- Earnings call transcript Q3 2022

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Operator

Good day and welcome to the Trinity Industries Third Quarter Results Conference Call. All participants will be in listen-only mode today. [Operator Instructions] Please note this event is being recorded today.

Before we get started let me remind you that today's conference call contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995 and include statements as to estimates, expectations, intentions and predictions of future financial performance. Statements that are not historical facts are forward-looking. of Trinity's of and issues differ certain a in to for SEC and materially directed actual change description cause in a of any statements. from are those Form outcomes the other XX-K filings risks, results expressed Participants or could forward-looking to which the business Mann of Investor Relations. I would the turn President to conference over Vice now like to Leigh Anne Please go ahead.

Leigh Anne Mann

results third conference appreciate We Thank you, quarter joining for XXXX the morning, financial operator. you company's call. us everyone. Good

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

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

call measures supplemental slides, discussion Relations These the the reconciliations the key of website the we as are highlighting portion appendix metrics www.trin.net. be of metrics. Presentations slides, points Events as found comparable to our provided The During non-GAAP of on XXXX. Investor and under along at of Presentations Relations Time A over be in under information on third link. can conference the event Jean. the GAAP will certain call today, call which reference well non-GAAP today's It accessible are slides November of website. available & now our replay call after to the the on X, midnight to is XX:XX is turn a.m. available with through the quarter Eastern pleasure Events earnings financial website Investor Replay page will my

Jean Savage

the laid are path back the in results. morning, production, I financial report markets pleased we to told fleet you expecting in Thank to and today railcar we in significant were everyone. we that you, July, half year Anne in and that on we you, When of lease for momentum Leigh of continue and we the am serve. last terms see growth good we I spoke the out acceleration better

our the economy, business the of over industry minor a balance in by believe recession. a supply are While underpinned about years. unchanged of messages we They Slide talk key will in uncertainty last business call, from and is to demand In there lot we improvement to quarter. of are view in of X railcars our today's two and the is our resilient significant with on past Turn the the our the to me expand prepared our which short, in of later remarks. relatively all

we $X.XX last are which quarter adjusted First, the year-over-year. GAAP continuing up third EPS $X.XX, reporting operations quarter an of and and from $X.XX up of for EPS $X.XX from is

show transaction You'll today our businesses our our see higher another remarks that deliveries results bolstered in successful from gains Wafra as strength external results. across and our

XX% will Future lease support positive supply Second, renewing utilization higher or and Lease to high that in fleet the evidence quarter, remains This rates. that which is continue Rate our believe FLRD and XX.X% remains we the lease showing this available fleet, Differential demand market for due limited. our increases solid is a was a quarter, to

sale as program. gain part $XX of railcars completed our of million announced our of and venture Wafra vehicle of investment our quarter a we this a in X,XXX recorded joint generated business. Third, million previously with we This sale leasing rail $XXX to proceeds

this of these we supply relative is ratio industry. quarter billion our and of which the of $X.X $X.X our six-year order, to a railcar demand orders sales a Again, finally, see we was the small sold billion. the visibility This to by backlog $XXX $XX earlier addition proceeds for Wafra quarter And in our month, reportable In total and sale, five third book-to-bill an million. announced million reflection impressive for our we increased times. of for order up the backlog to car several other gain quarter portfolios drove a each XX,XXX in and

We slide long-term make market turn for investment are And decisions. update. continue a many now, to see let's to customers four encouraged our to of

While and some fall easing. ticked rail make in of support full the traffic to XX no and still traffic and pre-pandemic Rail but declines harvest headcounts efficiency for needed going rail still season. There support is railroad increased step in service. cars After is number over months in preparations service storage, summer, seasonal are but cars we tank below continue levels, the see believe grain is largely to the and impacted heating we back in to shortages solution, issues, storage storage rail before starting in driven up a this the see quick we by of improvements the better railcars industry. and slightly to labor service is by storage into are winter

since of However, number year reversed a cars XX% This since reported XXXX. in the AAR that as when compared ago. of inactive XXXX the lowest the trend October idle and cars October to almost absolute lowest percentage inactive XX.X% of railcars in is

to the Moving Trinity's on the specific bottom the of half data slide.

