TRN - Earnings call transcript Q3 2017 | Trinity Industries, Inc.

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Operator

Good day, everyone, and welcome to today's Trinity Industries Third Quarter Results Conference Call. At this time all participants are in a listen-only mode. Please note this call may be recorded. I'll be standing by if you should need any assistance. 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 of Participants SEC certain filings to to Trinity's differ in of or those actual and forward-looking other Form XX-K statements. any change for a in business materially and are could outcomes issues cause results directed the risks, which expressed a the from description of It to Gail is now Peck. my pleasure to turn the conference over

Gail M. Peck

Products President morning, third I'm morning. matter. Good we've Leo. joining everyone. Finance Vice quarter Gail with earnings recent litigation results you, the for Industries' on we Welcome used of Thank Trinity Similar Treasurer will an call. XXXX conference Peck, you Highway format Trinity. begin of and on to update our call, to Thank the this us the

President quarterly of Vice Executive and President and Chief Senior Equipment, Officer; Chief Bill and and the President Theis President call our of then Senior Today's Perry, format. with Chief Barge Group Railcar Vice Menzies, the are Legal McWhirter, Rail Inland President Vice We Officer. will Chairman, our Rice, Officer, follow Energy Group and and Vice Steve our earnings conference Senior President and James group; President; Senior Construction Financial Wallace, normal Tim Products, Leasing; and speakers

turn move in room over the call Following Henderson, their I then with Chief also the is comments Rice. us we session. to now Mary Q&A will and the Officer will to our Vice Accounting today. Theis President

S. Theis Rice

guardrail is September Trial Joshua $XXX.X to tam system. judgment everyone. False law. that by the the means pleased matter by Harman a report Act favor to Trinity Fifth the did Act. unanimous judgment the Circuit you, published Trinity. filed the XXXX, I Claims Claims affirms company's in in ruling violate the to am and that a previously now as and reversed the Court's and I appeal Trial our qui Reversed in Circuit entered instance is Gail. have not that reversed on for Fifth ET-Plus judgment pertaining Thank Good XX, judgment of the reported end-terminal Court Trinity morning, of that on judgment for rendered litigation ruling rendered million a False This this

Our a reasoned case nothing the an Fifth wrong. we was presenting founded was False of this defense belief, and opinion Circuit case that thorough, law well in the believe simple unanimous upon and under We XX-page Claims in-depth controlling did the in panel's this facts analysis the Act.

the in are Circuit's our We ruling Fifth steadfast gratified agrees are belief with of having proud and remained us.

the appeal. legal for of recourse, although thankful Mr. of is the matter and our also in are We such internal within commitments Procedurally, the resulted that the successful without not further external is a courts of and not is Harman right. contributions discretion appellate recourse teams and

are denies aware rehearing judges a to which to respective Mr. Circuit or granted tomorrow has review petitions file he and or the is with Supreme banc, could case. by States United rehearing discretionary hear denied that Mr. Fifth If rehearing, the Circuit Circuit an wholly on Harman's are requested until Fifth would all Fifth for Court whether Harman's however, the matter. with Mr. not Again, the petition, or the ask court. We panel Harman extension procedure petition the active was the a en granted

plaintiffs of the to these claims. judgment, ET-Plus lawsuits were of that cases We their wake in used also a of is prominent now number pending. support which reported the verdict, original jury previously regarding reversed, on adverse remain In the filed have assertion which other is the many a by

ET-Plus the and lawsuits. to vigorously our these continue company defend will We in

wavered safety standards, in its system its meets has As of never product. all approval ET-Plus the in the opinion, panel the federal unanimous the end-terminal recognized applicable Fifth government Circuit and

For financial be other the which Form-XX-Q company's XX in litigation, a of see for to Trinity's please more filed Claims disclosure today. Note the XXXX, September False statements will XX, and the case the Act detailed period ended

the www.etplusfacts.com. information a copy opinion the can on and Tim. Fifth False over now Act the Claims will be found I of Circuit's to call case Additional turn at

Timothy R. Wallace

everyone. supported you, our legal like products support. and most importantly Circuit our The I ruling business who Fifth to grateful and practices, taking I'm the Trinity's quality confidence your a Thank character, the of continued our on stakeholders Theis, is good to reflection company's by people. for our strong morning, and begin in challenges. would through moment very thank have a Trinity our

is ruling end it's an not the very While situation. positive, to the

updates provide remainder we through to the continue will process. move of the We as legal

ahead for by financial results results in came in driven on report segments. of financial Bill, expectations, and views the of James and our our the third remarks. railcar-related will primarily quarter Steve, our operations their business performance Our their

of in product with small as an the layers of adding amounts pricing, of with This majority levels climate. For businesses result they in oversupply of optimism mixture the industry to complexity more order year a than be company. end a combined uncertainty management landscape planning of combined a conditions political have our and serve. Periods well appears uncertainty to the the seen markets economic as of the of the within and create volatility

to of some markets, remain incent of usually decrease margins relatively This make third Lower quarter. to product. while the our during due customers pricing. occurred pricing strategic revenues types lower these stable During purchases

in challenging very markets. at experienced are We operating

positions to has diversity cost swings plans, expressed conditions. and We businesses strategies. continuously variety interest increased number develop high-level strive the of take will and the to view. combined businesses, cyclical and our a reduce our brief, area. the our of in a Circuit Fifth in unique capital factors a our capital businesses market situation. as to capital planning business long-term corporate approach as for some planning balanced community our share investment mixture lines. consideration places we to railcar of orders maintain in to of their Our Since barge they a pursue we extend ruling, portfolio production thoughts The with ways respond this model and within flexible industrial manufacturing The businesses Trinity's search I culture of Trinity into

