What changed in this filing

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Item 1. Financial Statements

2023-08-01 compared with 2023-05-02 · 295 added, 133 removed, 834 unchanged (34% of the section changed)

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

(in millions, except per share amounts)

1 unchanged sentence

Leasing 223.0 195.1 426.3 378.0

722.4 416.8 1,364.1 889.5

Operating costs:

2 unchanged sentences

Leasing 121.3 104.8 237.8 207.7

601.2 325.6 1,139.7 724.1

Selling, engineering, and administrative expenses:

2 unchanged sentences

Other 31.6 25.4 57.6 47.6

54.3 45.0 104.2 89.7

Gains on dispositions of property:

1 unchanged sentence

Other 0.6 0.9 2.4 14.4

30.4 27.8 45.7 53.1

Restructuring activities, net ( 1.8 ) 1.0 ( 2.2 ) 1.0

2 unchanged sentences

Interest expense, net 66.9 49.7 129.0 93.2

Loss on extinguishment of debt — 1.5 — 1.5

Other, net 1.3 ( 0.5 ) 2.9 ( 2.1 )

68.2 50.7 131.9 92.6

Income from continuing operations before income taxes 30.9 22.3 36.2 35.2

2 unchanged sentences

Deferred 4.3 3.8 ( 8.1 ) 5.0

7.4 5.8 ( 4.1 ) 8.8

Income from continuing operations 23.5 16.5 40.3 26.4

2 unchanged sentences

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

— ( 4.6 ) — ( 5.7 )

Net income 21.2 8.5 34.9 10.4

Net income attributable to noncontrolling interest 4.2 4.8 13.5 7.4

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

Net income attributable to Trinity Industries, Inc.

$ 17.0 $ 3.7 $ 21.4 $ 3.0

2 unchanged sentences

Loss from discontinued operations ( 0.03 ) ( 0.10 ) ( 0.07 ) ( 0.19 )

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

Basic net income attributable to Trinity Industries, Inc.

$ 0.21 $ 0.04 $ 0.26 $ 0.04

2 unchanged sentences

Loss from discontinued operations ( 0.03 ) ( 0.10 ) ( 0.06 ) ( 0.19 )

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

Diluted net income attributable to Trinity Industries, Inc.

$ 0.20 $ 0.04 $ 0.26 $ 0.04

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

(in millions)

3 unchanged sentences

Unrealized gains arising during the period, net of tax expense of $ 2.7 ,$ 1.0 , $ 2.8 , and $ 5.4

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

8.9 2.1 9.4 16.8

Reclassification adjustments for (gains) losses included in net income, net of tax (expense) benefit of $( 1.1 ), $ 0.4 , $ 9.9 , and $ 1.3

( 3.9 ) 1.9 ( 18.8 ) 4.4

Defined benefit plans:

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

Currency translation adjustments:

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

5.0 5.3 ( 9.4 ) 22.6

Comprehensive income (loss) ( 0.7 ) 19.2

Comprehensive income 26.2 13.8 25.5 33.0

comprehensive income attributable to noncontrolling interest 4.3 3.8 6.2 6.6

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

Comprehensive income attributable to Trinity Industries, Inc.

$ 21.9 $ 10.0 $ 19.3 $ 26.4

3 unchanged sentences

Consolidated Balance Sheets

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

(in millions)

39 unchanged sentences

Consolidated Statements of Cash Flows

Three Months Ended

Six Months Ended

(in millions)

3 unchanged sentences

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

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

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

Depreciation and amortization 146.8 136.2

4 unchanged sentences

Gains on insurance recoveries from property damage ( 1.2 ) ( 6.4 )

Non-cash impact of restructuring activities ( 2.2 ) —

Non-cash interest expense 5.7 7.2

Loss on extinguishment of debt — 1.5

Other ( 3.0 ) ( 2.9 )

6 unchanged sentences

Increase (decrease) in other liabilities 1.9 ( 4.0 )

Net cash provided by operating activities – continuing operations 102.5 28.5

Net cash provided by (used in) operating activities – continuing operations 140.3 ( 61.3 )

Net cash used in operating activities – discontinued operations ( 5.4 ) ( 12.0 )

