Trinity Industries, Inc. July 2012 Exhibit 99.1 |
2 Forward Looking Statements This presentation contains “forward looking statements” as defined by the Private Securities Litigation Reform Act of 1995 and includes statements as to expectations, beliefs and future financial performance, or assumptions underlying or concerning matters herein. These statements that are not historical facts are forward looking. Readers are directed to Trinity’s Form 10-K and other SEC filings for a description of certain of the business issues and risks, a change in any of which could cause actual results or outcomes to differ materially from those expressed in the forward looking statements. Any forward looking statement speaks only as of the date on which such statement is made. Trinity undertakes no obligation to update any forward looking statement or statements to reflect events or circumstances after the date on which such statement is made. |
3 Agenda I. Overview II. Key Investment Considerations III. Strategy and Vision IV. Financial Highlights V. Appendix |
I. Trinity Industries, Inc. Overview 4 Trinity Industries, Inc. is a multi-industry company that owns a variety of market-leading businesses that provide products and services to the industrial, energy, transportation, and construction sectors Trinity operates through five business segments: Rail Group Railcar Leasing and Management Services Group (“Leasing”) Inland Barge Group Construction Products Group (“CPG”) Energy Equipment Group (“EEG”) The Company serves its customers through manufacturing facilities located in the United States and Mexico and had approximately 13,400 employees at the end of 2011 Total Revenue and EBITDA for the LTM 6/12 was $3,686 million and $717 million, respectively 1 Intersegment Revenues are eliminated and Leasing Revenues include revenues related to TRIP beginning in FY 2010 2 FY 2009 EPS excludes a $325 million pretax Goodwill impairment External Revenue by Business Group (1) |
II. Key Investment Considerations 5 Seasoned Performers Enrichment Value Focused Flexible and Cost-Effective Manufacturing Diversified Portfolio of Businesses Leading Market Positions |
Leading Market Positions 6 Rail Group Leading manufacturer of railcars in North America Leading manufacturer of railcar axles in North America Leading manufacturer of railcar coupling devices in North America Railcar Leasing and Management Services Group Leading provider of railcar leasing and management services Inland Barge Group Leading manufacturer of inland barges in the United States Largest manufacturer of fiberglass covers for barges in the United States Construction Products Group Leading full-line manufacturer of highway guardrail and crash cushions in the United States Leading supplier of concrete and aggregates in certain regions of Texas Energy Equipment Group Leading manufacturer of structural wind towers in North America Leading producer of propane tanks, tank containers, and tank heads for pressure and non- pressure vessels in North America |
Diversified Portfolio of Businesses 7 PAST (FY 2000) PRESENT (FY 2011) Total Revenues = $2.7 B Total Revenues = $3.1 B Revenues Revenues Operating Profit (1) Operating Profit (1) Our diversified portfolio of businesses produced a higher level of EPS on fewer railcar deliveries during the latest recovery (1) Operating Profit Excludes All Other, Corporate and is reduced by Leasing Interest Expense of $7 million in FY 2000 and $161 million in FY2011 (2) Rail percentage represents Operating Profit less all Intersegment Company Eliminations; Leasing percentage represents Operating Profit less Leasing Interest Expense (3) FY 2009 EPS excludes a $325 million pretax Goodwill impairment (1) Operating Profit Excludes All Other, Corporate and is reduced by Leasing Interest Expense of $7 million in FY 2000 and $161 million in FY2011 (2) Rail percentage represents Operating Profit less all Intersegment Company Eliminations; Leasing percentage represents Operating Profit less Leasing Interest Expense (3) FY 2009 EPS excludes a $325 million pretax Goodwill impairment (2) (2) (2) (2) 60% 5% 21% 6% 8% 55% 14% 19% 4% 8% Rail Leasing CPG EEG Barge 16% 30% 17% 3% 34% Rail Leasing CPG EEG Barge 30% 18% 19% 15% 18% MEASUREABLE PROGRESS |
Flexible and Cost-Effective Manufacturing 8 Trinity's manufacturing flexibility across product and business segments enhances our ability to opportunistically respond to changes in market demand Trinity’s manufacturing scale, vertical integration, and presence in the Southern U.S. and Mexico provides cost effective benefits across multiple business segments Flexibility Cost-Effective |
Enrichment Value Focused 9 Rail Leasing Construction Energy Inland Barge Customer Sharing Internal Component Sourcing Shared Best Manufacturing Practices Facility Optimization Centralized Cost Savings Trinity focuses on collaboration across business segments… …generating synergies that enrich value and ultimately provide competitive benefits |
