Trinity Industries (TRN) 24 Oct 192019 Q3 Earnings call transcript

Before we get started, let me remind you that today’s conference call contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995 and includes statements as to estimates, expectations, intentions and predictions of future financial performance. Statements that are not historical facts are forward-looking. Participants are directed to Trinity’s Form 10-K and other SEC filings for a description of certain of the business issues and risks, a change in any of which could cause the actual results or outcomes to differ materially from those expressed in the forward-looking statements.

Good day and welcome to the Third Quarter Results Conference Call. [Operator Instructions] Please be advised, today’s program may be recorded. pleasure the my Jessica over now Greiner. is to program turn to It

may You begin.

Good and of morning, joining Aaron. financial to you, Thank everyone, quarter third I’m Communications. welcome XXXX Greiner, Trinity and Industries’ us conference thank Jessica Vice Relations President call. Investor results We you today. for you

President Chief Lovett, Senior earnings President; followed and Vice our begin our Vice will Chief will Officer and call with Financial Melendy prepared provide highlights Eric Executive Marchetto, of remarks President and We the conference from Senior and President Group Tim TrinityRail. Wallace, Officer, by outlook. financial

the Products, will Brian room team, we Madison, us are room us with Officer; also Following Chief Mauer, Management and will part Chief session. Accounting Trinity also a the of Vice Q&A Officer, Paul Vice and Q&A of and Legal in Leasing Senior the the Teachout, session. remarks President with prepared be President are Services; today from today. the TrinityRail move and Sarah of President leadership and McDowell, Steve and the in to President

my now to It’s to call turn Tim. over pleasure the

lease economic to Thank growth financial results due and third of earnings Trinity’s quarter several railcar. you, improved deliveries year-over-year in our at increase to good lower continued Demand Jessica, share revenues significantly the of increased morning, grow everyone. reflects fleet railcar new XX% quarter doubling its of due and financial the results. per The and levels and our TrinityRail’s improve ability to third factors. during

highly railcar accordingly is when team being originating leases. responding management Our selective is new and

challenges. schedule delivery quarter impacted third various by our addition, In was

transition a during of next year. into first with production new next topic railcar our our our the helps result, this to team of – of a worked a remarks. lower this specifics customers of to his on the production This half level out will worked for shift Eric portion smooth As provide year year. the railcar through

navigate successfully to market Trinity through is the demand. positioned in shifts

highly long-term experienced steady responding – predictable both level at a with business short- associated cycles. cash to in with and Railcar leases company are Leasing steady long-term flow. revenues cash predictable with the We our a flow The recurring of provide

management of streamlining in structure. been successful our capital addition, team and cost our Trinity’s lowering In operating has

progress lie our We’re optimizing during making sheet. provide information another Railcar. about great will the just financing ahead in portfolio company. We our of her completed balance for optimistic opportunities comments. Melendy that this the about I’m successful of

situations, times with During we have of and navigated our company my variety expanded successfully years multiple our significantly a XX transformed Trinity, competencies. wide through

fleet lease railcar Our is the now largest in America. of one North

team the Our door opinion, and to collaborative wide and create range value shareholders. my new customers open capable. strengths management our of In possibilities our a to is for highly

my desire my confident a as Board of The honor well-qualified and both CEO. this search great to our candidates and a XX Board will my company month, our current initiated progressing as Trinity’s search well. Early necessary identify to Board has facilitate includes into been role to is internal I will external continue informed to The retirement. last of select I’m a I It’s smooth transition next in CEO strong, CEO. and privilege years. be long for transition.

shaping is strategy supports in of The Board committed vision Trinity’s robust role a that to up fulfilling. products I infrastructure America. services grew bright has important an has and of of values. being within been very team career future. which North a country’s My and a played premier emphasizes collaboration, at other professionalism, culture, Trinity’s has our Trinity key and aspects executing provider our Trinity flexibility, and integrity railcar in management

customers, and I treasure watching a suppliers flourish. Trinity for forward dedicated and the of helped to about our who company. company employees, always will to I They’re craftsmanship quality and I’m for our employees. relationship appreciation grow vision Trinity, I and deep our excellence stakeholders. the our be all passionate a other our very product. grateful people have look great and I the of continue has make to a and stakeholders. our have Trinity great legacy, our

comments. now turn will to Eric for the call over I conference his

of or Thank for you, remained Throughout during Tim, above levels. in third TrinityRail railcars year-over-year has replacement everyone. the and had strong quarter. at good America morning, financial performance much demand North XXXX,

