may, will, should, and similar expressions to identify these forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from historical experience or our present expectations. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see Forward-Looking Statements in the Companys Annual Report on Form 10-K for the most recent fiscal year.
- TABLES TO FOLLOW -
Trinity Industries, Inc.
Condensed Consolidated Income Statements
(in millions, except per share amounts)
(unaudited)
Three Months Ended March 31, | ||||||||
2012 | 2011 | |||||||
Revenues(1) |
$ | 925.3 | $ | 634.2 | ||||
Operating costs: |
||||||||
Cost of revenues |
756.5 | 500.3 | ||||||
Selling, engineering, and administrative expenses |
53.9 | 50.3 | ||||||
(Gain)/loss on disposition of property, plant, and
equipment: |
||||||||
Net gains on lease fleet sales(1) |
(3.7 | ) | (1.1 | ) | ||||
Other |
(3.8 | ) | (0.8 | ) | ||||
802.9 | 548.7 | |||||||
Operating profit |
122.4 | 85.5 | ||||||
Interest expense, net |
47.5 | 44.2 | ||||||
Other (income) expense |
(3.0 | ) | (0.5 | ) | ||||
Income before income taxes |
77.9 | 41.8 | ||||||
Provision for income taxes |
25.6 | 16.2 | ||||||
Net income |
52.3 | 25.6 | ||||||
Net income attributable to noncontrolling interest |
(0.6 | ) | 1.4 | |||||
Net income attributable to Trinity Industries, Inc. |
$ | 52.9 | $ | 24.2 | ||||
Net income attributable to Trinity Industries, Inc. per common share: |
||||||||
Basic |
$ | 0.66 | $ | 0.30 | ||||
Diluted |
$ | 0.66 | $ | 0.30 | ||||
Weighted average number of shares outstanding: |
||||||||
Basic |
77.8 | 77.1 | ||||||
Diluted |
78.1 | 77.4 |
(1) In 2011, the Company adopted the emerging industry policy of recognizing sales of railcars from the lease fleet which have been owned by the lease fleet for more than one year as a net gain or loss from the disposal of a long-term asset. Proceeds from the sales of railcars owned more than one year at the time of sale were $26.5 million and $10.0 million for the three months ended March 31, 2012 and 2011, respectively. There is no change in accounting treatment for sales of railcars from the lease fleet which have been owned by the lease fleet for one year or less which continue to be reported in revenues and cost of revenues. Operating profit from sales of railcars owned one year or less at the time of sale was $2.9 million and $0.0 million for the three months ended March 31, 2012 and 2011, respectively. Prior year reported amounts have been reclassified to conform to this policy.
Trinity Industries, Inc.
Condensed Segment Data
(in millions)
(unaudited)
Three Months Ended March 31, | ||||||||
Revenues: | 2012 | 2011 | ||||||
Rail Group |
$ | 467.1 | $ | 219.8 | ||||
Construction Products Group |
155.0 | 133.6 | ||||||
Inland Barge Group |
169.4 | 137.9 | ||||||
Energy Equipment Group |
125.0 | 118.7 | ||||||
Railcar Leasing and Management Services |
142.3 | 119.8 | ||||||
Group(1) |
||||||||
All Other |
15.7 | 13.1 | ||||||
Eliminations lease subsidiary |
(122.6 | ) | (85.4 | ) | ||||
Eliminations other |
(26.6 | ) | (23.3 | ) | ||||
Consolidated Total |
$ | 925.3 | $ | 634.2 | ||||
Operating profit (loss): | Three Months Ended March 31, | |||||||
2012 | 2011 | |||||||
Rail Group |
$ | 40.1 | $ | 9.3 | ||||
Construction Products Group |
10.8 | 8.3 | ||||||
Inland Barge Group |
30.0 | 21.7 | ||||||
Energy Equipment Group |
(3.8 | ) | 10.5 | |||||
Railcar Leasing and Management Services |
66.5 | 54.7 | ||||||
Group(1) |
||||||||
All Other |
1.2 | (0.3 | ) | |||||
Corporate |
(11.6 | ) | (10.7 | ) | ||||
Eliminations lease subsidiary |
(10.9 | ) | (8.1 | ) | ||||
Eliminations other |
0.1 | 0.1 | ||||||
Consolidated Total |
$ | 122.4 | $ | 85.5 | ||||
(1) In the fourth quarter of 2011, the Company adopted the emerging industry policy of
recognizing sales of railcars from the lease fleet which have been owned by the lease fleet for
more than one year as a net gain or loss from the disposal of a long-term asset. There is no change
in accounting treatment for sales of railcars from the lease fleet which have been owned by the
lease fleet for one year or less which continue to be reported in revenues and cost of revenues.