Net cash provided by operating activities 99.4 20.5

Net cash provided by (used in) operating activities 134.9 ( 73.3 )

Investing activities:

6 unchanged sentences

Other ( 1.1 ) —

Net cash used in investing activities – continuing operations ( 292.1 ) ( 198.5 )

Payments related to sale of discontinued operations — ( 2.7 )

Net cash used in investing activities ( 292.1 ) ( 201.2 )

2 unchanged sentences

Proceeds from issuance of debt 1,253.9 1,194.1

Shares repurchased — ( 22.4 )

Dividends paid to common shareholders ( 43.3 ) ( 39.3 )

2 unchanged sentences

Net cash provided by financing activities 159.5 278.6

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

Net increase in cash, cash equivalents, and restricted cash 2.3 4.1

Cash, cash equivalents, and restricted cash at beginning of period 294.3 302.4

29 unchanged sentences

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

Net income — — — 17.0 — — — 17.0 4.2 21.2

Other comprehensive income — — — — 4.9 — — 4.9 0.1 5.0

Cash dividends declared on common stock (1)

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

Distributions to noncontrolling interest

— — — — — — — — ( 6.1 ) ( 6.1 )

Stock-based compensation expense

— — 6.5 — — — — 6.5 — 6.5

Settlement of share-based awards, net 1.0 — — — — ( 0.3 ) ( 6.4 ) ( 6.4 ) — ( 6.4 )

Retirement of treasury stock

( 0.3 ) — ( 7.2 ) — — 0.3 7.2 — — —

June 30, 2023

81.8 $ 0.8 $ 5.9 $ 971.0 $ 17.6 — $ ( 0.7 ) $ 994.6 $ 254.4 $ 1,249.0

(1) Dividends of $ 0.26 per common share for all periods presented in 2023.

Common Stock Capital in

22 unchanged sentences

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

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

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

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

Cash dividends declared on common stock (1)

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

Distributions to noncontrolling interest

— — — — — — — — ( 8.8 ) ( 8.8 )

Stock-based compensation expense

— — 5.7 — — — — 5.7 — 5.7

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

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

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

Retirement of treasury stock

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

June 30, 2022

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

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

See accompanying notes to Consolidated Financial Statements.

6 unchanged sentences

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

In our opinion, all normal and recurring adjustments necessary for a fair presentation of our financial position as of March 31, 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.

In our opinion, all normal and recurring adjustments necessary for a fair presentation of our financial position as of June 30, 2023, the results of operations for the three and six months ended June 30, 2023 and 2022, and cash flows for the six months ended June 30, 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, 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.

Due to seasonal and other factors, the results of operations for the six months ended June 30, 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.

3 unchanged sentences

We recognize revenue when we satisfy a performance obligation by transferring control over a product or service to a customer.

For all contracts with customers, we evaluate whether we are the principal (i.e., report revenues on a gross basis) or agent (i.e., report revenues on a net basis).

Generally, we are the principal in our contracts with customers and report revenues on a gross basis as we control the product or service before it is transferred to a customer.

We act as an agent for a small number of service contracts and report those revenues on a net basis as we do not control the services before they are provided to the customer.

Payments for our products and services are generally due within normal commercial terms.

9 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 March 31, 2023 and 2022.

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

These sales are presented in the Lease portfolio sales line in our Consolidated Statements of Operations.

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

as such, these fees are recorded in revenue.

The fees and costs of shipping and handling activities are accrued when the related performance obligation has been satisfied.

We act as an agent for certain logistics services and report these revenues on a net basis as we do not control the services before they are provided to the customer.

Rail Products Group

1 unchanged sentence

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.

this amount represents variable consideration for which we are generally 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 $ 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.

We recorded contract assets of $ 9.7 million and $ 2.9 million as of June 30, 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.

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

as such, these fees are recorded in revenue.

The fees and costs of shipping and handling activities are accrued when the related performance obligation has been satisfied.

Unsatisfied Performance Obligations

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

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, 2023 and the percentage of the outstanding performance obligations as of June 30, 2023 expected to be delivered during the remainder of 2023:

Unsatisfied performance obligations at June 30, 2023

Amount Percent expected to be delivered in 2023

14 unchanged sentences

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.

