Trinity Industries (TRN) 22 Apr 212021 Q1 Earnings call transcript

Good day and welcome to the Trinity Industries' First Quarter Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note today's event is being recorded.

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. historical forward-looking. not are that facts are Statements Participants SEC certain filings to Trinity's of and other Form XX-K for business and are issues directed the risks. a description of any those expressed the results in A cause in which differ from to forward-looking actual change materially or of outcomes statements. could to and would Communications. over the now President Vice turn to Greiner, I of like conference Jessica Investor Relations ma'am. Please go ahead,

appreciate Vice you Rocco, good us results for morning President Greiner, of and Jessica Communications financial Investor you, company's Thank Trinity. the I'm We joining for XXXX first and Relations everyone. quarter call. conference

will comments the remarks company's prepared Savage, Our Marchetto, and Officer. Financial include Trinity's Officer Chief Executive Chief Eric Jean and President; from

a the session following hold our prepared will leaders. Q&A from We remarks

under points metrics. well certain supplemental on in slides. During website the call These They are the quarter the materials link. reconciliation today, over The to the supplemental at can event accessible www.trin.net. we turn my metrics slides the key discussions call non-GAAP Appendix as now available Jean. earnings the the be of will live is are financial The along Events with webcast. to the site are highlighting reference non-GAAP during also portion of pleasure first our of Presentations & provided IR It call found of as our slides

Investor financial to slide Thank to our you, our platform Jessica November We value and deploy in performance pick three to on for where and and capital I'd up left deliver strategy today everyone. Rail laid good at Day creation. morning last start Trinity's we off premier drive like out year.

the is healthy certainly whole. in year us to looking a and And today. and by are Jessica. improving good We everyone a you, morning trends for brighter I business hope as the and ahead. our encouraged joining economy everyone staying increasingly Thank summer are, the forward to

our of that initial these To highlight strategic the the the focused Investor were challenging implementing While either strategic in part the recovery certain impact of reflect are for control to first last XXXX, the financial are as volumes, in key of showing is initiatives market from our execution we more volumes position which company of initiatives performance. last railcar on Trinity's pricing within quarter, our on top results acceleration year. Many Day the signs of given detailed of winter lower themes declining project and the of order plan. three-year an

weather our the two events affected in productivity quarter. Additionally, significant

long-term have the I'm which of out our pleased so, One will the forth. and second toward feel for very in tremendous teams are about the goals positioning the We value platform in how business for a Investor effort we with recovery impact have our lingering put are our at quarter. Even creating and progress laid business on good Day we the embedded our our performance. we

low generate in While the were platforms stated, first level I reasons the just Rail quarter. given cash flow a earnings healthy of Trinity's still

capital long-term framework value. the We quarter the made with during also allocation investments for align curating shareholder our believe

review and X our Let's Slide turn me results. to now

its mentioned we the I early is opening, headwinds As pandemic-related the my XXXX. in recovery in market railcar believe of from

year. show However, pricing market of quarter and pressure impact continued our in the demand the financials lower over first the past to

be. a down second U.S. given until ago. not year-over-year will broader be challenging most hold COVID-XX last $X.XX, the first in it was year deliveries within Our quarter $XXX expectations, did or to impacted take ago, EPS the compared a for us, not our of also revenue year. was of like quarter Lower XX% The a which adjusted to that where which of we quarter year past was nonetheless, down million from comparison but the

details What railcar relative Rail in of cash flow, to platform is moment. overall that into operational positively the cash free seeing. on totaled as internal go to the results results through to earnings and and achieved. results financial first million our turning we'll flow pleased in all quarter the progress which external consolidated cash are we the performance our Trinity's $XX essentially was trends million. the and operations flow flow weak, Eric the trended $XX the cash to we level from and solid is more am remained first quarter. a see I While we are excess are dividends, continues encouraging corner investments In after our difficult and report increase drive cash

address briefly the Let's railcar market. first

Turning X. Slide to

of rail largest we COVID-XX the headwinds. soft, the is in uncertainty Market mentioned, As a but the still pandemic remains signs market recovery. of are seeing wake

economic customers lease renewals, ease asset with increasing decisions tell vaccine mean their refine that their North fleet outlook recovery to expectations American what the programs. stimulus and they to regarding concerns their confidence for and for impacts Their Our continue economic us and expansion are the replacement. businesses. will starting and Customer government distribution

