What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-04-27 compared with 2021-10-26 · 290 added, 489 removed, 660 unchanged (54% of the section changed)

4 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

(in millions, except per share amounts)

1 unchanged sentence

Leasing 182.9 183.3

503.5 459.4 1,273.8 1,583.8

Operating costs:

2 unchanged sentences

Leasing 102.9 96.7

398.7 334.5 953.9 1,213.1

Selling, engineering, and administrative expenses:

2 unchanged sentences

Other 22.2 24.8

54.3 51.2 166.4 172.3

Gains on dispositions of property:

Lease portfolio sales (Note 1) 32.9 2.9 45.7 17.3

Lease portfolio sales 11.8 1.7

Other 13.5 9.8

41.6 3.9 65.2 20.1

Impairment of long-lived assets — — — 369.4

Restructuring activities, net — ( 0.3 )

Total operating profit (loss) 92.2 72.9 219.8 ( 161.4 )

Total operating profit 54.8 51.5

Other (income) expense:

Interest expense, net 43.5 51.3

Loss on extinguishment of debt — — 11.7 5.0

Other, net ( 1.6 ) 1.2

44.5 53.7 160.5 164.1

Income (loss) from continuing operations before income taxes 12.9 ( 1.0 )

2 unchanged sentences

Deferred 1.2 ( 0.7 )

11.4 ( 6.7 ) 16.5 ( 226.1 )

Income (loss) from continuing operations 9.9 ( 5.0 )

Loss from discontinued operations, net of provision (benefit) for income taxes of $ 0.4 , $ — , $ 0.8 , and $( 0.1 )

( 0.4 ) — ( 0.8 ) ( 0.2 )

Net income (loss) 35.9 25.9 42.0 ( 99.6 )

Income (loss) from discontinued operations, net of provision (benefit) for income taxes of $( 2.0 ) and $ 2.3

Loss on sale of discontinued operations, net of benefit for income taxes of $ 0.4 and $ —

Net income 1.9 1.3

Net income (loss) attributable to noncontrolling interest 2.6 ( 2.0 )

19 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

(in millions)

Net income (loss) $ 35.9 $ 25.9 $ 42.0 $ ( 99.6 )

Net income $ 1.9 $ 1.3

Other comprehensive income (loss):

Derivative financial instruments:

Unrealized gains (losses) arising during the period, net of tax benefit (expense) of $ 0.2 , $( 0.6 ), $( 1.5 ), and $ 7.6

( 0.8 ) 2.0 5.0 ( 25.3 )

Reclassification adjustments for losses included in net income, net of tax benefit of $ 0.3 , $ 1.3 , $ 0.6 , and $ 3.0

1.8 4.7 2.9 10.6

Unrealized gains arising during the period, net of tax expense of $ 4.4 and $ 2.0

Reclassification adjustments for (gains) losses included in net income, net of tax benefit of $ 0.9 and $ 0.9

Defined benefit plans:

Amortization of prior service cost, net of tax benefit of $ — , $ 0.1 , $ — , and $ 0.3

Amortization of net actuarial losses, net of tax benefit of $ — and $ —

— 1.2 0.1 3.6

1.0 8.1 8.0 ( 10.5 )

Comprehensive income (loss) 36.9 34.0 50.0 ( 110.1 )

Comprehensive income 19.2 6.7

comprehensive income (loss) attributable to noncontrolling interest 2.8 ( 1.7 )

Comprehensive income (loss) attributable to Trinity Industries, Inc.

$ 32.7 $ 32.9 $ 55.0 $ ( 31.5 )

Comprehensive income attributable to Trinity Industries, Inc.

See accompanying notes to Consolidated Financial Statements.

2 unchanged sentences

Consolidated Balance Sheets

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

(in millions)

29 unchanged sentences

Retained earnings 1,026.6 1,046.6

Accumulated other comprehensive loss ( 23.9 ) ( 30.9 )

Accumulated other comprehensive income (loss) 0.1 ( 17.0 )

Treasury stock ( 0.8 ) ( 0.6 )

7 unchanged sentences

Consolidated Statements of Cash Flows

Nine Months Ended

September 30,

Three Months Ended

(in millions)

Operating activities:

Net income (loss) $ 42.0 $ ( 99.6 )

Loss from discontinued operations, net of income taxes 0.8 0.2

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Net income $ 1.9 $ 1.3

(Income) loss from discontinued operations, net of income taxes 6.9 ( 6.3 )

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:

Depreciation and amortization 66.9 64.6

Stock-based compensation expense 5.1 5.1

Provision for deferred income taxes 10.6 245.1

Provision (benefit) for deferred income taxes 1.2 ( 0.7 )

Net gains on lease portfolio sales ( 10.5 ) ( 1.7 )

1 unchanged sentence

Gains on insurance recoveries from property damage ( 6.4 ) —

Impairment of long-lived assets — 369.4

Non-cash impact of restructuring activities — 5.9

Non-cash interest expense 3.3 3.0

Loss on early extinguishment of debt 11.7 5.0

Other 0.5 5.4

8 unchanged sentences

Net cash provided by operating activities – continuing operations 28.5 69.3

Net cash used in operating activities – discontinued operations ( 0.8 ) ( 0.2 )

Net cash provided by (used in) operating activities – discontinued operations ( 8.0 ) 0.4

Net cash provided by operating activities 20.5 69.7

2 unchanged sentences

Proceeds from lease portfolio sales 71.1 17.3

Capital expenditures – leasing (net of sold lease fleet railcars owned one year or less with a net cost of $ 54.0 for the nine months ended September 30, 2020)

( 363.9 ) ( 448.8 )

Capital expenditures – leasing ( 84.6 ) ( 107.9 )

Capital expenditures – manufacturing and other ( 2.3 ) ( 7.4 )

Acquisitions, net of cash acquired — ( 16.6 )

Proceeds from insurance recoveries 6.5 —

Net cash provided by (used in) investing activities 43.6 ( 361.0 )

Other — ( 0.1 )

Net cash used in investing activities – continuing operations ( 0.2 ) ( 94.9 )

Net cash used in investing activities – discontinued operations — ( 1.1 )

Net cash used in investing activities ( 0.2 ) ( 96.0 )

Financing activities:

4 unchanged sentences

Purchase of shares to satisfy employee tax on vested stock ( 0.2 ) ( 0.1 )

Contributions from (distributions to) noncontrolling interest ( 6.8 ) 6.1

Other — ( 0.2 )

Net cash used in financing activities ( 354.1 ) ( 151.3 )

Net increase (decrease) in cash, cash equivalents, and restricted cash 116.7 ( 55.7 )

Distributions to noncontrolling interest ( 6.2 ) —

Net cash provided by financing activities 28.7 83.4

Net increase in cash, cash equivalents, and restricted cash 49.0 57.1

Cash, cash equivalents, and restricted cash at beginning of period 302.4 228.4

4 unchanged sentences

Consolidated Statements of Stockholders' Equity

Stock Capital in

Common Stock Capital in

Par Value Retained

1 unchanged sentence

Comprehensive

Loss Treasury

Stock Trinity

Income (Loss) Treasury Stock Trinity

Stockholders’

13 unchanged sentences

— — 5.1 — — — — 5.1 — 5.1

Shares repurchased — — — — — ( 1.3 ) ( 36.8 ) ( 36.8 ) — ( 36.8 )

Settlement of share-based awards, net — — 0.2 — — — ( 0.2 ) — — —

March 31, 2021

111.2 $ 1.1 $ 6.1 $ 1,749.4 $ ( 25.8 ) ( 1.4 ) $ ( 38.4 ) $ 1,692.4 $ 275.5 $ 1,967.9

Net income (loss) — — — 12.7 — — — 12.7 ( 7.9 ) 4.8

Other comprehensive income

— — — — 1.2 — — 1.2 0.4 1.6

Cash dividends declared on common stock (1)

— — — ( 21.0 ) — — — ( 21.0 ) — ( 21.0 )

Stock-based compensation expense

— — 4.4 — — — — 4.4 — 4.4

Shares repurchased — — — — — ( 10.5 ) ( 290.8 ) ( 290.8 ) — ( 290.8 )

Settlement of share-based awards, net 1.1 — 0.1 — — ( 0.3 ) ( 9.1 ) ( 9.0 ) — ( 9.0 )

Retirement of treasury stock

( 12.2 ) ( 0.1 ) ( 10.6 ) ( 327.0 ) — 12.2 337.7 — — —

June 30, 2021

100.1 $ 1.0 $ — $ 1,414.1 $ ( 24.6 ) — $ ( 0.6 ) $ 1,389.9 $ 268.0 $ 1,657.9

Net income — — — 32.0 — — — 32.0 3.9 35.9

Other comprehensive income — — — — 0.7 — — 0.7 0.3 1.0

Cash dividends declared on common stock (1)

— — — ( 20.9 ) — — — ( 20.9 ) — ( 20.9 )

Stock-based compensation expense

— — 6.5 — — — — 6.5 — 6.5

Shares repurchased — — — — — ( 2.8 ) ( 77.1 ) ( 77.1 ) — ( 77.1 )

Settlement of share-based awards, net 0.1 — 0.4 — — ( 0.1 ) ( 0.5 ) ( 0.1 ) — ( 0.1 )

Distributions to noncontrolling interest

September 30, 2021

— — — — — — — — ( 6.2 ) ( 6.2 )

(1) Dividends of $ 0.21 per common share for all periods presented in 2021.

