What changed in this filing

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Item 1. Financial Statements

2023-05-02 compared with 2022-10-25 · 223 added, 381 removed, 744 unchanged (45% of the section changed)

4 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

(in millions, except per share amounts)

1 unchanged sentence

Leasing 203.3 182.9

496.6 419.8 1,386.1 1,043.8

Operating costs:

2 unchanged sentences

Leasing 116.5 102.9

395.3 337.4 1,119.4 785.8

Selling, engineering, and administrative expenses:

2 unchanged sentences

Other 26.0 22.2

48.0 45.8 137.7 136.7

Gains on dispositions of property:

1 unchanged sentence

Other 1.8 13.5

39.4 41.6 92.5 65.2

Restructuring activities, net ( 0.4 ) —

2 unchanged sentences

Interest expense, net 62.1 43.5

Loss on extinguishment of debt — — 1.5 11.7

Other, net 1.6 ( 1.6 )

54.4 44.5 147.0 160.5

Income from continuing operations before income taxes 5.3 12.9

2 unchanged sentences

Deferred ( 12.4 ) 1.2

8.6 8.3 17.4 9.4

Income from continuing operations 16.8 9.9

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

Loss from discontinued operations, net of benefit for income taxes of $ 0.8 and $ 2.0

( 3.1 ) ( 6.9 )

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

— — ( 5.7 ) —

Net income 13.7 1.9

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

Net income attributable to Trinity Industries, Inc.

Net income attributable to noncontrolling interest 9.3 2.6

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

$ 4.4 $ ( 0.7 )

1 unchanged sentence

Income from continuing operations $ 0.09 $ 0.09

Income (loss) from discontinued operations ( 0.04 ) 0.11 ( 0.24 ) 0.23

Basic net income attributable to Trinity Industries, Inc.

Loss from discontinued operations ( 0.04 ) ( 0.10 )

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

$ 0.05 $ ( 0.01 )

1 unchanged sentence

Income from continuing operations $ 0.09 $ 0.09

Income (loss) from discontinued operations ( 0.04 ) 0.11 ( 0.23 ) 0.23

Diluted net income attributable to Trinity Industries, Inc.

Loss from discontinued operations ( 0.04 ) ( 0.10 )

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

$ 0.05 $ ( 0.01 )

7 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

(in millions)

2 unchanged sentences

Derivative financial instruments:

Unrealized gains (losses) arising during the period, net of tax benefit (expense) of $( 3.0 ), $ 0.2 , $( 8.4 ), and $( 1.5 )

10.0 ( 0.8 ) 26.8 5.0

Reclassification adjustments for losses included in net income, net of tax benefit (expense) of $( 0.1 ), $ 0.3 , $ 1.2 , and $ 0.6

0.2 1.8 4.6 2.9

Unrealized gains arising during the period, net of tax expense of $ 0.1 and $ 4.4

Reclassification adjustments for (gains) losses included in net income, net of tax benefit of $ 11.0 and $ 0.9

Defined benefit plans:

1 unchanged sentence

( 14.4 ) 17.3

Currency translation adjustments:

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

10.3 1.0 32.9 8.0

Comprehensive income 36.6 36.9 69.6 50.0

comprehensive income (loss) attributable to noncontrolling interest 0.8 4.2 7.4 ( 5.0 )

Comprehensive income attributable to Trinity Industries, Inc.

Comprehensive income (loss) ( 0.7 ) 19.2

comprehensive income attributable to noncontrolling interest 1.9 2.8

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

$ ( 2.6 ) $ 16.4

3 unchanged sentences

Consolidated Balance Sheets

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

(in millions)

29 unchanged sentences

Retained earnings 975.6 992.6

Accumulated other comprehensive income (loss) 16.4 ( 17.0 )

Accumulated other comprehensive income 12.7 19.7

Treasury stock ( 1.5 ) ( 0.7 )

7 unchanged sentences

Consolidated Statements of Cash Flows

Nine Months Ended

September 30,

Three Months Ended

(in millions)

1 unchanged sentence

Net income $ 13.7 $ 1.9

(Income) loss from discontinued operations, net of income taxes 13.7 ( 24.3 )

Loss from discontinued operations, net of income taxes 3.1 6.9

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

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

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

Depreciation and amortization 74.0 66.9

5 unchanged sentences

Non-cash interest expense 2.6 3.3

Loss on extinguishment of debt 1.5 11.7

Other ( 1.9 ) 0.5

1 unchanged sentence

(Increase) decrease in receivables 2.8 38.2

(Increase) decrease in income tax receivable ( 5.6 ) 249.8

(Increase) decrease in inventories ( 3.3 ) ( 75.5 )