Prior year reported amounts have been reclassified to conform to this policy.
Trinity Industries, Inc.
Condensed Consolidated Balance Sheets
(in millions)
(unaudited)
March 31, | December 31, | |||||||
2012 | 2011 | |||||||
Cash and cash equivalents |
$ | 304.8 | $ | 351.1 | ||||
Receivables, net of allowance |
367.2 | 384.3 | ||||||
Income tax receivable |
1.4 | 1.6 | ||||||
Inventories |
596.0 | 549.9 | ||||||
Restricted cash |
224.0 | 240.3 | ||||||
Net property, plant, and equipment |
4,217.3 | 4,179.5 | ||||||
Goodwill |
225.9 | 225.9 | ||||||
Other assets |
193.6 | 188.4 | ||||||
$ | 6,130.2 | $ | 6,121.0 | |||||
Accounts payable |
$ | 220.9 | $ | 207.4 | ||||
Accrued liabilities |
384.0 | 421.3 | ||||||
Debt, net of unamortized discount of $96.8 and $99.8 |
2,927.5 | 2,974.9 | ||||||
Deferred income |
37.4 | 38.7 | ||||||
Deferred income taxes |
465.5 | 434.7 | ||||||
Other liabilities |
90.6 | 95.7 | ||||||
Stockholders equity |
2,004.3 | 1,948.3 | ||||||
$ | 6,130.2 | $ | 6,121.0 | |||||
Trinity Industries, Inc.
Additional Balance Sheet Information
(in millions)
(unaudited)
March 31, | December 31, 2011 | |||||||
2012 | ||||||||
Property, Plant, and Equipment |
||||||||
Corporate/Manufacturing: |
||||||||
Property, plant, and equipment |
$ | 1,235.5 | $ | 1,242.8 | ||||
Accumulated depreciation |
(735.1 | ) | (732.8 | ) | ||||
500.4 | 510.0 | |||||||
Leasing: |
||||||||
Wholly-owned subsidiaries: |
||||||||
Machinery and other |
9.6 | 9.6 | ||||||
Equipment on lease |
3,497.2 | 3,429.3 | ||||||
Accumulated depreciation |
(398.2 | ) | (372.9 | ) | ||||
3,108.6 | 3,066.0 | |||||||
TRIP Holdings: |
||||||||
Equipment on lease |
1,271.4 | 1,257.7 | ||||||
Accumulated depreciation |
(128.7 | ) | (122.7 | ) | ||||
1,142.7 | 1,135.0 | |||||||
Net deferred profit on railcars sold
to the Leasing Group: |
||||||||
Sold to wholly-owned subsidiaries |
(348.0 | ) | (344.5 | ) | ||||
Sold to TRIP Holdings |
(186.4 | ) | (187.0 | ) | ||||
(534.4 | ) | (531.5 | ) | |||||
$ | 4,217.3 | $ | 4,179.5 | |||||
Leasing portfolio information: |
||||||||
Portfolio size (number of railcars): |
||||||||
Wholly-owned subsidiaries |
55,485 | 54,595 | ||||||
TRIP Holdings |
14,470 | 14,350 | ||||||
Total fleet |
69,955 | 68,945 | ||||||
Portfolio utilization: |
||||||||
Wholly-owned subsidiaries |
99.4 | % | 99.3 | % | ||||
TRIP Holdings |
99.9 | % | 99.9 | % | ||||
Total fleet |
99.5 | % | 99.5 | % |
Trinity Industries, Inc.