Stock Capital in

March 31, 2022

83.3 $ 0.8 $ 5.3 $ 1,026.6 $ 0.1 — $ ( 0.8 ) $ 1,032.0 $ 263.6 $ 1,295.6

Common Stock Capital in

Par Value Retained

1 unchanged sentence

Comprehensive

Loss Treasury

Stock Trinity

Loss Treasury Stock Trinity

Stockholders’

7 unchanged sentences

111.2 $ 1.1 $ — $ 1,769.4 $ ( 30.9 ) ( 0.1 ) $ ( 0.8 ) $ 1,738.8 $ 277.2 $ 2,016.0

Net income — — — 161.7 — — — 161.7 0.6 162.3

Other comprehensive income (loss) — — — — ( 23.5 ) — — ( 23.5 ) 0.3 ( 23.2 )

Cash dividends declared on common stock (1)

— — — ( 24.6 ) — — — ( 24.6 ) — ( 24.6 )

Stock-based compensation expense

— — 7.3 — — — — 7.3 — 7.3

Shares repurchased — — — — — ( 1.9 ) ( 35.4 ) ( 35.4 ) — ( 35.4 )

Settlement of share-based awards, net — — 0.7 — — — ( 0.9 ) ( 0.2 ) — ( 0.2 )

Cumulative effect of adopting new accounting standard

— — — 0.5 — — — 0.5 — 0.5

March 31, 2020

119.7 $ 1.2 $ 8.0 $ 2,321.0 $ ( 176.6 ) ( 2.0 ) $ ( 37.2 ) $ 2,116.4 $ 349.7 $ 2,466.1

Net loss — — — ( 206.9 ) — — — ( 206.9 ) ( 80.9 ) ( 287.8 )

Net income (loss) — — — 3.3 — — — 3.3 ( 2.0 ) 1.3

Other comprehensive income — — — — 5.1 — — 5.1 0.3 5.4

3 unchanged sentences

— — 5.1 — — — — 5.1 — 5.1

Retirement of treasury stock

( 2.5 ) — ( 17.5 ) ( 30.2 ) — 2.5 47.7 — — —

Settlement of share-based awards, net — — 1.0 — — — ( 0.8 ) 0.2 — 0.2

June 30, 2020

118.7 $ 1.2 $ — $ 2,063.3 $ ( 172.3 ) ( 0.1 ) $ ( 0.9 ) $ 1,891.3 $ 269.1 $ 2,160.4

Net income — — — 25.1 — — — 25.1 0.8 25.9

Other comprehensive income — — — — 7.8 — — 7.8 0.3 8.1

Cash dividends declared on common stock (1)

— — — ( 21.6 ) — — — ( 21.6 ) — ( 21.6 )

Stock-based compensation expense

— — 4.8 — — — — 4.8 — 4.8

Shares repurchased — — — — — ( 1.3 ) ( 36.8 ) ( 36.8 ) — ( 36.8 )

— — — — — ( 4.5 ) ( 89.9 ) ( 89.9 ) — ( 89.9 )

Settlement of share-based awards, net — — 0.5 — — — ( 0.7 ) ( 0.2 ) — ( 0.2 )

Contributions from noncontrolling interest — — — — — — — — 6.1 6.1

September 30, 2020

March 31, 2021

111.2 $ 1.1 $ 6.1 $ 1,749.4 $ ( 25.8 ) ( 1.4 ) $ ( 38.4 ) $ 1,692.4 $ 275.5 $ 1,967.9

(1) Dividends of $ 0.19 per common share for all periods presented in 2020.

(1) Dividends of $ 0.23 and $ 0.21 per common share for the three months ended March 31, 2022 and 2021, respectively.

See accompanying notes to Consolidated Financial Statements.

6 unchanged sentences

and its consolidated 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"), 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 September 30, 2021, and the results of operations for the three and nine months ended September 30, 2021 and 2020, and cash flows for the nine months ended September 30, 2021 and 2020, have been made in conformity with generally accepted accounting principles.

In our opinion, all normal and recurring adjustments necessary for a fair presentation of our financial position as of March 31, 2022, and the results of operations and cash flows for the three months ended March 31, 2022 and 2021, 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 2022 presentation.

Due to seasonal and other factors, including the impacts of the coronavirus pandemic (“COVID-19”) and the related governmental response, the results of operations for the nine months ended September 30, 2021 may not be indicative of expected results of operations for the year ending December 31, 2021.

Due to seasonal and other factors, including the ongoing impacts of the coronavirus pandemic (“COVID-19”), the results of operations for the three months ended March 31, 2022 may not be indicative of expected results of operations for the year ending December 31, 2022.

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, 2021.

Sale of Highway Products Business

In the fourth quarter of 2021, the Company completed the sale of Trinity Highway Products, LLC (“THP”), a wholly-owned subsidiary of the Company, and certain direct and indirect subsidiaries of THP, to Rush Hour Intermediate II, LLC ("Rush Hour"), an entity owned by an affiliated investment fund of Monomoy Capital Partners, for an aggregate purchase price of $ 375.0 million, subject to certain adjustments.

We concluded that the sale of THP represented a strategic shift that will have a major effect on the Company’s operations and financial results.

Accordingly, we have presented the operating results and cash flows of THP as discontinued operations for all periods in this Quarterly Report on Form 10-Q.

Results of prior periods have been recast to reflect these changes and present results on a comparable basis.

See Note 2 for further information related to the sale of THP.

Revenue Recognition

13 unchanged sentences

Interest income related to sales-type leases is recognized over the lease term using the effective interest method.

We had no sales-type leases as of September 30, 2021 and December 31, 2020.

During the fourth quarter of 2020, we began presenting sales from our lease fleet in the Railcar Leasing and Management Services Group on a net basis regardless of the age of railcar that is sold.

Historically, in accordance with ASC 606, Revenue from contracts with customers , we presented sales of railcars from the lease fleet on a gross basis in Revenues – Leasing and Cost of revenues – Leasing in our Consolidated Statements of Operations if the railcars had been owned for one year or less at the time of sale.

Sales of railcars from the lease fleet owned for more than one year had historically been presented as a net gain or loss from the disposal of a long-term asset.

We now report all sales of railcars from the lease fleet as a net gain or loss from the disposal of a long-term asset in accordance with ASC 610-20, Gains and losses from the derecognition of non-financial assets.

See "Lease Accounting" below for additional information regarding sales-type leases as of March 31, 2022.

We had no sales-type leases as of December 31, 2021.

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 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.

however, because this change in presentation was effected on a prospective basis beginning in the fourth quarter of 2020, lease portfolio sales for the three and nine months ended September 30, 2020 only include sales of railcars from the lease fleet owned for more than one year.

We have concluded that the new presentation is appropriate given the significant change in the strategic focus of the Company.

The new presentation had no effect on the Company’s operating profit, net income, earnings per share, or Consolidated Balance Sheet.

We account for shipping and handling costs as activities to fulfill the promise to transfer the good;

2 unchanged sentences

Rail Products Group

Our railcar manufacturing business recognizes revenue when the customer has submitted its certificate of acceptance and legal title of the railcar has passed to the customer.

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 steel-price indices;

this amount represents variable consideration for which we are unable to estimate the final consideration until the railcar is delivered.

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 incurred relative to the total estimated costs of performing the project.

We recorded contract assets of $ 5.8 million and $ 4.4 million as of September 30, 2021 and December 31, 2020, respectively, related to unbilled revenues recognized on repair and maintenance services 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.

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 $ 12.9 million and $ 4.5 million as of March 31, 2022 and December 31, 2021, respectively, related 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.

Our highway products business recognizes revenue when shipment has occurred and legal title of the product has passed to the customer.

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 September 30, 2021 and the percentage of the outstanding performance obligations as of September 30, 2021 expected to be delivered during the remainder of 2021:

Unsatisfied performance obligations at September 30, 2021

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, 2022 and the percentage of the outstanding performance obligations as of March 31, 2022 expected to be delivered during the remainder of 2022:

Unsatisfied performance obligations at March 31, 2022

Amount Percent expected to be delivered in 2022

6 unchanged sentences

Sustainable railcar conversions $ 128.2 95.6 %

$ 98.3 25.8 %

Maintenance services $ 2.2 100.0 %

Railcar Leasing and Management Services Group $ 69.8 17.8 %

(1) During 2021, the Rail Products Group introduced a sustainable railcar conversion program whereby certain tank cars and freight cars are converted or upgraded to better meet the changing market demands.

The remainder of the unsatisfied performance obligations for the Rail Products Group is expected to be delivered through 2025.

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 choose 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.

1 unchanged sentence

We are the lessee of operating leases predominantly for railcars, as well as office buildings, manufacturing equipment, and office equipment.

Our operating leases have remaining lease terms ranging from one year to sixteen 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 September 30, 2021, 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.

As applicable, the lease liability is also reduced by the amount of lease incentives that have not yet been reimbursed by the lessor.

Our operating leases have remaining lease terms ranging from one year to fifteen 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, 2022, we had no material finance leases in which we were the lessee.

As applicable, the lease liability is reduced by the amount of lease incentives that have not yet been reimbursed by the lessor.

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

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Consolidated Statements of Operations

1 unchanged sentence

Short-term lease expense $ 0.1 $ —

September 30, 2021 December 31, 2020

Consolidated Statements of Cash Flows

Cash flows from operating activities $ 4.2 $ 3.5

Right-of-use assets recognized in exchange for new lease liabilities $ 11.1 $ 11.0

March 31, 2022 December 31, 2021

Consolidated Balance Sheets

5 unchanged sentences

Weighted average discount rate 2.9 % 3.0 %

Nine Months Ended

September 30,

Consolidated Statements of Cash Flows

Cash flows from operating activities $ 12.1 $ 12.2

Right-of-use assets recognized in exchange for new lease liabilities (3)

$ 26.6 $ 53.6

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

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

(3) Includes the commencement of the new headquarters facility for the nine months ended September 30, 2020 .

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

Leasing Group Non-Leasing Group Total

Remaining three months of 2021 $ 2.9 $ 1.1 $ 4.0

Remaining nine months of 2022 $ 9.2 $ 5.7 $ 14.9

2023 10.5 7.2 17.7

10 unchanged sentences

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 options to terminate within one year with certain notice requirements and early termination penalties.

