UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


(Mark One)
☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, ~~2023~~2024


			OR
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________ .

Commission File Number 1-6903

(Exact name of registrant as specified in its charter)


Delaware		75-0225040
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
14221 N. Dallas Parkway, Suite 1100
Dallas,	Texas	75254-2957
(Address of principal executive offices)		(Zip Code)

(214) 631-4420

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	TRN	New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ Accelerated filer ¨ Non-accelerated filer ¨

Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No þ

At April ~~25, 2023,~~24, 2024, the number of shares of common stock, $0.01 par value, outstanding was ~~81,148,848.~~81,835,835.

TRINITY INDUSTRIES, INC.

FORM 10-Q

TABLE OF CONTENTS

Table of Contents

PART I

Item 1. Financial Statements

Trinity Industries, Inc. and Subsidiaries

Consolidated Statements of Operations

(unaudited)


		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
				2023		2022		2024	2023
				(in millions, except per share amounts)				(in millions, except per share amounts)
Revenues:	Revenues:
Manufacturing	Manufacturing			$	438.4	$	289.8
Leasing				203.3		182.9
				641.7		472.7
Manufacturing
Manufacturing
Leasing & Services
			809.6
Operating costs:	Operating costs:
Cost of revenues:	Cost of revenues:
Cost of revenues:
Cost of revenues:
Manufacturing	Manufacturing			422.0		295.6
Leasing				116.5		102.9
				538.5		398.5
Manufacturing
Manufacturing
Leasing & Services
			644.9
Selling, engineering, and administrative expenses:	Selling, engineering, and administrative expenses:
Manufacturing	Manufacturing			8.2		9.7
Leasing				15.7		12.8
Other				26.0		22.2
				49.9		44.7
Manufacturing
Manufacturing
Leasing & Services
Corporate & other
			52.3
Gains on dispositions of property:	Gains on dispositions of property:
Lease portfolio sales	Lease portfolio sales			13.5		11.8
Lease portfolio sales
Lease portfolio sales
Other	Other			1.8		13.5
			2.8
				15.3		25.3

Restructuring activities, net
Restructuring activities, net
Restructuring activities, net	Restructuring activities, net			(0.4)		—
Total operating profit	Total operating profit			69.0		54.8
Other (income) expense:	Other (income) expense:
Interest expense, net
Interest expense, net
Interest expense, net	Interest expense, net			62.1		43.5

Other, net	Other, net			1.6		(1.6)
				63.7		41.9
Other, net

Other, net
			72.5
Income from continuing operations before income taxes	Income from continuing operations before income taxes			5.3		12.9
Provision (benefit) for income taxes:	Provision (benefit) for income taxes:
Current	Current			0.9		1.8
Current
Current
Deferred	Deferred			(12.4)		1.2
			11.0
Income from continuing operations
Loss from discontinued operations, net of benefit for income taxes of $1.3 and $0.8
				(11.5)		3.0
Income from continuing operations				16.8		9.9
Loss from discontinued operations, net of benefit for income taxes of $0.8 and $2.0				(3.1)		(6.9)
Loss on sale of discontinued operations, net of benefit for income taxes of $— and $0.4				—		(1.1)
Net income
Net income
Net income	Net income			13.7		1.9
Net income attributable to noncontrolling interest	Net income attributable to noncontrolling interest			9.3		2.6
Net income (loss) attributable to Trinity Industries, Inc.				$	4.4	$	(0.7)
Net income attributable to Trinity Industries, Inc.

Basic earnings per common share:	Basic earnings per common share:
Basic earnings per common share:
Basic earnings per common share:
Income from continuing operations
Income from continuing operations
Income from continuing operations	Income from continuing operations			$	0.09	$	0.09
Loss from discontinued operations	Loss from discontinued operations			(0.04)		(0.10)
Basic net income (loss) attributable to Trinity Industries, Inc.				$	0.05	$	(0.01)
Basic net income attributable to Trinity Industries, Inc.
Diluted earnings per common share:	Diluted earnings per common share:
Income from continuing operations	Income from continuing operations			$	0.09	$	0.09
Income from continuing operations
Income from continuing operations
Loss from discontinued operations	Loss from discontinued operations			(0.04)		(0.10)
Diluted net income (loss) attributable to Trinity Industries, Inc.				$	0.05	$	(0.01)
Diluted net income attributable to Trinity Industries, Inc.
Weighted average number of shares outstanding:	Weighted average number of shares outstanding:
Basic	Basic			80.8		82.9
Basic
Basic
Diluted	Diluted			83.2		85.5

See accompanying notes to Consolidated Financial Statements.

Table of Contents

Trinity Industries, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

(unaudited)


		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
			2023		2022		2024	2023
			(in millions)				(in millions)
Net income	Net income		$	13.7	$	1.9
Other comprehensive income (loss):	Other comprehensive income (loss):
Derivative financial instruments:	Derivative financial instruments:
Unrealized gains arising during the period, net of tax expense of $0.1 and $4.4			0.5		14.7
Reclassification adjustments for (gains) losses included in net income, net of tax benefit of $11.0 and $0.9			(14.9)		2.5
Defined benefit plans:

Amortization of net actuarial losses, net of tax benefit of $—, and $—			—		0.1
Derivative financial instruments:
Derivative financial instruments:
Unrealized gains arising during the period, net of tax benefit (expense) of $3.4 and $(0.1)
Unrealized gains arising during the period, net of tax benefit (expense) of $3.4 and $(0.1)
Unrealized gains arising during the period, net of tax benefit (expense) of $3.4 and $(0.1)
Reclassification adjustments for gains included in net income, net of tax (expense) benefit of $(1.2) and $11.0

			(14.4)		17.3

			7.5

			7.5

			7.5
Comprehensive income (loss)	Comprehensive income (loss)		(0.7)		19.2
Less: comprehensive income attributable to noncontrolling interest	Less: comprehensive income attributable to noncontrolling interest		1.9		2.8
Comprehensive income (loss) attributable to Trinity Industries, Inc.	Comprehensive income (loss) attributable to Trinity Industries, Inc.		$	(2.6)	$	16.4

See accompanying notes to Consolidated Financial Statements.

Table of Contents

Trinity Industries, Inc. and Subsidiaries

Consolidated Balance Sheets


	March 31, 2024						March 31, 2024	December 31, 2023
	(unaudited)
		March 31, 2023		December 31, 2022
		(unaudited)
		(in millions)				(in millions)
ASSETS	ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	81.9	$	79.6
Cash and cash equivalents
Cash and cash equivalents

Receivables, net of allowance
Receivables, net of allowance
Receivables, net of allowance	Receivables, net of allowance	333.2		323.5
Income tax receivable	Income tax receivable	10.1		7.8
Inventories:	Inventories:
Raw materials and supplies	Raw materials and supplies	410.1		423.6
Raw materials and supplies
Raw materials and supplies
Work in process	Work in process	175.1		164.2
Finished goods	Finished goods	47.5		41.6
		632.7		629.4
Restricted cash, including partially-owned subsidiaries of $74.1 and $74.4		181.1		214.7
Property, plant, and equipment, at cost, including partially-owned subsidiaries of $1,919.8 and $1,917.6		9,415.8		9,272.6
Less accumulated depreciation, including partially-owned subsidiaries of $610.9 and $599.0		(2,439.3)		(2,385.8)
		6,976.5		6,886.8
	643.1
Restricted cash, including partially-owned subsidiaries of $30.0 and $30.6
Property, plant, and equipment, at cost, including partially-owned subsidiaries of $1,921.7 and $1,922.5
Less accumulated depreciation, including partially-owned subsidiaries of $656.8 and $644.7
	7,059.6
Goodwill	Goodwill	222.3		195.9
Other assets	Other assets	401.4		386.6
Total assets	Total assets	$	8,839.2	$	8,724.3

LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable
Accounts payable
Accounts payable	Accounts payable	$	314.5	$	287.5
Accrued liabilities	Accrued liabilities	273.7		261.0
Debt:	Debt:
Recourse	Recourse	704.3		624.1
Recourse
Recourse
Non-recourse:	Non-recourse:
Wholly-owned subsidiaries	Wholly-owned subsidiaries	3,826.9		3,800.7
Wholly-owned subsidiaries
Wholly-owned subsidiaries
Partially-owned subsidiaries	Partially-owned subsidiaries	1,176.4		1,182.8
		5,707.6		5,607.6
	5,867.0
Deferred income taxes	Deferred income taxes	1,133.2		1,134.7
Other liabilities	Other liabilities	159.8		163.9
Total liabilities	Total liabilities	7,588.8		7,454.7

Commitments and contingencies (Note 14)
Preferred stock – 1.5 shares authorized and unissued
Preferred stock – 1.5 shares authorized and unissued
Preferred stock – 1.5 shares authorized and unissued	Preferred stock – 1.5 shares authorized and unissued	—		—
Common stock – 400.0 shares authorized	Common stock – 400.0 shares authorized	0.8		0.8
Capital in excess of par value	Capital in excess of par value	6.6		—
Retained earnings	Retained earnings	975.6		992.6
Accumulated other comprehensive income	Accumulated other comprehensive income	12.7		19.7
Treasury stock	Treasury stock	(1.5)		(0.7)
		994.2		1,012.4
	1,049.3
Noncontrolling interest	Noncontrolling interest	256.2		257.2
Total stockholders' equity	Total stockholders' equity	1,250.4		1,269.6
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	8,839.2	$	8,724.3

See accompanying notes to Consolidated Financial Statements.

Table of Contents

Trinity Industries, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(unaudited)


		Three Months Ended March 31,
	Three Months Ended March 31,							Three Months Ended March 31,
		2023		2022		2024	2023
		(in millions)				(in millions)
Operating activities:	Operating activities:
Net income	Net income	$	13.7	$	1.9
Net income
Net income
Loss from discontinued operations, net of income taxes	Loss from discontinued operations, net of income taxes	3.1		6.9
Loss on sale of discontinued operations, net of income taxes		—		1.1

Adjustments to reconcile net income to net cash provided by operating activities – continuing operations:	Adjustments to reconcile net income to net cash provided by operating activities – continuing operations:
Adjustments to reconcile net income to net cash provided by operating activities – continuing operations:
Adjustments to reconcile net income to net cash provided by operating activities – continuing operations:
Depreciation and amortization
Depreciation and amortization
Depreciation and amortization	Depreciation and amortization	74.0		66.9
Stock-based compensation expense	Stock-based compensation expense	6.2		5.1

Provision (benefit) for deferred income taxes
Provision (benefit) for deferred income taxes
Provision (benefit) for deferred income taxes	Provision (benefit) for deferred income taxes	(12.4)		1.2
Net gains on lease portfolio sales	Net gains on lease portfolio sales	(13.5)		(10.5)
Gains on dispositions of property and other assets	Gains on dispositions of property and other assets	(1.0)		(8.4)
Gains on insurance recoveries from property damage	Gains on insurance recoveries from property damage	(1.2)		(6.4)

Non-cash interest expense	Non-cash interest expense	2.6		3.3

Non-cash interest expense

Non-cash interest expense

Other
Other
Other	Other	(1.9)		0.5
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:
(Increase) decrease in receivables	(Increase) decrease in receivables	2.8		38.2
(Increase) decrease in receivables
(Increase) decrease in receivables

(Increase) decrease in inventories
(Increase) decrease in inventories
(Increase) decrease in inventories	(Increase) decrease in inventories	(3.3)		(75.5)
(Increase) decrease in other assets	(Increase) decrease in other assets	7.3		(4.8)
Increase (decrease) in accounts payable	Increase (decrease) in accounts payable	11.6		26.6
Increase (decrease) in accrued liabilities	Increase (decrease) in accrued liabilities	14.7		(18.3)
Increase (decrease) in other liabilities	Increase (decrease) in other liabilities	(0.2)		0.7
Net cash provided by operating activities – continuing operations	Net cash provided by operating activities – continuing operations	102.5		28.5
Net cash used in operating activities – discontinued operations	Net cash used in operating activities – discontinued operations	(3.1)		(8.0)
Net cash provided by operating activities	Net cash provided by operating activities	99.4		20.5
Investing activities:	Investing activities:

Proceeds from dispositions of property and other assets	Proceeds from dispositions of property and other assets	4.9		15.6

Proceeds from dispositions of property and other assets

Proceeds from dispositions of property and other assets
Proceeds from lease portfolio sales	Proceeds from lease portfolio sales	56.7		71.1

Capital expenditures – leasing		(191.5)		(84.6)
Capital expenditures – manufacturing and other		(7.1)		(2.3)
Capital expenditures – lease fleet
Capital expenditures – lease fleet
Capital expenditures – lease fleet
Capital expenditures – operating and administrative
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	(66.2)		—
Proceeds from insurance recoveries	Proceeds from insurance recoveries	1.2		—
Other		(1.1)		—
Equity investments

Net cash used in investing activities

Net cash used in investing activities

Net cash used in investing activities	Net cash used in investing activities	(203.1)		(0.2)
Financing activities:	Financing activities:

Payments to retire debt	Payments to retire debt	(149.6)		(73.0)

Payments to retire debt

Payments to retire debt
Proceeds from issuance of debt	Proceeds from issuance of debt	246.3		127.2

Payments to settle contingent consideration liability
Dividends paid to common shareholders	Dividends paid to common shareholders	(21.1)		(19.1)
Purchase of shares to satisfy employee tax on vested stock	Purchase of shares to satisfy employee tax on vested stock	(0.3)		(0.2)

Distributions to noncontrolling interest	Distributions to noncontrolling interest	(2.9)		(6.2)

Distributions to noncontrolling interest

Distributions to noncontrolling interest

Net cash provided by financing activities

Net cash provided by financing activities

Net cash provided by financing activities	Net cash provided by financing activities	72.4		28.7
Net increase (decrease) in cash, cash equivalents, and restricted cash	Net increase (decrease) in cash, cash equivalents, and restricted cash	(31.3)		49.0
Cash, cash equivalents, and restricted cash at beginning of period	Cash, cash equivalents, and restricted cash at beginning of period	294.3		302.4
Cash, cash equivalents, and restricted cash at end of period	Cash, cash equivalents, and restricted cash at end of period	$	263.0	$	351.4

See accompanying notes to Consolidated Financial Statements.

Table of Contents

Trinity Industries, Inc. and Subsidiaries

Consolidated Statements of Stockholders' Equity

(unaudited)


	Common Stock																										Common Stock	Capital in Excess of Par Value	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Treasury Stock	Trinity Stockholders’ Equity	Noncontrolling Interest	Total Stockholders’ Equity

		Common Stock			Capital in Excess of Par Value				Retained Earnings			Accumulated Other Comprehensive Income (Loss)		Treasury Stock				Trinity Stockholders’ Equity		Noncontrolling Interest		Total Stockholders’ Equity
		Shares	$0.01 Par Value								Shares			Amount
		(in millions, except par value and per common share amounts)																						(in millions, except par value and per common share amounts)
Balances at December 31, 2022		81.1	$	0.8			$	—				$	992.6	$	19.7	—		$	(0.7)	$	1,012.4	$	257.2		$	1,269.6
Balances at December 31, 2023
Net income	Net income	—	—		—				4.4			—		—		—		4.4		9.3		13.7
Other comprehensive loss		—	—		—				—			(7.0)		—		—		(7.0)		(7.4)		(14.4)
Other comprehensive income
Cash dividends declared on common stock (1)	Cash dividends declared on common stock (1)	—	—		—				(21.4)			—		—		—		(21.4)		—		(21.4)
Distributions to noncontrolling interest	Distributions to noncontrolling interest	—	—		—				—			—		—		—		—		(2.9)		(2.9)
Stock-based compensation expense	Stock-based compensation expense	—	—		6.2				—			—		—		—		6.2		—		6.2
Settlement of share-based awards, net	Settlement of share-based awards, net	—	—		0.4				—			—		—		(0.8)		(0.4)		—		(0.4)

Balances at March 31, 2024

Balances at March 31, 2023		81.1	$	0.8	$	6.6			$	975.6		$	12.7	—		$	(1.5)	$	994.2	$	256.2	$	1,250.4

Balances at March 31, 2024

Balances at March 31, 2024


	Common Stock																										Common Stock	Capital in Excess of Par Value	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Treasury Stock	Trinity Stockholders’ Equity	Noncontrolling Interest	Total Stockholders’ Equity

		Common Stock			Capital in Excess of Par Value				Retained Earnings			Accumulated Other Comprehensive Income (Loss)		Treasury Stock				Trinity Stockholders’ Equity		Noncontrolling Interest		Total Stockholders’ Equity
		Shares	$0.01 Par Value								Shares			Amount
		(in millions, except par value and per common share amounts)																						(in millions, except par value and per common share amounts)
Balances at December 31, 2021		83.3	$	0.8			$	—				$	1,046.6	$	(17.0)	—		$	(0.6)	$	1,029.8	$	267.0		$	1,296.8
Net income (loss)		—	—		—				(0.7)			—		—		—		(0.7)		2.6		1.9
Other comprehensive income		—	—		—				—			17.1		—		—		17.1		0.2		17.3
Balances at December 31, 2022
Net income
Other comprehensive loss
Cash dividends declared on common stock (1)	Cash dividends declared on common stock (1)	—	—		—				(19.3)			—		—		—		(19.3)		—		(19.3)
Distributions to noncontrolling interest	Distributions to noncontrolling interest	—	—		—				—			—		—		—		—		(6.2)		(6.2)
Stock-based compensation expense	Stock-based compensation expense	—	—		5.1				—			—		—		—		5.1		—		5.1
Settlement of share-based awards, net	Settlement of share-based awards, net	—	—		0.2				—			—		—		(0.2)		—		—		—

Balances at March 31, 2022		83.3	$	0.8	$	5.3			$	1,026.6		$	0.1	—		$	(0.8)	$	1,032.0	$	263.6	$	1,295.6
Balances at March 31, 2023

Balances at March 31, 2023

Balances at March 31, 2023

(1) Dividends of ~~$0.26~~$0.28 and ~~$0.23~~$0.26 per common share for the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, respectively.

See accompanying notes to Consolidated Financial Statements.

Table of Contents

Trinity Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

Note 1. Summary of Significant Accounting Policies

Basis of Presentation

The foregoing Consolidated Financial Statements are unaudited and have been prepared from the books and records of Trinity Industries, Inc. and ~~its consolidated subsidiaries~~Subsidiaries (“Trinity,” “Company,” “we,” “our,” or "us"), including the accounts of our wholly-owned subsidiaries and partially-owned subsidiaries, TRIP Rail Holdings LLC (“TRIP Holdings”) ~~and~~, RIV 2013 Rail Holdings LLC ("RIV 2013"), and Trinity Global Ventures Limited ("Trinity Global Ventures"), in which we have a controlling interest. In our opinion, all normal and recurring adjustments necessary for a fair presentation of our financial position as of March 31, ~~2023,~~2024 and the results of operations and cash flows for the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023 have been made in conformity with generally accepted accounting principles. All significant intercompany accounts and transactions have been eliminated. Certain prior year balances have been reclassified to conform to the ~~2023~~2024 presentation.

Due to seasonal and other factors, the results of operations for the three months ended March 31, ~~2023~~2024 may not be indicative of expected results of operations for the year ending December 31, ~~2023.~~2024. These interim financial statements and notes are condensed as permitted by the instructions to Form 10-Q and should be read in conjunction with our audited Consolidated Financial Statements included in our Form 10-K for the year ended December 31, ~~2022.~~2023.

Our Reportable Segments

Effective January 1, 2024, the Company modified its organizational structure to better leverage our maintenance services capabilities to support lease fleet optimization and to grow our services and parts businesses. The new structure resulted in a change to our reportable segments beginning in 2024. In connection with this organizational update, we aligned the maintenance services business, which was previously reported in the Rail Products Group, to now be presented within our leasing business. This change aligns with the way in which our Chief Operating Decision Maker ("CODM") assesses performance and allocates resources. Consequently, beginning January 1, 2024, we report our operating results in two reportable segments: (1) the Railcar Leasing and Services Group, formerly the Railcar Leasing and Management Services Group, and (2) the Rail Products Group. These changes had no impact to our previously reported consolidated results of operations, financial position, or cash flows. All prior period segment results set forth herein have been recast to reflect these changes and present results on a comparable basis.

Revenue Recognition

Revenue is measured based on the allocation of the transaction price in a contract to satisfied performance obligations. The transaction price does not include any amounts collected on behalf of third parties. We recognize revenue when we satisfy a performance obligation by transferring control over a product or service to a customer. For all contracts with customers, we evaluate whether we are the principal (i.e., report revenues on a gross basis) or agent (i.e., report revenues on a net basis). Generally, we are the principal in our contracts with customers and report revenues on a gross basis as we control the product or service before it is transferred to a customer. We act as an agent for a small number of service contracts and report those revenues on a net basis as we do not control the services before they are provided to the customer. Payments for our products and services are generally due within normal commercial terms. The following is a description of principal activities from which we generate our revenue, separated by reportable segments. See Note 4 for a further discussion regarding our reportable segments.

Railcar Leasing and ~~Management~~ Services Group

In our Railcar Leasing and ~~Management~~ Services Group ("Leasing Group"), revenue from rentals and operating leases, including contracts that contain non-level fixed lease payments, is recognized monthly on a straight-line basis. Leases not classified as operating leases are generally considered sales-type leases as a result of an option to purchase.

We review our operating lease receivables for collectibility on a regular basis, taking into consideration changes in factors such as the lessee’s payment history, the financial condition of the lessee, and business and economic conditions in the industry in which the lessee operates. In the event that the collectibility of a receivable with respect to any lessee is no longer probable, we derecognize the revenue and related receivable and recognize future revenue only when the lessee makes a rental payment. Contingent rents are recognized when the contingency is resolved.

Table of Contents

Selling profit or loss associated with sales-type leases is recognized upon lease commencement, and a net investment in the sales-type lease is recorded in the Consolidated Balance Sheets. Interest income related to sales-type leases is recognized over the lease term using the effective interest method. See "Lease Accounting" below for additional information regarding sales-type leases as of March 31, ~~2023~~2024 and ~~2022.~~2023.

We report all sales of railcars from the lease fleet and selling profit or loss associated with sales-type leases as a net gain or loss from the disposal of a long-term asset in accordance with ~~ASC~~Accounting Standards Codification ("ASC") 610-20, Gains and losses from the derecognition of non-financial assets. These sales are presented in the Lease portfolio sales line in our Consolidated Statements of Operations.