fleet we As FLRD up again the will call utilization believe I and top of favorable drive once leasing in revenues in at quarters. mentioned the are our coming the quarter and

of quarter first double the we chain service quarter, half mix supply a quarter, rates strength stated to of Our FLRD Last second opposed lease to the the remarketing XX% delivered seeing X,XXX down we in We we of broad-based. railroad railcars in decline the in from approximately as this is and The year. slightly are of despite rate. in to but disruption. more increase cars is expiring of challenges quarter, a a second year the is plan last deliveries continued the the with half function over compared as

continued of accelerate has sight we have to in this and XXXX. production line of achieve target pace to still Our

Moving to orders.

attrition we to be multi-year by during driven and with We seem Lessors than macroeconomic order speculative keeping for demand cycles, steady term is and rationalize. which In continued so less an assets of in consistent addition momentum aging remain despite would the quarter, previous received third to the to demonstrating uncertainty. believe the volumes orders demand X,XXX more short expect the of in XX,XXX railcar GATX, additional order market railcars we the the market. is

With the backlog, XXXX. take growth beginning in for to continued is our Trinity space production in orders

the believe the other and ability and companies to railcars continue strength six-year view industry. drive the base provides We period. this strong into orders trends and for six which a ultimately broadest long-tenured industry shareholders. us that demonstrates over newly mix of give look in to agreement, load dynamics supply leasing the a We order next to railroads deliver freight partnership this we shippers, relationships our XX,XXX our renewed maintain multi-year provide over railcars we for the tank and continuing the returns The forward and of expect a With years. built GATX to in

slide five. to Moving

Our year-over-year. was was quarter $X.XX for of up up revenue million, XX% $XXX year-over-year the share $X.XX per our and earnings adjusted

results. million can. short flow quarter was depth. $X we supply free was negative as cash mitigate is this quarter expected to we as in capital flow to pace the slide for segment continue deliveries as flow to Our a X risk increased me in for grow our much of turn Eric But with Please our we million. the more and prepare chain working and $XX the cash for what in cover cash will

the segment, in change in We quarter Our we expect and quarter Leasing by a rates saw our the composition see activities. fleet, slightly XX%. to $XXX the and as our up remained This which net flows Revenue and we fleet fleet. bottom-line. over fleet rates impacted the in we ended as positive revenue revenue a to of is FLRD smaller success of with continue lease renewal growth renewal reprice with quarter expiring the segment result straight million to to investment compared also last rate the a is of consistent fifth

of as car million Excluding margins well profit higher the declined a capital. support options as our for is business. operating and to view on decide gives our an levers benefited the several allocate how depreciation Wafra fleet due sales Leasing of on owning Total conversion fleet, optimization this $XX in profit best segments dual levels Fleet to gain ongoing operating Having in railcar to of our sale program. as and our and railcar from railcar normal higher sequentially to recurring continue segment margin the a to sales, part us sustainable Management production operating slightly gains costs process.

$XXX in revenue Rail was as XX% dynamics. pricing and year-over-year of XX% Products, driven quarter the by million deliveries our at up well in Looking sequentially large increase better as a

in basis a gain gain dynamics operating due the points Products of our improved we quarter, margin pricing due consolidated delivered. and insurance recoveries. results, but profit In booked better of to included would be X.X% operating margin to is up X.X% $X.X sequentially Our Removing the our from in Group. million XXX adjusted also Products Rail railcars this excluded quarter. the Rail This

deliveries our the way basis meet quarter across has impacted While US-Mexico our come congestion supply in by changing been This margins have were in adapted points of operating team operations customers. of affecting issues the this needs and a has and the environment proud the flexibility the the to at to cost quarter. XXX service border. negatively by at issues chain our rail I'm improving network, production

the facilities amended which LIBOR. shares due Finally, a upcoming Wafra investment initiatives. revolver term Year-to-date slide offsetting now fleet. indexed in be to renewed in down our we million million anticipation than warehouse quarter to activities and to the current like We sale in additional strategic have of went and lease and moving large during a more our worth our in to phase-out portfolio our amended for $XX of both few repurchased additions million is the our fleet five-year of to revolver undertook I'd longer-term $XXX authorization. quarter X. the of on and to highlight support SOFR to our We $XX net the new remaining

and backlog XXXX conversion conversion railcar results the have continues good sustainable current railcars. program Our to is

great its is as of for Eric Finally, our report pursuing. our our industry I'm financial that, presentation improved some in on sustainability to proud reading we ESG purpose am Trinity of review the company's business The website impressed to show. on road completed And the you all. I'll good results. initiatives about our first delivering the over team for as of both fulfill call for whole to by turn our available a goods now, interested are and the focus if is Trinity's I