3 unchanged sentences

Increase (decrease) in other liabilities ( 0.2 ) 0.7

Net cash provided by (used in) operating activities – continuing operations ( 52.6 ) 418.8

Net cash provided by (used in) operating activities – discontinued operations ( 15.4 ) 8.4

Net cash provided by (used in) operating activities ( 68.0 ) 427.2

Net cash provided by operating activities – continuing operations 102.5 28.5

Net cash used in operating activities – discontinued operations ( 3.1 ) ( 8.0 )

Net cash provided by operating activities 99.4 20.5

Investing activities:

5 unchanged sentences

Proceeds from insurance recoveries 1.2 —

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

Other ( 1.1 ) —

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

Financing activities:

1 unchanged sentence

Proceeds from issuance of debt 246.3 127.2

Shares repurchased ( 36.8 ) ( 406.5 )

Dividends paid to common shareholders ( 21.1 ) ( 19.1 )

1 unchanged sentence

Distributions to noncontrolling interest ( 2.9 ) ( 6.2 )

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

Net cash provided by financing activities 72.4 28.7

Net increase (decrease) in cash, cash equivalents, and restricted cash ( 31.3 ) 49.0

19 unchanged sentences

81.1 $ 0.8 $ — $ 992.6 $ 19.7 — $ ( 0.7 ) $ 1,012.4 $ 257.2 $ 1,269.6

Net income (loss) — — — ( 0.7 ) — — — ( 0.7 ) 2.6 1.9

Other comprehensive income — — — — 17.1 — — 17.1 0.2 17.3

Cash dividends declared on common stock (1)

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

Distributions to noncontrolling interest

— — — — — — — — ( 6.2 ) ( 6.2 )

Stock-based compensation expense

— — 5.1 — — — — 5.1 — 5.1

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

March 31, 2022

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

Net income — — — 4.4 — — — 4.4 9.3 13.7

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

Other comprehensive loss — — — — ( 7.0 ) — — ( 7.0 ) ( 7.4 ) ( 14.4 )

Cash dividends declared on common stock (1)

5 unchanged sentences

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

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

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

Retirement of treasury stock

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

June 30, 2022

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

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

March 31, 2023

81.1 $ 0.8 $ 6.6 $ 975.6 $ 12.7 — $ ( 1.5 ) $ 994.2 $ 256.2 $ 1,250.4

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

Common Stock Capital in

2 unchanged sentences

Comprehensive

Loss Treasury Stock Trinity

Income (Loss) Treasury Stock Trinity

Stockholders’

11 unchanged sentences

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

Stock-based compensation expense

— — 5.1 — — — — 5.1 — 5.1

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

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

March 31, 2021

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

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

Other comprehensive income — — — — 1.2 — — 1.2 0.4 1.6

Cash dividends declared on common stock (1)

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

Stock-based compensation expense

— — 4.1 — — — — 4.1 — 4.1

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

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

Retirement of treasury stock

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

June 30, 2021

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

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 — — — — — — — — ( 6.2 ) ( 6.2 )

2 unchanged sentences

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

Shares repurchased

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

September 30, 2021

March 31, 2022

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

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

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

See accompanying notes to Consolidated Financial Statements.

6 unchanged sentences

and its consolidated subsidiaries (“Trinity,” “Company,” “we,” “our,” or "us") including the accounts of our wholly-owned subsidiaries and partially-owned subsidiaries, TRIP Rail Holdings LLC (“TRIP Holdings”) and RIV 2013 Rail Holdings LLC ("RIV 2013"), in which we have a controlling interest.

In our opinion, all normal and recurring adjustments necessary for a fair presentation of our financial position as of September 30, 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.

In our opinion, all normal and recurring adjustments necessary for a fair presentation of our financial position as of March 31, 2023, and the results of operations and cash flows for the three months ended March 31, 2023 and 2022, have been made in conformity with generally accepted accounting principles.

All significant intercompany accounts and transactions have been eliminated.

Certain prior year balances have been reclassified to conform to the 2023 presentation.

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.

Due to seasonal and other factors, the results of operations for the three months ended March 31, 2023 may not be indicative of expected results of operations for the year ending December 31, 2023.

These interim financial statements and notes are condensed as permitted by the instructions to Form 10-Q and should be read in conjunction with our audited Consolidated Financial Statements included in our Form 10-K for the year ended December 31, 2022.

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 a final working capital adjustment, which was recorded in the second quarter of 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.

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

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

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

Revenue Recognition

13 unchanged sentences

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

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.

See "Lease Accounting" below for additional information regarding sales-type leases as of March 31, 2023 and 2022.