Within our maintenance services business, revenue is recognized over time as repair and maintenance projects are completed, using an input approach based on the costs ~~as activities~~incurred relative to ~~fulfill~~ the ~~promise to transfer the good; as such, these fees are recorded in revenue. The fees and~~total estimated costs of ~~shipping~~performing the project. We recorded contract assets of $17.4 million and ~~handling~~$8.8 million as of March 31, 2024 and December 31, 2023, respectively, related to unbilled revenues recognized on repair and maintenance activities that have been performed, but for which the entire project has not yet been completed, and the railcar has not yet been shipped to the customer. These contract assets are ~~accrued when~~included within the ~~related performance obligation has been satisfied.~~Receivables, net of allowance line in our Consolidated Balance Sheets.

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We act as an agent for certain logistics services and report these revenues on a net basis as we do not control the services before they are provided to the customer.

Rail Products Group

Our railcar manufacturing business recognizes revenue related to new railcars when the customer has submitted its certificate of acceptance and legal title of the railcar has passed to the customer. Certain contracts for the sales of railcars include price adjustments based on changes to input costs; this amount represents variable consideration for which we are generally unable to estimate the final consideration until the railcar is delivered.

Revenue is recognized over time as ~~repair and maintenance projects and~~ sustainable railcar conversions are completed, using an input approach based on the costs incurred relative to the total estimated costs of performing the project. We recorded contract assets of ~~$4.4~~$6.2 million and ~~$2.9~~$12.6 million as of March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, respectively, ~~related~~which primarily relate to unbilled revenues recognized on ~~repair and maintenance services and~~ sustainable railcar conversions that have been performed, but for which the entire project has not yet been completed, and the railcar has not yet been shipped to the customer. These contract assets are included within the Receivables, net of allowance line in our Consolidated Balance Sheets.

We account for shipping and handling costs as activities to fulfill the promise to transfer the good; as such, these fees are recorded in revenue. The fees and costs of shipping and handling activities are accrued when the related performance obligation has been satisfied.

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Unsatisfied Performance Obligations

The following table includes estimated revenue expected to be recognized in future periods related to performance obligations that are unsatisfied or partially satisfied as of March 31, ~~2023~~2024 and the percentage of the outstanding performance obligations as of March 31, ~~2023~~2024 expected to be delivered during the remainder of ~~2023:~~2024:


		Unsatisfied performance obligations at March 31, 2023
		Total Amount		Percent expected to be delivered in 2023
	Unsatisfied performance obligations at March 31, 2024												Unsatisfied performance obligations at March 31, 2024
	Total Amount									Total Amount					Percent expected to be delivered in 2024
		(in millions)
Rail Products Group:	Rail Products Group:
Rail Products Group:
Rail Products Group:
New railcars:
New railcars:
New railcars:	New railcars:
External customers	External customers	$	3,257.1
External customers
External customers
Leasing Group	Leasing Group	448.8
		$	3,705.9	42.3	%
Leasing Group
Leasing Group
		$
		$
		$						2,938.9			49.1		%
Sustainable railcar conversions	Sustainable railcar conversions	$	173.7	76.9	%	Sustainable railcar conversions	$	35.8	91.5			91.5		%

Railcar Leasing and Management Services Group		$	73.0	15.9	%
Railcar Leasing and Services Group:
Railcar Leasing and Services Group:
Railcar Leasing and Services Group:
Leasing and management
Leasing and management
Leasing and management							$	62.7			21.4		%
Maintenance services						Maintenance services	$	7.9			100.0		%

The remainder of the unsatisfied performance obligations for the Rail Products Group is expected to be delivered through 2028. The orders in the Rail Products Group's backlog from the Leasing Group are fully supported by lease commitments with external customers. The final amount of backlog attributable to the Leasing Group may vary by the time of delivery as customers may elect to change their procurement decision.

Unsatisfied performance obligations for the Railcar Leasing and ~~Management~~ Services Group are related to servicing, maintenance, and management agreements and are expected to be performed through 2029.

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Lease Accounting

Lessee

We are the lessee of operating leases predominantly for office buildings and railcars, as well as manufacturing equipment and office equipment. Our operating leases have remaining lease terms ranging from one year to ~~fourteen~~thirteen years, some of which include options to extend for up to five years, and some of which include options to terminate within one year. As of March 31, ~~2023,~~2024, we had no material finance leases in which we were the lessee. Certain of our operating leases include lease incentives, which reduce the right-of-use asset and are recognized on a straight-line basis over the lease term.

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The following table summarizes the impact of our operating leases on our Consolidated Financial Statements (in millions, except lease term and discount rate):


				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
						2024															2024	2023
Consolidated Statements of Operations
Operating lease expense
Operating lease expense
Operating lease expense

				Three Months Ended March 31,
Consolidated Statements of Cash Flows
							2023					2022
Consolidated Statements of Operations
Operating lease expense							$	4.3				$	4.2
Short-term lease expense							$	—				$	0.1
Consolidated Statements of Cash Flows

Consolidated Statements of Cash Flows	Consolidated Statements of Cash Flows
Cash flows from operating activities	Cash flows from operating activities				$	4.3				$	4.2
Cash flows from operating activities
Cash flows from operating activities
Right-of-use assets recognized in exchange for new lease liabilities	Right-of-use assets recognized in exchange for new lease liabilities	$	2.1		$	11.1

							March 31, 2023					December 31, 2022
							March 31, 2024
							March 31, 2024
							March 31, 2024									December 31, 2023
Consolidated Balance Sheets	Consolidated Balance Sheets
Right-of-use assets (1)
Right-of-use assets (1)
Right-of-use assets (1)	Right-of-use assets (1)						$	91.2				$	93.1
Lease liabilities (2)	Lease liabilities (2)						$	111.5				$	114.8
Weighted average remaining lease term	Weighted average remaining lease term						9.9 years					9.9 years			Weighted average remaining lease term		9.1 years		9.3 years
Weighted average discount rate							2.9		%			2.8		%
Weighted average discount rate (3)															Weighted average discount rate (3)		3.7	%	3.6	%

(1) Included in other assets in our Consolidated Balance Sheets.

(2) Included in other liabilities in our Consolidated Balance Sheets.

(3) As the rate implicit in our leases is not readily determinable, we use the incremental borrowing rate of our Trinity Industries Leasing Company ("TILC") warehouse loan facility for railcar leases or our revolving credit facility for operating and administrative leases at lease commencement to determine the present value of lease payments.

Future contractual minimum operating lease liabilities will mature as follows (in millions):


		Leasing Group		Non-Leasing Group		Total
Remaining nine months of 2023		$	8.1	$	6.9	$	15.0
2024		7.0		8.1		15.1
	Railcars in our Lease Fleet							Railcars in our Lease Fleet	Operating and Administrative	Total
Remaining nine months of 2024
2025	2025	6.1		7.3		13.4
2026	2026	5.8		6.9		12.7
2027	2027	5.3		6.9		12.2
2028
Thereafter	Thereafter	3.7		56.5		60.2
Total operating lease payments	Total operating lease payments	$	36.0	$	92.6	$	128.6
Less: Present value adjustment	Less: Present value adjustment					(17.1)

Total operating lease liabilities	Total operating lease liabilities					$	111.5
Total operating lease liabilities
Total operating lease liabilities

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Lessor

Our Leasing Group enters into railcar operating leases with third parties with terms generally ranging between one year and ten years. The majority of our fleet operates on leases that earn fixed monthly lease payments. Generally, lease payments are due at the beginning of the applicable month. A portion of our fleet operates on per diem leases that earn usage-based variable lease payments. Some of our leases include options to extend the leases for up to five years, and a small percentage of our leases include early termination options with certain notice requirements and early termination penalties. As of March 31, ~~2023, non-Leasing Group~~2024, non-lease fleet operating leases in which we are the lessor were not significant, and we had no direct finance leases.

We manage risks associated with residual values of leased railcars by investing across a diverse portfolio of railcar types, staggering lease maturities within any given railcar type, avoiding concentration of railcar type and industry, and actively participating in secondary markets. Additionally, our lease agreements contain normal wear and tear return condition provisions and high mileage thresholds designed to protect the value of our residual assets. Our lease agreements do not contain any material residual value guarantees or restrictive covenants.

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The following table summarizes the impact of our leases on our Consolidated Statements of Operations:

Three Months Ended
March 31,
2023 2022
(in millions)
Operating lease revenues $ 176.7 $ 163.6
Variable operating lease revenues $ 14.6 $ 13.2
Interest income on sales-type lease receivables $ 0.2 $ 0.1
Profit recognized at sales-type lease commencement (1)
$ — $ 1.3

~~(1)Included in gains on dispositions of property – lease portfolio sales on our Consolidated Statements of Operations.~~


	Three Months Ended March 31,
		2024		2023
		(in millions)
Operating lease revenues		$	191.8	$	176.7
Variable operating lease revenues		$	13.7	$	14.6

Interest income on sales-type lease receivables		$	0.2	$	0.2

Future contractual minimum revenues for operating leases will mature as follows (in millions)(1):


Remaining nine months of 2023		$	480.8
2024		533.8
Remaining nine months of 2024
2025	2025	424.1
2026	2026	312.9
2027	2027	219.5
2028
Thereafter	Thereafter	318.5
Total	Total	$	2,289.6

(1) Total contractual minimum rental revenues on operating leases relates to our wholly-owned and partially-owned subsidiaries and sub-lease rental revenues associated with the Leasing Group's operating lease obligations.

Future contractual minimum lease receivables for sales-type leases will mature as follows (in millions)~~(1)~~:


Remaining nine months of 2023		$	0.8
2024		1.1
Remaining nine months of 2024
2025	2025	1.1
2026	2026	1.1
2027	2027	1.1
2028
Thereafter	Thereafter	10.1
Total	Total	15.3
Less: Unearned interest income	Less: Unearned interest income	(4.8)
Net investment in sales-type leases (1)	Net investment in sales-type leases (1)	$	10.5

(1) Included in other assets in our Consolidated Balance Sheets.

Financial Instruments

We consider all highly liquid debt instruments to be either cash and cash equivalents if purchased with a maturity of three months or less, or short-term marketable securities if purchased with a maturity of more than three months and less than one year.

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Financial instruments that potentially subject us to a concentration of credit risk are primarily cash investments, including restricted cash and receivables. We place our cash investments in bank deposits, investment grade short-term debt instruments, highly-rated money market funds, and highly-rated commercial paper. We limit the amount of credit exposure to any one commercial issuer. The carrying values of cash, receivables, and accounts payable are considered to be representative of their respective fair values.

Concentrations of credit risk with respect to receivables are limited due to control procedures that monitor the credit worthiness of customers, the large number of customers in our customer base, and their dispersion across different end markets and geographic areas. Receivables are generally evaluated at a portfolio level based on these characteristics. As receivables are generally unsecured, we maintain an allowance for credit losses using a forward-looking approach based on historical losses and consideration of current and expected future economic conditions. Historically, we have observed that the likelihood of loss increases when receivables have aged beyond 180 days. When a receivable is deemed uncollectible, the write-off is recorded as a reduction to the allowance for credit losses. During the three months ended March 31, ~~2023,~~2024, we recognized approximately ~~$0.5~~$0.6 million of credit loss expense and ~~approximately $0.5 million of recoveries and other adjustments, and~~ wrote off ~~$0.2~~$0.8 million related to our trade receivables that are in the scope of ASC 326, Financial Instruments – Credit Losses, bringing the allowance for credit losses balance from ~~$10.6~~$12.8 million at December 31, ~~2022~~2023 to ~~$10.4~~$12.6 million at March 31, ~~2023.~~2024. This balance excludes the general reserve for operating lease receivables that is permitted under ASC 450, Contingencies.

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~~Goodwill~~

~~Goodwill by segment is as follows:~~

March 31, 2023 December 31, 2022
Railcar Leasing and Management Services Group $ 33.5 $ 7.1
Rail Products Group 188.8 188.8
$ 222.3 $ 195.9

~~Warranties~~

We provide various express, limited product warranties that generally range from one year to five years depending on the product. The warranty costs are estimated using a two-step approach. First, an engineering estimate is made for the cost of all claims that have been asserted by customers. Second, based on historical claims experience, a cost is accrued for all products still within a warranty period for which no claims have been filed. We provide for the estimated cost of product warranties at the time revenue is recognized related to products covered by warranties and assess the adequacy of the resulting reserves on a quarterly basis. The changes in the accruals for warranties for the three months ended March 31, 2023 and 2022 are as follows:

Three Months Ended
March 31,
2023 2022
(in millions)
Beginning balance $ 3.3 $ 3.1
Warranty costs incurred — (1.2)
Warranty originations and revisions 1.0 1.6
Warranty expirations (0.4) (0.3)
Ending balance $ 3.9 $ 3.2

~~Recent Accounting Pronouncements~~

~~Adopted in 2023~~

~~ASU 2022-04~~ ~~– In September 2022, the FASB issued ASU No. 2022-04,~~ ~~Disclosure of Supplier~~Supply Chain Finance Program ~~Obligation~~s, which requires entities that use supplier finance programs in connection with the purchase of goods and services to disclose information about the key terms of these programs, outstanding amounts as of the end of the reporting period, a description of where in the financial statements outstanding amounts are presented, and a rollforward of these obligations. ASU 2022-04 is effective for public companies during interim and annual reporting periods beginning after December 15, 2022 and is to be adopted on a retrospective basis, except for the disclosure of rollforward information, which is effective for public companies during interim and annual reporting periods beginning after December 15, 2023 and is to be adopted on a prospective basis.

~~We adopted ASU 2022-04 effective January 1, 2023. The adoption did not have a significant impact on our Consolidated Financial Statements.~~ In cooperation with a participating financial institution, we facilitate a voluntary supply chain finance ("SCF") program for several of our suppliers. We negotiate payment terms with suppliers that are in line with average industry terms. We have not pledged any assets as security or provided other forms of guarantees to the financial institution. Under the SCF program, participating suppliers may choose to sell, at a discounted price, receivables due from us to the financial institution, at the sole discretion of both the suppliers and the financial institution, prior to the invoices’ scheduled due dates. The payment terms that we negotiate with all suppliers are consistent regardless of whether the supplier chooses to participate in the SCF program for a particular invoice. The SCF program is administered by a third-party financial institution, and our responsibility is limited to making payments based on the terms originally negotiated with participating suppliers, regardless of whether such suppliers sell receivables to the financial institution.

Amounts due to our participating suppliers in the SCF program totaled ~~$17.3~~$23.9 million and ~~$22.8~~$18.3 million as of March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, respectively, and are included in accounts payable in our Consolidated Balance Sheets. Payments made under the SCF program are reflected in net cash provided by operating activities from continuing operations in our Consolidated Statements of Cash Flows.

Goodwill

Goodwill by segment is as follows:


	March 31, 2024		December 31, 2023
Railcar Leasing and Services Group	$	50.6	$	50.6
Rail Products Group	170.9		170.9
	$	221.5	$	221.5

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Warranties


	Three Months Ended March 31,
		2024		2023
		(in millions)
Beginning balance		$	3.3	$	3.3
Warranty costs incurred		(0.2)		—
Warranty originations and revisions		(0.2)		1.0
Warranty expirations		(0.1)		(0.4)
Ending balance		$	2.8	$	3.9

Recent Accounting Pronouncements

Not Yet Adopted

ASU 2023-07 – In November 2023, the FASB issued ASU No. 2023-07, "Improvements to Reportable Segment Disclosures," which improves disclosures about a public entity's reportable segments through enhanced disclosures about significant segment expenses. ASU 2023-07 requires disclosures, on an annual and interim basis, of significant segment expenses that are regularly provided to the CODM, the amount for other segment items by reportable segment and a description of its composition, the title and position of the CODM, and interim period disclosure of all current ASC 280, Segment Reporting, annual disclosures about a reportable segment's profit or loss and assets. ASU 2023-07 is effective for public companies during annual reporting periods beginning after December 15, 2023 and during interim reporting periods beginning after December 15, 2024 and is to be adopted on a retrospective basis. Early adoption is permitted. We are currently evaluating the impact ASU 2023-07 will have on our segment reporting disclosures.

ASU 2023-09 – In December 2023, the FASB issued ASU No. 2023-09, "Improvements to Income Tax Disclosures," which enhances transparency and decision usefulness of income tax disclosures. ASU 2023-09 requires, on an annual basis, a tabular disclosure using specific categories in the rate reconciliation and providing additional information for reconciling items that meet a quantitative threshold, as well as the disaggregation of income taxes paid by federal, state, and foreign jurisdictions. ASU 2023-09 is effective for public companies during annual reporting periods beginning after December 15, 2024 on a prospective basis, with an option for retrospective application. Early adoption is permitted. We are currently evaluating the impact ASU-2023-09 will have on our income tax disclosures.

Note 2. Acquisitions and Discontinued Operations

Acquisitions

Acquisition of Holden America

In December 2022, we acquired Holden America, a manufacturer of market-leading multi-level vehicle securement and protection systems, gravity-outlet gates, and gate accessories for freight rail in North America. The purchase agreement included minimum additional consideration of $10.0 million, which is payable in installments of $5.0 million per year in each of 2024 and 2025. The purchase agreement also contained a provision whereby additional consideration could become payable based on the achievement of certain revenue targets, up to a maximum payout of $10.0 million.

The total additional consideration, which is included in other liabilities in our Consolidated Balance Sheets, had an estimated fair value of $20.0 million as of December 31, 2023 and is remeasured at each reporting period using Level 3 inputs. During the three months ended March 31, 2024, the first installment of the additional consideration, totaling $10.0 million, was paid. This payment is reflected in our Consolidated Statements of Cash Flows, of which $8.0 million related to the initial estimated fair value is included in financing activities, and $2.0 million related to the remeasurement of the initial estimated fair value is included in operating activities. As of March 31, 2024, the estimated fair value of the remaining additional consideration was $10.0 million.

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Acquisition of RSI Logistics

OnIn March 8, 2023, we acquired RSI Logistics ("RSI"), a data-centric provider of proprietary software and logistics and terminal management solutions to the North American rail ~~industry, for an aggregate purchase price of $72.1 million.~~industry. This transaction was recorded as a business combination within the Leasing Group, based on valuations of the acquired assets and liabilities at their acquisition date fair value using Level 3 inputs. The fair values of the assets acquired and liabilities assumed are considered preliminary and are subject to adjustment as additional information is obtained and reviewed. The final allocation of the purchase price may differ from the preliminary allocation based on completion of the valuation. We expect to finalize the purchase price allocation within the measurement period, which will not exceed one year from the acquisition date.

Based on our ~~preliminary~~ purchase price allocation, we recorded identifiable intangible assets of ~~$37.4~~$35.7 million, goodwill of ~~$26.3~~$25.6 million, and certain other immaterial assets ~~net of liabilities, totaling $8.4 million.~~and liabilities. The identifiable intangible assets, with the exception of the trade name, which ~~will be~~is considered an indefinite-lived intangible asset, ~~will be~~are being amortized over their estimated useful lives, ranging from 5 years to 15 years. ~~The primary areas of the purchase price allocation that are not yet finalized relate to the valuation of intangible assets, goodwill and certain other immaterial assets and liabilities.~~

~~Acquisition of Holden America~~

On December 30, 2022, we acquired Holden America, a manufacturer of market-leading multi-level vehicle securement and protection systems, gravity-outlet gates, and gate accessories for freight rail in North America. This transaction was recorded as a business combination within the Rail Products Group, based on valuations of the acquired assets and liabilities at their acquisition date fair value using Level 3 inputs. Based on our preliminary purchase price allocation recorded during the year ended December 31, 2022, we recorded identifiable intangible assets of $45.9 million, goodwill of $36.4 million, and certain other immaterial assets. The fair values of the assets acquired and liabilities assumed are considered preliminary and are subject to adjustment as additional information is obtained and reviewed. The final allocation of the purchase price may differ from the preliminary allocation based on completion of the valuation. We did not make any adjustments during the three months ended March 31, 2023. We expect to finalize the purchase price allocation within the measurement period, which will not exceed one year from the acquisition date.Discontinued Operations

Sale of Highway Products Business

In the fourth quarter of 2021, we completed the sale of Trinity Highway Products, LLC (“THP”) ~~to Rush Hour Intermediate II, LLC ("Rush Hour"), an entity owned by an affiliated investment fund of Monomoy Capital Partners.~~. Upon completion of the sale, the accounting requirements for reporting THP as a discontinued operation were met. In connection with the sale, the Company agreed to indemnify Rush Hour for certain liabilities related to the highway products business, including certain liabilities resulting from or arising out of the ET-Plus® System, a highway guardrail end-terminal system (the “ET Plus”). Consequently, results from discontinued operations ~~below~~ include certain legal expenses that are directly attributable to the highway products business. Similar expenses related to these retained obligations that may be incurred in the future will likewise be reported in discontinued operations. For the three months ended March 31, 2024 and 2023, we recorded expenses related to these obligations of $5.6 million ($4.3 million, net of income taxes) and $3.9 million ($3.1 million, net of income taxes), respectively, which are included in loss from discontinued operations, net of income taxes in our Consolidated Statements of Operations. See Note 14 for further information regarding obligations retained in connection with the THP sale.

~~The following is a summary of residual THP expenses included in loss from discontinued operations for the three months ended March 31, 2023 and 2022:~~

Three Months Ended
March 31,
2023 2022
(in millions)
Selling, engineering, and administrative expenses 3.9 8.9
Loss from discontinued operations before income taxes (3.9) (8.9)
Benefit for income taxes (0.8) (2.0)
Loss from discontinued operations, net of income taxes $ (3.1) $ (6.9)

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Note 3. Derivative Instruments and Fair Value Measurements

Derivative Instruments

We use derivative instruments to mitigate interest rate risk, including risks associated with the impact of changes in interest rates in anticipation of future debt issuances and to offset interest rate variability of certain floating rate debt issuances outstanding. We also use derivative instruments to mitigate the impact of changes in foreign currency exchange rates. Derivative instruments that are designated and qualify as cash flow hedges are accounted for by recording the effective portion of the gain or loss on the derivative instrument in accumulated other comprehensive income or loss ("AOCI") as a separate component of stockholders' equity. These accumulated gains or losses are reclassified into earnings in the periods during which the hedged transactions affect earnings. Derivative instruments that are not designated as hedges are accounted for by recording the realized and unrealized gains or losses on the derivative instrument in other, net (income) expense in our Consolidated Statements of Operations. We continuously monitor our derivative positions and the credit ratings of our counterparties and do not anticipate losses due to non-performance. See Note 8 for a description of our debt instruments.

