Exhibit 99.1
FOR IMMEDIATE RELEASE
Trinity Industries, Inc. Announces Third Quarter 2020 Results
Reports quarterly GAAP and Adjusted earnings from continuing operations of $0.21 and $0.17 per diluted share, respectively
Generates both year-to-date operating and free cash flow before leasing investment of $457 million, respectively
Returned $193 million of capital to stockholders year-to-date, including $90 million of share repurchases in the third quarter, completing the authorization
Announces new $250 million share repurchase authorization
DALLAS, Texas – October 21, 2020 – Trinity Industries, Inc. (NYSE:TRN) today announced earnings results for the third quarter ended September 30, 2020.
Financial and Operational Highlights — Third Quarter 2020
•Quarterly total company revenues of $459 million
•Quarterly income from continuing operations per common diluted share ("EPS") of $0.21 and quarterly adjusted EPS of $0.17, which excludes the following:
◦Restructuring activities totaling $0.03 per common diluted share
◦Additional income tax benefit of $0.07 per common diluted share related to carryback claims as permitted under recent tax legislation
•Both year-to-date cash flow from operations and free cash flow before leasing investment were $457 million, respectively
•Year-to-date investment of $310 million in leasing capital expenditures, net of railcar sales, predominantly for growth
•Total committed liquidity of $719 million as of September 30, 2020
•Repurchases of approximately 4.5 million shares at a cost of $89.9 million
•Year-to-date returns to shareholders of $193 million through dividends and share repurchases
•Announces new $250 million share repurchase authorization approved subsequent to quarter-end
•Completed a new $155.5 million securitization under an existing indenture bearing interest at 1.96% annually to replace $153.1 million of secured railcar equipment notes bearing interest at 3.82%, which were redeemed
•Previously announced date of 2020 Investor Day on November 19, 2020
“In the wake of the challenges created by the COVID-19 pandemic, I applaud the commitment of Trinity’s people to deliver high-quality products and services to our customers and continue our progress in effecting the transformation of the Company’s rail-focused operating strategy,” said Jean Savage, Trinity’s CEO and President. “Trinity’s third quarter performance reflects solid execution against numerous headwinds including competitive pricing, declining deliveries, and difficult decisions in rightsizing our operations. Through it all, Trinity’s rail platform, which generates significant cash flow, and our strong balance sheet have enabled us to manage through the current environment from a position of strength.”
“Railcar loadings rebounded during the third quarter from the historical declines earlier in the year resulting from economic shutdowns amid the coronavirus outbreak. However, market uncertainty continues to cloud demand for railcars as much of the economy remains under pressure. We continue to see a good pipeline of inquiries for available railcars – new and existing – from strategic buyers and owners of railcar assets, and we remain cautiously optimistic regarding the trajectory of demand heading into next year. Average lease rates and the utilization of our lease fleet remained essentially flat from the second quarter, while lease rate renewal pricing continued to experience negative headwinds. Rail manufacturing received orders for 2,000 railcars during the third quarter, composed primarily of larger, complex transactions that leverage the strength of Trinity’s rail platform and our ability to tailor solutions for our customers.”
“Our business leaders are taking additional actions to optimize our operating structure and our balance sheet. During the third quarter, Trinity transitioned its U.S. logistics business and outsourced these services to third-party providers, as well as completed the realignment of its organizational structure. The Company also completed the $350 million share repurchase authorization, our second such completion in the past two years, with the purchase of approximately $90 million during the quarter. Earlier this week, Trinity’s Board approved a new $250 million share repurchase authorization that runs through the end of 2021.”
Ms. Savage concluded, “As we move forward with the execution of our long-term strategy, we have redefined our purpose to ‘Delivering Goods for the Good of All.’ We are proud of the essential role our railcars play in sustaining our communities, and our strategic initiatives are aimed at enhancing the rail industry's modal advantage while improving our returns on the business. We are strongly committed to accelerating the financial performance of the Company and unlocking value for our shareholders through a disciplined capital allocation framework.”
Consolidated Financial Summary
| | | | | | | | | | | | | | | | | |
| Three Months Ended
September 30, | | | | |
| 2020 | | 2019 | | Year over Year – Comparison |
| (in millions, except percentages and per share amounts) | | | | |
| Revenues | $ | 459.4 | | $ | 813.6 | | Lower deliveries in the Rail Products Group and fewer railcars sold from our lease fleet |
Selling, engineering, and administrative expenses | $ | 51.2 | | $ | 62.1 | | Lower employee-related costs resulting from cost optimization initiatives, including headcount reductions and adjustments to incentive-based compensation, and lower litigation-related expenses |
| | | | | |
Operating profit (loss) | $ | 72.9 | | $ | 120.3 | | Lower volumes in the Rail Products Group and fewer railcar sales in the Leasing Group |
| | | | | |
| Interest expense | $ | 52.3 | | $ | 55.8 | | Reduction in the average borrowings and the variable interest rates associated with the Company's debt facilities, as well as the early redemption of a securitization in the first quarter of 2020 |
EBITDA (1) | $ | 136.4 | | $ | 194.5 | | See change in operating profit described above |
| | | | | |
| Effective tax expense (benefit) rate | (34.9) | % | | 27.5 | % | | Primarily tax benefit due to the carryback of net operating losses |
| Net income (loss) attributable to Trinity Industries, Inc. | $ | 25.1 | | $ | 49.0 | | |
| | | | | |
Diluted EPS – GAAP | $ | 0.21 | | $ | 0.39 | | |
Diluted EPS – Adjusted (1) | $ | 0.17 | | $ | 0.39 | | |
| | | | | |
| Nine Months Ended
September 30, | | | | |
| 2020 | | 2019 | | Year over Year – Comparison |
| (in millions) | | | | |
Net cash provided by operating activities – continuing operations | $ | 456.8 | | $ | 166.3 | | Cash impacts include cyclical shifts and working capital initiatives, as well as inflows from a customer's exercise of a purchase option on a sales-type lease |
Free cash flow before leasing investment (1) | $ | 457.0 | | $ | 217.2 | | |
| Capital expenditures – leasing, net | $ | 448.8 | | $ | 854.3 | | Reduced lease fleet investment in 2020 |
| Returns of capital to shareholders | $ | 193.1 | | $ | 294.7 | | Reduced share repurchase activity in 2020 |
(1) Non-GAAP financial measure. See the Reconciliations of Non-GAAP Measures section within this Press Release for a reconciliation to the most directly comparable GAAP measure and why management believes this measure is useful to management and investors.