As of June 30, 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.

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Consolidated Statements of Operations

4 unchanged sentences

Right-of-use assets recognized in exchange for new lease liabilities $ 6.4 $ 17.8

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Consolidated Balance Sheets

9 unchanged sentences

Leasing Group Non-Leasing Group Total

Remaining nine months of 2023 $ 8.1 $ 6.9 $ 15.0

Remaining six months of 2023 $ 5.4 $ 5.0 $ 10.4

2024 7.1 9.0 16.1

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 March 31, 2023, non-Leasing Group operating leases were not significant, and we had no direct finance leases.

As of June 30, 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

June 30, Six Months Ended

2023 2022 2023 2022

(in millions)

3 unchanged sentences

Profit recognized at sales-type lease commencement (1)

$ — $ — $ — $ 1.3

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

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

Remaining nine months of 2023 $ 480.8

Remaining six months of 2023 $ 340.7

Thereafter 400.0

2 unchanged sentences

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

Remaining nine months of 2023 $ 0.8

Remaining six months of 2023 $ 0.6

Thereafter 10.1

13 unchanged sentences

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

During the three months ended March 31, 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.

During the six months ended June 30, 2023, we recognized approximately $ 1.3 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 $ 11.1 million at June 30, 2023.

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

Goodwill by segment is as follows:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Railcar Leasing and Management Services Group $ 33.5 $ 7.1

6 unchanged sentences

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

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

The changes in the accruals for warranties for the three and six months ended June 30, 2023 and 2022 are as follows:

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

(in millions)

8 unchanged sentences

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.

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

6 unchanged sentences

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.

Amounts due to our participating suppliers in the SCF program totaled $ 15.7 million and $ 22.8 million as of June 30, 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.

6 unchanged sentences

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.

Based on our preliminary purchase price allocation recorded during the first quarter of 2023, 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.

We did not make any purchase price allocation adjustments during the second quarter of 2023.

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.

1 unchanged sentence

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.

The total cash funded at closing, when combined with the potential additional future consideration described below, resulted in total consideration of $ 87.1 million.

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.

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 made immaterial purchase price allocation adjustments to certain assets and liabilities during the second quarter of 2023, resulting in a goodwill balance of $ 36.2 million as of June 30, 2023.

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

The purchase agreement included minimum additional consideration of $ 10.0 million, which is payable in installments of $ 5.0 million per year for the next two years.

The purchase agreement also contained a provision whereby additional consideration could become payable based on the achievement of certain revenue targets, up to a maximum payout of $ 10.0 million.

The total additional consideration, which is included in other liabilities in our Consolidated Balance Sheets, had an initial estimated fair value of $ 15.7 million as of December 31, 2022 and is remeasured at each reporting period.

As of June 30, 2023, the estimated fair value of the additional consideration was $ 18.0 million.

The change in fair value is included in selling, engineering, and administrative expenses in our Consolidated Statements of Operations for the three and six months ended June 30, 2023.

Sale of Highway Products Business

5 unchanged sentences

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

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:

The following is a summary of residual THP expenses included in loss from discontinued operations for the three and six months ended June 30, 2023 and 2022:

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

(in millions)

3 unchanged sentences

Loss from discontinued operations, net of income taxes $ ( 2.3 ) $ ( 3.4 ) $ ( 5.4 ) $ ( 10.3 )

Additionally, 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.

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.

Derivative Instruments and Fair Value Measurements

10 unchanged sentences

Included in accompanying balance sheet

at March 31, 2023

at June 30, 2023

AOCI – loss/(income)

9 unchanged sentences

2017 promissory notes – interest rate swap $ 421.4 2.31 % $ 20.3 $ ( 19.8 ) $ —

TRL-2023 term loan (3)

$ 272.0 3.79 % $ 1.4 $ ( 1.2 ) $ —

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

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

(3) In June 2023, Trinity Rail Leasing 2023 LLC (“TRL-2023”), a limited purpose, indirect wholly-owned subsidiary of the Company owned through Trinity Industries Leasing Company ("TILC"), executed and designated a new interest rate swap derivative as a cash flow hedge to fix the Secured Overnight Financing Rate ("SOFR") component of the interest rate on a portion of the outstanding TRL-2023 term loan agreement ("TRL-2023 term loan").