Eric Marchetto

Thank with you, start morning, good Starting I'll everyone. the my on slide comments income Jean statement. and X.

deliveries. of external Our total reflects $XXX million, higher revenues railcar

from per from gain are Our continuing $X.XX share exclude and operations adjusted the the insurance recoveries. earnings

quarter. we from Jean the As portfolio sale to benefited Wafra in million mentioned, lease a $XXX

Moving statement. flow cash to the

$XX million working year-to-date a is quarter. capital the cash from negative a Our operations which and of continued flow of cash due This increase was our was million, to mainly free multiple for million $X a function is factors. $XXX

deliveries, higher for And increased our affected inventories the pace of production. Jean prepare anticipation the current environment, are raw more at we as in have we've also been issues in by Inventories First, materials accelerated border mentioned. the of service rail finally, expensive. that

we see As in production, expect our we the to deliver railcars cash improve. flow currently

$XXX fleet lease million. net investment Our year-to-date is

The for deliveries fleet small included million our secondary portfolio railcar as third purchase. well new a in lease market quarter $XXX as

the and railcars million $XXX In quarter of addition in we the of million. to leased for Wafra additional sold $XX sale, a gain car total proceeds

Continuing remained market Secondary fleet in as and market take of disciplined opportunities to please secondary effective and these optimize new conversation to nine. turn view market. rates input reflecting in see advantage rising valuations slide remain of cost we transactions liquidity, increased assumptions the transactions any our in on railcars. and way an strong, our our We lease

as and the rate is floating to our liquidity and debt million. until debt $XXX debt, flow us manufacturing optimize favorable relatively contains our with maturities to current lease our currently XXXX. Our over provides rates, with strength of This we good of profile, of our no coming mix environment, combined low quarters the the rate rising backlog, business. visibility a fleet interest interest a fixed continue In robust profile cash

to I'll expect remain demand of with we this talk slide and for are turn XX, and not expectations visibility. momentum our to we year rest While will prepared the think railcar we on where strong to good exit XXXX, commentary XXXX. give about Please

by to replacement will be continue industry the and We between XX,XXX deliveries railcars, XX,XXX think which predominantly driven for demand. year is

not views have as through Our the changed macroeconomic despite progressed we have headwinds. year

$XXX fleet to railcar to the lower internal on We range our $XXX deliveries net a guidance for to and million lease investment revising of year million due higher sales. are

fleet had macro the than our an lease deliveries into market take higher million of million of additions and offset economy, cadence conversions, have fleet the secondary and $XXX internal as and also sales Given railcar additions net in fleet of by is previously been are secondary through year. managing million of some next forecasted. moved Year-to-date investment nature attractive had able and sales. we our modifications We've $XXX million $XXX and advantage deliveries investment includes railcar both market to of $XXX

on We reinforcing for lease our are operations. range $X.XX nine target of forecast. net year investment for of the our And months with we fleet $X.XX guidance still are to adjusted three-year continuing EPS finally, complete,

will external rise results higher expected deliveries. quarter fourth Our due sequentially to

not from into to are risk acknowledge good chain. or other to want in believe, immune we challenges, any rail have deliveries deliveries interest may quarter all impact. higher line that our we further insulated fourth from working and delay into service issues rates, while are of We supply their some mitigate However, sight chain have we been And XXXX. year we supply

higher much the interest in guidance reflects we full Our than expense expected. year, year

we from operations forth. our questions, with introduced of our challenging and objectives billion $X November of $X.X We will will quarters, be visibility cash $X.X over are of to to our operations billion take we revising operating that and have XXXX meet we projected target. on billion track did unanticipated we the briefly targets, a XXXX, plan. over I come And plan the into to Through in year all three period, three-year want billion. put one years. And remain we talk but In we between from about environment Before XXXX. we despite XXXX, three-year million. three cash our our the generated in flow believe $X.X $XXX of seven

highway Our our initial which is business, assumption this update. included flow removed from cash in

expectations progress of working to the offset income forecast We a the of are receivable. over for we higher significantly rest partial in sales with of believe, to our reinforce first year. Additionally, of the unexpected our our capital continue are the momentum you a comments our to making. positive now, forward-looking execute market and in received third railcar Jean's impacting We our geography change from we're expect lot strong we with for our about start our from Put question. cash timing despite think it proof we is lot due all XXXX With of Question-and-Answer ready we for results still together, the and of end tax to XXXX. into cash want ability And the feel we a goals update the flow, next call. will targets, track three-year headwinds Session on operator, metrics, if are I to quarter our of