10 Seasoned Performer Across Economic Cycles Trinity is uniquely positioned to emerge from a severe down cycle with more opportunity for growth to generate significant profits during an up cycle Seasoned management team knows how to assess the market, proactively plan for cycles and address changes in economic conditions Manufacturing flexibility is a core competency, and when combined with our broad product offering allows us to pursue a wide range of orders Cost-effective manufacturing footprint in the Southern United States and Mexico is a competitive advantage for many of our product lines Shared synergies across business lines provide unique opportunities Trinity’s lease fleet of approximately 70,700 railcars (including TRIP) provides a strong strategic connection to our customers, as well as a consistent long-term stream of profit and cash flow Strong liquidity position of approximately $832 million and solid balance sheet |
III. Strategy and Vision: Operational 11 Strategically Grow the Lease Fleet Maximize Manufacturing Efficiency Selectively Build our Backlogs Diversify Through Organic Growth Acquire Complementary Product Portfolios Be a premier, multi-industry growth company that generates superior earnings and returns for shareholders |
Liquidity (at 6/30/12): ~ $832 mm Strategy and Vision: Financial 12 Working Capital Working Capital Capital Expenditures Capital Expenditures Acquisitions Acquisitions Shareholder Distributions Shareholder Distributions Corporate Debt (1) - Convertible Subordinated Notes - $450 mm Leasing Debt (2) – Recourse Debt: Capital lease obligations/Term loan - $100 mm Non-recourse Debt: TILC Warehouse borrowings - $291 mm TILC Long-term financings - $1,277 mm TRIP Long-term financings - $880 mm (1) Excludes $93.8 mm of unamortized discount (2) Total leasing financings of $2.5 billion, including TRIP; Leasing assets have a net book value of $4.3 billion, including TRIP, which leaves a significant amount of unencumbered assets available for financing Cash and Cash Equivalents - $294 mm Corporate Revolver Availability - $354 mm TILC Warehouse Availability - $184 mm Balance Sheet Debt (at 6/30/12): ~ $2,911 mm Equity (at 6/30/12): ~ $2,028 mm |
13 IV. Financial Highlights LTM as of June 30, 2012 (1): Revenues increased 47% from $2.5 billion to $3.7 billion Operating profit increased 64% from $212 million to $348 million (2) EBITDA increased 33% from $540 million to $717 million Earnings per common diluted share increased 106% from $1.26 to $2.60 per diluted share (1) Relative to LTM 6/30/11 (2) Operating Profit includes Leasing Interest Expense (3) EPS from Continuing Operations (4) Excludes $325mm pre-tax impact of impairment of Goodwill (5) Beginning in FY 2010, TRIP Revenues and OP were consolidated with the Leasing Group (6) See Note in Appendix pg. 21 for Reconciliation of EBITDA (1) Relative to LTM 6/30/11 (2) Operating Profit includes Leasing Interest Expense (3) EPS from Continuing Operations (4) Excludes $325mm pre-tax impact of impairment of Goodwill (5) Beginning in FY 2010, TRIP Revenues and OP were consolidated with the Leasing Group (6) See Note in Appendix pg. 21 for Reconciliation of EBITDA Trinity’s Earnings Summary FY 2005 – LTM 6/30/12 (3) Trinity’s EBITDA Summary FY 2005 – LTM 6/30/12 (6) |
Guidance and Outlook (As of July 26, 2012) 14 Any forward-looking statements made by the Company speak only as of the date on which they are made. The Company is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, subsequent events or otherwise. Rail Group Revenues ~ $1 – 1.1B in 2H-2012 OP Margin ~ 9-11% in 2H-2012 Shipments ~ 8,745 – 9,745 in 2H-2012 Leasing Group Revenue Eliminations ~ $290-310mm in 2H-2012 EPS Elimination Impact ~ $0.20-0.26 in 2H-2012 Net Lease Fleet Additions ~ $140-170mm in 2H-2012 Railcar Sales from Lease Fleet EPS Impact ~ $0.17-0.22 in 2H-2012 Barge Group Revenues ~ $320-340mm in 2H-2012 OP Margin ~ 16-18% in 2H-2012 Total Company EPS ~ $2.95-3.10 in FY 2012 Manufacturing Capital Expenditures ~ $130-150mm in FY 2012 EPS Impact of Manufacturing Repositioning ~ ($0.08-0.10) in 2H-2012 |
Appendix: Operating Business Summaries |
16 Trinity delivered approximately 18,965 railcars representing 30% of industry shipments during LTM 6/30/12 Trinity received orders for approximately 22,335 railcars representing 34% of the industry total during LTM 6/30/12 Trinity’s order backlog was approximately 30,610 railcars representing 52% of industry backlog as of 6/30/12 Rail Group Leading manufacturer of railcars, railcar axles, and coupling devices in North America Broadest product offering for railcar manufacturing in North America Networking of customers between railcar sales and railcar leasing Focus on new and advanced engineering designs Centralized sourcing provides cost savings Streamlined manufacturing efficiencies Rail Group Highlights (1) Before eliminations for Intersegment Sales to Leasing and Intercompany Profit (2) Excludes $325mm pretax charge for impairment of Goodwill (1) Sources: Historical data as reported per the Railway Supply Institute. 2012-2016 projections are an average of estimates provided by Global Insight (05/12) and Economic Planning Associates, Inc. (04/12) and are provided as a point of reference. Rail 30% Total FY11 Revenue $3.1B 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 Rail Group Historical Revenues and OP Margin Railcar Deliveries (1958 - 2016P) (1) Projections based on Third Party estimates(1) |