Effect on interest expense – increase/(decrease)

Three Months Ended

March 31, Expected effect during next twelve months

June 30, Six Months Ended

June 30, Expected effect during next twelve months

2023 2022 2023 2022

(in millions)

5 unchanged sentences

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

Open hedge (1) :

Open hedges (1) :

2017 promissory notes – interest rate swap $ (2.9) $ 2.2 $ (5.4) $ 5.0 $ ( 10.8 )

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

TRL-2023 term loan $ (0.2) $ — $ (0.2) $ — $ ( 3.7 )

(1) Based on the fair value of open hedges as of June 30, 2023.

Foreign Currency Hedge

1 unchanged sentence

Information related to our foreign currency hedge is as follows:

accompanying balance sheet at March 31, 2023

accompanying balance

sheet at June 30, 2023

Effect on cost of revenues – increase/(decrease)

1 unchanged sentence

loss/(income) Three Months Ended

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

June 30, Six Months Ended

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

2023 2022 2023 2022

(in millions)

$ 36.0 $ 2.7 $ ( 4.1 ) $ (2.2) $ (0.4) $ (3.9) $ (0.2) $ ( 4.1 )

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

(1) Based on the fair value of open hedges as of June 30, 2023.

Derivatives Not Designated as Hedging Instruments (1)

Asset/(Liability) at

March 31, 2023

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

June 30, 2023

Effect on other, net (income) expense –

increase/(decrease)

Amount Interest

Rate Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

($ in millions)

11 unchanged sentences

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

(in millions)

8 unchanged sentences

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

June 30, 2023 December 31, 2022

(in millions)

10 unchanged sentences

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

As of March 31, 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.

As of June 30, 2023 and December 31, 2022, we have no assets or liabilities measured on a recurring basis as Level 3 in the fair value hierarchy, except as described in Note 2.

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

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

14 unchanged sentences

We operate principally in North America.

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

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

2 unchanged sentences

Total revenues $ 223.2 $ 709.0 $ ( 209.6 ) $ ( 0.2 ) $ 722.4

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

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

2 unchanged sentences

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

Six Months Ended June 30, 2023

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

External revenue $ 426.3 $ 937.8 $ — $ — $ 1,364.1

Intersegment revenue 0.4 409.0 ( 409.0 ) ( 0.4 ) —

Total revenues $ 426.7 $ 1,346.8 $ ( 409.0 ) $ ( 0.4 ) $ 1,364.1

Six Months Ended June 30, 2022

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

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

Intersegment revenue 0.4 310.2 ( 310.2 ) ( 0.4 ) —

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

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

Three Months Ended March 31,

Three Months Ended

June 30, Six Months Ended June 30,

2023 2022 2023 2022

(in millions)

Operating profit (loss):

Operating profit:

Railcar Leasing and Management Services Group $ 118.5 $ 105.5 $ 204.0 $ 185.3

12 unchanged sentences

Partially-Owned Leasing Subsidiaries

Through our wholly-owned subsidiary, Trinity Industries Leasing Company ("TILC"), we formed two subsidiaries, TRIP Holdings and RIV 2013, for the purpose of providing railcar leasing services in North America for institutional investors.

Through our wholly-owned subsidiary, TILC, we formed two subsidiaries, TRIP Holdings and RIV 2013, for the purpose of providing railcar leasing services in North America for institutional investors.

Each of TRIP Holdings and RIV 2013 are direct, partially-owned subsidiaries of TILC in which we have a controlling interest.

1 unchanged sentence

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

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

At June 30, 2023, the carrying value of our investment in TRIP Holdings and RIV 2013 totaled $ 134.1 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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TILC will service all railcars owned by Signal Rail.

To date, TILC has sold 6,460 railcars to Signal Rail for an aggregate sales price of $ 598.6 million.

To date, TILC has sold 6,460 railcars and related leases to Signal Rail for an aggregate sales price of $ 598.6 million.