Additional Balance Sheet Information
(in millions)
(unaudited)
March 31, | December 31, | |||||||
2012 | 2011 | |||||||
Debt |
||||||||
Corporate/Manufacturing Recourse: |
||||||||
Revolving credit facility |
$ | | $ | | ||||
Convertible subordinated notes |
450.0 | 450.0 | ||||||
Less: unamortized discount |
(96.8 | ) | (99.8 | ) | ||||
353.2 | 350.2 | |||||||
Other |
6.1 | 4.2 | ||||||
359.3 | 354.4 | |||||||
Leasing: |
||||||||
Wholly-owned subsidiaries: |
||||||||
Recourse: |
||||||||
Capital lease obligations |
47.9 | 48.6 | ||||||
Term loan |
54.0 | 54.7 | ||||||
101.9 | 103.3 | |||||||
Non-recourse: |
||||||||
Secured railcar equipment notes |
833.5 | 842.0 | ||||||
Warehouse facility |
282.7 | 308.5 | ||||||
Promissory notes |
459.3 | 465.5 | ||||||
1,575.5 | 1,616.0 | |||||||
TRIP Holdings Non-recourse: |
||||||||
Senior secured notes |
170.0 | 170.0 | ||||||
Less: Held by Trinity |
(108.8 | ) | (108.8 | ) | ||||
61.2 | 61.2 | |||||||
Secured railcar equipment notes |
829.6 | 840.0 | ||||||
890.8 | 901.2 | |||||||
$ | 2,927.5 | $ | 2,974.9 | |||||
Trinity Industries, Inc.
Additional Balance Sheet Information
(in millions)
(unaudited)
March 31, | December 31, | |||||||
2012 | 2011 | |||||||
Leasing Debt Summary |
||||||||
Total Recourse Debt |
$ | 101.9 | $ | 103.3 | ||||
Total Non-Recourse Debt (1) |
2,466.3 | 2,517.2 | ||||||
$ | 2,568.2 | $ | 2,620.5 | |||||
Total Leasing Debt |
||||||||
Wholly-owned subsidiaries |
$ | 1,677.4 | $ | 1,719.3 | ||||
TRIP Holdings(1) |
890.8 | 901.2 | ||||||
$ | 2,568.2 | $ | 2,620.5 | |||||
Equipment on Lease(2) |
||||||||
Wholly-owned subsidiaries |
$ | 3,108.6 | $ | 3,066.0 | ||||
TRIP Holdings |
1,142.7 | 1,135.0 | ||||||
$ | 4,251.3 | $ | 4,201.0 | |||||
Total Leasing Debt as a % of Equipment on Lease |
||||||||
Wholly-owned subsidiaries |
54.0 | % | 56.1 | % | ||||
TRIP Holdings |
78.0 | % | 79.4 | % | ||||
Combined |
60.4 | % | 62.4 | % | ||||
(1) Excludes $108.8 million in TRIP Holdings Senior Secured Notes owned by Trinity and eliminated in consolidation. |
||||||||
(2) Excludes net deferred profit on railcars sold to the Leasing Group which is eliminated in consolidation. |
Trinity Industries, Inc.
Earnings per Share Calculation
(in millions, except per share amounts)
(unaudited)
Basic net income attributable to Trinity Industries, Inc. per common share is computed by dividing net income attributable to Trinity remaining after allocation to unvested restricted shares by the weighted average number of basic common shares outstanding for the period.
Three Months Ended | Three Months Ended | |||||||||||||||||||||||
March 31, 2012 | March 31, 2011 | |||||||||||||||||||||||
Average | ||||||||||||||||||||||||
Income (Loss) | Average Shares | EPS | Income (Loss) | Shares | EPS | |||||||||||||||||||
Net income attributable to Trinity
Industries, Inc. |
$ | 52.9 | $ | 24.2 | ||||||||||||||||||||
Unvested restricted share participation |
(1.7 | ) | (0.9 | ) | ||||||||||||||||||||
Net income attributable to Trinity
Industries, Inc. basic |
51.2 | 77.8 | $ | 0.66 | 23.3 | 77.1 | $ | 0.30 | ||||||||||||||||
Effect of dilutive securities: |
||||||||||||||||||||||||
Stock options |
| 0.3 | | 0.3 | ||||||||||||||||||||
Net income attributable to Trinity
Industries, Inc. diluted |
$ | 51.2 | 78.1 | $ | 0.66 | $ | 23.3 | 77.4 | $ | 0.30 | ||||||||||||||
Trinity Industries, Inc.