Our and as and a cycle are we whenever of maintain top flexible respond generating balance challenging during to priority strategic on points strong We cycle. liquid strong we downturns, financially strive business swiftly where the cash to regardless while in sheet so is view strategic cycles, surface. we remaining operationally can the investments. business flow We focus situations, at opportunities consider and of significant opportunities cyclical all

leasing improvements that are grow support financially easily internal to During are business and strive implemented downturns, continue also we railcar normal. be to business than more activities positioned when to our slower

and consideration Our capital efficiently takes our planning into improves. as also need soon demand working market as capital to quickly replenish the

In priority addition, a capital we returning to on shareholders place repurchases. dividends through share and

shareholders, an five approximately During activities $XXX million our to element years, planning. and remain these capital we've returned balanced of important to approach the last

During sales reservoir upfront process. view, a point the in last strive railcar in of fleet, of increasing amount We unique factor for our to significant up capital have investment to flow. We cycle, readily investors our requires cash the this a available This our significant vehicle good From generating investment. RIV a our and resources size capital railcars participating in we progress is railcar of sufficient planning platform. area, growing with expand leases investment made of platform planning earnings dedicated platform. our managed a to

respect During a challenges the years, encountered past deployment with worked and deliberate through were cautiously legal and downturn. while cyclical few we prudent to we've capital our

and a barge-related maintaining balance market in successful strong transitioned very been have businesses. We the through as our we in railcar sheet cycle

capital capital believe is Our working flexibility have planning as fresh process. We company planning of we regard capital Fifth additional from breath like financial our intended. The the was positive a our with to and Circuit allocation. to air approach ruling

experienced market-leading options Over the value built compelling with the growth portfolio leadership provides in of a continuing variant years, of numerous of teams market. a shareholders. for opportunities strength have to end believe our businesses unique Trinity diversity and for these businesses with and we collective We create sizes,

needs. intangible strategically the integrated a positioned value provides across leasing Our integrated ability chain, railcar manufacturing customer providing platform us to a with railcar the us benefit. an important variety and of infrastructure-related utility in This economy, to structures materials role the supplying aggregates. and services play ranging unique spectrum overall serve manufacturing our broad construction industrial businesses structure is same essential and construction the tangible of time, from products At and services

about leadership senior and team engage and in board opportunities Our strategies. ongoing strategic of corporate series an growth discussions

turn initiatives, makeup shareholder number discuss our of I to will the strategic the of potential Bill with our it We're portfolio, of we to enhancing his overall capital a our ideas. for remarks. and now study goal continuing plans and over During and value. topics discussions, review

William A. McWhirter

everyone. morning, good and Tim, you, Thank

end of conditions the the quarter, Energy mixed we to reflect third the During Group financial markets performance Equipment the serve. demand continued for

in higher and slightly lines. quarter, revenues group's the For volumes softness product partially businesses, our to over wind year increased towers the utility by last in continued offset other structures due

third margins totaled production third backlog end stable pricing wind $XXX of the the our The At group providing pressure. for a result year-over-year quarter declined the as visibility. tower of quarter, million,

those decline overhead fewer As we a exercised indicated of will result on unchanged until first in dollars cost. some as of customer sharply expect their sales to quarter we has XXXX. margin quarter call, a with remain as delivery cover to right The towers revenues delivery fourth defer the earnings to our last compressed cost

rate next Our revenue first of in will normalize year. run quarter the

During structures the for to third improve. quarter, utility continues demand

the the market projects be side small on tend to and challenging. However, is

improve the on grid. order visibility. need term based remain current book intact near provides Long-term for and aging Our reliability to replace good infrastructure fundamentals

Inland reductions third year-over-year reflect market as The our conditions significant quarter weak for results Group volume Barge persist.

in the transport Overcapacity $XX continue the freight significant create inland that a are expected to group reported of and headwinds. declines and small waterways operating the quarter, million loss. to along movements revenues goods For

Orders million XXXX During the backlog barges orders $XX and million the of were quarter. quarter, to totaling quarter end the bringing million, received $XXX compared for new $XX to for placed the during delivery. XXXX second at we've the

extend our the buying increase Group, revenues an were while businesses, offset to revenues third X% quarter reflect generated volumes to our during lower Products pleased by shoring strategic quarter business. customers. our In in products compared in last construction partially by orders backlog, our received our down aggregates Construction the products year, and were we highway by While decisions

operating by and aligned strategic million. at I'll of made situation failure Products our $X During revenues Steve. investments products' profit. with with associated Construction now our operating have unusual of impacted have long-term view the to In And spending. turn the that in positive, quarter, had one equipment an impacted over plants August, negatively presentation infrastructure our The our opportunities we Group approximately we growth highway an profit