As of September 30, 2021, non-Leasing Group operating leases were not significant, and we had no sales-type leases and 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 are active participants in secondary markets.

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, 2022, non-Leasing Group operating leases were not significant, and we had no direct finance leases.

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.

2 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

(in millions)

1 unchanged sentence

Variable operating lease revenues $ 13.2 $ 13.4

Interest income on sales-type lease receivables $ 0.1 $ —

Profit recognized at sales-type lease commencement (1)

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

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

Remaining three months of 2021 $ 146.7

Remaining nine months of 2022 $ 421.4

Thereafter 283.2

1 unchanged sentence

(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 2022 $ 0.8

Thereafter 11.0

Unearned interest income ( 5.5 )

Net investment in sales-type leases (1)

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

Financial Instruments

1 unchanged sentence

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 and investment grade, short-term debt instruments and limit the amount of credit exposure to any one commercial issuer.

We place our cash investments in bank deposits, investment grade, short-term debt instruments, 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.

4 unchanged sentences

When a receivable is deemed uncollectible, the write-off is recorded as a reduction to allowance for credit losses.

The balance of the allowance for credit losses that are in the scope of ASC 326, Financial Instruments - Credit Losses was $ 10.1 million and $ 9.3 million at September 30, 2021 and December 31, 2020, respectively.

During the three months ended March 31, 2022, we recognized approximately $ 0.5 million of credit loss expense and wrote off $ 1.0 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 $ 10.5 million at December 31, 2021 to $ 10.0 million at March 31, 2022.

This balance excludes the general reserve for operating lease receivables that is permitted under ASC 450, Contingencies .

3 unchanged sentences

This transaction resulted in goodwill of $ 7.0 million.

There was no acquisition activity for the three and nine months ended September 30, 2020.

As of September 30, 2021 and December 31, 2020, the carrying amount of our goodwill totaled $ 215.8 million and $ 208.8 million, respectively, which is primarily attributable to the Rail Products Group.

There was no acquisition activity for the three months ended March 31, 2022.

As of both March 31, 2022 and December 31, 2021, the carrying amount of our goodwill totaled $ 154.2 million, which is primarily attributable to the Rail Products Group.

We provide various express, limited product warranties that generally range from one year to five years depending on the product.

3 unchanged sentences

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 and nine months ended September 30, 2021 and 2020 are as follows:

The changes in the accruals for warranties for the three months ended March 31, 2022 and 2021 are as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

(in millions)

4 unchanged sentences

Ending balance $ 3.2 $ 6.9

Discontinued Operations

Sale of Highway Products Business

In the fourth quarter of 2021, we completed the sale of our highway products business, THP.

The sale closed on December 31, 2021, and we received net proceeds of approximately $ 364.7 million, after certain adjustments and closing costs.

During the three months ended March 31, 2022, we recorded a loss of $ 1.5 million ($ 1.1 million, net of income taxes) related to additional transaction costs incurred in the period.

We concluded that the sale of THP represented a strategic shift that will have a major effect on the Company’s operations and financial results.

Accordingly, we have presented the operating results and cash flows of THP as discontinued operations for all periods in this Quarterly Report on Form 10-Q.

In connection with the sale, Trinity and Rush Hour entered into various agreements to effect the transaction and provide a framework for their relationship after the separation, including a purchase and sale agreement, a transition services agreement, and a lease agreement.

The transition services have various durations ranging between one and eighteen months.

We have determined that the continuing cash flows generated by these agreements do not constitute significant continuing involvement in the operations of THP.

The amount billed for transition services provided under the above agreements is not expected to be material to our results of operations.

Additionally, in connection with the sale of THP, the Company has 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 were directly attributable to the highway products business, which were previously reported in continuing operations.

Similar expenses incurred during the three months ended March 31, 2022 and that may be incurred in the future related to these retained obligations will likewise be reported in discontinued operations.

See Note 14 for further information regarding obligations retained in connection with the THP sale.

The following is a summary of THP's operating results included in income (loss) from discontinued operations for the three months ended March 31, 2022 and 2021:

Three Months Ended

(in millions)

Revenues $ — $ 68.1

Cost of revenues — 49.5

Selling, engineering, and administrative expenses 8.9 10.0

Income (loss) from discontinued operations before income taxes ( 8.9 ) 8.6

Provision (benefit) for income taxes ( 2.0 ) 1.9

Income (loss) from discontinued operations, net of income taxes $ ( 6.9 ) $ 6.7

Other discontinued operations

In addition to the THP operating results above, a loss of $ 0.4 million included in income (loss) from discontinued operations, net of income taxes for the three months ended March 31, 2021 related to the spin-off of Arcosa, Inc.

Derivative Instruments and Fair Value Accounting

1 unchanged sentence

We use derivative instruments to mitigate the impact of changes in interest rates, both in anticipation of future debt issuances and to offset interest rate variability of certain floating rate debt issuances outstanding.

We also may use derivative instruments to mitigate the impact of changes in natural gas and diesel fuel prices and 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 loss ("AOCL") as a separate component of stockholders' equity and reclassified into earnings in the period during which the hedged transaction affects earnings.

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.

We continuously monitor our derivative positions and the credit ratings of our counterparties and do not anticipate losses due to non-performance.

2 unchanged sentences

Included in accompanying balance sheet

at September 30, 2021

AOCL – loss/(income)

at March 31, 2022

AOCI – loss/(income)

Notional Amount Interest Rate (1)

Asset/(Liability) Controlling Interest Noncontrolling Interest

(in millions, except %)

($ in millions)

Expired hedges:

6 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30, Expected effect during next twelve months

2021 2020 2021 2020

March 31, Expected effect during next twelve months

(in millions)

1 unchanged sentence

2018 secured railcar equipment notes

$ — $ 0.1 $ 0.2

TRIP Holdings warehouse loan $ 0.4 $ 0.5 $ 0.9

Triumph Rail secured railcar equipment notes $ — $ 0.1 $ 0.1 $ 0.2 $ —

2017 promissory notes – interest rate cap $ — $ — $ ( 0.1 )

1 unchanged sentence

2017 promissory notes – interest rate swap $ 2.8 $ 3.1 $ 11.2

(1) Based on the fair value of open hedges as of September 30, 2021.

Other Derivatives

(1) Based on the fair value of open hedges as of March 31, 2022.

Foreign Currency Hedge

Our exposure related to foreign currency transactions is currently hedged for up to a maximum of twelve months.

The effect of commodity hedge transactions was immaterial to the Consolidated Financial Statements for all periods presented herein.

Information related to our foreign currency hedge is as follows:

accompanying balance sheet at September 30, 2021

accompanying balance sheet at March 31, 2022

Effect on cost of revenues – increase/(decrease)

Amount Asset/(Liability) AOCL –

Amount Asset/ (Liability) AOCI –

loss/(income) Three Months Ended

September 30, Nine Months Ended

September 30, Expected effect during next twelve months (1)

2021 2020 2021 2020

March 31, Expected effect during next twelve months (1)

(in millions)

$ 35.0 $ 1.4 $ ( 1.5 ) $ 0.2 $ ( 3.7 ) $ ( 1.5 )

(1) Based on the fair value of open hedges as of September 30, 2021.

(1) Based on the fair value of open hedges as of March 31, 2022.

Fair Value Measurements

6 unchanged sentences

The assets measured as Level 1 in the fair value hierarchy are summarized below:

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

(in millions)

8 unchanged sentences

The assets and liabilities measured as Level 2 in the fair value hierarchy are summarized below:

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

(in millions)

2 unchanged sentences

Interest rate hedge (2)

$ 28.9 $ 45.2

Foreign currency hedge (2)

3 unchanged sentences

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 September 30, 2021 and December 31, 2020, we have no assets measured as Level 3 in the fair value hierarchy.

See Note 10 for information regarding the non-recurring fair value measurement considerations during the nine months ended September 30, 2020 for the impairment charge related to our small cube covered hopper railcars.

As of March 31, 2022 and December 31, 2021, we have no assets measured as Level 3 in the fair value hierarchy.

See Note 8 for the estimated fair values of our debt instruments.

1 unchanged sentence

Segment Information

We report our operating results in three principal business segments:

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;

(2) the Rail Products Group, which manufactures and sells railcars and related parts and components, and provides railcar maintenance and modification services;

and (3) All Other, which includes our highway products business and legal, environmental, and maintenance costs associated with non-operating facilities.

and (2) the Rail Products Group, which manufactures and sells railcars and related parts and components, and provides railcar maintenance and modification services.

Following the sale of THP, which was previously reported within All Other, we have combined the results of the prior Corporate and All Other groupings into a single Corporate and other grouping.

The remaining activity previously reported in All Other primarily includes legal, environmental, and maintenance costs associated with non-operating facilities.

Results of prior periods 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") regularly reviews the operating results of our reportable segments in order to assess performance and allocate resources.

Our CODM does not consider impairment of long-lived assets or restructuring activities when evaluating segment operating results;

therefore, impairment of long-lived assets and restructuring activities are not allocated to segment profit or loss.

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.

4 unchanged sentences

We operate principally in North America.