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

5 unchanged sentences

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

Certain contracts for the sales of railcars include price adjustments based on steel-price indices;

Certain contracts for the sales of railcars include price adjustments based on changes to input costs;

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

Revenue is recognized over time as repair and maintenance projects and sustainable railcar conversions are completed, using an input approach based on the costs incurred relative to the total estimated costs of performing the project.

We recorded contract assets of $ 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.

We recorded contract assets of $ 4.4 million and $ 2.9 million as of March 31, 2023 and December 31, 2022, 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 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

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

Unsatisfied performance obligations at March 31, 2023

Amount Percent expected to be delivered in 2023

7 unchanged sentences

Railcar Leasing and Management Services Group $ 73.0 15.9 %

(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.

4 unchanged sentences

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 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.

Our operating leases have remaining lease terms ranging from one year to fourteen years , some of which include options to extend for up to five years , and some of which include options to terminate within one year .

As of March 31, 2023, we had no material finance leases in which we were the lessee.

Certain of our operating leases include lease incentives, which reduce the right-of-use asset and are recognized on a straight-line basis over the lease term.

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Consolidated Statements of Operations

4 unchanged sentences

Right-of-use assets recognized in exchange for new lease liabilities $ 2.1 $ 11.1

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Consolidated Balance Sheets

9 unchanged sentences

Leasing Group Non-Leasing Group Total

Remaining three months of 2022 $ 3.2 $ 2.1 $ 5.3

Remaining nine months of 2023 $ 8.1 $ 6.9 $ 15.0

2024 7.0 8.1 15.1

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

As of March 31, 2023, 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

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

(in millions)

3 unchanged sentences

Profit recognized at sales-type lease commencement (1)

$ — $ — $ 1.3 $ —

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

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

Remaining three months of 2022 $ 156.7

Remaining nine months of 2023 $ 480.8

Thereafter 318.5

2 unchanged sentences

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

Remaining three months of 2022 $ 0.3

Remaining nine months of 2023 $ 0.8

Thereafter 10.1

5 unchanged sentences

Financial instruments that potentially subject us to a concentration of credit risk are primarily cash investments, including restricted cash and receivables.

We place our cash investments in bank deposits, investment grade, short-term debt instruments, and highly-rated commercial paper.

We place our cash investments in bank deposits, investment grade short-term debt instruments, highly-rated money market funds, and highly-rated commercial paper.

We limit the amount of credit exposure to any one commercial issuer.

5 unchanged sentences

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

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.

During the three months ended March 31, 2023, we recognized approximately $ 0.5 million of credit loss expense and approximately $ 0.5 million of recoveries and other adjustments, and wrote off $ 0.2 million related to our trade receivables that are in the scope of ASC 326, Financial Instruments – Credit Losses, bringing the allowance for credit losses balance from $ 10.6 million at December 31, 2022 to $ 10.4 million at March 31, 2023.

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

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

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

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

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

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

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

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

Based on our preliminary purchase price allocation, we recorded intellectual property of $ 5.2 million, which will be amortized over five years, goodwill of $ 5.3 million, and certain other immaterial assets and liabilities.

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

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

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

This transaction resulted in goodwill of $ 7.0 million.

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.

Goodwill by segment is as follows:

March 31, 2023 December 31, 2022

Railcar Leasing and Management Services Group $ 33.5 $ 7.1

Rail Products Group 188.8 188.8

$ 222.3 $ 195.9

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

3 unchanged sentences

We provide for the estimated cost of product warranties at the time revenue is recognized related to products covered by warranties and assess the adequacy of the resulting reserves on a quarterly basis.

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

The changes in the accruals for warranties for the three months ended March 31, 2023 and 2022 are as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

(in millions)

5 unchanged sentences

Recent Accounting Pronouncements

Adopted in 2023

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.

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

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

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

We adopted ASU 2022-04 effective January 1, 2023.

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

In cooperation with a participating financial institution, we facilitate a voluntary supply chain finance ("SCF") program for several of our suppliers.

We negotiate payment terms with suppliers that are in line with average industry terms.

We have not pledged any assets as security or provided other forms of guarantees to the financial institution.

Under the SCF program, participating suppliers may choose to sell, at a discounted price, receivables due from us to the financial institution, at the sole discretion of both the suppliers and the financial institution, prior to the invoices’ scheduled due dates.

The payment terms that we negotiate with all suppliers are consistent regardless of whether the supplier chooses to participate in the SCF program for a particular invoice.

The SCF program is administered by a third-party financial institution, and our responsibility is limited to making payments based on the terms originally negotiated with participating suppliers, regardless of whether such suppliers sell receivables to the financial institution.

Amounts due to our participating suppliers in the SCF program totaled $ 17.3 million and $ 22.8 million as of March 31, 2023 and December 31, 2022, respectively, and are included in accounts payable in our Consolidated Balance Sheets.