D. Stephen Menzies

integrated our morning. and and third Bill, manufacturing, generated services Leasing continued and strong of lease Group's improvement We performance and production, financial leasing our continues strength and owned you, to level manufacturing Rail model. of the the quarter performance, during higher growing a the fleet fleet sequential and margins quarter. good lease railcar business Thank reflect in breadth managed maintained during and

services we railcar the provider expanding by enhanced addition, a investment vehicle In positioning premier for of investors institutional our as railcar platform.

competencies what as we those penetrate focused We enhance continues the business both financial Leasing continue proposition Group's be with both I creating value strong chains. and Rail challenging to a performance for and deeper of market. and into in on model, value our investors industrial shippers customers' a am integrated to pleased the capabilities railcar institutional

These to catalyst. While delay weak railcars, production meaningful capacity, new the pricing a number demand showing albeit stability, include a or railcar fundamentals we industrial industry by of a growth recovery. continue factors signs of encouraged levels, production high and market numbers strong of lack existing excess of may factors remain

in us railcar in express the in Institutional the market and to and quickly railcar in integrated is interest indicators railcar shifts positions investors Our provided new upon This services by and which market lease market demand of identify market, rate in valuations our platforms. continue manufacturing, our the assessment to railcar participating utilization dashboard, trends strategic a railcar market based market, demand. captures drivers, platform. leasing secondary existing RIV dashboard

align who remains conduct extensive to partners While diligence due objectives. interest our identify long-term with high, we investing

quarter, the of partner, railcars. approximately through railcars leased our million sold During platform portfolio $XXX a new we these RIV we continue and will to to a investor of manage

portfolios $XXX we of intermediate develop between leased strategically adviser a on million. portfolio our and this fees asset railcars, an ECN as leverage acted of portfolio $XXX railcars Corp.'s a management and of as capabilities our leased the of management proceeds we new behalf to addition, approximately transactions exemplify $X investors ability These of and million in for Capital arranger meaningful sale now full billion stream. fee-earning railcars year to result In leased anticipate too. sales institutional earning of and XXXX, retaining In

respectively operations X% lower Management partially high and fleet and net quarter, and increased revenue fleet offset fees, During asset the additions, on lease Leasing X% utilization, and increased profit management Services from by rates. average year-over-year

leased quarter, fleet year-over-year. an manage railcar retained the X,XXX added to the fleet. our railcars up Capital, XX% was additional quarter third by quarter-end, of to we Subsequent the During approximately at approximately to leased railcars to X,XXX of managed owned wholly-owned end Lease were we railcars, total ECN our fleet utilization XXX,XXX portfolio XX.X%. bringing

We while associated lease fleet Lease plants trend to of leased on servicing quarter the the the fleet managed continue frac from fleet. of committed manufacturing stable end this to pleased of of Group average year-over-year. second an railcar The XXXX customers. the expect to plan lease services costs to which fourth of is fleet With XX,XXX a orders previous our comments X% into the XXXX Lease and compliance quarter, lease growing and high our trends expenses for of increased a conference approximately during while on to regulatory support and focused period improvements for experiencing the and expanded fleet. are Rail quarter of key million. regulatory focus into Inquiries levels. approximately footprint fleets lease and with second At These $XXX We We continue manageable backlog year third and half platform supported flexibility on maintenance the flexibility to with rates consistent growing within maintaining and are and Consistent production includes this aging maintenance compliance our I'm the renewal a production lease increase at to our sand operating our X% in increased remaining third range. peak back calls, they XXXX. the geographic of tank performance the The railcar remain capabilities. quarter an expand as maintenance compared we years, increase I acceleration railcars to remainder X.X quarter XX% to year. booked margins, expirations with growing and lease remaining the delivered HM-XXX and improved in utilization railcars. term increase. orders our anticipate approximately strong previously deferred margin of during of demand, helping full the contain railcars, XXXX X,XXX and X,XXX in improvement. delivery revenue deliveries our sequential profit railcars. of capabilities for and unit continue compared service owned our our modifications and car XXXX, existing were

Rail X,XXX serving both quarter, third diverse which from select railcar growth. or the fully shipper the both larger Nearly lease received fleet million a Group this may railcars with mainly market totaled customers XX% quarter The on combination new procurement fourth fleets. range for end for for value strategies our of a mix are $XXX replacement railcar several focused commitments vary prior a broad of markets orders of orders lease. railcars were industry in transaction, quarter, by received supported are railcars on received of Most for Third from the lease third replacement leasing, for the for a fleet types. purchasing, railcars by the comparable have new parties. inquiries purchases Orders representing various or Industrial we orders firm and quarter select X,XXX Inquiries aging railcar transactions. include of markets in of growth to strategic are far quarters. and represent during for

to provides railcars of build the highly future value in platform railcar leverage RIV an incremental The new a beneficial, the orders. quarter, enables flexibility us by is XX,XXX the Our billion. approximately significantly also to than strategies. integrated responding business including visibility operating order it downturns. stood an visibility production to backlog better level enhanced with procurement previous end is $X.X This provide of backlog At model in opportunity of our provided third with our at

be ability XXXX XXXX. delivered deliveries this of be weaker our approximately for Trinity third production current with the with pricing to deliveries business to our throughout for plans and formulate services business XXXX XX,XXX, In scheduled the Leasing broad of we market and with cash anticipate railcar portfolio, financial At generated Strong needs. we backlog end demonstrate were customer effectiveness in of quarter-end. priced manufacturing, backlog in prevail. manufacturing. of XX% Rail is of earnings quarter, and approximately XX% leverage unique our our to and Rail railcar expect model consistent the backlog spectrum the conditions integrated providing At to by a in As flows approximately associated scheduled more its more the of current leasing continues cycle, operating Most Groups, stable environment. which meet at platform our closing, to a to time, we lease in market projections from the both our XXXX