Derivatives Designated as Hedging Instruments

Interest Rate Hedges


						Included in accompanying balance sheet at March 31, 2023									Included in accompanying balance sheet at March 31, 2024
									AOCI – loss/(income)
								AOCI – loss/(income)										AOCI – loss/(income)
		Notional Amount		Interest Rate (1)		Asset/(Liability)			Controlling Interest		Noncontrolling Interest		Notional Amount	Interest Rate (1)	Asset/(Liability)	Controlling Interest	Noncontrolling Interest
		($ in millions)											($ in millions)
Expired hedges:	Expired hedges:
2018 secured railcar equipment notes	2018 secured railcar equipment notes	$	249.3	4.41	%	$	—		$	0.4	$	—
TRIP Holdings warehouse loan (2)		$	788.5	3.60	%	$	—		$	—	$	—
2018 secured railcar equipment notes
2018 secured railcar equipment notes

Tribute Rail secured railcar equipment notes
Tribute Rail secured railcar equipment notes
Tribute Rail secured railcar equipment notes	Tribute Rail secured railcar equipment notes	$	256.0	2.86	%	$	—		$	0.7	$	0.9
2017 promissory notes – interest rate cap	2017 promissory notes – interest rate cap	$	169.3	3.00	%	$	—		$	(0.2)	$	—
Open hedge:
Open hedges:
2017 promissory notes – interest rate swap	2017 promissory notes – interest rate swap	$	428.0	2.32	%	$	15.6		$	(15.1)	$	—
2017 promissory notes – interest rate swap
2017 promissory notes – interest rate swap
TRL-2023 term loan

(1) Weighted average fixed interest rate, except for the interest rate cap on the 2017 promissory notes.

~~(2)As of March 31, 2023, all amounts previously recorded in AOCI related to this hedge have been fully amortized.~~

Effect on interest expense – increase/(decrease)
Three Months Ended
March 31, Expected effect during next twelve months
2023 2022
(in millions)
Expired hedges:
2018 secured railcar equipment notes $ — $ — $ 0.2
TRIP Holdings warehouse loan $ 0.1 $ 0.4 $ —
Tribute Rail secured railcar equipment notes $ 0.2 $ — $ 0.7
2017 promissory notes – interest rate cap $ — $ — $ (0.1)
Open hedge (1):
2017 promissory notes – interest rate swap $ (2.5) $ 2.8 $ (10.0)

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		Effect on interest expense – increase/(decrease)
	Three Months Ended March 31,			Expected effect during next twelve months
		2024				2023
		(in millions)
Expired hedges:
2018 secured railcar equipment notes		$	—	$	—		$	0.2
TRIP Holdings warehouse loan		$	—	$	0.1		$	—

Tribute Rail secured railcar equipment notes		$	0.2	$	0.2		$	0.7
2017 promissory notes – interest rate cap		$	—	$	—		$	(0.1)
Open hedges (1):
2017 promissory notes – interest rate swap		$	(3.1)	$	(2.5)		$	(12.4)
TRL-2023 term loan		$	(1.0)	$	—		$	(2.9)

(1) Based on the fair value of open hedges as of March 31, ~~2023.~~2024.

~~Table of Contents~~

Foreign Currency ~~Hedge~~Hedges

Our exposure related to foreign currency transactions is currently hedged for up to a maximum of twelve months. Information related to our foreign currency ~~hedge~~hedges is as follows:




			Included in accompanying balance sheet at March 31, 2023								Effect on cost of revenues – increase/(decrease)									Included in accompanying balance sheet at March 31, 2024				Effect on cost of revenues – increase/(decrease)
Notional Amount	Notional Amount		Asset/ (Liability)			AOCI – loss/(income)			Three Months Ended March 31,					Expected effect during next twelve months (1)			Notional Amount				Asset/ (Liability)	AOCI – loss/(income)	Three Months Ended March 31,		Expected effect during next twelve months (1)
										2023		2022
Instrument
(in millions)
$	22.5			$	2.3		$	(3.8)				$	(1.7)		$	0.2		$	(3.8)
		(in millions)
		(in millions)
Forward contracts
Options

(1) Based on the fair value of open hedges as of March 31, ~~2023.~~2024.

Derivatives Not Designated as Hedging Instruments(1)


									Asset/(Liability) at March 31, 2023			Effect on other, net (income) expense – increase/(decrease)
		Notional Amount			Interest Rate						Three Months Ended March 31,
							2023				Asset/(Liability) at March 31, 2023		2022									Asset/(Liability) at March 31, 2024				Effect on other, net (income) expense – increase/(decrease)
	Notional Amount																			Notional Amount	Interest Rate			Three Months Ended March 31,
				($ in millions)																			2024		2023
																			($ in millions)
Interest rate derivatives – open:
TILC warehouse facility – interest rate cap
TILC warehouse facility – interest rate cap
TILC warehouse facility – interest rate cap
TILC – interest rate cap (2)
Interest rate derivatives – expired (3):
TILC warehouse facility – interest rate cap
TILC warehouse facility – interest rate cap
TILC warehouse facility – interest rate cap	TILC warehouse facility – interest rate cap	$	800.0				2.50	%					$	18.4	$	(0.9)	$	—
TILC – interest rate cap	TILC – interest rate cap	$	800.0		2.50	%			$	(18.4)			$	0.9	$	—

(1) ~~Derivatives not designated as hedging instruments are comprised~~Comprised of back-to-back interest rate caps entered into with the same counterparty ~~that offset and do not have a net effect on Trinity's consolidated earnings. These derivative contracts were entered into~~ in connection with our risk management objectives.

(2)The amount recorded to other, net (income) expense in our Consolidated Statements of Operations for the three months ended March 31, 2024 includes a fee of $3.1 million related to the execution of back-to-back interest rate caps associated with the new TILC warehouse loan facility. See Note 8 for further information.

(3) These interest rate caps matured in March 2024 and were settled in April 2024.

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Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for that asset or liability in an orderly transaction between market participants on the measurement date. An entity is required to establish a fair value hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value are listed below.

Level 1 – This level is defined as quoted prices in active markets for identical assets or liabilities. Our cash equivalents and restricted cash are instruments of the U.S. Treasury or highly-rated money market mutual funds. The assets measured on a recurring basis as Level 1 in the fair value hierarchy are summarized below:

Level 1
March 31, 2023 December 31, 2022
(in millions)
Assets:
Cash equivalents $ 41.0 $ 29.8
Restricted cash 181.1 214.7
Total assets $ 222.1 $ 244.5

~~Table of Contents~~


	Level 1
	March 31, 2024		December 31, 2023
	(in millions)
Assets:
Cash equivalents	$	43.9	$	78.7
Restricted cash	116.3		129.4
Total assets	$	160.2	$	208.1

Level 2 – This level is defined as observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Interest rate swaps and interest rate caps are valued at exit prices obtained from each counterparty. Foreign currency hedges are valued at exit prices obtained from each counterparty, which are based on currency spot and forward rates and forward points. The assets and liabilities measured on a recurring basis as Level 2 in the fair value hierarchy are summarized below:

Level 2
March 31, 2023 December 31, 2022
(in millions)
Assets:
Interest rate hedge (1)
$ 15.6 $ 19.7
Foreign currency hedge (1)
2.3 2.0
Derivatives not designated as hedging instruments (1)
18.4 21.6
Total assets $ 36.3 $ 43.3
Liabilities:
Derivatives not designated as hedging instruments (2)
$ 18.4 $ 21.6
Total liabilities $ 18.4 $ 21.6


	Level 2
	March 31, 2024		December 31, 2023
	(in millions)
Assets (1):
Derivatives designated as hedging instruments:
Interest rate hedges	$	16.6	$	13.1
Foreign currency forward contracts	7.7		5.8
Foreign currency options	0.5		1.0
Derivatives not designated as hedging instruments:
TILC warehouse facility – interest rate caps	36.9		6.6


Total assets	$	61.7	$	26.5

Liabilities (2):
Derivatives designated as hedging instruments:
Interest rate hedges	$	—	$	2.5

Derivatives not designated as hedging instruments:
TILC – interest rate caps	36.9		6.6
Total liabilities	$	36.9	$	9.1

(1) Included in other assets in our Consolidated Balance Sheets.

(2) Included in accrued liabilities in our Consolidated Balance Sheets.

Level 3 – This level is defined as unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. As of March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, we have no assets or liabilities measured on a recurring basis as Level 3 in the fair value ~~hierarchy.~~hierarchy, except as described in Note 2.

See Note 2 for more information regarding ~~non-recurring~~ fair value measurements involving Level 3 inputs resulting from acquisition activity. See Note 8 for the estimated fair values of our debt instruments. The fair values of all other financial instruments are estimated to approximate carrying value.

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Note 4. Segment Information

We report our operating results in two reportable segments: (1) the Railcar Leasing and ~~Management~~ Services Group, which owns and operates a fleet of railcars and provides third-party fleet leasing, management, and administrative ~~services, as well as~~services; railcar maintenance and modification services; and other railcar logistics products and services; and (2) the Rail Products Group, which manufactures and sells railcars and related parts and ~~components,~~components.

Effective January 1, 2024, the Company modified its organizational structure to better leverage our maintenance services capabilities to support lease fleet optimization and ~~provides railcar~~to grow our services and parts businesses. The new structure resulted in a change to our reportable segments beginning in 2024. In connection with this organizational update, we aligned the maintenance services business, which was previously reported in the Rail Products Group, to now be presented within our leasing business. This change aligns with the way in which our CODM assesses performance and ~~modification services.~~allocates resources. Consequently, beginning January 1, 2024, we report our operating results in two reportable segments: (1) the Railcar Leasing and Services Group, formerly the Railcar Leasing and Management Services Group, and (2) the Rail Products Group. These changes had no impact to our previously reported consolidated results of operations, financial position, or cash flows. All prior period segment results set forth herein have been recast to reflect these changes and present results on a comparable basis.

Gains and losses from the sale of property, plant, and equipment are included in the operating profit of each respective segment. Our ~~Chief Operating Decision Maker ("CODM")~~CODM regularly reviews the operating results of our reportable segments in order to assess performance and allocate ~~resources`.~~resources. Our CODM does not consider restructuring activities when evaluating segment operating results; therefore, restructuring activities are not allocated to segment profit or loss.

Sales and related net profits ("deferred profit") from the Rail Products Group to the Leasing Group are recorded in the Rail Products Group and eliminated in ~~consolidation and are reflected in "Eliminations – Lease Subsidiary" in the tables below.~~consolidation. Sales between these groups are recorded at prices comparable to those charged to external customers, taking into consideration quantity, features, and production demand. Amortization of deferred profit on railcars sold to the Leasing Group is included in the operating profit of the Leasing Group, resulting in the recognition of depreciation expense based on our original manufacturing cost of the railcars. Lease portfolio sales are included in the Leasing Group, with related gains and losses computed based on the net book value of the original manufacturing cost of the railcars.

~~Table of Contents~~

The financial information for these segments is shown in the tables below (in millions). We operate principally in North America.


		Three Months Ended March 31, 2023
		Railcar Leasing and Management Services Group		Rail Products Group		Eliminations – Lease Subsidiary		Eliminations – Other		Consolidated Total
		Three Months Ended March 31, 2024
		Three Months Ended March 31, 2024
		Three Months Ended March 31, 2024
	Railcar Leasing and Services Group											Railcar Leasing and Services Group	Rail Products Group	Eliminations	Consolidated Total
External revenue	External revenue	$	203.3	$	438.4	$	—	$	—	$	641.7
Intersegment revenue	Intersegment revenue	0.2		199.4		(199.4)		(0.2)		—
Total revenues	Total revenues	$	203.5	$	637.8	$	(199.4)	$	(0.2)	$	641.7


		Three Months Ended March 31, 2022
		Railcar Leasing and Management Services Group		Rail Products Group		Eliminations – Lease Subsidiary		Eliminations – Other		Consolidated Total
		Three Months Ended March 31, 2023
		Three Months Ended March 31, 2023
		Three Months Ended March 31, 2023
	Railcar Leasing and Services Group											Railcar Leasing and Services Group	Rail Products Group	Eliminations	Consolidated Total
External revenue	External revenue	$	182.9	$	289.8	$	—	$	—	$	472.7
Intersegment revenue	Intersegment revenue	0.2		101.3		(101.3)		(0.2)		—
Total revenues	Total revenues	$	183.1	$	391.1	$	(101.3)	$	(0.2)	$	472.7

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The reconciliation of segment operating profit to consolidated net income is as follows:


		Three Months Ended March 31,
			2023		2022
			(in millions)				Three Months Ended March 31,
Operating profit (loss):
Railcar Leasing and Management Services Group			$	85.5	$	79.8
								2024	2023
								(in millions)
Operating profit:
Railcar Leasing and Services Group
Railcar Leasing and Services Group
Railcar Leasing and Services Group
Rail Products Group	Rail Products Group		25.3		0.8
Segment Totals	Segment Totals		110.8		80.6
Corporate and other	Corporate and other		(26.0)		(15.7)

Restructuring activities, net	Restructuring activities, net		0.4		—
Eliminations – Lease Subsidiary			(16.8)		(8.8)
Eliminations – Other			0.6		(1.3)
Restructuring activities, net
Restructuring activities, net
Eliminations

Consolidated operating profit
Consolidated operating profit
Consolidated operating profit	Consolidated operating profit		69.0		54.8
Other (income) expense	Other (income) expense		63.7		41.9
Provision (benefit) for income taxes	Provision (benefit) for income taxes		(11.5)		3.0
Loss from discontinued operations, net of income taxes	Loss from discontinued operations, net of income taxes		(3.1)		(6.9)
Loss on sale of discontinued operations, net of income taxes			—		(1.1)

Net income	Net income		$	13.7	$	1.9
Net income
Net income

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Note 5. Partially-Owned Subsidiaries

Investments in Leasing Subsidiaries

Through our wholly-owned subsidiary, ~~Trinity Industries Leasing Company ("TILC"),~~TILC, we formed two subsidiaries, TRIP Holdings and RIV 2013, for the purpose of providing railcar leasing services in North America for institutional investors. Each of TRIP Holdings and RIV 2013 are direct, partially-owned subsidiaries of TILC in which we have a controlling interest. Each is governed by a seven-member board of representatives, two of whom are designated by TILC. TILC is the agent of each of TRIP Holdings and RIV 2013 and, as such, has been delegated the authority, power, and discretion to take certain actions on behalf of the respective companies.

At March 31, ~~2023,~~2024, the carrying value of our investment in TRIP Holdings and RIV 2013 totaled ~~$135.3~~$124.2 million. Our weighted average ownership interest in TRIP Holdings and RIV 2013 is 38% while the remaining 62% weighted average interest is owned by third-party, investor-owned funds. The investment in our partially-owned leasing subsidiaries is eliminated in consolidation.

Each of TRIP Holdings and RIV 2013 has wholly-owned subsidiaries that are the owners of railcars acquired from our Rail Products and Leasing Groups. TRIP Holdings has wholly-owned subsidiaries known as Triumph Rail LLC ("Triumph Rail") and Tribute Rail LLC ("Tribute Rail"). RIV 2013 has a wholly-owned subsidiary known as TRP 2021 LLC ("TRP-2021"). TILC is the contractual servicer for Triumph Rail, Tribute Rail, and TRP-2021, with the authority to manage and service each entity's owned railcars. Our controlling interest in each of TRIP Holdings and RIV 2013 results from our combined role as both equity member and agent/servicer. The noncontrolling interest included in the accompanying Consolidated Balance Sheets represents the non-Trinity equity interest in these partially-owned subsidiaries.

Trinity has no obligation to guarantee performance under any of our partially-owned subsidiaries' (or their respective subsidiaries') debt agreements, guarantee any railcar residual values, shield any parties from losses or guarantee minimum yields.

The assets of each of Triumph Rail, Tribute Rail, and TRP-2021 may only be used to satisfy the particular subsidiary's liabilities, and the creditors of each of Triumph Rail, Tribute Rail, and TRP-2021 have recourse only to the particular subsidiary's assets. Each of TILC and the third-party equity investors receive distributions from TRIP Holdings and RIV 2013, when available, in proportion to its respective equity interests, and has an interest in the net assets of the partially-owned subsidiaries upon a liquidation event in the same proportion. TILC is paid fees for the services it provides to Triumph Rail, Tribute Rail, and TRP-2021 and has the potential to earn certain incentive fees. There are no remaining equity commitments with respect to TRIP Holdings or RIV 2013.

See Note 8 for additional information regarding the debt of TRIP Holdings and RIV 2013 and their respective subsidiaries.

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Other Investment in Consolidated Affiliate

In 2023, the Company and a third party formed Trinity Global Ventures to deliver railcars and provide warranty support services in Saudi Arabia. Trinity Global Ventures is owned 51.0% by Trinity Rail Group, LLC ("Trinity Rail Group"), a wholly-owned subsidiary of the Company, and 49.0% by the third party. Upon consideration under the variable interest entity (“VIE”) model of ASC 810, Consolidation, Trinity has concluded that Trinity Global Ventures meets the definition of a VIE. Trinity Rail Group has a variable interest in Trinity Global Ventures arising from its 51.0% equity ownership position. We determined that Trinity is the primary beneficiary and therefore consolidates this entity as we have the power to direct the activities of the entity that most significantly impact its economic performance. At March 31, 2024, the carrying value of our investment in Trinity Global Ventures totaled $2.5 million, which is eliminated in consolidation.

Investment in Unconsolidated Affiliate

In ~~August~~ 2021, the Company and Wafra, Inc. (“Wafra”), a global alternative investment manager, announced a new railcar investment vehicle ~~(“RIV”)~~ program between Trinity and certain funds managed by Wafra (“Wafra Funds”). As part of this program, a joint venture was formed, Signal Rail Holdings LLC (“Signal Rail”), which is currently owned 87.1% by Wafra Funds and 12.9% by TILC. Signal Rail or its subsidiaries are expected to invest in diversified portfolios of leased railcars originated by TILC targeting up to $1 billion in total acquisitions over an expected three-year investment period. TILC will service all railcars owned by Signal Rail. To date, TILC has sold 6,460 railcars and related leases to Signal Rail for an aggregate sales price of $598.6 million. TILC services all railcars owned by Signal Rail.

Upon consideration under the ~~variable interest entity (“VIE”)~~VIE model of ASC 810, ~~Consolidations~~Consolidation, Trinity has concluded that Signal Rail meets the definition of a VIE. TILC has variable interests in Signal Rail arising from its 12.9% equity ownership position and its role as a service provider. We determined that Trinity is not the primary beneficiary and therefore does not consolidate this entity as we do not have the power to direct the activities of the entity that most significantly impact its economic performance. We will absorb portions of Signal Rail’s expected losses and/or receive portions of expected residual returns commensurate with our 12.9% equity interest in Signal Rail.

Our investment in Signal Rail is being accounted for under the equity method of accounting. At March 31, ~~2023,~~2024, the carrying value of TILC’s equity investment in Signal Rail was ~~$21.2~~$20.3 million, which is included in other assets in our Consolidated Balance Sheets. The carrying value of this investment ~~together with any potential future investments described above, collectively represent~~represents our maximum exposure in Signal Rail.

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Note 6. Railcar Leasing and ~~Management~~ Services Group

The Railcar Leasing and ~~Management~~ Services Group owns and operates a fleet of railcars ~~as well as~~and provides third-party fleet leasing, management, and administrative services; railcar maintenance and modification services; and other railcar logistics products and services. ~~Selected consolidated financial information for~~Information related to the Leasing Group is as follows:

March 31, 2023
Wholly-
Owned
Subsidiaries Partially-Owned Subsidiaries Total Leasing Group
Eliminations – Lease Subsidiary(1)
Adjusted Total Leasing Group
(in millions)
Cash and cash equivalents $ 10.5 $ — $ 10.5 $ — $ 10.5
Accounts receivable 110.7 10.4 121.1 — 121.1
Property, plant, and equipment, net 5,888.1 1,509.9 7,398.0 (763.4) 6,634.6
Restricted cash 107.0 74.1 181.1 — 181.1
Other assets 204.7 1.9 206.6 — 206.6
Total assets $ 6,321.0 $ 1,596.3 $ 7,917.3 $ (763.4) $ 7,153.9
Accounts payable and accrued liabilities $ 125.8 $ 39.3 $ 165.1 $ — $ 165.1
Debt, net 3,826.9 1,176.4 5,003.3 — 5,003.3
Deferred income taxes 1,151.3 1.1 1,152.4 (167.2) 985.2
Other liabilities 37.5 — 37.5 — 37.5
Total liabilities 5,141.5 1,216.8 6,358.3 (167.2) 6,191.1
Noncontrolling interest — 256.2 256.2 — 256.2
Total Equity $ 1,179.5 $ 123.3 $ 1,302.8 $ (596.2) $ 706.6

December 31, 2022
Wholly-
Owned
Subsidiaries Partially-Owned Subsidiaries Total Leasing Group
Eliminations – Lease Subsidiary(1)
Adjusted Total Leasing Group
(in millions)
Cash and cash equivalents $ 2.6 $ — $ 2.6 $ — $ 2.6
Accounts receivable 89.9 10.8 100.7 — 100.7
Property, plant, and equipment, net 5,788.1 1,521.3 7,309.4 (763.3) 6,546.1
Restricted cash 140.3 74.4 214.7 — 214.7
Other assets 150.3 2.2 152.5 — 152.5
Total assets $ 6,171.2 $ 1,608.7 $ 7,779.9 $ (763.3) $ 7,016.6
Accounts payable and accrued liabilities $ 109.7 $ 44.1 $ 153.8 $ — $ 153.8
Debt, net 3,800.7 1,182.8 4,983.5 — 4,983.5
Deferred income taxes 1,152.3 1.1 1,153.4 (173.1) 980.3
Other liabilities 38.8 — 38.8 — 38.8
Total liabilities 5,101.5 1,228.0 6,329.5 (173.1) 6,156.4
Noncontrolling interest — 257.2 257.2 — 257.2
Total Equity $ 1,069.7 $ 123.5 $ 1,193.2 $ (590.2) $ 603.0

~~(1)~~ Net deferred profit on railcars sold to the Leasing Group consists of intersegment profit that is eliminated in consolidation. Net deferred profit and the related deferred tax impact are included as adjustments to the property, plant, and equipment, net and deferred income taxes line items, respectively, in the Eliminations – Lease Subsidiary column above to reflect the net book value of the railcars purchased by the Leasing Group from the Rail Products Group based on manufacturing cost. See Note 5 and Note 8 for a further discussion regarding our investment in our partially-owned leasing subsidiaries and the related indebtedness.

