What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-07-27 compared with 2022-04-27 · 278 added, 140 removed, 810 unchanged (34% of the section changed)

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

(in millions, except per share amounts)

1 unchanged sentence

Leasing 195.1 185.0 378.0 368.3

416.8 293.3 889.5 624.0

Operating costs:

2 unchanged sentences

Leasing 104.8 102.5 207.7 199.2

325.6 202.1 724.1 448.4

Selling, engineering, and administrative expenses:

2 unchanged sentences

Other 25.4 24.5 47.6 49.3

45.0 46.2 89.7 90.9

Gains on dispositions of property:

1 unchanged sentence

Other 0.9 1.0 14.4 10.8

27.8 12.1 53.1 23.6

Restructuring activities, net 1.0 ( 0.7 ) 1.0 ( 1.0 )

2 unchanged sentences

Interest expense, net 49.7 51.0 93.2 102.3

Loss on extinguishment of debt 1.5 11.7 1.5 11.7

Other, net ( 0.5 ) 0.8 ( 2.1 ) 2.0

50.7 63.5 92.6 116.0

Income (loss) from continuing operations before income taxes 22.3 ( 5.7 ) 35.2 ( 6.7 )

2 unchanged sentences

Deferred 3.8 ( 3.4 ) 5.0 ( 4.1 )

5.8 ( 2.9 ) 8.8 1.1

Income (loss) from continuing operations 16.5 ( 2.8 ) 26.4 ( 7.8 )

Income (loss) from discontinued operations, net of provision (benefit) for income taxes of $( 0.5 ), $ 2.1 , $( 2.5 ), and $ 4.4

( 3.4 ) 7.6 ( 10.3 ) 13.9

Loss on sale of discontinued operations, net of benefit for income taxes of $ 1.0 , $ — , $ 1.4 , and $ —

( 4.6 ) — ( 5.7 ) —

Net income 8.5 4.8 10.4 6.1

Net income (loss) attributable to noncontrolling interest 4.8 ( 7.9 ) 7.4 ( 9.9 )

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

Net income attributable to Trinity Industries, Inc.

$ 3.7 $ 12.7 $ 3.0 $ 16.0

Basic earnings per common share:

Income (loss) from continuing operations $ 0.09 $ ( 0.03 )

Income from continuing operations $ 0.14 $ 0.05 $ 0.23 $ 0.02

Income (loss) from discontinued operations ( 0.10 ) 0.07 ( 0.19 ) 0.13

Basic net income (loss) attributable to Trinity Industries, Inc.

Basic net income attributable to Trinity Industries, Inc.

$ 0.04 $ 0.12 $ 0.04 $ 0.15

Diluted earnings per common share:

Income (loss) from continuing operations $ 0.09 $ ( 0.03 )

Income from continuing operations $ 0.14 $ 0.05 $ 0.23 $ 0.02

Income (loss) from discontinued operations ( 0.10 ) 0.07 ( 0.19 ) 0.13

Diluted net income (loss) attributable to Trinity Industries, Inc.

Diluted net income attributable to Trinity Industries, Inc.

$ 0.04 $ 0.12 $ 0.04 $ 0.15

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

(in millions)

2 unchanged sentences

Derivative financial instruments:

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

Unrealized gains (losses) arising during the period, net of tax benefit (expense) of $( 1.0 ), $ 0.3 , $( 5.4 ), and $( 1.7 )

2.1 ( 0.4 ) 16.8 5.8

Reclassification adjustments for losses included in net income, net of tax benefit (expense) of $ 0.4 , $( 0.6 ),$ 1.3 , and $ 0.3

1.9 2.0 4.4 1.1

Defined benefit plans:

Amortization of net actuarial losses, net of tax benefit of $ — , $ 0.1 , $ — , and $ 0.1

Currency translation adjustments:

Reclassification adjustments for losses included in discontinued operations, net of tax benefit of $ — , $ — , $ — , and $ —

5.3 1.6 22.6 7.0

Comprehensive income 13.8 6.4 33.0 13.1

1 unchanged sentence

Comprehensive income attributable to Trinity Industries, Inc.

$ 10.0 $ 13.9 $ 26.4 $ 22.3

See accompanying notes to Consolidated Financial Statements.