Our financial the valuing while opportunities flexibility grow positions transportation throughout organically value strategic chain. us growth rail to

and financial are operating competitive us. Our flexibility important for advantages

As are of growth our success, turn I'll build remarks. forward for greater now well his XXXX, positioned it generating James over we our further market-leading into move to differentiation to platform. and we upon

James E. Perry

for Thank and quarter everyone. you, XXXX. the morning, third Steve, Yesterday, good announced results of we our

share EPS quarter For compared million of $X.XX company $XXX and revenues and XXXX. the for $X.X $X.XX of of to the quarter, of of third earnings the reported per billion revenues

presence level. during million our the trench corporate million a at of a we that shoring of in across lease and which quarter, quarter, in We completed $XX business expands market. related with our expenditures infrastructure third capital $XXX manufacturing invested million the wholly-owned During purchase added value $XX third our businesses the fleet the railcars and to

sold we of our RIV through portfolio quarter investor. to a platform $XXX of a third the leased million new During railcars

provides $X.XX to compared we to $X.XX fourth to of to allows balance to our cash to deal earnings level opportunistic short-term and record guidance includes marketable the available to $X.XX sales end expect $X.X flexible a strong leased operationally we was our increase well Our reflects nearly anticipate visibility position liquidity provided an we quarter and guidance $X.XX approximately In our the full we increased be equivalents, increased and quarter. great during quarter in year sheet and financial cash, press provided of of that The which of in full last It $X.XX challenging guidance $X.X yesterday, our $X.XX securities our XXXX as fourth of year, facilities. billion, of third that in XXXX leased flexibility. Group, conditions. to fourth quarter XXXX quarter, our EPS for committed year At railcar billion. our release third fees company the guidance better of sales us market as credit the quarter the operations. revenues, In available railcars, respect excluding with Leasing continue total to results,

Rail year Rail consolidated sales XXXX, in in expect company. with operating we We billion from million $XX railcars fourth profit which in our eliminate the In an of our margin railcars leasing million to just approximately an leads implies defer margin of of quarter. XX.X% the operating guidance the revenues the X.X%. We Group's and at company XX,XXX X,XXX revenues an of to quarter approximately of expect to Group previous with fourth $X Group revenues anticipate level, our over of This the to due XX% operating XX%, improvement $XXX million approximately deliver full to Rail to quarter. $XXX of fourth

significantly an profit anticipate our revenues of of customer million the a operating caused year, on revenues of earnings tower these Group expect the X.X%, operating still defer quarter with $XXX in to margin eliminate For sales. of indicated last deliveries full quarter from primarily lower million timing the revenues call. We wind due to million of fourth level Equipment of we as $XX Energy recorded and by $XXX

operating For now revenues of $XXX X.X% million for margin Energy with year, the an we Equipment the Group. full XXXX of expect

with revenues of year Group. quarter million XX% this revenues operating results an for and margin margin an XXXX. X% operating of fourth of Products expect million the $XXX Construction group We in full This of for in $XXX

of full and Group, of and in $XXX fourth record operating For operating for an quarter. $XXX negotiated per will tax from an $X.XX XXXX year the margin We a the of a million. related include termination of slightly anticipate of improved These quarter revenues million million with are leased million share loss Group expectations revenues fee after million Leasing for expect profit Inland revenues our Barge we leasing X.X% an $XX and the order in during figures $X of $XX XXXX. to fourth The management railcars.

$XXX and expect revenues and The now For proceeds fees We reflects million of management previous primarily XXXX. of advisory total operating full fee. and than of higher $XXX expect These the increase figures our with exclude $XXX the now leasing railcars $XXX of and both order profit railcars. leased during in year, we of management guidance. leased higher from million, sales million between million guidance termination sales

leased of readily leased million. Year-to-date quarter, include sales is some the earnings This as with unencumbered value the quarter our opportunity leverage strong as flows those This available proceeds find without our in well directly implies which business we leases to the of emphasizes increase our period and the our lease to lease sold million, enhanced in as generally a to The unencumbered deploy $XXX realize from was railcars. leased $XXX railcars third leased capital. At railcars between during strategic of standalone hit our greatly facility. production lease importance incurring flexibility the over from of which cash last to While line, has way In total the has proceeds financial this end years. the warehouse of of loan These sales expect of our $XXX litigation. to pool from the railcars wholly-owned our long-term, the sold railcars fourth operations as the of are from railcars on million leasing sales are business. few fleet additional expense. of low we been XX%. complex our in to We fleet generate due downturn is compared the an interest efficient leasing fleet,

of EPS the also level expenses per includes due in accounting of assumptions. XX%. $XXX the of to share and from statement, income the the Corporate of to a approximately $X.XX the on our to from a stock guidance lease tax following dilution notes XXXX reduction two-class $X.XX year and calculating of compared the non-controlling corporate $X.XX due fleet, EPS of between convertible per a share $XXX face Trinity's million share of million, directly owned rate full based partially interest Our method the reduction per price, current

we range manufacturing of capital of $XX the in investment, In corporate in $XX the million expect million and terms to expenditures XXXX.