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.

3 unchanged sentences

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

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.

At June 30, 2023, the carrying value of TILC’s equity investment in Signal Rail was $ 20.9 million, which is included in other assets in our Consolidated Balance Sheets.

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

2 unchanged sentences

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

March 31, 2023

June 30, 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 March 31,

2023 2022 Percent

($ in millions) Change

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

2023 2022 Percent 2023 2022 Percent

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

Leasing and management $ 223.2 $ 195.3 14.3 % $ 426.7 $ 378.4 12.8 %

2 unchanged sentences

Lease portfolio sales (2)

29.8 26.9 * 43.3 38.7 *

Total operating profit $ 118.5 $ 105.5 12.3 % $ 204.0 $ 185.3 10.1 %

3 unchanged sentences

Selected expense information:

Depreciation (3)

Depreciation and amortization (3)

$ 61.1 $ 59.4 2.9 % $ 123.5 $ 116.6 5.9 %

3 unchanged sentences

$ 14.0 $ 12.6 11.1 % $ 29.7 $ 25.4 16.9 %

Interest $ 54.8 $ 38.7 41.6 %

$ 57.0 $ 46.0 23.9 % $ 111.8 $ 84.7 32.0 %

* Not meaningful

6 unchanged sentences

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

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

(3) Depreciation expense 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.

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

(3) Depreciation expense includes $ 0.8 million and $ 5.5 million for the three and six months ended June 30, 2023, respectively, related to the disposal of certain railcar components associated with our sustainable railcar conversion program.

For the three and six months ended June 30, 2022, depreciation expense includes $ 3.9 million and $ 6.1 million, respectively, 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.

LLC's outstanding term loan agreement.

Information related to lease portfolio sales is as follows:

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

($ in millions)

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Operating profit margin on lease portfolio sales 23.1 % 18.7 % 23.3 % 17.4 %

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

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

Railcar Leasing Equipment Portfolio.

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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 nine months of 2023 2024 2025 2026 2027 Thereafter Total

Remaining six months of 2023 2024 2025 2026 2027 Thereafter Total

(in millions)

1 unchanged sentence

Wholly-owned subsidiaries.

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.

The Leasing Group’s debt at June 30, 2023 consisted primarily of non-recourse debt.

As of June 30, 2023, Trinity’s wholly-owned subsidiaries included in the Leasing Group held equipment with a net book value of $ 5,641.3 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, 2023 was $ 292.3 million.

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

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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 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.

As of June 30, 2023, TRIP Holdings held equipment with a net book value of $ 1,066.8 million, which is pledged solely as collateral for the TRIP Holdings' debt held by its subsidiaries.

As of June 30, 2023, TRP-2021 equipment with a net book value of $ 434.0 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.

1 unchanged sentence

Future amounts due as well as future contractual minimum rental revenues related to the Leasing Group's railcar operating lease obligations are as follows:

Remaining nine months of 2023 2024 2025 2026 2027 Thereafter Total

Remaining six 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:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

(in millions)

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The carrying amounts of our debt are as follows:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

(in millions)

1 unchanged sentence

Revolving credit facility $ — $ 225.0

Senior notes, net of unamortized discount of $ 0.1 and $ 0.1

Senior notes due 2024, net of unamortized discount of $ 0.1 and $ 0.1

Senior notes due 2028 400.0 —

unamortized debt issuance costs ( 6.0 ) ( 0.8 )

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2017 promissory notes, net of unamortized discount of $ 4.5 and $ 5.6

TRL-2023 term loan 340.0 —

TILC warehouse facility 545.5 721.8

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Total debt $ 5,832.6 $ 5,607.6

Estimated Fair Value of Debt – The estimated fair value of our 4.55 % senior notes due 2024 ("Senior Notes") is based on a quoted market price in a market with little activity (Level 2 input).

Estimated Fair Value of Debt – The estimated fair values of our 7.75 % senior notes due 2028 ("Senior Notes due 2028") and our 4.55 % senior notes due 2024 ("Senior Notes due 2024") are based on a quoted market price in a market with little activity (Level 2 input).

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 and TILC warehouse facility 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, TRL-2023 term loan, 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:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

(in millions)

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We incurred $ 0.7 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.

