Trinity Industries, Inc. (NYSE:TRN) today announced earnings
results for the first quarter ended March 31, 2016, including
the following significant highlights:
- Quarterly revenues and net income of
$1.2 billion and $97.2 million, respectively
- Quarterly earnings per common diluted
share of $0.64, including $0.03 per common diluted share related to
sales of leased railcars
- Company repurchases approximately 2.1
million shares of common stock at a cost of $34.7 million under its
share repurchase authorization during the quarter
- Company now anticipates full year 2016
earnings of between $2.00 and $2.30 per common diluted share
Consolidated Results
Trinity Industries, Inc. reported net income attributable to
Trinity stockholders of $97.2 million, or $0.64 per common diluted
share, for the first quarter ended March 31, 2016. Net income
for the same quarter of 2015 was $180.2 million, or $1.13 per
common diluted share. Revenues for the first quarter of 2016
totaled $1.19 billion compared to revenues of $1.63 billion for the
same quarter of 2015.
“Trinity's first quarter financial results reflect the
deterioration in demand for a number of our products,” said Timothy
R. Wallace, Trinity’s Chairman, CEO and President. “Even though our
financial results declined quarter over quarter and year over year,
I am pleased with our Company's ability to make orderly transitions
when market conditions shift. Our people did a good job
transitioning from high production levels in the fourth quarter to
much lower levels in the first quarter.”
Mr. Wallace added, “We are continuing to reposition and
streamline our operations based on current demand levels. Trinity
is a much stronger company today than in previous market
downturns.”
Business Group Results
In the first quarter of 2016, the Rail Group reported revenues
of $846.9 million compared to revenues of $1,144.5 million in the
first quarter of 2015. Operating profit for the Rail Group was
$157.2 million in the first quarter of 2016 compared to operating
profit of $212.7 million in the first quarter of 2015. The decrease
in revenues and profit was primarily due to lower deliveries and
changes in product mix. The Rail Group shipped 7,145 railcars and
received orders for 1,620 railcars during the first quarter. The
Rail Group had a backlog of $4.72 billion as of March 31,
2016, representing 43,360 railcars, compared to a backlog of $5.40
billion as of December 31, 2015, representing 48,885 railcars.
At the end of the first quarter, the backlog of railcar orders
extends into 2020.
The Railcar Leasing and Management Services Group ("Leasing
Group") reported leasing and management revenues of $170.5 million
in the first quarter of 2016 compared to $166.1 million in the
first quarter of 2015 primarily due to net fleet additions. In
addition, the Group recognized revenues of $8.0 million during the
first quarter from sales of railcars from the lease fleet owned for
one year or less compared to $78.7 million in the first quarter of
2015. Proceeds from the sale of railcars from the lease fleet owned
for more than one year at the time of sale are not included in
revenue and totaled $6.7 million in the first quarter of 2016 and
$78.5 million in the first quarter of 2015. Operating profit for
this Group was $74.2 million in the first quarter of 2016 compared
to operating profit of $122.8 million in the first quarter of 2015.
The decrease in operating profit was primarily due to a decrease in
the volume of sales of railcars from the lease fleet and higher
maintenance expense. Supplemental information for the Leasing Group
is provided in the accompanying tables.
The Inland Barge Group reported revenues of $110.8 million for
the first quarter of 2016 compared to revenues of $153.1 million in
the first quarter of 2015. Operating profit for this Group was
$12.6 million in the first quarter of 2016 compared to $27.5
million in the first quarter of 2015. The decrease in revenues and
operating profit compared to the same quarter last year was
primarily due to lower tank barge deliveries. As of March 31,
2016, the Inland Barge Group had a backlog of $318.7 million
compared to a backlog of $416.0 million as of December 31,
2015.