Payments made under the SCF program are reflected in net cash provided by operating activities in our Consolidated Statements of Cash Flows.

Acquisitions and Discontinued Operations

Acquisition of RSI Logistics

On March 8, 2023, we acquired RSI Logistics ("RSI"), a data-centric provider of proprietary software and logistics and terminal management solutions to the North American rail industry, for an aggregate purchase price of $ 72.1 million.

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

The fair values of the assets acquired and liabilities assumed are considered preliminary and are subject to adjustment as additional information is obtained and reviewed.

The final allocation of the purchase price may differ from the preliminary allocation based on completion of the valuation.

We expect to finalize the purchase price allocation within the measurement period, which will not exceed one year from the acquisition date.

Based on our preliminary purchase price allocation, we recorded identifiable intangible assets of $ 37.4 million, goodwill of $ 26.3 million, and certain other assets, net of liabilities, totaling $ 8.4 million.

The identifiable intangible assets, with the exception of the trade name, which will be considered an indefinite-lived intangible asset, will be amortized over their estimated useful lives, ranging from 5 years to 15 years.

The primary areas of the purchase price allocation that are not yet finalized relate to the valuation of intangible assets, goodwill and certain other immaterial assets and liabilities.

Acquisition of Holden America

On December 30, 2022, we acquired Holden America, a manufacturer of market-leading multi-level vehicle securement and protection systems, gravity-outlet gates, and gate accessories for freight rail in North America.

Based on our preliminary purchase price allocation recorded during the year ended December 31, 2022, we recorded identifiable intangible assets of $ 45.9 million, goodwill of $ 36.4 million, and certain other immaterial assets.

The fair values of the assets acquired and liabilities assumed are considered preliminary and are subject to adjustment as additional information is obtained and reviewed.

The final allocation of the purchase price may differ from the preliminary allocation based on completion of the valuation.

We did not make any adjustments during the three months ended March 31, 2023.

We expect to finalize the purchase price allocation within the measurement period, which will not exceed one year from the acquisition date.

Sale of Highway Products Business

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

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

During the 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.

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

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

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

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

The 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 nine months ended September 30, 2022, and that may be incurred in the future, will likewise be reported in discontinued operations.

In the fourth quarter of 2021, we completed the sale of Trinity Highway Products, LLC (“THP”) to Rush Hour Intermediate II, LLC ("Rush Hour"), an entity owned by an affiliated investment fund of Monomoy Capital Partners.

Upon completion of the sale, the accounting requirements for reporting THP as a discontinued operation were met.

In connection with the sale, the Company agreed to indemnify Rush Hour for certain liabilities related to the highway products business, including certain liabilities resulting from or arising out of the ET-Plus® System, a highway guardrail end-terminal system (the “ET Plus”).

Consequently, results from discontinued operations below include certain legal expenses that are directly attributable to the highway products business.

Similar expenses related to these retained obligations that may be incurred in the future will likewise be reported in discontinued operations.

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 nine months ended September 30, 2022 and 2021:

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

(in millions)

Revenues $ — $ 83.7 $ — $ 230.0

Cost of revenues — 60.4 — 165.2

Selling, engineering, and administrative expenses 3.9 8.9

Income (loss) from discontinued operations before income taxes ( 4.4 ) 14.0 ( 17.2 ) 32.3

Provision (benefit) for income taxes ( 1.0 ) 3.2 ( 3.5 ) 7.2

Income (loss) from discontinued operations, net of income taxes $ ( 3.4 ) $ 10.8 $ ( 13.7 ) $ 25.1

Other discontinued operations

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.

Loss from discontinued operations before income taxes ( 3.9 ) ( 8.9 )

Benefit for income taxes ( 0.8 ) ( 2.0 )

Loss from discontinued operations, net of income taxes $ ( 3.1 ) $ ( 6.9 )

Derivative Instruments and Fair Value Measurements

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These accumulated gains or losses are reclassified into earnings in the periods during which the hedged transactions affect earnings.

Derivative instruments that are not designated as hedges are accounted for by recording the realized and unrealized gains or losses on the derivative instrument in other, net (income) expense in our Consolidated Statements of Operations.

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

See Note 8 for a description of our debt instruments.