Three Months Ended September 30, 2021

Railcar Leasing and Management Services Group Rail Products Group All Other Eliminations – Lease Subsidiary Eliminations – Other Consolidated Total

External Revenue $ 185.3 $ 234.5 $ 83.7 $ — $ — $ 503.5

Intersegment Revenue 0.2 105.4 — ( 105.3 ) ( 0.3 ) —

Total Revenues $ 185.5 $ 339.9 $ 83.7 $ ( 105.3 ) $ ( 0.3 ) $ 503.5

Three Months Ended September 30, 2020

Railcar Leasing and Management Services Group Rail Products Group All Other Eliminations – Lease Subsidiary Eliminations – Other Consolidated Total

External Revenue $ 183.7 $ 213.1 $ 62.6 $ — $ — $ 459.4

Intersegment Revenue 0.2 168.1 — ( 166.0 ) ( 2.3 ) —

Total Revenues $ 183.9 $ 381.2 $ 62.6 $ ( 166.0 ) $ ( 2.3 ) $ 459.4

Nine Months Ended September 30, 2021

Railcar Leasing and Management Services Group Rail Products Group All Other Eliminations – Lease Subsidiary Eliminations – Other Consolidated Total

Three Months Ended March 31, 2022

Railcar Leasing and Management Services Group Rail Products Group Eliminations – Lease Subsidiary Eliminations – Other Consolidated Total

External revenue $ 182.9 $ 289.8 $ — $ — $ 472.7

1 unchanged sentence

Total revenues $ 183.1 $ 391.1 $ ( 101.3 ) $ ( 0.2 ) $ 472.7

Nine Months Ended September 30, 2020

Railcar Leasing and Management Services Group Rail Products Group All Other Eliminations – Lease Subsidiary Eliminations – Other Consolidated Total

Three Months Ended March 31, 2021

Railcar Leasing and Management Services Group Rail Products Group Eliminations – Lease Subsidiary Eliminations – Other Consolidated Total

External revenue $ 183.3 $ 147.4 $ — $ — $ 330.7

1 unchanged sentence

Total revenues $ 183.5 $ 261.0 $ ( 111.3 ) $ ( 2.5 ) $ 330.7

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

Three Months Ended

September 30, Nine Months Ended September 30,

2021 2020 2021 2020

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

Three Months Ended March 31,

(in millions)

Operating profit (loss):

Operating profit:

Railcar Leasing and Management Services Group $ 79.8 $ 78.3

Rail Products Group 0.8 ( 8.8 )

All Other 14.7 7.3 42.8 23.9

Segment Totals before Eliminations, Corporate Expenses, Impairment of long-lived assets, and Restructuring activities 120.9 100.2 302.8 325.6

Corporate ( 23.9 ) ( 21.0 ) ( 73.7 ) ( 73.3 )

Impairment of long-lived assets — — — ( 369.4 )

Segment Totals 80.6 69.5

Corporate and other ( 15.7 ) ( 16.1 )

Restructuring activities, net — 0.3

1 unchanged sentence

Eliminations – Other ( 1.3 ) ( 0.4 )

Consolidated operating profit (loss) 92.2 72.9 219.8 ( 161.4 )

Consolidated operating profit 54.8 51.5

Other (income) expense 41.9 52.5

Provision (benefit) for income taxes 3.0 4.0

Loss from discontinued operations, net of income taxes ( 0.4 ) — ( 0.8 ) ( 0.2 )

Net income (loss) $ 35.9 $ 25.9 $ 42.0 $ ( 99.6 )

Income (loss) from discontinued operations, net of income taxes ( 6.9 ) 6.3

Loss on sale of discontinued operations, net of income taxes ( 1.1 ) —

Net income $ 1.9 $ 1.3

Partially-Owned Leasing Subsidiaries

3 unchanged sentences

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 September 30, 2021, the carrying value of our investment in TRIP Holdings and RIV 2013 totaled $ 139.5 million.

At March 31, 2022, the carrying value of our investment in TRIP Holdings and RIV 2013 totaled $ 139.8 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.

1 unchanged sentence

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"), formerly known as TRIP Master Funding LLC ("TRIP Master Funding”), and TRIP Railcar Co.

TRIP Holdings has wholly-owned subsidiaries known as Triumph Rail LLC ("Triumph Rail") and TRIP Railcar Co.

LLC ("TRIP Railcar Co.").

RIV 2013 has a wholly owned-subsidiary known as TRP 2021 LLC ("TRP-2021"), formerly known as Trinity Rail Leasing 2012 LLC (“TRL-2012”).

RIV 2013 has a wholly owned-subsidiary known as TRP 2021 LLC ("TRP-2021").

TILC is the contractual servicer for Triumph Rail, TRIP Railcar Co., and TRP-2021, with the authority to manage and service each entity's owned railcars.

13 unchanged sentences

TILC will service all railcars owned by Signal Rail.

In connection with the launch of the RIV program, in August 2021, TILC and certain of its subsidiaries sold an initial portfolio of 3,582 railcars and related leases to Signal Rail for an aggregate sales price of approximately $ 325.1 million.

As a result of the sale, TILC received approximately $ 318.7 million in cash, of which $ 2.9 million was recognized as revenue for services performed associated with the delivery of railcars with attached leases.

Additionally, in connection with the sale, TILC received a 10 % equity interest in Signal Rail valued at $ 6.4 million, which was primarily received in exchange for its contribution of railcars to Signal Rail.

TILC recognized a gain of approximately $ 32.9 million on the initial portfolio sale during the three months ended September 30, 2021 and will earn on-going fee revenue from servicing these railcars.

Signal Rail financed this purchase primarily through an asset-backed securitization.

In the event of future railcar portfolio sales, we expect that Signal Rail would issue additional debt, and Wafra Funds and TILC would make additional equity contributions to Signal Rail such that TILC would maintain its 10 % equity interest.

Upon consideration under the variable interest entity (“VIE”) model of ASC 810, Trinity has concluded that Signal Rail meets the definition of a VIE.

TILC has variable interests in Signal Rail arising from its 10 % equity ownership position and its role as a service provider.

We have evaluated the potential for consolidation using the variable interest model and have determined that Trinity is not required to 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 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 10 % equity interest in Signal Rail.

Our investment in Signal Rail is being accounted for under the equity method of accounting.

At September 30, 2021, the carrying value of TILC’s equity investment in Signal Rail was $ 6.1 million, which is included in other assets in our Consolidated Balance Sheet.

The carrying value of this investment, together with any potential future funding commitments described above, collectively represent our maximum exposure in Signal Rail.

At March 31, 2022, the carrying value of TILC’s equity investment in Signal Rail was $ 6.4 million, which is included in other assets in our Consolidated Balance Sheet.

The carrying value of this investment, together with any potential future investments described above, collectively represent our maximum exposure in Signal Rail.

Railcar Leasing and Management Services Group

1 unchanged sentence

Selected consolidated financial information for the Leasing Group is as follows:

September 30, 2021

March 31, 2022

Subsidiaries Partially-Owned Subsidiaries Total Leasing Group Eliminations – Lease Subsidiary (1)

34 unchanged sentences

See Note 5 and Note 8 for a further discussion regarding our investment in our partially-owned leasing subsidiaries and the related indebtedness.

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 Percent 2021 2020 Percent

($ in millions) Change ($ in millions) Change

Three Months Ended March 31,

2022 2021 Percent

($ in millions) Change

Leasing and management $ 183.1 $ 183.5 ( 0.2 ) %

Sales of railcars owned one year or less at the time of sale (1)

— — * — 54.4 ( 100.0 ) %

Total revenues $ 185.5 $ 183.9 0.9 % $ 554.1 $ 613.0 ( 9.6 ) %

Operating profit (1) :

1 unchanged sentence

Lease portfolio sales (2)

$ 32.9 $ 2.9 * 45.7 17.7 158.2 %

Total operating profit $ 79.8 $ 78.3 1.9 %

6 unchanged sentences

Maintenance and compliance $ 29.2 $ 25.6 14.1 %

Rent $ 1.9 $ 2.1 ( 9.5 ) % $ 5.3 $ 8.1 ( 34.6 ) %

Rent and ad valorem taxes $ 5.0 $ 4.6 8.7 %

Selling, engineering, and administrative expenses

$ 12.8 $ 11.3 13.3 %

$ 39.9 $ 47.0 ( 15.1 ) % $ 142.6 $ 149.2 ( 4.4 ) %

Interest $ 38.7 $ 45.7 ( 15.3 ) %

* Not meaningful

(1) Beginning in the fourth quarter of 2020, we made a prospective change in the presentation of sales of railcars from the lease fleet.

Therefore, all railcar sales for the three and nine months ended September 30, 2021 are presented as a net gain or loss from the disposal of a long-term asset regardless of the age of railcar that is sold.

See Note 1 for more information.

(1) Operating profit includes:

depreciation;

maintenance and compliance;

fleet operating costs, which include maintenance, compliance, freight, and storage;

rent and ad valorem taxes;

and selling, engineering, and administrative expenses.

1 unchanged sentence

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

(3) Depreciation expense increased $ 4.7 million and $ 7.3 million for the three and nine months ended September 30, 2021, respectively, as a result of the disposal of certain railcar components associated with our sustainable railcar conversion program.

Additionally, depreciation expense related to our small cube covered hopper railcars decreased by approximately $ 7.0 million for the nine months ended September 30, 2021 relative to the nine months ended September 30, 2020 as a result of the impairment charge recorded in the second quarter of 2020 related to these railcars.

(4) Interest expense for the nine months ended September 30, 2021 includes $ 11.7 million of loss on extinguishment of debt associated with the refinancing of our partially-owned subsidiaries' debt.

See Note 7 for more information.

Interest expense for the nine months ended September 30, 2020 includes $ 5.0 million of loss on extinguishment of debt associated with the early redemption of debt.

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

(3) Depreciation expense increased $ 2.2 million for the three months ended March 31, 2022 as a result of 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

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

($ in millions)

2 unchanged sentences

Operating profit margin on lease portfolio sales 14.8 % 9.8 %

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

Railcar Leasing Equipment Portfolio.

3 unchanged sentences

Future contractual minimum rental revenues on operating leases related to our wholly-owned and partially-owned subsidiaries are as follows:

Remaining three months of 2021 2022 2023 2024 2025 Thereafter Total

Remaining nine months of 2022 2023 2024 2025 2026 Thereafter Total

(in millions)

1 unchanged sentence

Wholly-owned subsidiaries.

The Leasing Group’s debt at September 30, 2021 consisted primarily of non-recourse debt.