The Energy Equipment Group reported revenues of $273.4 million
in the first quarter of 2016 compared to revenues of $300.1 million
in the same quarter of 2015. Operating profit for the first quarter
of 2016 increased slightly to $37.4 million compared to $37.2
million in the same quarter last year. The decrease in revenues
compared to the same quarter last year was due to lower delivery
volumes in the utility structures business and other product lines
partially offset by higher delivery volumes in the wind towers
business. The backlog for wind towers as of March 31, 2016 was
$263.4 million compared to a backlog of $371.3 million as of
December 31, 2015.
Revenues in the Construction Products Group were $124.9 million
in the first quarter of 2016 compared to revenues of $112.8 million
in the first quarter of 2015. The Group recorded an operating
profit of $15.9 million in the first quarter of 2016 compared to an
operating profit of $8.3 million in the first quarter of 2015.
Revenues and operating profit increased compared to the same
quarter last year primarily as a result of higher delivery volumes
in both the Aggregates and Highway Products businesses.
Cash and Liquidity
At March 31, 2016, the Company had cash, cash equivalents,
and short-term marketable securities of $835.6 million. When
combined with capacity under committed credit facilities, the
Company had approximately $2.1 billion of available liquidity at
the end of the first quarter.
Share Repurchase
The Company repurchased 2,070,600 shares of common stock at a
cost of $34.7 million under its share repurchase authorization
during the quarter, leaving $215.4 million remaining under its
current authorization through December 31, 2017.
Earnings Guidance for
2016
For the full year of 2016, the Company anticipates earnings per
common diluted share of between $2.00 and $2.30 compared to its
previous guidance of between $2.00 and $2.40 per share. The
Company’s 2016 earnings guidance is based on the assumption that
current market conditions will continue throughout the year. The
reduction in the upper end of the earnings guidance range is due to
a lower expected level of sales of leased railcars than previously
provided.
The Company's current earnings guidance incorporates the sales
of between $300 million and $400 million of leased railcars during
2016 compared to its previous guidance of approximately $500
million. In the current market environment, the Company is closely
evaluating the current returns it may earn from selling portfolios
of leased railcars compared to retaining the leased railcars in its
wholly-owned lease fleet. During the first quarter, proceeds from
the sales of leased railcars totaled $22.8 million and resulted in
$0.03 per common diluted share of earnings.
Actual results in 2016 may differ from present expectations and
could be impacted by a number of factors including, among others,
fluctuations in prices of commodities that our customers produce
and transport; expenses related to current and potential
litigation; the operating leverage and efficiencies that can be
achieved by the Company's manufacturing businesses; the costs
associated with aligning manufacturing production capacity with
demand; the level of sales and profitability of manufacturing
railcars; the level of profitability associated with the sales of
leased railcars; the dilutive impact of the convertible notes
related to changes in the Company's stock price; and the impact of
weather conditions on our operations and delivery schedules.
Conference Call
Trinity will hold a conference call at 11:00 a.m. Eastern on
April 22, 2016 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 and select the Conference
Calls menu link. An audio replay may be accessed through the
Company’s website or by dialing (402) 220-7220 until 11:59 p.m.
Eastern on April 29, 2016.
Trinity Industries, Inc., headquartered in Dallas, Texas, is a
diversified industrial company that owns market-leading businesses
providing products and services to the energy, transportation,
chemical, 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 Trinity's estimates,
expectations, beliefs, intentions or strategies for the future, and
the assumptions underlying these forward-looking statements.
Trinity uses the words “anticipates,” “assumes,” “believes,”
“estimates,” “expects,” “intends,” “forecasts,” “may,” “will,”
“should,” “guidance,” “outlook,” 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 “Risk
Factors” and “Forward-Looking Statements” in the Company's Annual
Report on Form 10-K for the most recent fiscal year.