2 unchanged sentences

Consolidated Balance Sheets

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

(in millions)

39 unchanged sentences

Consolidated Statements of Cash Flows

Three Months Ended

Six Months Ended

(in millions)

3 unchanged sentences

Loss on sale of discontinued operations, net of income taxes 5.7 —

Adjustments to reconcile net income to net cash provided by operating activities – continuing operations:

Adjustments to reconcile net income to net cash provided by (used in) operating activities – continuing operations:

Depreciation and amortization 136.2 131.8

5 unchanged sentences

Non-cash interest expense 7.2 6.6

Loss on early extinguishment of debt 1.5 11.7

Other ( 2.9 ) 6.8

7 unchanged sentences

Increase (decrease) in other liabilities ( 4.0 ) 1.0

Net cash provided by operating activities – continuing operations 28.5 69.3

Net cash provided by (used in) operating activities – continuing operations ( 61.3 ) 324.9

Net cash provided by (used in) operating activities – discontinued operations ( 12.0 ) 9.8

Net cash provided by operating activities 20.5 69.7

Net cash provided by (used in) operating activities ( 73.3 ) 334.7

Investing activities:

4 unchanged sentences

Acquisitions, net of cash acquired ( 9.4 ) ( 16.6 )

Proceeds from insurance recoveries 4.8 —

Other — ( 0.1 )

Net cash used in investing activities – continuing operations ( 198.5 ) ( 169.9 )

Payments related to sale of discontinued operations ( 2.7 ) —

Net cash used in investing activities – discontinued operations — ( 3.1 )

7 unchanged sentences

Distributions to noncontrolling interest ( 15.0 ) —

Net cash provided by financing activities 28.7 83.4

Net cash provided by (used in) financing activities 278.6 ( 134.4 )

Net increase in cash, cash equivalents, and restricted cash 4.1 27.3

30 unchanged sentences

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

Net income — — — 3.7 — — — 3.7 4.8 8.5

Other comprehensive income (loss) — — — — 6.3 — — 6.3 ( 1.0 ) 5.3

Cash dividends declared on common stock (1)

— — — ( 19.1 ) — — — ( 19.1 ) — ( 19.1 )

Distributions to noncontrolling interest

— — — — — — — — ( 8.8 ) ( 8.8 )

Stock-based compensation expense

— — 5.7 — — — — 5.7 — 5.7

Settlement of share-based awards, net 0.8 — 0.4 — — ( 0.2 ) ( 6.1 ) ( 5.7 ) — ( 5.7 )

Shares repurchased — — — — — ( 1.0 ) ( 25.3 ) ( 25.3 ) — ( 25.3 )

Accelerated share repurchase agreement — — 25.0 — — ( 0.8 ) ( 25.0 ) — — —

Retirement of treasury stock

( 2.0 ) — ( 36.4 ) ( 20.1 ) — 2.0 56.5 — — —

June 30, 2022

82.1 $ 0.8 $ — $ 991.1 $ 6.4 — $ ( 0.7 ) $ 997.6 $ 258.6 $ 1,256.2

(1) Dividends of $ 0.23 per common share for all periods presented in 2022.

Common Stock Capital in

22 unchanged sentences

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 $ 0.23 and $ 0.21 per common share for the three months ended March 31, 2022 and 2021, respectively.

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

— — 4.1 — — — — 4.1 — 4.1

Settlement of share-based awards, net 1.1 — 0.4 — — ( 0.3 ) ( 9.1 ) ( 8.7 ) — ( 8.7 )

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

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

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

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 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.

In our opinion, all normal and recurring adjustments necessary for a fair presentation of our financial position as of June 30, 2022, the results of operations for the three and six months ended June 30, 2022 and 2021, and cash flows for the six months ended June 30, 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 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.

Due to seasonal and other factors, including the ongoing impacts of the coronavirus pandemic (“COVID-19”), the results of operations for the six months ended June 30, 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.

18 unchanged sentences

Contingent rents are recognized when the contingency is resolved.

Selling profit or loss associated with sales-type leases is recognized upon lease commencement, and a net investment in the sales-type lease is recorded on the Consolidated Balance Sheet.

Selling profit or loss associated with sales-type leases is recognized upon lease commencement, and a net investment in the sales-type lease is recorded in the Consolidated Balance Sheet.

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

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

See "Lease Accounting" below for additional information regarding sales-type leases as of June 30, 2022.

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

9 unchanged sentences

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.

We recorded contract assets of $ 4.5 million as of both June 30, 2022 and December 31, 2021 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.

Unsatisfied Performance Obligations

The following table includes estimated revenue expected to be recognized in future periods related to performance obligations that are unsatisfied or partially satisfied as of March 31, 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

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 June 30, 2022 and the percentage of the outstanding performance obligations as of June 30, 2022 expected to be delivered during the remainder of 2022:

Unsatisfied performance obligations at June 30, 2022

Amount Percent expected to be delivered in 2022

10 unchanged sentences

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.

The final amount of backlog attributable to the Leasing Group may vary by the time of delivery as customers may elect to change their procurement decision.

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

2 unchanged sentences

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 of June 30, 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.

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Consolidated Statements of Operations

4 unchanged sentences

Right-of-use assets recognized in exchange for new lease liabilities $ 17.8 $ 19.7

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Consolidated Balance Sheets

9 unchanged sentences

Leasing Group Non-Leasing Group Total

Remaining nine months of 2022 $ 9.2 $ 5.7 $ 14.9

Remaining six months of 2022 $ 6.6 $ 4.1 $ 10.7

2023 11.4 7.8 19.2

11 unchanged sentences

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.

