What changed in this filing

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Item 1. Financial Statements

2024-05-01 compared with 2023-11-02 · 305 added, 485 removed, 685 unchanged (54% of the section changed)

4 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(in millions, except per share amounts)

Manufacturing $ 525.3 $ 409.0

Leasing 222.3 194.6 648.6 572.6

821.3 496.6 2,185.4 1,386.1

Leasing & Services 284.3 232.7

Operating costs:

1 unchanged sentence

Manufacturing 476.3 391.9

Leasing 122.2 107.3 360.0 315.0

679.5 395.3 1,819.2 1,119.4

Leasing & Services 168.6 146.6

Selling, engineering, and administrative expenses:

Manufacturing 7.7 7.0

Leasing 15.5 14.2 45.2 39.6

Other 25.2 25.1 82.8 72.7

49.1 48.0 153.3 137.7

Leasing & Services 18.1 16.9

Corporate & other 26.5 26.0

Gains on dispositions of property:

1 unchanged sentence

Other 0.7 1.8

7.5 39.4 53.2 92.5

Restructuring activities, net — ( 0.4 )

2 unchanged sentences

Interest expense, net 69.1 62.1

Loss on extinguishment of debt — — — 1.5

Other, net 3.4 1.6

67.9 54.4 199.8 147.0

Income from continuing operations before income taxes 42.7 5.3

6 unchanged sentences

( 4.3 ) ( 3.1 )

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

— — — ( 5.7 )

Net income 27.4 13.7

1 unchanged sentence

Net income attributable to Trinity Industries, Inc.

$ 21.8 $ 25.8 $ 43.2 $ 28.8

Basic earnings per common share:

16 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(in millions)

2 unchanged sentences

Derivative financial instruments:

Unrealized gains arising during the period, net of tax expense of $ 1.4 , $ 3.0 , $ 4.2 , and $ 8.4

5.0 10.0 14.4 26.8

Reclassification adjustments for (gains) losses included in net income, net of tax (expense) benefit of $( 1.4 ), $( 0.1 ), $ 8.5 , and $ 1.2

( 4.8 ) 0.2 ( 23.6 ) 4.6

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 $ —

Unrealized gains arising during the period, net of tax benefit (expense) of $ 3.4 and $( 0.1 )

Reclassification adjustments for gains included in net income, net of tax (expense) benefit of $( 1.2 ) and $ 11.0

( 3.9 ) ( 14.9 )

Comprehensive income 23.8 36.6 49.3 69.6

Comprehensive income (loss) 34.9 ( 0.7 )

comprehensive income attributable to noncontrolling interest 3.8 1.9

Comprehensive income attributable to Trinity Industries, Inc.

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

$ 31.1 $ ( 2.6 )

3 unchanged sentences

Consolidated Balance Sheets

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

(in millions)

25 unchanged sentences

Total liabilities 7,791.3 7,631.0

Commitments and contingencies (Note 14)

Preferred stock – 1.5 shares authorized and unissued

12 unchanged sentences

Consolidated Statements of Cash Flows

Nine Months Ended

September 30,

Three Months Ended

(in millions)

2 unchanged sentences

Loss from discontinued operations, net of income taxes 4.3 3.1

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

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

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

Depreciation and amortization 73.4 74.0

4 unchanged sentences

Gains on insurance recoveries from property damage — ( 1.2 )

Non-cash impact of restructuring activities ( 2.2 ) —

Non-cash interest expense 3.4 2.6

Loss on extinguishment of debt — 1.5

Other 0.5 ( 1.9 )

6 unchanged sentences

Increase (decrease) in other liabilities 0.6 ( 0.2 )

Net cash provided by (used in) operating activities – continuing operations 215.8 ( 52.6 )

Net cash provided by operating activities – continuing operations 56.5 102.5

Net cash used in operating activities – discontinued operations ( 4.3 ) ( 3.1 )

Net cash provided by (used in) operating activities 207.7 ( 68.0 )

Net cash provided by operating activities 52.2 99.4

Investing activities:

1 unchanged sentence

Proceeds from lease portfolio sales 24.2 56.7

Capital expenditures – leasing ( 483.3 ) ( 691.1 )

Capital expenditures – manufacturing and other ( 29.4 ) ( 25.7 )

Capital expenditures – lease fleet ( 147.5 ) ( 191.5 )

Capital expenditures – operating and administrative ( 4.6 ) ( 7.1 )

Acquisitions, net of cash acquired — ( 66.2 )

1 unchanged sentence

Equity investments — ( 1.1 )

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

Payments related to sale of discontinued operations — ( 2.7 )

Net cash used in investing activities ( 124.0 ) ( 203.1 )

2 unchanged sentences

Proceeds from issuance of debt 909.9 246.3

Shares repurchased — ( 36.8 )

Payments to settle contingent consideration liability ( 8.0 ) —

Dividends paid to common shareholders ( 23.0 ) ( 21.1 )

2 unchanged sentences

Net cash provided by financing activities 71.8 72.4

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

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

Cash, cash equivalents, and restricted cash at beginning of period 235.1 294.3

19 unchanged sentences

Net income — — — 23.7 — — — 23.7 3.7 27.4

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

Cash dividends declared on common stock (1)

— — — ( 21.4 ) — — — ( 21.4 ) — ( 21.4 )

Distributions to noncontrolling interest

— — — — — — — — ( 2.9 ) ( 2.9 )

Stock-based compensation expense

— — 6.2 — — — — 6.2 — 6.2

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

March 31, 2023

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 — — — — 7.4 — — 7.4 0.1 7.5

6 unchanged sentences

Settlement of share-based awards, net — — 0.1 — — — ( 0.4 ) ( 0.3 ) — ( 0.3 )

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

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

March 31, 2024

81.8 $ 0.8 $ 20.2 $ 1,010.9 $ 18.4 — $ ( 1.0 ) $ 1,049.3 $ 239.2 $ 1,288.5

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

Common Stock Capital in

12 unchanged sentences

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

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

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

Cash dividends declared on common stock (1)

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

Distributions to noncontrolling interest — — — — — — — — ( 6.2 ) ( 6.2 )

Stock-based compensation expense

— — 5.1 — — — — 5.1 — 5.1

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

March 31, 2022

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

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

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

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

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

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

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

Cash dividends declared on common stock (1)

4 unchanged sentences

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

Shares repurchased

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

September 30, 2022

March 31, 2023

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

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

(1) Dividends of $ 0.28 and $ 0.26 per common share for the three months ended March 31, 2024 and 2023, respectively .

See accompanying notes to Consolidated Financial Statements.

5 unchanged sentences

The foregoing Consolidated Financial Statements are unaudited and have been prepared from the books and records of Trinity Industries, Inc.

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

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

and 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”), RIV 2013 Rail Holdings LLC ("RIV 2013"), and Trinity Global Ventures Limited ("Trinity Global Ventures"), 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, 2024 and the results of operations and cash flows for the three months ended March 31, 2024 and 2023 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 2024 presentation.

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.

Due to seasonal and other factors, the results of operations for the three months ended March 31, 2024 may not be indicative of expected results of operations for the year ending December 31, 2024.

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, 2023.

Our Reportable Segments

Effective January 1, 2024, the Company modified its organizational structure to better leverage our maintenance services capabilities to support lease fleet optimization and to grow our services and parts businesses.

The new structure resulted in a change to our reportable segments beginning in 2024.

In connection with this organizational update, we aligned the maintenance services business, which was previously reported in the Rail Products Group, to now be presented within our leasing business.

This change aligns with the way in which our Chief Operating Decision Maker ("CODM") assesses performance and allocates resources.

Consequently, beginning January 1, 2024, we report our operating results in two reportable segments:

(1) the Railcar Leasing and Services Group, formerly the Railcar Leasing and Management Services Group, and (2) the Rail Products Group.

These changes had no impact to our previously reported consolidated results of operations, financial position, or cash flows.

