Trinity Industries Inc. announced earnings results for the second quarter ended June 30. Quarterly total company revenues were $509 million.
“During the second quarter, Trinity managed through significant headwinds related to the COVID-19 pandemic and economic fallout while executing on optimization initiatives to support the transition of our rail-focused strategy,” said Jean Savage, Trinity Industries CEO and president. “Our first priority is the safety of our employees, and we have taken actions designed to prevent community spread of the virus within our manufacturing facilities and administrative offices while ensuring business continuity. Our people have risen to the occasion with a spirit of resilience and collaboration – completing significant milestones in the streamlining of our organization structure and further positioning Trinity’s rail-platform for improved financial performance.
“Our businesses are facing challenging market dynamics resulting from the historic decline in railcar loadings and the resulting underutilized railcars in North America,” he said. “Commercially, our primary focus is to maintain the utilization of our lease fleet, then to meet customer demand for newly manufactured railcars as appropriate. Our lease fleet utilization is holding around 95%, albeit with pricing pressure on lease rates, and our production capacity for 2020 railcar deliveries is essentially sold. The timeline for a recovery in the rail sector remains unclear as increasing COVID-19 cases in the U.S. potentially threaten the recent improvement in economic and rail market activity. However, we are seeing a strong increase in railcar inquiries relative to last quarter from strategic buyers and large leasing customers, and we expect a number of these will turn to orders or lease contracts in the near term.
“Trinity has realigned its organization from the previous holding company structure, to an operating model centrally focused on our customers’ business needs, he continued. “As we work through the process flows for various production and service functions, we are establishing additional structural savings goals that will be part of our near-term focus. We are also prepared to take further actions to reduce our cost structure and manufacturing footprint in the event of a prolonged railcar down cycle.
Savage concluded, “I am pleased Trinity’s rail platform continues to display its resiliency with strong cash flow generation stemming from the platform synergies. Leased railcar assets remain attractive to the capital markets, and we’ve had continued success in financing new railcar portfolios and selling railcars to our institutional investor partners in mutually beneficial transactions. Trinity delivered second quarter cash flow from operations of $154 million, made a net investment of $94 million in our leasing and manufacturing businesses, and returned $24 million to shareholders in the form of dividends – highlighting again that Trinity’s platform enables meaningful investment in the business for growth while returning substantial capital to shareholders. Our liquidity stayed strong at $709 million at quarter end, and has been further enhanced by the recent completion of the $225 million rail financing and amendments to our corporate revolver in the month of July. We are committed to delivering long-term shareholder value, and Trinity is taking the necessary steps to optimize our business and position the company for an acceleration in financial performance.”