Trinity Industries Inc (TRN)

[Enterprising Investor]

Trinity Industries, Inc. Announces First Quarter 2016 Results (4/21/16)

DALLAS--(BUSINESS WIRE)--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 [phone] 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.

http://www.businesswire.com/news/home/20160421006652/en/Trinity-Industries-Announces-Quarter-2016-Results