All prior period segment results set forth herein have been recast to reflect these changes and present results on a comparable basis.

Revenue Recognition

8 unchanged sentences

See Note 4 for a further discussion regarding our reportable segments.

Railcar Leasing and Management Services Group

In our Railcar Leasing and Management Services Group ("Leasing Group"), revenue from rentals and operating leases, including contracts that contain non-level fixed lease payments, is recognized monthly on a straight-line basis.

Railcar Leasing and Services Group

In our Railcar Leasing and Services Group ("Leasing Group"), revenue from rentals and operating leases, including contracts that contain non-level fixed lease payments, is recognized monthly on a straight-line basis.

Leases not classified as operating leases are generally considered sales-type leases as a result of an option to purchase.

4 unchanged sentences

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

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

See "Lease Accounting" below for additional information regarding sales-type leases as of March 31, 2024 and 2023.

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 Accounting Standards Codification ("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.

Our maintenance services business is primarily dedicated to servicing our lease fleet pursuant to the provisions of our lease contracts.

This may include services that are not included in the full-service lease agreement, such as repairs of railcar damage or other customer-specific requirements.

We also perform maintenance and repair activities on railcars owned by third parties, including our investor-owned fleet.

Within our maintenance services business, revenue is recognized over time as repair and maintenance projects 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 $ 17.4 million and $ 8.8 million as of March 31, 2024 and December 31, 2023, respectively, related to unbilled revenues recognized on repair and maintenance activities 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 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.

3 unchanged sentences

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 $ 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.

Revenue is recognized over time as 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 $ 6.2 million and $ 12.6 million as of March 31, 2024 and December 31, 2023, respectively, which primarily relate to unbilled revenues recognized on 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 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

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, 2024 and the percentage of the outstanding performance obligations as of March 31, 2024 expected to be delivered during the remainder of 2024:

Unsatisfied performance obligations at March 31, 2024

Amount Percent expected to be delivered in 2024

6 unchanged sentences

Sustainable railcar conversions $ 35.8 91.5 %

Railcar Leasing and Services Group:

Leasing and management $ 62.7 21.4 %

Maintenance services $ 7.9 100.0 %

Railcar Leasing and Management Services Group $ 69.5 7.1 %

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

1 unchanged sentence

The final amount of backlog attributable to the Leasing Group may vary by the time of delivery as customers may elect to change their procurement decision.

Unsatisfied performance obligations for the Railcar Leasing and Management Services Group are related to servicing, maintenance, and management agreements and are expected to be performed through 2029.

Unsatisfied performance obligations for the Railcar Leasing and Services Group are related to servicing, maintenance, and management agreements and are expected to be performed through 2029.

Lease Accounting

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

Our operating leases have remaining lease terms ranging from one year to 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 September 30, 2023, we had no material finance leases in which we were the lessee.

Our operating leases have remaining lease terms ranging from one year to thirteen 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, 2024, 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

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Consolidated Statements of Operations

Operating lease expense $ 5.3 $ 4.3

Short-term lease expense $ — $ 0.1 $ — $ 0.3

Consolidated Statements of Cash Flows

1 unchanged sentence

Right-of-use assets recognized in exchange for new lease liabilities $ 4.2 $ 2.1

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Consolidated Balance Sheets

7 unchanged sentences

(2) Included in other liabilities in our Consolidated Balance Sheets.

(3) As the rate implicit in our leases is not readily determinable, we use the incremental borrowing rate of our Trinity Industries Leasing Company ("TILC") warehouse loan facility for railcar leases or our revolving credit facility for operating and administrative leases at lease commencement to determine the present value of lease payments.

Future contractual minimum operating lease liabilities will mature as follows (in millions):

Leasing Group Non-Leasing Group Total

Remaining three months of 2023 $ 2.7 $ 2.6 $ 5.3

Railcars in our Lease Fleet Operating and Administrative Total

Remaining nine months of 2024 $ 6.6 $ 9.1 $ 15.7

2025 8.2 10.7 18.9

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

As of March 31, 2024, non-lease fleet operating leases in which we are the lessor were not significant, and we had no direct finance leases.

We manage risks associated with residual values of leased railcars by investing across a diverse portfolio of railcar types, staggering lease maturities within any given railcar type, avoiding concentration of railcar type and industry, and actively participating in secondary markets.

3 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(in millions)

2 unchanged sentences

Interest income on sales-type lease receivables $ 0.2 $ 0.2

Profit recognized at sales-type lease commencement (1)

$ — $ — $ — $ 1.3

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

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

Remaining three months of 2023 $ 176.3

Remaining nine months of 2024 $ 530.2

Thereafter 331.7

2 unchanged sentences

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

Remaining three months of 2023 $ 0.3

Remaining nine months of 2024 $ 0.8

Thereafter 9.0

12 unchanged sentences

Historically, we have observed that the likelihood of loss increases when receivables have aged beyond 180 days.

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

During the nine months ended September 30, 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.

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

During the three months ended March 31, 2024, we recognized approximately $ 0.6 million of credit loss expense and wrote off $ 0.8 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 $ 12.8 million at December 31, 2023 to $ 12.6 million at March 31, 2024.

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

Supply Chain Finance Program

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

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

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

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

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

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

Amounts due to our participating suppliers in the SCF program totaled $ 23.9 million and $ 18.3 million as of March 31, 2024 and December 31, 2023, 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 from continuing operations in our Consolidated Statements of Cash Flows.

Goodwill by segment is as follows:

September 30, 2023 December 31, 2022

Railcar Leasing and Management Services Group $ 33.9 $ 7.1

March 31, 2024 December 31, 2023

Railcar Leasing and Services Group $ 50.6 $ 50.6

Rail Products Group 170.9 170.9

5 unchanged sentences

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

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

The changes in the accruals for warranties for the three months ended March 31, 2024 and 2023 are as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(in millions)

5 unchanged sentences

Recent Accounting Pronouncements

Adopted in 2023

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

2022-04, Disclosure of Supplier Finance Program 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.

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

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

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

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

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

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

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.

Not Yet Adopted

ASU 2023-07 – In November 2023, the FASB issued ASU No.

2023-07, "Improvements to Reportable Segment Disclosures," which improves disclosures about a public entity's reportable segments through enhanced disclosures about significant segment expenses.

ASU 2023-07 requires disclosures, on an annual and interim basis, of significant segment expenses that are regularly provided to the CODM, the amount for other segment items by reportable segment and a description of its composition, the title and position of the CODM, and interim period disclosure of all current ASC 280, Segment Reporting , annual disclosures about a reportable segment's profit or loss and assets.

ASU 2023-07 is effective for public companies during annual reporting periods beginning after December 15, 2023 and during interim reporting periods beginning after December 15, 2024 and is to be adopted on a retrospective basis.

Early adoption is permitted.

We are currently evaluating the impact ASU 2023-07 will have on our segment reporting disclosures.

ASU 2023-09 – In December 2023, the FASB issued ASU No.

2023-09, "Improvements to Income Tax Disclosures," which enhances transparency and decision usefulness of income tax disclosures.

ASU 2023-09 requires, on an annual basis, a tabular disclosure using specific categories in the rate reconciliation and providing additional information for reconciling items that meet a quantitative threshold, as well as the disaggregation of income taxes paid by federal, state, and foreign jurisdictions.

ASU 2023-09 is effective for public companies during annual reporting periods beginning after December 15, 2024 on a prospective basis, with an option for retrospective application.

Early adoption is permitted.

We are currently evaluating the impact ASU-2023-09 will have on our income tax disclosures.

Acquisitions and Discontinued Operations

Acquisition of RSI Logistics

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

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

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

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

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

Based on our preliminary purchase price allocation 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.

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.

Acquisition of Holden America

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

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 and liabilities.

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.

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.

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.

In December 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 purchase agreement included minimum additional consideration of $ 10.0 million, which is payable in installments of $ 5.0 million per year in each of 2024 and 2025.

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 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.

The total additional consideration, which is included in other liabilities in our Consolidated Balance Sheets, had an estimated fair value of $ 20.0 million as of December 31, 2023 and is remeasured at each reporting period using Level 3 inputs.

During the three months ended March 31, 2024, the first installment of the additional consideration, totaling $ 10.0 million, was paid.

This payment is reflected in our Consolidated Statements of Cash Flows, of which $ 8.0 million related to the initial estimated fair value is included in financing activities, and $ 2.0 million related to the remeasurement of the initial estimated fair value is included in operating activities.

As of March 31, 2024, the estimated fair value of the remaining additional consideration was $ 10.0 million.

Acquisition of RSI Logistics

In March 2023, we acquired RSI Logistics ("RSI"), a data-centric provider of proprietary software and logistics and terminal management solutions to the North American rail industry.

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

Based on our purchase price allocation, we recorded identifiable intangible assets of $ 35.7 million, goodwill of $ 25.6 million, and certain other immaterial assets and liabilities.

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

Discontinued Operations

Sale of Highway Products Business

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

In the fourth quarter of 2021, we completed the sale of Trinity Highway Products, LLC (“THP”).

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

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

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

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

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

For the three months ended March 31, 2024 and 2023, we recorded expenses related to these obligations of $ 5.6 million ($ 4.3 million, net of income taxes) and $ 3.9 million ($ 3.1 million, net of income taxes), respectively, which are included in loss from discontinued operations, net of income taxes in our Consolidated Statements of Operations.

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 nine months ended September 30, 2023 and 2022:

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(in millions)

Selling, engineering, and administrative expenses $ 3.4 $ 4.4 $ 10.3 $ 17.2

Loss from discontinued operations before income taxes ( 3.4 ) ( 4.4 ) ( 10.3 ) ( 17.2 )

Benefit for income taxes ( 0.7 ) ( 1.0 ) ( 2.2 ) ( 3.5 )

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

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 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

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Included in accompanying balance sheet

at September 30, 2023

at March 31, 2024

AOCI – loss/(income)

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2018 secured railcar equipment notes $ 249.3 4.41 % $ — $ 0.2 $ —

TRIP Holdings warehouse loan (2)

$ 788.5 3.60 % $ — $ — $ —

Tribute Rail secured railcar equipment notes $ 256.0 2.86 % $ — $ 0.4 $ 0.5

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TRL-2023 term loan $ 265.4 3.79 % $ 2.2 $ ( 2.1 ) $ —

$ 269.8 3.79 % $ 5.9 $ ( 5.7 ) $ —

(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

September 30, Nine Months Ended

September 30, Expected effect during next twelve months

2023 2022 2023 2022

March 31, Expected effect during next twelve months

(in millions)

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TRL-2023 term loan $ (1.0) $ — $ ( 2.9 )

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

(1) Based on the fair value of open hedges as of March 31, 2024.

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:

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

Information related to our foreign currency hedges is as follows:

accompanying balance

sheet at September 30, 2023

Effect on cost of revenues – increase/(decrease)

sheet at March 31, 2024

Effect on cost of revenues –

increase/(decrease)

Amount Asset/ (Liability) AOCI –

loss/(income) Three Months Ended

September 30, Nine Months Ended

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

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

Instrument 2024 2023

2 unchanged sentences

Options $ 5.9 $ 0.5 $ ( 0.6 ) $ 0.3 $ — $ ( 0.6 )

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

(1) Based on the fair value of open hedges as of March 31, 2024.

Derivatives Not Designated as Hedging Instruments (1)

Asset/(Liability) at

September 30, 2023

Effect on other, net (income) expense –

increase/(decrease)

March 31, 2024

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

Amount Interest

Rate Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

($ in millions)

Interest rate derivatives (1) :

Interest rate derivatives – open:

TILC warehouse facility – interest rate cap $ 680.0 2.50 % $ 36.0 $ 0.7 $ —

TILC – interest rate cap (2)

(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.

$ 680.0 2.50 % $ ( 36.0 ) $ 2.4 $ —

Interest rate derivatives – expired (3) :

TILC warehouse facility – interest rate cap $ 800.0 2.50 % $ 0.9 $ 1.0 $ (0.9)

TILC – interest rate cap $ 800.0 2.50 % $ ( 0.9 ) $ (1.0) $ 0.9

(1) Comprised of back-to-back interest rate caps entered into with the same counterparty in connection with our risk management objectives.

(2) The amount recorded to other, net (income) expense in our Consolidated Statements of Operations for the three months ended March 31, 2024 includes a fee of $ 3.1 million related to the execution of back-to-back interest rate caps associated with the new TILC warehouse loan facility.

See Note 8 for further information.

(3) These interest rate caps matured in March 2024 and were settled in April 2024.

Fair Value Measurements

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Treasury or highly-rated money market mutual funds.

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

September 30, 2023 December 31, 2022

The assets measured on a recurring basis as Level 1 in the fair value hierarchy are summarized below:

March 31, 2024 December 31, 2023

(in millions)

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

(in millions)

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Derivatives not designated as hedging instruments:

TILC warehouse facility – interest rate cap 12.4 21.6

TILC warehouse facility – interest rate caps 36.9 6.6

Total assets $ 61.7 $ 26.5

Liabilities (2) :

Derivatives designated as hedging instruments:

Interest rate hedges $ — $ 2.5

Derivatives not designated as hedging instruments:

TILC – interest rate cap $ 12.4 $ 21.6

TILC – interest rate caps 36.9 6.6

Total liabilities $ 36.9 $ 9.1

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

As of September 30, 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 March 31, 2024 and December 31, 2023, 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.

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We report our operating results in two reportable segments:

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

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

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

railcar maintenance and modification services;

and other railcar logistics products and services;

and (2) the Rail Products Group, which manufactures and sells railcars and related parts and components.

The new structure resulted in a change to our reportable segments beginning in 2024.

In connection with this organizational update, we aligned the maintenance services business, which was previously reported in the Rail Products Group, to now be presented within our leasing business.

This change aligns with the way in which our CODM assesses performance and allocates resources.

Consequently, beginning January 1, 2024, we report our operating results in two reportable segments:

(1) the Railcar Leasing and Services Group, formerly the Railcar Leasing and Management Services Group, and (2) the Rail Products Group.

These changes had no impact to our previously reported consolidated results of operations, financial position, or cash flows.

All prior period segment results set forth herein have been recast to reflect these changes and present results on a comparable basis.

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

Our Chief Operating Decision Maker ("CODM") regularly reviews the operating results of our reportable segments in order to assess performance and allocate resources.

Our CODM regularly reviews the operating results of our reportable segments in order to assess performance and allocate resources.

Our CODM does not consider restructuring activities when evaluating segment operating results;

therefore, restructuring activities are not allocated to segment profit or loss.

Sales and related net profits ("deferred profit") from the Rail Products Group to the Leasing Group are recorded in the Rail Products Group and eliminated in consolidation and are reflected in "Eliminations – Lease Subsidiary" in the tables below.

Sales and related net profits ("deferred profit") from the Rail Products Group to the Leasing Group are recorded in the Rail Products Group and eliminated in consolidation.

Sales between these groups are recorded at prices comparable to those charged to external customers, taking into consideration quantity, features, and production demand.

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We operate principally in North America.