Looking first were positive quarter impacted few emerged the but weather events, in momentum at weeks. some greatly rail last traffic, loadings by

coming recovery were trends Additionally, average. representing Previously, improving in steel recovery fleet high a levels carload over last since trending five-year the to months negative leading Product Trinity's markets. level of result a consumer metric well build, crude increasing comps the industrial slightly lag, of the like the fleet. as early pricing but energy utilization with firming as and a on first railcar metals potential lease presenting within our quarter FLRD activity. are XX.X%, economy steel associated of from we serving seeing based for With aspiring are during the are and carloads. peak the lows more and markets benefits a and prices declined types positive see agriculture of across we and markets nine economy, around the also storage across opportunity see to some and The continue oil construction infrastructure likely for commodities as inquiries summer, the most of signs mills pandemic and straight difficult American on ethanol the we North railcars of to to We Utilization and industry railcar rate. a returning industry the country. reopening the pre-pandemic within portfolio, the of out and rail seeing coal, cars lease quarter XX% utilization storage positive to return normal

at to to the carloads. meet support course We deliveries on want capacity expect levels in potential replacement slightly in to When just to below currently year. excess that railcar stabilize increasing But railcar the looking replacement levels I service railcar for at year, to lease rates or make above a markets prices. steel many industry deliveries over we're of returns quick this demand, believe to improve XXXX. be current expect inquiry the as new comment

limit steel decline to the sustained production as our uses of to industry the operating in these will current meet In is practices, demand. months. arrangements similar the current enough contractual to steel supply commitments, six current and and forecast. Trinity their rise environment prices prices least in and nine the new supplier past steel year. trend to steel dynamic provisions last in believe levels our profit effects volatility for other price up could at purchasing existing in create it on near-term as current If a with ramps unique it existing typically Given levels, some few the steel importance, production rail pricing chain price to higher, seen for relates industrial a production increasing that of meet unprecedented our profits we years, demand or cars. supply are deliveries headwind and could of escalation the capacity contract-specific the Of in customers the we over mitigate at there meet general, the contracts our

Turning X, our color provide I'd little a to like Slide results. further on segment to

compared high was to prices such softer Trinity's continuation in lower rates, business, improves, to rates year utilization. to market, news success on leasing addition lengthening good last terms. we the positive revenue with is, as pricing the the as seeing of developments in lease slightly indicators, renewal firming leading due demand For and and down are lease The slightly

other taking rail are point, rates. inflection full are markets an be approaching a are We will our monitoring on disciplined that required expenses And we a available margin but leasing headwind certain fleet also lease demand costs, pricing expect and to to for maintenance operational to segment in year. position closely our increasing We're nearing approach cars the utilization. as we the for lease believe the

percentage continue work to part strategic the handled increasing events maintenance towards our initiatives, shops. internally As and of within compliance we our will of

current our few the to effect and we the set the last our which our the over maintenance XX%, improve reduce half will our achieving a railcar service margins regards get In railcars our the end to one from for increased of third are segment we capacity our have events, to customers. surface, cost to our at understandably on of the production the out operations, below have maintenance XXXX. to of of still rail targets. roughly of continue With target serviceability fleet we Over ability years, footprint,

to continue and We indirect operations our hard work shift to variable and right costs. size

manufacturing our reduce to XX% production another by we balance headcount with quarter, first the capacity During demand.

events $X quarter We first disrupted our million. impacted roughly that experienced weather profit operations two the by also significant and in

minor over the for impacted impacted with several the February, weather First, buildings country sustaining that facilities, utilities damage. severe the some storms much of middle critical of

in Georgia Second, very damaged Cartersville a the quarter, maintenance plant. late our tornado

coverage minor damage Group And our Fortunately, the insurance tornado related Rail no The to to on costs cover is is to have expected property one results. second a the we sufficient event. was damage impact believe quarter injured. Products

to may company due work to the the Additionally, stoppage. interruption business be entitled proceeds

progress improvement for efforts expect our in the year, resulting margins backlog optimization expected to quarter, deliver translate will second breakeven and with Approximately deliveries. declining year-end. year-over-year is roughly we forward, continuous Looking our the of into through XX% on

build our year to for expect delivery do we rate to new demand Although meet orders. the through

terms quarter. Slide initiatives the efficiency on our and in Moving first We goals. sheet of the balance progress against along executed our our both in X,

operations completion the outsourced successfully reductions. we have structure. costs are mentioned from In great continue we lean year, the production, initiatives railcar to Through install of on to cost to Over activities. aggregate, automation initiatives rail further lower remainder the we value our throughout progress the to lower starting benefits launched overall and headcount various fabrication quarter, we made already plan see I of breakeven our our the tangible enhance additional to the of and efforts.