Business Group Summary
| | | | | | | | | | | | | | | | | |
| Three Months Ended
September 30, | | | | |
| 2020 | | 2019 | | Year over Year – Comparison |
| (in millions, except percentages and number of units) | | | | |
| Leasing and Management Services Group | | | | | |
| Leasing and management revenues | $ | 183.9 | | $ | 190.1 | | Lower fleet utilization and lower lease rates on renewals, partially offset by growth in the lease fleet and higher lease rates associated with new railcar additions |
| Leasing and management operating profit | $ | 86.8 | | $ | 79.8 | | Growth in the lease fleet and lower depreciation expense |
| Operating profit on sales of leased railcars | $ | 2.9 | | $ | 35.9 | | Lower volume of railcars sold from the lease fleet |
| Fleet utilization | 94.8 | % | | 96.7 | % | | Primarily driven by decrease in energy-related markets |
Owned lease fleet (in units) (1) | 105,925 | | 102,090 | | |
| Managed lease fleet (in units) | 26,655 | | 24,215 | | Additional sales of leased railcars to third-party fleets managed by the Company |
| | | | | |
| Rail Products Group | | | | | |
| Revenues | $ | 381.2 | | $ | 735.1 | | Lower deliveries and railcar modification services |
| Operating profit margin | 0.8 | % | | 8.9 | % | | Lower deliveries resulting in additional unabsorbed burden in addition to lower pricing |
| Deliveries (in units) | 2,605 | | 5,320 | | |
| Orders (in units) | 2,000 | | 2,530 | | |
| Order value | $ | 186.8 | | $ | 259.2 | | Lower number of units and competitive pricing |
| Backlog value | $ | 1,155.4 | | $ | 2,445.7 | | |
| | | | | |
| All Other Group | | | | | |
| Revenues | $ | 62.6 | | $ | 70.3 | | Decreased demand for highway products |
| Operating profit | $ | 7.3 | | $ | 3.9 | | Lower employee-related costs and lower costs associated with our non-operating facilities |
| | | | | |
| September 30, 2020 | | December 31, 2019 | | |
| Loan-to-value ratio: | | | | | |
Wholly-owned subsidiaries, including corporate revolving credit facility | 57.9 | % | | 55.1 | % | | |
(1) Includes wholly-owned and partially-owned railcars and railcars under sale-leaseback arrangements.
Additional Business Items
Income Tax Adjustments
•As a result of the reinstatement of the tax-loss carryback provisions in recent tax legislation, the Company recognized an additional tax benefit in the third quarter of $8.6 million, or $0.07 per common diluted share. The associated income tax losses were primarily due to accelerated tax depreciation associated with our investment in the lease fleet.
•The Company’s tax rate was a benefit of 34.9% for the quarter and a benefit of 69.5% for the year. These rates differed from the U.S. statutory rate primarily as a result of the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act").
Liquidity and Capital Source Updates
•In July 2020, Trinity Rail Leasing 2017 LLC, a wholly-owned subsidiary of the Company, issued $225.0 million of additional promissory notes through its existing loan agreement. The promissory notes bear interest at LIBOR plus 1.50%. Net proceeds received from the transaction were used to repay borrowings under TILC's secured warehouse credit facility and under the Company’s revolving credit facility, and for general corporate purposes.
•In July 2020, we amended our revolving credit facility to increase the maximum leverage ratio through December 31, 2021 to provide near-term covenant flexibility.
•In October 2020, Trinity Rail Leasing 2018 LLC (“TRL-2018”), a wholly-owned subsidiary of the Company, issued $155.5 million of Series 2020-1 Class A Secured Railcar Equipment Notes (the “2020-1 Notes”) under an existing indenture. The 2020-1 Notes bear interest at a fixed rate of 1.96% per annum and have a stated final maturity date of 2050. In a separate transaction during October 2020, TRL-2018 redeemed its Series 2018-1 Class A-1 Secured Railcar Equipment Notes, of which $153.1 million was outstanding at the redemption date. The fixed interest rate for these notes was 3.82% per annum.
•In October 2020, our Board of Directors authorized a new share repurchase program effective October 23, 2020 through December 31, 2021. The new share repurchase program authorizes the Company to repurchase up to $250.0 million of its common stock.
•The Company's income tax receivable at the end of the third quarter was $485 million.
Cost Optimization
•In connection with the Company's ongoing assessment of future needs to support our rail-focused strategy and to optimize the performance of the business, the Company recognized pre-tax restructuring charges totaling $10.5 million year to date, primarily from employee transition costs and the write-down of our corporate headquarters campus, partially offset by a net gain on the disposition of a non-operating facility and certain related assets.
◦Restructuring charges for the third quarter of 2020 totaled $4.7 million, which included $3.4 million for severance costs, $0.7 million in asset write-downs from transportation equipment related to our logistics operations, and $0.6 million of contract termination costs.
•Trinity currently anticipates that the structural and cyclical administrative cost reductions completed thus far in 2020 will generate approximately $80 million in future annualized cost savings.
◦As the Company continues to reposition its operating structure and drive platform efficiency, we anticipate identifying further cost savings opportunities, which could lead to additional restructuring charges.
•In connection with the Company's previously communicated pension plan termination, the plan is expected to be fully settled in the fourth quarter of 2020. Upon settlement, the Company currently expects to recognize a pre-tax non-cash pension settlement charge totaling between $145 million to $160 million, which includes the recognition of all pre-tax actuarial losses accumulated in Accumulated Other Comprehensive Loss.
Conference Call
Trinity will hold a conference call at 11:00 a.m. Eastern on October 22, 2020 to discuss its third quarter results. To listen to the call, please visit the Investor Relations section of the Company's website at www.trin.net and access the Events & Presentations webpage, or the live call can be accessed at 785-424-1854 with the conference ID "Trinity". Please call at least 10 minutes in advance to ensure a timely connection. An audio replay may be accessed through the Company’s website or by dialing (402) 220-1140 until 11:59 p.m. Eastern on October 29, 2020.
Additionally, the Company will provide Supplemental Materials to accompany the earnings conference call. The materials will be accessible on Trinity's Investor Relations website under the Events and Presentations portion of the site along with the Third Quarter Earnings Call event weblink.
2020 Investor Day
Trinity Industries will also hold a virtual Investor Day at 9:00 a.m. Eastern on November 19, 2020. The half-day event will include presentations on the Company’s business strategy from Jean Savage, Trinity’s CEO and President; Eric Marchetto, EVP and Chief Financial Officer; as well as other members of executive management. The live webcast and presentation slides will be accessible via the Events & Presentations portion of the Investor Relations website located at www.trin.net. A replay of the event will also be made available on the Company’s website following the event.
Non-GAAP Financial Measures
We have included financial measures compiled in accordance with generally accepted accounting principles ("GAAP") and certain non-GAAP measures in this earnings press release to provide management and investors with additional information regarding our financial results. Non-GAAP measures should not be considered in isolation or as a substitute for our reporting results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures for other companies. For each non-GAAP financial measure, a reconciliation to the most comparable GAAP measure has been included in the accompanying tables. When forward-looking non-GAAP measures are provided, quantitative reconciliations to the most directly comparable GAAP measures are not provided because management cannot, without unreasonable effort, predict the timing and amounts of certain items included in the computations of each of these measures. These factors include, but are not limited to: the product mix of expected railcar deliveries; the timing and amount of significant transactions and investments, such as railcar sales from the lease fleet, capital expenditures, and returns of capital to shareholders; and the amount and timing of certain other items outside the normal course of our core business operations, such as restructuring activities and non-cash pension plan termination charges.