in leased railcars future fleet, proceeds well XXXX, During well We end We maintained, XX% plants we from well XX,XXX deliveries netting a XXXX. that for and of to EPS of investments approximately quarter. we economic in than making our pricing expenditures to wholly-owned corporate guidance in introduced fleet after of foundation our new million as infrastructure leased deliver release to that those level to $XXX which as market backlog will purchases. XXXX profit growth. our are downturns, in of as in modest capital is have the we net additions were $X.XX. wholly-owned which The of sales lease a new $X.XX includes a lower railcars press anticipate the will during of that expect deferred the railcars adding XXXX, keep of The as approximately be $XXX investment and that from provide million. railcars secondary our our and between we anticipate for deliver million In plan backlog in that of yesterday, third at additions, expected XXXX $XXX level the approximately our

in for businesses. and a supply demand softer earnings products level of and pricing, Our uncertainty conditions reflecting our many guidance of reflects continued

million Our sales expected to from as guidance the million platform to million, to compared leased also includes profit our $XXX of railcars expect XXXX. we an the in million to of RIV $XXX $XXX $XXX that

providing full provide would in our We it are for in uncertainties year to some markets. expectations, helpful insight than guidance into prior our be year thought We current given earlier the years. next

many The that are on cost pricing enhancement. process pending. with of to of in While guidance for challenging, level and focused the for the our nature achieve our reductions we've assumes margin various due dynamic remain the legal matters provided XXXX's of legal markets remain level in businesses to XXXX products line the we expenses

decline on expectations as that in several hopeful are found during we have In these However, the expenses XXXX the will performance. of successful levers improve we're reducing we past matters. litigation operating to our

out on seek and We will the opportunities these execute throughout year.

we We have XXXX. will updates provide updates as more quarter insight into on our progress and to our each guidance

We may environment on yesterday, by the enhanced in and down release cycles, and and from the we over distressed As prices. businesses could difficult statements actual earnings priority we disclosed two years, to place among have prior challenging our strength. in acquisition including, XXXX liquidity last flexibility balance sheet and expectations In have $X.X available available number a our press In of and forward-looking impacted we a economic differ found others, XXXX and present results high financial for assets in billion. be XX-K. a risk factors indicated factors, our at

available opportunities, and elevated. With capital the amount the market generally acquisition high seeking have valuations remained of investment

opportunity, buyer. we a be willing highly However, strategic a if we may identify

to we to that results. economic the record resources, and deliver our these of identify the continue to in We've options value. abilities strategic shareholders. and that demonstrated today. that directors strategies a Trinity the a confident This to management lens strategic strong a continues through we capital today Trinity of confidence The interest company's of have to board that continue position has long-term manner have to be we of execute always over will create in have We strong the considered performance types are deploy value. team track long-term shareholder cycles. case of and the advancing shareholder also talent, generate I'm

now will for us operator Our question-and-answer session. the prepare

Operator

first of question our Markets. take Steve Capital from Barger KeyBanc We'll

Steve Barger

Good Hey. guys. morning,

Timothy R. Wallace

Morning.

Steve Barger

you planning never of how cash at Tim, prepare about an on to you've capital cycle. the much bottom had Realistically, for a Trinity's talked much hand this needs. Clearly, liquidity up-cycle? do liquidity you need or

Timothy R. Wallace

want you that? do try to respond to James, to

James E. Perry

There's to million and from capital peak that. the at XXXX a One down it working be couple part the capital, in pieces is working of where hundred Sure. cycle. was back would several Yeah. dollars

period that quickly quickly. to of on we a strong pretty you need back to move replenish how So depending demand, would

ahead coming do clearly in buy to cash as the produce that you of products. You flows the materials

to that's reserving so certain sure amount of of capital we matter that. can accomplish be a a And

another Our demand is as that CapEx grows. grows place

get of we our at projects some focused $XX is level on we're type the point obviously which a for the As we're growth, million to replacement as now, plans corporate us at low $XX and about right plant the level. for maintenance million ready and

CapEx would up. partially demand cash and the partially demand demand grow on needed. would level you a third capital you picks need mention you've as as well, So you'll as up got of to up, is have thing ramp invest we then, to you overall I as And working for if available for hand that fund then the through through that credit continues leased when and facilities rail grows, our rail cars cars ramp

Steve Barger

for $X for the a underleveraged year? lease So the the target does billion fleet, an and cash board deployment given coming have I capital guess in

James E. Perry

that's say James. very is conversation. I a would dynamic this Steve,

that options got there's those, good working type for see management there that and The of with lot acquisition talked I board some right say about seeking opportunities on wouldn't We're thoughts. other Tim there's us. of about, now talk but target is would and and out we've strategic a things, we good we the publicly. As both I team a

Operator

from next Stephens. question our take of We'll Justin Long

Your line is open.