production headwinds trade In disputes will into However, market. creating continued rail in drive we for rail in on believe near a drag new traffic declines these and be industrial conditions railcars demand unfavorable are and ongoing railcars equipment storage. volumes, slowing the the term, existing

portions broader that petrochemical and railcar American are of strong American see market shift a trend. new the North to fuels interest Canada are few likely said, to the despite fleet. in Investments capacity, North railcars to Mexico from existing opportunities in markets With and new demand the to attrition and likely for ongoing U.S. drive

deliberate we the as we very adjust pursue being environment. are our railcar as to softer a for platform We business demand

quarter, shuttered portfolio TrinityRail’s and year-over-year. major while and assign given pleased of the products slipped portfolio, sequentially renew railcars operations of of was utilization filings with fire continued of product to the market of reflect Railcar which TrinityRail’s a Chapter leased services. I’m our third higher financial a differentiating manufacturing two and the mix our railcars of in quarter a platform to customers’ favorable railcar our leased of XX during growth one results competitive ability result deliveries primarily company. with that the due environment

XXXX. rates increase in our a lease year-over-year expect We lease portfolio experience to in slight average

diversification fleet. Our lease the renewal team railcar our job of managing risk has exposure a and done good

growth. lease of anticipate from fleet of ahead in on is we a higher current approximately our renewal. portfolio pricing, expiring rates next for to of average below and rates Based year. XXXX, operations are revenue will as up than As look We less leasing XX% market profit the XXXX lease result be X%

softer in also our manufacturing are railcar a positioning We response to footprint market.

leading XX,XXX. the XXXX expectations XXXX. to in X,XXX in industry the delivery for delivered Industry and received approximately XXXX to quarter, for have orders In orders railcars third lower the declined order pace relative

quarter for with railcars X,XXX across five associated during and the end markets, orders secured are commercial the team Our economics. pleased we our

As a trend half worked in this our operational to we and as transition XXXX. the third expansion our plan XXXX. these well for our quarter, in shift disruptions pace facilitate a demand our for delays expected production remainder railcar this tempered have result the as with capacity year, customers of the change smoother deliveries This plan first into to will of of production

The range. will work low compliance market be with outlook fleet our XXXX, railcars railcar business or tanker industry insights, XX% expect on X,XXX and for from be is to XXXX our solid events. lease backlog X,XXX for Approximately scheduled of of to which originated lease of our current mid-XX,XXX Based deliver deliveries to is approximately we in backlog approximately our agreements. the maintenance foreseeable a on and modification additional services delivered to sight line in

times Our successfully platform and market has cycles, to the numerous demand through we’re changing proactively ability railcar to conditions. responding navigate demonstrated

We have industry built the cycle. the TrinityRail business platform to railcar throughout outperform the

the and railcar Our end-user business maintain to of equipment. direct engagement and customer is model our with designed foster

all to flow throughout maintenance, an and support steady, market and providing design levels and railcar services, field predictable recurring from administration engineering the cycle. insight unique leasing Our cash are generating our important and platform, of and part of to revenue

sales which the business from generated a cost overall cost a generate for including valuable cash platform lease the have equipment leasing maintenance channel operations, lower include growth a of and to lease railcar fleet of portfolio. tax-advantaged asset can SG&A. commercial and flow number financial significant following; The of A a base; relative in organic investment lower originate ownership synergy cost-advantaged in our benefits, lower of

in cash relative return railcar higher level to cycle. on a and generation overall We expect cost investment through significant of platform flow lower a result the

Our differentiate teams to our services. of services. the products railcar platform our working and products vision premier is are of Trinity’s and to actively Across organization, provider

to a has approximately transportation Our and to The and manner. railcars, TrinityRail expectations loyalty with expand of transportation. XXX,XXX and million and the presence room in the build value fleet industrial innovation With through railcar rail are our X.X an proposition this customer railcars. deliberate in market, shippers we’ll do American owned railcar of returns-focused enhancing managed North by the over that encompasses improve ecosphere experience technology customer

integrated single the railcar to source a work to that solutions usage the of customer. and ownership with deliver provide given depth any all of providers, cycle Our offer life platform customers of railcar of together platform teams. railcar that any, equipment optimize Few can and TrinityRail’s breadth our businesses service their equipment and and if