~~Table of Contents~~


					Three Months Ended March 31,
					Three Months Ended March 31,
					Three Months Ended March 31,
		Three Months Ended March 31,										2024	2023				Percent
		2023			2022				Percent
		($ in millions)							Change
								($ in millions)										($ in millions)								Change
Revenues:	Revenues:
Leasing and management	Leasing and management	$	203.5		$	183.1			11.1	%
Leasing and management
Leasing and management														$	209.0				$	194.7		7.3		%
Maintenance services (1)											Maintenance services (1)			65.2					29.4			121.8		%
Digital and logistics services											Digital and logistics services			11.0					8.8			25.0		%
Total revenues											Total revenues			$	285.2				$	232.9		22.5		%

Operating profit (1):
Leasing and management		$	72.0		$	68.0			5.9	%
Cost of revenues (2)
Cost of revenues (2)
Cost of revenues (2)														169.6					146.8			15.5		%
Selling, engineering, and administrative expenses											Selling, engineering, and administrative expenses			18.1					16.9			7.1		%
Gains on dispositions of property:
Lease portfolio sales ~~(2)~~	Lease portfolio sales ~~(2)~~	13.5			11.8				*
Lease portfolio sales ~~(2)~~
Lease portfolio sales ~~(2)~~														2.1					13.5			*
Other											Other			0.7					1.9			*
Total operating profit	Total operating profit	$	85.5		$	79.8			7.1	%	Total operating profit			$	100.3	$			$	84.6	18.6		18.6		%
Total operating profit margin	Total operating profit margin	42.0		%	43.6		%
Total operating profit margin, excluding lease portfolio sales
Total operating profit margin, excluding lease portfolio sales
Total operating profit margin, excluding lease portfolio sales

Leasing and management operating profit margin		35.4		%	37.1		%
Selected expense information for Company-owned railcars (3):

Selected expense information:
Depreciation (3)		$	62.4		$	57.2			9.1	%
Maintenance and compliance		$	35.8		$	29.2			22.6	%
Rent and ad valorem taxes		$	4.3		$	5.0			(14.0)	%
Selling, engineering, and administrative expenses		$	15.7		$	12.8			22.7	%
Interest		$	54.8		$	38.7			41.6	%
Selected expense information for Company-owned railcars (3):

Selected expense information for Company-owned railcars (3):
Depreciation and amortization expense (4)
Depreciation and amortization expense (4)
Depreciation and amortization expense (4)														$	59.9				$	61.6		(2.8)		%
Maintenance and compliance expense (5)											Maintenance and compliance expense (5)			$	30.4				$	34.8		(12.6)		%
Other fleet operating costs (6)											Other fleet operating costs (6)			$	7.7				$	9.2		(16.3)		%
Interest expense (7)											Interest expense (7)			$	57.4				$	54.8		4.7		%

* Not meaningful

(1)~~Operating profit includes: depreciation;~~ Revenues related to services performed by the maintenance services business to support the railcars in our lease fleet are eliminated within the Railcar Leasing & Services Group and are excluded from the totals reported on this line.

(2) Includes depreciation and amortization expense, maintenance and compliance expense, and other fleet operating costs ~~which include~~related to our lease fleet, as well as cost of revenues for our maintenance ~~compliance, freight,~~services and ~~storage; rent~~digital and ~~ad valorem taxes;~~logistics services businesses.

(3) Includes wholly-owned railcars, partially-owned railcars, and ~~selling, engineering,~~railcars under leased-in arrangements.

(4) Depreciation and ~~administrative expenses. Amortization~~amortization expense includes $4.7 million for the three months ended March 31, 2023 related to the disposal of certain railcar components associated with our sustainable railcar conversion program. Additionally, amortization of deferred profit on railcars sold from the Rail Products Group to the Leasing Group is included in ~~the operating profit of the Leasing Group,~~depreciation and amortization expense, resulting in the recognition of depreciation expense based on our original manufacturing cost of the railcars.

(5) Maintenance and compliance expense is reported at cost with respect to the work that is completed by our maintenance services business to support the railcars in our lease fleet.

(6) Other fleet operating costs include freight, storage, rent, and ad valorem taxes.

(7) Interest expense is not a component of operating profit and includes the effect of hedges.

~~(2)Includes $1.3 million selling profit associated with sales-type leases for the three months ended March 31, 2022.~~

~~(3)~~ Depreciation expense includes $4.7 million and $2.2 million for the three months ended March 31, 2023 and 2022, respectively, related to the disposal of certain railcar components associated with our sustainable railcar conversion program.

Information related to lease portfolio sales is as follows:

Three Months Ended
March 31,
2023 2022
($ in millions)
Lease portfolio sales $ 56.7 $ 71.1
Operating profit on lease portfolio sales (1)
$ 13.5 $ 10.5
Operating profit margin on lease portfolio sales 23.8 % 14.8 %

~~(1)Excludes $1.3 million selling profit associated with sales-type leases for the three months ended March 31, 2022.~~


	Three Months Ended March 31,
		2024			2023
		($ in millions)
Lease portfolio sales		$	24.2		$	56.7
Operating profit on lease portfolio sales		$	2.1		$	13.5
Operating profit margin on lease portfolio sales		8.7		%	23.8		%

2021

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Railcar Leasing Equipment Portfolio. The Leasing Group's equipment consists primarily of railcars leased by third parties. The Leasing Group purchases equipment manufactured predominantly by the Rail Products Group and enters into lease contracts with third parties with terms generally ranging between one year and ten years. The Leasing Group primarily enters into operating leases. Future contractual minimum rental revenues on operating leases related to our wholly-owned and partially-owned subsidiaries are as follows:

Remaining nine months of 2023 2024 2025 2026 2027 Thereafter Total
(in millions)
Future contractual minimum rental revenues $ 473.6 $ 528.7 $ 420.5 $ 310.9 $ 219.0 $ 318.4 $ 2,271.1


	Remaining nine months of 2024		2025		2026		2027		2028		Thereafter		Total
	(in millions)
Future contractual minimum rental revenues	$	523.0	$	586.3	$	467.0	$	349.3	$	211.1	$	331.7	$	2,468.4

Debt. Wholly-owned subsidiaries. The Leasing Group’s debt at March 31, ~~2023~~2024 consisted primarily of non-recourse debt. As of March 31, ~~2023,~~2024, Trinity’s wholly-owned subsidiaries included in the Leasing Group held equipment with a net book value of ~~$5,567.2~~$5,634.0 million, which is pledged solely as collateral for Leasing Group debt held by those subsidiaries. The net book value of unpledged equipment at March 31, ~~2023~~2024 was ~~$307.3~~$368.6 million. See Note 8 for more information regarding the Leasing Group’s debt.

Partially-owned subsidiaries. Debt owed by TRIP Holdings and RIV 2013 and their respective subsidiaries is ~~nonrecourse~~non-recourse to Trinity and TILC. Creditors of each of TRIP Holdings and RIV 2013 and their respective subsidiaries have recourse only to the particular subsidiary's assets. As of March 31, ~~2023,~~2024, TRIP Holdings held equipment with a net book value of ~~$1,054.8~~$1,035.1 million, which is pledged solely as collateral for the TRIP Holdings' debt held by its subsidiaries. As of March 31, ~~2023,~~2024, TRP-2021 equipment with a net book value of ~~$455.1~~$422.9 million is pledged solely as collateral for the TRP-2021 debt. See Note 5 for a description of TRIP Holdings and RIV 2013 and their respective subsidiaries.

Operating Lease Obligations. Future amounts due as well as future contractual minimum rental revenues related to the Leasing Group's railcar operating lease obligations are as follows:


		Remaining nine months of 2023		2024		2025		2026		2027		Thereafter		Total
	Remaining nine months of 2024																Remaining nine months of 2024	2025	2026	2027	2028	Thereafter	Total
		(in millions)														(in millions)
Future operating lease obligations	Future operating lease obligations	$	8.0	$	6.9	$	6.1	$	5.8	$	5.3	$	3.7	$	35.8
Future contractual minimum rental revenues	Future contractual minimum rental revenues	$	7.2	$	5.1	$	3.6	$	2.0	$	0.5	$	0.1	$	18.5

Operating lease obligations totaling ~~$1.2~~$0.8 million are guaranteed by Trinity Industries, Inc. and certain subsidiaries. ~~The Leasing Group also has future amounts due for operating lease obligations related to office space of approximately $0.2 million, which is excluded from the table above.~~

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Note 7. Property, Plant, and Equipment

The following table summarizes the components of property, plant, and equipment:


	March 31, 2024						March 31, 2024	December 31, 2023
		March 31, 2023		December 31, 2022		(in millions)
Railcars in our lease fleet:
Wholly-owned subsidiaries:
Wholly-owned subsidiaries:
Wholly-owned subsidiaries:
Equipment on lease
Equipment on lease
Equipment on lease
Less: accumulated depreciation
	6,002.6
Partially-owned subsidiaries:
Equipment on lease
Equipment on lease
Equipment on lease
Less: accumulated depreciation
	1,458.0
		(in millions)
Manufacturing/Corporate:
Deferred profit on railcar products sold (1)
Deferred profit on railcar products sold (1)
Deferred profit on railcar products sold (1)
Less: accumulated amortization
	(743.1)
Total railcars in our lease fleet

Operating and administrative assets:
Operating and administrative assets:
Operating and administrative assets:
Land
Land
Land	Land	$	17.1	$	15.7
Buildings and improvements	Buildings and improvements	386.9		384.6
Machinery and other	Machinery and other	405.9		405.5
Construction in progress	Construction in progress	22.3		18.1
		832.2		823.9
	826.5
Less: accumulated depreciation	Less: accumulated depreciation	(490.3)		(483.2)
		341.9		340.7
Leasing:
Wholly-owned subsidiaries:
Machinery and other		27.1		21.7
Equipment on lease		7,379.0		7,247.3
		7,406.1		7,269.0
Less: accumulated depreciation		(1,518.0)		(1,480.9)
		5,888.1		5,788.1
Partially-owned subsidiaries:
Equipment on lease		2,233.1		2,230.4
Less: accumulated depreciation		(723.2)		(709.1)
		1,509.9		1,521.3

Deferred profit on railcars sold to the Leasing Group		(1,055.6)		(1,050.7)
Less: accumulated amortization		292.2		287.4
		(763.4)		(763.3)
		$	6,976.5	$	6,886.8
Total operating and administrative assets
Total property, plant, and equipment, net

(1)Includes deferred profit related to new railcar additions, sustainable railcar conversions, railcar modifications, and other betterments. The deferred profit is subsequently eliminated in consolidation.

2223

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Note 8. Debt

The carrying amounts of our debt are as follows:


		March 31, 2023		December 31, 2022
	March 31, 2024						March 31, 2024	December 31, 2023
		(in millions)				(in millions)
Corporate – Recourse:	Corporate – Recourse:
Revolving credit facility	Revolving credit facility	$	305.0	$	225.0
Senior notes, net of unamortized discount of $0.1 and $0.1		399.9		399.9
		704.9		624.9
Revolving credit facility
Revolving credit facility
Senior notes due 2024, net of unamortized discount of $— and $0.1
Senior notes due 2028
	800.0
Less: unamortized debt issuance costs	Less: unamortized debt issuance costs	(0.6)		(0.8)
Total recourse debt	Total recourse debt	704.3		624.1

Leasing – Non-recourse:
Lease fleet – Non-recourse:
Lease fleet – Non-recourse:
Lease fleet – Non-recourse:
Wholly-owned subsidiaries:	Wholly-owned subsidiaries:
Secured railcar equipment notes, net of unamortized discount of $0.4 and $0.3		2,344.9		2,384.0
2017 promissory notes, net of unamortized discount of $5.1 and $5.6		705.4		716.0
Wholly-owned subsidiaries:
Wholly-owned subsidiaries:
Secured railcar equipment notes, net of unamortized discount of $0.2 and $0.2
Secured railcar equipment notes, net of unamortized discount of $0.2 and $0.2
Secured railcar equipment notes, net of unamortized discount of $0.2 and $0.2
2017 promissory notes, net of unamortized discount of $3.0 and $3.5
TRL-2023 term loan
TILC warehouse facility	TILC warehouse facility	796.2		721.8
		3,846.5		3,821.8
Other equipment financing
	3,962.0
Less: unamortized debt issuance costs	Less: unamortized debt issuance costs	(19.6)		(21.1)
		3,826.9		3,800.7
	3,946.0
Partially-owned subsidiaries:	Partially-owned subsidiaries:
Secured railcar equipment notes, net of unamortized discount of $0.3 and $0.3		1,185.6		1,192.6
Secured railcar equipment notes, net of unamortized discount of $0.1 and $0.1
Secured railcar equipment notes, net of unamortized discount of $0.1 and $0.1
Secured railcar equipment notes, net of unamortized discount of $0.1 and $0.1

Less: unamortized debt issuance costs	Less: unamortized debt issuance costs	(9.2)		(9.8)
		1,176.4		1,182.8
Total non–recourse debt		5,003.3		4,983.5
Less: unamortized debt issuance costs

Less: unamortized debt issuance costs
	1,126.0
Total non-recourse debt
Total debt	Total debt	$	5,707.6	$	5,607.6

Estimated Fair Value of Debt – The estimated fair ~~value~~values of our 7.75% senior notes due 2028 ("Senior Notes due 2028") and our 4.55% senior notes due 2024 ("Senior ~~Notes"~~Notes due 2024") isare based on a quoted market price in a market with little activity (Level 2 input). The estimated fair values of our secured railcar equipment notes are based on our estimate of their fair value using unobservable input values provided by a third party (Level 3 inputs). The respective carrying values of our revolving credit facility, 2017 promissory notes, TRL-2023 term loan, and TILC warehouse facility approximate fair value because the interest rate adjusts to the market interest rate. As of March 31, 2024, we evaluated the fair value of the other equipment financing liability using Level 3 inputs and determined that the carrying value approximates fair value. The estimated fair values of our debt are as follows:


	March 31, 2024					March 31, 2024		December 31, 2023
	(in millions)						(in millions)
		March 31, 2023		December 31, 2022
		(in millions)
Level 1		$	1,806.6	$	1,662.8
Level 2
Level 2
Level 2	Level 2	389.8		387.5
Level 3	Level 3	3,217.8		3,194.0
		$	5,414.2	$	5,244.3

Table of Contents

Revolving Credit Facility – We have a $600.0 million unsecured corporate revolving credit facility. In March 2023, we amended our revolving credit facility to increase the total facility commitment from $450.0 million to $600.0 million, increase the maximum leverage ratio to provide additional flexibility, modify the limitations on restricted payments, and allow up to $100.0 million of annual dividends on the Company's common stock. We incurred $0.5 million in costs related to the amendment, which will be amortized to interest expense through the maturity date. The maturity date for the revolving credit facility is the earlier of (i) July 25, 2027 or (ii) July 2, 2024 if our Senior Notes have not been repaid in full by that date.

~~Table of Contents~~

During the three months ended March 31, ~~2023,~~2024, we had total borrowings of ~~$155.0~~$130.0 million and total repayments of ~~$75.0~~$130.0 million under the revolving credit facility. Additionally, we had outstanding letters of credit issued in an aggregate amount of ~~$16.8~~$18.2 million, leaving ~~$278.2~~$581.8 million available for borrowing as of March 31, ~~2023.~~2024. The majority of our outstanding letters of credit as of March 31, ~~2023~~2024 are scheduled to expire in October ~~2023.~~2024. Our letters of credit obligations support performance bonds related to certain railcar orders. The revolving credit facility bears interest at a variable rate of ~~the Secured Overnight Financing Rate ("SOFR")~~SOFR plus (1) a benchmark adjustment of 10 basis points and (2) a facility margin of 1.75%, for an all-in interest rate of ~~6.69%~~7.16% as of March 31, ~~2023.~~2024. A commitment fee accrues on the average daily unused portion of the revolving credit facility at the rate of 0.175% to 0.40% (0.25% as of March 31, ~~2023)~~2024).

The revolving credit facility requires the maintenance of ratios related to minimum interest coverage for the leasing and manufacturing operations and maximum leverage. As of March 31, ~~2023,~~2024, we were in compliance with all such financial covenants.

TILC Warehouse Loan Facility – TILC has historically maintained a ~~$1.0 billion~~ warehouse loan facility ~~which was established~~ to finance railcars owned by TILC. In March 2024, we entered into a new warehouse loan facility with a total commitment amount of $800.0 million, a revolving termination date of March 15, 2027, and a maturity date of March 15, 2028. This warehouse loan facility replaced the prior $1.0 billion warehouse loan facility. We incurred $3.6 million in debt issuance costs, which are recorded in other assets in our Consolidated Balance Sheets as of March 31, 2024, and are being amortized to interest expense over the facility term. During the three months ended March 31, ~~2023,~~2024, we had total borrowings of ~~$91.8~~$783.7 million and total repayments of ~~$17.4~~$611.2 million under the current and prior TILC warehouse loan ~~facility. Of the remaining~~facilities. The entire unused facility amount of ~~$203.8 million, $91.4~~$98.2 million was available as of March 31, ~~2023~~2024 based on the amount of warehouse-eligible, unpledged equipment. Advances under the facility bear interest at one-month term SOFR plus ~~(1) a benchmark adjustment of 11 basis points and (2)~~ a facility margin of ~~185 basis points,~~1.75%, for an all-in interest rate of ~~6.63%~~7.12% at March 31, ~~2023.~~

~~TRL-2017 SOFR Transition~~ –In February 2023, we amended the Amended and Restated Loan Agreement and the Trinity Rail Leasing 2017, LLC ("TRL-2017") interest rate swap agreements to transition the benchmark rate from LIBOR to SOFR plus a benchmark adjustment. The Company has elected to apply the optional accounting expedient under ASC 848, ~~Reference Rate Reform, for hedging relationships affected by reference rate reform.~~2024.

Terms and conditions of our other ~~long-term~~ debt, including recourse and non-recourse provisions and scheduled maturities, are described in Note 89 of our ~~2022~~2023 Annual Report on Form 10-K.

Note 9. Income Taxes

The effective tax rate from continuing operations for the three months ended March 31, 2024 was an expense of 25.8%, which differs from the U.S. statutory rate of 21.0% primarily due to state income taxes and foreign income taxes, partially offset by the benefit of noncontrolling interest, for which we do not provide income taxes.

The effective tax rate from continuing operations for the three months ended March 31, 2023 was a benefit of 217.0%, which differs from the U.S. statutory rate of 21.0% primarily due to the release of residual taxes out of AOCI; the re-measurement of our net deferred tax liabilities due to the acquisition of a subsidiary; changes in our valuation allowances; state income taxes; and foreign income taxes.

During the three months ended March 31, 2023, one of our partially-owned subsidiaries released residual tax effects that had previously been recorded in AOCI. This deferred tax benefit was originally recorded before the partially-owned subsidiary was treated as a flow-through entity, remaining in AOCI until the underlying ~~book to tax~~book-to-tax difference no longer existed, which occurred during the three months ended March 31, 2023. As a result, we recorded an $11.9 million income tax benefit in our Consolidated Statements of Operations during the three months ended March 31, 2023.

Pursuant to the acquisition of ~~RSI~~a subsidiary during the three months ended March 31, 2023, we re-measured our existing deferred tax assets and liabilities, taking into account the expected change to state tax apportionment. This resulted in an increase to our net deferred tax liability of $3.2 million in the ~~quarter,~~period, which was recorded through deferred income tax expense.

The tax provision for the three months ended March 31, 2023 also reflects a $4.0 million tax benefit related to the net impact of an adjustment to valuation allowances, primarily for deferred tax assets in Mexico, state tax loss carryforwards, and federal tax credits.

The effective tax rate from continuing operations for the three months ended March 31, 2023 was a benefit of 217.0% which differs from the U.S. statutory rate of 21.0% primarily due to the release of residual taxes out of AOCI, the re-measurement of our net deferred tax liabilities due to the acquisition of RSI, changes in our valuation allowances, state income taxes, and foreign income taxes.

The effective tax rate from continuing operations for the three months ended March 31, 2022 was an expense of 23.3%, which differs from the U.S. statutory rate of 21.0% primarily due to state income taxes, foreign income taxes, and non-deductible executive compensation, net of the benefits of excess deductions on equity compensation.

~~The~~ total income tax receivable position as of March 31, ~~2023~~2024 was ~~$10.1 million.~~$4.9 million primarily for state tax overpayments. Our income tax payable for federal, state, and foreign income taxes is $11.6 million as of March 31, 2024.

Deferred income taxes related to railcars in our lease fleet were $1.1 billion as of both March 31, 2024 and December 31, 2023.

Our federal tax return years through 2020 are ~~effectively settled except with respect to carryback claims related to~~closed under statute and the ~~2013 through 2015 tax~~ years which are currently in review by the Joint Committee on Taxation. We do not expect any significant changes to the carryback claims. We have received a partial acceptance letter for our 2021 federal tax refund and have one open issue.2021-2023 remain open. We have state tax returns that are under audit in the normal course of business, and our Mexican subsidiaries' tax returns statutes of limitations remain open for auditing ~~2017~~2018 forward. We believe we are appropriately reserved for any potential matters.

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Beginning in 2024, certain jurisdictions have enacted a 15% minimum tax on all companies that operate in their jurisdiction, consistent with one or more Organization for Economic Co-operation and Development Global Anti-Base Erosion Model Rules ("Pillar Two"). Because the Pillar Two legislation has not been enacted in jurisdictions in which we operate, there is no impact to our effective tax rate; however, we will continue to monitor our potential exposure to Pillar Two in the jurisdictions in which we operate.

Note 10. Employee Retirement Plans

~~Our defined contribution expense for the three months ended March 31, 2023 and 2022 was $2.4 million and $2.1 million, respectively.~~

~~The net periodic benefit cost~~Amounts related to our ~~Supplemental Executive Retirement Plan was $0.2 million for each of the three months ended March 31, 2023 and 2022. The non-service cost components of net periodic benefit cost~~employee retirement plans are ~~included in other, net (income) expense in our Consolidated Statements of Operations.~~as follows:

~~Pension Plan Termination~~

In September 2019, our Board of Directors approved the termination of the Trinity Industries, Inc. Consolidated Pension Plan (the "Pension Plan"), effective December 31, 2019. The Pension Plan was settled in the fourth quarter of 2020, which resulted in the Company no longer having any remaining funded pension plan obligations. During the three months ended March 31, 2023, we reverted the remaining surplus pension assets of $0.4 million to the Company and incurred an excise tax of approximately $0.1 million. Following the completion of this transaction, there are no longer any pension assets reported in our Consolidated Balance Sheet.