As of September 30, 2021, Trinity’s wholly-owned subsidiaries included in the Leasing Group held equipment with a net book value of $ 4,761.9 million, which is pledged solely as collateral for Leasing Group debt held by those subsidiaries.

The net book value of unpledged equipment at September 30, 2021 was $ 825.8 million.

The Leasing Group’s debt at March 31, 2022 consisted primarily of non-recourse debt.

As of March 31, 2022, Trinity’s wholly-owned subsidiaries included in the Leasing Group held equipment with a net book value of $ 4,896.5 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, 2022 was $ 770.7 million.

See Note 8 for more information regarding the Leasing Group debt.

7 unchanged sentences

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 three months of 2021 2022 2023 2024 2025 Thereafter Total

Remaining nine months of 2022 2023 2024 2025 2026 Thereafter Total

(in millions)

7 unchanged sentences

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

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

(in millions)

20 unchanged sentences

The carrying amounts of our long-term debt are as follows:

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

(in millions)

15 unchanged sentences

Secured railcar equipment notes, net of unamortized discount of $ 0.3 and $ 0.3

909.2 1,237.5

TRIP Railcar Co.

term loan 321.0 323.7

1,218.3 1,227.2

unamortized debt issuance costs ( 10.5 ) ( 11.1 )

7 unchanged sentences

The estimated fair values of our long-term debt are as follows:

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

(in millions)

4 unchanged sentences

Revolving Credit Facility – We have a $ 450.0 million unsecured corporate revolving credit facility.

During the nine months ended September 30, 2021, we had total borrowings of $ 470.0 million and total repayments of $ 520.0 million under the revolving credit facility.

Additionally, we had outstanding letters of credit issued in an aggregate amount of $ 28.3 million, leaving $ 421.7 million available for borrowing as of September 30, 2021.

The outstanding letters of credit as of September 30, 2021 are scheduled to expire in July 2022.

The revolving credit facility bears interest at a variable rate which resulted in an interest rate of LIBOR plus 1.75 %, with a LIBOR floor of 0.30 %, as of September 30, 2021.

A commitment fee accrues on the average daily unused portion of the revolving facility at the rate of 0.175 % to 0.40 % ( 0.25 % as of September 30, 2021).

During the three months ended March 31, 2022, we had total borrowings of $ 70.0 million and total repayments of $ 20.0 million under the revolving credit facility.

Additionally, we had outstanding letters of credit issued in an aggregate amount of $ 28.3 million.

Of the $ 371.7 million remaining unused amount, $ 192.1 million was available for borrowing as of March 31, 2022.

The outstanding letters of credit as of March 31, 2022 are scheduled to expire in July 2022.

The revolving credit facility bears interest at a variable rate which resulted in an interest rate of LIBOR plus 1.75 %, with a LIBOR floor of 0.30 %, as of March 31, 2022.

A commitment fee accrues on the average daily unused portion of the revolving facility at the rate of 0.175 % to 0.40 % ( 0.25 % as of March 31, 2022).

The revolving credit facility requires the maintenance of ratios related to minimum interest coverage for the leasing and manufacturing operations and maximum leverage.

In March 2021, we amended our revolving credit facility to increase the maximum leverage ratio through March 31, 2022 and to decrease the minimum interest coverage ratio through December 31, 2021 to provide additional near-term flexibility.

As of September 30, 2021, we were in compliance with all such financial covenants.

In December 2021, we amended our revolving credit facility to increase the maximum leverage ratio through June 30, 2022.

As of March 31, 2022, we were in compliance with all such financial covenants.

TILC Warehouse Loan Facility – TILC has a $ 1.0 billion warehouse loan facility, which was established to finance railcars owned by TILC.

In March 2021, the facility was extended through March 15, 2024, the total commitment was increased from $ 750 million to $ 1.0 billion, with a potential increase of up to an additional $ 250 million, subject to certain conditions, and provided for a facility margin of 185 basis points.

During the nine months ended September 30, 2021, we had total borrowings of $ 374.7 million and total repayments of $ 379.7 million under the TILC warehouse loan facility.

Under the renewed facility, the entire unused facility amount of $ 485.6 million was available as of September 30, 2021 based on the amount of warehouse-eligible, unpledged equipment.

Advances under the facility bear interest at a defined index rate plus a margin, for an all-in interest rate of 1.94 % at September 30, 2021.

TRL-2021 – In June 2021, Trinity Rail Leasing 2021 LLC, a Delaware limited liability company ("TRL-2021") and a limited purpose, indirect wholly-owned subsidiary of the Company owned through TILC, issued an aggregate principal amount of (i) $ 305.2 million of its Series 2021-1 Class A Green Secured Railcar Equipment Notes (the "TRL-2021 Class A Notes") and (ii) $ 19.8 million of its Series 2021-1 Class B Green Secured Railcar Equipment Notes (the "TRL-2021 Class B Notes") (the TRL-2021 Class A Notes and the TRL-2021 Class B Notes are, collectively, the “TRL-2021 Notes”).

The TRL-2021 Class A Notes bear interest at a fixed rate of 2.26 %, and the TRL-2021 Class B Notes bear interest at a fixed rate of 3.08 %.

The TRL-2021 Notes are payable monthly, and have a stated final maturity date of July 19, 2051.

We incurred $ 3.3 million in debt issuance costs, which will be amortized to interest expense through the anticipated repayment date of the TRL-2021 Notes.

The TRL-2021 Notes are obligations of TRL-2021 and are non-recourse to Trinity.

The obligations are secured by a portfolio of railcars and operating leases thereon, certain cash reserves, and other assets acquired and owned by TRL-2021.

Net proceeds received from the railcars acquired in connection with the issuance of the TRL-2021 Notes were used to repay approximately $ 214.4 million of borrowings under TILC's warehouse loan facility and for general corporate purposes.

June 2021 Refinancing of Partially-Owned Leasing Subsidiaries

Triumph Rail – In June 2021, Triumph Rail, formerly known as TRIP Master Funding, issued an aggregate principal amount of (i) $ 535.0 million of its Series 2021-2 Class A Green Secured Railcar Equipment Notes (the “Triumph Class A Notes”) and (ii) $ 25.4 million of its Series 2021-2 Class B Green Secured Railcar Equipment Notes (the “Triumph Class B Notes”) (the Triumph Class A Notes and the Triumph Class B Notes are, collectively, the “Triumph Notes”).

The Triumph Class A Notes bear interest at a fixed rate of 2.15 %, and the Triumph Class B Notes bear interest at a fixed rate of 3.08 %.

The Triumph Notes are payable monthly, and have a stated final maturity date of June 15, 2051.

We incurred $ 5.6 million in debt issuance costs, which will be amortized to interest expense through the anticipated repayment date of the Triumph Notes.

The Triumph Notes are non-recourse to Trinity, TILC, TRIP Holdings, and the other equity investors in TRIP Holdings, and are secured by Triumph Rail's portfolio of railcars and operating leases thereon, its cash reserves, and all other assets owned by Triumph Rail.

Triumph Rail used the net proceeds received from the issuance of the Triumph Notes, as well as proceeds from the sale of railcars and related operating leases to TRIP Railcar Co.

described below, to redeem its outstanding debt, consisting of (i) the Series 2011 Class A-2 TRIP Master Funding Secured Railcar Equipment Notes due July 2041, (ii) the Series 2014-1 Class A-2 Secured Railcar Equipment Notes due April 2044, and (iii) the Series 2017-1 Secured Railcar Equipment Notes due August 2047, of which $ 869.1 million was outstanding at the redemption date.

The all-in rate for these notes was 5.16 % per annum at the time of redemption.

In connection with the redemption, we recognized a loss on extinguishment of debt of $ 8.7 million, which included a $ 3.3 million early redemption premium and a write-off of $ 5.4 million in unamortized debt issuance costs.

These charges are reflected in the loss on extinguishment of debt line of our Consolidated Statements of Operations for the nine months ended September 30, 2021.

TRIP Railcar Co.

Term Loan – In June 2021, TRIP Railcar Co.

drew down $ 329.6 million under a term loan agreement ("TRIP Railcar Co.

The TRIP Railcar Co.

term loan was established to finance railcars and operating leases thereon purchased by TRIP Railcar Co.

from Triumph Rail.

The principal and interest of this indebtedness are paid from the cash flows of the underlying leases.

The TRIP Railcar Co.

term loan bears interest at LIBOR plus 1.85 %, for an all-in interest rate of 1.94 % at September 30, 2021, and has a stated maturity date of June 2025.

We incurred $ 2.9 million in debt issuance costs, which will be amortized to interest expense over the anticipated repayment term of the TRIP Railcar Co.

The TRIP Railcar Co.

term loan is non-recourse to Trinity, TILC, TRIP Holdings, and the other equity investors in TRIP Holdings;

and are secured by TRIP Railcar Co.'s portfolio of railcars, operating leases thereon, and all other assets owned by TRIP Railcar Co.

Net proceeds received from the transaction were used to purchase railcars and related operating leases from Triumph Rail.

TRP-2021 – In June 2021, TRP-2021, formerly known as TRL-2012, issued an aggregate principal amount of (i) $ 334.0 million of its Series 2021-1 Class A Green Secured Railcar Equipment Notes (the “TRP-2021 Class A Notes”) and (ii) $ 21.0 million of its Series 2021-1 Class B Green Secured Railcar Equipment Notes (the “TRP-2021 Class B Notes”) (the TRP-2021 Class A Notes and the TRP-2021 Class B Notes are, collectively, the “TRP-2021 Notes”).

The TRP-2021 Class A Notes bear interest at a fixed rate of 2.07 %, and the TRP-2021 Class B Notes bear interest at a fixed rate of 3.06 %.

The TRP-2021 Notes are payable monthly, and have a stated final maturity date of June 15, 2051.

