Trinity Industries(TRN) - 2025 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION Item 1. Financial Statements Presents unaudited consolidated financial statements for Q2 2025 and 2024, detailing operations, balance sheets, cash flows, equity, and notes Consolidated Statements of Operations Revenues and net income significantly decreased for Q2 and H1 2025, driven by lower manufacturing revenues Consolidated Statements of Operations (Three Months Ended June 30, in millions) | Metric | Three Months Ended June 30, 2025 (in millions) | Three Months Ended June 30, 2024 (in millions) | | :--------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Revenues | $506.2 | $841.4 | | Operating profit | $95.4 | $141.9 | | Net income attributable to Trinity Industries, Inc. | $14.1 | $54.4 | | Diluted earnings per common share | $0.17 | $0.65 | Consolidated Statements of Operations (Six Months Ended June 30, in millions) | Metric | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :--------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Revenues | $1,091.6 | $1,651.0 | | Operating profit | $195.2 | $257.1 | | Net income attributable to Trinity Industries, Inc. | $36.2 | $78.1 | | Diluted earnings per common share | $0.43 | $0.94 | Consolidated Statements of Comprehensive Income (Loss) Net income and comprehensive income decreased for Q2 and H1 2025, with derivatives impacting other comprehensive income Consolidated Statements of Comprehensive Income (Loss) (Three Months Ended June 30, in millions) | Metric | Three Months Ended June 30, 2025 (in millions) | Three Months Ended June 30, 2024 (in millions) | | :------------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | | Net income | $20.0 | $56.4 | | Other comprehensive income (loss) | $0.1 | $(10.9) | | Comprehensive income attributable to Trinity Industries, Inc. | $14.1 | $43.4 | Consolidated Statements of Comprehensive Income (Loss) (Six Months Ended June 30, in millions) | Metric | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :------------------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | | Net income | $47.1 | $83.8 | | Other comprehensive income (loss) | $0.2 | $(3.4) | | Comprehensive income attributable to Trinity Industries, Inc. | $36.2 | $74.5 | Consolidated Balance Sheets Total assets and equity slightly decreased, while liabilities and debt increased from December 2024 to June 2025 Consolidated Balance Sheets (in millions) | Metric | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :-------------------------------- | :-------------------------- | :----------------------------- | | Total assets | $8,810.0 | $8,832.2 | | Total liabilities | $7,552.2 | $7,525.0 | | Total stockholders' equity | $1,257.8 | $1,307.2 | | Cash and cash equivalents | $147.7 | $228.2 | | Total debt | $5,856.8 | $5,690.9 | Consolidated Statements of Cash Flows Net cash from operations decreased, investing activities increased usage, resulting in a net decrease in cash for H1 2025 Consolidated Statements of Cash Flows (Six Months Ended June 30, in millions) | Metric | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :------------------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | | Net cash provided by operating activities | $138.1 | $293.7 | | Net cash used in investing activities | $(242.1) | $(55.9) | | Net cash provided by (used in) financing activities | $44.9 | $(108.7) | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $(59.1) | $129.1 | Consolidated Statements of Stockholders' Equity Stockholders' equity decreased from December 2024 to June 2025, primarily due to dividends and share repurchases Consolidated Statements of Stockholders' Equity (in millions) | Metric | December 31, 2024 (in millions) | June 30, 2025 (in millions) | | :------------------------------------ | :----------------------------- | :-------------------------- | | Trinity stockholders' equity | $1,058.9 | $1,009.1 | | Net income attributable to Trinity Industries, Inc. (6 months) | N/A | $36.2 | | Cash dividends declared on common stock (6 months) | N/A | $(49.3) | | Shares repurchased (6 months) | N/A | $(39.0) | Notes to Consolidated Financial Statements Detailed notes explain accounting policies, acquisitions, derivatives, segment performance, debt, income taxes, stock compensation, EPS, and contingencies Note 1. Summary of Significant Accounting Policies This note outlines the basis of presentation for interim financial statements, revenue recognition, lease accounting, and recent pronouncements - The interim financial statements are unaudited and prepared in conformity with GAAP, consolidating wholly-owned and partially-owned subsidiaries where control exists[16] - Revenue from railcar lease contracts is recognized under ASC 842, Leases, while manufacturing, maintenance, digital, and logistics services revenue is recognized under ASC 606, Revenue from Contracts with Customers[18] Unsatisfied Performance Obligations at June 30, 2025 (in millions) | Segment | Total Amount (in millions) | Percent expected to be delivered in 2025 | | :-------------------------------- | :------------------------- | :--------------------------------------- | | Rail Products Group (New railcars) | $1,959.8 | 36.7% | | Railcar Leasing and Services Group (Leasing and management) | $47.5 | 18.8% | | Railcar Leasing and Services Group (Maintenance services) | $4.6 | 100.0% | Future Contractual Minimum Revenues for Operating Leases (in millions) | Period | Amount (in millions) | | :-------------------------- | :------- | | Remaining six months of 2025 | $388.2 | | 2026 | $673.8 | | 2027 | $532.9 | | 2028 | $366.6 | | 2029 | $240.5 | | Thereafter | $466.5 | | Total | $2,668.5 | - ASU 2023-09 (Income Tax Disclosures) and ASU 2024-03 (Disaggregation of Income Statement Expenses) are recent accounting pronouncements not yet adopted, requiring enhanced disclosures[41][42] Note 2. Acquisitions and Discontinued Operations This note details the final installment payment for Holden America and ongoing expenses from discontinued operations - The second and final $10.0 million installment for the Holden America acquisition was paid during the six months ended June 30, 2025, with $8.0 million in financing activities and $2.0 million in operating activities[44] Loss from Discontinued Operations (net of income taxes, in millions) | Period | 2025 (in millions) | 2024 (in millions) | | :-------------------------- | :----- | :----- | | Three Months Ended June 30, | $(1.9) | $(1.7) | | Six Months Ended June 30, | $(3.8) | $(6.0) | Note 3. Derivative Instruments and Fair Value Measurements This note explains the company's use of derivative instruments to mitigate market risks and their fair value measurements - The company uses derivative instruments to mitigate interest rate risk (for future debt issuances and floating rate debt) and foreign currency exchange rate risk[46] Effect of Interest Rate Hedges on Interest Expense (increase/(decrease) in millions) | Hedge Type | Three Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2025 (in millions) | Expected Effect During Next Twelve Months (in millions) | | :------------------------------------ | :------------------------------- | :------------------------------ | :-------------------------------------- | | 2017 promissory notes – interest rate swap | $(1.7) | $(3.6) | $(2.3) | | TRL-2023 term loan (open hedge) | $(1.2) | $(1.2) | $(3.0) | Fair Value Hierarchy - Level