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 due 2024 have not been repaid in full by that date.

During the six months ended June 30, 2023, we had total borrowings of $ 315.0 million and total repayments of $ 540.0 million under the revolving credit facility.

Additionally, we had outstanding letters of credit issued in an aggregate amount of $ 16.8 million.

Of the $ 583.2 million remaining unused amount, $ 476.9 million was available for borrowing as of June 30, 2023.

The majority of our outstanding letters of credit as of June 30, 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 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 bears interest at a variable rate of 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 6.90 % as of June 30, 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 June 30, 2023).

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

As of March 31, 2023, we were in compliance with all such financial covenants.

As of June 30, 2023, we were in compliance with all such financial covenants.

Senior Notes Due 2028 – In June 2023, we issued $ 400.0 million aggregate principal amount of 7.75 % senior notes due July 2028.

These notes were issued through a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and outside the United States to non-U.S.

persons pursuant to Regulation S under the Securities Act.

Interest on the Senior Notes due 2028 is payable semiannually commencing January 15, 2024.

The Senior Notes due 2028 rank senior to existing and future subordinated debt and rank equal to existing and future senior indebtedness, including our Senior Notes due 2024 and our revolving credit facility.

The Senior Notes due 2028 are subordinated to all our existing and future secured debt to the extent of the value of the collateral securing such indebtedness.

The Senior Notes due 2028 contain covenants that limit our ability and/or certain subsidiaries' ability to create or permit to exist certain liens;

enter into sale and leaseback transactions;

and consolidate, merge, or transfer all or substantially all of our assets.

Our Senior Notes due 2028 are fully and unconditionally and jointly and severally guaranteed by each of our domestic subsidiaries that is a guarantor under our revolving credit facility.

We incurred $ 5.5 million in debt issuance costs, which will be amortized to interest expense over the term of the Senior Notes due 2028.

Net proceeds received from the issuance were used to repay outstanding borrowings under our revolving credit facility and to pay related fees, costs, premiums, and expenses in connection with the issuance.

We intend to use the remainder of the net proceeds for general corporate purposes, which may include repayment of other debt, including the Senior Notes due 2024.

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

During the three months ended March 31, 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.

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 6.63 % at March 31, 2023.

During the six months ended June 30, 2023, we had total borrowings of $ 207.4 million and total repayments of $ 383.7 million under the TILC warehouse loan facility.

Of the remaining unused facility amount of $ 454.5 million, $ 129.9 million was available as of June 30, 2023 based on the amount of warehouse-eligible, unpledged equipment.

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 1.85 %, for an all-in interest rate of 7.12 % at June 30, 2023.

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.

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.

TRL-2023 Term Loan – In June 2023, TRL-2023 entered into a $ 340.0 million term loan agreement.

The TRL-2023 term loan was established to finance railcars and related operating leases thereon purchased by TRL-2023 from TILC and TILC's warehouse loan facility.

The TRL-2023 term loan bears interest at a variable rate of daily simple SOFR plus (1) a benchmark adjustment of 10 basis points and (2) a facility margin of 1.80 %, for an all-in interest rate of 6.96 % as of June 30, 2023.

The TRL-2023 term loan has a stated maturity date of June 12, 2028.

We incurred $ 2.2 million in debt issuance costs, which will be amortized to interest expense over the term of the TRL-2023 term loan.

The TRL-2023 term loan is an obligation of TRL-2023 and is non-recourse to Trinity.

The obligation is secured by a portfolio of railcars and operating leases thereon, certain cash reserves, and other assets to be acquired and owned by TRL-2023.

Net proceeds received from the transaction were used to repay approximately $ 300.1 million of borrowings under TILC's warehouse loan facility and for general corporate purposes.

Terms and conditions of our other 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 months ended June 30, 2023 was an expense of 23.9 %, which differs from the U.S.

statutory rate of 21.0 % primarily due to state income taxes, foreign income 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.

The effective tax rate from continuing operations for the six months ended June 30, 2023 was a benefit of 11.3 %, 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.

During the six months ended June 30, 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 six months ended June 30, 2023.

As a result, we recorded an $ 11.9 million income tax benefit in our Consolidated Statements of Operations during the six months ended June 30, 2023.

Pursuant to the acquisition of RSI during the six months ended June 30, 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 period, which was recorded through deferred income tax expense.

The tax provision for the six months ended June 30, 2023 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 rates from continuing operations for the three and six months ended June 30, 2022 were expenses of 26.0 % and 25.0 %, respectively, which differ from the U.S.

The total income tax receivable position as of June 30, 2023 was $ 15.3 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.

4 unchanged sentences

Employee Retirement Plans

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.

Amounts related to our employee retirement plans are as follows:

Three Months Ended

June 30, Six Months Ended June 30,

2023 2022 2023 2022

(in millions)

Defined contribution expense $ 2.6 $ 2.2 $ 5.0 $ 4.3

Net periodic benefit cost – Supplemental Executive Retirement Plan (1)

$ 0.1 $ 0.1 $ 0.3 $ 0.3

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

Pension Plan Termination

In September 2019, our Board of Directors approved the termination of the Trinity Industries, Inc.

Consolidated Pension Plan (the "Pension Plan"), effective December 31, 2019.

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.

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:

Changes in AOCI for the six months ended June 30, 2023 are as follows:

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

7 unchanged sentences

Other comprehensive loss ( 2.1 ) — ( 2.1 )

Balances at March 31, 2023

Balances at June 30, 2023

$ 18.8 $ ( 1.2 ) $ 17.6

3 unchanged sentences

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.

Consequently, during the six months ended June 30, 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.

6 unchanged sentences

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

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

There were no shares repurchased during the three and six months ended June 30, 2023.

During the three and six months ended June 30, 2022, repurchases totaled 1.8 million shares, at a cost of approximately $ 50.3 million, under a previous share repurchase program, which was terminated in the fourth quarter of 2022.

Share repurchases during the second quarter of 2022 included 0.8 million shares, at a cost of $ 25.0 million, representing the final settlement of the accelerated share repurchase agreement, which was funded in December 2021 but a portion of which remained outstanding as of December 31, 2021.

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

Stock-Based Compensation

Stock-based compensation expense totaled approximately $ 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”).

Stock-based compensation expense totaled approximately $ 6.5 million and $ 12.7 million for the three and six months ended June 30, 2023, respectively.

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

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

Our stock options have contractual terms of ten years and become exercisable over a three-year period.

5 unchanged sentences

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 three months ended March 31, 2023:

The following table summarizes stock-based compensation awards granted during the six months ended June 30, 2023:

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

Restricted stock units 625,419 $ 21.57

Restricted stock awards 22,937 $ 21.32

Performance units 279,633 $ 28.42

Earnings Per Common Share

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

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

Basic net income attributable to Trinity Industries, Inc.

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

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

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

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

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

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

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

Three Months Ended March 31,

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

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

2023 2022 2023 2022

(in millions, except per share amounts)

2 unchanged sentences

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

19.3 11.7 26.8 19.0

Loss from discontinued operations, net of income taxes ( 2.3 ) ( 3.4 ) ( 5.4 ) ( 10.3 )

2 unchanged sentences

( 2.3 ) ( 8.0 ) ( 5.4 ) ( 16.0 )

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

Net income attributable to Trinity Industries, Inc.

$ 17.0 $ 3.7 $ 21.4 $ 3.0

2 unchanged sentences

Diluted weighted average shares outstanding

83.4 84.4 83.5 84.9

Basic earnings per common share:

1 unchanged sentence

Loss from discontinued operations ( 0.03 ) ( 0.10 ) ( 0.07 ) ( 0.19 )

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

Basic net income attributable to Trinity Industries, Inc.

$ 0.21 $ 0.04 $ 0.26 $ 0.04

2 unchanged sentences

Loss from discontinued operations ( 0.03 ) ( 0.10 ) ( 0.06 ) ( 0.19 )

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

Diluted net income attributable to Trinity Industries, Inc.

$ 0.20 $ 0.04 $ 0.26 $ 0.04

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

Harman's appeal remains pending.