Our platform add grow leases our offering, our returns. with to high-margin a long-term base revenue provides integrate our services recurring and enhance traditional new from existing product of that unique services ability

deliver. We are to built

over it our to financial and performance guidance. turn now discuss to I’ll Melendy

everyone. morning, good Thank you, Eric, and

performance on third my our XXXX begin financial review I’ll quickly I Before prepared and highlights announced remarks priorities release press our the in outlook, yesterday. quarter

in per mix well profit railcars sales due to with favorable year-over-year operating our of a higher as manufacturing product The deliveries railcar and in fleet company revenue, leased and reported growth significant railcar as earnings share, growth lease our from overall portfolio. primarily

were deliveries going our as into weakening demand than expectation railcar Eric XXXX. market to challenges the lower quarter Third mentioned well due as

the responded has and the remainder year first XXXX. replanned of half of production schedules our team for the Our and

cost due to in spend contributed is reduction to optimization expense performance corporate XX% down our during $XX or also Year-to-date, litigation-related A quarter. efforts. corporate-related financial and the expenses million lower

the XXXX be company lease operating XX% investment believe before As will $XXX has year-to-date, the before close. of million flow We investments or lease of market respectively. of around cap cash quarter, our and million of generated $XXX yesterday’s fleet for the third cash of flow as million generation and $XXX end fleet approximately free free

performance demand scale quarter ability shareholders. our and of to leverage to operations platform meet strong generating our third Trinity’s customer Our is for integrated while results indicative

making lowering return to accretive of steady to investments for capital and progress key amounts capital our returning of of XXXX good are on capital, including financial our meaningful shareholders. priorities deploying and We cost

rated our fleet XX% more spin-off. optimizing increased lowered Subsequent our sheet for rate issued our lease loan of Trinity Trinity under million weighted A quarter-end, interest our By of an and balance to of cost blended capital X.XX% to securitization. a existing This value company, to wholly-owned than asset-backed average notes yielded by railcar issuance $XXX leasing has XX%. ratio the railcar of the since

we capital can As LTV cost achieve lower of for target we stay further companies. our we fleet railcar other of leasing XX%, believe the competitive to XX% near-term with leased to wholly-owned our

$XX in businesses platforms. including third net in fleet quarter, of made we number maintenance our the our approximately million expenditures and During lease for investment a investments manufacturing $XX of million and a capital

in Trinity’s return million with we expect Our fleet lease accretive which year-to-date be on the to approximately returns, solid investment totals to $XXX equity.

the $XXX during million. $XXX bringing Trinity of repurchases year-to-date third our million share also completed approximately to quarter, total approximately

or cap. results shareholders. and When October Our meaningfully around capability XX% a of share quarterly of yesterday’s enables integrated we growth in cash dividend the generation be market return and repurchases closing capital paid at capital of combining Trinity strength of high-return price. $XXX in as flow to to dividend have combined will The cash returned year-to-date dividends, yield end rail X.X% our million shareholders substantial and to of opportunities platform of the invest and

All pre-tax are our improve deliver a management’s aligned to target to average earnings of goal with year-end these XXXX and XXXX. of XX% three-year ROE between accomplishments by XX% to range growth and

end our financial plan is the pre-tax improvement spin-off This X.X% X.X%. a following of last X% first the for three-year pre-tax ROE of the ROE Our significant XXXX, track between at from forecast this year. a for is and of year on

Moving you’ve slowing from global and and declining trade Tim been now issues. railroad demand uncertainty from impacted has production continued further guidance, volumes to railcar industrial as and related Eric, to heard

business going market has for team a our slower year. management and into demand responded Our has accordingly next positioned

between EPS which a added Trinity EPS result update our impact in operations excluding growth be lower continuing in now fleet, of press issued quarter, railcar restructuring of XX% $X.XX, This expects $X.XX results in between of and our XX% of to potential guidance annual some the lease deliveries narrowed in charge. from year-over-year. any yesterday. and XXXX the we quarter our to were release fourth of designated As range third the

$XXX and revenue Our to $XXX Management the million year. Services as Group and lease the Railcar the of for is Leasing of between railcar now for fleet result timing be million expected expectations deliveries a to

million and We year. for to operating be for $XXX between segment the million $XXX profit expect this

million. railcars We have leased Vehicle, increased market of partners to sales secondary from $XXX expectations RIV, the approximately Investment Railcar our and proceeds for to

for grow A servicing younger Our and RIV partner fine-tuning our RIV sales cars partners continue from to purchasing that portfolios. express railcars as railcars leased sales relationship always difficult in the with some to manage our year-to-date predict the to have well we capital. reminder in margin when our fleet therefore partners, The fee, their keeps interest railcar the railcar we timing we of on is RIV as a management sell reflects managed of Trinity customer fleet our our fleet for assets the to on sold lease railcar diversification. the lease from done maturity lease portfolio

Another we the to leases type accounted fleet sales which lease GAAP. from earnings be in reminder, have are sales our as required in accordance guidance, for with

EPS year-to-date. this expect an this million We attributed fleet revenue our total to sales range guidance lease to from incorporates $XXX on assumptions. for leasing gain being add segment the sales the be these The car of with recognized $XX additional year in and million revenue the profit will

Moving the to Products Rail Group.

impacted XXXX. Products to to delivery peripheral align $X of with the businesses billion approximately as costs to is in guidance railcar highway also will go-forward from well our by impacted product an revenue XX,XXX the operating approximately development segment for Rail with associated new quarter is X%. performance expenses fourth be other as be to the structure. railcars operating our in all seasonality segment by are efforts. profit during We This range Operating margin revising transition expected some with now business XX,XXX

continue Our and work our to operating right-size corporate structure corporate teams to costs. business and optimize collaboratively

we range lowered million to corporate $XXX As have result, a expense million. again to $XXX guidance our

level separation of the transition Arcosa expenses. as As costs well elevated include our stranded spin-off legal expenses reminder, an and related a highway-related corporate as and to of

finalized. we our these release does a in as any write-downs cost we fourth underutilized transition efforts range costs. quarter the as include incur press restructuring employee a manufacturing in and Again, fourth not result the XXXX to footprint charges optimization In highlighted decisions EPS for potential our charge of yesterday, restructuring specific are guidance quarter asset may our

and railcar transfer pricing we These segments, business eliminations to inter-company manufactured reflect respectively. profit the Due leasing products the line primarily profit items lowering $X.X between with and lease $XXX to additions market-based to our our associated railcars. for guidance fleet, billion fewer and revenue the are for and revenue for railcar newly million, transactions

portfolio to net now total lease fleet lease additions of million $XXX from sales fewer fewer we a our fleet. of secondary Regarding with investment level investment, expect the additions, planned million railcar fleet market and $XXX higher

expected expenditures to to capital to leasing manufacturing capital $XXX expenditures, million year-end. addition by our In project planned corporate our revised and forecast given progress $XXX million is

market Looking of the into financial too demand. of as is any XXXX, provide result that lower it early competitiveness specific the increased factors economic to guidance well as given railcar uncertainty pricing affect as a the

anticipate fleet we revenue result mentioned, however lease production from XXXX a market-driven railcar year, Eric profit operations as headwinds for will affecting expectation have higher of be As we leasing growth. our next in and

We in goals organization. and are both significant also cost savings our corporate defining for initiatives our businesses

working result expect cash improve lease of our we a to before lower the as business. primarily For XXXX, needs free capital fleet year-over-year, flow investment in

Board leadership refine plan In Industries for and closely priorities and strategic been working our forward. establish the our team initiatives with to has going key Trinity closing,

platform the industry. model purpose, vision, our and to priorities stem Our we belief TrinityRail’s strategic in aim And for results from railcar is our the best to compete it. demonstrate that

is team to our for macroeconomic respond prepared demand the business while value headwinds a our opportunity to TrinityRail’s our business, platform. market in evolve the demonstrate create excited leadership a railcar of and We’re factors of refine lower number integrated XXXX and to about

advantages platform upside by predictable performance leases our while maximize to high built model a focused from to generating on including market flows to the integrated combined return shareholder capital elements meaningful levers This control the throughout the in and value. to tailwinds within invest improvement. can ROE railcar XXXX, have We Trinity management’s demand our cash that financial cycle These financial long-term of outperform meaningfully capturing was lease rail enable returning of substantial business in also of number to fleet shareholders. opportunities growth provide

We’ll Operator, instructions. now will our session. listeners give you transition the Q&A the please into

our [Operator Instructions] Bascome first with will Certainly. we And Susquehanna. take Majors from question

the the here. hire Tim, timeline Trinity was the for both on Yes. my at congrats on retirement. questions looming Board’s for for really what’s you who is to going the share hoping find CEO maybe business effectively, to that generation? lifetime I next that you Thanks on skill-sets Thank into perspective and trying focused lead the been could taking you’re next family when you’re a the you.