Reconciliation of EBITDA
(in millions)
(unaudited)
EBITDA is defined as income (loss) from continuing operations plus interest expense, income taxes, and depreciation and amortization including goodwill impairment charges. EBITDA is not a calculation based on generally accepted accounting principles. The amounts included in the EBITDA calculation, however, are derived from amounts included in the historical statements of operations data. In addition, EBITDA should not be considered as an alternative to net income or operating income as an indicator of our operating performance, or as an alternative to operating cash flows as a measure of liquidity. We believe EBITDA assists investors in comparing a companys performance on a consistent basis without regard to depreciation and amortization, which can vary significantly depending upon many factors. However, the EBITDA measure presented in this press release may not always be comparable to similarly titled measures by other companies due to differences in the components of the calculation.
Three Months Ended March 31, | ||||||||
2012 | 2011 | |||||||
Net income |
$ | 52.3 | $ | 25.6 | ||||
Add: |
||||||||
Interest expense |
47.9 | 44.5 | ||||||
Provision for income taxes |
25.6 | 16.2 | ||||||
Depreciation and amortization expense |
49.1 | 47.6 | ||||||
Earnings before interest expense, income
taxes, and depreciation and amortization
expense |
$ | 174.9 | $ | 133.9 | ||||
-END -
Exhibit 99.2
Trinity Industries, Inc.
Earnings Release Conference Call
Comments by Gail M. Peck
Vice President and Treasurer
April 26, 2012
Thank you, Toya. Good morning everyone. Welcome to the Trinity Industries first quarter 2012 results conference call. Im Gail Peck, Vice President and Treasurer of Trinity. Thank you for joining us today.
Following the introduction you will hear from Tim Wallace our Chairman, Chief Executive Officer and President. After Tim, our business group leaders will provide overviews of the businesses within their respective groups. Our speakers are:
Steve Menzies, Senior Vice President and Group President of the Rail and Railcar Leasing Groups;
Antonio Carrillo, Senior Vice President and Group President of the Energy Equipment Group; and
Bill McWhirter, Senior Vice President and Group President of the Construction Products and Inland Barge Groups
Following their comments, James Perry, our Senior Vice President and Chief Financial Officer, will provide the financial summary and guidance. We will then move to the Q&A session. Mary Henderson, our Vice President and Chief Accounting Officer, is also in the room with us today. I will now turn the call over to Tim Wallace for his comments.
Tim
Steve
Antonio
Bill
James
Q&A Session
That concludes todays conference call. A replay of this call will be available after one oclock eastern standard time today through midnight on May 3, 2012. The access number is (402) 220-2669. Also the replay will be available on the website located at www.trin.net. We look forward to visiting with you again on our next conference call. Thank you for joining us this morning.
Exhibit 99.3
Trinity Industries, Inc.
Earnings Release Conference Call
Comments of Tim Wallace
Chairman, Chief Executive Officer, and President
April 26, 2012
Thank you Gail, and good morning everyone.
We are off to a good start in 2012. The momentum in our railcar and barge businesses generated operating leverage that enhanced our financial performance during the first quarter. From an overall company perspective, I am pleased with the way our businesses are leveraging off our multi-industry manufacturing platform to pursue growth opportunities in response to market demand. Our railcar, barge, and containers businesses continue to benefit from the shale oil and gas exploration and production activities and are well-positioned to capitalize as opportunities surface in the future.
Demand for railcars in North America remained consistent during the first quarter. Steve will provide additional information on the railcar market during his comments. Our railcar leasing business continues to perform well by obtaining higher lease rates and securing longer-term leases. This trend continues to build a solid base of leasing revenues and profit.
Our inland barge business obtained a good mix of orders in the first quarter that extended production into 2013. Demand was driven by several factors, including a need to transport oil associated with shale exploration and production.