Operator

We will the Wells session. Allison from with Poliniak Instructions] [Operator ahead. Please question question-and-answer And go our first come now Fargo. will begin here

Allison Poliniak

maybe weighing Macro you pretty the more the whether morning. certainly renewal on on metrics bit more little next that incrementally you're Hi, be the should are months. about? today and concerns any more are any absolute as good that color verticals Just and an lease how stabilization? what rate little through give thinking color solid Certainly, look seeing you a the a at forth. worried so terms of pricing Could here. just market on of you're over there in you Is Thanks. sentiment certainly basis, couple bit maybe

Jean Savage

to going of of at we automotive from tank going When you're you going the consumer to a products that then pretty the spending aren't by move intermodal. recession, consumer tell cars to some look that possibility as different risk and But that's the at be into are as and the the can are are most far still the probably some small of being really Allison, the markets mild Sure. as We closer looking have the used. utilization. pockets markets, is our it broad-based that as demand at

at chemical insulate move and looking to going you're typically the what's market, with And that strong leaves has of If there, construction. energy somewhat. economy North the America performance probably that independent agriculture going and on

bill should comes infrastructure there, down. you especially passed when movements to will aggregates the support market So give was us or from asphalt. But going housing some like things see pressure some or the it that

Allison Poliniak

manufacturing, headwind That's the on you. sizable then side helpful. transport rail of from it. Thank the a And Great.

mentioned fourth quarter I Just the or that Mexico it headwind? say given or again in of deliveries With think expecting appears ramp would year? quarter, about level you're deliveries any little the there. issues. and second it You the thoughts bit, how to start of should does Does would up dissipate the US we the even just accelerate a the text in

Jean Savage

XX% manufacturing highest we've volume production in our is, nice the experienced headwinds next had though, yet. same loss at XX% thing this the quarter and plant highest Allison days So at quarter not we as volume. Last the

So We between of already able of were in weekend not with XXX some some to impact. for X,XXX headwind the and us it a work, being but quarter was big offset delivered. was pretty major that and were process it that cars built be some a overtime could that in

got we've past seeing that maintains. just We improvement. hoping to -- So we're We're again, that. get

Allison Poliniak

I’ll you. it pass Thank along. Perfect.

Operator

will with Please, Our Stephens. next question Justin come ahead. from Long go

Justin Long

Thanks and good morning.

follow-up lease the when a to a investment, then, to just is the came of I for the like that? you those sounds the combination way two lease what $XXX lower reduction? down million that railcar $XXX of break and in buckets the level there drove fleet of a guidance level higher and by But fleet. Jean, if million cross-border product were issues that that's down a headwind investment at you It to at a midpoint. XXX mentioned sales on I on And think you clarify margins that Eric, were last group margins. look rail about referring basis wanted Just point to a net the question.

Jean Savage

points and I talking Products the talked answered answer or Allison Sure. I what that Allison with was just Yes, margin one cause was the the Justin. about first was Rail And XXX on. basis I'll to that

Eric Marchetto

Yes.

Justin, this Eric. is

-- you're combination net is So reduction driver of our a in CapEx right fleet lower the that, in fleet the investment in net our deliveries.

Some with with fleet of the that our pushed result. out are the good that secondary very strong on execute some market year as just we along fall that a deliveries three-year that we see car delivered the will investment, then, out it's a of think of third a quarter, our we've now. just to that time increase -- on year. the and net outlook right referenced impacted is that this And Jean And those sales certainly railcars and with

is So market the there.