Justin Long

Thanks, good morning. and

Timothy R. Wallace

Morning.

Justin Long

So a the start maybe questions to with on couple outlook.

factoring in How point? you're RIV forecast? much of for then the full the curious on guidance, for that this what with also to So committed for year first, XXXX. to railcar have XXXX talk you visibility I about you an for took sales. wanted up I gave the and XXXX. about much could how at that guidance in legal expenses is But you ask know outlook And

James E. Perry

this Justin, I'll James. to this is piece just start. take

given In were partners so we've range a It's year. range this portfolios kind range. that next sales, on not market, where terms the roughly year. primarily this the lower of RIV sell for is this finalized visibility there's guidance the of we've we thought be we good cars point in to got pretty At in the There earlier of bit a we've the year. year a for to you we'll because of going a RIV

reasonable a with look have our So we of that RIV at partners level it's where investment. do agreements range to

levels those there's aligned appetite RIV before, we're if talked the with about talked grow in as long-term RIV we Steve more And good as well. potential as remarks having from past, his can we've specific partners we've interest, talked and in investors. about work As when about very

be year. that we'll So of we update can and kind at we the into that's things as and fluid dialogue dynamic deeper that have now. But we right more as get look how

Most corporate course. change not our of that expenses. in disclosed what not have we figure, those point. And I expenses, at legal in of exact our assume is sits mention does a of within my now right guidance that that remarks did terms In this

that expenses as hopeful that are of matters some assumes are that litigation the We the those steady optimistic But down. for and guidance a now get can pending level. come we through

Operator

question Bascome Group. Financial next Majors from Susquehanna Our is of

open. is line Your

Bascome Majors

Good you here. taking question and morning, my for thank Yeah.

that opportunity market an for about capital Steve's context, flexibility the Tim liquidity lack material From that's seeing has not your some like being to of historical back couple in I'm $X.X as last more a that businesses the greater you're of get that been calls billion of lot related the deployment function over situation? Or to cash be for your markets James the a most this weak make the So today. as that of available you finding years both legal move? just in And advantage lets potential has more mean been period, in today. it and of is opportunistic you I to cap is it right roughly the half guys curious talked liquidity, there question, of a function it of to your

Timothy R. Wallace

Tim. to it. is respond This I'll

downturn balance strong a we we as of we When view. in I a – far want downturn into into to from our go sheet stated, we objective, As entered entered as position. be is we when an point that be operationally this preparing and strategically a flexible were for to business remain downturn well stated felt businesses flexible wanted we like as we almost extended downturn, we to this our conduct into to as able usual. as When

wanted look of much at be wanted could leverage well to to I acquisitions last of ongoing over the looked and going as downturn a for we've made acquisitions we've be as that whole a done Of of reduce able we the how the ready, and opportunities during extract have And ourselves, And lot we knowing down as long to to to strategic to and forces them, But them. litigation as surfaced. position we're lot cycle. last continue time, the course, couple at and try the prepared Not to described at last, has you long company a operating and then we few historically, we was accordingly. was cautiously your as the to what to going have strategic prudent a years, how we position. same tried

think capital us we it better that been our our have and on our reconsider with on litigation, having read Now structure I capital to board position our a this. conversations allows we've and

for more use our you much our And our be in to the putting and a that products, market we improves way. I effective decreases as will litigation so assure as capital

Bascome Majors

looking the those own you're realize perhaps whether need your and Understood or out lot of there's there. you be front? for M&A it'd that and I help to even opportunity kind shares of think more I in us get a to appreciate conversations aggressive Can see that on about you or that opportunities

Timothy R. Wallace

we we always at a the – down business area, think like $XXX ongoing will of a investments into switch be When that volume streamlined always appropriate very at we business have systems we an At systems have inventory a as into million in stayed a to into gets business the that had, of the time in cycle, last acquisition a And also didn't size you the we those that that look we idea area pursue a season, did in orders order mode, our balance kind And, a been have. years quickly a mode. shareholders there. same we is could back course, of we've with manufacturing to as be the a that I a the of records us magnitude improves crisis process that we be quite and you relative with And with said, off company has looking crisis you're computer our multiyear maintenance in that's company number litigation five opportunistic downtimes, of the store then we're three the It's can the leaner acquisition the we in are sheet that. and shift kind of mode. infrastructure in and there. the able In well. to in fortunately, returned large Well, years, when the really but time, that mode. And to then, of An particular our of these of – back that to to had, dialogs shareholders. during we other have an more that our that is, been of larger going we're and activities. quickly enterprise-wide and making are systems, example that to we upgrade opportunities our do ago, that out larger opportunity acquisitions a and of cash returning out

lot our is of strategic cycle, here this unusual with during for down been the discussion on thoughts the maintain have and and large a focused very able my we company. experience number strategic to So areas, people of we've and a

that Over And a years, very where is. a that overreacted, and I people it when quality downturn I this the at positive situation we high it had given XX the period balance of this sheet the confident our guess, strong eyes, was and the to feel are that have, we've but people problem have. through we we many that quality thinking of you have we infrastructure is work have. time, And as will as never in looking a