17 Railcar Leasing & Management Services Group Leading provider of comprehensive railcar leasing and management services Marketed with railcar sales activities as TrinityRail® Single point of contact for equipment and services Strengthens relationship with end-user of railcar Scale of operations facilitates active participation in secondary market activities for portfolio railcar sales as market conditions warrant Strategic Position Operating Benefits Financial Results Complements product offering (one-stop shopping) Provides Trinity’s rail customers option to purchase or lease Facilitates ideal method for introduction of new products Assists in balancing and extending production lines Minimizes administrative costs Provides an important dashboard of metrics for assessing railcar demand Provides attractive cash return on investment Minimizes the cyclicality of the company Diversifies Trinity’s revenue and cash flow ($mm) (1) Operations Margin calculated using only revenues and profitfrom Leasing Operations and excludes Car Sales; PBT Margin calculated using Operating Profit from Leasing Operations less Leasing Interest Expense (2) Beginning in FY 2010, TRIP Revenues and OP were consolidated with the Leasing Group (1) Operations Margin calculated using only revenues and profitfrom Leasing Operations and excludes Car Sales; PBT Margin calculated using Operating Profit from Leasing Operations less Leasing Interest Expense (2) Beginning in FY 2010, TRIP Revenues and OP were consolidated with the Leasing Group Trinity’s Lease fleet has grown at a 19% CAGR since 2000 Trinity’s Lease fleet has grown at a 19% CAGR since 2000 (2) Leasing 18% Total FY11 Revenue $3.1B Trinity Leasing’s capabilities provide the following advantages: Leasing Historical Revenues and Profit from Operations (1) |
18 Revenues up 32.2% in LTM 6/30/12 vs. LTM 6/30/11 Profitability continues to be strong compared to historical averages for this business - Operating Profit margins increased from 6.5% in FY 2005 to 17.1% during LTM 6/30/12 (3) Backlog remained strong at $542mm at 6/30/12 Quickly recovered from 2 significant floods in Tennessee (in 2010) and Missouri (in 2011) that halted production levels for a period of time and impacted financial results in certain periods Inland Barge Group Inland Barge Group Highlights Inland Barge Group Historical Revenues and OP Margin Tank Barges Hopper Barges Transports grain & coal Transports liquids ($mm) Leading manufacturer of barges that transport goods along U.S. inland waterways Largest U.S. manufacturer of fiberglass barge covers Multiple barge manufacturing facilities on inland waterways enable rapid delivery Barge transportation has a cost advantage in high-cost fuel environments 4,250 out of 17,996 hopper barges, or approximately 24%, are 20+ years old 1,152 out of 3,084 tank barges, or approximately 37%, are 20+ years old Over the past 10 years, 22% more barges were scrapped vs. built (9,306 scrapped vs. 7,630 built from 2001 – 2011) Leading manufacturer of barges that transport goods along U.S. inland waterways Largest U.S. manufacturer of fiberglass barge covers Multiple barge manufacturing facilities on inland waterways enable rapid delivery Barge transportation has a cost advantage in high-cost fuel environments 4,250 out of 17,996 hopper barges, or approximately 24%, are 20+ years old 1,152 out of 3,084 tank barges, or approximately 37%, are 20+ years old Over the past 10 years, 22% more barges were scrapped vs. built (9,306 scrapped vs. 7,630 built from 2001 – 2011) (1) (1) OP Margin excludes a $5.1mm net gain as a result of flood damage to the Tennessee barge plant (2) OP Margin excludes a $15.5 mm net gain as a result of flood damage to the Tennessee and Missouri barge plants (3) OP Margin excludes a $23.3 mm net gain as a result of flood damage to the Tennessee and Missouri barge plants, and the sale of leased barges (1) OP Margin excludes a $5.1mm net gain as a result of flood damage to the Tennessee barge plant (2) OP Margin excludes a $15.5 mm net gain as a result of flood damage to the Tennessee and Missouri barge plants (3) OP Margin excludes a $23.3 mm net gain as a result of flood damage to the Tennessee and Missouri barge plants, and the sale of leased barges (2) (3) Barge 18% Total FY11 Revenue $3.1B Replacement demand driver (as of 12/31/11): |