As of June 30, 2022, non-Leasing Group operating leases were not significant, and we had no direct finance leases.

We manage risks associated with residual values of leased railcars by investing across a diverse portfolio of railcar types, staggering lease maturities within any given railcar type, avoiding concentration of railcar type and industry, and actively participating in secondary markets.

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

(in millions)

3 unchanged sentences

Profit recognized at sales-type lease commencement (1)

$ — $ — $ 1.3 $ —

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

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

Remaining nine months of 2022 $ 421.4

Remaining six months of 2022 $ 295.5

Thereafter 304.2

2 unchanged sentences

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

Remaining nine months of 2022 $ 0.8

Remaining six months of 2022 $ 0.7

Thereafter 11.0

13 unchanged sentences

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

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.

During the six months ended June 30, 2022, we recognized approximately $ 0.8 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 $ 10.3 million at June 30, 2022.

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

In June 2022, the Leasing Group acquired, from an unrelated seller, a portfolio of railcars for $ 132.1 million in cash.

This transaction was recorded as an asset acquisition within the Leasing Group, based on valuations of the acquired assets and liabilities at their acquisition date fair value using Level 3 inputs.

As a result of the purchase transaction, the Leasing Group acquired approximately 3,800 railcars, substantially all of which are currently under lease to third parties.

We recorded acquired railcars of $ 125.0 million, lease-related intangible assets of $ 7.8 million, and certain other immaterial assets and liabilities in our Consolidated Balance Sheet as of the purchase date.

In May 2022, we completed the acquisition of a company that owns and operates an end-to-end rail logistics software platform providing a real-time data universe to freight rail shippers and operators.

This transaction was recorded as a business combination within the Leasing Group, based on valuations of the acquired assets and liabilities at their acquisition date fair value using Level 3 inputs.

The acquisition did not have a significant impact on our Consolidated Financial Statements.

Based on our preliminary purchase price allocation, we recorded intellectual property of $ 5.2 million, which will be amortized over five years, goodwill of $ 5.0 million, and certain other immaterial assets and liabilities.

In January 2021, we completed the acquisition of a company that owns and operates proprietary railcar cleaning technology systems.

2 unchanged sentences

This transaction resulted in goodwill of $ 7.0 million.

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.

As of June 30, 2022 and December 31, 2021, the carrying amount of our goodwill totaled $ 159.2 million and $ 154.2 million, respectively, 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 months ended March 31, 2022 and 2021 are as follows:

The changes in the accruals for warranties for the three and six months ended June 30, 2022 and 2021 are as follows:

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

(in millions)

8 unchanged sentences

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.

During the three and six months ended June 30, 2022, we recorded a loss on sale of discontinued operations of $ 4.3 million ($ 3.3 million, net of income taxes) and $ 5.8 million ($ 4.4 million, net of income taxes), respectively, which included a $ 2.7 million payment to Rush Hour during the three months ended June 30, 2022 representing a final working capital adjustment, as well as additional transaction costs incurred during these periods.

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.

3 unchanged sentences

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.

The amounts billed for transition services were not material to our results of operations for the three and six months ended June 30, 2022.

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.

Similar expenses related to these retained obligations incurred during the three and six months ended June 30, 2022, and that may be incurred in the future, 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:

The following is a summary of THP's operating results included in income (loss) from discontinued operations for the three and six months ended June 30, 2022 and 2021:

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

(in millions)

6 unchanged sentences

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

In addition to the THP activities above, results for the three and six months ended June 30, 2022 include $ 1.3 million of loss on sale of discontinued operations associated with businesses previously disposed.

Additionally, a loss of $ 0.4 million included in income (loss) from discontinued operations, net of income taxes for the six months ended June 30, 2021 related to the spin-off of Arcosa, Inc.

Derivative Instruments and Fair Value Measurements

Derivative Instruments

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 use derivative instruments to mitigate interest rate risk, including risks associated with the impact of changes in interest rates in anticipation of future debt issuances and to offset interest rate variability of certain floating rate debt issuances outstanding.

We also use derivative instruments to mitigate the impact of changes in foreign currency exchange rates.

5 unchanged sentences

Included in accompanying balance sheet

at March 31, 2022

at June 30, 2022

AOCI – loss/(income)

5 unchanged sentences

TRIP Holdings warehouse loan $ 788.5 3.60 % $ — $ 0.3 $ 0.3

Tribute Rail secured railcar equipment notes (2)

$ 256.0 2.86 % $ — $ 0.9 $ 1.3

2017 promissory notes – interest rate cap $ 169.3 3.00 % $ — $ ( 0.3 ) $ —

1 unchanged sentence

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

(2) In May 2022, Tribute Rail LLC ("Tribute Rail"), an indirect, wholly-owned subsidiary of TRIP Holdings, entered into and subsequently terminated a forward starting interest rate swap to hedge the risk of potential interest rate increases prior to the May 2022 Tribute Rail debt issuance.

Effect on interest expense – increase/(decrease)

Three Months Ended

March 31, Expected effect during next twelve months

June 30, Six Months Ended

June 30, Expected effect during next twelve months

2022 2021 2022 2021

(in millions)

3 unchanged sentences

TRIP Holdings warehouse loan $ 0.3 $ 0.5 $ 0.7 $ 1.0 $ 0.6

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

Tribute Rail secured railcar equipment notes $ 0.1 $ — $ 0.1 $ — $ 0.7

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

1 unchanged sentence

2017 promissory notes – interest rate swap $ 2.2 $ 3.1 $ 5.0 $ 6.2 $ 10.0

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

(1) Based on the fair value of open hedges as of June 30, 2022.

Foreign Currency Hedge

1 unchanged sentence

Information related to our foreign currency hedge is as follows:

accompanying balance sheet at March 31, 2022

accompanying balance

sheet at June 30, 2022

Effect on cost of revenues – increase/(decrease)

1 unchanged sentence

loss/(income) Three Months Ended

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

June 30, Six Months Ended

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

2022 2021 2022 2021

(in millions)

$ 42.5 $ 0.8 $ ( 1.3 ) $ ( 0.4 ) $ ( 2.3 ) $ ( 0.2 ) $ ( 6.0 ) $ ( 1.3 )

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

(1) Based on the fair value of open hedges as of June 30, 2022.

Fair Value Measurements

6 unchanged sentences

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

March 31, 2022 December 31, 2021

June 30, 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:

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

(in millions)

Foreign currency hedge (1)

Interest rate hedge (1)

Total assets $ 7.7 $ —

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

As of June 30, 2022 and December 31, 2021, we have no assets measured on a recurring basis as Level 3 in the fair value hierarchy.

See Note 1 for more information regarding non-recurring fair value measurements involving Level 3 inputs resulting from acquisition activity.

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

17 unchanged sentences

We operate principally in North America.

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

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

2 unchanged sentences

Total Revenues $ 195.3 $ 430.6 $ ( 208.9 ) $ ( 0.2 ) $ 416.8

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

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

2 unchanged sentences

Total Revenues $ 185.1 $ 261.8 $ ( 151.0 ) $ ( 2.6 ) $ 293.3

Six Months Ended June 30, 2022

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

External revenue $ 378.0 $ 511.5 $ — $ — $ 889.5

Intersegment revenue 0.4 310.2 ( 310.2 ) ( 0.4 ) —

Total revenues $ 378.4 $ 821.7 $ ( 310.2 ) $ ( 0.4 ) $ 889.5

Six Months Ended June 30, 2021

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

External revenue $ 368.3 $ 255.7 $ — $ — $ 624.0

Intersegment revenue 0.3 267.1 ( 262.3 ) ( 5.1 ) —

Total revenues $ 368.6 $ 522.8 $ ( 262.3 ) $ ( 5.1 ) $ 624.0

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

Three Months Ended March 31,

Three Months Ended

June 30, Six Months Ended June 30,

2022 2021 2022 2021

(in millions)

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

At June 30, 2022, the carrying value of our investment in TRIP Holdings and RIV 2013 totaled $ 136.6 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") and TRIP Railcar Co.

LLC ("TRIP Railcar Co.").

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

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.

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

Our controlling interest in each of TRIP Holdings and RIV 2013 results from our combined role as both equity member and agent/servicer.

1 unchanged sentence

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

The assets of each of Triumph Rail, TRIP Railcar Co., and TRP-2021 may only be used to satisfy the particular subsidiary's liabilities, and the creditors of each of Triumph Rail, TRIP Railcar Co., and TRP-2021 have recourse only to the particular subsidiary's assets.

The assets of each of Triumph Rail, Tribute Rail, and TRP-2021 may only be used to satisfy the particular subsidiary's liabilities, and the creditors of each of Triumph Rail, Tribute Rail, and TRP-2021 have recourse only to the particular subsidiary's assets.

Each of TILC and the third-party equity investors receive distributions from TRIP Holdings and RIV 2013, when available, in proportion to its respective equity interests, and has an interest in the net assets of the partially-owned subsidiaries upon a liquidation event in the same proportion.

TILC is paid fees for the services it provides to Triumph Rail, TRIP Railcar Co., and TRP-2021 and has the potential to earn certain incentive fees.

TILC is paid fees for the services it provides to Triumph Rail, Tribute Rail, and TRP-2021 and has the potential to earn certain incentive fees.

There are no remaining equity commitments with respect to TRIP Holdings or RIV 2013.

See Note 8 regarding TRIP Holdings and RIV 2013, including the redemption and refinancing of the debt of their respective subsidiaries.

