Trinity Industries Inc (TRN)

[Enterprising Investor]

Trinity Industries, Inc. Announces Second Quarter 2016 Results (7/21/16)

DALLAS--(BUSINESS WIRE)--Trinity Industries, Inc. (NYSE:TRN) today announced earnings results for the three and six months ended June 30, 2016, including the following significant highlights:

Quarterly revenues and net income of $1.2 billion and $94.6 million, respectively

• Quarterly earnings per common diluted share of $0.62 per share

• Receipt of $940 million order for the manufacture of wind towers expected to deliver during a three-year period beginning in 2017

• Anticipated 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 $94.6 million, or $0.62 per common diluted share, for the second quarter ended June 30, 2016. Net income for the same quarter of 2015 was $212.0 million, or $1.33 per common diluted share. Revenues for the second quarter of 2016 totaled $1.18 billion compared to revenues of $1.68 billion for the same quarter of 2015.

"Trinity’s consolidated second quarter financial results are in line with our expectations and continue to reflect the Company’s ability to make orderly transitions when market conditions shift," said Timothy R. Wallace, Trinity's Chairman, CEO, and President. "The current level of uncertainty in the industrial economy is continuing to impact the pace of new order volumes in some of our businesses. We remain highly focused on repositioning, streamlining, and aligning our manufacturing operations with current demand levels."

Mr. Wallace added, "I am pleased with the $940 million wind tower order we received during the second quarter, which brings our backlog in this business to over $1.1 billion. The level of demand for our wind towers is favorable, and our backlog now extends through 2019, partially offsetting some of the uncertainty in other areas of our business."

Business Group Results

In the second quarter of 2016, the Rail Group reported revenues of $693.2 million compared to revenues of $1,110.3 million in the second quarter of 2015. Operating profit for the Rail Group was $88.8 million in the second quarter of 2016 compared to operating profit of $227.7 million in the second quarter of 2015. The decrease in revenues and profit was primarily due to lower railcar deliveries and changes in product mix. The Rail Group shipped 6,065 railcars and received orders for 2,910 railcars during the second quarter. The Rail Group had a backlog of $4.29 billion as of June 30, 2016, representing 40,205 railcars, compared to a backlog of $4.72 billion as of March 31, 2016, representing 43,360 railcars. At the end of the second quarter, the Rail Group's orders extended into 2020. The order and backlog figures for the second quarter of 2016 reflect a cancellation of 50 railcars resulting from a customer bankruptcy.

The Railcar Leasing and Management Services Group reported total revenues of $296.6 million in the second quarter of 2016 compared to total revenues of $238.1 million in the same quarter of 2015. Included in the total revenues for the Group were leasing and management operating revenues of $178.5 million, which were substantially unchanged from the second quarter of 2015, as well as revenues of $118.1 million from sales of railcars from the lease fleet owned for one year or less compared to $59.9 million in the second quarter of 2015. Total proceeds from the sale of leased railcars from the lease fleet, including the sale of railcars owned for more than one year that are not included in revenue, were $149.1 million for the second quarter compared with $148.8 million in the second quarter of 2015. Operating profit for this Group was $117.7 million in the second quarter of 2016 compared to operating profit of $137.7 million in the second quarter of 2015. The decrease in operating profit was primarily due to higher maintenance expense for the lease fleet and lower profit from the sales of leased railcars. Supplemental information for the Leasing Group is provided in the accompanying tables.

The Inland Barge Group reported revenues of $118.3 million for the second quarter of 2016 compared to revenues of $187.8 million in the second quarter of 2015. Operating profit for this Group was $14.3 million in the second quarter of 2016 compared to $40.7 million in the second 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 June 30, 2016, the Inland Barge Group had a backlog of $251.0 million compared to a backlog of $318.7 million as of March 31, 2016.

The Energy Equipment Group reported revenues of $240.6 million in the second quarter of 2016 compared to revenues of $281.9 million in the same quarter of 2015. 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. Operating profit for the second quarter of 2016 was $34.9 million compared to $36.3 million in the same quarter last year primarily due to lower profit from our utility structures and other businesses partially offset by higher profit in our wind towers business. With the previously announced wind tower order of $940 million, the backlog for wind towers as of June 30, 2016 was $1.1 billion compared to a backlog of $263.4 million as of March 31, 2016.

The Construction Products Group reported revenues of $145.8 million in the second quarter of 2016 compared to revenues of $151.3 million in the second quarter of 2015. Operating profit for the second quarter of 2016 was $21.5 million compared to operating profit of $21.3 million in the second quarter of 2015. Revenues decreased compared to the same quarter last year primarily as a result of the sale of the assets of the Group's galvanizing business in June 2015. Operating profit for the Group was substantially unchanged in the second quarter of 2016 as improved manufacturing efficiencies in our Highway Products business were primarily offset by the $7.8 million gain from the sale of assets of the Group's galvanizing business reported in the second quarter of 2015.

Cash and Liquidity

At June 30, 2016, the Company had cash, cash equivalents, and short-term marketable securities of $814.0 million. When combined with capacity under committed credit facilities, the Company had approximately $2.1 billion of available liquidity at the end of the second quarter.

Share Repurchase

There were no shares repurchased during the second quarter of 2016 under the Company's current share repurchase authorization. Year to date, the Company repurchased 2,070,600 shares of common stock at a cost of $34.7 million 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, unchanged from its previous guidance. 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 July 22, 2016 to discuss its second 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 July 29, 2016.

Company Description

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.

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