And gets those fleet led combination of in sales, is it so, by that It's two car more that deliveries combination things the you push two. investment. of but out a

Justin Long

of initial market expectations Any there's it. recent but And my trends the rates for I obviously sales any how railcar like gains the obviously, have sales moving today, Got look could XXXX. still on curious into are if been in what a I'm level follow a normalized market. commentary you level up pretty second, And secondary railcar wanted higher higher. years. the strong thoughts It around about of sounds to Okay. it's interest like? secondary on

Eric Marchetto

not -- to would to of not you give But -- normalize going be I there So, going is I'm I a activity. gains. normalized that say level

much the do. activity what that market and customers the Some our choose that's lease to is flow origination on more the dependent gain activity through would that line, but the kind do. on more of would lease of dependent Obviously, how origination

buyers attractive a that I would are you're bit that secondary secondary in that, the just to in script you market, tell expectation that in in secondary certainly there we're valuations commented that our that's improve, assuming as higher. -- will are market an back the providing lease what seeing that the my of is continue rates. Going experience market. little lease rates right is in I higher in the is to interest rates

interest while to revenue line the growth going in up rates are rail speaks costs, overall or outlook So affect on longer in which with market the funding rates going lease up aren't the term. tightness line for that does the and the that, assumptions also

Justin Long

Okay. Thank you. Got it.

Operator

question go Matt next from ahead. Cowen. come with Please, will Our Elkott

Matt Elkott

you. morning. Good Thank

come for in fourth outlook half, the wondering guys' in you deliveries doubling on at pace second do down the up if cars on number was the with think, X,XXX comment delivery I based like can I quarter. into of you that in or So see XXXX, you going step we delivery forward that continue do half the first pace? a I quarterly --

Jean Savage

and we year in So back next you XXXX. guidance will our Matt, of February for come give

the the we As year. we fourth quarter, at product manpower produce the of we have all this look hired that now need for to

And good so that sign. is a

be I should already we orders do finishing acceleration of ramp my then So, XXXX. starting prepared take remarks. that We're mentioned the in things, and some to able very like be shortly, to into

besides front one the we'll I'm thing that's One February. in -- give let tidbit you me you So, be I'll back sorry Matt. tell more

levels our is industry to still XX,XXX to next delivered inquiry remain thing in other year. XX,XXX railcars line the have The for

Matt Elkott

anything any Okay. necessarily That's quarter first not about lumpiness a the a to of up cause helpful. kind kind you how -- have structural resources? down out of typically ramping deliveries of there bit, been trying there sense in or given play But XXXX. is the is guys Just get that step could to fact that would typically

Jean Savage

issues change structural that no anything. There's would

Matt Elkott

And that rate then lease is just continuing. good Okay, it's to it. see momentum the quick question rates, lease one on got

on improvement you maybe. the for the somewhere you has of high-single-digits basis, guys about the sequentially in been industry talk high-teens quarter-over-quarter a mid Can think the magnitude I to for to forward in fact the naturally third going the the given fourth been that it's over do percentage see going the now? two on we moderate years quarter increase that for And quarter?

Eric Marchetto

you quarter. asking question? -- FLRD us of that Is to you're fourth what project are you the that -- is your the the do for nature what Matt,

Matt Elkott

what was take on are on rates. renewals lease the in the average rate if the first, spot what actually question -- just third No. -- the Well, Eric for quarter we my

fleet? if third the in the percentage fourth improvement cross-section what's spot like take the of the versus the quarter, like So in market, quarter you a

Eric Marchetto

details you interest yes, to that of tightness sequentially the would into tell you if a don't combination get asset rates market, I both improve. when the rates look and I lease at to know to all lease rates should continue asset continue new that. the And railcar improve. -- and going So prices on I'm in

And to would can the year. next in improve the rates continue from to lease so, into they don't to I more third were quarter fourth we be clear than sequentially into think to that. where we expect improve continue quarter

Matt Elkott

Yes. That's helpful. know and that's maintenance somewhat coming impact? And impact and number between bunch the cars cars of next cars optically think for tank a up about to tank real cars there's freight talk utilization tank for in then, few effectively bifurcation I how industry I are a the scheduled a of years. you the for Can if going and there's