We incurred $ 3.7 million in debt issuance costs, which will be amortized to interest expense through the anticipated repayment date of the TRP-2021 Notes.

The TRP-2021 Notes are non-recourse to Trinity, TILC, RIV 2013, and the other equity investors in RIV 2013, and are secured by TRP-2021's portfolio of railcars and operating leases thereon, its cash reserves, and all other assets owned by TRP-2021.

TRP-2021 used the net proceeds from the issuance of the TRP-2021 Notes to redeem its outstanding debt, consisting of (i) the Series 2012-1 Secured Railcar Equipment Notes due January 2043 and (ii) the Series 2013-1 Class A-1 Secured Railcar Equipment Notes due July 2043, of which $ 348.0 million was outstanding at the redemption date.

The all-in rate for these notes was 3.59 % per annum at the time of redemption.

In connection with the redemption, we recognized a loss on extinguishment of debt of $ 3.0 million, which related to the write-off of unamortized debt issuance costs.

This write-off is reflected in the loss on extinguishment of debt line of our Consolidated Statements of Operations for the nine months ended September 30, 2021.

Each of our secured railcar equipment notes, including the TRL-2021 Notes, the Triumph Rail Notes, and the TRP-2021 Notes, generally has an anticipated repayment date and a stated final maturity date.

While the stated final maturity date of these notes is in 2051, the cash flows from the assets of each of TRL-2021, Triumph Rail, and TRP-2021 will be applied, pursuant to the payment priorities of their respective indentures, so as to amortize their respective notes to achieve monthly targeted principal balances.

If the cash flow assumptions used in determining the targeted balances are met, it is anticipated that the Notes will be repaid well in advance of their stated final maturity date.

There can be no assurance, however, that such cash flow assumptions will be realized.

If these notes are not repaid by the anticipated repayment date, the respective interest rates on these notes would increase from the fixed rates stated above.

During the three months ended March 31, 2022, we had total borrowings of $ 57.2 million and total repayments of $ 1.6 million under the TILC warehouse loan facility.

The entire unused facility amount of $ 382.6 million was available as of March 31, 2022 based on the amount of warehouse-eligible, unpledged equipment.

Advances under the facility bear interest at a defined index rate plus a facility margin of 185 basis points, for an all-in interest rate of 2.09 % at March 31, 2022.

Subsequent event – TRL-2022 – On April 20, 2022, Trinity Rail Leasing 2022 LLC, a Delaware limited liability company ("TRL-2022") and a limited purpose, indirect wholly-owned subsidiary of the Company owned through TILC, entered into a Note Purchase Agreement dated April 20, 2022 (the "Note Purchase Agreement").

The Note Purchase Agreement provides for the issuance and sale of an aggregate principal amount of $ 244.8 million of its Series 2022-1 Class A Green Secured Railcar Equipment Notes (the "TRL-2022 Notes").

The TRL-2022 Notes will bear interest at a fixed rate of 4.55 %, will be payable monthly, and will have a stated final maturity date of May 20, 2052.

The TRL-2022 Notes will be obligations of TRL-2022 and will be non-recourse to Trinity.

The obligations will be secured by a portfolio of railcars and operating leases thereon, certain cash reserves, and other assets to be acquired and owned by TRL-2022.

Terms and conditions of our other long-term debt, including recourse and non-recourse provisions and scheduled maturities, are described in Note 8 of our 2021 Annual Report on Form 10-K.

The effective tax rate from continuing operations for the three months ended September 30, 2021 was an expense of 23.9 %, which differs from the U.S.

statutory rate of 21.0 % primarily due to state income taxes, foreign taxes, non-deductible executive compensation, and other permanent differences.

The effective tax rate from continuing operations for the nine months ended September 30, 2021 was an expense of 27.8 %, which differs from the U.S.

statutory rate primarily due to an adjustment to the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") carryback benefit previously recognized and foreign taxes, partially offset by excess tax benefits associated with equity based compensation.

Our effective tax rates from continuing operations for the three and nine months ended September 30, 2020 were a benefit of 34.9 % and a benefit of 69.5 %, respectively, primarily due to carryback claims as permitted under the CARES Act, partially offset by the portion of the non-cash impairment charge that is not tax-effected because it is related to the noncontrolling interest.

Our effective tax rates, without the impact of the CARES Act, were an expense of 10.2 % and a benefit of 15.8 % for the three and nine months ended September 30, 2020, respectively, which differs from the U.S.

statutory rate primarily due to the impacts of state income taxes, foreign taxes, tax return true-ups, and non-deductible executive compensation.

Income tax refunds received, net of payments, during the nine months ended September 30, 2021 totaled $ 246.9 million.

The total income tax receivable position as of September 30, 2021 was $ 191.9 million, primarily related to carryback claims that have been filed.

Our 2016 and 2017 tax years are effectively settled.

The statutes of limitations for auditing the 2013-2015 and 2018-2020 tax years will remain open due to tax loss carryback claims that have been filed.

We have state tax returns that are under audit in the normal course of business, and our Mexican subsidiaries' tax return statutes of limitations remain open for auditing 2014 forward.

The effective tax rate from continuing operations for the three months ended March 31, 2022 was 23.3 %, which differs from the U.S.

statutory rate of 21.0 % primarily due to state income taxes, foreign taxes, non-deductible executive compensation, and the benefits of excess deductions on equity compensation.

For the three months ended March 31, 2021, we recorded income tax expense of $ 4.0 million on a loss from continuing operations before income taxes of $ 1.0 million, primarily due to an adjustment to the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") carryback benefit previously recognized.

The total income tax receivable position as of March 31, 2022 was $ 4.7 million.

Our tax years through 2019 are effectively settled.

The audit of our 2013 tax year was accepted by the Joint Committee of Taxation with no unresolved issues.

We have received a partial acceptance of our 2020 tax return and expect to receive a final acceptance during 2022.

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 2016 forward.

We believe we are appropriately reserved for any potential matters.

Employee Retirement Plans

The following table summarizes the components of our net retirement cost:

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

(in millions)

Expense Components

Service cost $ — $ — $ — $ —

Interest 0.1 3.8 0.3 11.2

Expected return on plan assets — ( 5.3 ) — ( 15.7 )

Amortization of actuarial loss — 1.5 0.2 4.5

Amortization of prior service cost — 0.3 — 0.9

Net periodic benefit cost 0.1 0.3 0.5 0.9

Profit sharing 3.1 1.9 8.3 6.5

Net expense $ 3.2 $ 2.2 $ 8.8 $ 7.4

The non-service cost components of net periodic benefit cost in the table above are included in other, net (income) expense in our Consolidated Statements of Operations.

For the three and nine months ended September 30, 2021, net periodic benefit cost relates to the Supplemental Executive Retirement Plan.

Our defined contribution expense for the three months ended March 31, 2022 and 2021 was $ 2.1 million and $ 2.4 million, respectively.

The net periodic benefit cost related to our Supplemental Executive Retirement Plan was $ 0.2 million for both the three months ended March 31, 2022 and 2021.

The non-service cost components of net periodic benefit cost are included in other, net (income) expense in our Consolidated Statements of Operations.

Pension Plan Termination

2 unchanged sentences

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.

Upon settlement, we recognized a pre-tax non-cash pension settlement charge in the fourth quarter of 2020 of $ 151.5 million, which was inclusive of all unamortized losses previously recorded in AOCL.

During the three and nine months ended September 30, 2021, as permitted by applicable regulations, we used $ 0.7 million and $ 10.9 million, respectively, of the Pension Plan surplus to fund obligations associated with the Company's profit sharing plans.

During the nine months ended September 30, 2021, we used $ 2.2 million to fund pension administrative expenses required to finalize the settlement of the Pension Plan.

There were no pension administrative expenses during the three months ended September 30, 2021.

During the three months ended March 31, 2021, we used $ 1.2 million to fund pension administrative expenses required to finalize the settlement of the Pension Plan, which is included in other, net (income) expense in our Consolidated Statements of Operations.

There were no pension administrative expenses during the three months ended March 31, 2022.

The remaining surplus of the Pension Plan of $ 0.6 million will be used to fund final pension administrative expenses.

We expect that any remaining surplus would be used for other corporate purposes, subject to applicable taxes.

Asset Impairments and Restructuring Activities

Second quarter of 2020 impairment of small cube covered hopper railcars

During the second quarter of 2020, the oil and gas proppants (or “frac sand”) industry continued to experience economic pressure created by low oil prices, reduced fracking activity, and the ongoing economic impact of COVID-19.

Significant price declines in the crude oil market, as well as lower demand for certain commodities, resulted in a decline in customer demand for certain types of railcars.

As a result, certain of the Leasing Group's small cube covered hopper customers requested rent relief and, in a number of cases, filed for bankruptcy in the second quarter of 2020.

Therefore, we determined that the events and circumstances that arose during the second quarter of 2020 constituted an impairment triggering event related to the small cube covered hopper car type in our lease fleet portfolio.

We performed a cash flow recoverability test of our small cube covered hopper railcars and compared the undiscounted cash flows to the carrying value of the assets.

Significant management judgment was used to determine the key assumptions utilized in our impairment analysis, the substantial majority of which represent unobservable (Level 3) inputs.

The aggregate impairment charge of $ 369.4 million is reflected in the impairment of long-lived assets line of our Consolidated Statements of Operations for the nine months ended September 30, 2020.

See Note 11 of our 2020 Annual Report on Form 10-K for further information regarding impairment of long-lived assets related to our small cube covered hopper railcars.

Restructuring activities

During the three months ended September 30, 2021, restructuring activities resulted in a net gain of $ 0.1 million.

During the nine months ended September 30, 2021, restructuring activities resulted in a net gain of $ 1.1 million, primarily as a result of a $ 1.6 million gain on the disposition of certain non-operating facilities included in previous restructuring plans, partially offset by $ 0.5 million in employee severance costs.