your and to Okay. is you, here appreciate I comments question. response your Thank my

This very selection initiated say a I’m gives I’d responding is the the in the this Board time. for process external is said, publicly about from of the of independent comment process I’ve and process we’re role the to announcement search there very at opportunity to establishing CEO and Chairman time the request and an and a really CEO situation. I’m when candidates both with going priority. us high as As I’m by a is participating supportive be considering internal Board our process. entire really and an to we will well made selection refresh search The is the highly Overall, process. this. the pleased

We that as talk new CEO introduce candidates in wide public. about and we’re of looking the and the person have we we’ll identify variety a to it for the more competencies a

is completed, that to someone your enough. something once takes would eventually on down Board remain is that’s Fair And where intent the or over? as step you

I lot the attitude so the for the Trinity company of company, advisory can, public there have will will that and to Arcosa assist that be of being as to is had involved. same vision. person the position CEO lead create a company important and the a able I I no full the its of watching me Yes. I becomes shareholder assume value and and position My on CEO has I soon intent and fulfillment that when to of the as team the takes do together plan it’s an position I fulfill will role manage be longer seeing the that watching but Board not actively the as as as pull and the company CEO, direct and ultimately shareholders a as

and personal involved not basis. be a company going the have on long-term a in active so plan I life actively to very So I’m

look for Thank the and Tim, now we’ll thank guys we to forward and best Board. you you next best the perspective detailed that and you. the and update you thoughtful from wish

Thank you.

question our will Cowen. And with from Matt we next take Elkott

Your line is open.

Good Tim, look guys at you the morning. XX% about Thank upcoming you, If I last congratulations you have on industry retirement. have XX%. about years, averaged orders. This five year-to-date, the of

at and I the manufacturing expecting is you So that a footprint look a focus you’re fleet lease to also when reduce manufacturing see on as this and more this into on strategy underutilized of write-downs more transition lessor? growing assets, your

Eric, want take that? you to

that. take I’ll Matt, Sure.

would I not inquiries I – go our footprint, and no, XXX,XXX think so is our through that have all opportunities we – railcar. before manufacturing – to commercial we railcar have reduce our of to don’t but fleet So another lease do our that opportunities, is the our railcar I fleet strategy reality build XXX,XXX

cycle. are We lease asset think assets. to more is owner. when did not – result we’re going the manufacturing efficient comes write-downs, a it railcar a with operate a large older, platform I as a fleet them last the So in builder like this specifically, those non-operating to, more act The get that you

we’ve didn’t those in our went production with future. elsewhere expanded for facilities really through so As we the a and our need existing it, facilities see footprint we

and that facilities the took of kept start, we some we of go we is in are Also, been This and Trinity we legacy But a years. some the of responsibility facilities. let talked facilities facilities have a some older idled – have and Arcosa for for clean number ahead about kept intentionally Tim.

Thank you very insights. much. Good

into cube Just you much XXXX hopper within current XXXX? and utilization question as pressure given In freights, see and fleet that fleet, covered the we how more lease one on more overall, have the the on for we exit lease the also environment small should fleet. tough

our where have and this good next year rates certainly, significant We have headwind, that and year. these do lease lease we line our are in we expirations current changes on types, think we expirations, And those next rates, We which about not car of year both X% modest. mentioned our at see is a I see remaining of look the utilization. a expect the – I sight very into as on to

at, We’re expirations. we’re – work exposures so working out fully our to into keep fleet we’re any to as certain smooth It’s markets and comfortable we our very employed. with comfortable very where hard we’re And very to – not we go XXXX renewal

freight that the think than by rate much be So, it’s the Eric, have different between now underlying you change utilization XXXX, and XXXX into does or end what environment not materially you of now? will if not plausible the that

Yes.