Derivatives Designated as Hedging Instruments

Interest Rate Hedges

Included in accompanying balance sheet

at September 30, 2022

at March 31, 2023

AOCI – loss/(income)

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TRIP Holdings warehouse loan (2)

Tribute Rail secured railcar equipment notes (2)

$ 788.5 3.60 % $ — $ — $ —

Tribute Rail secured railcar equipment notes $ 256.0 2.86 % $ — $ 0.7 $ 0.9

2017 promissory notes – interest rate cap $ 169.3 3.00 % $ — $ ( 0.2 ) $ —

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

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

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

Effect on interest expense – increase/(decrease)

Three Months Ended

September 30, Nine Months Ended

September 30, Expected effect during next twelve months

2022 2021 2022 2021

March 31, Expected effect during next twelve months

(in millions)

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TRIP Holdings warehouse loan $ 0.1 $ 0.4 $ —

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

Tribute Rail secured railcar equipment notes $ 0.2 $ — $ 0.7

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2017 promissory notes – interest rate swap $ (2.5) $ 2.8 $ ( 10.0 )

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

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

Foreign Currency Hedge

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Information related to our foreign currency hedge is as follows:

accompanying balance

sheet at September 30, 2022

accompanying balance sheet at March 31, 2023

Effect on cost of revenues – increase/(decrease)

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loss/(income) Three Months Ended

September 30, Nine Months Ended

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

2022 2021 2022 2021

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

(in millions)

$ 22.5 $ 2.3 $ ( 3.8 ) $ (1.7) $ 0.2 $ ( 3.8 )

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

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

Derivatives Not Designated as Hedging Instruments (1)

Asset/(Liability) at

March 31, 2023

Effect on other, net (income) expense – increase/(decrease)

Amount Interest

Rate Three Months Ended

($ in millions)

TILC warehouse facility – interest rate cap $ 800.0 2.50 % $ 18.4 $ (0.9) $ —

TILC – interest rate cap $ 800.0 2.50 % $ ( 18.4 ) $ 0.9 $ —

(1) Derivatives not designated as hedging instruments are comprised of back-to-back interest rate caps entered into with the same counterparty that offset and do not have a net effect on Trinity's consolidated earnings.

These derivative contracts were entered into in connection with our risk management objectives.

Fair Value Measurements

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

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

(in millions)

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or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Interest rate hedges are valued at exit prices obtained from each counterparty.

Interest rate swaps and interest rate caps are valued at exit prices obtained from each counterparty.

Foreign currency hedges are valued at exit prices obtained from each counterparty, which are based on currency spot and forward rates and forward points.

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

September 30, 2022 December 31, 2021

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

March 31, 2023 December 31, 2022

(in millions)

Interest rate hedge (1)

$ 15.6 $ 19.7

Foreign currency hedge (1)

Derivatives not designated as hedging instruments (1)

Total assets $ 36.3 $ 43.3

Interest rate hedge (2)

Foreign currency hedge (2)

Derivatives not designated as hedging instruments (2)

$ 18.4 $ 21.6

Total liabilities $ 18.4 $ 21.6

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Level 3 – This level is defined as unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

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

As of March 31, 2023 and December 31, 2022, we have no assets or liabilities measured on a recurring basis as Level 3 in the fair value hierarchy.

See Note 2 for more information regarding non-recurring fair value measurements involving Level 3 inputs resulting from acquisition activity.

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We report our operating results in two reportable segments:

(1) the Railcar Leasing and Management Services Group, which owns and operates a fleet of railcars and provides third-party fleet leasing, management, and administrative services;

(1) the Railcar Leasing and Management Services Group, which owns and operates a fleet of railcars and provides third-party fleet leasing, management, and administrative services, as well as other railcar logistics products and services;

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

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

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

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

Gains and losses from the sale of property, plant, and equipment are included in the operating profit of each respective segment.

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We operate principally in North America.

Three Months Ended September 30, 2022

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

External revenue $ 194.6 $ 302.0 $ — $ — $ 496.6

Intersegment revenue 0.2 295.3 ( 295.3 ) ( 0.2 ) —

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

Three Months Ended September 30, 2021

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

External revenue $ 185.3 $ 234.5 $ — $ — $ 419.8

Intersegment revenue 0.2 105.4 ( 105.3 ) ( 0.3 ) —

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

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

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

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Total revenues $ 203.5 $ 637.8 $ ( 199.4 ) $ ( 0.2 ) $ 641.7

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

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

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

Three Months Ended

September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

(in millions)

Operating profit:

Operating profit (loss):

Railcar Leasing and Management Services Group $ 85.5 $ 79.8

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Provision (benefit) for income taxes ( 11.5 ) 3.0

Income (loss) from discontinued operations, net of income taxes ( 3.4 ) 10.4 ( 13.7 ) 24.3

Loss from discontinued operations, net of income taxes ( 3.1 ) ( 6.9 )

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

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TILC is the agent of each of TRIP Holdings and RIV 2013 and, as such, has been delegated the authority, power, and discretion to take certain actions on behalf of the respective companies.

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

At March 31, 2023, the carrying value of our investment in TRIP Holdings and RIV 2013 totaled $ 135.3 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.