See Note 8 regarding TRIP Holdings and RIV 2013, including the debt issuance of Tribute Rail and the repayment of TRIP Railcar Co.

LLC's ("TRIP Railcar Co.") outstanding term loan agreement.

Investment in Unconsolidated Affiliate

9 unchanged sentences

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

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.

At June 30, 2022, the carrying value of TILC’s equity investment in Signal Rail was $ 6.3 million, which is included in other assets in our Consolidated Balance Sheets.

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

2 unchanged sentences

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

March 31, 2022

June 30, 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 March 31,

2022 2021 Percent

($ in millions) Change

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 Percent 2022 2021 Percent

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

Leasing and management $ 195.3 $ 185.1 5.5 % $ 378.4 $ 368.6 2.7 %

2 unchanged sentences

Lease portfolio sales (2)

26.9 11.1 * 38.7 12.8 *

Total operating profit $ 105.5 $ 81.1 30.1 % $ 185.3 $ 159.4 16.2 %

9 unchanged sentences

$ 12.6 $ 13.2 ( 4.5 ) % $ 25.4 $ 24.5 3.7 %

Interest $ 38.7 $ 45.7 ( 15.3 ) %

$ 46.0 $ 57.0 ( 19.3 ) % $ 84.7 $ 102.7 ( 17.5 ) %

* Not meaningful

6 unchanged sentences

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

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

(3) Depreciation expense 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.

(2) Includes $ 1.3 million selling profit associated with sales-type leases for the six months ended June 30, 2022.

(3) Depreciation expense includes $ 3.9 million and $ 6.1 million for the three and six months ended June 30, 2022, respectively, related to the disposal of certain railcar components associated with our sustainable railcar conversion program.

Additionally, for the three and six months ended June 30, 2021, depreciation expense includes $ 2.6 million related to our sustainable railcar conversion program.

(4) Interest expense for the three and six months ended June 30, 2022 includes $ 1.5 million of loss on extinguishment of debt associated with the repayment of TRIP Railcar Co.'s outstanding term loan agreement.

Interest expense for the three and six months ended June 30, 2021 includes $ 11.7 million of loss on extinguishment of debt associated with the refinancing of our partially-owned subsidiaries' debt.

Information related to lease portfolio sales is as follows:

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

($ in millions)

1 unchanged sentence

Operating profit on lease portfolio sales (1)

$ 26.9 $ 11.1 $ 37.4 $ 12.8

Operating profit margin on lease portfolio sales 18.7 % 15.5 % 17.4 % 14.4 %

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

(1) Excludes $ 1.3 million selling profit associated with sales-type leases for the six months ended June 30, 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 nine months of 2022 2023 2024 2025 2026 Thereafter Total

Remaining six months of 2022 2023 2024 2025 2026 Thereafter Total

(in millions)

1 unchanged sentence

Wholly-owned subsidiaries.

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.

The Leasing Group’s debt at June 30, 2022 consisted primarily of non-recourse debt.

As of June 30, 2022, Trinity’s wholly-owned subsidiaries included in the Leasing Group held equipment with a net book value of $ 5,253.1 million, which is pledged solely as collateral for Leasing Group debt held by those subsidiaries.

The net book value of unpledged equipment at June 30, 2022 was $ 579.2 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 nine months of 2022 2023 2024 2025 2026 Thereafter Total

Remaining six 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:

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

(in millions)

19 unchanged sentences

$ 6,944.1 $ 6,846.9

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

March 31, 2022 December 31, 2021

The carrying amounts of our debt are as follows:

June 30, 2022 December 31, 2021

(in millions)

15 unchanged sentences

Secured railcar equipment notes, net of unamortized discount of $ 0.4 and $ 0.3

1,217.7 903.5

TRIP Railcar Co.

10 unchanged sentences

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

March 31, 2022 December 31, 2021

June 30, 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 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.

During the six months ended June 30, 2022, we had total borrowings of $ 315.0 million and total repayments of $ 195.0 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).

Of the $ 301.7 million remaining unused amount, $ 123.9 million was available for borrowing as of June 30, 2022.

The outstanding letters of credit as of June 30, 2022 are scheduled to expire in July 2023.

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 June 30, 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 June 30, 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 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.

In July 2022, we amended our revolving credit facility to increase the maximum leverage ratio beginning June 30, 2022 to provide additional flexibility.

As of June 30, 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.

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.

During the six months ended June 30, 2022, we had total borrowings of $ 313.7 million and total repayments of $ 219.2 million under the TILC warehouse loan facility.

Of the remaining unused facility amount of $ 343.7 million, $ 246.0 million was available as of June 30, 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 2.91 % at June 30, 2022.

TRL-2022 – In April 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, issued 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 bear interest at a fixed rate of 4.55 %, are payable monthly, and have a stated final maturity date of May 20, 2052.

The TRL-2022 Notes are obligations of TRL-2022 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 to be acquired and owned by TRL-2022.

Net proceeds received from the railcars acquired in connection with the issuance of the TRL-2022 Notes were used to repay approximately $ 209.9 million of borrowings under TILC's warehouse loan facility and for general corporate purposes.

Tribute Rail – In May 2022, Tribute Rail, an indirect, wholly-owned subsidiary of TRIP Holdings, issued an aggregate principal amount of (i) $ 290.0 million of its Series 2022-1 Class A Green Secured Railcar Equipment Notes (the “Class A Notes”) and (ii) $ 37.0 million of its Series 2022-1 Class B Green Secured Railcar Equipment Notes (the “Class B Notes”) (the Class A Notes and the Class B Notes are, collectively, the “Tribute Rail Notes”).

The Class A Notes bear interest at a fixed rate of 4.76 %, and the Class B Notes bear interest at a fixed rate of 5.75 %.

The Tribute Rail Notes are payable monthly and have a stated final maturity date of May 17, 2052.

We incurred $ 3.4 million in debt issuance costs, which will be amortized to interest expense through the anticipated repayment date of the Tribute Rail Notes.

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

Tribute Rail used the proceeds from the sale of the Tribute Rail Notes to purchase railcars and related operating leases from TRIP Railcar Co.

TRIP Railcar Co.

used the proceeds from Tribute Rail to repay its outstanding term loan agreement due June 2025, of which $ 319.4 million was outstanding at the redemption date.

In connection with the redemption, we recognized a loss on extinguishment of debt of $ 1.5 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 three and six months ended June 30, 2022.

Each of our secured railcar equipment notes, including the TRL-2022 Notes and the Tribute Rail Notes, generally has an anticipated repayment date and a stated final maturity date.

While the stated final maturity date of these notes is in 2052, the cash flows from the encumbered assets of each of TRL-2022 and Tribute Rail 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.

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 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.

Subsequent Event – Amended Revolving Credit Facility – On July 25, 2022, we amended our $ 450.0 million unsecured corporate revolving credit facility to extend its maturity date to the earlier of (i) July 25, 2027 or (ii) July 2, 2024 if our 4.55 % senior notes due 2024 have not been repaid in full by that date.

We may also increase the amount of the commitments under the revolving credit facility by an aggregate amount not to exceed $ 200.0 million, subject to certain conditions.

The revolving credit facility will bear interest at a variable rate, which is initially set at Secured Overnight Financing Rate ("SOFR") plus 1.85 %.

A commitment fee will accrue on the average daily unused portion of the revolving credit facility at the rate of 0.175 % to 0.40 %, initially set at 0.25 %.

Additionally, we increased the maximum leverage ratio beginning June 30, 2022 to provide additional flexibility.

See Part II, Item 5.

for further information.

The effective tax rate from continuing operations for the three and six months ended June 30, 2022 was 26.0 % and 25.0 %, respectively, which differs from the U.S.

statutory rate of 21.0 % primarily due to state income taxes, foreign taxes, non-deductible executive compensation, excess tax benefits associated with equity-based compensation, and taxes not recorded on our non-controlling interests in partially-owned subsidiaries.

For the three months ended June 30, 2021, we recorded income tax benefit of $ 2.9 million on a loss from continuing operations before income taxes of $ 5.7 million, which differs from the U.S.

statutory rate primarily due to excess tax benefits associated with equity-based compensation.

For the six months ended June 30, 2021, we recorded income tax expense of $ 1.1 million on a loss from continuing operations before income taxes of $ 6.7 million, which differs from the U.S.

statutory rate primarily due to adjustments to the Coronavirus Aid, Relief, and Economic Security Act carryback benefit previously recognized, partially offset by excess tax benefits associated with equity-based compensation.

The total income tax receivable position as of June 30, 2022 was $ 8.5 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.

2 unchanged sentences

Employee Retirement Plans

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.

Our defined contribution expense for the three and six months ended June 30, 2022 was $ 2.2 million and $ 4.3 million, respectively.

Our defined contribution expense for the three and six months ended June 30, 2021 was $ 1.9 million and $ 4.3 million, respectively.

The net periodic benefit cost related to our Supplemental Executive Retirement Plan was $ 0.1 million and $ 0.3 million for the three and six months ended June 30, 2022.

The net periodic benefit cost related to our Supplemental Executive Retirement Plan was $ 0.2 million and $ 0.4 million for the three and six months ended June 30, 2021, respectively.

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

4 unchanged sentences

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 AOCI.

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.

During the three and six months ended June 30, 2021, we used $ 1.0 million and $ 2.2 million, respectively, 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.

During the three and six months ended June 30, 2022, we used $ 0.2 million to fund pension administrative expenses.

The remaining surplus of the Pension Plan of $ 0.4 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.

