What changed in this filing

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Item 1. Financial Statements

2022-10-25 compared with 2022-07-27 · 189 added, 152 removed, 936 unchanged (27% of the section changed)

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

24 unchanged sentences

54.4 44.5 147.0 160.5

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

Income from continuing operations before income taxes 38.3 33.8 73.5 27.1

Provision (benefit) for income taxes:

2 unchanged sentences

8.6 8.3 17.4 9.4

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

Income from continuing operations 29.7 25.5 56.1 17.7

Income (loss) from discontinued operations, net of provision (benefit) for income taxes of $( 1.0 ), $ 3.6 , $( 3.5 ), and $ 8.0

24 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

9 unchanged sentences

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

0.1 — 0.2 0.1

Currency translation adjustments:

9 unchanged sentences

Consolidated Balance Sheets

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

(in millions)

39 unchanged sentences

Consolidated Statements of Cash Flows

Six Months Ended

Nine Months Ended

September 30,

(in millions)

11 unchanged sentences

Non-cash interest expense 10.2 10.3

Loss on early extinguishment of debt 1.5 11.7

Loss on extinguishment of debt 1.5 11.7

Other ( 4.8 ) 6.9

17 unchanged sentences

Proceeds from insurance recoveries 7.6 6.5

Other — ( 0.1 )

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

Equity investments ( 15.5 ) ( 0.2 )

Net cash provided by (used in) investing activities – continuing operations ( 186.1 ) 47.8

Payments related to sale of discontinued operations ( 2.7 ) —

Net cash used in investing activities – discontinued operations — ( 4.2 )

Net cash used in investing activities ( 201.2 ) ( 173.0 )

Net cash provided by (used in) investing activities ( 188.8 ) 43.6

Financing activities:

6 unchanged sentences

Net cash provided by (used in) financing activities 193.1 ( 354.1 )

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

Net increase (decrease) in cash, cash equivalents, and restricted cash ( 63.7 ) 116.7

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

22 unchanged sentences

— — — ( 19.3 ) — — — ( 19.3 ) — ( 19.3 )

Distributions to noncontrolling interest

— — — — — — — — ( 6.2 ) ( 6.2 )

Stock-based compensation expense

1 unchanged sentence

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

Distributions to noncontrolling interest

— — — — — — — — ( 6.2 ) ( 6.2 )

March 31, 2022

15 unchanged sentences

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

Net income — — — 25.8 — — — 25.8 0.5 26.3

Other comprehensive income — — — — 10.0 — — 10.0 0.3 10.3

Cash dividends declared on common stock (1)

— — — ( 19.2 ) — — — ( 19.2 ) — ( 19.2 )

Distributions to noncontrolling interest — — — — — — — — ( 4.2 ) ( 4.2 )

Stock-based compensation expense

— — 5.9 — — — — 5.9 — 5.9

Settlement of share-based awards, net — — 0.2 — — — ( 0.3 ) ( 0.1 ) — ( 0.1 )

Shares repurchased — — — — — ( 0.6 ) ( 14.1 ) ( 14.1 ) — ( 14.1 )

September 30, 2022

82.1 $ 0.8 $ 6.1 $ 997.7 $ 16.4 ( 0.6 ) $ ( 15.1 ) $ 1,005.9 $ 255.2 $ 1,261.1

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

35 unchanged sentences

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

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

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

Cash dividends declared on common stock (1)

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

Distributions to noncontrolling interest — — — — — — — — ( 6.8 ) ( 6.8 )

Stock-based compensation expense

— — 6.0 — — — — 6.0 — 6.0

Settlement of share-based awards, net 0.1 — 0.9 — — ( 0.1 ) ( 0.5 ) 0.4 — 0.4

Shares repurchased

— — — — — ( 2.8 ) ( 77.1 ) ( 77.1 ) — ( 77.1 )

September 30, 2021

100.2 $ 1.0 $ 6.9 $ 1,425.2 $ ( 23.9 ) ( 2.9 ) $ ( 78.2 ) $ 1,331.0 $ 265.4 $ 1,596.4

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

7 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 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.

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

Sale of Highway Products Business

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

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

15 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 in 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 Sheets.

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

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

See "Lease Accounting" below for additional information regarding sales-type leases as of September 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 $ 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.

We recorded contract assets of $ 3.0 million and $ 4.5 million as of September 30, 2022 and December 31, 2021, respectively, related to unbilled revenues recognized on repair and maintenance services and sustainable railcar conversions that have been performed, but for which the entire project has not yet been completed, and the railcar has not yet been shipped to the customer.

These contract assets are included within the Receivables, net of allowance line in our Consolidated Balance Sheets.

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 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

The following table includes estimated revenue expected to be recognized in future periods related to performance obligations that are unsatisfied or partially satisfied as of September 30, 2022 and the percentage of the outstanding performance obligations as of September 30, 2022 expected to be delivered during the remainder of 2022:

Unsatisfied performance obligations at September 30, 2022

Amount Percent expected to be delivered in 2022

6 unchanged sentences

Sustainable railcar conversions $ 201.4 26.5 %

Maintenance services $ 0.4 100.0 %

Railcar Leasing and Management Services Group $ 133.6 6.8 %

(1) Unsatisfied performance obligations at September 30, 2022 include 15,000 railcars expected to be delivered through 2028, valued at approximately $ 1.8 billion, associated with a new long-term railcar supply agreement with GATX Corporation.

The remainder of the unsatisfied performance obligations for the Rail Products Group is expected to be delivered through 2028.

3 unchanged sentences

Lease Accounting

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

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

Our operating leases have remaining lease terms ranging from one year to 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 June 30, 2022, we had no material finance leases in which we were the lessee.

As of September 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

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

5 unchanged sentences

Right-of-use assets recognized in exchange for new lease liabilities $ 21.0 $ 23.7

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Consolidated Balance Sheets

9 unchanged sentences

Leasing Group Non-Leasing Group Total

Remaining six months of 2022 $ 6.6 $ 4.1 $ 10.7

Remaining three months of 2022 $ 3.2 $ 2.1 $ 5.3

2023 12.0 7.9 19.9

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

As of September 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

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

7 unchanged sentences

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

Remaining six months of 2022 $ 295.5

Remaining three months of 2022 $ 156.7

Thereafter 369.4

2 unchanged sentences

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

Remaining six months of 2022 $ 0.7

Remaining three months of 2022 $ 0.3

Thereafter 11.2

13 unchanged sentences

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

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.

During the nine months ended September 30, 2022, we recognized approximately $ 1.7 million of credit loss expense and wrote off $ 1.9 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 September 30, 2022.

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

11 unchanged sentences

This transaction resulted in goodwill of $ 7.0 million.

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.

As of September 30, 2022 and December 31, 2021, the carrying amount of our goodwill totaled $ 159.5 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 and six months ended June 30, 2022 and 2021 are as follows:

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

5 unchanged sentences

Ending balance $ 2.9 $ 3.5 $ 2.9 $ 3.5

Recent Accounting Pronouncements

ASU 2022-04 – In September 2022, the FASB issued ASU No.

2022-04, "Disclosure of Supplier Finance Program Obligations," which requires entities that use supplier finance programs in connection with the purchase of goods and services to disclose information about the key terms of these programs, outstanding amounts as of the end of the reporting period, a description of where in the financial statements outstanding amounts are presented, and a rollforward of these obligations.

ASU 2022-04 is effective for public companies during interim and annual reporting periods beginning after December 15, 2022 and is to be adopted on a retrospective basis, except for the disclosure of rollforward information, which is effective for public companies during interim and annual reporting periods beginning after December 15, 2023 and is to be adopted on a prospective basis.

Early adoption is permitted.

We plan to adopt ASU 2022-04 effective January 1, 2023 and are currently evaluating the impact these disclosures will have on our Consolidated Financial Statements.

Discontinued Operations

2 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 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.

During the nine months ended September 30, 2022, we recorded a loss on sale of discontinued operations of $ 5.8 million ($ 4.4 million, net of income taxes), which included a $ 2.7 million payment to Rush Hour representing a final working capital adjustment, as well as additional transaction costs incurred during the period.

There was no loss on sale of discontinued operations during the three months ended September 30, 2022.

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

The amounts billed for transition services were not material to our results of operations for the three and nine months ended September 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 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.

Similar expenses related to these retained obligations incurred during the three and nine months ended September 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 and six months ended June 30, 2022 and 2021:

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

7 unchanged sentences

Other discontinued operations

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.

In addition to the THP activities disclosed above, results include certain amounts related to businesses previously disposed, including a $ 1.3 million of loss on sale of discontinued operations, net of income taxes for the nine months ended September 30, 2022 and losses of $ 0.4 million and $ 0.8 million included in income (loss) from discontinued operations, net of income taxes for the three and nine months ended September 30, 2021, respectively.

Derivative Instruments and Fair Value Measurements

8 unchanged sentences

Included in accompanying balance sheet

at June 30, 2022

at September 30, 2022

AOCI – loss/(income)

13 unchanged sentences

Three Months Ended

June 30, Six Months Ended

June 30, Expected effect during next twelve months

September 30, Nine Months Ended

September 30, Expected effect during next twelve months

2022 2021 2022 2021

9 unchanged sentences

2017 promissory notes – interest rate swap $ 0.3 $ 3.1 $ 5.3 $ 9.3 $ 5.6

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

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

Foreign Currency Hedge

2 unchanged sentences

accompanying balance

sheet at June 30, 2022

sheet at September 30, 2022

Effect on cost of revenues – increase/(decrease)

1 unchanged sentence

loss/(income) Three Months Ended

June 30, Six Months Ended

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

September 30, Nine Months Ended

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

2022 2021 2022 2021

1 unchanged sentence

$ 40.8 $ 1.1 $ ( 1.6 ) $ (0.5) $ (1.4) $ (0.7) $ (7.4) $ ( 1.6 )

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

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

Fair Value Measurements

6 unchanged sentences

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

June 30, 2022 December 31, 2021

September 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:

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

(in millions)

Foreign currency hedge (1)

Interest rate hedge (1)

Foreign currency hedge (1)

Total assets $ 20.7 $ —

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

As of September 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.

18 unchanged sentences

We operate principally in North America.

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

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

2 unchanged sentences

Total revenues $ 194.8 $ 597.3 $ ( 295.3 ) $ ( 0.2 ) $ 496.6

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

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

2 unchanged sentences

Total revenues $ 185.5 $ 339.9 $ ( 105.3 ) $ ( 0.3 ) $ 419.8

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

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

2 unchanged sentences

Total revenues $ 573.2 $ 1,419.0 $ ( 605.5 ) $ ( 0.6 ) $ 1,386.1

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

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

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended June 30,

September 30, Nine Months Ended September 30,

2022 2021 2022 2021

19 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 June 30, 2022, the carrying value of our investment in TRIP Holdings and RIV 2013 totaled $ 136.6 million.

At September 30, 2022, the carrying value of our investment in TRIP Holdings and RIV 2013 totaled $ 134.5 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.

16 unchanged sentences

(“Wafra”), a global alternative investment manager, announced a new railcar investment vehicle (“RIV”) program between Trinity and certain funds managed by Wafra (“Wafra Funds”).

As part of this program, a joint venture was formed, Signal Rail Holdings LLC (“Signal Rail”), which is owned 90 % by Wafra Funds and 10 % by TILC.

As part of this program, a joint venture was formed, Signal Rail Holdings LLC (“Signal Rail”), which was owned 90 % by Wafra Funds and 10 % by TILC.

Signal Rail or its subsidiaries are expected to invest in diversified portfolios of leased railcars originated by TILC targeting up to $ 1 billion in total acquisitions over an expected three-year investment period.

TILC will service all railcars owned by Signal Rail.

In August 2022, TILC and certain of its subsidiaries sold a second portfolio comprised of 2,678 railcars and related leases to Signal Rail for an aggregate sales price of approximately $ 254.1 million.

TILC recognized a gain of approximately $ 25.1 million on the sale and approximately $ 2.5 million was recognized as revenue for services performed associated with the delivery of railcars with attached leases during the three and nine months ended September 30, 2022.

In connection with the sale, TILC contributed $ 13.5 million of cash to Signal Rail, resulting in an increase in TILC's weighted average equity ownership in Signal Rail to 12.9 %.

Signal Rail financed the August 2022 purchase primarily through a term loan.

To date, TILC has sold 6,260 railcars to Signal Rail for an aggregate sales price of $ 579.2 million.

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

3 unchanged sentences

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

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.

At September 30, 2022, the carrying value of TILC’s equity investment in Signal Rail was $ 20.6 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:

June 30, 2022

September 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 June 30, Six Months Ended June 30,

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

2022 2021 Percent 2022 2021 Percent

25 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 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.

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

(3) Depreciation expense includes $ 2.4 million and $ 8.5 million for the three and nine months ended September 30, 2022, respectively, related to the disposal of certain railcar components associated with our sustainable railcar conversion program.

For the three and nine months ended September 30, 2021, depreciation expense includes $ 4.7 million and $ 7.3 million, respectively, related to our sustainable railcar conversion program.

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

Information related to lease portfolio sales is as follows:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

4 unchanged sentences

Operating profit margin on lease portfolio sales 11.4 % 10.2 % 13.9 % 11.1 %

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

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

Remaining three months of 2022 2023 2024 2025 2026 Thereafter Total

(in millions)

1 unchanged sentence

Wholly-owned subsidiaries.

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.

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

As of September 30, 2022, Trinity’s wholly-owned subsidiaries included in the Leasing Group held equipment with a net book value of $ 5,431.2 million, which is pledged solely as collateral for Leasing Group debt held by those subsidiaries.

The net book value of unpledged equipment at September 30, 2022 was $ 350.8 million.

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

2 unchanged sentences

Creditors of each of TRIP Holdings and RIV 2013 and their respective subsidiaries have recourse only to the particular subsidiary's assets.

TRIP Holdings held equipment with a net book value of $ 1,087.0 million, which is pledged solely as collateral for the TRIP Holdings' debt held by its subsidiaries.

TRP-2021 equipment with a net book value of $ 447.8 million is pledged solely as collateral for the TRP-2021 debt.

As of September 30, 2022, TRIP Holdings held equipment with a net book value of $ 1,078.6 million, which is pledged solely as collateral for the TRIP Holdings' debt held by its subsidiaries.

As of September 30, 2022, TRP-2021 equipment with a net book value of $ 454.9 million is pledged solely as collateral for the TRP-2021 debt.

See Note 5 for a description of TRIP Holdings and RIV 2013 and their respective subsidiaries.

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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 six months of 2022 2023 2024 2025 2026 Thereafter Total

Remaining three months of 2022 2023 2024 2025 2026 Thereafter Total

(in millions)

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

(in millions)

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The carrying amounts of our debt are as follows:

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

(in millions)

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term loan approximate fair value because the interest rate adjusts to the market interest rate.

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

June 30, 2022 December 31, 2021

The estimated fair values of our debt are as follows:

September 30, 2022 December 31, 2021

(in millions)

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

In July 2022, we amended our revolving credit facility to extend its maturity date to the earlier of (i) July 25, 2027 or (ii) July 2, 2024 if our Senior Notes have not been repaid in full by that date.

During the nine months ended September 30, 2022, we had total borrowings of $ 545.0 million and total repayments of $ 485.0 million under the revolving credit facility.

Additionally, we had outstanding letters of credit issued in an aggregate amount of $ 4.9 million.

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).

Of the $ 385.1 million remaining unused amount, $ 264.1 million was available for borrowing as of September 30, 2022.

The majority of our outstanding letters of credit as of September 30, 2022 are scheduled to expire in November 2023.

Our letters of credit obligations support performance bonds related to certain railcar orders.

The revolving credit facility bears interest at a variable rate of Secured Overnight Financing Rate ("SOFR") plus 2.35 %, for an all-in interest rate of 5.34 % as of September 30, 2022.

A commitment fee accrues on the average daily unused portion of the revolving credit facility at the rate of 0.175 % to 0.40 % ( 0.35 % as of September 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 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.

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

As of September 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 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.

During the nine months ended September 30, 2022, we had total borrowings of $ 554.1 million and total repayments of $ 387.7 million under the TILC warehouse loan facility.

Of the remaining unused facility amount of $ 271.8 million, $ 142.1 million was available as of September 30, 2022 based on the amount of warehouse-eligible, unpledged equipment.

In August 2022, we amended our warehouse loan facility to transition the facility benchmark rate from LIBOR to SOFR plus a benchmark adjustment.

Advances under the facility bear interest at one-month term SOFR plus (1) a benchmark adjustment of 11 basis points and (2) a facility margin of 185 basis points, for an all-in interest rate of 4.48 % at September 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.

We incurred $ 2.6 million in debt issuance costs, which will be amortized to interest expense through the anticipated repayment date of the TRL-2022 Notes.

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

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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.

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

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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.

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.

The effective tax rate from continuing operations for the three and nine months ended September 30, 2022 was 22.5 % and 23.7 %, 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, taxes not recorded on our non-controlling interests in partially-owned subsidiaries, and a reduction of our uncertain tax positions balance due to a lapse of a state statute of limitations.

For the three months ended September 30, 2021, we recorded income tax expense of $ 8.3 million on income from continuing operations before income taxes of $ 33.8 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.

For the nine months ended September 30, 2021, we recorded income tax expense of $ 9.4 million on income from continuing operations before income taxes of $ 27.1 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.

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

The total income tax receivable position as of September 30, 2022 was $ 11.0 million.

Our tax years through 2019 are effectively settled except with respect to carryback claims related to the 2013 through 2015 tax years, which are currently in review.

We do not expect any significant changes to the carryback claims.

We have state tax returns that are under audit in the normal course of business, and our Mexican subsidiaries' tax returns statutes of limitations remain open for auditing 2017 forward.

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Employee Retirement Plans

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.

Our defined contribution expense for the three and nine months ended September 30, 2022 was $ 2.5 million and $ 6.8 million, respectively.

Our defined contribution expense for the three and nine months ended September 30, 2021 was $ 2.5 million and $ 6.8 million, respectively.

The net periodic benefit cost related to our Supplemental Executive Retirement Plan was $ 0.2 million and $ 0.5 million for the three and nine months ended September 30, 2022.

The net periodic benefit cost related to our Supplemental Executive Retirement Plan was $ 0.1 million and $ 0.5 million for the three and nine months ended September 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.

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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 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.

During the nine months ended September 30, 2021, we used $ 2.2 million to fund pension administrative expenses required to finalize the settlement of the Pension Plan, which is included in other, net (income) expense in our Consolidated Statements of Operations.

There were no pension administrative expenses for the three months ended September 30, 2022 and 2021.

During the nine months ended September 30, 2022, we used $ 0.2 million to fund pension administrative expenses, resulting in a remaining surplus of the Pension Plan of $ 0.4 million at September 30, 2022.

Accumulated Other Comprehensive Income (Loss)

Changes in AOCI for the six months ended June 30, 2022 are as follows:

Changes in AOCI for the nine months ended September 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)

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Other comprehensive income 1.3 31.9 0.2 33.4

Balances at June 30, 2022

Balances at September 30, 2022

$ — $ 19.7 $ ( 3.3 ) $ 16.4

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

July 1, 2022 through September 30, 2022 610,000 14.1 $ 33.7

Total 7,525,953 $ 216.3

(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.

Certain shares of stock repurchased during September 2022, totaling $ 2.6 million, were cash settled in October 2022 in accordance with normal settlement practices.

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

Share repurchases during the nine months ended September 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 ("ValueAct").

The repurchase from ValueAct was approved by our Board of Directors separately from, and did not reduce the authorized amount remaining under, the previous share repurchase program, which was completed in the third quarter of 2021.

Stock-Based Compensation

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.

Stock-based compensation expense totaled approximately $ 5.9 million and $ 16.7 million for the three and nine months ended September 30, 2022, respectively.

Stock-based compensation expense totaled approximately $ 6.0 million and $ 15.2 million for the three and nine months ended September 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”).

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Expense related to stock options is recognized on a straight-line basis over the vesting period.

Expense related to restricted stock units ("RSUs") issued to eligible employees under the Plan is recognized ratably over the vesting period, generally between three years and four years .

Expense related to restricted stock units ("RSUs") issued to eligible employees under the Plan is recognized over the vesting period, generally between three years and four years .

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

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

Expense related to RSUs and restricted stock awards ("RSAs") granted to non-employee directors under the Plan is recognized ratably over the vesting period, generally one year .

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 six months ended June 30, 2022:

Expense related to RSUs and restricted stock awards ("RSAs") granted to non-employee directors under the Plan is recognized on a straight-line basis over the vesting period, generally one year .

Expense related to performance units is recognized on a straight-line basis from their award date to the end of the performance period, generally three years .

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

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

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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,

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

2022 2021 2022 2021

(in millions, except per share amounts)

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

Income from continuing operations $ 29.7 $ 25.5 $ 56.1 $ 17.7

Net (income) loss attributable to noncontrolling interest ( 0.5 ) ( 3.9 ) ( 7.9 ) 6.0

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

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

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

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

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On February 7, 2022, Mr.

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

Harman filed a Notice of Appeal of the trial court's order dismissing the case.

Harman's appeal remains pending.

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

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

On August 9, 2022, Mr.

Harman filed a Notice of Appeal of the trial court's order denying Mr.

Harman's motion for reconsideration.

Harman's appeal remains pending.

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

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

Harman ( Commonwealth of Massachusetts ex rel.

Harman Qui Tam v.

Trinity Industries, Inc.

and Trinity Highway Products, LLC , Case No.

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

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

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

The parties have reached an agreement 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.

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.

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

Also as previously reported, in June 2022, a state qui tam action filed by Mr.

Harman in the state of Massachusetts was settled for $ 5.0 million, which is included in income (loss) from discontinued operations, net of income taxes, in our Consolidated Statement of Operations for the nine months ended September 30, 2022.

Based on information currently available to the Company and previously disclosed, we currently do not believe that a loss is probable in the Virginia, Tennessee, and New Jersey state qui tam actions described under "State actions," therefore no accrual has been included in the accompanying Consolidated Financial Statements.

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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 to settle all claims in this case without any admission of liability or fault.

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

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

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

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

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

On May 30, 2022, the trial court granted preliminary approval of the settlement, and on August 30, 2022, the trial court granted final approval of the settlement.

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.

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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 $ 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 range of reasonably possible losses for such matters is $ 37.0 million to $ 51.2 million, which includes our rights in indemnity and recourse to third parties of approximately $ 10.1 million, which is recorded in other assets in our Consolidated Balance Sheet as of September 30, 2022.

This range includes any amounts related to the Highway Products litigation matters described above in the section titled “Highway products litigation." At September 30, 2022, total accruals of $ 37.3 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.

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

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

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

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

To date, we have received total advanced payments from insurance of approximately $ 25.4 million, which includes $ 8.1 million for reimbursement of cleanup and damage remediation expenditures.

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.

As of September 30, 2022, we have utilized $ 17.0 million of the advanced payments from insurance towards new capital expenditures in support of the reconstruction efforts.

During the first six months 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.

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.

During the third quarter of 2022, we recorded an additional insurance receivable of approximately $ 2.9 million for additional insurance recoveries that we expect to be reimbursed under the terms of our insurance policy, and we recorded a gain of $ 1.1 million, which is included in the gains on dispositions of other property line in our Consolidated Statements of Operations.

We received $ 2.8 million of reimbursements during the third quarter of 2022, resulting in a remaining insurance receivable of $ 2.6 million as of September 30, 2022.

Any additional property damage insurance proceeds received in excess of the net book value of property lost 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