About Trinity Industries
Trinity Industries, Inc., headquartered in Dallas, Texas, owns businesses that are leading providers of rail transportation products and services in North America. Our rail-related businesses market their railcar products and services under the trade name TrinityRail®. The TrinityRail platform provides railcar leasing and management services, as well as railcar manufacturing, maintenance and modifications. Trinity also owns businesses engaged in the manufacture of products used on the nation’s roadways and in traffic control. Trinity reports its financial results in three principal business segments: the Railcar Leasing and Management Services Group, the Rail Products Group, and the All Other Group. For more information, visit: www.trin.net.
Some statements in this release, which are not historical facts, are “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements about Trinity's estimates, expectations, beliefs, intentions or strategies for the future, and the assumptions underlying these forward-looking statements, including, but not limited to, future financial and operating performance, future opportunities and any other statements regarding events or developments that Trinity believes or anticipates will or may occur in the future, including the potential financial and operational impacts of the COVID-19 pandemic. Trinity uses the words “anticipates,” “assumes,” “believes,” “estimates,” “expects,” “intends,” “forecasts,” “may,” “will,” “should,” “guidance,” “projected,” “outlook,” and similar expressions to identify these forward-looking statements. Forward-looking statements speak only as of the date of this release, and Trinity expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in Trinity’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based, except as required by federal securities laws. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from historical experience or our present expectations, including but not limited to risks and uncertainties regarding economic, competitive, governmental, and technological factors affecting Trinity’s operations, markets, products, services and prices, and such forward-looking statements are not guarantees of future performance. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” and “Forward-Looking Statements” in Trinity’s Annual Report on Form 10-K for the most recent fiscal year, as may be revised and updated by Trinity’s Quarterly Reports on Form 10-Q, and Trinity’s Current Reports on Form 8-K.
| | |
| Investor Contact: |
| Jessica L. Greiner |
| Vice President, Investor Relations and Communications |
| Trinity Industries, Inc. |
| (Investors) 214/631-4420 |
|
| Media Contact: |
| Jack L. Todd |
| Vice President, Public Affairs |
| Trinity Industries, Inc. |
| (Media Line) 214/589-8909 |
- TABLES TO FOLLOW -
Trinity Industries, Inc.
Condensed Consolidated Statements of Operations
(in millions, except per share amounts)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended
September 30, | | | | Nine Months Ended
September 30, | | |
| 2020 | | 2019 | | 2020 | | 2019 |
| Revenues | $ | 459.4 | | | $ | 813.6 | | | $ | 1,583.8 | | | $ | 2,154.4 | |
| Operating costs: | | | | | | | |
| Cost of revenues | 334.5 | | | 649.1 | | | 1,213.1 | | | 1,691.0 | |
| Selling, engineering, and administrative expenses | 51.2 | | | 62.1 | | | 172.3 | | | 191.5 | |
| Gains (losses) on dispositions of property: | | | | | | | |
| Net gains on railcar lease fleet sales owned more than one year at the time of sale | 2.9 | | | 18.1 | | | 17.3 | | | 44.7 | |
| Other | 1.0 | | | (0.2) | | | 2.8 | | | 2.5 | |
| Impairment of long-lived assets | — | | | — | | | 369.4 | | | — | |
| Restructuring activities, net | 4.7 | | | — | | | 10.5 | | | — | |
| 386.5 | | | 693.3 | | | 1,745.2 | | | 1,835.3 | |
| Operating profit (loss) | 72.9 | | | 120.3 | | | (161.4) | | | 319.1 | |
| Interest expense, net | 51.7 | | | 54.0 | | | 163.6 | | | 160.8 | |
| Other, net | 2.0 | | | — | | | 0.5 | | | 0.2 | |
| Income (loss) from continuing operations before income taxes | 19.2 | | | 66.3 | | | (325.5) | | | 158.1 | |
| Provision (benefit) for income taxes: | | | | | | | |
| Current | (18.7) | | | 2.5 | | | (471.2) | | | 2.7 | |
| Deferred | 12.0 | | | 15.7 | | | 245.1 | | | 38.5 | |
| (6.7) | | | 18.2 | | | (226.1) | | | 41.2 | |
| Income (loss) from continuing operations | 25.9 | | | 48.1 | | | (99.4) | | | 116.9 | |
| Loss from discontinued operations, net of income taxes | — | | | (0.4) | | | (0.2) | | | (2.3) | |
| Net income (loss) | 25.9 | | | 47.7 | | | (99.6) | | | 114.6 | |
| Net income (loss) attributable to noncontrolling interest | 0.8 | | | (1.3) | | | (79.5) | | | (1.4) | |
| Net income (loss) attributable to Trinity Industries, Inc. | $ | 25.1 | | | $ | 49.0 | | | $ | (20.1) | | | $ | 116.0 | |
| | | | | | | |
| Basic earnings per common share: | | | | | | | |
| Income (loss) from continuing operations | $ | 0.21 | | | $ | 0.39 | | | $ | (0.17) | | | $ | 0.91 | |
| Income (loss) from discontinued operations | — | | | — | | | — | | | (0.02) | |
| Basic net income (loss) attributable to Trinity Industries, Inc. | $ | 0.21 | | | $ | 0.39 | | | $ | (0.17) | | | $ | 0.89 | |
| Diluted earnings per common share: | | | | | | | |
| Income (loss) from continuing operations | $ | 0.21 | | | $ | 0.39 | | | $ | (0.17) | | | $ | 0.90 | |
| Income (loss) from discontinued operations | — | | | — | | | — | | | (0.02) | |
| Diluted net income (loss) attributable to Trinity Industries, Inc. | $ | 0.21 | | | $ | 0.39 | | | $ | (0.17) | | | $ | 0.88 | |
| Weighted average number of shares outstanding: | | | | | | | |
| Basic | 116.4 | | | 124.7 | | | 117.2 | | | 127.6 | |
| Diluted | 117.0 | | | 126.0 | | | 117.2 | | | 129.2 | |
Trinity is required to utilize the two-class method of calculating earnings per share ("EPS") as a result of unvested restricted shares that have non-forfeitable rights to dividends and are, therefore, considered to be participating securities. The calculation of EPS using the two-class method excludes income attributable to these participating securities from the numerator and excludes the dilutive impact of those shares from the denominator; therefore, the two-class method may result in a lower EPS than is calculated from the face of the income statement. There were no restricted shares and stock options included in the computation of diluted EPS for the nine months ended September 30, 2020 as we incurred a loss for the period, and any effect on loss per common share would have been antidilutive.
Trinity Industries, Inc.