Accumulated Other Comprehensive Income (Loss)

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

Changes in AOCI for the six months ended June 30, 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)

5 unchanged sentences

— 4.4 0.1 4.5

Amounts reclassified to discontinued operations, net of tax 1.3 — — 1.3

noncontrolling interest — 0.8 — 0.8

Other comprehensive income 1.3 22.0 0.1 23.4

Balances at March 31, 2022

Balances at June 30, 2022

$ — $ 9.8 $ ( 3.4 ) $ 6.4

2 unchanged sentences

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.

Changes in currency translation adjustments above relate to the final resolution of amounts associated with businesses previously disposed and are included in loss on sale of discontinued operations, net of income taxes in our Consolidated Statements of Operations.

Common Stock and Stock-Based Compensation

4 unchanged sentences

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.

The ASR was completed in April 2022.

Share repurchase activity under the authorized program is as follows:

7 unchanged sentences

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

April 1, 2022 through June 30, 2022 1,760,462 50.3 $ 47.8 (1)

Total 6,915,953 $ 202.2

(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.

(1) Share repurchases during the second quarter of 2022 included 760,602 shares at a cost of $ 25.0 million representing the final settlement of the ASR, which was funded in December 2021 but a portion of which remained outstanding as of December 31, 2021.

During the three and six months ended June 30, 2021, share repurchases totaled 10.5 million and 11.8 million, respectively, at a cost of approximately $ 290.8 million and $ 327.6 million, respectively, under a previous share repurchase program, which was completed in the third quarter of 2021.

Share repurchases during the three and six months ended June 30, 2021 included 8.1 million shares, at a cost of approximately $ 222.5 million, from a privately negotiated transaction with ValueAct Capital Master Fund, L.P.

Certain shares of stock repurchased during June 2022, totaling $ 2.9 million, were cash settled in July 2022 in accordance with normal settlement practices.

Stock-Based Compensation

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

Stock-based compensation expense totaled approximately $ 5.7 million and $ 10.8 million for the three and six months ended June 30, 2022, respectively.

Stock-based compensation expense totaled approximately $ 4.1 million and $ 9.2 million for the three and six months ended June 30, 2021, respectively.

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”).

2 unchanged sentences

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 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.

Beginning in 2020, certain RSU grants provide for full vesting when the award recipients retire having reached 60 years of age and having provided at least ten years of service to the Company, provided that the awards remain outstanding for a period of six months from the date of grant.

The expense for these awards is recognized over the applicable service period for each of the eligible award recipients.

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 three months ended March 31, 2022:

The following table summarizes stock-based compensation awards granted during the six months ended June 30, 2022:

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

Restricted stock units 609,736 $ 25.68

Restricted stock awards 22,730 $ 25.63

Performance units 242,519 $ 29.90

Earnings Per Common Share

Basic net income (loss) attributable to Trinity Industries, Inc.

per common share ("EPS") is computed by dividing net income (loss) attributable to Trinity remaining after allocation to unvested restricted shares by the weighted average number of basic common shares outstanding for the period.

Basic net income attributable to Trinity Industries, Inc.

per common share ("EPS") is computed by dividing net income attributable to Trinity remaining after allocation to unvested restricted shares by the weighted average number of basic common shares outstanding for the period.

Except when the effect would be antidilutive, the calculation of diluted EPS includes the net impact of potentially dilutive common shares.

The Company has certain unvested RSAs that participate in dividends on a nonforfeitable basis and are therefore considered to be participating securities.

Consequently, diluted net income (loss) attributable to Trinity Industries, Inc.

Consequently, diluted net income attributable to Trinity Industries, Inc.

per common share is calculated under both the two-class method and the treasury stock method, and the more dilutive of the two calculations is presented.

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.

Three Months Ended March 31,

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

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

(in millions, except per share amounts)

1 unchanged sentence

Net (income) loss attributable to noncontrolling interest ( 4.8 ) 7.9 ( 7.4 ) 9.9

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

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

11.7 5.1 19.0 2.1

Income (loss) from discontinued operations, net of income taxes ( 3.4 ) 7.6 ( 10.3 ) 13.9

1 unchanged sentence

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

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

( 8.0 ) 7.6 ( 16.0 ) 13.9

Net income attributable to Trinity Industries, Inc.

$ 3.7 $ 12.7 $ 3.0 $ 16.0

Basic weighted average shares outstanding 82.4 102.8 82.7 106.4

1 unchanged sentence

Diluted weighted average shares outstanding

84.4 105.1 84.9 108.9

Basic earnings per common share:

Income (loss) from continuing operations $ 0.09 $ ( 0.03 )

Income from continuing operations $ 0.14 $ 0.05 $ 0.23 $ 0.02

Income (loss) from discontinued operations ( 0.10 ) 0.07 ( 0.19 ) 0.13

Basic net income (loss) attributable to Trinity Industries, Inc.

Basic net income attributable to Trinity Industries, Inc.