– expect I a think railcars more at do but American I in comments, we storage, our as fleet that it’s expect still relatively – mentioned good we enter to level. the North in

that fleet You the ago, cube year XX% XX% And about small still hoppers. talked XX% utilized from over few A – or range. fairly was into years But Today, about historical utilized. the it’s ago, it’s well standpoint. it’s a gotten about a was utilized. covered

to drop. that fleet standpoint, But it XX% low in – it compared that feels big is XXs XX% XX% than because it’s isn’t a the from the is overall different. So worse to

it’s want put just to lower, that I So pace, dramatic out but been is the of not decline fallen that that, the it’s level while has unprecedented. there terms to in

Thank much. very Great. you

we with And Stephens. Justin to will next go Long

morning. first retirement the to Good and question. you my Thanks. on the best. with Tim, start wish Maybe congrats

from EPS? mentioned you on together everything think cost year some do a grow up an some just lease items the standpoint, you are gave you You in or next and manufacturing for pressure some there business, actions for is a underway. few arrow railcar directional arrow We’ll will the When fleet clearly XXXX. down color but have put

EPS. expect, a delivery would say overall, morning, it that Melendy. we would Justin. It’s Good the deliveries I especially down that, be given the would say, – I

and think not on However, mentioned control, decline take a such levers those EPS be are I will would you year this management’s that much there number in expect. would as action demonstrated that we’ve we of the as I that

does sense? give you that So a good

does. that to for this railcar that, And on sales Obviously, That’s forward. ask was I year following up Yes, about increased. guidance helpful. wanted going maybe the

you elevated We’re business kind to of pretty I averages. key give you is going relative any us from be forward, it’s whether year. XXXX part sense they’ve also for what but then at railcar this And just or been around sales of historical level expect the a will XX% And going on forward, railcar a basis? sales, the know there normalized on margins this a could

Thank curious think forward. good be that’s still to place you a going Just directionally if you.

our point out car we be be RIV want want as more be we the sales and continue business grow to And partners’ what I’m back the car to Trinity primarily signal to but more to company, XXXX, of really regards did set and it’s is, part that’s we programmatic. our of investment that prepared of driven a will new million today sales, to from with million, our for $XXX not railcar grow I by our car guidance specific with So capital. – normal desire lease investment our a also we increase program to and sales we $XXX want to part demand. fleet fleet, as we as to partner we do lease sales said our railcar way to we

you that $XXX to at and And year moderating fleet car $XXX million gives were XXXX. so about we said sales of a where the any thoughts our see given as of we years like specifics sales general be million something much, grow believe time, in don’t would for so kind lease that what we I in without targeting. our I

Speaking that is specifically the One of are what that margin, is. factors age the margin to cars. impact there of the number a

type cars, portfolio the are those cars value sell is the in Another of assets. we that as that well of that on market the

RIV our partners in margin be would what that similar would So to to expect to a I historically. we you’ve say seen range sales

time. great. I Okay, the helpful. That’s really appreciate

Gordon we And Research. will Johnson to next GLJ go with

Hey, guys.

Good morning.

How that. Sorry about it Hey. is going?

if the phone. Just you I for division to enough addressing investment the thinks first some community assets question. and the how on just plan do the for leasing taking division issues credit the guys, and management not, guess wanted you gives railcar if between earnings that question Thanks the you there, that? from selling with I guys know manufacturing

as communicated plan is integrated to monetize to our our servicing the customer assets have an ability at consider – of assets. have mentioned keeping opportunity relationship We that same we I the of those platform while the and it time advantage the those

offered we do the opportunity fee, only take not cars of are So management to those to platform. the receive and services we for that a have we keep customer by advantages our relationship, continue

our earnings that goal those as So of flow-generating ability. railcar and our is programmatic will more cash be considered that by our part making sales more and predictable

you then And there’s heard helpful. been I’m about guys concerns. that’s Okay, PSR. some sure have

your the these some shippers Have kind least And complaining, heard what’s you concerns we’ve guys of guess concerns. at view of, heard some there? recent I and

is take Sure, Gordon. Marchetto. that. Eric This I’ll

certainly first So topic. big – a is let me PSR

and transportation. step Rail back and rail just and the talk we’ll get into is then transportation the Let the mode PSR. greenest cost transportation lowest me about of still land-based

cars which off the So that get starts is will right-size railcars. so and time, it implements of assets shipper cars either or they in line an where to on then and railroad for certainly – with when the railcars inherent that’s lines on add their growth, first and last of year the they’re and will traffic have Rail impact PSR, try will and that their has be there they do had form have to the going thing is they at When an in look to railroad around the cars. advantage. demand turn declined

we’re operating for more now the of in growth years, The first not railroad last efficient and long-term. growth heard From talked on the they real so for railroads to that’s good the a years, efficient few that modal which in share. that more more about a path. that hearing PSR business good traffic down system, system, are be would few news is specifically time going We’ve our driving an certainly, and network positive will lead operating

demurrage related mentioned to XX% fleet. and is the about of railroad PSR. Demurrage fees other You equipment, incurred which on is