During the three months ended September 30, 2020, we recorded total restructuring charges of $ 4.7 million, consisting of $ 3.4 million for severance costs, $ 0.7 million in asset write-downs associated with transportation equipment in our logistics operations, and $ 0.6 million of contract termination costs.

During the nine months ended September 30, 2020, we recorded total restructuring charges of $ 10.5 million, consisting of $ 7.5 million for severance costs, $ 5.9 million of non-cash charges primarily from the write-down of our corporate headquarters campus and certain other assets, and $ 0.6 million in contract termination costs, partially offset by a $ 3.5 million net gain on the disposition of a non-operating facility and certain related assets.

The following table sets forth the restructuring activity and balance of the restructuring liability, which is included in other liabilities in our Consolidated Balance Sheets:

Accrued charges as of

December 31, 2020

Charges and adjustments Payments Accrued charges as of

September 30, 2021

(in millions)

Cash charges:

Employee severance costs $ 1.4 $ 0.5 $ ( 1.6 ) $ 0.3

$ 1.4 $ 0.5 $ ( 1.6 ) $ 0.3

Non-cash charges:

Gain on disposition of assets $ ( 1.6 )

Total restructuring activities $ ( 1.1 )

Although restructuring activities are not allocated to our reportable segments, the following tables summarize the restructuring activities by reportable segment:

Three Months Ended September 30, 2021

Employee Severance Costs Gain on Disposition on Assets Total

Railcar Leasing and Management Services Group $ — $ — $ —

Rail Products Group 0.1 — $ 0.1

All Other — ( 0.2 ) $ ( 0.2 )

Corporate — — $ —

Total restructuring activities $ 0.1 $ ( 0.2 ) $ ( 0.1 )

Three Months Ended September 30, 2020

Employee Severance Costs Contract Termination Costs Write-down of Assets Total

(in millions)

Railcar Leasing and Management Services Group $ 1.4 $ — $ — $ 1.4

Rail Products Group 1.3 0.2 0.7 2.2

All Other 0.1 — — 0.1

Corporate 0.6 0.4 — 1.0

Total restructuring activities $ 3.4 $ 0.6 $ 0.7 $ 4.7

Nine Months Ended September 30, 2021

Employee Severance Costs Gain on Disposition of Assets Total

(in millions)

Railcar Leasing and Management Services Group $ — $ — $ —

Rail Products Group 0.4 — 0.4

All Other — ( 1.6 ) ( 1.6 )

Corporate 0.1 — 0.1

Total restructuring activities $ 0.5 $ ( 1.6 ) $ ( 1.1 )

Nine Months Ended September 30, 2020

Employee Severance Costs Contract Termination Costs Gain on Disposition of Assets Write-down of Assets Total

(in millions)

Railcar Leasing and Management Services Group $ 1.4 $ — $ — $ — $ 1.4

Rail Products Group 3.9 0.2 — 0.7 4.8

All Other 0.2 — ( 3.5 ) — ( 3.3 )

Corporate 2.0 0.4 — 5.2 7.6

Total restructuring activities $ 7.5 $ 0.6 $ ( 3.5 ) $ 5.9 $ 10.5

Accumulated Other Comprehensive Loss

Changes in AOCL for the nine months ended September 30, 2021 are as follows:

Currency translation adjustments Unrealized gains/(losses) on derivative financial instruments Net actuarial gains/(losses) and prior service costs of defined benefit plans Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Income (Loss)

Changes in AOCI for the three months ended March 31, 2022 are as follows:

Currency translation adjustments Unrealized gains/(losses) on derivative financial instruments Net actuarial gains/(losses) of defined benefit plans Accumulated other comprehensive income (loss)

(in millions)

2 unchanged sentences

Other comprehensive income, net of tax, before reclassifications — 14.7 — 14.7

Amounts reclassified from AOCL, net of tax benefit of $ — , $ 0.6 , $ 0.1 , and $ 0.7

Amounts reclassified from AOCI, net of tax benefit of $ — , $ 0.9 , $ — , and $ 0.9

— 2.5 0.1 2.6

1 unchanged sentence

Other comprehensive income — 17.0 0.1 17.1

Balances at September 30, 2021

Balances at March 31, 2022

$ ( 1.3 ) $ 4.8 $ ( 3.4 ) $ 0.1

See Note 2 for information on the reclassification of amounts in AOCL into earnings.

Reclassifications of unrealized before-tax gains and losses on derivative financial instruments are included in interest expense 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) and prior service costs of defined benefit plans are included in other, net (income) expense in our Consolidated Statements of Operations.

See Note 3 for 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.

Common Stock and Stock-Based Compensation

Stockholders' Equity

Repurchase Agreement with ValueAct

On April 29, 2021, we entered into a stock repurchase agreement with ValueAct Capital Master Fund, L.P.

(“ValueAct”), the Company's largest shareholder and a related party, to repurchase 8.1 million shares of our common stock for $ 27.47 per share, for an aggregate purchase price of $ 222.5 million, in a privately negotiated transaction.

The price per share represents a discount of 3.5 % from the closing price for a share of common stock on the New York Stock Exchange on April 29, 2021.

The repurchase from ValueAct was approved by our Board of Directors separately from, and did not reduce the authorized amount remaining under, the previous share repurchase program described below.

New Share Repurchase Authorization

In September 2021, our Board of Directors authorized a new share repurchase program effective September 9, 2021 through December 31, 2022.

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 this program during the three months ended September 30, 2021.

Previous Share Repurchase Authorization

In October 2020, our Board of Directors authorized a share repurchase program effective October 23, 2020 through December 31, 2021.

The share repurchase program authorized the Company to repurchase up to $ 250.0 million of its common stock and was completed in the third quarter of 2021.

Share repurchase activity under this program is as follows:

In December 2021, we entered into an accelerated share repurchase agreement (the "ASR") to repurchase $ 125.0 million of our common stock.

Approximately 3.3 million shares repurchased as part of the ASR on December 31, 2021 were delivered to the Company in January 2022 in accordance with normal settlement practices, representing approximately 80% of the total notional value of the ASR.

The ASR is expected to be completed during the third quarter of 2022, at which time any remaining shares will be delivered to the Company.

Share repurchase activity under the authorized program is as follows:

Shares Repurchased Remaining Authorization to Repurchase

2 unchanged sentences

(in millions)

October 23, 2020 Authorization $ 250.0

September 9, 2021 Authorization $ 250.0

September 9, 2021 through September 30, 2021 — $ — $ 250.0

October 1, 2021 through December 31, 2021 5,155,491 151.9 $ 98.1 (1)

January 1, 2022 through March 31, 2022 — — $ 98.1 (1)

April 1, 2021 through June 30, 2021 2,440,793 68.3 $ 77.1

July 1, 2021 through September 30, 2021 2,815,307 77.1 $ —

Total 5,155,491 $ 151.9

During the three and nine months ended September 30, 2021, total share repurchases were 2.8 million and 14.6 million, respectively, at a cost of approximately $ 77.1 million and $ 404.7 million, respectively.

During the three and nine months ended September 30, 2020, share repurchases totaled 4.5 million and 6.3 million, respectively, at a cost of approximately $ 89.9 million and $ 125.3 million, respectively, under a previous share repurchase program, which was completed in the third quarter of 2020.

Certain shares of stock repurchased during September 2020, totaling $ 4.9 million, were cash settled in October 2020 in accordance with normal settlement practices.

(1) Remaining authorization includes $ 25.0 million of committed share repurchases under the terms of the ASR.

Approximately $ 73.1 million of the share repurchase program will remain after the completion of the ASR.

During the three months ended March 31, 2021, share repurchases totaled 1.3 million, at a cost of approximately $ 36.8 million, under a previous share repurchase program, which was completed in the third quarter of 2021.

Certain shares of stock repurchased during March 2021, totaling $ 2.9 million, were cash settled in April 2021 in accordance with normal settlement practices.

Stock-Based Compensation

Stock-based compensation totaled approximately $ 6.5 million and $ 16.3 million for the three and nine months ended September 30, 2021, respectively.

Stock-based compensation totaled approximately $ 4.8 million and $ 19.7 million for the three and nine months ended September 30, 2020, respectively.

Stock-based compensation expense totaled approximately $ 5.1 million for both the three months ended March 31, 2022 and 2021.

The Company's annual grant of share-based awards generally occurs in the second quarter under our 2004 Fourth Amended and Restated Stock Option and Incentive Plan (the "Plan”).

Our stock options have contractual terms of ten years .

Expense related to stock options issued to eligible employees under the Plan is recognized on a straight-line basis over their vesting period.

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 ratably 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 reach 60 years of age and have provided at least 10 years of service to the Company, provided that the awards remain outstanding for a period of six months from the date of grant.

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 10 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.

1 unchanged sentence

Expense related to performance units is recognized ratably 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 nine months ended September 30, 2021:

The following table summarizes stock-based compensation awards granted during the three months ended March 31, 2022:

Number of Shares Granted Weighted Average Grant-Date Fair Value per Award

Restricted stock units 648 $ 30.87

Restricted stock awards 22,734 $ 28.48

Performance units 108,127 $ 38.26

6 unchanged sentences

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.

There were no restricted shares and stock options included in the computation of diluted earnings per common share for the nine months ended September 30, 2020 as we incurred a loss for the period, and any effect on loss per common share would have been antidilutive.

There were 2.4 million dilutive equivalents from restricted stock and stock options excluded from the computation of diluted earnings per common share for the three months ended March 31, 2021 as we incurred a loss from continuing operations for the period, and any effect on loss per common share would have been antidilutive.

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

for the three and nine months ended September 30, 2021 and 2020.

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

(in millions, except per share amounts)

1 unchanged sentence

Net (income) loss attributable to noncontrolling interest ( 2.6 ) 2.0

Unvested restricted share participation – continuing operations — ( 0.2 ) — —

Net income (loss) from continuing operations attributable to Trinity Industries, Inc.