19 Revenues increased 8.1% LTM 06/30/12 vs. LTM 6/30/11 Operating Profit increased 7.0% LTM 6/30/12 vs. LTM 6/30/11 Acquired Quixote Corporation in February 2010 which increased Highway Products Revenue by 31% during the year it was acquired Continued portfolio restructuring in 2011 through the completion of several acquisitions, including the addition of a custom galvanizing business and increased exposure to Aggregates Construction Products Group Leading U.S. manufacturer of highway guardrail and crash cushions; plus a line of proprietary products including guardrail end treatments and cable barrier guardrail systems Leading Texas producer of concrete and aggregates Diversified exposure to commercial, residential, industrial, and highway markets Business has grown organically and through acquisitions Consistent contributor to Company cash flow Demand tied to construction projects and federal funding Construction Products Group Highlights ($mm) (1) OP Margin excludes a $3.8mm net gain as a result of the divestiture of the Asphalt business from within the Concrete and Aggregates business (1) OP Margin excludes a $3.8mm net gain as a result of the divestiture of the Asphalt business from within the Concrete and Aggregates business (1) CPG 19% Total FY11 Revenue $3.1B Construction Products Group Historical Revenues and OP Margin |
20 Structural Wind Towers: Revenues of $228 million in LTM 6/30/12 Trinity’s backlog as of 6/30/12 was $817 million (1) Plants are strategically located along the central corridor where the majority of wind farms are installed Tank Containers: Consistent and mature business Recently launched the frac tank product to support oil & gas exploration industry Trinity has taken cost out of the business – Improved processes – Elimination of non-profitable products – Consolidated North American operations Energy Equipment Group Leading North American manufacturer of structural wind tower business Leading producer of propane tanks, tank containers, and tank heads for pressure and non- pressure vessels in North America Low-cost manufacturer with primary tank container production in Mexico facilities Synergies among products across multiple Trinity business groups Energy Equipment Group Highlights ($mm) (1) Approximately $413 million of this backlog is involved in litigation filed by the Company against one of our structural wind tower customers for breach of a long-term supply contract for the manufacture of towers EEG 15% Total FY11 Revenue $3.1B Energy Equipment Group Historical Revenues & OP Margin |
2005 2006 2007 2008 2009 2010 2011(1) LTM 6/12 Income (loss) from continuing operations $110.5 $212.6 $289.8 $282.4 ($137.7) $75.4 $145.7 $208.3 Add: Interest expense 42.2 68.7 84.5 109.4 123.2 182.1 185.3 192.8 Provision/(Benefit) for income taxes 65.6 131.3 165.1 171.4 (9.4) 40.9 91.8 120.0 Depreciation & amortization expense 76.2 87.6 118.9 140.3 160.8 189.6 192.9 196.2 Goodwill impairment - - - - 325.0 - - - Earnings from continuing before interest expense, income taxes, and depreciation and amortization expense $294.5 $500.2 $658.3 $703.5 $461.9 $488.0 $615.7 $717.3 Reconciliation of EBITDA “EBITDA” is defined as income (loss) from continuing operations plus interest expense, income taxes, and depreciation and amortization including goodwill impairment charges. EBITDA is not a calculation based on generally accepted accounting principles. The amounts included in the EBITDA calculation, however, are derived from amounts included in the historical statements of operations data. In addition, EBITDA should not be considered as an alternative to net income or operating income as an indicator of our operating performance, or as an alternative to operating cash flows as a measure of liquidity. We believe EBITDA assists investors in comparing a company’s performance on a consistent basis without regard to depreciation and amortization, which can vary significantly depending upon many factors. However, the EBITDA measure presented in this presentation may not always be comparable to similarly titled measures by other companies due to differences in the components of the calculation. (1) Includes results of operations related to TRIP starting January 1, 2010 “EBITDA” is defined as income (loss) from continuing operations plus interest expense, income taxes, and depreciation and amortization including goodwill impairment charges. EBITDA is not a calculation based on generally accepted accounting principles. The amounts included in the EBITDA calculation, however, are derived from amounts included in the historical statements of operations data. In addition, EBITDA should not be considered as an alternative to net income or operating income as an indicator of our operating performance, or as an alternative to operating cash flows as a measure of liquidity. We believe EBITDA assists investors in comparing a company’s performance on a consistent basis without regard to depreciation and amortization, which can vary significantly depending upon many factors. However, the EBITDA measure presented in this presentation may not always be comparable to similarly titled measures by other companies due to differences in the components of the calculation. (1) Includes results of operations related to TRIP starting January 1, 2010 21 (1) (1) (1) (1) (1) |