Our Energy Equipment Group reported a loss during the lst quarter. The results were due to lingering issues associated with challenges in our wind tower manufacturing business. The wind energy industry as a whole is continuing to work through a number of fundamental issues that are affecting demand for wind towers. We continue to dedicate management time and company resources to enhancing our manufacturing platform for wind towers so that it can respond effectively to changes in customer demand. While the financial performance reflects a lack of improvement thus far, I believe we are making important strides to improve in this area. Antonio will provide more information in his remarks.
Our Construction Products businesses are building momentum as they enter the early part of the construction season. Our Highway Products businesses continue to experience inconsistency in demand for products due to the lack of long-term federal highway funding. We expect levels of uncertainty associated with highway funding will persist until our political leaders pass a multi-year transportation bill.
Overall, our first quarter performance reflects the strength of our multi-industry platform, the benefits provided by our market leadership positions, our commitment to operational excellence and the talents and hard work of our people. The trend lines in most of our businesses indicate another solid year of growth for the company.
I will now turn it over to Steve Menzies for his comments.
Exhibit 99.4
Trinity Industries, Inc.
Earnings Release Conference Call
Comments of Steve Menzies
Senior Vice President and Group President
Rail and Railcar Leasing Groups
April 26, 2012
Thank you, Tim, Good morning!
First quarter operating results of the Rail Group and Leasing Group reflect improved operating leverage amid steady railcar demand. Our Rail Group posted an operating profit of $40.1 million during the 1st quarter of 2012, a 16% increase compared to the 4th quarter of 2011 and a 330% increase compared to the 1st quarter of 2011. The dollar value of our railcar order backlog remained virtually unchanged at the end of the 1st quarter despite a slight decline in total units. Our Leasing Group posted a 22% increase in operating profit year-over-year when compared to the 1st quarter of 2011, due principally to higher lease renewal rates and profit from lease portfolio sales. Lease rate and renewal trends remained favorable.
Industry demand for new railcars continued at a steady pace during the 1st quarter. Industry orders for new railcars totaled 12,500 and were driven primarily by orders for railcars needed to transport crude oil from shale and tar sands fields and orders for general service freight cars by several Class I railroads, lessors and TTX. In the long run, we believe demand for rail transportation to support oil and gas exploration and production activities will continue to generate additional new railcar orders. Near term, the current price and abundant supply levels of natural gas has negatively impacted drilling thus reducing demand for small covered hoppers used to transport frac sand and proppants. At current oil price levels, we expect oil drilling and the demand for railcars to transport crude oil will remain steady. The energy sector overall is an exciting growth opportunity for our businesses and we are monitoring industry developments and their downstream impacts closely.
The abundance of low price natural gas is benefiting North American chemical producers. Several major chemical companies have announced plans to build new plants or significantly expand existing facilities in North America. Fertilizer producers are benefitting from low natural gas prices and record spring crop plantings. Oil and gas drilling is also impacting chemical usage. As a result, domestic chemical production is growing, driving orders for new railcars to transport chemical products.
Low natural gas prices have, however, depressed demand for coal cars as utilities switch to natural gas for power generation. This is only partially offset by slightly improving coal exports. As a result, we have seen an increase in the idle North American fleet principally related to an increase in coal cars placed in storage.
Orders for flat cars for autoracks were also placed during the quarter as automobile production is projected to rise and the existing autorack fleet is fully deployed. Replacement orders for box cars are, in part, related to increased auto parts shipments. Orders for railcars to transport steel are also driven by automobile production increases.
During the 1st quarter, TrinityRail received orders for approximately 3,255 new railcars, including autoracks. Our 1st quarter orders were primarily for tank and covered hopper railcars from industrial shippers and general service freight cars and autoracks from railroads. TrinityRails railcar order backlog was 27,245 railcars at the end of the 1st quarter down 6% from the end of the 4th quarter of 2011. The dollar value of the backlog remained stable during the quarter at approximately $2.6 billion. 1st quarter orders included higher value railcars and benefitted from increasing prices on certain railcars in high demand. Approximately 21% of the units in our order backlog are for customers of our leasing business.