Operator

next Johnson Our Capital. from Axiom question is of Gordon

Gordon Johnson

Thanks guys. the question. for Hey, taking

Timothy R. Wallace

Gordon. Sure,

Gordon Johnson

versus XXX% year-to-date Just $XXX looking year year railcar this million the year, million year-over-year. leased up for $XX over sales last cash at proceeds a – or

million, XXX%. timeframe, however, same up on the gains next respectively, million the costs, Over these $XX.X versus $XX year

should next XXX%. lot to say a are year? fleet fair than less I the out then, of more have we selling a for And into expect follow-up. it So And this of gain? less continue guys your Is a to you

James E. Perry

how of new the where margins to for higher could with depends This cars quite go types we're they on numbers RIV of offline. we cars the through things. of saw of our Hey, peak seem are and the Gordon. selling, we've portfolio mix that. is the have a the like, in in we've James, cycle been leases cars, than The been may kind most don't year, sales been We is that numbers this level selling low there. look The those what little partners, working mid Really the XX% the this some be, the part.

pricing one kinds we're kind offline good these peak selling the quarter to are our that I the RIV to bit than to and compare it's a of versus of said like go other little we some earlier through portfolios of quarter where So, another and partners But that we're of to are. those leases resets happy things portfolios some we're but selling quality of long-term hard with today. numbers

Gordon Johnson

is about termination it for And then an release fair maybe industry press a this seen – that order And has to something or I an assume that looking that an noticed guys increase cancellation it way? was we're wrong helpful. or That's adjustment the that else? cancellations something the your you negotiated. is Is in at talked it in Okay.

D. Stephen Menzies

of just not We've of as quarters I strategic Well, Steve. any that issue. in is businesses future shifted see matter a on to give a developing I'm this had Gordon, cancellations. unique specifics that the not had you and that They the the can today aware discussions last set and few were I going respect that cancellation. that really they of other for circumstance cancellations with customer's

So really situation. one-off view as a that I

James E. Perry

was agreement, to reminder, provisions cancellation a James. it quarter. negotiated a as Gordon, came agreement. that to That's fourth And a We $X.XX this not is it within at the

arrangement. for So, that well compensated

Gordon Johnson

Helpful. then last... And

Timothy R. Wallace

Operator?

Operator

Yes.

Matt of actually should Citigroup. question back, is Rao from next Elkott I of that Our Prashant take –

Your line is open.

Prashant Rao

seem incremental the share million been might something program? where the be I drill speaking, easier And all and there buyback wanted Thanks. Thanks current so we down I broadly I the just down, to $XXX reversal have I that buybacks, two-parter. might the I a do little capital bit like since given that for and of of the to Tim. deployment activity on are then guess the on on portion total and might on appeal be incrementally. appreciate the came and – a to has the you with package? of allocation taking back, the thinking return timing circle allocation. comments play how wanted Where commentary get the you've about sort specifically topic level how is the a conversation that high particular shareholder question. on on One, that we And to should board? capital into specifically and

James E. Perry

is Yeah. Prashant, James. this

course. we Let share things. report at specific each One, since business the That ruling we the we know quarter. asked was given after-hours not was earnings, public the We buying into a does through been repurchase. purchases me blackout you have the the on of a of from question quarter. of end the quarter? information of that earnings mention end One ourselves literally handle period when the we I'll our couple that end take day our of release quarter with last the of now

I our shares you what not we buying about that and may talk be. tell we have last weeks the plans don't three in been So can

board. of project periods. publicly process do but one the have the planning available We couple don't future it's we we the certainly things the we a $XXX the what utilize Tim can forecast We do years of in capital As year. we of that through go share our may repurchase end in as ago, terms or with mentioned, million renewed through that

Prashant Rao

with color dynamic of I you're there any would helpful. into maybe of – That's be is the way, dynamic board Okay. the guess put it maybe that the on is conversation helpful. guess I where fits sort having another

James E. Perry

when knew information. we're back I the a up Element It's market transactional of every for the it's may talked non-public to conversation. consistently when not announcing talk planning, ourselves say also would it earnings something I board. the some component transaction capital And was coming, of from time – that James quarter. a quarter. That it's about would things Prashant, transaction the earnings this said, come as we the I like Like last and move shares. was And take a we is know at generate necessarily of to buy we us shares quarter-to-quarter. There's part time I the we that year-to-year, that would out don't we key historically that do we again, of coming quarter have with we our we've periods something's end near bought

project we it talk of in the the the may portion key allocation we're or to that again, management do senior of what where a capital but board cautious respect, hard about, but So what team with fits in future. part as it's that be

Operator

Our from next Baudendistel is Stifel. question of Mike

is open. line Your

Michael James Baudendistel

have order I down have pricing could that put the in you to any and asset termination significant written I'm which was in you. thinking of from that down build not are and buckets are factors next hoping year, there you railcar XXXX year, railcar a just help me of volume don't about? Thank I next other bridge the EPS sales impacts most XXXX the those sort with Can is XXXX are delivery you is but down had benefit up.