Trinity Industries, Inc. Condensed
Consolidated Income Statements
(in millions, except per share
amounts)
(unaudited)
Three Months EndedMarch 31, 2016
2015 Revenues $ 1,187.9 $ 1,626.7 Operating costs:
Cost of revenues 889.9 1,211.1 Selling, engineering, and
administrative expenses 96.5 98.3 Gains on dispositions of
property: Net gains on lease fleet sales (2.1 ) (14.9 ) Other
0.2 (0.9 ) 984.5 1,293.6
Operating profit 203.4 333.1 Interest expense, net 44.6 51.0
Other, net (0.7 ) (2.3 ) Income before income taxes
159.5 284.4 Provision for income taxes 57.4
95.4 Net income 102.1 189.0 Net income attributable to
noncontrolling interest 4.9 8.8 Net
income attributable to Trinity Industries, Inc. $ 97.2 $
180.2 Net income attributable to Trinity Industries,
Inc. per common share: Basic $ 0.64 $ 1.15 Diluted $ 0.64 $ 1.13
Weighted average number of shares outstanding: Basic 148.3 151.2
Diluted 148.3 154.3
Trinity is required to utilize the two-class method of
accounting when calculating earnings per share as a result of
unvested restricted shares that have non-forfeitable rights to
dividends and are, therefore, considered to be a participating
security. The unvested restricted shares are excluded from the
weighted average number of shares outstanding for the purposes of
determining earnings per share. The two-class method results in a
lower earnings per share than is calculated from the face of the
income statement. See Earnings Per Share Calculation table
below.
Trinity Industries, Inc. Condensed
Segment Data
(in millions)
(unaudited)
Three Months EndedMarch 31, Revenues:
2016 2015 Rail Group $ 846.9 $ 1,144.5
Construction Products Group 124.9 112.8 Inland Barge Group 110.8
153.1 Energy Equipment Group 273.4 300.1 Railcar Leasing and
Management Services Group 178.5 244.8 All Other 21.9
28.1 Segment Totals before Eliminations 1,556.4
1,983.4 Eliminations - lease subsidiary (283.3 ) (259.0 )
Eliminations - other (85.2 ) (97.7 ) Consolidated
Total $ 1,187.9 $ 1,626.7
Three Months
EndedMarch 31, Operating profit (loss):
2016 2015 Rail Group $ 157.2 $ 212.7 Construction
Products Group 15.9 8.3 Inland Barge Group 12.6 27.5 Energy
Equipment Group 37.4 37.2 Railcar Leasing and Management Services
Group 74.2 122.8 All Other (5.1 ) (1.5 ) Segment
Totals before Eliminations and Corporate Expenses 292.2 407.0
Corporate (24.7 ) (26.7 ) Eliminations - lease subsidiary (65.5 )
(48.3 ) Eliminations - other 1.4 1.1
Consolidated Total $ 203.4 $ 333.1
Trinity Industries, Inc. Leasing Group
Condensed Results of Operations
(unaudited)
Three Months EndedMarch 31, 2016
2015 ($ in millions) Revenues: Leasing and
management
$
170.5
$ 166.1 Sales of railcars owned one year or less at the time of
sale 8.0 78.7 Total revenues $ 178.5 $
244.8 Operating profit: Leasing and management $ 69.8 $ 82.3
Railcar sales: Railcars owned one year or less at the time of sale
2.3 25.6 Railcars owned more than one year at the time of sale
2.1 14.9 Total operating profit $ 74.2
$ 122.8 Operating profit margin: Leasing and management 40.9 % 49.5
% Railcar sales * * Total operating profit margin 41.6 % 50.2 %
Selected expense information(1): Depreciation $ 37.4 $ 34.1
Maintenance $ 31.6 $ 19.9 Rent $ 9.5 $ 11.8 Interest $ 31.8 $ 37.9
March 31,2016 December 31,2015
Leasing portfolio information: Portfolio size (number of railcars)
79,055 76,765 Portfolio utilization 97.2 % 97.7 %
Three
Months Ended March 31, 2016 2015 (in
millions) Proceeds from sales of leased railcars: Leasing
Group: Railcars owned one year or less at the time of sale $ 8.0 $
78.7 Railcars owned more than one year at the time of sale 6.7 78.5
Rail Group 8.1 15.2 $ 22.8 $
172.4
* Not meaningful
(1) Depreciation, maintenance, and rent expense are components
of operating profit. Amortization of deferred profit on railcars
sold from the Rail Group to the Leasing Group is included in the
operating profit of the Leasing Group resulting in the recognition
of depreciation expense based on the Company's original
manufacturing cost of the railcars. Interest expense is not a
component of operating profit and includes the effect of
hedges.