Condensed Segment Data
(in millions)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended
September 30, | | | | Nine Months Ended
September 30, | | |
| Revenues: | 2020 | | 2019 | | 2020 | | 2019 |
| Railcar Leasing and Management Services Group | $ | 183.9 | | | $ | 326.4 | | | $ | 613.0 | | | $ | 803.9 | |
| Rail Products Group | 381.2 | | | 735.1 | | | 1,296.2 | | | 2,075.8 | |
| All Other | 62.6 | | | 70.3 | | | 195.3 | | | 200.3 | |
| Segment Totals before Eliminations | 627.7 | | | 1,131.8 | | | 2,104.5 | | | 3,080.0 | |
| Eliminations – Lease Subsidiary | (166.0) | | | (314.0) | | | (512.4) | | | (913.0) | |
| Eliminations – Other | (2.3) | | | (4.2) | | | (8.3) | | | (12.6) | |
| Consolidated Total | $ | 459.4 | | | $ | 813.6 | | | $ | 1,583.8 | | | $ | 2,154.4 | |
| | | | | | | |
| Three Months Ended
September 30, | | | | Nine Months Ended
September 30, | | |
| Operating profit (loss): | 2020 | | 2019 | | 2020 | | 2019 |
| Railcar Leasing and Management Services Group | $ | 89.7 | | | $ | 115.7 | | | $ | 265.5 | | | $ | 306.3 | |
| Rail Products Group | 3.2 | | | 65.4 | | | 36.2 | | | 180.8 | |
| All Other | 7.3 | | | 3.9 | | | 23.9 | | | 19.9 | |
| Segment Totals before Eliminations, Corporate Expenses, Impairment of long-lived assets, and Restructuring activities | 100.2 | | | 185.0 | | | 325.6 | | | 507.0 | |
| Corporate | (21.0) | | | (23.9) | | | (73.3) | | | (78.1) | |
| Impairment of long-lived assets | — | | | — | | | (369.4) | | | — | |
| Restructuring activities, net | (4.7) | | | — | | | (10.5) | | | — | |
| Eliminations – Lease Subsidiary | (2.6) | | | (40.7) | | | (33.5) | | | (109.5) | |
| Eliminations – Other | 1.0 | | | (0.1) | | | (0.3) | | | (0.3) | |
| Consolidated Total | $ | 72.9 | | | $ | 120.3 | | | $ | (161.4) | | | $ | 319.1 | |
Trinity Industries, Inc.
Selected Financial Information – Leasing Group
($ in millions)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended
September 30, | | | | Nine Months Ended
September 30, | | |
| | 2020 | | 2019 | | 2020 | | 2019 |
| Revenues: | | | | | | | |
| Leasing and management | $ | 183.9 | | | $ | 190.1 | | | $ | 558.6 | | | $ | 566.6 | |
Sales of railcars owned one year or less at the time of sale (1)(2) | — | | | 136.3 | | | 54.4 | | | 237.3 | |
| Total revenues | $ | 183.9 | | | $ | 326.4 | | | $ | 613.0 | | | $ | 803.9 | |
Operating profit (3): | | | | | | | |
| Leasing and management | $ | 86.8 | | | $ | 79.8 | | | $ | 247.8 | | | $ | 234.6 | |
Railcar sales(1): | | | | | | | |
Railcars owned one year or less at the time of sale | — | | | 17.8 | | | 0.4 | | | 27.0 | |
Railcars owned more than one year at the time of sale | 2.9 | | | 18.1 | | | 17.3 | | | 44.7 | |
| | | | | | | |
| Total operating profit | $ | 89.7 | | | $ | 115.7 | | | $ | 265.5 | | | $ | 306.3 | |
| Total operating profit margin | 48.8 | % | | 35.4 | % | | 43.3 | % | | 38.1 | % |
| | | | | | | |
| Leasing and management operating profit margin | 47.2 | % | | 42.0 | % | | 44.4 | % | | 41.4 | % |
| | | | | | | |
| Selected expense information: | | | | | | | |
Depreciation (4)(5) | $ | 51.5 | | | $ | 59.4 | | | $ | 159.1 | | | $ | 171.6 | |
| Maintenance and compliance | $ | 18.5 | | | $ | 24.9 | | | $ | 67.4 | | | $ | 79.2 | |
| Rent | $ | 2.1 | | | $ | 3.8 | | | $ | 8.1 | | | $ | 13.6 | |
| Selling, engineering, and administrative expenses | $ | 11.7 | | | $ | 10.7 | | | $ | 39.0 | | | $ | 36.2 | |
| Interest | $ | 47.0 | | | $ | 50.0 | | | $ | 149.2 | | | $ | 146.4 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended
September 30, | | | | Nine Months Ended
September 30, | | |
| 2020 | | 2019 | | 2020 | | 2019 |
| Sales of leased railcars: | | | | | | | |
Railcars owned one year or less at the time of sale (2) | $ | — | | | $ | 136.3 | | | $ | 54.4 | | | $ | 237.3 | |
Railcars owned more than one year at the time of sale | 6.5 | | | 75.1 | | | 138.7 | | | 175.0 | |
| $ | 6.5 | | | $ | 211.4 | | | $ | 193.1 | | | $ | 412.3 | |
| Operating profit on sales of leased railcars: | | | | | | | |
| Railcars owned one year or less at the time of sale | $ | — | | | $ | 17.8 | | | $ | 0.4 | | | $ | 27.0 | |
| Railcars owned more than one year at the time of sale | 2.9 | | | 18.1 | | | 17.3 | | | 44.7 | |
| $ | 2.9 | | | $ | 35.9 | | | $ | 17.7 | | | $ | 71.7 | |
| Operating profit margin on sales of leased railcars: | | | | | | | |
| Railcars owned one year or less at the time of sale | — | % | | 13.1 | % | | 0.7 | % | | 11.4 | % |
| Railcars owned more than one year at the time of sale | 44.6 | % | | 24.1 | % | | 12.5 | % | | 25.5 | % |
Weighted average operating profit margin on sales of leased railcars | 44.6 | % | | 17.0 | % | | 9.2 | % | | 17.4 | % |
(1) The Company recognizes sales of railcars from the lease fleet which have been owned by the lease fleet for one year or less as revenue. Sales of railcars from the lease fleet which have been owned by the lease fleet for more than one year are recognized as a net gain or loss from the disposal of a long-term asset.
(2) Includes revenues associated with sales-type leases of $26.3 million and $60.5 million for the three and nine months ended September 30, 2019, respectively.
(3) Operating profit includes: depreciation; maintenance and compliance; rent; and selling, engineering, and administrative expenses. Amortization of deferred profit on railcars sold from the Rail Products Group to the Leasing Group is included in the operating profit of the Leasing Group, resulting in the recognition of depreciation expense based on the Company's original manufacturing cost of the railcars. Interest expense is not a component of operating profit and includes the effect of hedges.
(4) Effective January 1, 2020, we revised the estimated useful lives and salvage values of certain railcar types in our lease fleet. This change in estimate resulted in a decrease in depreciation expense in the three and nine months ended September 30, 2020 of approximately $7.7 million and $23.1 million, respectively. This decrease was partially offset by higher depreciation associated with growth in the lease fleet.
(5) As a result of the impairment of long-lived assets related to our small cube covered hopper railcars recorded in the second quarter of 2020, our quarterly depreciation expense beginning in the third quarter of 2020 has decreased by approximately $3.5 million.