32.4 24.9 48.8 ( 19.9 )

Net loss from discontinued operations, net of income taxes

( 0.4 ) — ( 0.8 ) ( 0.2 )

Unvested restricted share participation – discontinued operations — — — —

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

Income (loss) from discontinued operations, net of income taxes ( 6.9 ) 6.3

Loss on sale of discontinued operations, net of income taxes ( 1.1 ) —

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

Net income (loss) attributable to Trinity Industries, Inc.

$ ( 0.7 ) $ 3.3

Net income (loss) attributable to Trinity Industries, Inc., including the effect of unvested restricted share participation $ 32.0 $ 24.9 $ 48.0 $ ( 20.1 )

Basic weighted average shares outstanding 82.9 110.2

1 unchanged sentence

Diluted weighted average shares outstanding

99.5 117.0 105.7 117.2

Basic earnings per common share:

18 unchanged sentences

Government declined to intervene, the relator, Mr.

Joshua Harman, alleged the Company violated the FCA pertaining to sales of the Company's ET-Plus® System, a highway guardrail end-terminal system (“ET Plus”).

On October 20, 2014, a trial in this case concluded with a jury verdict stating that the Company and its subsidiary, Trinity Highway Products, LLC (“Trinity Highway Products”), “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 Trinity Highway Products.

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 January 7, 2019, the United States Supreme Court denied Mr.

2 unchanged sentences

Harman's petition ended this action.

State, county, and municipal actions

Harman also has separate state qui tam actions currently pending pursuant to:

the Virginia Fraud Against Taxpayers Act ( Commonwealth of Virginia ex rel.

Trinity Industries, Inc.

and Trinity Highway Products, LLC , Case No.

CL13-698, in the Circuit Court, Richmond, Virginia) and the Massachusetts False Claims Act ( Commonwealth of Massachusetts ex rel.

Harman Qui Tam v.

Pursuant to the purchase and sale agreement related to the sale of THP, the Company has 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 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

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.

Trinity Industries, Inc.

and Trinity Highway Products, LLC , Case No.

1484-CV-02364, in the Superior Court Department of the Trial Court).

In addition to these two currently pending state qui tam actions, Mr.

Harman has also filed a second amended complaint in a previously dismissed action pursuant to the Tennessee False Claims Act ( State of Tennessee ex rel.

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, which is scheduled for trial on April 17, 2023.

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.

Trinity Industries, Inc., and Trinity Highway Products, LLC , Case No.

14C2652, in the Circuit Court for Davidson County, Tennessee) and sought leave to file an amended complaint in a previously dismissed action pursuant to the New Jersey False Claims Act ( State of New Jersey ex rel.

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 has filed a Notice of Election to Decline Intervention in this matter.

On January 10, 2022, the trial court granted Trinity’s Motion to Dismiss Harman’s Second Amended Complaint and entered an order dismissing Mr.

Harman’s complaint with prejudice.

On February 7, 2022, Mr.

Harman filed a Notice of Appeal of the trial court's order dismissing the case, which remains pending.

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

In a similar New Jersey state qui tam action ( State of New Jersey ex rel.

Trinity Industries, Inc.

and Trinity Highway Products, LLC , Case No.L-1344-14, in the Superior Court of New Jersey Law Division:

Mercer County).

In each of these cases, Mr.

Harman alleged the Company violated the respective states' false claims act pertaining to sales of the ET Plus, and he is seeking damages, civil penalties, attorneys’ fees, costs and interest.

Also, the respective states’ Attorneys General filed Notices of Election to Decline Intervention in all of these matters, with the exception of the Commonwealth of Virginia Attorney General, who intervened in the Virginia matter.

No trial date has been scheduled in these cases other than in the Massachusetts action, which has been scheduled for trial on June 7, 2022, and the Virginia action, which has been scheduled for trial on April 17, 2023.

The Company believes these state qui tam lawsuits are without merit and intends to vigorously defend all allegations.

Other states could take similar or different actions, and could be considering similar state false claims or other litigation against the Company.

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.

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

In a similar Massachusetts state qui tam action filed by Mr.

Harman ( Commonwealth of Massachusetts ex rel.

Harman Qui Tam v.

Trinity Industries, Inc.

and Trinity Highway Products, LLC , Case No.

1484-CV-02364, in the Superior Court Department of the Trial Court), Mr.

Harman alleged the Company violated the Massachusetts False Claims Act pertaining to sales of the ET Plus, and he is seeking damages, civil penalties, attorneys’ fees, costs and interest.

The State of Massachusetts Attorney General has filed a Notice of Election to Decline Intervention in this matter.

The parties have reached an agreement in principle to settle all claims in this matter without any admission of liability or fault for $ 5.0 million.

Defendants have denied and continue to deny specifically each and all of the claims and contentions alleged in this case.

The settlement is subject to completion of a formal settlement agreement and final court approval.

During the three months ended March 31, 2022, the Company recorded a $ 5.0 million charge and a corresponding liability for this matter, which was included in income (loss) from discontinued operations, net of income taxes, in our Consolidated Statement of Operations and is included in the amounts described below under “Other matters.” Although the parties have reached an agreement in principle to settle this litigation, there is, however, no assurance that a final settlement will be reached or, if a settlement is reached, that the charge, which represents the Company’s current best estimate of the costs to resolve this matter, will represent the actual costs of the settlement.

If a settlement is unable to be reached, the Company will continue to vigorously defend the action.

As previously reported, state qui tam actions filed by Mr.

Harman in the states of Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Minnesota, Montana, Nevada, Rhode Island, Tennessee, New Jersey, and California were dismissed.

Harman in the states of Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Minnesota, Montana, Nevada, Rhode Island, and California were dismissed.

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.

Missouri class action

The Company has been served in a lawsuit filed November 5, 2015, titled Jackson County, Missouri, individually and on behalf of a class of others similarly situated vs.

4 unchanged sentences

Louis, and the State of Missouri’s transportation authority.

The plaintiff alleges that the Company and Trinity Highway Products 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 alleges 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 alleges product liability negligence, product liability strict liability, and negligently supplying dangerous instrumentality for supplier’s business purposes.

2 unchanged sentences

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.

A trial date has been scheduled in this case for April 4, 2022.

The Company believes this lawsuit is without merit and intends to vigorously defend all allegations.

While the financial impacts of these state, county, and municipal actions are currently unknown, they could be material.

Based on information currently available to the Company and previously disclosed, we currently do not believe that a loss is probable in any one or more of the actions described under "State, county, and municipal actions," therefore no accrual has been included in the accompanying Consolidated Financial Statements.

The parties have reached an agreement in principle 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 settlement is subject to completion of a formal settlement agreement and final court approval.

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 is probable and the estimated costs to resolve this action.

Although the parties have reached an agreement in principle to settle this litigation, there is, however, no assurance that a final settlement will be reached or, if a settlement is reached, that the charge, which represents the Company’s current best estimate of the costs to resolve this matter, will represent the actual costs of the settlement.

If a settlement is unable to be reached, the Company will continue to vigorously defend the action.

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 Trinity Highway Products.

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.

4 unchanged sentences

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 $ 11.2 million to $ 18.4 million, which includes our rights in indemnity and recourse to third parties of approximately $ 6.4 million, which is recorded in other assets on our Consolidated Balance Sheet as of September 30, 2021.

This range includes any amounts related to the Highway Products litigation matters described above in the section titled “Highway products litigation." At September 30, 2021, total accruals of $ 11.7 million, including environmental and workplace matters described below, are included in accrued liabilities in the accompanying Consolidated Balance Sheets.

The range of reasonably possible losses for such matters is $ 41.6 million to $ 59.4 million, which includes our rights in indemnity and recourse to third parties of approximately $ 10.3 million, which is recorded in other assets on our Consolidated Balance Sheet as of March 31, 2022.

This range includes any amounts related to the Highway Products litigation matters described above in the section titled “Highway products litigation." At March 31, 2022, total accruals of $ 42.0 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.

6 unchanged sentences

On March 26, 2021, a tornado damaged the Company’s rail maintenance facility in Cartersville, Georgia.

We have incurred costs related to cleanup and damage remediation activities in order for the facility to resume operations in the second quarter.

We have incurred costs related to cleanup and damage remediation activities in order for the facility to resume operations in the second quarter of 2021.

We believe our insurance coverage is sufficient to cover property damage costs related to the event.

Accordingly, at March 31, 2021, we recorded an insurance receivable of approximately $ 1.2 million for property damage recoveries, which was collected in the third quarter of 2021.

As of September 30, 2021, we have received total advanced payments from insurance of approximately $ 14.6 million, which includes $ 8.1 million for reimbursement of cleanup and damage remediation expenditures and the $ 1.2 million insurance receivable described above.

We recorded a gain of $ 4.7 million for insurance recoveries received in excess of the net book value of assets destroyed, net of the applicable deductible, which is included in the gains on dispositions of other property line in our Consolidated Statements of Operations.

As of September 30, 2021, we have utilized $ 2.6 million of the advanced payments from insurance towards new capital expenditures in support of the reconstruction efforts.

To date, we have received total advanced payments from insurance of approximately $ 17.8 million, which includes $ 8.1 million for reimbursement of cleanup and damage remediation expenditures.

As of March 31, 2022, we have utilized $ 6.5 million of the advanced payments from insurance towards new capital expenditures in support of the reconstruction efforts.

During the first quarter of 2022, we recorded an insurance receivable of approximately $ 7.3 million for additional property damage recoveries that we expect to be reimbursed under the terms of our insurance policy, and we recorded a corresponding gain, net of the applicable deductible, of $ 6.4 million, which is included in the gains on dispositions of other property line in our Consolidated Statements of Operations.

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.

Additionally, the Company may be entitled to business interruption proceeds related to the event.

We will not record these recoveries until final settlement has been reached with the insurance carriers.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements