TRINITY INDUSTRIES INC 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide management's perspective on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. Our MD&A should be read in conjunction with the unaudited Consolidated Financial Statements and related Notes in Part I, Item 1 of this Quarterly Report on Form 10-Q and Item 8, Financial Statements and Supplementary Data, of our 2021 Annual Report on Form 10-K. This MD&A includes financial measures compiled in accordance with generally accepted accounting principles ("GAAP") and certain non-GAAP measures. Please refer to the Non-GAAP Financial Measures section herein for information on the non-GAAP measures included in the MD&A, reconciliations to the most directly comparable GAAP financial measure, and the reasons why management believes each measure is useful to management and investors. 32 Table of Contents Forward-Looking Statements This quarterly report on Form 10-Q (or statements otherwise made by the Company or on the Company’s behalf from time to time in other reports, filings with the Securities and Exchange Commission (“SEC”), news releases, conferences, website postings or otherwise) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements contained herein that are not historical facts are forward-looking statements and involve risks and uncertainties. These forward-looking statements include expectations, beliefs, plans, objectives, future financial performances, estimates, projections, goals, and forecasts. Trinity uses the words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “forecasts,” “may,” “will,” “should,” and similar expressions to identify these forward-looking statements. Potential factors, which could cause our actual results of operations to differ materially from those in the forward-looking statements, include, among others: • market conditions and customer demand for our business products and services; • the cyclical nature of the industries in which we compete; • variations in weather in areas where our products are sold or used; • naturally-occurring events, pandemics, and/or disasters causing disruption to our manufacturing, product deliveries, and production capacity, thereby giving rise to an increase in expenses, loss of revenue, and property losses; • the impact of the coronavirus pandemic (“COVID-19”) and the response thereto, on, among other things, demand for our products and services, our customers' ability to pay, disruptions to our supply chain, our liquidity and financial position, results of operations, stock price, payment of dividends, our ability to generate new railcar orders, our ability to originate and/or renew leases at favorable rates, our ability to convert backlog to revenue, and the operational status of our facilities; • disruptions in the transportation network used to deliver our products, which may impact our ability to timely deliver railcars to our customers; • shortages of labor; • impacts from asset impairments and related charges; • the timing of introduction of new products; • the timing and delivery of customer orders, lease portfolio sales, or a breach of customer contracts; • the creditworthiness of customers and their access to capital; • product price changes; • changes in mix of products sold; • the costs incurred to align manufacturing capacity with demand and the extent of its utilization; • the operating leverage and efficiencies that can be achieved by our manufacturing businesses; • availability and costs of steel, component parts, supplies, and other raw materials; • competition and other competitive factors; • changing technologies; • material failure, interruption of service, compromised data security, phishing emails, or cybersecurity breaches in our information technology (or that of the third-party vendors who provide information technology or other services); • surcharges and other fees added to fixed pricing agreements for steel, component parts, supplies, and other raw materials; • interest rates and capital costs; • counter-party risks for financial instruments; • long-term funding of our operations; • taxes; • the stability of the governments and political and business conditions in certain foreign countries, particularly Mexico; • geopolitical events, including armed conflicts, and their impact on supply chains, pricing, and the global economy; • changes in import and export quotas and regulations; • business conditions in emerging economies; • costs and results of litigation, including trial and appellate costs; • changes in accounting standards or inaccurate estimates or assumptions in the application of accounting policies; • changes in laws and regulations that may have an adverse effect on demand for our products and services, our results of operations, financial condition or cash flows; • legal, regulatory, and environmental issues, including compliance of our products with mandated specifications, standards, or testing criteria and obligations to remove and replace our products following installation or to recall our products and install different products manufactured by us or our competitors; 33 Table of Contents • actions by U.S. and/or foreign governments (particularly Mexico and Canada) relative to federal government budgeting, taxation policies, government expenditures, borrowing/debt ceiling limits, tariffs, and trade policies; • the use of social or digital media to disseminate false, misleading and/or unreliable or inaccurate information; and • the inability to sufficiently protect our intellectual property rights. Any forward-looking statement speaks only as of the date on which such statement is made. Except as required by federal securities laws, Trinity undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made. For a discussion of risks and uncertainties which could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” in our 2021 Annual Report on Form 10-K, this Form 10-Q and future Forms 10-Q and Current Reports on Forms 8-K. Company Overview Trinity Industries, Inc. and its consolidated subsidiaries (“Trinity,” “Company,” “we,” “our,” or "us") own businesses that are leading providers of railcar products and services in North America. Our rail-related businesses market their railcar products and services under the trade name TrinityRail ® . The TrinityRail platform provides railcar leasing and management services, railcar manufacturing, and railcar maintenance and modification services. 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. In connection with the sale of THP, we agreed to indemnify Rush Hour for certain liabilities related to the ET-Plus® System, a highway guardrail end-terminal system (the “ET Plus”). Consequently, results from discontinued operations 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 and six months ended June 30, 2022 and that may be incurred in the future related to these retained obligations will likewise be reported in discontinued operations. See Note 2 of the Consolidated Financial Statements for further information related to the sale of THP and Note 14 for information regarding the retained liabilities. Following the sale of THP, we report our operating results in two reportable segments: (1) the Railcar Leasing and Management Services Group (the "Leasing Group"), which owns and operates a fleet of railcars and provides third-party fleet leasing, management, and administrative services; and (2) the Rail Products Group, which manufactures and sells railcars and related parts and components, and provides railcar maintenance and modification services. Additionally, 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. Executive Summary Recent Market Developments COVID-19 The COVID-19 pandemic significantly impacted global and North American economic conditions. The social and economic effects of the pandemic have been widespread and are ongoing. We continue to monitor the operational and financial impacts of the pandemic and other economic factors. Although we have not experienced significant interruptions to our daily operations or a material impact to our operating costs, the economic pressures created by the pandemic have negatively impacted our results of operations for the three and six months ended June 30, 2022. While we continue to see signs of economic recovery, we are monitoring the evolving impacts of COVID-19 variants on the economy and our workforce, including reduced employee availability, and expect that our results of operations may remain under pressure in the near term. Please refer to the "Forward-Looking Statements" section above and Part I, Item 1A “Risk Factors” of the 2021 Annual Report on Form 10-K for additional information regarding the potential impacts of COVID-19 on our business. Other Cyclical and Seasonal Trends Impacting Our Business 34 Table of Contents The industries in which our customers operate are cyclical in nature. Weaknesses in certain sectors of the North American and global economy may make it more difficult to sell or lease certain types of railcars. Additionally, changes in commodity prices, including fluctuations in the crude oil market, or changes in demand for certain commodities, could impact customer demand for various types of railcars. Further, disruptions in the global supply chain have impacted demand for, and the costs of, certain of our products and services. We continuously assess demand for our products and services and take steps to rationalize and diversify our leased railcar portfolio and align our operating capacity appropriately. We diligently evaluate the creditworthiness of our customers and monitor performance of relevant market sectors; however, weaknesses in any of these market sectors could affect the financial viability of our underlying Leasing Group customers, which could continue to negatively impact our recurring leasing revenues and operating profits. Railcar loading volumes, levels of railcars in storage, and orders for new railcar equipment have improved, and the recovery of railcar lease rates and utilization is ongoing. We continue to believe that our rail platform is designed to respond to cyclical changes in demand and perform throughout the railcar cycle. Steel prices and labor costs have increased significantly since the fourth quarter of 2020 and are major components of our cost of revenues. We typically use contract-specific purchasing practices, existing supplier commitments, contractual price escalation provisions, and other arrangements with our customers to reduce the impact of plate and coil steel price volatility on our operating profit. However, higher steel prices have resulted in increases in the cost of certain railcar components and could reduce demand for new railcars. Additionally, although we remain committed to attracting and retaining a highly skilled and diverse workforce, labor shortages, high turnover, and increases in labor costs have negatively impacted our operations. We continue to monitor the impact of potential margin and operating profit headwinds resulting from these factors. As a result of disruptions in the global supply chain, we have recently experienced temporary shortages of materials used to manufacture or repair certain railcar types, as well as disruptions in the transportation network used to deliver our products, which have impacted our ability to timely deliver these railcars to our customers. While we believe these shortages are short-term in nature, we will continue to monitor the situation and take appropriate steps to mitigate the impact on our production schedules and delivery timelines. Due to their transactional nature, lease portfolio sales are the primary driver of fluctuations in results in the Leasing Group. Financial and Operational Highlights • Our revenues for the six months ended June 30, 2022 were $889.5 million, representing an increase of 42.5%, compared to the six months ended June 30, 2021. Our operating profit for the six months ended June 30, 2022 was $127.8 million compared to $109.3 million for the six months ended June 30, 2021. • The Leasing Group's lease fleet of 110,560 company-owned railcars was 97.2% utilized as of June 30, 2022, compared to a lease fleet utilization of 94.3% on 108,635 company-owned railcars as of June 30, 2021. Our company-owned lease fleet include wholly-owned, partially-owned, and railcars under leased-in arrangements. • For the six months ended June 30, 2022, we made a net investment in our lease fleet of approximately $198.9 million, which primarily includes new railcar additions and railcar modifications, net of deferred profit, and secondary market purchases; and is net of proceeds from lease portfolio sales. • The total value of the new railcar backlog at June 30, 2022 was $2.2 billion, compared to $1.2 billion at June 30, 2021. The Rail Products Group received orders for 9,390 railcars and delivered 4,980 railcars in the six months ended June 30, 2022, in comparison to orders for 5,980 railcars and deliveries of 3,660 railcars in the six months ended June 30, 2021. • The Rail Products Group offers a sustainable railcar conversion program whereby certain tank cars and freight cars are converted or upgraded to better meet changing market demands. During the six months ended June 30, 2022, sustainable railcar conversion revenues totaled $89.0 million, representing 930 railcars. • For the six months ended June 30, 2022, operating cash flows from continuing operations was a net use of $61.3 million and Free Cash Flow After Investments and Dividends ("Free Cash Flow") was $42.5 million (1) , in comparison to generating operating cash flows from continuing operations and Free Cash Flow of $324.9 million and $351.8 million (1) , respectively, for the six months ended June 30, 2021. (1) Non-GAAP financial measure. See the Non-GAAP Financial Measures section within this Form 10-Q for a reconciliation to the most directly comparable GAAP measure and why management believes this measure is useful to management and investors. 35 Table of Contents See "Consolidated Results of Operations" and "Segment Discussion" below for additional information regarding our operating results. 36 Table of Contents Returns of Capital to Shareholders Returns of capital to shareholders in the form of dividends and share repurchases are summarized below: (1) Dividend yield is calculated as dividends paid for the four previous quarters divided by the closing stock price on the last trading day of each respective quarter. (2) In the second quarter of 2021, we entered into a stock repurchase agreement with ValueAct Capital Master Fund, L.P. ("ValueAct") in a privately negotiated transaction. (3) In the third quarter of 2021, we completed the existing share repurchase program, and our Board of Directors authorized a new $250.0 million share repurchase program. (4) In the fourth quarter of 2021, we entered into an additional stock repurchase agreement with ValueAct in a privately negotiated transaction. Additionally, we entered into an accelerated share repurchase agreement (the "ASR") to repurchase $125.0 million of our common stock. See Note 12 of the Consolidated Financial Statements for more information on the ASR. (5) There were no shares repurchased during the first quarter of 2022 due to the ongoing ASR. (6) In the second quarter of 2022, we completed the final settlement of the ASR. See Note 12 of the Consolidated Financial Statements for more information on the ASR. Capital Structure Updates 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 Trinity Industries Leasing Company ("TILC"), issued $244.8 million of its Series 2022-1 Green Secured Railcar Equipment Notes. These notes bear interest at a fixed rate of 4.55%, are payable monthly, and have a stated final maturity date of 2052. Net proceeds received from the transaction were used to repay borrowings under TILC's secured warehouse loan facility and for general corporate purposes. Tribute Rail – In May 2022, Tribute Rail LLC ("Tribute Rail"), an indirect, wholly-owned subsidiary of TRIP Rail Holdings LLC ("TRIP Holdings"), issued $327.0 million of its Series 2022-1 Green Secured Railcar Equipment Notes. These notes bear interest at an all-in interest rate of 4.88% and have a stated final maturity date of 2052. Net proceeds received from the issuance of these notes were used to redeem TRIP Railcar Co. LLC's ("TRIP Railcar Co.") existing term loan agreement, of which $319.4 million was outstanding at the redemption date. Litigation Updates See Note 14 of the Consolidated Financial Statements for an update on the status of certain litigation retained in connection with the sale of THP. 37 Table of Contents Subsequent Events 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. Consolidated Results of Operations The following table summarizes our consolidated results of operations for the three and six months ended June 30, 2022 and 2021: Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 (in millions) Revenues $ 416.8 $ 293.3 $ 889.5 $ 624.0 Cost of revenues 325.6 202.1 724.1 448.4 Selling, engineering, and administrative expenses 45.0 46.2 89.7 90.9 Gains on dispositions of property 27.8 12.1 53.1 23.6 Restructuring activities, net 1.0 (0.7) 1.0 (1.0) Total operating profit 73.0 57.8 127.8 109.3 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 Income (loss) from continuing operations before income taxes 22.3 (5.7) 35.2 (6.7) Provision (benefit) for income taxes 5.8 (2.9) 8.8 1.1 Income (loss) from continuing operations $ 16.5 $ (2.8) $ 26.4 $ (7.8) 38 Table of Contents Revenues The tables below present revenues by segment for the three and six months ended June 30, 2022 and 2021: Three Months Ended June 30, 2022 Revenues Percent External Intersegment Total Change (in millions) Railcar Leasing and Management Services Group $ 195.1 $ 0.2 $ 195.3 5.5 % Rail Products Group 221.7 208.9 430.6 64.5 % Segment Totals 416.8 209.1 625.9 40.1 % Eliminations – Lease Subsidiary — (208.9) (208.9) Eliminations – Other — (0.2) (0.2) Consolidated Total $ 416.8 $ — $ 416.8 42.1 % Three Months Ended June 30, 2021 Revenues External Intersegment Total (in millions) Railcar Leasing and Management Services Group $ 185.0 $ 0.1 $ 185.1 Rail Products Group 108.3 153.5 261.8 Segment Totals 293.3 153.6 446.9 Eliminations – Lease Subsidiary — (151.0) (151.0) Eliminations – Other — (2.6) (2.6) Consolidated Total $ 293.3 $ — $ 293.3 Six Months Ended June 30, 2022 Revenues Percent External Intersegment Total Change (in millions) Railcar Leasing and Management Services Group $ 378.0 $ 0.4 $ 378.4 2.7 % Rail Products Group 511.5 310.2 821.7 57.2 % Segment Totals 889.5 310.6 1,200.1 34.6 % Eliminations – Lease Subsidiary — (310.2) (310.2) Eliminations – Other — (0.4) (0.4) Consolidated Total $ 889.5 $ — $ 889.5 42.5 % Six Months Ended June 30, 2021 Revenues External Intersegment Total (in millions) Railcar Leasing and Management Services Group $ 368.3 $ 0.3 $ 368.6 Rail Products Group 255.7 267.1 522.8 Segment Totals 624.0 267.4 891.4 Eliminations – Lease Subsidiary — (262.3) (262.3) Eliminations – Other — (5.1) (5.1) Consolidated Total $ 624.0 $ — $ 624.0 39 Table of Contents Operating Costs Operating costs are comprised of cost of revenues; selling, engineering, and administrative costs; gains or losses on property disposals; and restructuring activities. Operating costs by segment for the three and six months ended June 30, 2022 and 2021 were as follows: Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 (in millions) Railcar Leasing and Management Services Group $ 89.8 $ 104.0 $ 193.1 $ 209.2 Rail Products Group 416.9 258.6 807.2 528.4 Segment Totals 506.7 362.6 1,000.3 737.6 Corporate and other 25.1 23.9 40.8 40.0 Restructuring activities, net 1.0 (0.7) 1.0 (1.0) Eliminations – Lease Subsidiary (188.6) (148.0) (281.1) (257.5) Eliminations – Other (0.4) (2.3) 0.7 (4.4) Consolidated Total $ 343.8 $ 235.5 $ 761.7 $ 514.7 Operating Profit Operating profit by segment for the three and six months ended June 30, 2022 and 2021 was as follows: Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 (in millions) Railcar Leasing and Management Services Group $ 105.5 $ 81.1 $ 185.3 $ 159.4 Rail Products Group 13.7 3.2 14.5 (5.6) Segment Totals 119.2 84.3 199.8 153.8 Corporate and other (25.1) (23.9) (40.8) (40.0) Restructuring activities, net (1.0) 0.7 (1.0) 1.0 Eliminations – Lease Subsidiary (20.3) (3.0) (29.1) (4.8) Eliminations – Other 0.2 (0.3) (1.1) (0.7) Consolidated Total $ 73.0 $ 57.8 $ 127.8 $ 109.3 Discussion of Consolidated Results Revenues – Our revenues for the three months ended June 30, 2022 were $416.8 million, representing an increase of $123.5 million, or 42.1%, over the prior year period. Our revenues for the six months ended June 30, 2022 were $889.5 million, representing an increase of $265.5 million, or 42.5%, over the prior year period. The increases in revenues were primarily due to higher external deliveries in the Rail Products Group. Cost of revenues – Our cost of revenues for the three months ended June 30, 2022 was $325.6 million, representing an increase of $123.5 million, or 61.1%, over the prior year period. Our cost of revenues for the six months ended June 30, 2022 was $724.1 million, representing an increase of $275.7 million, or 61.5%, over the prior year period. The increases in cost of revenues were primarily due to higher costs associated with external deliveries in the Rail Products Group. Selling, engineering, and administrative expenses – Selling, engineering, and administrative expenses were substantially unchanged for the three and six months ended June 30, 2022 when compared to the prior year periods. Gains on dispositions of property – Gains on dispositions of property increased by $15.7 million and $29.5 million for the three and six months ended June 30, 2022, respectively, when compared to the prior year periods primarily due to higher lease portfolio sales activity. Additionally, during the six months ended June 30, 2022, we recorded a $6.4 million gain related to insurance recoveries in excess of net book value for assets damaged by a tornado at the Company’s rail maintenance facility in Cartersville, Georgia in the first quarter of 2021. See Note 14 of the Consolidated Financial Statements for more information. 40 Table of Contents Operating profit – Operating profit for the three months ended June 30, 2022 totaled $73.0 million, representing an increase of $15.2 million, or 26.3%, from the prior year period primarily due to higher lease portfolio sales activity and improved operating performance in the Leasing Group, partially offset by deliveries of orders taken at the bottom of the cycle in the Rail Products Group, as well as increased depreciation in the Leasing Group. Operating profit for the six months ended June 30, 2022 totaled $127.8 million, representing an increase of $18.5 million, or 16.9%, from the prior year period primarily due to higher lease portfolio sales activity, partially offset by higher costs associated with external deliveries in the Rail Products Group, including the impact of deliveries of orders taken at the bottom of the cycle, as well as increased depreciation in the Leasing Group. Operating profit was favorably impacted in the current year period by gains related to insurance recoveries from damage sustained at the Company’s rail maintenance facility in Cartersville, Georgia in the first quarter of 2021. For further information regarding the operating results of individual segments, see "Segment Discussion" below. Interest expense, net – Interest expense, net was flat for the three months ended June 30, 2022 when compared to the prior year period. Interest expense, net for the six months ended June 30, 2022 totaled $93.2 million, compared to $102.3 million for the six months ended June 30, 2021. The decrease in interest expense, net for the six months ended June 30, 2022 was primarily driven by lower overall borrowing costs associated with the Company's debt facilities resulting from debt refinancing activity during the second quarter of 2021, partially offset by higher overall average debt. Loss on extinguishment of debt – Loss on extinguishment of debt for the three and six months ended June 30, 2022 was $1.5 million from the write-off of unamortized debt issuance costs associated with the repayment of TRIP Railcar Co.'s outstanding term loan agreement. Loss on extinguishment of debt for the three and six months ended June 30, 2021 was $11.7 million from the refinancing of our partially-owned subsidiaries' debt, which included the write-off of $8.4 million in unamortized debt issuance costs and a $3.3 million early redemption premium. Income taxes – 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 $6.7 million, which differs from the U.S. statutory rate primarily due to adjustments to the Coronavirus Aid, Relief, and Economic Security Act carryback benefit previously recognized, partially offset by excess tax benefits associated with equity-based compensation. 41 Table of Contents Segment Discussion Railcar Leasing and Management Services Group Three Months Ended June 30, Six Months Ended June 30, 2022 2021 Percent 2022 2021 Percent ($ in millions) Change ($ in millions) Change Revenues: Leasing and management $ 195.3 $ 185.1 5.5 % $ 378.4 $ 368.6 2.7 % Operating profit (1) : Leasing and management $ 78.6 $ 70.0 12.3 % $ 146.6 $ 146.6 — % 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 % Total operating profit margin 54.0 % 43.8 % 49.0 % 43.2 % Leasing and management operating profit margin 40.2 % 37.8 % 38.7 % 39.8 % Selected expense information: Depreciation (3) $ 59.4 $ 57.2 3.8 % $ 116.6 $ 111.8 4.3 % Maintenance and compliance $ 27.3 $ 25.3 7.9 % $ 56.5 $ 50.9 11.0 % Rent and ad valorem taxes $ 5.3 $ 4.7 12.8 % $ 10.3 $ 9.3 10.8 % Selling, engineering, and administrative expenses $ 12.6 $ 13.2 (4.5) % $ 25.4 $ 24.5 3.7 % Interest (4) $ 46.0 $ 57.0 (19.3) % $ 84.7 $ 102.7 (17.5) % * Not meaningful (1) Operating profit includes: depreciation; fleet operating costs, which include maintenance, compliance, freight, and storage; rent and ad valorem taxes; and selling, engineering, and administrative expenses. Amortization of deferred profit on railcars sold from the Rail Products Group to the Leasing Group is included in the operating profits of the Leasing Group, resulting in the recognition of depreciation expense based on our original manufacturing cost of the railcars. 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 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, as a result of 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 $11.7 million of loss on extinguishment of debt associated with the refinancing of our partially-owned subsidiaries' debt. Information related to lease portfolio sales is as follows: Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 ($ in millions) Lease portfolio sales $ 144.1 $ 71.5 $ 215.2 $ 88.8 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 six months ended June 30, 2022. Total revenues for the Railcar Leasing and Management Services Group increased by 5.5% and 2.7% for the three and six months ended June 30, 2022, respectively, compared to the prior year periods. Leasing and management revenues for the three and six months ended June 30, 2022 were favorably impacted by higher utilization, increased lease fleet size and improved renewal rates, partially offset by the effect of net lease fleet investment activities, which resulted in higher revenues when compared to the three and six months ended June 30, 2021. 42 Table of Contents Operating profit for the Leasing Group increased by 30.1% and 16.2% for the three and six months ended June 30, 2022, respectively, compared to the prior year periods and was favorably impacted by higher lease portfolio sale activity. Leasing and management operating profit for the three months ended June 30, 2022 increased by 12.3%, compared to the prior year period primarily due to higher utilization, increased lease fleet size, and lower fleet operating costs, partially offset by increased depreciation. Leasing and management operating profit for the six months ended June 30, 2022 was flat compared to the prior year period primarily due to higher utilization and increased lease fleet size, substantially offset by increased depreciation primarily related to sustainable railcar conversions. The Leasing Group generally uses its non-recourse warehouse loan facility or cash to provide initial funding for a portion of the purchase price of the railcars. After initial funding, the Leasing Group may obtain long-term financing for the railcars in the lease fleet through non-recourse asset-backed securities; long-term non-recourse operating leases pursuant to sale-leaseback transactions; long-term recourse debt such as equipment trust certificates; long-term non-recourse promissory notes; or third-party equity. Information regarding the Leasing Group’s lease fleet is as follows: June 30, 2022 June 30, 2021 Number of railcars: Wholly-owned (1) 86,630 84,115 Partially-owned 23,930 24,520 110,560 108,635 Investor-owned 30,115 26,490 140,675 135,125 Company-owned railcars (2) : Average age in years 11.9 10.6 Average remaining lease term in years 2.9 3.0 Fleet utilization 97.2 % 94.3 % (1) Includes 2,845 railcars and 2,177 railcars under leased-in arrangements as of June 30, 2022 and 2021, respectively. (2) Includes wholly-owned railcars, partially-owned railcars, and railcars under leased-in arrangements. 43 Table of Contents Rail Products Group Three Months Ended June 30, Six Months Ended June 30, 2022 2021 Percent 2022 2021 Percent ($ in millions) Change ($ in millions) Change Revenues: Rail products (1) $ 359.0 $ 208.1 72.5 % $ 697.4 $ 411.6 69.4 % Maintenance services 57.0 43.0 32.6 % 100.0 91.1 9.8 % Other 14.6 10.7 36.4 % 24.3 20.1 20.9 % Total revenues $ 430.6 $ 261.8 64.5 % $ 821.7 $ 522.8 57.2 % Operating costs: Cost of revenues 409.8 250.0 63.9 % 796.8 511.2 55.9 % Selling, engineering, and administrative expenses 7.0 8.5 (17.6) % 16.7 17.1 (2.3) % (Gains) losses on dispositions of property 0.1 0.1 * (6.3) 0.1 * Operating profit (loss) $ 13.7 $ 3.2 328.1 % $ 14.5 $ (5.6) 358.9 % Operating profit (loss) margin 3.2 % 1.2 % 1.8 % (1.1) % * Not meaningful (1) Includes sustainable railcar conversion revenues of $39.2 million, representing 485 railcars, for the three months ended June 30, 2022 and sustainable railcar conversion revenues of $89.0 million, representing 930 railcars, for the six months ended June 30, 2022. Includes sustainable railcar conversion revenues of $12.8 million, representing 120 railcars for the three and six months ended June 30, 2021. Revenues and cost of revenues for the Rail Products Group increased for the three months ended June 30, 2022 by 64.5% and 63.9%, respectively, when compared to the prior year period. Revenues and cost of revenues for the Rail Products Group increased for the six months ended June 30, 2022 by 57.2% and 55.9%, respectively, when compared to the prior year period. Revenues in our rail products business increased as a result of higher deliveries and price escalation provisions contained in our customer contracts, and revenues in our maintenance services business increased as a result of a higher mix of HM-251 modifications relative to other maintenance services revenues. In our rail products business, the increase in cost of revenues was driven by higher deliveries and input cost inflation, as well as operational inefficiencies associated with supply chain disruptions and the introduction of additional products into the production line. In our maintenance services business, cost of revenues increased as a result of HM-251 modifications and continues to be negatively impacted by labor shortages leading to operating inefficiencies. Operating profit for the three and six months ended June 30, 2022 was favorably impacted by higher deliveries and improved pricing, partially offset by deliveries of orders taken at the bottom of the cycle. Additionally, during the six months ended June 30, 2022, operating profit was favorably impacted by a $6.4 million gain related to insurance recoveries in excess of net book value for assets damaged by a tornado at the Company’s rail maintenance facility in Cartersville, Georgia in the first quarter of 2021. 44 Table of Contents Information related to our Rail Products Group backlog of new railcars is as follows. In addition to the amounts below, as of June 30, 2022, our backlog related to sustainable railcar conversions totaled $188.6 million, representing 2,350 railcars. June 30, 2022 2021 Percent (in millions) Change External customers $ 1,432.1 $ 891.3 Leasing Group 762.6 286.4 Total (1) $ 2,194.7 $ 1,177.7 86.4 % Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Percent Change Beginning balance 16,265 8,500 13,980 8,985 Orders received 4,335 4,570 9,390 5,980 57.0 % Deliveries (2,510) (1,765) (4,980) (3,660) 36.1 % Other adjustments (1) — — (300) — Ending balance 18,090 11,305 18,090 11,305 60.0 % Average selling price in ending backlog $ 121,321 $ 104,175 16.5 % (1) The adjustment for the six months ended June 30, 2022 includes 300 railcars valued at $34.6 million that were removed from the new railcar backlog and shifted to the sustainable railcar conversion backlog. Total backlog dollars increased by 86.4% when compared to the prior year period primarily from an increase in the volume and average selling price of orders received. We expect to deliver approximately 48.0% of our railcar backlog value during 2022 and 38.7% during 2023, with the remainder to be delivered through 2025. The orders in our backlog from the Leasing Group are fully supported by lease commitments with external customers. The final amount of backlog attributable to the Leasing Group may vary by the time of delivery as customers may elect to change their procurement decision. Transactions between the Rail Products Group and the Leasing Group are as follows: Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 ($ in millions) Revenues: New railcars $ 136.7 $ 115.9 $ 194.7 $ 208.4 Sustainable railcar conversions $ 38.3 $ 12.8 $ 60.3 $ 12.8 Other maintenance services $ 33.9 $ 22.3 $ 55.2 $ 41.1 Deferred profit $ 20.3 $ 3.0 $ 29.1 $ 4.8 Number of new railcars (in units) 1,015 1,125 1,470 2,071 Number of sustainable railcar conversions (in units) 365 120 560 120 45 Table of Contents Corporate and other Three Months Ended June 30, Six Months Ended June 30, 2022 2021 Percent 2022 2021 Percent Change ($ in millions) Change ($ in millions) Operating costs: Selling, engineering, and administrative expenses $ 25.4 $ 24.5 3.7 % $ 47.6 $ 49.3 (3.4) % Gains on dispositions of property (0.3) (0.6) * (6.8) (9.3) * Operating loss $ (25.1) $ (23.9) 5.0 % $ (40.8) $ (40.0) 2.0 % * Not meaningful Selling, engineering, and administrative expenses for the three months ended June 30, 2022 increased 3.7%, compared to the prior year period, primarily from higher consulting costs. Selling, engineering, and administrative expenses for the six months ended June 30, 2022 decreased 3.4%, compared to the prior year period, primarily from lower litigation-related expenses. Total operating costs in the six months ended June 30, 2022 and 2021 were favorably impacted by gains associated with the disposition of non-operating facilities. As we continue to streamline our operational footprint, we may have additional gains or losses on the disposition of other non-operating facilities. 46 Table of Contents Liquidity and Capital Resources Overview We expect to finance future operating requirements with cash, cash equivalents, and short-term marketable securities; cash flows from operations; and short-term debt, long-term debt, and equity. Debt instruments that we have utilized include the TILC warehouse loan facility, senior notes, convertible subordinated notes, asset-backed securities, non-recourse promissory notes, sale-leaseback transactions, and our revolving credit facility. As of June 30, 2022, we have total committed liquidity of $419.6 million. Our total available liquidity includes: $49.7 million of unrestricted cash and cash equivalents; $123.9 million unused and available under our revolving credit facility; and $246.0 million unused and available under the TILC warehouse loan facility based on the amount of warehouse-eligible, unpledged equipment. We believe we have access to adequate capital resources to fund operating requirements and are an active participant in the capital markets. Liquidity Highlights TRL-2022 – In April 2022, TRL-2022 issued $244.8 million of its Series 2022-1 Green Secured Railcar Equipment Notes. These notes bear interest at a fixed rate of 4.55% and have a stated final maturity date of 2052. Net proceeds received from the transaction were used to repay borrowings under TILC's secured warehouse loan facility and for general corporate purposes. Dividend Payments – We paid $39.3 million in dividends to our common stockholders during the six months ended June 30, 2022. 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. In December 2021, using a portion of the proceeds from the sale of THP, we entered into an 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 was completed in April 2022. Share repurchase activity under the authorized program is as follows: Shares Repurchased Remaining Authorization to Repurchase Period Number of shares Cost (in millions) Cost (in millions) 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 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) 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. Cash Flows The following table summarizes our cash flows from operating, investing, and financing activities for the six months ended June 30, 2022 and 2021: Six Months Ended June 30, 2022 2021 (in millions) Net cash flows from continuing operations: Operating activities $ (61.3) $ 324.9 Investing activities (198.5) (169.9) Financing activities 278.6 (134.4) Net cash flows from discontinued operations (14.7) 6.7 Net increase in cash, cash equivalents, and restricted cash $ 4.1 $ 27.3 47 Table of Contents Operating Activities . Net cash used in operating activities from continuing operations for the six months ended June 30, 2022 was $61.3 million compared to net cash provided by operating activities from continuing operations of $324.9 million for the six months ended June 30, 2021. The changes in our operating assets and liabilities are as follows: Six Months Ended June 30, 2022 2021 (in millions) (Increase) decrease in receivables, inventories, and other assets $ (245.5) $ (26.9) (Increase) decrease in income tax receivable (3.1) 208.6 Increase (decrease) in accounts payable, accrued liabilities, and other liabilities 55.2 14.1 Changes in operating assets and liabilities $ (193.4) $ 195.8 The changes in our operating assets and liabilities resulted in a net use of $193.4 million for the six months ended June 30, 2022, as compared to a net source of $195.8 million for the six months ended June 30, 2021. Operating assets in the current period were impacted by cyclical shifts in anticipation of higher volumes of railcar deliveries in future periods, as well as continued supply chain challenges. The decrease in the income tax receivable in the prior year period was primarily driven by the collection of approximately $207.0 million of income tax refunds associated with the loss carryback provisions included in recent tax legislation. Investing Activities. Net cash used in investing activities for the six months ended June 30, 2022 was $198.5 million compared to $169.9 million of net cash used in investing activities from continuing operations for the six months ended June 30, 2021. Significant investing activities are as follows: • We made a net investment in our lease fleet of $198.9 million during the six months ended June 30, 2022, compared to $162.9 million in the prior year period. Our investment in the lease fleet primarily includes new railcar additions and railcar modifications, net of deferred profit, and secondary market purchases; and is net of proceeds from lease portfolio sales. • During the six months ended June 30, 2022, we acquired 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 for net cash of $9.4 million. During the six months ended June 30, 2021, we acquired a company that owns and operates proprietary railcar cleaning technology systems for net cash of $16.6 million. Financing Activities. Net cash provided by financing activities during the six months ended June 30, 2022 was $278.6 million compared to $134.4 million of net cash used in financing activities for the same period in 2021. Significant financing activities are as follows: • During the six months ended June 30, 2022, we had total borrowings of $1,194.1 million and total repayments of $833.3 million, for net proceeds of $360.8 million, primarily from debt proceeds to support our investment in the lease fleet. During the six months ended June 30, 2021, we had total borrowings of $2,176.7 million and total repayments of $1,925.2 million, for net proceeds of $251.5 million, primarily from debt proceeds to support our investment in the lease fleet. • We paid $39.3 million and $47.4 million in dividends to our common stockholders during the six months ended June 30, 2022 and 2021, respectively. • We repurchased common stock totaling $22.4 million and $329.4 million during the six months ended June 30, 2022 and 2021, respectively. The current year period excludes $25.0 million representing the final settlement of the ASR, which was funded in December 2021 but a portion of which remained outstanding. Certain shares of stock repurchased during June 2022, totaling $2.9 million, were cash settled in July 2022 in accordance with normal settlement practices. The prior year period includes shares repurchased in a privately negotiated transaction with ValueAct totaling $222.5 million. 48 Table of Contents Current Debt Obligations The revolving credit facility contains several financial covenants that require the maintenance of ratios related to minimum interest coverage for the leasing and manufacturing operations and maximum leverage. In July 2022, we amended our revolving credit facility to increase the maximum leverage ratio beginning June 30, 2022 to provide additional flexibility. A summary of our financial covenants is detailed below: Ratio Covenant Actual at June 30, 2022 Maximum leverage (1) No greater than 4.25 to 1.00 3.43 Minimum interest coverage (2) No less than 2.25 to 1.00 6.34 (1) Defined as the ratio of consolidated total indebtedness to consolidated earnings before interest, taxes, depreciation and amortization ("EBITDA") for the Borrower and its Restricted Subsidiaries for the period of four consecutive quarters ending with June 30, 2022. (2) Defined as the ratio of the difference of (A) consolidated EBITDA less (B) consolidated capital expenditures – manufacturing and other to consolidated interest expense to the extent paid in cash, in each case for the Borrower and its Restricted Subsidiaries for the period of four consecutive quarters ending with June 30, 2022. As of June 30, 2022, we were in compliance with all such financial covenants. Please refer to Note 8 of the Consolidated Financial Statements for a description of our current debt obligations. 49 Table of Contents Supplemental Guarantor Financial Information Our 4.55% senior notes due 2024 ("Senior Notes") are fully and unconditionally and jointly and severally guaranteed by certain of Trinity’s 100%-owned subsidiaries: Trinity Industries Leasing Company; Trinity North American Freight Car, Inc.; Trinity Rail Group, LLC; Trinity Tank Car, Inc.; and TrinityRail Maintenance Services, Inc. (collectively, the "Guarantor Subsidiaries”). The Senior Notes indenture agreement includes customary provisions for the release of the guarantees by the Guarantor Subsidiaries upon the occurrence of certain allowed events including the release of one or more of the Combined Guarantor Subsidiaries as guarantor under our revolving credit facility. See Note 8 of our 2021 Annual Report on Form 10-K. The Senior Notes are not guaranteed by any of our remaining 100%-owned subsidiaries or partially-owned subsidiaries (“Non-Guarantor Subsidiaries”). As of June 30, 2022, assets held by the Non-Guarantor Subsidiaries included $241.5 million of restricted cash that was not available for distribution to Trinity Industries, Inc. (“Parent”), $7,004.2 million of equipment securing certain non-recourse debt, and $564.9 million of assets located in foreign locations. As of December 31, 2021, assets held by the Non-Guarantor Subsidiaries included $79.6 million of restricted cash that was not available for distribution to the Parent, $6,595.5 million of equipment securing certain non-recourse debt, and $414.8 million of assets located in foreign locations. The following tables include the summarized financial information for Parent and Guarantor Subsidiaries (together the obligor group) on a combined basis after elimination of intercompany transactions within the obligor group (in millions). Investments in and equity in the earnings of the Non-Guarantor Subsidiaries (the non-obligor group) have been excluded. Six Months Ended June 30, 2022 Summarized Statement of Operations: Revenues (1) $ 537.6 Cost of revenues (2) $ 511.8 Income (loss) from continuing operations $ (44.4) Net income (loss) $ (59.3) June 30, 2022 December 31, 2021 Summarized Balance Sheets: Assets: Receivables, net of allowance (3) $ 283.8 $ 245.8 Inventories $ 589.0 $ 409.4 Property, plant, and equipment, net $ 659.9 $ 953.3 Goodwill and other assets $ 404.4 $ 385.7 Liabilities: Accounts payable and accrued liabilities (4) $ 384.2 $ 337.0 Debt $ 518.9 $ 398.7 Deferred income taxes $ 924.4 $ 926.2 Other liabilities $ 144.0 $ 147.0 Noncontrolling interest $ 258.6 $ 267.0 (1) There were no net sales from the obligor group to Non-Guarantor Subsidiaries during the six months ended June 30, 2022. (2) Cost of revenues includes $111.1 million of purchases from Non-Guarantor Subsidiaries during the six months ended June 30, 2022. (3) Receivables, net of allowance includes $98.5 million and $93.5 million of receivables from Non-Guarantor Subsidiaries as of June 30, 2022 and December 31, 2021, respectively. (4) Accounts payable includes $25.7 million and $29.7 million of payables to Non-Guarantor Subsidiaries as of June 30, 2022 and December 31, 2021, respectively. 