Trinity Industries, Inc.
Condensed Consolidated Balance Sheets
(in millions)
(unaudited)
| | | | | | | | | | | |
| September 30, 2020 | | December 31, 2019 |
| ASSETS | | | |
| Cash and cash equivalents | $ | 120.8 | | | $ | 166.2 | |
| | | |
| Receivables, net of allowance | 219.9 | | | 260.1 | |
| Income tax receivable | 485.0 | | | 14.7 | |
| Inventories | 373.1 | | | 433.4 | |
| Restricted cash | 101.1 | | | 111.4 | |
| Property, plant, and equipment, net | 6,937.9 | | | 7,110.6 | |
| Goodwill | 208.8 | | | 208.8 | |
| | | |
| Other assets | 276.6 | | | 396.2 | |
| Total assets | $ | 8,723.2 | | | $ | 8,701.4 | |
| | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | |
| Accounts payable | $ | 178.9 | | | $ | 203.9 | |
| Accrued liabilities | 333.8 | | | 342.1 | |
| Debt | 4,935.1 | | | 4,881.9 | |
| | | |
| Deferred income taxes | 1,040.6 | | | 798.3 | |
| | | |
| Other liabilities | 141.2 | | | 96.3 | |
| Stockholders' equity: | | | |
| Trinity Industries, Inc. | 1,817.3 | | | 2,030.1 | |
| Noncontrolling interest | 276.3 | | | 348.8 | |
| 2,093.6 | | | 2,378.9 | |
| Total liabilities and stockholders' equity | $ | 8,723.2 | | | $ | 8,701.4 | |
Trinity Industries, Inc.
Additional Balance Sheet Information
(in millions)
(unaudited)
| | | | | | | | | | | |
| September 30, 2020 | | December 31, 2019 |
| Property, Plant, and Equipment | | | |
| Manufacturing/Corporate: | | | |
| Property, plant, and equipment | $ | 1,089.5 | | | $ | 1,040.4 | |
| Accumulated depreciation | (655.1) | | | (631.6) | |
| 434.4 | | | 408.8 | |
| Leasing: | | | |
| Wholly-owned subsidiaries: | | | |
| Machinery and other | 13.9 | | | 13.7 | |
| Equipment on lease | 6,868.7 | | | 6,944.2 | |
| Accumulated depreciation | (1,190.1) | | | (1,139.0) | |
| 5,692.5 | | | 5,818.9 | |
| Partially-owned subsidiaries: | | | |
| Equipment on lease | 2,245.6 | | | 2,410.0 | |
| Accumulated depreciation | (607.8) | | | (623.3) | |
| 1,637.8 | | | 1,786.7 | |
| | | |
| Deferred profit on railcars sold to the Leasing Group | (1,063.8) | | | (1,135.8) | |
| Accumulated amortization | 237.0 | | | 232.0 | |
| (826.8) | | | (903.8) | |
| $ | 6,937.9 | | | $ | 7,110.6 | |
| | | | | | | | | | | |
| September 30, 2020 | | December 31, 2019 |
| Debt | | | |
| Corporate – Recourse: | | | |
| Revolving credit facility | $ | 125.0 | | | $ | 125.0 | |
| Senior notes, net of unamortized discount of $0.2 and $0.2 | 399.8 | | | 399.8 | |
| 524.8 | | | 524.8 | |
| Less: unamortized debt issuance costs | (1.7) | | | (2.0) | |
| Total recourse debt | 523.1 | | | 522.8 | |
| | | |
| Leasing – Non-recourse: | | | |
| Wholly-owned subsidiaries: | | | |
| Secured railcar equipment notes, net of unamortized discount of $1.1 and $2.0 | 1,948.8 | | | 2,124.1 | |
| 2017 promissory notes, net of unamortized discount of $10.7 and $— | 813.7 | | | 627.1 | |
| TILC warehouse facility | 430.5 | | | 353.4 | |
| 3,193.0 | | | 3,104.6 | |
| Less: unamortized debt issuance costs | (20.3) | | | (23.9) | |
| 3,172.7 | | | 3,080.7 | |
| Partially-owned subsidiaries: | | | |
| Secured railcar equipment notes | 1,248.9 | | | 1,289.3 | |
| Less: unamortized debt issuance costs | (9.6) | | | (10.9) | |
| 1,239.3 | | | 1,278.4 | |
| Total non–recourse debt | 4,412.0 | | | 4,359.1 | |
| Total debt | $ | 4,935.1 | | | $ | 4,881.9 | |
Trinity Industries, Inc.
Condensed Consolidated Statements of Cash Flows
(in millions)
(unaudited)
| | | | | | | | | | | |
| Nine Months Ended
September 30, | | |
| 2020 | | 2019 |
| Operating activities: | | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| Net cash provided by operating activities – continuing operations | $ | 456.8 | | | $ | 166.3 | |
| Net cash used in operating activities – discontinued operations | (0.2) | | | (2.3) | |
| Net cash provided by operating activities | 456.6 | | | 164.0 | |
| | | |
| Investing activities: | | | |
| Proceeds from railcar lease fleet sales owned more than one year at the time of sale | 138.7 | | | 175.0 | |
| Proceeds from dispositions of property and other assets | 19.8 | | | 19.5 | |
| Capital expenditures – leasing, net of sold lease fleet railcars owned one year or less with a net cost of $54.0 and $210.3 | (448.8) | | | (854.3) | |
| Capital expenditures – manufacturing and other | (70.7) | | | (63.3) | |
| | | |
| Other | — | | | (0.2) | |
| | | |
| | | |
| Net cash used in investing activities | (361.0) | | | (723.3) | |
| | | |
| Financing activities: | | | |
| Net (repayments of) proceeds from debt | 40.3 | | | 649.4 | |
| Shares repurchased | (120.4) | | | (154.9) | |
| Dividends paid to common shareholders | (67.8) | | | (60.8) | |
| Other | (3.4) | | | (10.1) | |
| | | |
| | | |
| Net cash provided by (used in) financing activities | (151.3) | | | 423.6 | |
| Net decrease in cash, cash equivalents, and restricted cash | (55.7) | | | (135.7) | |
| Cash, cash equivalents, and restricted cash at beginning of period | 277.6 | | | 350.8 | |
| Cash, cash equivalents, and restricted cash at end of period | $ | 221.9 | | | $ | 215.1 | |
Trinity Industries, Inc.
Reconciliations of Non-GAAP Measures
(in millions, except per share amounts)
(unaudited)
Adjusted Operating Results
We have supplemented the presentation of our reported GAAP operating profit (loss), interest expense, net, provision (benefit) for income taxes, income (loss) from continuing operations, net income (loss) attributable to Trinity Industries, Inc., diluted weighted average shares outstanding and diluted income (loss) from continuing operations per common share attributable to Trinity Industries, Inc. with non-GAAP measures that adjust the GAAP measures to exclude the impact of restructuring activities, impairment of long-lived assets, early redemption of debt, the income tax effects of the CARES Act and certain other non-recurring transactions or events (as applicable).These non-GAAP measures are derived from amounts included in our GAAP financial statements and are reconciled to the most directly comparable GAAP financial measures in the tables below. Management believes that these measures are useful to both management and investors for analyzing the performance of our business without the impact of certain non-recurring items. Non-GAAP measures should not be considered in isolation or as a substitute for our reporting results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures for other companies.