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Each of TRIP Holdings and RIV 2013 has wholly-owned subsidiaries that are the owners of railcars acquired from our Rail Products and Leasing Groups.

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

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

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

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

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

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

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

Investment in Unconsolidated Affiliate

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(“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 was 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 is currently owned 87.1 % by Wafra Funds and 12.9 % by TILC.

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

TILC will service all railcars owned by Signal Rail.

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 6,460 railcars to Signal Rail for an aggregate sales price of $ 598.6 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.

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

TILC has variable interests in Signal Rail arising from its 12.9 % equity ownership position and its role as a service provider.

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

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.

At March 31, 2023, the carrying value of TILC’s equity investment in Signal Rail was $ 21.2 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.

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

September 30, 2022

March 31, 2023

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

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

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

2022 2021 Percent 2022 2021 Percent

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

Three Months Ended March 31,

2023 2022 Percent

($ in millions) Change

Leasing and management $ 203.5 $ 183.1 11.1 %

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Lease portfolio sales (2)

34.3 32.9 * 73.0 45.7 *

Total operating profit $ 85.5 $ 79.8 7.1 %

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$ 15.7 $ 12.8 22.7 %

$ 49.2 $ 39.9 23.3 % $ 133.9 $ 142.6 ( 6.1 ) %

Interest $ 54.8 $ 38.7 41.6 %

* Not meaningful

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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 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.

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

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

Information related to lease portfolio sales is as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

($ in millions)

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Operating profit margin on lease portfolio sales 23.8 % 14.8 %

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

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

Railcar Leasing Equipment Portfolio.

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

Remaining three months of 2022 2023 2024 2025 2026 Thereafter Total

Remaining nine months of 2023 2024 2025 2026 2027 Thereafter Total

(in millions)

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Wholly-owned subsidiaries.

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.

The Leasing Group’s debt at March 31, 2023 consisted primarily of non-recourse debt.

As of March 31, 2023, Trinity’s wholly-owned subsidiaries included in the Leasing Group held equipment with a net book value of $ 5,567.2 million, which is pledged solely as collateral for Leasing Group debt held by those subsidiaries.

The net book value of unpledged equipment at March 31, 2023 was $ 307.3 million.

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

Partially-owned subsidiaries.

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

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.

As of March 31, 2023, TRIP Holdings held equipment with a net book value of $ 1,054.8 million, which is pledged solely as collateral for the TRIP Holdings' debt held by its subsidiaries.

As of March 31, 2023, TRP-2021 equipment with a net book value of $ 455.1 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 three months of 2022 2023 2024 2025 2026 Thereafter Total

Remaining nine months of 2023 2024 2025 2026 2027 Thereafter Total

(in millions)

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

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

(in millions)

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The carrying amounts of our debt are as follows:

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

(in millions)

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1,185.6 1,192.6

TRIP Railcar Co.

term loan — 323.7

1,200.7 1,227.2

unamortized debt issuance costs ( 9.2 ) ( 9.8 )

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The estimated fair values of our secured railcar equipment notes are based on our estimate of their fair value using unobservable input values provided by a third party (Level 3 inputs).

The respective carrying values of our revolving credit facility, 2017 promissory notes, TILC warehouse facility, and TRIP Railcar Co.

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

The respective carrying values of our revolving credit facility, 2017 promissory notes and TILC warehouse facility approximate fair value because the interest rate adjusts to the market interest rate.

The estimated fair values of our debt are as follows:

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

(in millions)

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Revolving Credit Facility – We have a $ 600.0 million unsecured corporate 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 $ 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.

In March 2023, we amended our revolving credit facility to increase the total facility commitment from $ 450.0 million to $ 600.0 million, increase the maximum leverage ratio to provide additional flexibility, modify the limitations on restricted payments, and allow up to $ 100.0 million of annual dividends on the Company's common stock.

We incurred $ 0.5 million in costs related to the amendment, which will be amortized to interest expense through the maturity date.

The maturity date for the revolving credit facility is the earlier of (i) July 25, 2027 or (ii) July 2, 2024 if our Senior Notes have not been repaid in full by that date.

During the three months ended March 31, 2023, we had total borrowings of $ 155.0 million and total repayments of $ 75.0 million under the revolving credit facility.

Additionally, we had outstanding letters of credit issued in an aggregate amount of $ 16.8 million, leaving $ 278.2 million available for borrowing as of March 31, 2023.

The majority of our outstanding letters of credit as of March 31, 2023 are scheduled to expire in October 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 bears interest at a variable rate of the Secured Overnight Financing Rate ("SOFR") plus (1) a benchmark adjustment of 10 basis points and (2) a facility margin of 1.75 %, for an all-in interest rate of 6.69 % as of March 31, 2023.

A commitment fee accrues on the average daily unused portion of the revolving credit facility at the rate of 0.175 % to 0.40 % ( 0.25 % as of March 31, 2023).

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 to provide additional flexibility.

As of September 30, 2022, we were in compliance with all such financial covenants.

As of March 31, 2023, 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 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.

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

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

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

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

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

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

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

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

TRIP Railcar Co.

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

In connection with the redemption, we recognized a loss on extinguishment of debt of $ 1.5 million, which related to the write-off of unamortized debt issuance costs.

This write-off is reflected in the loss on extinguishment of debt line of our Consolidated Statements of Operations for the 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.

While the stated final maturity date of these notes is in 2052, the cash flows from the encumbered assets of each of TRL-2022 and Tribute Rail will be applied, pursuant to the payment priorities of their respective indentures, so as to amortize their respective notes to achieve monthly targeted principal balances.

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

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

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

During the three months ended March 31, 2023, we had total borrowings of $ 91.8 million and total repayments of $ 17.4 million under the TILC warehouse loan facility.

Of the remaining unused facility amount of $ 203.8 million, $ 91.4 million was available as of March 31, 2023 based on the amount of warehouse-eligible, unpledged equipment.

TRL-2017 SOFR Transition – In February 2023, we amended the Amended and Restated Loan Agreement and the Trinity Rail Leasing 2017, LLC ("TRL-2017") interest rate swap agreements to transition the benchmark rate from LIBOR to SOFR plus a benchmark adjustment.

The Company has elected to apply the optional accounting expedient under ASC 848, Reference Rate Reform , for hedging relationships affected by reference rate reform.

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 2022 Annual Report on Form 10-K.

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 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 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.

During the three months ended March 31, 2023, one of our partially-owned subsidiaries released residual tax effects that had previously been recorded in AOCI.

This deferred tax benefit was originally recorded before the partially-owned subsidiary was treated as a flow-through entity, remaining in AOCI until the underlying book to tax difference no longer existed, which occurred during the three months ended March 31, 2023.

As a result, we recorded an $ 11.9 million income tax benefit in our Consolidated Statements of Operations during the three months ended March 31, 2023.

Pursuant to the acquisition of RSI during the three months ended March 31, 2023, we re-measured our existing deferred tax assets and liabilities, taking into account the expected change to state tax apportionment.

This resulted in an increase to our net deferred tax liability of $ 3.2 million in the quarter, which was recorded through deferred income tax expense.

The tax provision also reflects a $ 4.0 million tax benefit related to an adjustment to valuation allowances, primarily for deferred tax assets in Mexico, state tax loss carryforwards, and federal tax credits.

The effective tax rate from continuing operations for the three months ended March 31, 2023 was a benefit of 217.0 % which differs from the U.S.

statutory rate of 21.0 % primarily due to the release of residual taxes out of AOCI, the re-measurement of our net deferred tax liabilities due to the acquisition of RSI, changes in our valuation allowances, state income taxes, and foreign income taxes.

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

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

The total income tax receivable position as of March 31, 2023 was $ 10.1 million.

Our tax years through 2020 are effectively settled except with respect to carryback claims related to the 2013 through 2015 tax years, which are currently in review by the Joint Committee on Taxation.

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

We have received a partial acceptance letter for our 2021 federal tax refund and have one open issue.

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 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.

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

The net periodic benefit cost related to our Supplemental Executive Retirement Plan was $ 0.2 million for each of the three months ended March 31, 2023 and 2022.

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

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The Pension Plan was settled in the fourth quarter of 2020, which resulted in the Company no longer having any remaining funded pension plan obligations.

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

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 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)

During the three months ended March 31, 2023, we reverted the remaining surplus pension assets of $ 0.4 million to the Company and incurred an excise tax of approximately $ 0.1 million.

Following the completion of this transaction, there are no longer any pension assets reported in our Consolidated Balance Sheet.

Accumulated Other Comprehensive Income

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

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

(in millions)

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( 14.9 ) — ( 14.9 )

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

noncontrolling interest 7.4 — 7.4

Other comprehensive income 1.3 31.9 0.2 33.4

Balances at September 30, 2022

Other comprehensive loss ( 7.0 ) — ( 7.0 )

Balances at March 31, 2023

$ 13.9 $ ( 1.2 ) $ 12.7

See Note 3 for information on the reclassification of amounts in AOCI into earnings.

In May 2013, one of our partially-owned leasing subsidiaries, TRIP Holdings, was converted to a partnership for income tax purposes.

At the time of the conversion, TRIP Holdings had deferred tax assets associated with certain terminated interest rate hedges that were initially recognized as a component of AOCI.