Trinity Industries, Inc.
Condensed Consolidated Balance Sheets
(in millions)
(unaudited)
March 31,2016 December 31,2015
Cash and cash equivalents $ 635.7 $ 786.0 Short-term marketable
securities 199.9 84.9 Receivables, net of allowance 375.0 369.9
Income tax receivable 21.9 94.9 Inventories 936.1 943.1 Restricted
cash 185.6 195.8 Net property, plant, and equipment 5,523.5 5,348.0
Goodwill 754.7 753.8 Other assets 277.3 309.5 $
8,909.7 $ 8,885.9 Accounts payable $ 223.8 $ 216.8 Accrued
liabilities 452.3 529.6 Debt, net of unamortized discount of $40.0
and $44.2 3,171.0 3,195.4 Deferred income 25.8 27.1 Deferred income
taxes 813.5 752.2 Other liabilities 117.3 116.1 Stockholders'
equity 4,106.0 4,048.7 $ 8,909.7 $ 8,885.9
Trinity Industries, Inc.
Additional Balance Sheet Information
(in millions)
(unaudited)
March 31,2016 December 31,2015
Property, Plant, and Equipment Corporate/Manufacturing:
Property, plant, and equipment $ 1,870.8 $ 1,861.5 Accumulated
depreciation (920.3 ) (905.4 ) 950.5
956.1 Leasing: Wholly-owned subsidiaries: Machinery
and other 10.7 10.7 Equipment on lease 4,042.7 3,763.5 Accumulated
depreciation (673.3 ) (647.9 ) 3,380.1
3,126.3 Partially-owned subsidiaries: Equipment on
lease 2,309.1 2,307.7 Accumulated depreciation (385.4 )
(369.1 ) 1,923.7 1,938.6
Net deferred profit on railcars sold to the Leasing Group
(730.8 ) (673.0 ) $ 5,523.5 $ 5,348.0
Trinity Industries, Inc.
Additional Balance Sheet Information
(in millions)
(unaudited)
March 31,2016 December 31,2015
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 $39.6 and $43.8 409.8 405.6 Other 0.5
0.5 809.9 805.7 Less: unamortized debt issuance costs
(4.4 ) (4.7 ) 805.5 801.0
Leasing: Wholly-owned subsidiaries: Recourse: Capital lease
obligations, net of unamortized debt issuance costs of $0.1 and
$0.1 34.9 35.7 34.9
35.7 Non-recourse: Secured railcar equipment notes
672.3 679.5 Warehouse facility 259.3 264.3
931.6 943.8 Less: unamortized debt issuance costs
(14.1 ) (15.1 ) 917.5 928.7
Partially-owned subsidiaries - Non-recourse: Secured railcar
equipment notes 1,429.5 1,446.9 Less: unamortized debt issuance
costs (16.4 ) (16.9 ) 1,413.1
1,430.0 $ 3,171.0 $ 3,195.4
Trinity Industries, Inc.
Additional Balance Sheet Information
($ in millions)
(unaudited)
March 31,2016 December 31,2015
Leasing Debt Summary Total Recourse Debt $ 34.9 $ 35.7 Total
Non-Recourse Debt 2,330.6 2,358.7 $
2,365.5 $ 2,394.4 Total Leasing Debt Wholly-owned
subsidiaries $ 952.4 $ 964.4 Partially-owned subsidiaries
1,413.1 1,430.0 $ 2,365.5 $ 2,394.4
Equipment on Lease(1) Wholly-owned subsidiaries $ 3,380.1 $
3,126.3 Partially-owned subsidiaries 1,923.7
1,938.6 $ 5,303.8 $ 5,064.9 Total Leasing Debt
as a % of Equipment on Lease Wholly-owned subsidiaries 28.2 % 30.8
% Partially-owned subsidiaries 73.5 % 73.8 % Combined 44.6 % 47.3 %
(1) Excludes net deferred profit on railcars sold to the Leasing
Group.