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, 2020 | | | | | | | | | | |
| GAAP | | | | | | Restructuring activities (1) | | Income tax effect of CARES Act | | Adjusted |
| Operating profit (loss) | $ | 72.9 | | | | | | | $ | 4.7 | | | $ | — | | | $ | 77.6 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Provision (benefit) for income taxes | $ | (6.7) | | | | | | | $ | 1.1 | | | $ | 8.6 | | | $ | 3.0 | |
| | | | | | | | | | | |
| Income (loss) from continuing operations | $ | 25.9 | | | | | | | $ | 3.6 | | | $ | (8.6) | | | $ | 20.9 | |
| | | | | | | | | | | |
| Net income (loss) attributable to Trinity Industries, Inc. | $ | 25.1 | | | | | | | $ | 3.6 | | | $ | (8.6) | | | $ | 20.1 | |
| | | | | | | | | | | |
| Diluted weighted average shares outstanding | 117.0 | | | | | | | | | | 117.0 |
| | | | | | | | | | | |
Diluted income (loss) from continuing operations per common share attributable to Trinity Industries, Inc. | $ | 0.21 | | | | | | | | | | | $ | 0.17 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, 2020 | | | | | | | | | | | | |
| GAAP | | Impairment of long-lived assets – Controlling Interest (1)(2) | | Impairment of long-lived assets – Noncontrolling Interest (3) | | Restructuring activities (1) | | Early redemption of debt (1) | | Income tax effect of CARES Act | | Adjusted |
| Operating profit (loss) | $ | (161.4) | | | $ | 288.1 | | | $ | 81.3 | | | $ | 10.5 | | | $ | — | | | $ | — | | | $ | 218.5 | |
| | | | | | | | | | | | | |
| Interest expense, net | $ | 163.6 | | | $ | — | | | $ | — | | | $ | — | | | $ | (5.0) | | | $ | — | | | $ | 158.6 | |
| | | | | | | | | | | | | |
| Provision (benefit) for income taxes | $ | (226.1) | | | $ | 67.4 | | | $ | — | | | $ | 2.5 | | | $ | 1.2 | | | $ | 174.6 | | | $ | 19.6 | |
| | | | | | | | | | | | | |
| Income (loss) from continuing operations | $ | (99.4) | | | $ | 220.7 | | | $ | 81.3 | | | $ | 8.0 | | | $ | 3.8 | | | $ | (174.6) | | | $ | 39.8 | |
| | | | | | | | | | | | | |
| Net income (loss) attributable to Trinity Industries, Inc. | $ | (20.1) | | | $ | 220.7 | | | $ | — | | | $ | 8.0 | | | $ | 3.8 | | | $ | (174.6) | | | $ | 37.8 | |
| | | | | | | | | | | | | |
Diluted weighted average shares outstanding (4) | 117.2 | | | | | | | | | | | | 118.4 |
| | | | | | | | | | | | | |
Diluted income (loss) from continuing operations per common share attributable to Trinity Industries, Inc. | $ | (0.17) | | | | | | | | | | | | | $ | 0.32 | |
(1) The effective tax rate for impairment of long-lived assets, restructuring activities, and the early redemption of debt is before consideration of the CARES Act.
(2) Excludes $81.3 million of non-cash impairment of long-lived asset charges associated with the noncontrolling interest.
(3) Represents the portion of the non-cash impairment of long-lived asset charge attributable to the noncontrolling interest, for which Trinity does not provide income taxes.
(4) GAAP diluted weighted average shares outstanding excludes 1.2 million shares for the nine months ended September 30, 2020 since the Company was in a net loss position for the period. When adjusting for the items above, these shares become dilutive.
Free Cash Flow
Free Cash Flow before Capital expenditures – leasing ("Free Cash Flow") is a non-GAAP financial measure and is defined as net cash provided by operating activities from continuing operations as computed in accordance with GAAP, plus cash proceeds from sales of leased railcars owned more than one year at the time of sale, less cash payments for manufacturing capital expenditures and dividends. We believe Free Cash Flow is useful to both management and investors as it provides a relevant measure of liquidity and a useful basis for assessing our ability to fund our operations and repay our debt. Free Cash Flow is reconciled to net cash provided by operating activities from continuing operations, the most directly comparable GAAP financial measure, in the following table. Non-GAAP measures should not be considered in isolation or as a substitute for our reporting results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures for other companies.
| | | | | | | | | | | |
| Nine Months Ended
September 30, | | |
| 2020 | | 2019 |
| Net cash provided by operating activities – continuing operations | $ | 456.8 | | | $ | 166.3 | |
| Add: | | | |
| Proceeds from railcar lease fleet sales owned more than one year at the time of sale | 138.7 | | | 175.0 | |
| Adjusted Net Cash Provided by Operating Activities | $ | 595.5 | | | $ | 341.3 | |
| Less: | | | |
| Capital expenditures – manufacturing and other | (70.7) | | | (63.3) | |
| Dividends paid to common shareholders | (67.8) | | | (60.8) | |
| Free Cash Flow (before Capital expenditures – leasing) | $ | 457.0 | | | $ | 217.2 | |
EBITDA and Adjusted EBITDA
“EBITDA” is defined as income (loss) from continuing operations plus interest expense, income taxes, and depreciation and amortization expense. Adjusted EBITDA is defined as EBITDA plus non-cash impairment of long-lived assets and restructuring activities. EBITDA and Adjusted EBITDA are non-GAAP financial measures; however, the amounts included in these calculations are derived from amounts included in our GAAP financial statements. EBITDA and Adjusted EBITDA are reconciled to net income (loss), the most directly comparable GAAP financial measure, in the following table. This information is provided to assist management and investors in making meaningful comparisons of our operating performance between periods. We believe EBITDA is a useful measure for analyzing the performance of our business. We also believe that EBITDA is commonly reported and widely used by investors and other interested parties as a measure of a company’s operating performance and debt servicing ability because it assists in comparing performance on a consistent basis without regard to capital structure, depreciation or amortization (which can vary significantly depending on many factors). EBITDA and Adjusted EBITDA should not be considered as alternatives to net income as indicators of our operating performance, or as alternatives to operating cash flows as measures of liquidity. Non-GAAP measures should not be considered in isolation or as a substitute for our reporting results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures for other companies.