Eric Marchetto

service industry of to the cars. of see replaced would there the good think those an ones phase-out going I impact has that May getting So the new of most of year modified job cars is compliant of et on are not cars tank be a referring sight will done very tank that and have the tell just One a next were compliant today tank which naturally are ethanol then, car Both XXXX, that for terms higher for in for point in compliance tank phase-out. to of we those either line you that are the for to with I hits of XXXX or things. in built two cetera. XXXX, And flammable ethanol XXXX. you're is cars

kind don't standpoint. any that there's So, changes from of supply I dramatic think

more years year come. and next to see will compliance We

won't impact the tank those have could numbers because an the six what for -- days shops AAR that in in so longer. you move or hit -- And that cars railcar see potentially

could an it that impact makes low. that artificially have look So

existing it's fleet tighter. that little is tank side to make of The will other -- The pressure on a going it will bit fleet car. the put

And and so is we that go do shippers planning factoring fleet as XXXX. XXXX they into think decisions that the

Matt Elkott

you, I Great. appreciate it. and Thank Thanks Eric.

Eric Marchetto

you. Thank

Operator

Our will Please go with from next Susquehanna. come ahead. question Majors Bascome

Bascome Majors

Yeah.

as you guidance? a or year. a $X.XX fourth next the in that the what's And I higher this the quarter about $X.XX quarter, going us embedded For of range to to you the give far into interest can as implied walk know, talk little for aren't expense

of are or pull sell-side about levers a You've the you. sure make want But big that you that. little of that Thank you helpful. would qualitative are look guidance at if buy-side been have pieces visibility that do pretty be the if that would cognizant to there clear give to and of that any pieces and where us

Jean Savage

I'm the Eric will going then to piece interest. with back and on start the second come

whole So the their up because would typically some together this a you're will kind we've being been we said of XX,XXX down help talking there. the of is you of for deliver belief stability not on ramp be look going of, that at number about to the with efficiency deliveries do. our a When ramp pieces the industry or that couple the and need cars industry as talked that better through I year. years you that now And XX,XXX. to that, put for the get that while it We should all players about next

a going lift either higher when in You do when you or have down. the you're or cycle input higher

stabilize through help to go going companies things give that they've on ability interest. those maximize to out iron to the let of what's the that Eric as seen efficiency problems I'll the and should ramp-up. So they've any And gone

Eric Marchetto

see of that up provide you to reminder debt interest I'm But So expense that's investment while step markets the or fixed that benchmarks fleet -- floating. you not with the mix the as floating floating line-item the When about debt did the fixed XX% a kind you projecting as XX% that to we tell rate year significant Bascome, were have to guidance levels I still of will our going rate changes to the throughout increased. the in have have. -- of debt any we're not guide

proxy the tell expecting. good would third you for run I the pretty is So rate we're that a that quarter

Bascome Majors

so a for answers. talk that lease Can you're incremental an this to those little add are? level think of feel you. goals? market you that to Thank you're And -- like do changed getting? both discussions is equipment you long-term attractive the far the you and in are Trinity six you buying And take of at with Thank returns the it participants targets of underwriting talk some a earlier. And maybe underwriting the as and how a cost that And your about about or could capital we last maybe has can sense whether how in behavior to the the three lease and leases market today that of capital helpful you as step incremental off you anything line cost they're bit back you'd about of months?

Eric Marchetto

Sure, Bascome.

our would of rates seen yes light rates support I are in and valuations have years changes our serving. support it hurdle average hurdle rates very process. to lease rates yields we of focused three that in and interest market and in laid underwriting off we the that disciplined new the on And that cost what you company the targets out we're that higher and lease comes are for when railcars lease return pricing higher seen have that setting the originations And markets very we've even we those based on ago. of capital. we weighted feel I tell we in So our

we're will accretive long-term look the quarter lease that of we supportive and at to we return be our targets. fleet current in both adding our we're originations margins backlog, when our our believe to adding fleet in that the lease and So what's those the

In strength the differently market market shifted. changed? terms I have terms the People in of has of higher has rates reacted think interest the inflation. dollar of how

in a more less find which to way. lot ordering think today, lot of discipline. less speculative there's in And a the have provides is to I a home RevPAR desperate market sort likely a

a standpoint where supportive seeing. lease that's than So feel And It like the market. a auction speculating little get that that bit good. that's more you're the And as process from lower I aggressive little known feels a that of market may hurdle more taking some rational really secondary originations deals than things have rate you're maybe because much. we're of of not an and