	Three Months Ended March 31,
		2024		2023
		(in millions)
Defined contribution expense		$	3.0	$	2.4

Note 11. Accumulated Other Comprehensive Income

Changes in AOCI for the three months ended March 31, ~~2023~~2024 are as follows:

Unrealized gains/(losses) on derivative financial instruments Net actuarial gains/(losses) of defined benefit plans Accumulated other comprehensive income (loss)
(in millions)
Balances at December 31, 2022 $ 20.9 $ (1.2) $ 19.7
Other comprehensive income, net of tax, before reclassifications 0.5 — 0.5
Amounts reclassified from AOCI, net of tax benefit of $11.0, $—, and $11.0 (14.9) — (14.9)
Less: noncontrolling interest 7.4 — 7.4
Other comprehensive loss (7.0) — (7.0)
Balances at March 31, 2023 $ 13.9 $ (1.2) $ 12.7

In May 2013, one of our partially-owned leasing subsidiaries, TRIP Holdings, was converted to a partnership for income tax purposes. At the time of the conversion, TRIP Holdings had deferred tax assets associated with certain terminated interest rate hedges that were initially recognized as a component of AOCI. As TRIP Holdings was no longer a taxable entity following the conversion, these deferred tax assets were removed during the year ended December 31, 2013, with a corresponding charge to income tax expense in the Consolidated Statements of Operations, leaving residual tax effects in AOCI. These residual tax effects are released when the item giving rise to the tax effect is disposed of, liquidated, or terminated. Pursuant to our election of the portfolio approach, we released the residual tax effects when all of the interest rate swap balances were fully amortized, which occurred during the three months ended March 31, 2023. Consequently, during the three months ended March 31, 2023, we recorded an income tax benefit of $13.2 million to TRIP Holdings, reflecting the reclassification of the residual tax effects previously recorded in AOCI. The controlling interest portion of this income tax benefit was $4.4 million.


	Unrealized gains/(losses) on derivative financial instruments		Net actuarial gains/(losses) of defined benefit plans		Accumulated other comprehensive income (loss)
	(in millions)
Balances at December 31, 2023	$	12.4	$	(1.4)	$	11.0
Other comprehensive income, net of tax, before reclassifications	11.4		—		11.4
Amounts reclassified from AOCI, net of tax expense of $1.2, $—, and $1.2	(3.9)		—		(3.9)

Less: noncontrolling interest	(0.1)		—		(0.1)
Other comprehensive income	7.4		—		7.4
Balances at March 31, 2024	$	19.8	$	(1.4)	$	18.4

See Note 3 for additional information on the reclassification of amounts in AOCI into earnings. Reclassifications of unrealized before-tax gains and losses on derivative financial instruments are included in interest expense, net for our interest rate hedges and in cost of revenues for our foreign currency hedges in our Consolidated Statements of Operations. Reclassifications of before-tax net actuarial gains/(losses) of defined benefit plans are included in other, net (income) expense in our Consolidated Statements of Operations.

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Note 12. Common Stock and Stock-Based Compensation

Stockholders' Equity

In December 2022, our Board of Directors authorized a ~~new~~ share repurchase program effective December 9, 2022 with no expiration. The ~~new~~ share repurchase program authorizes the Company to repurchase up to $250.0 million of its common stock. There were no shares repurchased during the three months ended March 31, ~~2023 or 2022.~~2024 and 2023.

Stock-Based Compensation

Stock-based compensation expense totaled approximately ~~$6.2~~$4.7 million and ~~$5.1~~$6.2 million for the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, respectively. The Company's annual ~~grant~~grants of share-based awards generally ~~occurs~~occur in the first and second ~~quarter~~quarters under our ~~2004 Fourth~~Fifth Amended and Restated Stock Option and Incentive Plan (the "Plan”). Our stock options have contractual terms of ten years and become exercisable over a three-year period. Expense related to stock options is recognized on a straight-line basis over the vesting period. Expense related to restricted stock units ("RSUs") issued to eligible employees under the Plan is recognized over the vesting period, generally between three years and four years. Beginning in 2020, certain RSU grants provide for full vesting when the award recipients retire having reached 60 years of age and having provided at least ten years of service to the Company, provided that the awards remain outstanding for a period of six months from the date of grant. The expense for these awards is recognized over the applicable service period for each of the eligible award recipients. Expense related to RSUs and restricted stock awards ("RSAs") granted to non-employee directors under the Plan is recognized on a straight-line basis over the vesting period, generally one year. Expense related to performance units is recognized on a straight-line basis from their award date to the end of the performance period, generally three years.

The following table summarizes stock-based compensation awards granted during the three months ended March 31, ~~2023:~~2024:

Number of Shares Granted

Weighted Average Grant-Date Fair Value per Award

Number of Shares Granted

Weighted Average Grant-Date Fair Value per Award

Restricted stock units

30,799

26.42

Performance units

114,875

41.96

Performance units

The fair value of RSUs granted is based on the Company's closing stock price on the date of grant. The fair value of the performance units for relative total shareholder return granted during the three months ended March 31, 2024 was estimated at the date of grant using a Monte Carlo simulation with assumptions that reflect market conditions at the date of grant, including stock price, risk-free interest rate, expected term, expected volatility, and dividend yield.

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Note 13. Earnings Per Common Share

Basic net income ~~(loss)~~ attributable to Trinity Industries, Inc. per common share ("EPS") is computed by dividing net income ~~(loss)~~ attributable to Trinity by the weighted average number of basic common shares outstanding for the period. Except when the effect would be antidilutive, the calculation of diluted EPS includes the net impact of potentially dilutive common shares. The Company has certain unvested RSAs that participate in dividends on a nonforfeitable basis and are therefore considered to be participating securities. Consequently, diluted net income ~~(loss)~~ attributable to Trinity Industries, Inc. per common share is calculated under both the two-class method and the treasury stock method, and the more dilutive of the two calculations is presented.

The following table sets forth the computation of basic and diluted net income ~~(loss)~~ attributable to Trinity Industries, Inc.


		Three Months Ended March 31,
		2023		2022
		(in millions, except per share amounts)					Three Months Ended March 31,
								2024	2023
						(in millions, except per share amounts)				(in millions, except per share amounts)
Income from continuing operations	Income from continuing operations	$	16.8	$	9.9
Less: Net income attributable to noncontrolling interest	Less: Net income attributable to noncontrolling interest	(9.3)		(2.6)

Net income from continuing operations attributable to Trinity Industries, Inc.	Net income from continuing operations attributable to Trinity Industries, Inc.	7.5		7.3
Loss from discontinued operations, net of income taxes		(3.1)		(6.9)
Loss on sale of discontinued operations, net of income taxes		—		(1.1)
Net income from continuing operations attributable to Trinity Industries, Inc.
Net income from continuing operations attributable to Trinity Industries, Inc.

Net loss from discontinued operations attributable to Trinity Industries, Inc.	Net loss from discontinued operations attributable to Trinity Industries, Inc.	(3.1)		(8.0)
Net income (loss) attributable to Trinity Industries, Inc.		$	4.4	$	(0.7)

Net loss from discontinued operations attributable to Trinity Industries, Inc.

Net loss from discontinued operations attributable to Trinity Industries, Inc.
Net income attributable to Trinity Industries, Inc.

Basic weighted average shares outstanding
Basic weighted average shares outstanding
Basic weighted average shares outstanding	Basic weighted average shares outstanding	80.8		82.9
Effect of dilutive securities	Effect of dilutive securities	2.4		2.6
Diluted weighted average shares outstanding	Diluted weighted average shares outstanding	83.2		85.5

Basic earnings per common share:	Basic earnings per common share:
Basic earnings per common share:
Basic earnings per common share:
Income from continuing operations
Income from continuing operations
Income from continuing operations	Income from continuing operations	$	0.09	$	0.09
Loss from discontinued operations	Loss from discontinued operations	(0.04)		(0.10)
Basic net income (loss) attributable to Trinity Industries, Inc.		$	0.05	$	(0.01)
Basic net income attributable to Trinity Industries, Inc.
Diluted earnings per common share:	Diluted earnings per common share:
Income from continuing operations	Income from continuing operations	$	0.09	$	0.09
Income from continuing operations
Income from continuing operations
Loss from discontinued operations	Loss from discontinued operations	(0.04)		(0.10)
Diluted net income (loss) attributable to Trinity Industries, Inc.		$	0.05	$	(0.01)
Diluted net income attributable to Trinity Industries, Inc.

Potentially dilutive securities excluded from EPS calculation:	Potentially dilutive securities excluded from EPS calculation:
Potentially dilutive securities excluded from EPS calculation:
Potentially dilutive securities excluded from EPS calculation:
Antidilutive restricted shares
Antidilutive restricted shares
Antidilutive restricted shares	Antidilutive restricted shares	0.1		0.1
Antidilutive stock options	Antidilutive stock options	—		—

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Note 14. Contingencies

Highway products litigation

We previously reported the filing of a False Claims Act (“FCA”) complaint in the United States District Court for the Eastern District of Texas, Marshall Division (“District Court”) styled Joshua Harman, on behalf of the United States of America, Plaintiff/Relator v. Trinity Industries, Inc., Defendant, Case No. 2:12-cv-00089-JRG (E.D. Tex.). In this case, in which the U.S. Government declined to intervene, the relator, Mr. Joshua Harman, alleged the Company violated the FCA pertaining to sales of the ET Plus. On October 20, 2014, a trial in this case concluded with a jury verdict stating that the Company and THP “knowingly made, used or caused to be made or used, a false record or statement material to a false or fraudulent claim," and the District Court entered judgment on the verdict in the total amount of $682.4 million. On September 29, 2017, the United States Court of Appeals for the Fifth Circuit ("Fifth Circuit") reversed the District Court’s $682.4 million judgment and rendered judgment as a matter of law in favor of the Company and THP. On January 7, 2019, the United States Supreme Court denied Mr. Harman's petition for certiorari seeking review of the Fifth Circuit's decision. The denial of Mr. Harman's petition ended this action.

Pursuant to the purchase and sale agreement related to the sale of THP, the Company agreed to indemnify Rush Hour for certain liabilities related to the highway products business, including those liabilities resulting from or arising out of (a) the proceedings set forth under “State actions” ~~and "Missouri class action"~~ below and (b) any other proceedings to the extent resulting from or arising out of ET Plus systems or specified ET Plus component parts that ~~are~~were both (i) manufactured prior to December 31, 2021, and (ii) sold in the United States on or prior to April 30, 2022, or related warranty obligations with respect thereto.

State actions

Mr. Harman also has a separate state qui tam action currently pending pursuant to the Virginia Fraud Against Taxpayers Act ("VFATA") (Commonwealth of Virginia ex rel. Joshua M. Harman v. Trinity Industries, Inc. and Trinity Highway Products, LLC, Case No. CL13-698, in the Circuit Court, Richmond, Virginia). In this matter, Mr. Harman alleged the Company violated the VFATA pertaining to sales of the ET Plus, and he is seeking damages, civil penalties, attorneys’ fees, costs, and interest. The Commonwealth of Virginia Attorney General has intervened in the Virginia matter. ~~The trial court has set the case for trial on March 18, 2024. The Company believes that the claims in this matter are without merit and intends to vigorously defend against all allegations.~~

~~In a similar Tennessee state qui tam action filed by Mr. Harman (State of Tennessee ex rel. Joshua M. Harman v. Trinity Industries, Inc., and Trinity Highway Products, LLC~~, Case No. 14C2652, in the Circuit Court for Davidson County, Tennessee), Mr. Harman alleged the Company violated the Tennessee False Claim Act pertaining to sales of the ET Plus, and he is seeking damages, civil penalties, attorneys’ fees, costs, and interest. The State of Tennessee Attorney General filed a Notice of Election to Decline Intervention in this matter. On ~~January 10, 2022,~~February 7, 2024, the trial court granted ~~Trinity’s Motion to Dismiss Harman’s Second Amended Complaint~~the Company's motion for summary judgment and ~~entered an order dismissing Mr. Harman’s complaint with prejudice. On February 7, 2022, Mr. Harman filed a Notice of Appeal of~~ordered that the trial ~~court's order dismissing the case. Mr. Harman's appeal remains pending. The Company believes that the claims~~dates and hearing dates in this matter ~~are without merit and intends~~be removed from the court's docket. On March 26, 2024, the trial court granted the Commonwealth of Virginia’s motion to ~~vigorously defend against all allegations.~~suspend entry of a final order pending the trial court’s review of Mr. Harman’s forthcoming motion for reconsideration of the order granting the Company’s motion for summary judgment.

In a similar New Jersey state qui tam action (State of New Jersey ex rel. Joshua M. Harman v. Trinity Industries, Inc. and Trinity Highway Products, LLC, Case No.L-1344-14, in the Superior Court of New Jersey Law Division: Mercer County) that was previously dismissed by the trial court, Mr. Harman sought leave to file an amended complaint pursuant to the New Jersey False Claims Act. On February 16, 2022, the trial court denied Mr. Harman’s motion. On March 9, 2022, Mr. Harman filed a motion for reconsideration of the trial court’s order denying leave to file an amended complaint. On June 27, 2022, the trial court denied Mr. Harman’s motion for reconsideration seeking leave to file an amended complaint with prejudice. On August 9, 2022, Mr. Harman filed a Notice of Appeal of the trial court's order denying Mr. Harman's motion for reconsideration. Mr. Harman's appeal remains pending.

The Company believes that the claims in ~~this matter~~these matters are without merit and intends to vigorously defend against all allegations.

Based on information currently available to the Company and previously disclosed, we currently do not believe that a loss is probable in the ~~Virginia, Tennessee, and New Jersey~~ state qui tam actions described under "State actions," therefore no accrual has been included in the accompanying Consolidated Financial Statements. Because of the complexity of these actions, as well as the current status of certain of these actions, we are not able to estimate a range of possible losses with respect to any one or more of these actions. While the financial impacts of these state actions are currently unknown, they could be material.

~~Table of Contents~~

~~Missouri class action~~

~~On November 5, 2015, a lawsuit was filed against the Company titled~~ ~~Jackson County, Missouri, individually and on behalf of a class of others similarly situated vs. Trinity Industries, Inc. and Trinity Highway Products, LLC~~, Case No. 1516-CV23684 (Circuit Court of Jackson County, Missouri). The case was brought by plaintiff for and on behalf of itself and all Missouri counties with a population of 10,000 or more persons, including the City of St. Louis, and the State of Missouri’s transportation authority. The plaintiff alleged that the Company and THP did not disclose design changes to the ET Plus and these allegedly undisclosed design changes made the ET Plus allegedly defective, unsafe, and unreasonably dangerous. The plaintiff alleged product liability negligence, product liability strict liability, and negligently supplying dangerous instrumentality for supplier’s business purposes. The plaintiff sought compensatory damages, interest, attorneys' fees, and costs, and in the alternative plaintiff sought a declaratory judgment that the ET Plus is defective, the Company’s conduct was unlawful, and class-wide costs and expenses associated with removing and replacing the ET Plus throughout Missouri. On December 6, 2017, the Court granted plaintiff's Motion for Class Certification, certifying a class of Missouri counties with populations of 10,000 or more persons, including the City of St. Louis and the State of Missouri's transportation authority that have or had ET Plus guardrail end terminals with 4-inch wide guide channels installed on roadways they own or maintain.

As previously reported, the parties reached an agreement to settle all claims in this case without any admission of liability or fault. Defendants have denied and continue to deny specifically each and all of the claims and contentions alleged in this case. The Company’s settlement with the class avoids the uncertainty and expense of continued litigation. Pursuant to the settlement, the Company will pay for the past replacement of certain ET Plus systems, for locating and replacing certain existing undamaged ET Plus systems, and for attorneys’ fees and costs. In accordance with ASC 450, ~~Contingencies~~, the Company recorded a pre-tax charge of $23.9 million ($18.3 million, net of income taxes) during the year ended December 31, 2021, which was included in income from discontinued operations, net of income taxes, in our Consolidated Statement of Operations, based on the Company’s assessment that a settlement was probable and the estimated costs to resolve this action. To date, the Company has funded $17.5 million in connection with the settlement and refined certain estimates, resulting in a remaining liability of $7.8 million as of March 31, 2023.

Certain amounts involved in the settlement cannot be precisely determined at this time as the actual number of qualifying ET Plus systems that will be replaced as part of the settlement is not currently known. Consequently, the corresponding liability will be periodically reviewed and adjusted, when appropriate, for a number of factors, including differences between actual and estimated costs. The accrual and related range of reasonably possible loss related to this matter are included in the amounts described below under "Other matters."

Product liability cases

The Company is currently defending product liability lawsuits ~~in several different states~~ that are alleged to involve the ET Plus as well as other products manufactured by THP. These cases are diverse in light of the randomness of collisions in general and the fact that each accident involving a roadside device, such as an end terminal, or any other fixed object along the highway, has its own unique facts and circumstances. The Company carries general liability insurance to mitigate the impact of adverse judgment exposures in these product liability cases. To the extent that the Company believes that a loss is probable with respect to these product liability cases, the accrual for such losses is included in the amounts described below under "Other matters".

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East Palestine, OH Train Derailment

On February 3, 2023, a Norfolk Southern Railway freight train derailed 38 railcars in East Palestine, Ohio. In March 2023, the State of Ohio and the United States Environmental Protection Agency filed lawsuits against Norfolk Southern Railway Company and Norfolk Southern Corporation (“Norfolk Southern”), which were consolidated in the United States District Court for the Northern District of Ohio, Eastern Division in a civil action styled The State of Ohio, ex rel., Dave Yost, Ohio Attorney General, and the United States of America, Plaintiffs v. Norfolk Southern Railway Company and Norfolk Southern Corporation, Defendants, Civil Action No. 4:23-cv-00517. In this action, on June 30, 2023, Norfolk Southern filed a third-party complaint against the Company’s wholly-owned subsidiary, TILC. Norfolk Southern also named as third-party defendants in this action Oxy Vinyls LP, GATX Corporation, General American Marks Company, SMBC Rail Services LLC, Dow Chemical Incorporated, and Union Tank Car Company. Norfolk Southern asserts third-party claims against TILC for recovery of response costs, contribution, and declaratory relief under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"); negligence; and equitable contribution. TILC was the owner of one tank car cited in this action, which was leased to a third party, who is also a third-party defendant in the litigation. On September 15, 2023, TILC filed a motion to dismiss Norfolk Southern’s third-party complaint. On March 6, 2024, the trial court granted TILC’s motion to dismiss Norfolk Southern’s Third-Party Complaint and entered an order dismissing Norfolk Southern’s complaint against TILC. On March 26, 2024, Norfolk Southern filed a Motion for Entry of Partial Final Judgment, which remains pending.

In April 2023, multiple putative class action lawsuits filed against Norfolk Southern were consolidated in the United States District Court for the Northern District of Ohio, Eastern Division in a civil action styled In re: East Palestine Train Derailment, Civil Action No. 4:23-CV-00242 ("Consolidated Class Action"). In this action, on July 25, 2023, Norfolk Southern filed a third-party complaint against the Company’s wholly-owned subsidiary, TILC. Norfolk Southern also named as third-party defendants in this action Oxy Vinyls LP, GATX Corporation, and General American Marks Company. Norfolk Southern asserts third-party claims against TILC for negligence, joint and several liability, and contribution. On August 14, 2023, plaintiffs filed a First Amended Master Consolidated Class Action Complaint and Jury Demand (“First Amended Complaint”) asserting direct claims for negligence, gross negligence, and medical monitoring against Oxy Vinyls LP, GATX Corporation, General American Marks Company, and TILC ("Railcar Defendants"). On September 15, 2023, TILC filed a motion to dismiss Norfolk Southern’s third-party complaint, and on September 26, 2023, TILC filed a motion to dismiss plaintiffs’ First Amended Complaint. On March 13, 2024, the trial court granted in part and denied in part TILC’s motion to dismiss Norfolk Southern’s third-party complaint and TILC’s motion to dismiss plaintiffs’ First Amended Complaint. On April 9, 2024, plaintiffs and Norfolk Southern announced a settlement in principal of plaintiffs’ claims against Norfolk Southern and the Railcar Defendants. Norfolk Southern preserved its third-party claims against the Railcar Defendants. TILC was the owner of one tank car cited in this action, which was leased to a third party, who is also a third-party defendant in the litigation.

On December 8, 2023, a lawsuit was filed against TILC titled Ambridge Area School District et al. v. Norfolk Southern Corporation et al., Case No. 2:23-cv-01530-CB, in the United States District Court for the Western District of Pennsylvania. Plaintiffs in this putative class action lawsuit assert claims against Norfolk Southern Corporation, Norfolk Southern Railway Company, Oxy Vinyls, LP, GATX Corporation, General American Marks Company, and TILC for negligence, negligence per se, strict liability, public and private nuisance, future health monitoring, trespass, and punitive damages. On February 23, 2024, TILC filed a motion to dismiss plaintiffs’ amended complaint, which remains pending. TILC was the owner of one tank car cited in this action, which was leased to a third party, who is also a defendant in the litigation.

On March 8, 2024, a lawsuit was filed against TILC titled Patricia Almasy et al. v. Norfolk Southern Corporation et al., Case No. 4:24-cv-00452, in the United States District Court for the Northern District of Ohio (“Almasy Lawsuit”). Plaintiffs assert claims against Norfolk Southern Corporation, Norfolk Southern Railway Company, Oxy Vinyls, LP, GATX Corporation, General American Marks Company, and TILC. Plaintiffs assert claims against TILC for negligence, gross negligence, future health monitoring, and willful and wanton conduct. TILC was the owner of one tank car cited in this action, which was leased to a third party, who is also a defendant in this lawsuit. On March 13, 2024, this lawsuit was consolidated into the Consolidated Class Action lawsuit.

The Company believes it has substantial defenses and intends to vigorously defend itself against all allegations in the third-party and direct claims asserted against TILC. The Company or its subsidiaries could be named in similar litigation involving other plaintiffs, but the ultimate number of claims and the jurisdiction(s) in which such claims, if any, may be filed may vary. We do not believe at this time that a loss is probable in these matters, nor can a range of possible losses be determined. Accordingly, no accrual or range of loss has been included in the accompanying consolidated financial statements. The Company maintains liability insurance coverage and commercial contractual indemnity rights to protect the Company’s assets from losses arising from these types of litigation claims.

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Other matters

The Company is involved in claims and lawsuits incidental to our business arising from various matters, including product warranty, personal injury, environmental issues, workplace laws, and various governmental regulations. The Company evaluates its exposure to such claims and suits periodically and establishes accruals for these contingencies when a range of loss can be reasonably estimated. The range of reasonably possible losses for such matters is ~~$10.0~~$7.9 million to ~~$20.9 million.~~$19.4 million, which includes our rights to indemnity and recourse to third parties of approximately $0.1 million, which is recorded in other assets in our Consolidated Balance Sheets as of March 31, 2024. This range includes any amounts related to the Highway Products litigation matters described above in the section titled “Highway products litigation." At March 31, ~~2023,~~2024, total accruals of ~~$10.5~~$8.8 million, including environmental and workplace matters described below, are included in accrued liabilities in the accompanying Consolidated Balance Sheets. The Company believes any additional liability would not be material to its financial position or results of operations.

Trinity is subject to remedial orders and federal, state, local, and foreign laws and regulations relating to the environment and the workplace. The Company has reserved ~~$1.2~~$1.4 million to cover our probable and estimable liabilities with respect to the investigations, assessments, and remedial responses to such matters, taking into account currently available information and our contractual rights to indemnification and recourse to third parties. However, estimates of liability arising from future proceedings, assessments, or remediation are inherently imprecise. Accordingly, there can be no assurance that we will not become involved in future litigation or other proceedings involving the environment and the workplace or, if we are found to be responsible or liable in any such litigation or proceeding, that such costs would not be material to the Company. We believe that we are currently in substantial compliance with environmental and workplace laws and regulations.

