What changed in this filing

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Item 1. Financial Statements

2023-11-02 compared with 2023-08-01 · 176 added, 135 removed, 994 unchanged (24% of the section changed)

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

56 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

20 unchanged sentences

Consolidated Balance Sheets

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

(in millions)

39 unchanged sentences

Consolidated Statements of Cash Flows

Six Months Ended

Nine Months Ended

September 30,

(in millions)

31 unchanged sentences

Proceeds from insurance recoveries 4.9 7.6

Other ( 1.1 ) —

Equity investments ( 1.1 ) ( 15.5 )

Net cash used in investing activities – continuing operations ( 316.3 ) ( 186.1 )

9 unchanged sentences

Net cash provided by financing activities 81.0 193.1

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

Net decrease in cash, cash equivalents, and restricted cash ( 27.6 ) ( 63.7 )

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

42 unchanged sentences

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

Net income — — — 21.8 — — — 21.8 1.8 23.6

Other comprehensive income — — — — 0.1 — — 0.1 0.1 0.2

Cash dividends declared on common stock (1)

— — — ( 21.7 ) — — — ( 21.7 ) — ( 21.7 )

Distributions to noncontrolling interest — — — — — — — — ( 3.7 ) ( 3.7 )

Stock-based compensation expense

— — 6.1 — — — — 6.1 — 6.1

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

September 30, 2023

81.8 $ 0.8 $ 12.2 $ 971.1 $ 17.7 — $ ( 1.0 ) $ 1,000.8 $ 252.6 $ 1,253.4

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

38 unchanged sentences

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

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

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

Cash dividends declared on common stock (1)

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

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

Stock-based compensation expense

— — 5.9 — — — — 5.9 — 5.9

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

Shares repurchased

— — — — — ( 0.6 ) ( 14.1 ) ( 14.1 ) — ( 14.1 )

September 30, 2022

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

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

7 unchanged sentences

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

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

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

17 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 June 30, 2023 and 2022.

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

6 unchanged sentences

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

We recorded contract assets of $ 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.

We recorded contract assets of $ 12.3 million and $ 2.9 million as of September 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.

3 unchanged sentences

Unsatisfied Performance Obligations

The following table includes estimated revenue expected to be recognized in future periods related to performance obligations that are unsatisfied or partially satisfied as of June 30, 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

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

Unsatisfied performance obligations at September 30, 2023

Amount Percent expected to be delivered in 2023

6 unchanged sentences

Sustainable railcar conversions $ 124.4 33.5 %

Maintenance services $ 7.6 100.0 %

Railcar Leasing and Management Services Group $ 69.5 7.1 %

6 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 June 30, 2023, we had no material finance leases in which we were the lessee.

As of September 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

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

5 unchanged sentences

Right-of-use assets recognized in exchange for new lease liabilities $ 9.6 $ 21.0

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Consolidated Balance Sheets

9 unchanged sentences

Leasing Group Non-Leasing Group Total

Remaining six months of 2023 $ 5.4 $ 5.0 $ 10.4

Remaining three months of 2023 $ 2.7 $ 2.6 $ 5.3

2024 7.2 9.7 16.9

11 unchanged sentences

Some of our leases include options to extend the leases for up to five years , and a small percentage of our leases include early termination options with certain notice requirements and early termination penalties.

As of June 30, 2023, non-Leasing Group operating leases were not significant, and we had no direct finance leases.

As of September 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

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

7 unchanged sentences

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

Remaining six months of 2023 $ 340.7

Remaining three months of 2023 $ 176.3

Thereafter 434.3

2 unchanged sentences

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

Remaining six months of 2023 $ 0.6

Remaining three months of 2023 $ 0.3

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 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.

During the nine months ended September 30, 2023, we recognized approximately $ 0.8 million of credit loss expense and approximately $ 0.6 million of recoveries and other adjustments, and wrote off $ 0.3 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 $ 10.5 million at September 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:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Railcar Leasing and Management Services Group $ 33.9 $ 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 and six months ended June 30, 2023 and 2022 are as follows:

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

17 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 $ 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.

Amounts due to our participating suppliers in the SCF program totaled $ 24.8 million and $ 22.8 million as of September 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.

8 unchanged sentences

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.

During the third quarter of 2023, we made immaterial purchase price allocation adjustments to certain assets, which included a final working capital adjustment, resulting in a goodwill balance of $ 26.8 million as of September 30, 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.

6 unchanged sentences

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

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.

During 2023, we made immaterial purchase price allocation adjustments to certain assets and liabilities.

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

2 unchanged sentences

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.

As of September 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 nine months ended September 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 and six months ended June 30, 2023 and 2022:

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

4 unchanged sentences

Loss from discontinued operations, net of income taxes $ ( 2.7 ) $ ( 3.4 ) $ ( 8.1 ) $ ( 13.7 )

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.

Additionally, 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.

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.

In addition to the THP activities above, results for the nine months ended September 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 June 30, 2023

at September 30, 2023

AOCI – loss/(income)

16 unchanged sentences

Three Months Ended

June 30, Six Months Ended

June 30, Expected effect during next twelve months

September 30, Nine Months Ended

September 30, Expected effect during next twelve months

2023 2022 2023 2022

9 unchanged sentences

TRL-2023 term loan $ (1.0) $ — $ (1.2) $ — $ ( 4.2 )

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

Foreign Currency Hedge

Our exposure related to foreign currency transactions is currently hedged for up to a maximum of twelve months.

Information related to our foreign currency hedge is as follows:

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

Foreign Currency Hedges

Our exposure related to foreign currency transactions is currently hedged for up to a maximum of eighteen months.

Information related to our foreign currency hedges are as follows:

accompanying balance

sheet at June 30, 2023

sheet at September 30, 2023

Effect on cost of revenues – increase/(decrease)

1 unchanged sentence

loss/(income) Three Months Ended

June 30, Six Months Ended

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

2023 2022 2023 2022

September 30, Nine Months Ended

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

Instrument 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 June 30, 2023.

Forward contracts $ 121.2 $ 0.4 $ ( 1.3 ) $ (2.2) $ (0.5) $ (6.1) $ (0.7) $ ( 0.7 )

Options $ 33.0 $ 0.1 $ 1.5 $ — $ — $ — $ — $ 1.5

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

Derivatives Not Designated as Hedging Instruments

Asset/(Liability) at

June 30, 2023

September 30, 2023

Effect on other, net (income) expense –

2 unchanged sentences

Rate Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

($ in millions)

Interest rate derivatives (1) :

TILC warehouse facility – interest rate cap $ 800.0 2.50 % $ 12.4 $ (0.3) $ — $ (5.5) $ —

TILC – interest rate cap $ 800.0 2.50 % $ ( 12.4 ) $ 0.3 $ — $ 5.5 $ —

(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.

(1) 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.

7 unchanged sentences

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

June 30, 2023 December 31, 2022

September 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:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

(in millions)

Interest rate hedge (1)

$ 21.7 $ 19.7

Foreign currency hedge (1)

Derivatives designated as hedging instruments:

Interest rate hedges $ 26.1 $ 19.7

Foreign currency forward contracts 0.4 2.0

Foreign currency options 0.1 —

Derivatives not designated as hedging instruments:

TILC warehouse facility – interest rate cap 12.4 21.6

Total assets $ 39.0 $ 43.3

Liabilities (2) :

Derivatives not designated as hedging instruments:

$ 17.7 $ 21.6

TILC – interest rate cap $ 12.4 $ 21.6

Total liabilities $ 12.4 $ 21.6

2 unchanged sentences

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

As of June 30, 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.

As of September 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.

15 unchanged sentences

We operate principally in North America.

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

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

2 unchanged sentences

Total revenues $ 222.6 $ 682.2 $ ( 83.2 ) $ ( 0.3 ) $ 821.3

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

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

2 unchanged sentences

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

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

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

2 unchanged sentences

Total revenues $ 649.3 $ 2,029.0 $ ( 492.2 ) $ ( 0.7 ) $ 2,185.4

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

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

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended June 30,

September 30, Nine Months Ended September 30,

2023 2022 2023 2022

19 unchanged sentences

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

At June 30, 2023, the carrying value of our investment in TRIP Holdings and RIV 2013 totaled $ 134.1 million.

At September 30, 2023, the carrying value of our investment in TRIP Holdings and RIV 2013 totaled $ 132.8 million.

Our weighted average ownership interest in TRIP Holdings and RIV 2013 is 38 % while the remaining 62 % weighted average interest is owned by third-party, investor-owned funds.

16 unchanged sentences

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.

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.

TILC services all railcars owned by Signal Rail.

Upon consideration under the variable interest entity (“VIE”) model of ASC 810, Consolidation , 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.

2 unchanged sentences

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

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.

At September 30, 2023, the carrying value of TILC’s equity investment in Signal Rail was $ 20.7 million, which is included in other assets in our Consolidated Balance Sheets.

The carrying value of this investment represents our maximum exposure in Signal Rail.

Railcar Leasing and Management Services Group

1 unchanged sentence

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

June 30, 2023

September 30, 2023

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

34 unchanged sentences

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

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

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

2023 2022 Percent 2023 2022 Percent

19 unchanged sentences

(1) Operating profit includes:

depreciation;

depreciation and amortization;

fleet operating costs, which include maintenance, compliance, freight, and storage;

3 unchanged sentences

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

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

(3) Depreciation expense includes $ 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.

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

(3) Depreciation and amortization expense includes $ 0.1 million and $ 5.6 million for the three and nine months ended September 30, 2023, 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, 2022, depreciation and amortization expense includes $ 2.4 million and $ 8.5 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.

LLC's outstanding term loan agreement.

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

4 unchanged sentences

Operating profit margin on lease portfolio sales 5.2 % 11.4 % 18.9 % 13.9 %

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

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

Railcar Leasing Equipment Portfolio.

3 unchanged sentences

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

Remaining six months of 2023 2024 2025 2026 2027 Thereafter Total

Remaining three months of 2023 2024 2025 2026 2027 Thereafter Total

(in millions)

1 unchanged sentence

Wholly-owned subsidiaries.

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.

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

As of September 30, 2023, Trinity’s wholly-owned subsidiaries included in the Leasing Group held equipment with a net book value of $ 5,633.3 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, 2023 was $ 268.9 million.

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

2 unchanged sentences

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

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.

As of September 30, 2023, TRIP Holdings held equipment with a net book value of $ 1,058.7 million, which is pledged solely as collateral for the TRIP Holdings' debt held by its subsidiaries.

As of September 30, 2023, TRP-2021 equipment with a net book value of $ 432.0 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 six months of 2023 2024 2025 2026 2027 Thereafter Total

Remaining three months of 2023 2024 2025 2026 2027 Thereafter Total

(in millions)

7 unchanged sentences

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

(in millions)

20 unchanged sentences

The carrying amounts of our debt are as follows:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

(in millions)

26 unchanged sentences

The estimated fair values of our debt are as follows:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

(in millions)

1 unchanged sentence

Level 3 $ 3,098.7 $ 3,194.0

Level 3 3,116.5 3,194.0

$ 5,493.5 $ 5,244.3

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

2 unchanged sentences

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.

During the nine months ended September 30, 2023, we had total borrowings of $ 435.0 million and total repayments of $ 660.0 million under the revolving credit facility.

Additionally, we had outstanding letters of credit issued in an aggregate amount of $ 15.9 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.

Of the $ 584.1 million remaining unused amount, $ 561.2 million was available for borrowing as of September 30, 2023.

The majority of our outstanding letters of credit as of September 30, 2023 are scheduled to expire in October 2024.

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

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).

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

As of September 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.

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

During the six months ended June 30, 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.

During the nine months ended September 30, 2023, we had total borrowings of $ 277.9 million and total repayments of $ 443.8 million under the TILC warehouse loan facility.

Of the remaining unused facility amount of $ 444.1 million, $ 104.8 million was available as of September 30, 2023 based on the amount of warehouse-eligible, unpledged equipment.

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

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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.

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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.

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.

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.

The effective tax rate from continuing operations for the three months ended September 30, 2023 was an expense of 18.6 %, 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, taxes not recorded on our non-controlling interests in partially-owned subsidiaries, and the remeasurement of deferred tax liabilities due to state tax law changes and rate reductions enacted during the third quarter.

The effective tax rate from continuing operations for the nine months ended September 30, 2023 was an expense of 2.8 %, 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 and state tax law changes and rate reductions enacted during the year;

changes in our valuation allowances;

state income taxes;

and foreign income taxes.

During the nine months ended September 30, 2023, one of our partially-owned subsidiaries released residual tax effects that had previously been recorded in AOCI.

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

Pursuant to the acquisition of RSI during the nine months ended September 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.

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.

The tax provision for the nine months ended September 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 nine months ended September 30, 2022 were expenses of 22.5 % and 23.7 %, respectively, which differ 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, 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.

The total income tax receivable position as of September 30, 2023 was $ 7.9 million primarily for state and foreign tax overpayments.

Our income tax payable for federal and state taxes is $ 10.5 million as of September 30, 2023.

During the third quarter, we recorded an uncertain tax position and a corresponding deferred tax asset for a prior year federal tax return item, which resulted in an immaterial impact to income tax expense during the three and nine months ended September 30, 2023.

Our federal tax return years through 2021 are effectively settled.

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 2018 forward.

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Amounts related to our employee retirement plans are as follows:

Three Months Ended

June 30, Six Months Ended June 30,

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

2023 2022 2023 2022

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Accumulated Other Comprehensive Income

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

Changes in AOCI for the nine months ended September 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)

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Other comprehensive loss ( 2.0 ) — ( 2.0 )

Balances at June 30, 2023

Balances at September 30, 2023

$ 18.9 $ ( 1.2 ) $ 17.7

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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 first quarter of 2023.

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.

Consequently, during the nine months ended September 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.

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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 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.

There were no shares repurchased during the three and nine months ended September 30, 2023.

During the three and nine months ended September 30, 2022, repurchases totaled 0.6 million and 2.4 million shares, respectively, at a cost of approximately $ 14.1 million and $ 64.4 million, respectively, under a previous share repurchase program, which was terminated in the fourth quarter of 2022.

Share repurchases during the nine months ended September 30, 2022 included 0.8 million shares, at a cost of $ 25.0 million, representing the final settlement of an 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 September 2022, totaling $ 2.6 million, were cash settled in October 2022 in accordance with normal settlement practices.

Stock-Based Compensation

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.

Stock-based compensation expense totaled approximately $ 6.1 million and $ 18.8 million for the three and nine months ended September 30, 2023, respectively.

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

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”).

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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 six months ended June 30, 2023:

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

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

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

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

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

2023 2022 2023 2022

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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.

On August 14, 2023, Mr.

Harman filed an Application for Permission to Appeal in the Tennessee Supreme Court.

Harman’s application remains pending.

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

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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 June 30, 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 $ 7.7 million as of September 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.

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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.

On September 15, 2023, TILC filed a motion to dismiss Norfolk Southern’s third-party complaint.

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:

4 unchanged sentences

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

On August 14, 2023, plaintiffs filed a First Amended Master Consolidated Class Action Complaint and Jury Demand (“First Amended Complaint”) asserting direct claims for negligence, gross negligence, and medical monitoring against Oxy Vinyls LP, GATX Corporation, General American Marks Company, and TILC.

On September 15, 2023, TILC filed a motion to dismiss Norfolk Southern’s third-party complaint, and on September 26, 2023, TILC filed a motion to dismiss plaintiffs’ First Amended Complaint.

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 believes that the third-party claims and direct 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.

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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 $ 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 range of reasonably possible losses for such matters is $ 22.5 million to $ 33.7 million, which includes our rights to indemnity and recourse to third parties of approximately $ 14.0 million, which is recorded in other assets in our Consolidated Balance Sheet as of September 30, 2023.

This range includes any amounts related to the Highway Products litigation matters described above in the section titled “Highway products litigation." At September 30, 2023, total accruals of $ 22.9 million, including environmental and workplace matters described below, are included in accrued liabilities in the accompanying Consolidated Balance Sheets.

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

9 unchanged sentences

To date, we have received total advanced payments from insurance of approximately $ 32.7 million, which includes $ 8.1 million for reimbursement of cleanup and damage remediation expenditures.

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.

As of September 30, 2023, we have utilized $ 23.4 million of the advanced payments from insurance towards new capital expenditures in support of the reconstruction efforts.

During the three and nine months ended September 30, 2023, we recorded gains of $ 3.7 million and $ 4.9 million, respectively, 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