And of evaluate carrying are these during sold and We our the facilities. the the reduce quarter. next enterprise. of to these conduct the first facilities over couple several a years cost footprint We idled across operational cost continuing transactions to we of expect to savings clean up number

the goal, railcars On these sheet. This of to a small small portfolio of the strategies improve we portfolio our a toward balance as a but balance sale completed goals. is sheet, our progress improvement part yield in have step sale of number we

As to real-time, you Trinity raising fleet balance LTV. recall tracking XX%, from by And which leverage our update sheet of XX% to data lowering capital committed our a an is target service. Trinsight, our is of to Investor our finally, shortly. will to more Eric optimization speak Day, on and cost our digital

and given have our building active encouraged with returns to predict In executing We both and for pilot but financials were see of timing the promising those forward continued the our Eric, business. a can improve are operating we're program hand have over are by with it future. you or always continue an updating of customers. market. an we dialogue momentum difficult believe It's to in and comments. within fundamentals, for moved and we inflection the impact additional rail exact the we well. and incrementally with of the recovery, to summary, we cycle up to revenue pace improvements the customers opportunity business to the And potential We number you the financial within the on plans on look and market our I'll in the the leverage growing

challenging and you, a first an are Thank our post-pandemic summary in the details. few the market I'll combination position financial everyone. to provide Slide Trinity's for Jean. And on business X, more financial results environment, and start with the quarter performance. good acceleration morning, efforts of

deliveries necessary efforts While lower as are highlighted seeing the lease changes our and performance, profitability green including the making XXXX. in the overall shoots has than And several from XXXX, of earnings said, of first for our prior quarters. the we're financial challenging compared quarter pricing we car within business. drivers Jean improved results new Jean business believe to lower we're and

with in quarter, ton, associated distinct two of our $X During earnings impacted the weather by events. results were approximately direct million lost production costs

modest first expect in the primarily year, cash in of in level with resulting of year-over-year we cash flow, improvement look the half improvement regards earnings we operating acceleration As to XXXX, lower earnings reflects from flow further through in operations XXXX. In next the quarter, the quarter back income.

was Our flow unchanged in in first for quarter, substantially period. working $XX the the resulting million operating capital during cash

XXXX, flow million. For of between from expect operations we $XXX continue and cash $XXX to million

the million our in quarter million and in completion manufacturing the approximately Midwest for maintenance new following and $X facility. betterments leasing investments Our of CapEx $XXX in included railcars CapEx

after from QX. the for the leased equity railcar to also expectation For and the a fleet the technology during for anticipate for capital a $XX $XX and respectively. we initiative manufacturing order the previously at lease Trinity, improve XXXX approximately million million remains required. financing operations flow We offsetting flow fleet million to and Total announced $XXX year, from investments $XX completing our growth leasing free as sales portfolio totaled timing is returns. of the the and additional cash $XX The net our improvement execute CapEx cleaning of from the of same million. million cash result our acquisition million fleet dividends CapEx to completed on $XXX in company

to automation leverage as operations. technology new capability this in maintenance our expect rail of and building We part efforts

repurchases, capital and return to shareholders $XX our share for continue during amounts which the to dividends We quarter. of meaningful combined approximately million through

repurchase the the remaining has of authorization end Our million share $XXX through year.

shareholder. taking we're look and a for our right the we committed set do across by deploying As approach returns-based opportunity to capital,

X. also the strong We're Slide and position leverage in our lowering Trinity cost financial of of target steady balance capable progress remains opportunistic making sheet a the deployment. on capital. our with Turning goals

size leasing warehouse the During increased the floating lower Trinity interest while expense debt. overall size ability to the expanded The of rate exposure first Trinity gaining of our warehouse. quarter, to gives

the the end of the the of liquidity was quarter end at $XXX - Our at million. quarter first