Bascome Majors

Does share. is piece starting again if down rates we is the of the current rate and the you. for rate? you about constructed year think denominator next to that the the just go portfolio And on inputs next rate or expiring the the of Thank Thank both clarifying of stabilize lease both and today, when how year, on angles. does that could renewal based expiring those you one

Eric Marchetto

There's in always come each the in that would in mix quarter we that FLRD a changes up. add to terms each of quarter

So give on I answer detail. I'm good a that not you sure in can

to that. think going have can follow-up. it just I I'm So to We leave at

Operator

ahead. go will with Capital Steve question Markets. Please next Our come Barger from KeyBanc

Steve Barger

some good expect modest Jean, decelerate. we've seen but Thanks, a resiliency ocean you industry morning. to recession freight

there's commentary affected been think of truck are historically GDP. some of I by cautious orders and traffic from And some course, railcar the companies.

slowdown? a So the just you talk about a industry could can little more sidestep you're confident why

Jean Savage

very lot Sure. that look supply more the disciplined that going and When of can mentioned everyone is discussed, this fact with cost the that as just differential. has in along you at That prominent mean now over the what much in balance and demand and on a and orders. trucks Eric the of been benefits we right the that's the at my rationale. without industry speculative the rail cycle more tables in ESG,

the modal finally are to take long-term an back and We customers going improve service making And on we're those guess the start the I'm to levels is point we if last highway to make fact moving the about that XXXX. decisions over this that continue talked some I opportunity into the of rails. investments. fact And just orders So see already starting our share the to as roads. that from to

short-term So to don't a blip going still believe change is affect or we that.

Steve Barger

expect years where lease environment XX long Do lived the well obviously. in investment low a lot fleet theoretical rates of meaning see underinvestment effect having with we fleet? Well, for have rate drove past above we'll of the you the a interest higher then deliveries the opposite rather Okay. stretch replacement, will

Eric Marchetto

a and Steve, capital capital on a standpoint I it's more attractive is from – that say railcar would that capital – risk-adjusted basis. lease still leasing

And assets relative attractive a make long-lived be relative attractive do long-term, that that can railcar market these return And the characteristics. all more are cyclicality, I it's but less it we the will have think So has leasing value. stable that value. that more has

still it think will for capital attractive I so And long-term. be

Steve Barger

why But pretax to cash if rate, right growth better I flow ROE. that know a resonate manage some on directly cycle, that the oppose or to we you're into more metric improving focused is of Well, the to get may as part EPS maybe based metric with more investors?

Eric Marchetto

question. believe measures Other the economic business, have our best behaviors. place is in disciplined that shareholders. drive equity incentives look think view creation and that's how at our we will think value the and And think long-term that important I long-term our we the We measure return way we aligns on measure drives business success. with that's companies think it that profit have when to measure an how you we I we So different it. And different

Steve Barger

is the reason you this But And should next deliveries good EPS at leverage. I up lease my the you fleet it. are I Got see can it last upside. earnings ask year time, guess grow if the question. same mask if

earlier echoing expecting we about So into think growth what we question you I an should production leveraging guess be growth? EPS as

Jean Savage

not prepared in you Investor going XXXX Eric that November gave mentioned that the we only we're fact remarks, there the Day the of one to in the that metrics So hit. on is

you years. the So able the three you're back if Also and at ROE, of be gives go end are EPS. in it now see where be we to and investment the to expect our we fleet to look and you going where lease

those They've still of of last sight to the you taken in look the need the think gives And it headwinds metrics, mean to metrics at the see majority I team. really two where So to a of we lot of line we're see you hit. of that years. I And all proud heading.

Steve Barger

Okay. Thanks.

Eric Marchetto

Thanks Steve.

Operator

the our Q&A of to question-and-answer closing turn This like Jean conference End session. for any I'd Savage concludes back to remarks. over

Jean Savage

joining you morning. thank everyone thanks and us this for Well,

show extremely am heard of they've our the our proud in Trinity you've today, and progress in for despite perform I years. you support. to quarter on in rail continue again how I continued improvement our will unexpected network. well challenges, these headwinds Thank third results the your and business As our call coming believe and managed dedicated team

Operator

now presentation. The conference concluded. Thank attending today's for has you

lines. disconnect your may now You

Trinity Industries (TRN) 25 Oct 222022 Q3 Earnings call transcript