Georgia ~~tornado~~Fire

On ~~March 26, 2021,~~January 16, 2024, a ~~tornado~~fire damaged a portion of the ~~Company’s rail maintenance~~Company's facility in Cartersville, Georgia. We have incurred costs related to cleanup and damage remediation activities in order for the facility to resume limited operations, and we expect to return to normal production levels in the second ~~quarter~~half of ~~2021.~~2024. We believe our insurance coverage is sufficient to cover property damage costs related to the event. ~~To date,~~Accordingly, at March 31, 2024, we recorded an insurance receivable of approximately $1.0 million for property damage recoveries that we have concluded are probable of collection. As of March 31, 2024, we have received ~~total~~ advanced payments from insurance of approximately ~~$28.9~~$1.5 million ~~which includes $8.1 million~~ for ~~reimbursement of~~ cleanup and damage remediation ~~expenditures. As of March 31, 2023, we have utilized $19.6 million of the advanced payments from insurance towards new capital expenditures in support of the reconstruction efforts.~~

During the three months ended March 31, 2023, we recorded a gain of $1.2 million for property damage insurance recoveries received in excess of the net book value of assets destroyed, which is included in the gains on dispositions of other property line in our Consolidated Statements of Operations.activities.

Any ~~additional~~ property damage insurance proceeds received in excess of the net book value of property lost and related cleanup costs will be accounted for as ~~gains in future quarters.~~a gain. Additionally, the Company may be entitled to business interruption proceeds related to the event. We will not record these recoveries until settlements have been reached with the insurance company.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide management's perspective on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. Our MD&A should be read in conjunction with the unaudited Consolidated Financial Statements and related Notes in Part I, Item 1 of this Quarterly Report on Form 10-Q and Item 8, Financial Statements and Supplementary Data, of our ~~2022~~2023 Annual Report on Form 10-K.

This MD&A includes financial measures compiled in accordance with generally accepted accounting principles ("GAAP") and certain non-GAAP measures. Please refer to the Non-GAAP Financial Measures section herein for information on the non-GAAP measures included in the MD&A, reconciliations to the most directly comparable GAAP financial measure, and the reasons why management believes each measure is useful to management and investors.

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Forward-Looking Statements

This quarterly report on Form 10-Q (or statements otherwise made by the Company or on the Company’s behalf from time to time in other reports, filings with the Securities and Exchange Commission (“SEC”), news releases, conferences, website postings or otherwise) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements contained herein that are not historical facts are forward-looking statements and involve risks and uncertainties. These forward-looking statements include expectations, beliefs, plans, objectives, future financial performances, estimates, projections, goals, and forecasts. Trinity uses the words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “forecasts,” “may,” “will,” “should,” and similar expressions to identify these forward-looking statements. Potential factors ~~which~~that could cause our actual results of operations to differ materially from those in the forward-looking statements, include, among others:

•market conditions and customer demand for our business products and services;

•the cyclical nature of the industries in which we compete;

•variations in weather in areas where our products are manufactured, delivered, or used;

•naturally-occurring events, pandemics, and/or disasters causing disruption to our manufacturing, product deliveries, and production capacity, thereby giving rise to an increase in expenses, loss of revenue, and property losses;

•the impact of the coronavirus pandemic (“COVID-19”) and the response thereto, on, among other things, demand for our products and services, our customers' ability to pay, disruptions to our supply chain, our liquidity and financial position, results of operations, stock price, payment of dividends, our ability to generate new railcar orders, our ability to originate and/or renew leases at favorable rates, our ability to convert backlog to revenue, and the operational status of our facilities;

•disruptions in the transportation network used to transport parts and components to our production facilities and to deliver products to our ~~products,~~customers, particularly with respect to the delivery of finished railcars from Mexico to the U.S., which may impact our ability to manufacture and timely deliver railcars to our customers;

•shortages of labor;

•impacts from asset impairments and related charges;

•the timing of introduction of new products;

•the inability to effectively integrate acquired businesses;

•the timing and delivery of customer orders, lease portfolio sales, or a breach of customer contracts;

•the creditworthiness of customers and their access to capital;

•product price changes;

•changes in mix of products sold;

•the costs incurred to align manufacturing capacity with demand and the extent of its utilization;

•the operating leverage and efficiencies that can be achieved by our manufacturing businesses;

•availability and costs of steel, component parts, supplies, and other raw materials;

•competition and other competitive factors;

•changing technologies;

•material failure, interruption of service, compromised data security, phishing emails, or cybersecurity breaches in our information technology (or that of the third-party vendors who provide information technology or other services);

•surcharges and other fees added to fixed pricing agreements for steel, component parts, supplies, and other raw materials;

•inflation, interest rates, and capital costs;

•counter-party risks for financial instruments;

•long-term funding of our operations;

•taxes;

•the stability of the governments and political and business conditions in certain foreign countries, particularly Mexico;

•fluctuations in foreign currency exchange rates, particularly the Mexican peso;

•geopolitical events, including armed conflicts, and their impact on supply chains, pricing, and the global economy;

•changes in import and export quotas and regulations;

•business conditions in emerging economies;

•costs and results of litigation, including trial and appellate costs;

•changes in accounting standards or inaccurate estimates or assumptions in the application of accounting policies;

•changes in laws and regulations that may have an adverse effect on demand for our products and services, our results of operations, financial condition or cash flows;

•legal, regulatory, and environmental issues, including compliance of our products with mandated specifications, standards, or testing criteria and obligations to remove and replace our products following installation or to recall our products and install different products;

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•actions by U.S. and/or foreign governments (particularly Mexico and Canada) relative to federal government budgeting, taxation policies, government expenditures, borrowing/debt ceiling limits, tariffs, and trade policies;

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•the use of social or digital media to disseminate false, misleading and/or unreliable or inaccurate information; and

•the inability to sufficiently protect our intellectual property rights.

Any forward-looking statement speaks only as of the date on which such statement is made. Except as required by federal securities laws, Trinity undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made. For a discussion of risks and uncertainties which could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” in our ~~2022~~2023 Annual Report on Form 10-K, this Form 10-Q and future Forms 10-Q and Current Reports on Forms 8-K.

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Company Overview

Trinity Industries, Inc. and its consolidated subsidiaries (“Trinity,” “Company,” “we,” “our,” or "us") own businesses that are leading providers of railcar products and services in North America. We market our railcar products and services under the trade name TrinityRail®. The TrinityRail platform provides railcar leasing and management services; railcar ~~manufacturing,~~manufacturing; railcar maintenance and modifications; and other railcar logistics products and services.

In the fourth quarter of 2021, we completed the sale of Trinity Highway Products, LLC (“THP”) to Rush Hour Intermediate II, LLC ("Rush Hour"), an entity owned by an affiliated investment fund of Monomoy Capital Partners. Upon completion of the sale, the accounting requirements for reporting THP as a discontinued operation were met. In connection with the sale of THP, we agreed to indemnify Rush Hour for certain liabilities related to the ET-Plus® System, a highway guardrail end-terminal system (the “ET Plus”). Consequently, expenses incurred during the three months ended March 31, 2023 and 2022, and that may be incurred in the future related to these retained obligations, will be reported in discontinued operations. See Note 2 of the Consolidated Financial Statements for further information related to the sale of THP and Note 14 of the Consolidated Financial Statements for information regarding the retained liabilities.

We report our operating results in two reportable segments: (1) the Railcar Leasing and ~~Management~~ Services Group (the "Leasing Group"), which owns and operates a fleet of railcars and provides third-party fleet leasing, management, and administrative ~~services, as well as~~services; railcar maintenance and modification services; and other railcar logistics products and services; and (2) the Rail Products Group, which manufactures and sells railcars and related parts and ~~components,~~components.

Effective January 1, 2024, the Company modified its organizational structure to better leverage our maintenance services capabilities to support lease fleet optimization and ~~provides railcar~~to grow our services and parts businesses. The new structure resulted in a change to our reportable segments beginning in 2024. In connection with this organizational update, we aligned the maintenance services business, which was previously reported in the Rail Products Group, to now be presented within our leasing business. This change aligns with the way in which our CODM assesses performance and ~~modification services.~~allocates resources. Consequently, beginning January 1, 2024, we report our operating results in two reportable segments: (1) the Railcar Leasing and Services Group, formerly the Railcar Leasing and Management Services Group, and (2) the Rail Products Group. These changes had no impact to our previously reported consolidated results of operations, financial position, or cash flows. All prior period segment results set forth herein have been recast to reflect these changes and present results on a comparable basis.

Executive Summary

~~Recent Market Developments~~

Cyclical, Seasonal and Other Trends Impacting Our Business

~~Although lease rates and lease fleet utilization continue to improve, the~~General/Business Trends

The industries in which our customers operate are cyclical in nature. ~~Weaknesses~~Although lease rates and lease fleet utilization remain strong, weaknesses in certain sectors of the North American and global economy may make it more difficult to sell or lease certain types of railcars. Additionally, changes in certain commodity prices, or changes in demand for certain commodities, could impact customer demand for various types of railcars. Further, disruptions in the global supply chain have impacted demand for, and the costs of, certain of our products and services.

We continuously assess demand for our products and services and take steps to rationalize and diversify our leased railcar portfolio and align our operating capacity appropriately. We evaluate the creditworthiness of our customers and monitor performance of relevant market sectors; however, weaknesses in any of these market sectors could affect the financial viability of our ~~underlying Leasing Group~~ customers, which could negatively impact our ~~recurring leasing~~ revenues, credit loss expense, and operating profits. We continue to believe that our rail platform is able to respond to cyclical changes in demand and perform throughout the railcar cycle.

~~Steel prices, which~~Due to their transactional nature, lease portfolio sales are ~~subject to volatility, were elevated over much~~the primary driver of the last two years and are a major component of our cost of revenues. We typically use contract-specific purchasing practices, existing supplier commitments, contractual price escalation provisions, and other arrangements with our customers to reduce the impact of plate and coil steel price volatility on our operating profit. Additionally, the cost and volume of lease fleet maintenance and compliance events increasedfluctuations in ~~2022, and we expect elevated levels of these activities to continue~~results in the ~~near term. Further, although we remain committed to attracting~~Leasing Group.

U.S.-Mexico Border Disruption

In late 2023, the U.S. Customs and ~~retaining a highly skilled and diverse workforce, challenging labor market conditions and increases~~Border Protection Agency suspended cross-border rail traffic in ~~labor costs have~~Eagle Pass, Texas, the primary border crossing used for railcar deliveries from our manufacturing facilities in Mexico, which negatively impacted our ~~operations.~~railcar deliveries in the second half of 2023. We have not experienced a border closure at Eagle Pass thus far in 2024, and substantially all railcar shipments that were delayed at the end of 2023 were delivered during the three months ended March 31, 2024; however, while we have seen some improvement in recent months, there is ongoing instability at the border, and there can be no assurance that similar border closings or congestion will not occur in the future. We actively monitor rail and truck traffic at the U.S.-Mexico border and remain in close contact with all stakeholders, including the relevant government agencies, and continue to ~~monitor~~evaluate available alternatives for rail and truck transportation between Mexico and the United States. Any future rail and truck congestion at the border could negatively impact our deliveries and supply chain.

Table of ~~potential margin and operating profit headwinds resulting from these factors.~~Contents

Supply Chain Disruptions

As a result of disruptions in the global supply chain, we have continued to experience shortages of materials used to manufacture or repair certain railcar types, as well as disruptions in the transportation network, ~~used to deliver our products,~~ which have impacted our ability to timely deliver these railcars to our customers. While we believe these challenges will be resolved over time, they may persist over the foreseeable future, which could continue to impact our operations. We will continue to monitor the situation and take appropriate steps within our control to mitigate the potential impacts on our production schedules and delivery timelines.

~~Due~~Foreign Currency Fluctuations

We are exposed to ~~their transactional nature, lease portfolio sales are~~ the ~~primary driver~~impact of foreign currency fluctuations in our Mexico operations resulting from certain expenditures that are denominated in the Mexican peso. The strengthening of the Mexican peso relative to the U.S. dollar unfavorably impacted the operating results in our Rail Products Group in 2023. We have expanded our hedging program and have taken other actions to mitigate the ~~Leasing Group.~~foreign currency impact of a portion of our peso-denominated expenditures. We regularly evaluate and update our strategies to mitigate the negative effects on margins and operating profits that may arise due to foreign currency fluctuations.

Input and Labor Costs

We periodically experience increases in the costs of steel, components, and certain other inputs that represent a substantial portion of our cost of revenues. We typically use contract-specific purchasing practices, existing supplier commitments, contractual price escalation provisions, and other arrangements with our customers to reduce the impact of the volatility of certain input costs on our operating profit. Further, the cost and volume of lease fleet maintenance and compliance events have increased, and we expect elevated levels of these activities to continue in the near term. Finally, although we remain committed to attracting and retaining a highly skilled and diverse workforce, challenging labor market conditions and increases in labor costs have negatively impacted our operations. We continually assess the impact of input and labor costs on our operational efficiency, margins, and overall profitability.

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Financial and Operational Highlights

•Our revenues for the three months ended March 31, ~~2023~~2024 were ~~$641.7~~$809.6 million, representing an increase of ~~35.8%~~26.2%, compared to the three months ended March 31, ~~2022.~~2023. Our operating profit for the three months ended March 31, ~~2023~~2024 was ~~$69.0~~$115.2 million compared to ~~$54.8~~$69.0 million for the three months ended March 31, ~~2022.~~2023.

•The Leasing Group's lease fleet of ~~108,865~~110,205 company-owned railcars was ~~98.2%~~97.5% utilized as of March 31, ~~2023,~~2024, compared to a lease fleet utilization of ~~96.5%~~98.2% on ~~107,090~~108,865 company-owned railcars as of March 31, ~~2022.~~2023. Our company-owned lease fleet includes wholly-owned railcars, partially-owned railcars, and railcars under leased-in arrangements.

•For the three months ended March 31, ~~2023,~~2024, we made a net investment in our lease fleet of approximately ~~$134.8~~$123.3 million, which primarily includes new railcar additions, sustainable railcar conversions, railcar modifications, and other betterments, net of deferred profit, and secondary market purchases; and is net of proceeds from lease portfolio sales.

•The total value of the new railcar backlog at March 31, ~~2023~~2024 was ~~$3.7~~$2.9 billion, compared to ~~$1.9~~$3.7 billion at March 31, ~~2022.~~2023. The Rail Products Group received orders for 1,880 railcars and delivered 4,695 railcars in the three months ended March 31, 2024, in comparison to orders for 2,690 railcars and ~~delivered~~deliveries of 4,045 railcars in the three months ended March 31, ~~2023, in comparison to orders for 5,055 railcars and deliveries of 2,470 railcars in the three months ended March 31, 2022.~~2023.

•During the three months ended March 31, ~~2023,~~2024, sustainable railcar conversion revenues totaled ~~$53.9~~$50.2 million, representing ~~590~~675 railcars.

•For the three months ended March 31, ~~2023,~~2024, we generated operating cash flows from continuing operations and Adjusted Free Cash Flow After Investments and Dividends ("Adjusted Free Cash Flow") of ~~$102.5~~$56.5 million and ~~$36.2~~$11.7 million(1), respectively, in comparison to ~~$28.5~~$102.5 million and ~~$47.8~~$36.2 million(1), respectively, for the three months ended March 31, ~~2022.~~2023.

(1) Non-GAAP financial measure. See the Non-GAAP Financial Measures section within this Form 10-Q for a reconciliation to the most directly comparable GAAP measure and why management believes this measure is useful to management and investors.

See "Consolidated Results of Operations" and "Segment Discussion" below for additional information regarding our operating results.

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Returns of Capital to Shareholders

Returns of capital to shareholders in the form of dividends ~~and share repurchases~~ are summarized ~~below:~~below. There were no shares repurchased during the three months ended March 31, 2024 and 2023.

(1) Dividend yield is calculated as dividends paid for the four previous quarters divided by the closing stock price on the last trading day of each respective quarter.

~~(2)~~ ~~In the second quarter of 2022, we completed the final settlement of an accelerated share repurchase agreement ("ASR").~~Capital Structure Updates

~~(3)~~TILC Warehouse Loan Facility – In ~~the fourth quarter of 2022, our Board of Directors terminated the existing share repurchase program and authorized~~March 2024, we entered into a new ~~$250.0~~Trinity Industries Leasing Company ("TILC") warehouse loan facility with a total commitment amount of $800.0 million, ~~share repurchase program.~~a revolving termination date of March 15, 2027, and a maturity date of March 15, 2028. This warehouse loan facility replaced the prior $1.0 billion warehouse loan facility.

See Note 8 of the Consolidated Financial Statements for additional information regarding this debt transaction.

Litigation Updates

See Note 14 of the Consolidated Financial Statements for an update on the status of certain ~~litigation retained in connection with the sale of THP.~~litigation.

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Consolidated Results of Operations

The following table summarizes our consolidated results of operations for the three months ended March 31, ~~2023~~2024 and ~~2022:~~2023:




		Three Months Ended March 31,				Three Months Ended March 31,
		2023		2022				2024	2023
		(in millions)					(in millions)
Revenues	Revenues	$	641.7	$	472.7
Cost of revenues	Cost of revenues	538.5		398.5
Selling, engineering, and administrative expenses	Selling, engineering, and administrative expenses	49.9		44.7
Gains on dispositions of property	Gains on dispositions of property	15.3		25.3

Restructuring activities, net	Restructuring activities, net	(0.4)		—
Restructuring activities, net
Restructuring activities, net
Total operating profit	Total operating profit	69.0		54.8
Interest expense, net	Interest expense, net	62.1		43.5

Other, net	Other, net	1.6		(1.6)
Other, net
Other, net
Income from continuing operations before income taxes	Income from continuing operations before income taxes	5.3		12.9
Provision (benefit) for income taxes	Provision (benefit) for income taxes	(11.5)		3.0
Income from continuing operations	Income from continuing operations	$	16.8	$	9.9

Revenues

The tables below present revenues by segment for the three months ended March 31, ~~2023~~2024 and ~~2022:~~2023:


		Three Months Ended March 31, 2023
		Revenues						Percent
		External		Intersegment		Total		Change
		(in millions)
Railcar Leasing and Management Services Group		$	203.3	$	0.2	$	203.5	11.1	%
Rail Products Group		438.4		199.4		637.8		63.1	%

Segment Totals		641.7		199.6		841.3		46.5	%
Eliminations – Lease Subsidiary		—		(199.4)		(199.4)
Eliminations – Other		—		(0.2)		(0.2)
Consolidated Total		$	641.7	$	—	$	641.7	35.8	%

		Three Months Ended March 31, 2022
		Revenues
		External		Intersegment		Total
		(in millions)
Railcar Leasing and Management Services Group		$	182.9	$	0.2	$	183.1
Rail Products Group		289.8		101.3		391.1

Segment Totals		472.7		101.5		574.2
Eliminations – Lease Subsidiary		—		(101.3)		(101.3)
Eliminations – Other		—		(0.2)		(0.2)
Consolidated Total		$	472.7	$	—	$	472.7






		Revenues
		Revenues
		Revenues																	Percent
	External												External			Intersegment				Total			Change
	(in millions)
Railcar Leasing and Services Group
Railcar Leasing and Services Group
Railcar Leasing and Services Group											$	284.3		$	0.9		$	285.2			22.5	%
Rail Products Group										Rail Products Group	525.3			142.1			667.4				13.6	%

Segment Totals
Segment Totals
Segment Totals											809.6			143.0			952.6				16.1	%
Eliminations

Consolidated Total

Consolidated Total

Consolidated Total											$	809.6		$	—		$	809.6			26.2	%

		Three Months Ended March 31, 2023
		Three Months Ended March 31, 2023
		Three Months Ended March 31, 2023
		Revenues
		Revenues
		Revenues
		External
		External
		External
		(in millions)
		(in millions)
		(in millions)
Railcar Leasing and Services Group
Railcar Leasing and Services Group
Railcar Leasing and Services Group
Rail Products Group
Rail Products Group
Rail Products Group

Segment Totals

Segment Totals

Segment Totals
Eliminations
Eliminations
Eliminations

Consolidated Total

Consolidated Total

Consolidated Total

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Operating Costs

Operating costs are comprised of cost of revenues; selling, engineering, and administrative costs; gains or losses on property disposals; and restructuring activities. Operating costs by segment for the three months ended March 31, ~~2023~~2024 and ~~2022~~2023 were as follows:


		Three Months Ended March 31,
		2023		2022
		(in millions)				Three Months Ended March 31,
Railcar Leasing and Management Services Group (1)		$	118.0	$	103.3
							2024	2023
							(in millions)
Railcar Leasing and Services Group (1)
Rail Products Group	Rail Products Group	612.5		390.3
Segment Totals	Segment Totals	730.5		493.6
Corporate and other	Corporate and other	26.0		15.7

Restructuring activities, net	Restructuring activities, net	(0.4)		—
Eliminations – Lease Subsidiary		(182.6)		(92.5)
Eliminations – Other		(0.8)		1.1
Restructuring activities, net
Restructuring activities, net
Eliminations

Consolidated Total	Consolidated Total	$	572.7	$	417.9
Consolidated Total
Consolidated Total

(1) Includes gains on lease portfolio sales of ~~$13.5~~$2.1 million and ~~$11.8~~$13.5 million for the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, respectively.

Operating Profit

Operating profit by segment for the three months ended March 31, ~~2023~~2024 and ~~2022~~2023 was as follows:


		Three Months Ended March 31,
		2023		2022
		(in millions)				Three Months Ended March 31,
Railcar Leasing and Management Services Group		$	85.5	$	79.8
							2024	2023
							(in millions)
Railcar Leasing and Services Group
Rail Products Group	Rail Products Group	25.3		0.8

Segment Totals
Segment Totals
Segment Totals	Segment Totals	110.8		80.6
Corporate and other	Corporate and other	(26.0)		(15.7)

Restructuring activities, net	Restructuring activities, net	0.4		—
Eliminations – Lease Subsidiary		(16.8)		(8.8)
Eliminations – Other		0.6		(1.3)
Restructuring activities, net
Restructuring activities, net
Eliminations

Consolidated Total	Consolidated Total	$	69.0	$	54.8
Consolidated Total
Consolidated Total

Discussion of Consolidated Results

Revenues – Our revenues for the three months ended March 31, ~~2023~~2024 were ~~$641.7~~$809.6 million, representing an increase of ~~$169.0~~$167.9 million, or ~~35.8%~~26.2%, over the prior year period. The increase in revenues was primarily due to a higher ~~volume of, and improved pricing on,~~ external deliveries in the Rail Products Group, and improved lease rates and a higher volume of external repairs in the Leasing Group.