allocation on sheet A ability in our shareholder our We interest were debt which financed overall new environment term capital. the interest rate low a expect these approach reduce of to disciplined - which to of partially from implementing of the growth level nearest that subsidiaries, relate with primarily fleet continue matching normalized tuck-in taking our term, the Through advantage We're capital rate capital market investment capital. in cost in lease lease maturities different much The and attract framework other environment. fleet investors to debt well securities deploy financing for asset-backed technology in new a services. Near secondary for priorities of both Rail deep is continued our to securitizations modest increased and a very maintenance taking deals. create leverage value. as announcement completing remain at environment portfolios, growth. the balance to new manufacturing our a also for creating compelling for to new small have pools acquisitions cleaning includes of business, CapEx, as potentially market opening lease owned green our

the and a After people closing, And focused including in are market and true us to more investors meet down of restructuring to XXXX loan-to-value opportunities, performance the example on first financial we big rising returning leaves was of we that worldwide in control, are capital the of take within plan to that a we to our towards quarter year a will will first strategic recovers. Our the financials, our accelerate as change major another quarter executing positioned company the shareholders. upon our XXXX, initiatives payments of while challenge. advantage attractive of pandemic, layout take to our efforts which success In within market our time fruition ended come taking is at hold. believe the XX%,

against We Our long-term a to for resiliency, prove build healthy earnings low allocating cash approach its delivering committed disciplined level flows of platform otherwise a continues shareholder number. remain to value. to capital

to on may by railcar to encouraged of you take continued participants. and questions us and seeing the pandemic are across Rocco, from we're our the outside We we're trends the road positive industry setback, believe a not recovery.

Thank you, sir.

Please Today's Allison ahead. now the Wells from question-and-answer Poliniak go Fargo. begin [Operator will We with comes first session. Instructions] question

morning. good Hi,

that see that in it your you of Is comments could from viewing car stronger in that understand guys talk how sort this are year? cadence? want And really in in railcar level. the inflection replacement the giving is of the I a guidance, but building any Just about, we 'XX, it thoughts. more second gradual to reaching of half specific on thoughts terms not builds Or Just positive perspective? overall you're a general

Well, Okay. Alison. thanks,

As we the combination we quarter. this XX,XXX traded continue. XX,XXX, And seeing cars demand. little will year, of expecting from and the trade were supply had out we industry. a the off those year into we're maybe half, a out look the that at more bit run-rate that Last see based or second It's believe the of first trends over we're to

So I see if one. to this types last One you expect would than much look is, mix in the car is at do the recovery, to of point those dynamics, out want different higher you pickup. in thing

So freight quicker than the tank back cars cars. are coming much

that what little we're so nuance a into seeing. just And

Got helpful. quarter. that then going improving exit you Should That's the continued with in that, had rate? us that you've line bribe forward? to we and reductions products here there. to Any it. And throughout And rail you some understand guess to I margin then do color can help mentioned anticipate headcount stabilize

Sure. Thanks, Alison.

expect looking start that or of increase the we demand to see that to gotten headcount for should half. we through the you're the to you ready the at for there, see would had said year. we've part I'll second as And to - demand when that start So headcount the first stabilize the the expect we place have in

on little change happen. of a So there bit you what's going see to a might

right for line in basically maybe now. it So

things couple at at there. look look margins, of to a you the If

actions. We outsourcing the to hold. have been both talked in take actively we improvements fabrications, to is value-added that were some taking of We going starting about lower the the make

some to have We in, materials done steel lower that's coming initiatives chain prices. building the where where with possible overall, cost of supply inputs

the going pull see As you better out know, our lean also starting with and direction that in automation factory. in wrong factories. events of within efficiencies the on But that coming is up We're to going there. time we've through spent

sustaining So we better all through us a the quarter year. of rate to fruition coming gave see the out that of coming run that

pass I'll it thanks. Perfect, along.

And our Please Cowen. Elkott comes with from next go Matt ahead. question today

Thank you what's your Is say and guys replacement you. could definition of XX,XXX-XX,XXX? morning. Eric, Jean demand? it Good

XX,XXX as between at we So demand is. cars what you're anywhere say looking and would XX,XXX is replacement

got us Okay, help I this modest it. improvement, Is earnings. And, in you Eric, just mentioned benefit? year it think improvement knowing meaningful that you Can improvement? year-over-year it is

Eric. this Matt is Okay.