Trinity Industries, Inc. Condensed
Consolidated Cash Flow Statements
(in millions)
(unaudited)
Three Months EndedMarch 31, 2016
2015 Operating activities: Net income $ 102.1
$ 189.0 Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 69.4 64.0 Net
gains on railcar lease fleet sales owned more than one year at the
time of sale (2.1 ) (14.9 ) Other 76.8 20.7 Changes in assets and
liabilities: (Increase) decrease in receivables 67.9 (76.6 )
(Increase) decrease in inventories 7.0 31.7 Increase (decrease) in
accounts payable and accrued liabilities (66.3 ) (99.3 ) Other
31.3 (5.2 ) Net cash provided by operating
activities 286.1 109.4
Investing
activities: Proceeds from railcar lease fleet sales owned more
than one year at the time of sale 6.7 78.5 Proceeds from
dispositions of property 1.1 1.6 Capital expenditures - leasing,
net of sold lease fleet railcars owned one year or less with a net
cost of $5.7 and $53.1 (222.8 ) (283.4 ) Capital expenditures -
manufacturing and other (26.3 ) (53.5 ) (Increase) decrease in
short-term marketable securities (115.0 ) (25.0 ) Acquisitions —
(45.5 ) Other 0.2 4.2 Net cash required
by investing activities (356.1 ) (323.1 )
Financing activities: Payments to retire debt (30.4 ) (70.9
) Shares repurchased (34.7 ) (18.0 ) Dividends paid to common
shareholders (16.8 ) (15.6 ) Purchase of shares to satisfy employee
tax on vested stock (0.1 ) (0.4 ) Distributions to noncontrolling
interest (6.8 ) (11.3 ) Decrease in restricted cash 10.2 33.0 Other
(1.7 ) (0.3 ) Net cash (required) provided by
financing activities (80.3 ) (83.5 ) Net (decrease)
increase in cash and cash equivalents (150.3 ) (297.2 ) Cash and
cash equivalents at beginning of period 786.0
887.9 Cash and cash equivalents at end of period $ 635.7
$ 590.7
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
EndedMarch 31, 2016 Three Months EndedMarch
31, 2015 Income
AverageShares
EPS Income
AverageShares
EPS Net income attributable to Trinity Industries,
Inc. $ 97.2 $ 180.2 Unvested restricted share participation
(2.9 ) (5.7 ) Net income attributable to Trinity Industries,
Inc. - basic 94.3 148.3 $ 0.64 174.5 151.2 $ 1.15 Effect of
dilutive securities: Convertible subordinated notes —
— 0.1 3.1 Net income attributable to Trinity
Industries, Inc. - diluted $ 94.3 148.3 $ 0.64 $ 174.6
154.3 $ 1.13
Trinity Industries, Inc.Reconciliation of
EBITDA(in millions)(unaudited)
“EBITDA” is defined as net income 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 are, however, derived from amounts included in the
historical consolidated 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
company’s 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 EndedMarch 31,
2016 2015 Net income $ 102.1 $ 189.0
Add: Interest expense 45.8 51.5 Provision for income taxes 57.4
95.4 Depreciation and amortization expense 69.4 64.0
Earnings before interest expense, income taxes, and depreciation
and amortization expense $ 274.7 $ 399.9
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version on businesswire.com: http://www.businesswire.com/news/home/20160421006652/en/
Trinity Industries, Inc.Investor Contact:Jessica Greiner,
214-631-4420Director of Investor RelationsorMedia
Contact:Jack Todd, 214-589-8909Vice President, Public
Affairs
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