We were successful at securing orders during the 1st quarter that extend our current production lines, for some railcar types, into the second half of 2013. We continue to focus on specific customer orders that optimize production at our facilities currently in operation, minimize line changeovers and reflect favorable pricing levels. Our 1st quarter orders should position us to achieve further operating leverage improvement.
We delivered approximately 5,010 railcars during the 1st quarter compared to the approximately 2,240 railcars we delivered in the first quarter of 2011, and 5,100 railcars in the 4th quarter of 2011. The steep slope of our production ramp-up during the last four quarters has been challenging. During the 1st quarter of 2012, we experienced solid improvement in our operating leverage as our labor force is now more experienced and we have stabilized our railcar production rate. This is evidenced by the increase in our margin during the 1st quarter while operating at consistent production levels. For the year 2012, we are projecting delivery of approximately 19,000-20,000 new railcars. As a point of comparison, we delivered 14,065 railcars in 2011 and 4,750 railcars in 2010. We remain flexible in our 2012 and 2013 production plans and the company has the ability to re-allocate production capacity from other product lines as sustainable demand opportunities warrant. While we have the ability to increase railcar production and major components suppliers have now ramped up, the industry may face further constraints from the availability of some specialty steel and components required for certain railcars.
We added approximately 1,554 new railcars to our wholly-owned lease fleet portfolio during the 1st quarter bringing our total lease fleet portfolio, including TRIP, to approximately 70,000 railcars.
Lease renewal trends are favorable. A high percentage of our lessees are renewing their contracts, which lowers remarketing expenses and minimizes out- of-service time for the fleet. This has had a positive impact on leasing operating margins, however, the timing of regulatory testing and maintenance can be uneven and sometimes difficult to project. Renewal lease rates are also showing steady increases. Lease rates on new railcars are at attractive investment levels. We expect this trend to continue while existing railcars are in tight supply and new railcar production backlogs remain extended.
We continue to see an active secondary market for the sale of leased railcars from our portfolio. During the 1st quarter of 2012, we sold another group of leased railcars from our portfolio. We expect additional lease portfolio sales during the next few quarters assuming conditions continue to support an active secondary market.
In summary, railcar market conditions remain favorable although driven, in large part, by demand from oil and gas exploration and production activities and increasing automotive production. We continue to see steady order inquiries. We are closely monitoring developments in these industries to better understand factors that may influence future demand for railcars. During the 1st quarter, we saw meaningful improvements in our operating leverage. As we continue through 2012, our operations team will continue to focus on improving efficiencies while keeping production levels stable for the next few quarters. We expect to continue to see the benefits of a strong lease pricing environment and an active secondary market supporting lease portfolio sales.
Ill now turn it over to Antonio.
Exhibit 99.5
Trinity Industries, Inc.
Earnings Release Conference Call
Comments by Antonio Carrillo
Senior Vice President and Group President
Energy Equipment Group
April 26, 2012
Thank you, Steve and good morning everyone.
The Energy Equipment Groups financial results continue to reflect the challenges faced by our wind tower manufacturing business. The wind energy industry as a whole has changed dramatically during the past few years. Today, wind towers are rapidly evolving as our customers seek more efficient designs that will better compete with other energy sources. Demand for additional wind energy is at a low point. As a result, domestic wind tower manufacturing capacity exceeds demand.
During the past year, our performance fell short of my expectations as our facilities transitioned
between 80- and 100-meter wind towers. At this point, I believe the majority of our transition issues are behind us. However, there are still some fundamental, market-related challenges ahead. Federal wind energy production incentives expire at the end of 2012. This is creating uncertainty that has brought orders for wind towers to low levels.
Going forward, our production flexibility is key. Wind tower manufacturers must be able to produce a wide variety of tower designs, and quickly shift facilities from one design to another, and from one customer to another. Trinitys multi-industry platform provides additional flexibility. It allows us to shift some wind tower manufacturing capacity to other Trinity products in greater demand.
As an example of the flexibility we have in our system, one of our wind tower facilities made a quick changeover during the first quarter from manufacturing wind towers to tank containers for the oil and gas industry. It has since gone back to making wind towers for a different customer. These rapid plant conversions speak to the progress we are making in adapting to the challenges of the wind energy environment.