are So did we improvement. you obviously adjectives at and where around have going in besides we We other quarter back-end year-over-year. not say improvement Jean we get commented do But the more put low. any really modestly second to the first there in when weighted. things better it, expect we're was it was quarter, look to

what think I us. can from you to expect what that's and So we see that's expect

Got footprint then maybe it. longer-term And manufacturing a bigger about the or question right-sizing. picture

more How five-year part up three that's not of not to meaning coming view, the in support you doing expect plus will it that environment? You of And Or as And recently now. manufacturing long-term a to weak future. to strategic, the we while And back? for much a is believe And that talking we even in footprint had, backlog manufacturing a as current the if how much is XX% to you're a a some much guys leasing? they're you quarter. did more the can once take the what back percentage ago? smaller ruling this have as of we I to this from been years look perspective? move a company due large maybe about guys Are out couple that as like whole we - of manufacturing

add that. it I'll hand will then And start wants anything. on if to Eric over Matt, to he

utilized. the So when out is have that thing I we're footprint, selling you properties at point look that some one our of to manufacturing not been want

So were facilities And of left category. still types that there other growth businesses. future or up. for they into cleaning those potential have numerous we that We're fall

for, selling levels will I'm really industry and about for properties, at we're what demands types So talking or through When when that next of look what industry in we we at the years. the industry, that's setting talk few think replacement possibly the be we XXXX. those about up

and then what in we would of also have for capacity, as And and that going us would work more share taken opens outside. the that your existing up alter floor Those we of outside, cars. taken some we even it our we've of make environment high-value So believe that answers our would doing next offline, our actually we're sizing sure space part type the buildings allow is. assembly is, some of question. produce lower that Hopefully We the value-added more in facilities. just fabrications to be of add

helpful. very much. Thank you very That's

Thank you.

Gordon comes question from Next Research. with ahead. go Johnson GLJ Please

you the guys, operating I that that's additional cash guess, know is what going flow that it guys on - than the guys doing expecting about? thanks are back the question. we to quarter. Is of guidance for the the first the half. see should bit year improvement anything we Anything Hey, you help of higher out number to business in are what that, there flow, seems taking in cash a that like for

approximately is our portion balance million. And previously. have Eric, And we're $XXX this at pointed have receivable related have I sheet. large today, I a into point tax least Gordon. this to the Yes, XXXX year And year. the didn't - we point rather to our out tax come that's Recall, but expecting out on

cash receivable flow operating when cash. number So is that to that converted through our flow will

of So other piece that's the it.

cash from also as see The obviously flow our then we our is, improves, to would flow cash other earnings piece you're our to expect operations going improve.

maybe it half that that some guys too. there seems do in sectors in then, are guess, Okay, should we Is gauge of out expect our of a or the of that's expectations? back we improve I helpful. should something Maybe and look like your kind metric? industrial really look to versus the ordinary, for ordinary, the just And trending things we to something something how you things other

you that as signs carloads as on. rates seeing. So industry going production that the the rail opening Overall lead at, you're the are for to that economy look far will back recovery normal recovery what seeing Overtime, all metrics or good you're that is up, potential industry. for

railcar the indicator Gordon, a the health of of are great industry. Yeah. our weekly loadings

And so that's the beauty of it is.

You get that real-time information every week.

And you one I going metric so, our one. industry that there's if that be point to to is for

question Excellent. Hey, thanks is the a lot guys. for

Gordon. you, Thank

Thank you.

And from our go comes Inc. Long Justin next today Stephens question with Please ahead.

This on for Justin good Long. Hey, is morning. George Sellers

it guess to target, start what a demand when longer lower little levels bit target. in that are for reach sounds the So ROE you're you maybe your ROE expecting on replacement than two-years you like railcars were I expecting to long-term that gave term

if there. So timeline with that's anything changed wondering the just there's

Eric. is this George, So

at Investor from say moving - just we speaking that have me I hasn't for would of industry our our when generally as the we that we changed. It's kind really would said Let Day, November, what last expected. outlook

we - So We below talked out then that the back would or cycle, over getting a this expect about bit it that demand and still that year to a level be is XX% being goal replacement longer term replacement cycle. Obviously, XX%- remains. there replacement that's levels. for goal that

level the outlook that term. has our say really changed - the would nothing near splitting over without hairs, of for So industry I

Gotcha.

of railcars give us update secondary like, then in on an you And helpful. level are, where could that's market terms activity valuations the Okay, there? and just of the for

So more the secondary than was definitely is robust. year, market better last it

both quarter. the remember, we And seller and in look. market to had buyer this small deal can in saw, be you continue As a a first we and a

strong I and the it's through think will year. strong remain

you Okay, that. great. Thank I'll leave all. with

you. Thank

And Bascome go question Majors comes Please ahead. Susquehanna. with the from next