PSR cars, impact business service principally expense the the cars, points community. is or that’s It’s more spot customers. of private have of with flat which a be little where an the to and ancillary covered would has certainly typically generated is that’s on impact so and with railcars, which impact agricultural shippers, does Generally, the railroad point other provided also It no unplanned cars. leasing fees frustration supply of this for There little hoppers so on service, grain one shippers. railcars likes cars a it expenses, frustration been going charge, operating more box like less in is well unplanned

Thanks Excellent. enjoy for and And the congratulations Tim, the retirement. questions.

you. Thank

And Allison go we next Fargo. will Poliniak Wells to with

Hi guys, morning. good

Good morning.

congrats all, First of Tim.

comments everyone’s that. to I go on echoed Just want just back.

I asked question think about Matt the lease.

mean rates thoughts, versus that here fleet. how but number? lease down are utilization in your on to they like take I from XXXX, entering stable, that the get rates I would managing are if your thinking versus just step duration about that over utilization know Just philosophy you fairly a

managing Allison. to is that’s terms storage earnings. Sure of art, be once negative railcars in it event in I mean is Eric. always tends a the is This lessor no go that

longer-term lower to a make, and are, by are As what lease determined go short on if going rates have those they rates assets falling, and to whether lease yields if on the be want to you what those it’s you there are terms yield are we generally than are conscious decision will in go accordingly. that basis, certainly a you type a and deal type. on we are manage that higher, car they deal then That’s cost to something and vary by you locked car If of of shorter. very capital

bit a little Great. I operational and just on a delays. And challenges then that go for you to expansion bit. the capacity unusual back little want to seemed Trinity. just It expand Can

What QX? operator. it in continue going great a on been always and that’s is was to something You’ve going there

ahead about talked it. railcars both on start add So have the Generally, mix that to those previous – calls, once freight Allison, Paul investments capacity side. I on We we interior started in aligned the high remainder tank as of year very cars we’ve had quarter this coatings with requiring made and I’ll cars, the we in a We’ve that that color lining we space. we’re of this we capacity return, if the car built and in linings our of had missed side expand any year. can and

that cost that of and in expected. additional we getting throughput the So terms had units challenges

Allison, this is Paul.

reasons we bit year this took those on of had time. major getting that. projects were on Unfortunately, outside delayed a give that done color to our Just and unit various more on projects those predicated were projects really two capital for little our deliveries We both on us control.

in And delays to impacted ability historically those cars our deliver our into this out, as project coming So in units product pointed the of really line third the had quarter. we high Eric year. number mix

thanks. That’s Great, helpful.

Brooklier Matt our take Buckingham question Research. will with we final And from

open. is line Your

pending your on congratulations Tim, morning. good and retirement. thanks Hey,

anticipated margins question. So I Group volumes We as the bit negatively some follow we’re that into up, and think contributed lower know well, wanted to quarter, there? as looking quarter fourth about Rail Group that are are, color do they in we Allison’s Rail inefficiencies by margins where provide but impacted a just think to little the margins are directionally obviously are on same, you maybe do

this Melendy. Hi is Matt,

would fourth guided full XXXX would that math from would So of for say year a what the is to work. bit segment so be be and quarter make for improvement year a quarter I X% margin the that our to approximate full for I the third and little

two I think think there kind about you it. in as as diverging it, businesses then your about trends guys is of And

year. put are some expectations to be also deliveries that company going going and leasing side that’s you where things on business to grow down within think pressure year Group, are the the improve profitability but hopefully you’re of doing your some the message is profitability next Next can and on specific you fleet Rail

be too talk could the you to that fleet year right going grow doesn’t now some you market gives you that factors of what next your lease favorable? in you’re seem know if able that are So just to a to contributing conviction

Eric. Sure. that. take I’ll This is

over growth fleet we of speaks itself, have, – of rate the for the the track terms Our our XX is in in lease some record of that growth years. kind last odd

our so broad product confident. our Our unprecedented, ability platform, originate market line, in our platform leases, to I’m is our visibility quite

and able our to accretive continue earnings are will be We that to leases to perform. to originate be able we will

backlog. industry have low We The mid XX,XXX to XX,XXX line XXs healthy deliveries. railcars in we XXs a of sight terms to on has industry expect – of or still

for railcars typically it’s leased railcars continues healthy to would in we demand through they that, with is we industry or we – railcars, of been still provide that’s relatively through next so as while them the trends, them operating to to year And deliveries, going good provided for this grow expect So be lower and Nothing there. other leases. provide terms trend PSR a to be has the whether change shippers industry. and expect it