During the years when demand for wind towers was high, we entered into long term contracts that continue to provide a foundation of work. However, as long as wind tower demand is low, we will remain flexible to accommodate our customers production volumes and product mix. In the current operating environment, which has shorter production runs and more product conversions, it will be difficult to obtain operating leverage. We are highly focused on returning the Energy segment to profitability.
I am pleased with the continued growth of the other businesses within the Energy Equipment Group. They have done a great job taking advantage of opportunities for new products and expanding production capacity in response to market demand.
I will now turn it over to Bill for his comments.
Exhibit 99.6
Trinity Industries, Inc.
Earnings Release Conference Call
Comments of William McWhirter,
Senior Vice President and Group President
Construction Products and Inland Barge Groups
April 26, 2012
Thank you Antonio and good morning everyone.
Our Construction Products Group continued to perform well during the 1st quarter, producing an operating profit of $10.8 million compared to $8.3 million during the same quarter a year ago. This 30% improvement was driven by our efforts during the past two years to reposition the mix of product lines within this segment.
I continue to see more opportunities to grow and reshape the segment in the coming year. From a head-wind perspective, we are seeing some slowdown in demand for highway products related to the lack of a multi-year federal highway bill.
I am confident that were positioned to perform well in the current market climate. Should Congress approve a multi-year federal highway bill, I believe we will be in a strong position to respond to increased demand
Moving to our Inland Barge Group:
For the 1st quarter, our barge business had sales of $169 million and reported operating profit of $30.0 million. $3.4 million of this operating profit was a one-time gain related to the sale of leased barges to third parties. The net result was $26.6 million in operating profit, as compared with $21.7 million in the same quarter of 2011.
Barge movement of petroleum products, chemicals and export coal continues to be strong. During the quarter, our sales team did a great job bringing in $187 million in new orders. These new orders reflect a very nice mix of dry and liquid barges. At quarters end, our barge backlog reached $512 million.
Overall, I continue to be pleased with the performance of both our Barge and Construction Products Groups.
At this time, I will turn the presentation over to James.
Exhibit 99.7
Trinity Industries, Inc.
Earnings Release Conference Call
Comments of James E. Perry
Senior Vice President and Chief Financial Officer
April 26, 2012
Thank you Bill, and good morning everyone.
My comments relate primarily to the first quarter of 2012. Our form 10-Q will be filed later today. For the first quarter of 2012, Trinity reported earnings of 66 cents per common diluted share, a 120% improvement over last years first quarter earnings of 30 cents per common diluted share.
Revenues for the first quarter of 2012 increased 46% year-over-year to $925 million, as a result of increased railcar and barge shipments, continued growth in our railcar leasing operations, and strategic acquisitions made last year by our Highway Products businesses.
Trinitys operating profit increased 43% during the first quarter to $122 million, and our EBITDA increased 31% to $175 million compared to the first quarter last year. The reconciliation of EBITDA was provided in our press release yesterday.
The Rail Group recorded a 113% increase in revenues in the first quarter of 2012 compared to the same quarter last year as railcar deliveries more than doubled to 5,010 railcars during the quarter. Operating profit for the group increased to $40 million during the first quarter compared to $9 million a year ago. The increase in revenue and profits for the quarter reflects the strength in the recovery of railcar demand, and TrinityRails successful ramp up of current production capacity to meet demand and achieve operating leverage.
During the first quarter, the Leasing Group reported growth of 6% in its leasing and management services revenues compared to the first quarter of 2011. Total operating profit for the Leasing Group grew to $67 million, including $7 million of gains from railcar sales from the lease fleet, compared to operating profit of $55 million during the first quarter last year, including $1 million of gains from railcar sales from the fleet. The lease fleet continues to experience improved utilization and higher rental rates compared to last year. In addition, due to the size and strength of the lease fleet, this group continues to successfully pursue opportunities to sell railcars from the lease fleet in the secondary market that align with its portfolio objectives, which include maximizing returns, diversifying the lease fleet, and managing investment levels.