50 Table of Contents Capital Expenditures For the full year 2022, we anticipate a net investment in our lease fleet of between $425 million and $475 million. Capital expenditures related to manufacturing and other activities, including expansion of our fleet maintenance capabilities and systems upgrades, are projected to range between $35 million and $45 million for the full year 2022. Equity Investment See Note 5 of the Consolidated Financial Statements for information about our investment in partially-owned leasing subsidiaries. Off Balance Sheet Arrangements As of June 30, 2022, we had letters of credit issued under our revolving credit facility in an aggregate amount of $28.3 million, the full amount of which is expected to expire in July 2023. Our letters of credit obligations support our various insurance programs and generally renew by their terms each year. See Note 8 of the Consolidated Financial Statements for further information about our corporate revolving credit facility. Derivative Instruments We use derivative instruments to mitigate interest rate risk, including risks associated with the impact of changes in interest rates in anticipation of future debt issuances and to offset interest rate variability of certain floating rate debt issuances outstanding. Derivative instruments that are designated and qualify as cash flow hedges are accounted for in accordance with applicable accounting standards. See Note 3 of the Consolidated Financial Statements for discussion of how we utilize our derivative instruments. LIBOR Transition The United Kingdom's Financial Conduct Authority, which regulates the London Interbank Offered Rate ("LIBOR"), has announced that it will no longer persuade or require banks to submit rates for the calculation of LIBOR after June 2023. In the U.S., the Alternative Reference Rates Committee has identified SOFR as its preferred alternative to LIBOR. We currently have LIBOR-based contracts that extend beyond June 2023 including derivative instruments, promissory notes for Trinity Rail Leasing 2017 LLC, and TILC's warehouse loan facility. After LIBOR is phased out, the interest rates for these obligations might be subject to change. The replacement of LIBOR with an alternative benchmark reference rate may adversely affect interest rates and result in higher borrowing costs under these agreements and any future agreements. 51 Table of Contents Non-GAAP Financial Measures We have included financial measures compiled in accordance with GAAP and certain non-GAAP measures in this Quarterly Report on Form 10-Q to provide management and investors with additional information regarding our financial results. Non-GAAP measures should not be considered in isolation or as a substitute for our reporting results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures for other companies. For each non-GAAP financial measure, we provide a reconciliation to the most comparable GAAP measure. Free Cash Flow Total Free Cash Flow After Investments and Dividends ("Free Cash Flow") is a non-GAAP financial measure. We believe Free Cash Flow is useful to both management and investors as it provides a relevant measure of liquidity and a useful basis for assessing our ability to fund our operations and repay our debt. Free Cash Flow is reconciled to net cash provided by (used in) operating activities from continuing operations, the most directly comparable GAAP financial measure, in the following table. Free Cash Flow is defined as net cash provided by (used in) operating activities from continuing operations as computed in accordance with GAAP, plus cash proceeds from lease portfolio sales, less capital expenditures for manufacturing, dividends paid, and Equity CapEx for leased railcars. Equity CapEx for leased railcars is defined as leasing capital expenditures, adjusted to exclude net proceeds from (repayments of) debt. Six Months Ended June 30, 2022 2021 (in millions) Net cash provided by (used in) operating activities – continuing operations $ (61.3) $ 324.9 Proceeds from lease portfolio sales 215.2 88.8 Adjusted Net Cash Provided by Operating Activities 153.9 413.7 Capital expenditures – manufacturing and other (18.8) (14.3) Dividends paid to common stockholders (39.3) (47.4) Free Cash Flow (before Capital expenditures – leasing) 95.8 352.0 Equity CapEx for leased railcars (53.3) (0.2) Total Free Cash Flow After Investments and Dividends $ 42.5 $ 351.8 Capital expenditures – leasing $ 414.1 $ 251.7 Less: Payments to retire debt (833.3) (1,925.2) Proceeds from issuance of debt 1,194.1 2,176.7 Net proceeds from (repayments of) debt 360.8 251.5 Equity CapEx for leased railcars $ 53.3 $ 0.2 Contractual Obligations and Commercial Commitments Except as described below, as of June 30, 2022, there have been no material changes to our contractual obligations from December 31, 2021: • In April 2022, TRL-2022 issued $244.8 million of its Series 2022-1 Green Secured Railcar Equipment Notes. These notes have a stated final maturity date of 2052. • In May 2022, Tribute Rail issued $327.0 million of its Series 2022-1 Green Secured Railcar Equipment Notes. These notes have a stated final maturity date of 2052. Net proceeds received from the issuance of these notes were used to redeem TRIP Railcar Co.'s existing term loan agreement, of which $ 323.7 million was outstanding at December 31, 2021. See Note 8 of the Consolidated Financial Statements for additional information regarding these debt transactions. Recent Accounting Pronouncements There have been no material changes in recently issued or adopted accounting standards during the six months ended June 30, 2022. 52 Table of Contents