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended
September 30, | | | | Nine Months Ended
September 30, | | |
| 2020 | | 2019 | | 2020 | | 2019 |
| Net income (loss) | $ | 25.9 | | | $ | 47.7 | | | $ | (99.6) | | | $ | 114.6 | |
Less: Loss from discontinued operations, net of income taxes | — | | | (0.4) | | | (0.2) | | | (2.3) | |
| Income (loss) from continuing operations | $ | 25.9 | | | $ | 48.1 | | | $ | (99.4) | | | $ | 116.9 | |
| Add: | | | | | | | |
| Interest expense | 52.3 | | | 55.8 | | | 166.6 | | | 165.5 | |
| Provision (benefit) for income taxes | (6.7) | | | 18.2 | | | (226.1) | | | 41.2 | |
| Depreciation and amortization expense | 64.9 | | | 72.4 | | | 199.5 | | | 210.5 | |
EBITDA | $ | 136.4 | | | $ | 194.5 | | | $ | 40.6 | | | $ | 534.1 | |
| Add: | | | | | | | |
| Impairment of long-lived assets | — | | | — | | | 369.4 | | | — | |
| Restructuring activities, net | 4.7 | | | — | | | 10.5 | | | — | |
| Adjusted EBITDA | $ | 141.1 | | | $ | 194.5 | | | $ | 420.5 | | | $ | 534.1 | |
Exhibit 99.2
Trinity Industries, Inc.
Earnings Release Conference Call – Q3 2020
October 22, 2020
Jessica Greiner
Vice President, Investor Relations and Communications
Thank you, David. Good morning everyone. I’m Jessica Greiner, Vice President of Investor Relations and Communications for Trinity. We appreciate you joining us for the Company’s third quarter 2020 financial results conference call.
Our prepared remarks will include comments from both Trinity’s Chief Executive Officer and President, Jean Savage, and Eric Marchetto, the Company’s Chief Financial Officer. We will hold a Q&A session following the prepared remarks from our leaders.
During the call today, we will refer to a few slides highlighting key points of discussion. The supplemental materials are accessible on our IR website at www.trin.net. These slides can be found under the Events and Presentations portion of the site along with the Third Quarter Earnings Call event link.
It is now my pleasure to turn the call over to Jean.
E. Jean Savage
Chief Executive Officer and President
Thank you, Jessica – and good morning everyone!
Trinity has been on a transformative journey over the last year to realign our business, our people, our cost structure, and our purpose to deliver superior returns to our shareholders. The timing and execution of these initiatives were challenged by the COVID-19 outbreak. I want to commend our people and our business leaders for their resiliency and commitment to overcoming the hurdles caused by the pandemic, and their efforts to establish our strategic framework for the future, all while delivering high-quality products and services to our customers.
As a major milestone in our journey, Trinity will host a virtual Investor Day in four weeks. At this event, the management team will present our value proposition and strategic framework for accelerating our financial performance. Today, we want to focus on the results of the third quarter – and highlight how our results and actions taken during the quarter align with our goals that you will hear more about in the coming months. The goals of our strategic framework are to: (1) optimize the returns of our lease fleet; (2) to reduce the impacts of cyclicality; and (3) to increase the modal advantage of the railcar industry.
In the third quarter, Trinity implemented its new strategy. We expect these strategic shifts to drive operating model performance and generate superior shareholder returns. Our strategy is grounded in our newly defined purpose of ‘Delivering Goods for the Good of All.’ This purpose seeks to emphasize for all Trinity stakeholders the essential role that rail transportation plays in our daily lives as we eat dinner with our families, clean our homes, fuel our cars, and lead a safe and happy life. Trinity has a rich history, a legacy of strong growth, and a reputation of flexibility. With these attributes and our new focus, Trinity’s premier railcar products and services will support essential North American supply chains.
Going forward, we will emphasize the optimization of our platform, and scale new product and service offerings that will make our existing investment more valuable. This strategy will place more importance on cash flow and returns, resulting in more disciplined levels of growth through the cycle.
Our management team continued our progress in optimizing the cost structure of the business during the third quarter. As a result of the new strategy, we had additional headcount and other administrative cost reductions. We also made the decision to exit the U.S. trucking and logistics business and outsource this service to third parties. With this, we had a small impairment charge relating to the trucking fleet that had primarily serviced Trinity’s former industrial businesses. When including the actions from the first half of the year, Trinity has implemented over $80 million worth of reduction in operating costs and other related costs. Please refer to slide 4 of our Supplemental Materials.
We’ve continued to rationalize our footprint as well. During the quarter, further rightsizing resulted in a total manufacturing headcount reduction of 47% year-to-date. We anticipate there could be additional reductions heading into the beginning of next year. We are evaluating our material costs, and reviewing the relative spend between direct and indirect costs in order to lower our breakeven point. We believe through various cost efforts the rail segment margin could meaningfully improve throughout the cycle. We will share more detail on these efforts at our upcoming Investor Day. As you saw in our press release, we are also working on our balance sheet optimization, and Eric will talk to you about our successes in the financial overview.
Overall, our business results were in line with our expectations from our base case scenario provided at the start of the COVID-19 pandemic. Our Leasing business is holding steady at around 95% utilization, and we are controlling costs in order to minimize the impact of lower lease rates on renewals. Lease rates on renewals declined in the third quarter relative to their expiring rates; however, pricing sequentially held fairly stable from the second quarter. Our portfolio of
expirations subject to renewal over the next 12 months is in line with our typical 15-20% average, and we are closely monitoring our markets for signs of improvement. Based on recent market pricing for renewals, the lease rates for our current expirations in 2021 will have a much easier comp relative to the expirations this year. We have already noticed improvements in certain markets, like agriculture, including grain and intermodal, while other markets, like energy, continue to see headwinds.
As an operating lessor, we aim to differentiate our product and service offerings on customer experience – making the ownership and usage of railcar equipment a more attractive and valuable proposition for industrial shippers. Scaling additional services that we can provide that leverage our broad platform, market knowledge, and analytics of our owned and managed lease fleet, can bring a premium recurring revenue stream to the business. More recently, we’ve been developing the analytics and infrastructure to support the addition of telematics on railcars, and have partnered with other leading rail service providers to create a new technology platform, called Rail Pulse, that we believe will help transform rail shipping in the future. While this platform and resulting services are in the early stages of development, we believe these capabilities are a key factor in improving the rail industry’s competitive position relative to other modes of transportation longer term.
Looking again at our third-quarter performance, we incurred start-up costs for our new maintenance facility in the Midwest as we onboarded new employees and accepted our first customers into the plant. We expect the inefficiencies from the start-up of operations to be a headwind for the segment margin in the coming year, but we do expect the new facility to be accretive to earnings in 2021. With the capacity from this new facility, we believe we have the capability to service and maintain up to 60% of our lease fleet in house. This exceeds the target we set two years ago at the time of spin-off. We will continue to evaluate further growth of our Maintenance Services business, including the expansion of service capabilities in underserved markets.
As I mentioned, our manufacturing operation continued to slow their production into the third quarter with additional rationalization of our headcount. However, this was not at the same pace as the reduction we had in the second quarter, which allowed us to limit the amount of disruption to our plants.
In our base case scenario, our production plans for the remainder of the year assume the full delivery of our 2020 backlog. This would result in just over 11,000 railcars delivered in 2020.