Cost of revenues – Our cost of revenues for the three months ended March 31, ~~2023~~2024 was ~~$538.5~~$644.9 million, representing an increase of ~~$140.0~~$106.4 million, or ~~35.1%~~19.8%, over the prior year period. The increase in cost of revenues was primarily due to a higher ~~volume of~~ external deliveries ~~higher labor costs~~ and ~~operational inefficiencies~~the impact of foreign currency fluctuations in the Rail Products Group.

Selling, engineering, and administrative expenses – Selling, engineering, and administrative expenses for the three months ended March 31, ~~2023~~2024 were ~~$49.9~~$52.3 million, representing an increase of ~~$5.2~~$2.4 million, or ~~11.6%~~4.8%, when compared to the prior year period primarily ~~as a result of~~due to higher employee-related costs.

Gains on dispositions of property – Gains on dispositions of property decreased by ~~$10.0~~$12.5 million for the three months ended March 31, ~~2023~~2024, when compared to the prior year period primarily due to ~~higher gains associated with the disposition of certain non operating facilities and insurance recoveries in the prior year period, partially offset by higher profits on~~lower lease portfolio sales volume in the current year period. ~~Results for the~~Additionally, we recorded gains of $1.2 million during three months ended March 31, 2023 ~~and 2022 included gains of $1.2 million and $6.4 million, respectively,~~ related to insurance recoveries in excess of net book value for assets damaged by a tornado at the Company’s rail maintenance facility in Cartersville, ~~Georgia in the first quarter of 2021. See Note 14 of the Consolidated Financial Statements for more information.~~Georgia.

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Operating profit – Operating profit for the three months ended March 31, ~~2023~~2024 totaled ~~$69.0~~$115.2 million, representing an increase of ~~$14.2~~$46.2 million, or ~~25.9%~~67.0%, from the prior year ~~period~~period. The increase was primarily due to a higher ~~volume of, and improved pricing on,~~ external deliveries in the Rail Products Group, ~~and~~ improved lease rates in the Leasing Group, and a higher volume of external repairs in our maintenance services business, partially offset by ~~higher employee-related and other operating costs across the enterprise. Operating profit was favorably impacted~~lower lease portfolio sales volume in the current ~~and prior~~ year ~~periods by insurance recoveries related to a tornado at the Company’s rail maintenance facility in Cartersville, Georgia in the first quarter of 2021.~~period.

For further information regarding the operating results of individual segments, see "Segment Discussion" below.

Interest expense, net – Interest expense, net for the three months ended March 31, ~~2023~~2024 totaled ~~$62.1~~$69.1 million, compared to ~~$43.5~~$62.1 million for the three months ended March 31, ~~2022,~~2023. The increase was primarily driven by higher ~~variable interest rates associated with TILC's warehouse loan facility and the revolving credit facility and higher overall~~ average debt in ~~2023.~~2024.

Income taxes – The effective tax rate from continuing operations for the three months ended March 31, 2024 was an expense of 25.8%, which differs from the U.S. statutory rate of 21.0% primarily due to state income taxes and foreign income taxes, partially offset by the benefit of noncontrolling interest, for which we do not provide income taxes.

The effective tax rate from continuing operations for the three months ended March 31, 2023 was a benefit of 217.0%, which differs from the U.S. statutory rate of 21.0% primarily due to the release of residual taxes out of accumulated other comprehensive ~~income,~~income; the re-measurement of our net deferred tax liabilities due to the acquisition of ~~RSI Logistics ("RSI"),~~a subsidiary; changes in our valuation ~~allowances,~~allowances; state income ~~taxes,~~taxes; and foreign income taxes. See Note 9 of the Consolidated Financial Statements for additional information.

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Segment Discussion

Railcar Leasing and ~~Management~~ Services Group


		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,												2024	2023				Percent
					2023			2022			Percent
				($ in millions)				Change
			($ in millions)																	($ in millions)								Change
Revenues:	Revenues:
Leasing and management	Leasing and management				$	203.5		$	183.1		11.1	%
Leasing and management
Leasing and management																$	209.0				$	194.7		7.3		%
Maintenance services (1)													Maintenance services (1)			65.2					29.4			121.8		%
Digital and logistics services													Digital and logistics services			11.0					8.8			25.0		%
Total revenues													Total revenues			$	285.2				$	232.9		22.5		%

Operating profit (1):
Leasing and management					$	72.0		$	68.0		5.9	%
Cost of revenues (2)
Cost of revenues (2)
Cost of revenues (2)																169.6					146.8			15.5		%
Selling, engineering, and administrative expenses													Selling, engineering, and administrative expenses			18.1					16.9			7.1		%
Gains on dispositions of property:
Lease portfolio sales ~~(2)~~	Lease portfolio sales ~~(2)~~				13.5			11.8			*
Lease portfolio sales ~~(2)~~
Lease portfolio sales ~~(2)~~																2.1					13.5			*
Other													Other			0.7					1.9			*
Total operating profit	Total operating profit				$	85.5		$	79.8		7.1	%	Total operating profit			$	100.3	$			$	84.6	18.6		18.6		%
Total operating profit margin	Total operating profit margin				42.0		%	43.6		%
Total operating profit margin, excluding lease portfolio sales
Total operating profit margin, excluding lease portfolio sales
Total operating profit margin, excluding lease portfolio sales

Leasing and management operating profit margin					35.4		%	37.1		%
Selected expense information for Company-owned railcars (3):

Selected expense information:
Depreciation (3)					$	62.4		$	57.2		9.1	%
Maintenance and compliance					$	35.8		$	29.2		22.6	%
Rent and ad valorem taxes					$	4.3		$	5.0		(14.0)	%
Selling, engineering, and administrative expenses					$	15.7		$	12.8		22.7	%
Interest					$	54.8		$	38.7		41.6	%
Selected expense information for Company-owned railcars (3):

Selected expense information for Company-owned railcars (3):
Depreciation and amortization expense (4)
Depreciation and amortization expense (4)
Depreciation and amortization expense (4)																$	59.9				$	61.6		(2.8)		%
Maintenance and compliance expense (5)													Maintenance and compliance expense (5)			$	30.4				$	34.8		(12.6)		%
Other fleet operating costs (6)													Other fleet operating costs (6)			$	7.7				$	9.2		(16.3)		%
Interest expense (7)													Interest expense (7)			$	57.4				$	54.8		4.7		%

* Not meaningful

(1) Revenues related to services performed by the maintenance services business to support the railcars in our lease fleet are eliminated within the Railcar Leasing & Services Group and are excluded from the totals reported on this line.

(2)~~Operating profit includes: depreciation;~~ Includes depreciation and amortization expense, maintenance and compliance expense, and other fleet operating costs ~~which include~~related to our lease fleet, as well as operating costs for our maintenance ~~compliance, freight,~~services and ~~storage; rent~~digital and ~~ad valorem taxes;~~logistics services businesses.

(3) Includes wholly-owned railcars, partially-owned railcars, and ~~selling, engineering,~~railcars under leased-in arrangements.

(4) Depreciation and ~~administrative expenses. Amortization~~amortization expense includes $4.7 million for the three months ended March 31, 2023 related to the disposal of certain railcar components associated with our sustainable railcar conversion program. Additionally, amortization of deferred profit on railcars sold from the Rail Products Group to the Leasing Group is included in ~~the operating profits of the Leasing Group,~~depreciation and amortization expense, resulting in the recognition of depreciation expense based on our original manufacturing cost of the railcars.

(5) Maintenance and compliance expense is reported at cost with respect to the services performed by our maintenance services business to support the railcars in our lease fleet.

(6) Other fleet operating costs include freight, storage, rent, and ad valorem taxes.

(7) Interest expense is not a component of operating profit and includes the effect of hedges.

~~(2)Includes $1.3 million selling profit associated with sales-type leases for the three months ended March 31, 2022.~~

Information related to lease portfolio sales is as follows:

~~(1)Excludes $1.3 million selling profit associated with sales-type leases for the three months ended March 31, 2022.~~


	Three Months Ended March 31,
		2024			2023
		($ in millions)
Lease portfolio sales		$	24.2		$	56.7
Operating profit on lease portfolio sales		$	2.1		$	13.5
Operating profit margin on lease portfolio sales		8.7		%	23.8		%

Total revenues for the Railcar Leasing and ~~Management~~ Services Group increased by ~~11.1%~~22.5% for the three months ended March 31, ~~2023~~2024, compared to the prior year period. Leasing and management revenues for the three months ended March 31, ~~2023~~2024 were favorably impacted primarily by improved lease rates and ~~higher utilization,~~net additions to the lease fleet, which resulted in higher revenues when compared to the three months ended March 31, ~~2022.~~2023.

Table of Contents

Our maintenance services business is primarily dedicated to servicing our lease fleet pursuant to the provisions of our lease contracts. This may include services that are not included in the full-service lease agreement, such as repairs of railcar damage or other customer-specific requirements. We also perform maintenance and repair activities on railcars owned by third parties, including our investor-owned fleet. Revenues ~~for the Leasing Group were also favorably impacted~~in our maintenance services business increased for the three months ended March 31, ~~2023 by~~2024 as a result of a higher volume of repairs completed for third parties, including our investor-owned fleet, as well as favorable pricing.

Cost of revenues for the ~~acquisition of RSI.~~

Railcar Leasing and ~~management operating profit~~Services Group increased by 15.5% for the three months ended March 31, ~~2023~~2024, compared to the prior year period. In our maintenance services business, cost of revenues increased for the three months ended March 31, 2024 as a result of the volume of external repairs. Cost of revenues was favorably impacted by lower maintenance and fleet operating costs and reduced depreciation in the leasing and management business.

Leasing Group operating profit increased by ~~5.9%~~18.6% for the three months ended March 31, 2024, compared to the prior year period primarily due to improved lease rates and a higher ~~utilization,~~volume of external repairs in the maintenance services business, partially offset by ~~higher maintenance costs and increased depreciation. Leasing Group~~lower lease portfolio sales volume in the current year period. Additionally, operating profit ~~increased~~was favorably impacted by ~~7.1% for~~gains of $1.2 million during the three months ended March 31, 2023 ~~compared~~related to insurance recoveries in excess of net book value for assets damaged by a tornado at the ~~prior year period and was favorably impacted by higher profit from lease portfolio sales.~~

~~Table~~Company’s rail maintenance facility in Cartersville, Georgia in the first quarter of ~~Contents~~

2021.

The Leasing Group generally uses its non-recourse warehouse loan facility or cash to provide initial funding for a portion of the purchase price of the railcars. After initial funding, the Leasing Group may obtain long-term financing for the railcars in the lease fleet through non-recourse asset-backed securities; long-term ~~non-recourse operating leases pursuant to sale-leaseback transactions; long-term~~ recourse ~~debt such as equipment trust certificates;~~debt; long-term non-recourse promissory notes; or third-party equity.

Information regarding the Leasing Group’s lease fleet is as follows:


		March 31, 2023		March 31, 2022			March 31, 2024		March 31, 2023
Number of railcars:	Number of railcars:
Wholly-owned (1)	Wholly-owned (1)	85,185		82,760
Wholly-owned (1)
Wholly-owned (1)
Partially-owned	Partially-owned	23,680		24,330
		108,865		107,090
	110,205
Investor-owned	Investor-owned	33,420		29,740
		142,285		136,830
	143,200
Company-owned railcars (2):	Company-owned railcars (2):
Average age in years
Average age in years
Average age in years	Average age in years	12.5		11.4
Average remaining lease term in years	Average remaining lease term in years	3.0		2.9
Fleet utilization	Fleet utilization	98.2	%	96.5	%	Fleet utilization	97.5	%	98.2	%

(1) Includes ~~2,470~~2,490 railcars and ~~2,575~~2,470 railcars under leased-in arrangements as of March 31, ~~2023~~2024 and ~~2022,~~2023, respectively.

(2) Includes wholly-owned railcars, partially-owned railcars, and railcars under leased-in arrangements.

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Rail Products Group




		Three Months Ended March 31,										Three Months Ended March 31,
				2023			2022			Percent						2024					2023					Percent
			($ in millions)				Change						($ in millions)	Change
Revenues:	Revenues:
Rail products (1)	Rail products (1)			$	558.4		$	338.4		65.0	%
Maintenance services				55.3			43.0			28.6	%
Other				24.1			9.7			148.5	%
Rail products (1)
Rail products (1)																$	639.2				$	558.4				14.5		%
Parts & components												Parts & components				28.2					29.2					(3.4)		%
Total revenues	Total revenues			$	637.8		$	391.1		63.1	%	Total revenues				$	667.4		$		$	587.6		13.6			13.6		%

Operating costs:	Operating costs:
Operating costs:
Operating costs:
Cost of revenues
Cost of revenues
Cost of revenues	Cost of revenues			605.4			387.0			56.4	%				615.9			556.4		556.4			10.7			10.7		%
Selling, engineering, and administrative expenses	Selling, engineering, and administrative expenses			8.2			9.7			(15.5)	%	Selling, engineering, and administrative expenses				7.7			7.0			7.0			10.0			10.0		%
Gains on dispositions of property				(1.1)			(6.4)			*
Losses on dispositions of property												Losses on dispositions of property				—					(0.1)					*
Operating profit	Operating profit			$	25.3		$	0.8		*		Operating profit				$	43.8		$		$	24.1		81.7			81.7		%
Operating profit margin	Operating profit margin			4.0		%	0.2		%

* Not meaningful

(1) Includes sustainable railcar conversion revenues of $50.2 million, representing 675 railcars, for the three months ended March 31, 2024 and sustainable railcar conversion revenues of $53.9 million, representing 590 railcars, for the three months ended March 31, 2023. ~~Includes sustainable railcar conversion revenues of $49.8 million, representing 445 railcars for the three months ended March 31, 2022.~~

Revenues for the Rail Products Group increased for the three months ended March 31, ~~2023~~2024 by ~~63.1%~~13.6%, when compared to the prior year ~~period. Revenues in our rail products business increased~~period primarily as a result of higher deliveries and favorable pricing, partially offset by the mix of railcars sold. Revenues in our maintenance services business increased as a result of higher volumes, favorable pricing, and the mix of repairs. Revenues in other were driven by the growth of our parts business, including the impact of acquisitions.deliveries.

Cost of revenues for the Rail Products Group increased for the three months ended March 31, ~~2023~~2024 by ~~56.4%~~10.7%, when compared to the prior year period. ~~In our rail products business, the~~The increase in cost of revenues was driven by higher deliveries, labor inefficiencies associated with onboarding of new employees, higher labor costs related to hiring and retention activities, and operational inefficiencies associated with supply chain disruptions. In our maintenance services business, cost of revenues increased as a result of a higher volume of general repairs and the mix of repairs and continues to be impacted by labor shortages leading to operating inefficiencies.

~~Operating profit~~ for the three months ended March 31, ~~2023~~2024 was ~~favorably impacted~~driven by higher deliveries and ~~improved pricing,~~the impact of foreign currency fluctuations, partially offset by operational efficiencies associated with reduced production line changeovers and fewer supply chain disruptions, and improved labor ~~inefficiencies, higher labor costs, and~~efficiencies when compared to the ~~mix of railcars sold. Additionally, during~~prior year period.

Operating profit for the Rail Products Group increased for the three months ended March 31, ~~2023~~2024 by 81.7%, when compared to the prior year period primarily due to higher deliveries and ~~2022, operating profit was favorably impacted by gains of $1.2 million~~improved operational and $6.4 million, respectively, related to insurance recoveries in excess of net book value for assets damaged by a tornado at the Company’s rail maintenance facility in Cartersville, Georgia in the first quarter of 2021.

~~Table of Contents~~

labor efficiencies.

Information related to our Rail Products Group backlog of new railcars is ~~as follows.~~set forth below. In addition to the amounts below, as of March 31, ~~2023,~~2024, our backlog related to sustainable railcar conversions totaled ~~$173.7~~$35.8 million, representing ~~2,085~~445 railcars.


		March 31,						March 31,
		2023		2022		Percent		2024		2023			Percent
		(in millions)				Change		(in millions)				Change
External customers	External customers	$	3,257.1	$	1,209.3
Leasing Group	Leasing Group	448.8		686.1
Leasing Group
Leasing Group
Total	Total	$	3,705.9	$	1,895.4	95.5	%
Total
Total								$	2,938.9	$	3,705.9		(20.7)	%

Three Months Ended
March 31,
2023 2022 Percent
Change
Beginning balance 32,270 13,980
Orders received 2,690 5,055 (46.8) %
Deliveries (4,045) (2,470) 63.8 %
Other adjustments (1)
— (300)
Ending balance 30,915 16,265 90.1 %
Average selling price in ending backlog $ 119,874 $ 116,532 2.9 %

~~(1)~~The adjustment for the three months ended March 31, 2022 includes 300 railcars valued at $34.6 million that were removed from the new railcar backlog and shifted to the sustainable railcar conversion backlog.


	Three Months Ended March 31,
		2024		2023		Percent
		(in units, $ in whole dollars)				Change
Beginning balance		25,890		32,270
Orders received		1,880		2,690		(30.1)	%
Deliveries		(4,695)		(4,045)		16.1	%

Ending balance		23,075		30,915		(25.4)	%
Average selling price in ending backlog		$	127,363	$	119,874	6.2	%

Total backlog dollars ~~increased~~decreased by ~~95.5%~~20.7% when compared to the prior year period due to an increase in the volume and average selling price of orders received primarily driven by a new long-term railcar supply agreement with GATX Corporation executed in the third quarter of 2022.period. We expect to deliver approximately ~~42.3%~~49.1% of our railcar backlog value during ~~2023~~the remaining nine months of 2024 and ~~22.5%~~20.4% during ~~2024,~~2025, with the remainder to be delivered through 2028. The orders in our backlog from the Leasing Group are fully supported by lease commitments with external customers. The final amount of backlog attributable to the Leasing Group may vary by the time of delivery as customers may elect to change their procurement decision.

Table of Contents

Transactions between the Rail Products Group and the Leasing Group are as follows:


				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
		Three Months Ended March 31,					2024	2023
		2023		2022
		($ in millions)
						($ in millions)			($ in millions)
Revenues:	Revenues:
New railcars	New railcars	$	134.3	$	58.0
New railcars
New railcars
Sustainable railcar conversions	Sustainable railcar conversions	$	39.0	$	22.0
Other maintenance services		$	26.1	$	21.3
Parts & components

Deferred profit
Deferred profit
Deferred profit	Deferred profit	$	16.8	$	8.8

Number of new railcars (in units)	Number of new railcars (in units)	1,020		455
Number of new railcars (in units)
Number of new railcars (in units)
Number of sustainable railcar conversions (in units)	Number of sustainable railcar conversions (in units)	390		195

~~Table of Contents~~

Corporate and other

Three Months Ended March 31,
2023 2022 Percent
(in millions) Change
Operating costs:
Selling, engineering, and administrative expenses $ 26.0 $ 22.2 17.1 %
Gains on dispositions of property — (6.5) *
Operating loss $ (26.0) $ (15.7) 65.6 %

* Not meaningful


	Three Months Ended March 31,
			2024		2023		Percent
		(in millions)			Change




Operating costs:

Selling, engineering, and administrative expenses			$	26.5	$	26.0	1.9	%

Operating loss			$	(26.5)	$	(26.0)	1.9	%

Selling, engineering, and administrative expenses for the three months ended March 31, ~~2023 increased 17.1%~~2024 were relatively flat when compared to the prior year ~~period, primarily from higher employee-related costs. Total operating costs during~~period. There were no gains or losses on dispositions of property for the three months ended March 31, ~~2022 were favorably impacted by gains associated with the disposition of non-operating facilities. As~~2024 and 2023; however, as we continue to streamline our operational footprint, we may have ~~additional~~ gains or losses on the disposition of ~~other~~ non-operating facilities.

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Liquidity and Capital Resources

Overview

We expect to finance future operating requirements with cash, cash equivalents, and short-term marketable securities; cash flows from operations; and short-term debt, long-term debt, and equity. Debt instruments that we have utilized include the TILC warehouse loan facility, senior notes, convertible subordinated notes, asset-backed securities, non-recourse promissory notes, ~~sale-leaseback transactions,~~ and our revolving credit facility.

As of March 31, ~~2023,~~2024, we have total committed liquidity of ~~$451.5~~$798.8 million. Our total available liquidity includes: ~~$81.9~~$118.8 million of unrestricted cash and cash equivalents; ~~$278.2~~$581.8 million unused and available under our revolving credit facility; and ~~$91.4~~$98.2 million unused and available under the TILC warehouse loan facility based on the amount of warehouse-eligible, unpledged equipment. We believe we have access to adequate capital resources to fund operating requirements and are an active participant in the capital markets.

~~The Company’s $400.0 million aggregate principal amount of~~ We intend to use cash from operations and our available liquidity to repay our 4.55% senior notes ~~are~~ due in 2024 ~~(“Senior Notes”). We are exploring various alternatives to refinance the~~ ("Senior Notes during 2023, including by issuing or incurring new debt. Any issuance or incurrence of new debt will depend on prevailing market conditions and other factors, and may have a material impact on our financial results.due 2024").

Liquidity Highlights

~~Revolving Credit~~TILC Warehouse Loan Facility – In March ~~2023,~~2024, we ~~amended our~~entered into a new TILC warehouse loan facility with a total commitment amount of $800.0 million, a revolving ~~credit~~termination date of March 15, 2027, and a maturity date of March 15, 2028. This warehouse loan facility ~~to increase~~replaced the total facility commitment from $450.0 million to $600.0 million, increase the maximum leverage ratio to provide additional flexibility, modify the limitations on restricted payments, and allow up to $100.0 million of annual dividends on the Company's common stock. prior $1.0 billion warehouse loan facility.

See Note 8 of the Consolidated Financial Statements for additional information regarding this ~~amendment.~~debt transaction.

Dividend Payments – We paid ~~$21.1~~$23.0 million in dividends to our common stockholders during the three months ended March 31, ~~2023.~~2024.

Share Repurchase Authorization – In December 2022, our Board of Directors authorized a ~~new~~ share repurchase program effective December 9, 2022 with no expiration. The ~~new~~ share repurchase program authorizes the Company to repurchase up to $250.0 million of its common stock. There were no shares repurchased during the three months ended March 31, ~~2023.~~2024.