Yes. This Tim. is

experienced Another that periods of consideration, picked during companies. or want thing to other demand reasons in that time to that there the railcars you’re shippers variety and this different sell a those sell historically, we leasing want for we and periods lot railcars nice a railcars taking people that is during assets up of and slower are

Correct.

to doing the is you the the So there share the here, opportunity believe things portfolios weaker grow in being potentially you you’ve be which I to I will guess is growth bit past market think guess kind the enable additive a cars little given you to message things should and your of acquire and story? environment done

Yes, all of that.

we’re year-in at that. you – by and we’re up business Our our and platform is that’s thing railcar when change the can whether the in count look you is it’s do. or to built on improving and to year-over-year us measure a used our We what down whether returns manufacturing, to cycles that’s perform going throughout year-out

finally, gotten a could that maybe bit little that pricing more expectations little has did Can in car a into Thanks. has And across new pressure on guess how get much railcars directionally industry that it new the see in heard someone is call I arms you on mention as talk just some trying to pricing market into XXXX? bit changed environment the we weaker, a incremental I then correctly. the think I competitive if pricing next I’m of terms if to my we your going around move year. and

coming When expirations at in and it looked these Sure. and modest rates, decline year, lease against and so seen compare in lease down as look impact. on new at you lease declines steel prices, new in current rates. we’ve at When car prices asset we prices material an existing has come plate – rates see raw a at you lease you somewhat this an probably we rates that steel is both When Eric next our some coil have fallen, pricing, down, again. scrap that’s pricing slightly, of quarter looked the impact has all modest looked more

the on in took characterize for I’d margins Margins, Those always we the orders third that good. quarter sale. is

So from that standpoint, it’s good.

bit. come lease car a little have down so seen rates, new rates Our lease certainly assets we’ve fallen, rates new on interest

they pricing, the a probably a on see and – there range generally in in As lease railcars a subleasing can you bit is result, that rates. railcars do little this impact of market have downward we shippers wider some subleasing when start generally get like periods

Matt, are you can there? the to question. next go Operator, we

do comes question. Barger we Steve have from with KeyBanc additional And Certainly. It an Capital Markets.

the the or for manufacturing? candidates of and setting up the its outside leg broadly you rail considering about as Tim, world Board machinery think are from you outside more Trinity thanks. the Hey, people history, external next for from

Yes.

Great.

just is we’re very– open-minded. the very Well, Board

We take people the that they and as provide recruiters leadership they’re come who as organization have and some looking think superior of internal candidate. and charge in well here for

very So open-minded. they are

before cash year, be free would any environment improve Is there thought. Melendy flow to where lease investment you And you you. Thank positive it. next free any including investment? Got fleet but fleet cash said you flow will envision expect

We this a on point, Steve. really haven’t fine point put that of it to

the As investment will before mentioned, cash I improvement driver be that working next is capital. business flow fleet lease primary of year consuming for less our free

Right. investment then dictate just will of environment what fleet is? the the lease the size And

leverage to fleet that, we positive flow you of if can investment as be have we XXXX. think and still about of financing lease and the before lease would cash our free net financing, leverage investment, do lease as fleet net financing Well, for – the would we that the after to that grow net fleet

Got it. one. one And last

deploy about look and into price talk the conditions higher ways in we Can maybe the something dividend shares Your a than buyback the current has special or capital, buying a weaker XXXX program so far share this considered year price. average Board thoughts has your else? you as to about other industry

to we in time, to shares. increased, more tried and share as and we are buyback share price repurchase operating have it quarter, declined continue and and repurchases regularly opportunistic we’ve the share third programmatic this be increased you we so At in to very expect an our saw programmatically

routinely the to topic this to of us there to as hasn’t about but As is decisions the to such appropriate flexible far discussion will for a the this been our return time, deployment Board’s market is as as shareholders. that make discussed we with something anything gives any Board dividend, other special the and shareholders capital opportunity stay capital it’s that a consideration at

you. Got it. Thank

you. Thank

program to for conclude the does I’d And Jessica like remarks. any turn the this Q&A Greiner to closing session. over back

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