As TRIP Holdings was no longer a taxable entity following the conversion, these deferred tax assets were removed during the year ended December 31, 2013, with a corresponding charge to income tax expense in the Consolidated Statements of Operations, leaving residual tax effects in AOCI.

These residual tax effects are released when the item giving rise to the tax effect is disposed of, liquidated, or terminated.

Pursuant to our election of the portfolio approach, we released the residual tax effects when all of the interest rate swap balances were fully amortized, which occurred during the three months ended March 31, 2023.

Consequently, during the three months ended March 31, 2023, we recorded an income tax benefit of $ 13.2 million to TRIP Holdings, reflecting the reclassification of the residual tax effects previously recorded in AOCI.

The controlling interest portion of this income tax benefit was $ 4.4 million.

See Note 3 for additional information on the reclassification of amounts in AOCI into earnings.

Reclassifications of unrealized before-tax gains and losses on derivative financial instruments are included in interest expense, net for our interest rate hedges and in cost of revenues for our foreign currency hedges in our Consolidated Statements of Operations.

Reclassifications of before-tax net actuarial gains/(losses) of defined benefit plans are included in other, net (income) expense in our Consolidated Statements of Operations.

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

Common Stock and Stock-Based Compensation

Stockholders' Equity

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

In December 2022, our Board of Directors authorized a new share repurchase program effective December 9, 2022 with no expiration.

The new share repurchase program authorizes the Company to repurchase up to $ 250.0 million of its common stock.

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

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

The ASR 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)

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.

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.

There were no shares repurchased during the three months ended March 31, 2023 or 2022.

Stock-Based Compensation

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.

Stock-based compensation expense totaled approximately $ 6.2 million and $ 5.1 million for the three months ended March 31, 2023 and 2022, 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 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:

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

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

Restricted stock units 30,799 $ 26.42

Restricted stock awards 26,339 $ 25.43

Performance units 114,875 $ 41.96

Earnings Per Common Share

Basic net income attributable to Trinity Industries, Inc.

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

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

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

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

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

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

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

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

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

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

2022 2021 2022 2021

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

Three Months Ended March 31,

(in millions, except per share amounts)

Income from continuing operations $ 16.8 $ 9.9

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

Net income attributable to noncontrolling interest ( 9.3 ) ( 2.6 )

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

29.2 21.6 48.2 23.7

Income (loss) from discontinued operations, net of income taxes ( 3.4 ) 10.4 ( 13.7 ) 24.3

Loss from discontinued operations, net of income taxes ( 3.1 ) ( 6.9 )

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

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

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

( 3.1 ) ( 8.0 )

Net income attributable to Trinity Industries, Inc.

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

$ 4.4 $ ( 0.7 )

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Diluted weighted average shares outstanding

83.3 99.5 84.4 105.7

Basic earnings per common share:

Income from continuing operations $ 0.09 $ 0.09

Income (loss) from discontinued operations ( 0.04 ) 0.11 ( 0.24 ) 0.23

Basic net income attributable to Trinity Industries, Inc.

Loss from discontinued operations ( 0.04 ) ( 0.10 )

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

$ 0.05 $ ( 0.01 )

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Income from continuing operations $ 0.09 $ 0.09

Income (loss) from discontinued operations ( 0.04 ) 0.11 ( 0.23 ) 0.23

Diluted net income attributable to Trinity Industries, Inc.

Loss from discontinued operations ( 0.04 ) ( 0.10 )

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

$ 0.05 $ ( 0.01 )

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Harman's petition ended this action.

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

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

State actions

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

The Commonwealth of Virginia Attorney General has intervened in the Virginia matter, which is scheduled for trial on April 17, 2023.

The Commonwealth of Virginia Attorney General has intervened in the Virginia matter.

The trial court has set the case for trial on March 18, 2024.

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

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

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

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

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

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

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

As previously reported, the parties reached an agreement to settle all claims in this case without any admission of liability or fault.

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

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

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.

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

To date, the Company has funded $ 17.5 million in connection with the settlement and refined certain estimates, resulting in a remaining liability of $ 7.8 million as of March 31, 2023.

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

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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 $ 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 range of reasonably possible losses for such matters is $ 10.0 million to $ 20.9 million.

This range includes any amounts related to the Highway Products litigation matters described above in the section titled “Highway products litigation." At March 31, 2023, total accruals of $ 10.5 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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To date, we have received total advanced payments from insurance of approximately $ 28.9 million, which includes $ 8.1 million for reimbursement of cleanup and damage remediation expenditures.

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.

As of March 31, 2023, we have utilized $ 19.6 million of the advanced payments from insurance towards new capital expenditures in support of the reconstruction efforts.

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

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