Cash Flows

The following table summarizes our cash flows from operating, investing, and financing activities for the three months ended March 31, ~~2023~~2024 and ~~2022:~~2023:


		Three Months Ended March 31,				Three Months Ended March 31,
		2023		2022		2024	2023
		(in millions)				(in millions)
Net cash flows from continuing operations:	Net cash flows from continuing operations:
Operating activities	Operating activities	$	102.5	$	28.5
Operating activities
Operating activities
Investing activities	Investing activities	(203.1)		(0.2)
Financing activities	Financing activities	72.4		28.7
Net cash flows from discontinued operations	Net cash flows from discontinued operations	(3.1)		(8.0)
Net increase (decrease) in cash, cash equivalents, and restricted cash	Net increase (decrease) in cash, cash equivalents, and restricted cash	$	(31.3)	$	49.0

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Operating Activities. Net cash provided by operating activities from continuing operations for the three months ended March 31, ~~2023~~2024 was ~~$102.5~~$56.5 million compared to net cash provided by operating activities from continuing operations of ~~$28.5~~$102.5 million for the three months ended March 31, ~~2022.~~2023. The changes in our operating assets and liabilities are as follows:


		Three Months Ended March 31,
		2023		2022
		(in millions)
	Three Months Ended March 31,						Three Months Ended March 31,
	2024					2024		2023
	(in millions)						(in millions)
(Increase) decrease in receivables, inventories, and other assets	(Increase) decrease in receivables, inventories, and other assets	$	6.8	$	(42.1)

Increase (decrease) in accounts payable, accrued liabilities, and other liabilities	Increase (decrease) in accounts payable, accrued liabilities, and other liabilities	26.1		9.0
Increase (decrease) in accounts payable, accrued liabilities, and other liabilities
Increase (decrease) in accounts payable, accrued liabilities, and other liabilities
Changes in operating assets and liabilities	Changes in operating assets and liabilities	$	32.9	$	(33.1)

The changes in our operating assets and liabilities resulted in a net use of $52.3 million for the three months ended March 31, 2024, as compared to a net source of $32.9 million for the three months ended March 31, ~~2023, as compared to a net use of $33.1 million~~2023. The change in operating assets for the ~~three months ended March 31, 2022. Operating assets in the prior~~current year period ~~were~~was impacted by higher receivables balances, partially offset by lower inventory balances ~~in anticipation of higher volumes of~~associated with railcar ~~deliveries in future periods, as well as continued supply chain challenges.~~deliveries.

Investing Activities. Net cash used in investing activities from continuing operations for the three months ended March 31, ~~2023~~2024 was ~~$203.1~~$124.0 million compared to ~~$0.2~~$203.1 million of net cash used in investing activities from continuing operations for the three months ended March 31, ~~2022.~~2023. Significant investing activities are as follows:

•We made a net investment in our lease fleet of ~~$134.8~~$123.3 million during the three months ended March 31, ~~2023,~~2024, compared to ~~$13.5~~$134.8 million in the prior year period. Our investment in the lease fleet primarily includes new railcar additions, sustainable railcar conversions, railcar modifications, and other betterments, net of deferred profit, and secondary market purchases; and is net of proceeds from lease portfolio sales.

•During the three months ended March 31, 2023, we acquired a company that is a provider of proprietary software and logistics and terminal management solutions for net cash of $66.2 million. We had no acquisitions during the three months ended March 31, ~~2022.~~2024.

Financing Activities. Net cash provided by financing activities during the three months ended March 31, ~~2023~~2024 was ~~$72.4~~$71.8 million compared to ~~$28.7~~$72.4 million of net cash provided by financing activities for the three months ended March 31, ~~2022.~~2023. Significant financing activities are as follows:

•During the three months ended March 31, 2024, we had total borrowings of $909.9 million and total repayments of $803.8 million, for net proceeds of $106.1 million, primarily from debt proceeds to support our investment in the lease fleet and for general corporate purposes. During the three months ended March 31, 2023, we had total borrowings of $246.3 million and total repayments of $149.6 million, for net proceeds of $96.7 million, primarily from debt proceeds to support our investment in the lease fleet and for general corporate purposes. During the three months ended March 31, 2022, we had total borrowings of $127.2 million and total repayments of $73.0 million, for net proceeds of $54.2 million, primarily from debt proceeds to support our investment in the lease fleet.

•We paid ~~$21.1~~$23.0 million and ~~$19.1~~$21.1 million in dividends to our common stockholders during the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, respectively.

Current Debt Obligations

The revolving credit facility contains several financial covenants that require the maintenance of ratios related to minimum interest coverage for the leasing and manufacturing operations and maximum leverage. ~~In March 2023, we amended our revolving credit facility to increase the maximum leverage ratio to provide additional flexibility and to amend certain other terms.~~ A summary of our financial covenants is detailed below:

Ratio

Covenant

Actual at

March 31, ~~2023~~2024

Maximum leverage (1)

No greater than ~~4.25~~3.75 to 1.00

~~2.76~~2.01

Minimum interest coverage (2)

No less than 2.25 to 1.00

~~7.66~~8.20

(1) Defined as the ratio of consolidated total indebtedness to consolidated earnings before interest, taxes, depreciation and amortization ("EBITDA") for the Borrower and its restricted subsidiaries for the period of four consecutive quarters ending with March 31, ~~2023.~~2024.

(2) Defined as the ratio of the difference of (A) consolidated EBITDA less (B) consolidated capital expenditures – ~~manufacturing~~operating and ~~other~~administrative to consolidated interest expense to the extent paid in cash, in each case for the Borrower and its restricted subsidiaries for the period of four consecutive quarters ending with March 31, ~~2023.~~2024.

As of March 31, ~~2023,~~2024, we were in compliance with all such financial covenants. Please refer to Note 8 of the Consolidated Financial Statements for a description of our current debt obligations.

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Supplemental Guarantor Financial Information

Our Senior Notes due 2024 are fully and unconditionally and jointly and severally guaranteed by certain of Trinity’s 100%-owned subsidiaries: Trinity Industries Leasing Company; Trinity North American Freight Car, Inc.; Trinity Rail Group, LLC; Trinity Tank Car, Inc.; and TrinityRail Maintenance Services, Inc. (collectively, the "Guarantor Subsidiaries”).

The Senior Notes due 2024 indenture agreement includes customary provisions for the release of the guarantees by the Guarantor Subsidiaries upon the occurrence of certain allowed events including the release of one or more of the Guarantor Subsidiaries as guarantor under our revolving credit facility. See Note 89 of our ~~2022~~2023 Annual Report on Form 10-K. The Senior Notes due 2024 are not guaranteed by any of our remaining 100%-owned subsidiaries or partially-owned subsidiaries (“Non-Guarantor Subsidiaries”).

As of March 31, ~~2023,~~2024, assets held by the Non-Guarantor Subsidiaries included ~~$173.1~~$110.7 million of restricted cash that was not available for distribution to Trinity Industries, Inc. (“Parent”), ~~$7,255.5~~$7,223.9 million of equipment securing certain non-recourse debt, and $545.7 million of assets located in foreign locations. As of December 31, ~~2022,~~2023, assets held by the Non-Guarantor Subsidiaries included ~~$209.8~~$122.4 million of restricted cash that was not available for distribution to the Parent, ~~$7,153.3~~$7,157.8 million of equipment securing certain non-recourse debt, and ~~$571.7~~$590.0 million of assets located in foreign locations.

The following tables include the summarized financial information for Parent and Guarantor Subsidiaries (together, the obligor group) on a combined basis after elimination of intercompany transactions within the obligor group (in millions). Investments in and equity in the earnings of the Non-Guarantor Subsidiaries (the non-obligor group) have been excluded.


				Three Months Ended March 31, 2024				Three Months Ended March 31, 2024
Summarized Statement of Operations:
Revenues (1)
Revenues (1)
Revenues (1)
Cost of revenues (2)
Income from continuing operations
Net income (3)

					Three Months Ended March 31, 2023
Summarized Statement of Operations:
Revenues (1)					$	428.4
Cost of revenues (2)					$	394.9
Income (loss) from continuing operations					$	(8.1)
Net income (loss) (3)					$	(11.2)
		March 31, 2024

		March 31, 2024

		March 31, 2023			December 31, 2022
		March 31, 2024					December 31, 2023
Summarized Balance Sheets:	Summarized Balance Sheets:
Assets:	Assets:
Assets:
Assets:
Receivables, net of allowance (4)
Receivables, net of allowance (4)
Receivables, net of allowance (4)	Receivables, net of allowance (4)	$	304.3		$	317.3
Inventories	Inventories	$	573.6		$	577.0
Property, plant, and equipment, net	Property, plant, and equipment, net	$	442.6		$	471.8
Goodwill and other assets	Goodwill and other assets	$	387.5		$	399.7

Liabilities:	Liabilities:
Liabilities:
Liabilities:
Accounts payable and accrued liabilities (5)
Accounts payable and accrued liabilities (5)
Accounts payable and accrued liabilities (5)	Accounts payable and accrued liabilities (5)	$	381.5		$	371.4
Debt	Debt	$	704.3		$	624.1
Deferred income taxes	Deferred income taxes	$	962.7		$	949.8
Other liabilities	Other liabilities	$	152.0		$	156.6
Noncontrolling interest	Noncontrolling interest	$	256.2		$	257.2

(1) There were no net sales from the obligor group to Non-Guarantor Subsidiaries during the three months ended March 31, ~~2023.~~2024.

(2) Cost of revenues includes ~~$94.3~~$102.1 million of purchases from Non-Guarantor Subsidiaries during the three months ended March 31, ~~2023.~~2024.

(3) Net income ~~(loss)~~ includes ~~$3.1~~$4.3 million of net loss related to discontinued operations.

(4) Receivables, net of allowance includes ~~$87.4~~$87.9 million and ~~$87.9~~$87.7 million of receivables from Non-Guarantor Subsidiaries as of March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, respectively.

(5) Accounts payable includes ~~$52.6~~$96.5 million and ~~$57.8~~$109.8 million of payables to Non-Guarantor Subsidiaries as of March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, respectively.

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Capital Expenditures

For the full year ~~2023,~~2024, we anticipate a net investment in our lease fleet of between ~~$250~~$300 million and ~~$350~~$400 million. Capital expenditures related to ~~manufacturing~~operating and ~~other~~administrative activities, including ~~expansion~~supporting automation, technology, and modernization of our ~~fleet maintenance capabilities~~facilities and ~~systems upgrades,~~processes, are projected to range between ~~$40~~$50 million and ~~$50~~$60 million for the full year ~~2023.~~2024.

Equity Investment

See Note 5 of the Consolidated Financial Statements for information about our investment in partially-owned ~~leasing~~ subsidiaries.

Off Balance Sheet Arrangements

As of March 31, ~~2023,~~2024, we had letters of credit issued under our revolving credit facility in an aggregate amount of ~~$16.8~~$18.2 million, the majority of which are expected to expire in October ~~2023.~~2024. Our letters of credit obligations support performance bonds related to certain railcar orders. See Note 8 of the Consolidated Financial Statements for further information about our corporate revolving credit facility. Additionally, we had a letter of credit issued outside our revolving credit facility for $8.5 million. This letter of credit obligation replaces a required cash liquidity reserve to support the TILC warehouse loan facility and renews by its terms each year.

Derivative Instruments

~~LIBOR Transition~~

The United Kingdom's Financial Conduct Authority, which regulates the London Interbank Offered Rate ("LIBOR"), previously announced that it will no longer persuade or require banks to submit rates for the calculation of LIBOR after June 2023. In the U.S., the Alternative Reference Rates Committee has identified the Secured Overnight Financing Rate ("SOFR") as its preferred alternative to LIBOR. In February 2023, we amended the promissory notes and derivative instruments for Trinity Rail Leasing 2017 LLC to transition the facility benchmark rate from LIBOR to SOFR plus a benchmark adjustment. Following the completion of these amendments, we have no remaining LIBOR-based contracts.

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Non-GAAP Financial Measures

We have included financial measures compiled in accordance with GAAP and certain non-GAAP measures in this Quarterly Report on Form 10-Q to provide management and investors with additional information regarding our financial results. Non-GAAP measures should not be considered in isolation or as a substitute for our ~~reporting~~reported results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures for other companies. For each non-GAAP financial measure, we provide a reconciliation to the most comparable GAAP measure.

Adjusted Free Cash Flow

Adjusted Free Cash Flow After Investments and Dividends ("Adjusted Free Cash Flow") is a non-GAAP financial measure. We believe Adjusted Free Cash Flow is useful to both management and investors as it provides a relevant measure of liquidity and a useful basis for assessing our ability to fund our operations and repay our debt. Adjusted Free Cash Flow is reconciled to net cash provided by operating activities from continuing operations, the most directly comparable GAAP financial measure, in the following table.

Adjusted Free Cash Flow is defined as net cash provided by operating activities from continuing operations as computed in accordance with GAAP, plus cash proceeds from lease portfolio sales, less capital expenditures for ~~manufacturing,~~operating and administrative activities, dividends paid, and Equity CapEx for leased railcars. Equity CapEx for leased railcars is defined as ~~leasing~~ capital expenditures for our lease fleet, adjusted to exclude net proceeds from (repayments of) recourse and non-recourse debt.


		Three Months Ended March 31,
		2023		2022
		(in millions)
	Three Months Ended March 31,						Three Months Ended March 31,
	2024					2024		2023
	(in millions)						(in millions)
Net cash provided by operating activities – continuing operations	Net cash provided by operating activities – continuing operations	$	102.5	$	28.5
Proceeds from lease portfolio sales	Proceeds from lease portfolio sales	56.7		71.1
Capital expenditures – manufacturing and other		(7.1)		(2.3)
Dividends paid to common stockholders		(21.1)		(19.1)
Capital expenditures – operating and administrative
Dividends paid to common shareholders
Equity CapEx for leased railcars	Equity CapEx for leased railcars	(94.8)		(30.4)
Adjusted Free Cash Flow After Investments and Dividends	Adjusted Free Cash Flow After Investments and Dividends	$	36.2	$	47.8

Capital expenditures – leasing		$	191.5	$	84.6
Capital expenditures – lease fleet
Capital expenditures – lease fleet
Capital expenditures – lease fleet
Less:	Less:
Payments to retire debt
Payments to retire debt
Payments to retire debt	Payments to retire debt	(149.6)		(73.0)
Proceeds from issuance of debt	Proceeds from issuance of debt	246.3		127.2
Net proceeds from (repayments of) debt	Net proceeds from (repayments of) debt	96.7		54.2
Equity CapEx for leased railcars	Equity CapEx for leased railcars	$	94.8	$	30.4

Contractual Obligations and Commercial Commitments

Except as described below, as of March 31, ~~2023,~~2024, there have been no material changes to our contractual obligations from December 31, ~~2022:~~2023:

•In March ~~2023,~~2024, we ~~amended our~~entered into a new TILC warehouse loan facility with a total commitment amount of $800.0 million, a revolving ~~credit~~termination date of March 15, 2027, and a maturity date of March 15, 2028. This warehouse loan facility ~~to increase~~replaced the ~~total facility commitment from $450.0 million to $600.0 million and to amend certain other terms.~~prior $1.0 billion warehouse loan facility.

See Note 8 of the Consolidated Financial Statements for additional information regarding this ~~amendment.~~debt transaction.

Recent Accounting Pronouncements

See Note 1 of the Consolidated Financial Statements for information about recent accounting pronouncements.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

There has been no material change in our market risks since December 31, ~~2022~~2023 as set forth in Item 7A of our ~~2022~~2023 Annual Report on Form 10-K. Refer to Note 3 and Note 8 of the Consolidated Financial Statements for a discussion of the impact of hedging activity and debt-related activity, respectively, for the three months ended March 31, ~~2023.~~2024.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that we are able to collect and record the information we are required to disclose in the reports we file with the SEC, and to process, summarize, and disclose this information within the time periods specified in the rules of the SEC. Our Chief Executive and Chief Financial Officers are responsible for establishing and maintaining these procedures and, as required by the rules of the SEC, evaluating their effectiveness. Based on their evaluation of our disclosure controls and procedures that took place as of the end of the period covered by this report, the Chief Executive and Chief Financial Officers concluded that these procedures are effective to 1) ensure that we are able to collect, process, and disclose the information we are required to disclose in the reports we file with the SEC within the required time periods and 2) accumulate and communicate this information to our management, including our Chief Executive and Chief Financial Officers, to allow timely decisions regarding this disclosure.

Internal Controls over Financial Reporting

During the period covered by this report, there have been no changes in our internal controls over financial reporting that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting.

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PART II

Item 1. Legal Proceedings

The information provided in Note 14 of the Consolidated Financial Statements is hereby incorporated into this Part II, Item 1 by reference.

Item 1A. Risk Factors

There have been no material changes from the risk factors previously disclosed in Item 1A of our ~~2022~~2023 Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds, and Issuer Purchases of Equity Securities

This table provides information with respect to purchases by the Company of shares of its common stock during the quarter ended March 31, ~~2023:~~2024:

Period
Number of Shares Purchased (1)
Average Price Paid per Share (1)
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)
Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (2)
(in millions)
January 1, 2023 through January 31, 2023 4,625 $ 27.77 — $ 250.0
February 1, 2023 through February 28, 2023 6,967 $ 28.29 — $ 250.0
March 1, 2023 through March 31, 2023 207 $ 23.96 — $ 250.0
Total 11,799 —


Period	Number of Shares Purchased (1)	Average Price Paid per Share (1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (2) (in millions)
January 1, 2024 through January 31, 2024	8,345	$	26.03	—	$	250.0
February 1, 2024 through February 29, 2024	726	$	25.57	—	$	250.0
March 1, 2024 through March 31, 2024	822	$	27.79	—	$	250.0
Total	9,893			—

(1) These columns include the following transactions during the three months ended March 31, ~~2023:~~2024: (i) the surrender to the Company of ~~11,438~~9,754 shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock issued to ~~employees,~~employees; and (ii) the purchase of ~~361~~139 shares of common stock by the Trustee for assets held in a non-qualified employee profit sharing plan trust.

(2) In December 2022, our Board of Directors authorized a ~~new~~ share repurchase program effective December 9, 2022 with no expiration. The ~~new~~ share repurchase program authorizes the Company to repurchase up to $250.0 million of its common stock. There were no shares repurchased under ~~the new~~this share repurchase program during the three months ended March 31, ~~2023.~~2024. The approximate dollar value of shares that were eligible to be repurchased under our share repurchase program is shown as of the end of such month or quarter.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

~~None.~~During the three months ended March 31, 2024, none of our directors or executive officers informed the Company of the adoption or termination of a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement", as those terms are defined in Item 408 of SEC Regulation S-K.

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Item 6. Exhibits


NO.						DESCRIPTION
~~3.1~~10.1						~~Amended and Restated Bylaws of Trinity Industries, Inc., effective March 6, 2023 (filed herewith).~~
~~10.1~~						~~Amendment No. 2 to Second Amended and Restated Credit~~Warehouse Loan Agreement dated as of March ~~6, 2023, by and~~15, 2024, among ~~the~~Trinity Rail Leasing Warehouse Trust, Trinity Industries ~~Inc., JPMorgan Chase Bank, N.A.~~Leasing Company, Atlas Securitized Products Administration, L.P., as ~~administrative~~Agent, the Lenders, and U.S. Bank Trust Company, National Association, not in its individual capacity, but solely in its capacity as collateral agentand ~~the other parties thereto~~depositary (incorporated by reference to Exhibit 10.1 to our Form 8-K filed on March ~~9, 2023).~~
~~10.2~~						Third Amendment and Waiver to the Fifth Amended and Restated Warehouse Loan Agreement dated as of March 7, 2023, by and among Trinity Industries Leasing Company, Trinity Rail Leasing Warehouse Trust, Atlas Securities Products Holdings, L.P, as agent, Wilmington Trust Company, as collateral agent and depositary, and the other parties thereto (filed herewith).
~~10.3~~						Amendment No. 3 to Amended and Restated Term Loan Agreement, dated as of February 15, 2023, among Trinity Rail Leasing 2017 LLC, Crédit Agricole Corporate and Investment Bank, as Administrative Agent for the Lenders; the Lenders; U.S. Bank National Association, as Custodian and Depositary; and U.S. Bank Trust Company, National Association, as Collateral Agent (filed herewith)18, 2024).
22.1						Subsidiary guarantors and issuers of guaranteed securities (filed herewith).
31.1						Rule 13a-15(e) and 15d-15(e) Certification of the Chief Executive Officer (filed herewith).
31.2						Rule 13a-15(e) and 15d-15(e) Certification of the Chief Financial Officer (filed herewith).
32.1						Certification pursuant to 18U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.2						Certification pursuant to 18U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
101.INS						Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH						Inline XBRL Taxonomy Extension Schema Document (filed electronically herewith).
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed electronically herewith).
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document (filed electronically herewith).
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed electronically herewith).
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document (filed electronically herewith).
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

_____________________________

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, ~~as amended,~~ the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


TRINITY INDUSTRIES, INC.	By:	/s/ Eric R. Marchetto
Registrant
		Eric R. Marchetto
		Executive Vice President and Chief Financial Officer
		May ~~2, 2023~~1, 2024

5354


Caption			Page
PART I FINANCIAL INFORMATION
Item 1. Financial Statements			3
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			3132
Item 3. Quantitative and Qualitative Disclosures About Market Risk			5051
Item 4. Controls and Procedures			5051

PART II OTHER INFORMATION
Item 1. Legal Proceedings			5152
Item 1A. Risk Factors			5152
Item 2. Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds, and Issuer Purchases of Equity Securities			5152
Item 3. Defaults Upon Senior Securities			5152
Item 4. Mine Safety Disclosures			5152
Item 5. Other Information			5152
Item 6. Exhibits			5253

SIGNATURES			5354


	March 31, 2023
	Wholly- Owned Subsidiaries		Partially-Owned Subsidiaries		Total Leasing Group		Eliminations – Lease Subsidiary(1)		Adjusted Total Leasing Group
	(in millions)
Cash and cash equivalents	$	10.5	$	—	$	10.5	$	—	$	10.5
Accounts receivable	110.7		10.4		121.1		—		121.1
Property, plant, and equipment, net	5,888.1		1,509.9		7,398.0		(763.4)		6,634.6
Restricted cash	107.0		74.1		181.1		—		181.1
Other assets	204.7		1.9		206.6		—		206.6
Total assets	$	6,321.0	$	1,596.3	$	7,917.3	$	(763.4)	$	7,153.9

Accounts payable and accrued liabilities	$	125.8	$	39.3	$	165.1	$	—	$	165.1
Debt, net	3,826.9		1,176.4		5,003.3		—		5,003.3
Deferred income taxes	1,151.3		1.1		1,152.4		(167.2)		985.2
Other liabilities	37.5		—		37.5		—		37.5
Total liabilities	5,141.5		1,216.8		6,358.3		(167.2)		6,191.1
Noncontrolling interest	—		256.2		256.2		—		256.2
Total Equity	$	1,179.5	$	123.3	$	1,302.8	$	(596.2)	$	706.6