Yeah. the next question. into some inquiry the like year. mid-cycle recover Thanks to and levels increased that dig Wanted towards manufacturing will market commentary the levels my for maybe on taking what conviction sounds encouraging

and down as want gummed just a kind here. a been to lot trading to well. You've up cars taken up supply in How in deliver you're been the customers of get and able have back have that steel you labor run-rate? the just that industries kind you. conviction materials that, markets capacity, Can as of of would of chains Cost margin challenging and beyond that you to need when and general ramp lot talk get about capacity to you'll the historical you'll you be XX% confident that able the a to your Thank XXX%, be mid-cycle? industries

change low fabrications. And facilities, some or of enhance we those reacting what capable idled in Okay. value-added and and very management the And team, very cycles, shuttered When start with they're we're our that look quickly to you of offsetting one. at ahead And Well, really I'll are many go efficiencies, demand. on times. outsourcing supply strong chain, they gone of experienced. they've that through these

very We're So by production more that dictated in. helps up that the labor force It's space. not the to The manufacturing in fortunate plants. the the have ramp people qualified ability ability also is get us. to we

welding our plants. our have own of We own inside schools

in to have go into new need and industry, we train and capability. that the if them, we people So bring

So we're for the feeling up demand. pretty to ramp our comfortable ability with

And more, for thank you capital And on that. one just the allocation.

You your the approach, talked about about returns-based near-term priorities. talked you

an be us Thank owner you. Is acquisitions about railcar overseas little market. growth North core opportunity With the go-forward to the of And instead and maybe stock some you give American that, basis? we've thoughts in versus dividend the buyback your bit maybe some in to talked a some more low-XXs, on mid-term? markets railcar XX a XX there that on a you offer how beyond may at can bucks the prioritize

Thanks, Bascome, this is Eric.

capital into get you allocation, when obviously, is dynamic. So it

changed year, last from has bit. quite price share improved a it's Our

equation, forward. so so going the certainly change but returns everything does expect And else that that of we the and

investment a things look very And And what to those us, dynamic So, see the of dividends, you'd If at have shareholder. the we decision. are? end, at opportunities going us. going all we're to it's what process. we acquisitions, choose the in you're of from each what's share for right end, were return. buybacks, the and look you a We do expect And ahead highest when in combination

whether investing Europe And the overseas markets, idea railcar or capital be somewhere on it in of potentially else. or India

Just as any tree going forward? cash you decision potential generate thoughts the that's whether on in is

Sure, Jean. Bascome. is I'll take, this

are in that for need that different business. looking areas. provide we're markets will at And look our M&A can also or returns we expecting in we the So we

to enter the able to we the have we will find into those. just consider in some have price of We Yes. So right again or to be considered market future? right the and

you. Thank

Thanks.

question today KeyBanc from ahead. Markets. comes our Barger go Please with And Steve Capital

Thanks. comments go Good backlog steel and your some steel prices? on you pressure have morning. prices Did back say chain current constraints? you due the to margin supply to Can could

What cause those steel I we in we in mitigate orders of for that something efforts about the the actions that pressure. any we're lot place. our prices that covered talking part, mitigation of comes that some a be different up to There have pricing is was do for are we on may unaware of headwinds. could most But

prices, But destruction? demand persist if they to you do think that were higher some steel could cause

We do.

that, to up steel and more a type of some at until been new though as for XX% car look car. some has the ranges recovery. you confidence it continue our will have car even delaying the it in XX% on and delay depending to business the gone prices already where they production, is customers think We in But their So have decisions. making

the that decision-making. does dynamics and the change So

that have are people you're available to that where and to have orders cars to going new. see anymore use, going to those them they're placing take buy for are So do

of existing one we builds. new when to Steve, and that attractive. platform. like the will existing make through things assets the our The we fleet, goes demand then more said, That's about And our that manufacturing railcar

And so leave that replacement lease leave that existing rates, existing our run up. of terms have little will increased to - in room will because the assets more gone a costs

see that. And so we

confident We our future. to in see that in why And expect outlook. that's the we're

chain, Makes from sense. And I a component price Any just on said availability and think in prices. terms about he standpoint? disruption supply comments something of

our of supply in chain America, supply very We've any so few been XX%. pandemic. very throughout had fortunate is Most if this We've North disruptions. above

have may So been have. others disruptions the same we experiencing

railcar components manufactured are you on production? contractually And into that go protected your