Our Inland Barge Group had another positive quarter in terms of operating performance. Revenues were 23% higher in the first quarter compared to the same quarter last year. The Groups operating profit was $30 million compared to $22 million in the same quarter last year. Operating profit for the first quarter of 2012 included a $3.4 million net gain from the sale of 15 barges included in property, plant and equipment that were previously leased to third-party customers. There are only two barges remaining in the barge lease fleet at this time. Excluding the gain from the sale of barges in the first quarter, the Barge Group delivered an operating margin of 15.7%.
The Energy Equipment Group incurred an operating loss of approximately $4 million during the first quarter on revenues of $125 million. This compares to an operating profit of $11 million on revenues of $119 million last year. Revenues for the first quarter of this year increased compared to the same period last year as a result of higher shipments of tank containers, tank heads, and utility structures, partially offset by lower volumes of wind towers. The operating loss resulted from transition issues arising from changes in product mix in our wind towers business, as well as competitive pricing on wind towers.
The Construction Products Group continued to perform well in a challenging construction environment, generating first quarter revenues that grew by 16% over the same quarter last year. Operating profit grew from $8 million in the first quarter of 2011 to $11 million in the first quarter this year. This segments performance continues to reflect the positive impacts of strategic portfolio realignments resulting from the acquisitions in the Highway Products space, and asset repositioning to align with demand for construction materials produced by our Concrete and Aggregates businesses.
In summary, this years first quarter results from our core operations reflect a significant improvement over the same period last year.
At quarter-end, our balance of unrestricted cash totaled $305 million. When this cash is combin
ed with the available capacity under our corporate revolver and Trinitys leasing warehouse facility, we had approximately $850 million of available liquidity at the end of the quarter, which positions us to capitalize on business opportunities as they arise.
I will now discuss our forward-looking guidance. For the second quarter of 2012, we expect earnings per common diluted share for the Company to be between 70 and 75 cents. For the full year, we expect earnings per common diluted share of between $2.55 and $2.70.
We anticipate that the Rail Group will report revenues of between $500 and $525 million during the second quarter with an operating margin of between 9% and 11%. We expect railcar manufacturing to deliver railcars to our leasing company that will result in an elimination of between $85 and $100 million in consolidated revenues and between 5 and 7 cents of earnings per share in the second quarter. This compares to an elimination of $123 million in consolidated revenues and 8 cents of earnings per share in the first quarter. For the full year, we expect our net leasing capital expenditures to be between $300 and $350 million.
Included in our guidance for the second quarter is approximately 3 to 4 cents per share of gains from the sale of railcars from our lease fleet. Our annual guidance includes approximately 12 to 14 cents per share from lease fleet sales gains. The level of railcar sale activity from the lease portfolio is difficult to accurately project, given the opportunistic nature of the transactions in the secondary market. But the secondary market remains receptive to sales from the fleet so we continue to seek opportunities to conduct such transactions.
Inland Barge revenues are expected to be between $160 and $170 million in the second quarter with an operating margin in the range of 15% to 17%.
Our wind towers business continues to be focused on enhancing its ability to transition efficiently between wind tower models when customers product needs change. This business is making progress in these areas, and we are focused on improving the results in this segment. However, we remain unable to provide detailed financial guidance until we have more clarity about the exact timing of these business developments.
We will continue to evaluate market conditions as we deploy capital to promote the growth of our businesses. Our current plan calls for an investment of $100 to $125 million of capital expenditures in our manufacturing businesses during 2012.
As a multi-industry company, we have a lot of moving variables in our businesses and in the external environment. Our results for the second quarter and full-year earnings for 2012 will depend on a number of factors, including: the orders we receive that will fill in the remaining open slots in our rail and barge backlogs; the operating leverage we can achieve in our rail and barge businesses as we operate at this elevated level of production; our ability to conduct attractive sales from our railcar lease fleet in the secondary market; uncertainty around a long-term highway bill; weather conditions for our construction businesses, and continued challenges in our wind towers business.
In addition as we reported, we benefitted from a lower effective tax rate of 32.9% in the first quarter due, to the settlement of certain tax audits. For the remaining three quarters of 2012, we expect our tax rate to be at a more normalized level of between 37 and 38%.
Overall we expect to have a solid 2012 with substantial growth over 2011s results, as reflected in our guidance.
Our operator will now prepare us for the question and answer session.
Q&A Session