$ 0.04 $ 0.12 $ 0.04 $ 0.15

Diluted earnings per common share:

Income (loss) from continuing operations $ 0.09 $ ( 0.03 )

Income from continuing operations $ 0.14 $ 0.05 $ 0.23 $ 0.02

Income (loss) from discontinued operations ( 0.10 ) 0.07 ( 0.19 ) 0.13

Diluted net income (loss) attributable to Trinity Industries, Inc.

Diluted net income attributable to Trinity Industries, Inc.

$ 0.04 $ 0.12 $ 0.04 $ 0.15

46 unchanged sentences

Harman filed a motion for reconsideration of the trial court’s order denying leave to file an amended complaint.

On June 27, 2022, the trial court denied Mr.

Harman’s motion for reconsideration seeking leave to file an amended complaint with prejudice.

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

7 unchanged sentences

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.

The parties have reached an agreement 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.

Defendants' settlement avoids the uncertainty and expense of continued litigation.

On June 22, 2022, the parties filed a stipulation of dismissal with prejudice.

During the six months ended June 30, 2022, the Company recorded a $ 5.0 million charge 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.”

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

4 unchanged sentences

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.

On November 5, 2015, a lawsuit was filed against the Company titled Jackson County, Missouri, individually and on behalf of a class of others similarly situated vs.

Trinity Industries, Inc.

1 unchanged sentence

1516-CV23684 (Circuit Court of Jackson County, Missouri).

The case is being brought by plaintiff for and on behalf of itself and all Missouri counties with a population of 10,000 or more persons, including the City of St.

The case was being brought by plaintiff for and on behalf of itself and all Missouri counties with a population of 10,000 or more persons, including the City of St.

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

The plaintiff 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.

The plaintiff seeks compensatory damages, interest, attorneys' fees and costs, and in the alternative plaintiff seeks a declaratory judgment that the ET Plus is defective, the Company’s conduct was unlawful, and class-wide costs and expenses associated with removing and replacing the ET Plus throughout Missouri.

The plaintiff alleged that the Company and THP did not disclose design changes to the ET Plus and these allegedly undisclosed design changes made the ET Plus allegedly defective, unsafe, and unreasonably dangerous.

The plaintiff alleged product liability negligence, product liability strict liability, and negligently supplying dangerous instrumentality for supplier’s business purposes.

The plaintiff sought compensatory damages, interest, attorneys' fees and costs, and in the alternative plaintiff sought a declaratory judgment that the ET Plus is defective, the Company’s conduct was unlawful, and class-wide costs and expenses associated with removing and replacing the ET Plus throughout Missouri.

On December 6, 2017, the Court granted plaintiff's Motion for Class Certification, certifying a class of Missouri counties with populations of 10,000 or more persons, including the City of St.

Louis and the State of Missouri's transportation authority that have or had ET Plus guardrail end terminals with 4-inch wide guide channels installed on roadways they own or maintain.

The parties have reached an agreement in principle to settle all claims in this case without any admission of liability or fault.

The parties have reached an agreement to settle all claims in this case without any admission of liability or fault.

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

The 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 Company’s settlement with the class avoids the uncertainty and expense of continued litigation.

On May 30, 2022, the trial court granted preliminary approval of the settlement.

A final approval hearing is scheduled for August 30, 2022.

Pursuant to the settlement, the Company will pay for the past replacement of certain ET Plus systems, for locating and replacing certain existing undamaged ET Plus systems, and for attorneys’ fees and costs.

In accordance with ASC 450, Contingencies, the Company recorded a pre-tax charge of $ 23.9 million ($ 18.3 million, net of income taxes) during the year ended December 31, 2021, which was included in income from discontinued operations, net of income taxes, in our Consolidated Statement of Operations, based on the Company’s assessment that a settlement was probable and the estimated costs to resolve this action.

Certain amounts involved in the settlement cannot be precisely determined at this time as the actual number of qualifying ET Plus systems that will be replaced as part of the settlement is not currently known.

Consequently, the corresponding liability will be periodically reviewed and adjusted, when appropriate, for a number of factors, including differences between actual and estimated costs.

The accrual and related range of reasonably possible loss related to this matter are included in the amounts described below under "Other matters."

7 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 $ 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 range of reasonably possible losses for such matters is $ 47.7 million to $ 66.1 million, which includes our rights in indemnity and recourse to third parties of approximately $ 20.4 million, which is recorded in other assets in our Consolidated Balance Sheet as of June 30, 2022.

This range includes any amounts related to the Highway Products litigation matters described above in the section titled “Highway products litigation." At June 30, 2022, total accruals of $ 48.7 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.

9 unchanged sentences

To date, we have received total advanced payments from insurance of approximately $ 22.6 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.

As of June 30, 2022, we have utilized $ 14.5 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.

During the second quarter of 2022, we received $ 4.8 million of reimbursements for property damage recoveries, resulting in a remaining insurance receivable of $ 2.5 million as of June 30, 2022.

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.

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