On June 13, 2023, the Tennessee Court of Appeals affirmed the trial court's decision dismissing Mr.

Harman's Second Amended Complaint with prejudice.

The deadline for Mr.

Harman to petition for review by the Tennessee Supreme Court is August 14, 2023.

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

35 unchanged sentences

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.

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 June 30, 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.

2 unchanged sentences

Product liability cases

The Company is currently defending product liability lawsuits in several different states that are alleged to involve the ET Plus as well as other products manufactured by THP.

The Company is currently defending product liability lawsuits that are alleged to involve the ET Plus as well as other products manufactured by THP.

These cases are diverse in light of the randomness of collisions in general and the fact that each accident involving a roadside device, such as an end terminal, or any other fixed object along the highway, has its own unique facts and circumstances.

1 unchanged sentence

To the extent that the Company believes that a loss is probable with respect to these product liability cases, the accrual for such losses is included in the amounts described below under "Other matters".

Train Derailment

On February 3, 2023, a Norfolk Southern Railway freight train derailed 38 railcars in East Palestine, Ohio.

In March 2023, the State of Ohio and the United States Environmental Protection Agency filed lawsuits against Norfolk Southern Railway Company and Norfolk Southern Corporation (“Norfolk Southern”), which were consolidated in the United States District Court for the Northern District of Ohio, Eastern Division in a civil action styled The State of Ohio, ex rel., Dave Yost, Ohio Attorney General, and the United States of America, Plaintiffs v.

Norfolk Southern Railway Company and Norfolk Southern Corporation, Defendants , Civil Action No.

4:23-cv-00517.

In this action, on June 30, 2023, Norfolk Southern filed a third-party complaint against the Company’s wholly-owned subsidiary, TILC.

TILC was served with this lawsuit on July 17, 2023.

Norfolk Southern also named as third-party defendants in this action Oxy Vinyls LP, GATX Corporation, General American Marks Company, SMBC Rail Services LLC, Dow Chemical Incorporated, and Union Tank Car Company.

Norfolk Southern asserts third-party claims against TILC for recovery of response costs, contribution, and declaratory relief under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA");

and equitable contribution.

TILC was the owner of one tank car cited in this action, which was leased to a third party, who is also a third-party defendant in the litigation.

In April 2023, multiple putative class action lawsuits filed against Norfolk Southern were consolidated in the United States District Court for the Northern District of Ohio, Eastern Division in a civil action styled In re:

East Palestine Train Derailment, Civil Action No.

4:23-CV-00242 .

In this action, on July 25, 2023, Norfolk Southern filed a third-party complaint against the Company’s wholly-owned subsidiary, TILC.

Norfolk Southern also named as third-party defendants in this action Oxy Vinyls LP, GATX Corporation, and General American Marks Company.

Norfolk Southern asserts third-party claims against TILC for negligence, joint and several liability, and contribution.

TILC was the owner of one tank car cited in this action, which was leased to a third party, who is also a third-party defendant in the litigation.

The Company believes that the third-party claims asserted against TILC in these matters are without merit and intends to vigorously defend against all allegations.

The Company or its subsidiaries could be named in similar litigation involving other plaintiffs, but the ultimate number of claims and the jurisdiction(s) in which such claims, if any, may be filed may vary.

We do not believe at this time that a loss is probable in either matter, nor can a range of losses be determined.

Accordingly, no accrual or range of loss has been included in the accompanying consolidated financial statements.

The Company maintains liability insurance coverage to protect the Company’s assets from losses arising from these types of litigation.

Other matters

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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 $ 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 range of reasonably possible losses for such matters is $ 25.4 million to $ 36.9 million, which includes our rights to indemnity and recourse to third parties of approximately $ 14.3 million, which is recorded in other assets in our Consolidated Balance Sheet as of June 30, 2023.

This range includes any amounts related to the Highway Products litigation matters described above in the section titled “Highway products litigation." At June 30, 2023, total accruals of $ 25.7 million, including environmental and workplace matters described below, are included in accrued liabilities in the accompanying Consolidated Balance Sheets.

The Company believes any additional liability would not be material to its financial position or results of operations.

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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 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.

As of June 30, 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 six months ended June 30, 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