James E. Perry

Yeah, James. is Mike, this

as to you try to railcars. leased projection hit the specific not margins current on like it I help but of think clearly a of bit of given you've things in more. quite for groups but lot I'll sales detail our a hit We've little a

assume million mid drop million a $XXX $XXX teens and or type on that million sizable $XXX year type have that. to projection change, at EPS this But what put relatively million so that's the pretty looking With those to at in to and same you $XXX midpoints $X.XX next a levels. there's you'll a of margins margins, year, the just

piece. one that's So

is Steve to within recording it a per we same third of Another the a And mentioned. quarter RIV order piece $X.XX We've about as that quantified type that then the sale partner. we leasing quarter. talked railcars due fee mentioned the earnings to ECN another share in but we termination lines that did the just for Steve not the fee report along that negotiated to fourth we're added

recurring we that aren't up necessarily. talk XXXX And you why that type of leasing. we're within operational kind those have those So for results about add to projecting better things things

in as it frac on years about than several as pressure, of ago. lower at you pricing we've XXXX the the volume, in we've hit what you've think I sand rail is were that, about backlog delivering XXXX. that nice some top the been market we're cars we've talked Beyond and taken look we've in pricing in pulled delivering We that talked about margin specifically that forward talked

reason. So that's one

about Another XXXX of two-thirds backlog. mentioned, we our in projection have the piece, already as Steve

on And as in So pricing in at for when new leasing side, on we assumptions later we pressure the then on side railcar look year. and other see the leases. pricing have the that filling you see renewals pressure third you

with I headwinds and demand those pieces, supply at look the would be conditions. as we that the quantifying would exact without look areas all of So that larger you at have

Operator

question next of Buckingham from Our Matthew Research. is Brooklier

Matthew Brooklier

and Hey. Thanks, morning. good

you've year had the next in about Group. guidance terms Rail I a volume up. for being within I of talked follow-up So your question understand

You've also talked about ASP being down.

highlighted of a pricing the just taken over XX your a lease function from Or railcars in things. for and side And We've at the bit a XXXX guidance, least time? on of better you've include on on does almost past, stable new maybe think the here? orders little more there's of orders expectations point taken get it some in that a on it from of I of past does you've this that's it is, you've like guess four sounds to gotten sequential it, have disconnect. basis call is function at I quarter. quarters kind Because – my question things like let's railcar, months. the function a worse the feels a been third over the

trying get it just a just getting year? as So the to to XXXX? of softer ASP and into your a function comparing pricing guidance next is feel contemplates Or if I'm more current XXXX move for from it we

D. Stephen Menzies

is this Matt, Steve. Yeah.

going manufacturing said into I expect XXXX XX% mind, it's XX% look at roughly be seen think we standpoint. I've a American is to And what from stabilize, fleet the that Keep lease the you railcar really arguably some a years. high pricing it that have of a that operating is when you also then fairly in market dynamics idle railcars at weak to somewhere industry but coming rates we We're fairly North of rates there's levels. booked that flat on a has industry, big manufacturing have five to capacity. today. also impact in of cars That were renewals. around off last is lease renewing of And the XX% three

fairly to product at and into seems last weak of few going have fairly is that type projections XXXX. in we've pricing. will But the I So forward say what in pricing that quarters industry any utilization, stable at capacity flat looked happens would operating our you when we that expect it

Operator

Matt question next from of & Our Elkott Company. Cowen comes

Your line is open.

Matt Elkott

is just or see years you taking in can thoughts Or margin in cycle I more if on my was where cycle. Good segment your give we're for than about two years that question, you into morning. on rail new down the floor margin general a a I have into question segment. you down the us XXXX. for wondering a actually, Thank two guys.

down is that floor that in raising is done raising down cycles. keep objectives and a So one this of cycle in far good you've floor, job this think your – I ongoing to

James E. Perry

the this range think segments years is guidance any we a have tremendous in respect. guidance. future that. for embedded in providing difficult backlog of nice to in we're know past, that The not have But, kind provided and as our we're of take in Rail XXXX because James. market, had the range levers businesses we that market different some that talked that that we'd job terms Matt, to The has like talked I'll get and margins company for for within been and those guidance Yeah, we a delivering what in We margin, to about in we've we've that given about lows the this variables wide in or available this always it's yeah, there's of specific specific a to to orders year like provides But not us that different floors achieve higher different we've us the Group and we higher the done in year. higher efficiencies. seek margin XX% right highs into ceilings or of now. the going or things achieving overall.

Matt Elkott

Got it.

D. Stephen Menzies

that. on to add And to just

an margins, good opportunity in produced been got little position orders at have, is a given we've compared downturns. incremental different be which think than prior I opportunity to have we've the backlogs an that that we to

market to we the provides. additional So see orders optimistic what with, we'll that just well can do that I'm have

Matt Elkott

because higher suggest guidance the XXXX? from just would We segment group from and guidance EPS the deliveries delivery rail infer margin. for and margin lower for that guiding necessarily implied you're So shouldn't the EPS

James E. Perry

going margin. thirds Again, we're year's and, know is. we've backlog We've lower deliveries the next not the work obviously, of generally know and you two we told pricing it with that where sold to given the pricing's already in on speaking, on are we But for it's efficiency detail.

and you XXXX. we'll we've that we update So expectations as through today's given proceed

Matt Elkott

Trinity Industries (TRN) 26 Oct 172017 Q3 Earnings call transcript