During the third quarter, rail manufacturing received orders for 2,000 railcars composed primarily of larger, complex transactions that reflect the strength of Trinity’s rail platform and our ability to tailor solutions for our customers. These orders were predominantly for 2021 delivery and reflect competitive market pricing. We continue to see a good pipeline of inquiries for railcars – new and existing.
Like so many others, our business continues to operate with an even greater emphasis on the health and wellbeing of our people. Looking out over the next few years, we see the broader economic recovery driving more rail shipments and equipment demand as business and consumer confidence is renewed and shippers across the continent feel confident in making long-term capital decisions.
Railcar loadings rebounded during the third quarter from the historical declines earlier this year. However, market uncertainty continues to cloud near-term demand for railcars as much of the economy remains under pressure given the COVID-19 pandemic. We remain cautiously optimistic regarding the trajectory of demand heading into next year. Given the range of possibilities based on potential scenarios for the economy, the election, and the pandemic – we are still operating in a very fluid environment and are electing to not provide guidance.
That being said, we are committed to improving the financial performance of our platform, and we believe much of the improvement is within our control. A recovery in the cycle, when it occurs, will be an added tailwind.
Eric, I’ll turn it over to you to discuss some of our financial initiatives.
Eric R. Marchetto,
Executive Vice President and Chief Financial Officer
Thank you, Jean – and good morning everyone!
Trinity’s platform has demonstrated the ability to generate significant cash flow from originating railcar transactions that leverage the synergies of our business model. We believe the cash flow generation from our platform and the ability to optimize our balance sheet within a disciplined capital allocation framework will create long-term shareholder value.
During the third quarter, Trinity generated $129 million of cash flow from operations, resulting in year to date adjusted cash flow from operations of $596 million. Our investments for the quarter included approximately $183 million of net lease investment for new railcar additions and fleet modifications, and $29 million for other enterprise capital expenditures.
As Jean has said, optimization of the Trinity rail platform has been a key focus for Management and the Board in the last year. We are addressing optimization in all areas of our organization, our operations, and our balance sheet. The combination of balance sheet optimization with a disciplined capital allocation framework underscores our commitment to being a returns-focused company.
We made additional progress in the third quarter, and since quarter close, in raising the leverage on our lease fleet to lower our cost of capital. In late July, we completed the upsizing of our TRL 2017 financing with an additional $225 million of debt funded at LIBOR plus 1.5%. Earlier this week, we also redeemed $153 million of secured railcar equipment notes bearing interest at 3.8% and issued a new $156 million securitization bearing interest just below 2%. We are further evaluating the capital markets and taking advantage of an attractive interest rate environment to lower our cost of capital.
Trinity is operating in line with the base case scenario that we presented to investors as a guidepost at the start of the pandemic. As contemplated within our base case scenario, we have maintained our dividend and completed our share repurchase authorization. During the third quarter, we returned approximately $111 million of capital to shareholders through dividends and the completion of our share repurchase authorization. Our returns to shareholders over the last twelve months totaled $275 million – approximately 11% of our market cap as of yesterday. Earlier this week, the Board authorized a new share repurchase program after we completed our second such authorization since the spin-off two years ago. The new $250 million authorization runs through the end of 2021. Returning capital to shareholders is a key element of our investment story and is enabled by strong cash flows resulting from the synergies of our platform.
We are also highly focused on maintaining a strong balance sheet, which you will see on page 5 of the Supplemental Materials. As of the end of the third quarter, the Company had committed available liquidity of approximately $719 million in the form of cash and cash equivalents, and availability under our various credit lines. At this time, our income tax receivable is $485 million, which gives us greater certainty of cash flow over the next several quarters. This receivable is a direct result of the tax-efficient benefits between our leasing and manufacturing businesses, which when reinvested through our disciplined capital allocation framework, should generate even greater value for shareholders.
We are maintaining significant financial flexibility and remain close to our capital providers. Our committed credit facilities are adequate, and our RIV partners have appetite for more assets through our programs. At the end of the third quarter, the Company had $1.4 billion of
unencumbered railcar assets on our balance sheet. These railcars can be monetized through leverage or secondary market transactions. We believe our balance sheet and financial strength enables Trinity to navigate the volatility of the COVID-19 pandemic and capitalize on opportunities that may emerge for long-term shareholder value creation.
Given the market uncertainty, we are maintaining a very fluid evaluation of our financial condition and business performance based on various scenarios. Market conditions are improving within the railcar industry, but there are still headwinds to overcome to be on path for a full recovery. These conditions make forecasting our business and giving earnings guidance difficult. We are committed to providing specific targets for financial performance where we have more control of our performance. As we move into 2021, we will reevaluate market conditions and, to the extent we can, provide expectations of our financial performance and capital allocation. We believe we are well positioned to respond to a rapid inflection in market demand, should conditions improve, with a strong balance sheet to defend against lingering market disruption.
In closing, we have put in place a disciplined capital allocation framework with a focus on improving our returns. As part of our Investor Day, we will lay out our expectations for the impact of balance sheet and other optimization efforts on our returns. We believe that through aggressive cost control measures, disciplined capital allocation, and selective actions to enhance the returns of our owned lease portfolio, we will set Trinity on a path of accelerating our financial performance.
I’ll now turn the call back over to Jean for closing comments.
E. Jean Savage
Chief Executive Officer and President
Thanks, Eric. You know this is a very exciting time for Trinity, our people, and, I believe, our investors. While much has been said about the obvious challenges throughout 2020, this year has been a year for tremendous positive change at Trinity. Our work has led us to prepare for a fresh start, a new perspective, and a new operating model.
In addition to the opportunity to hone our strategy and operating structure, I mentioned in my first earnings call as CEO, that I believe there is a real opportunity to accelerate Trinity’s position as an industry leader in the railcar market through innovative products and services. We believe this strategy will transition Trinity to a higher-quality, recurring-relationship business model.
The focus of our strategic framework we will lay out at our Investor Day will focus on the following themes: (1) to optimize the returns and performance of our fleet; (2) to reduce the cyclicality of our business model; and (3) to increase the modal advantage of the railcar industry.
We look forward to discussing these topics and more with you on November 19th, and we’ll now take some time to answer your questions on our third quarter performance results. Operator, will you please give our listeners the instructions for the Q&A session.
Jessica Greiner
Vice President, Investor Relations and Communications
Thank you, David. As Jean mentioned, we look forward to engaging with you all again in four weeks’ time at our upcoming virtual Investor Day on November 19th. Registration for the webcasted event is now open, and can be found on the Events and Presentations portion of the website.
Also please note, we expect Trinity will file our Form 10-Q within the next week. If you have questions, on the Company’s quarterly financial results press release, I am happy to follow up with you.
A replay of today’s call will be available after one o'clock eastern standard time through midnight on October 29, 2020. The access number is (402) 220-1140. A replay of the webcast will also be available under the Events and Presentations page on our Investor Relations website located at www.trin.net. We look forward to visiting with you again on our next conference call. That concludes today’s conference call. Thank you for joining us this morning.