So the you changes in escalation just other in clauses like for input costs. material have sometimes businesses, there

we there's make that where contracts, about those to our also that's so we And sure talk coverage. through pass

Yeah.

when that's surcharges contracts we that those. components, contemplate call comes generally their especially and scrap through For

it. to trend I initiatives how last or Day, focused one really opportunity for maybe the Analyst addressable along? data any read early $XX on are Got In those those platform billion commercial platforms digital coming me. Any market for $XX about billion And a services. been update you've how and site? And know talked on analytics. you've that on

one. go I'll ahead and take that

we're of So our time, I mentioned when conversations in were my in about customer that the more up now seeing more we Most prepared needs. interest. the talking them bringing customer to and remarks is that their

we're platform. paid, We are that now have that pilot customers into approximately for in already coming going of to we've number an cars right stages are And these. of XX the who on seen increase process in

still still results, from it's and very the demand initial So It's from recognition favorable but them. customer the beginning.

you. Got it. Thank

Thank you.

comes from Please Haimes Management. Asset Sage Barry next question today with And ahead. go our

That's the Thanks just for questions is, the coming so a little One much. at we question. that as I so the in down a couple XX.X% the mentioned Could and second, tough Does cars was think year? through about get comp fourth works here. you easier? on due that start to part quarter comp go third a off-lease. to the stay similar FLRD level comp that to first you bit quarter, how had in I talk or

Okay.

FLRD for rates the had let a about off rate the little recently. that me the But talk of the renewals months bit based we're seeing question. XX is that forward-looking lease and our I we've next if remember, So see answer

So to of different rate seeing role remember, markets this. pressures XX% storage, have will until are already. other different from they're service. rates and still in cars in continue recovering there's they're sequential a back plays Other at our markets all Scrapping many have lessors. markets, rates. put availability into and Those and increases

So supply demand and rates. cars the plus if you year, will a higher you're scrapping give demand XX,XXX lease - metrics

the everything lease we're direction. is what rate in seeing trending underpins right that is that that So

it. Got

Okay.

related ask maybe try up Let bit more a to question, to clarity. and give me follow one little

with to two where the build or theoretically, have higher more is Could lease newbuilds where take it does to it types, one the guys lease get to you rate the put you So price that about would of been the year rate would to fleet? and could it into end of If now? car the justify where steel, get But talk of perhaps if you need better. be car are where you at have to a will? striving the lease for importantly,

a ceiling not would still need on because go railcars, of go for a does the the get question for less - XX%, more oftentimes terms as on cars. existing specifically side, side, the rate grain into XX%, mean in rates lease to But tank excess types. is if tank XX% improvement. seen provides up and up, they a types, to going no than seen hurdle A tightened in on on the agricultural with lease I'm tightening we I'm car existing products. would going hoppers alternative same of seen statement freight by has car to car the they investment those little to tight XX%. we've where cars a the will car lease we've material generally, saying you've levels? different why up. what on XX% go new lot your increases. seen the Generally, changes So, markets. And your hold slack rates little there would to other XX% a cost that's mentioned up on, more investable you're That so that's to of fundamentally rates new have specifically, not There's utility. but need and think to come rates similar railcar, on invested railcar. Getting We've cover details some So serving Jean energy-related railcars into

will those run. costs investment to lease those a so capital up And give little - on rates the new room railcars going

that takes is time. And the market - perfectly efficient. not so doesn't It

So is Information that doesn't perfect. our less at in happen than just market once.

start see to see start the quarters, and three over to trend two quarters, that next that even as you'll continue. And quarter, pick people maybe so up

steel, sold One helpful. very quick for to approximately? What good That's is as a Thanks. you more very percentage guys, cost one.

into We of a on of steel, look detail our lot really - different steel and have components. don't get that. Obviously, there's you plate, types steel we of all coil, at when

steel All products. generally your which of are our components cast

the railcar turn, steel material in steel, raw go more in cost overall in talking componentry a steel. talking basically entire or is we're and the plate steel. steel - today, the we're when railcar, get coil about you So When into all the then

and the other is point that feat. only So, overhead labor our on

it steel, So high - well a it's that. at coil you just than then when you very more of lower under the When look much steel the all it's put together, probably it's it's - mix. and plate

Great, thanks very much.

you. Thank

conference And this to concludes our like final Jessica ladies and question-and-answer I'd session. back for remarks. any gentlemen to turn the Greiner, over

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