Three Months Ended September 30, 2023

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

External revenue $ 222.3 $ 599.0 $ — $ — $ 821.3

Intersegment revenue 0.3 83.2 ( 83.2 ) ( 0.3 ) —

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

Three Months Ended September 30, 2022

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

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

Intersegment revenue 0.2 295.3 ( 295.3 ) ( 0.2 ) —

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

Nine Months Ended September 30, 2023

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

Three Months Ended March 31, 2024

Railcar Leasing and Services Group Rail Products Group Eliminations Consolidated Total

External revenue $ 284.3 $ 525.3 $ — $ 809.6

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Total revenues $ 285.2 $ 667.4 $ ( 143.0 ) $ 809.6

Nine Months Ended September 30, 2022

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

Three Months Ended March 31, 2023

Railcar Leasing and Services Group Rail Products Group Eliminations Consolidated Total

External revenue $ 232.7 $ 409.0 $ — $ 641.7

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Three Months Ended

September 30, Nine Months Ended September 30,

2023 2022 2023 2022

(in millions)

Operating profit:

Railcar Leasing and Management Services Group $ 88.6 $ 107.9 $ 292.6 $ 293.2

Railcar Leasing and Services Group $ 100.3 $ 84.6

Rail Products Group 43.8 24.1

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Restructuring activities, net — 0.4

Eliminations – Lease Subsidiary ( 2.4 ) ( 19.6 ) ( 32.3 ) ( 48.7 )

Eliminations – Other — ( 0.2 ) 0.4 ( 1.3 )

Eliminations ( 2.4 ) ( 14.1 )

Consolidated operating profit 115.2 69.0

2 unchanged sentences

Loss from discontinued operations, net of income taxes ( 4.3 ) ( 3.1 )

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

Net income $ 27.4 $ 13.7

Partially-Owned Leasing Subsidiaries

Partially-Owned Subsidiaries

Investments in Leasing Subsidiaries

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.

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

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

At March 31, 2024, the carrying value of our investment in TRIP Holdings and RIV 2013 totaled $ 124.2 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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See Note 8 for additional information regarding the debt of TRIP Holdings and RIV 2013 and their respective subsidiaries.

Other Investment in Consolidated Affiliate

In 2023, the Company and a third party formed Trinity Global Ventures to deliver railcars and provide warranty support services in Saudi Arabia.

Trinity Global Ventures is owned 51.0 % by Trinity Rail Group, LLC ("Trinity Rail Group"), a wholly-owned subsidiary of the Company, and 49.0 % by the third party.

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

Trinity Rail Group has a variable interest in Trinity Global Ventures arising from its 51.0 % equity ownership position.

We determined that Trinity is the primary beneficiary and therefore consolidates this entity as we have the power to direct the activities of the entity that most significantly impact its economic performance.

At March 31, 2024, the carrying value of our investment in Trinity Global Ventures totaled $ 2.5 million, which is eliminated in consolidation.

Investment in Unconsolidated Affiliate

In August 2021, the Company and Wafra, Inc.

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

In 2021, the Company and Wafra, Inc.

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

As part of this program, a joint venture was formed, Signal Rail Holdings LLC (“Signal Rail”), which is currently owned 87.1 % by Wafra Funds and 12.9 % by TILC.

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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.

Upon consideration under the 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.

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

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.

At March 31, 2024, the carrying value of TILC’s equity investment in Signal Rail was $ 20.3 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

The Railcar Leasing and Management Services Group owns and operates a fleet of railcars as well as provides third-party fleet leasing, management, and administrative services.

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

September 30, 2023

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

Adjusted Total Leasing Group

(in millions)

Cash and cash equivalents $ 9.0 $ — $ 9.0 $ — $ 9.0

Accounts receivable 119.9 10.7 130.6 130.6

Property, plant, and equipment, net 5,915.7 1,490.7 7,406.4 ( 758.7 ) 6,647.7

Restricted cash 95.9 56.8 152.7 — 152.7

Other assets 197.2 1.6 198.8 — 198.8

Total assets $ 6,337.7 $ 1,559.8 $ 7,897.5 $ ( 758.7 ) $ 7,138.8

Accounts payable and accrued liabilities $ 134.5 $ 37.3 $ 171.8 $ — $ 171.8

Debt, net 3,838.3 1,149.9 4,988.2 — 4,988.2

Deferred income taxes 1,147.9 1.1 1,149.0 ( 166.2 ) 982.8

Other liabilities 30.6 — 30.6 — 30.6

Total liabilities 5,151.3 1,188.3 6,339.6 ( 166.2 ) 6,173.4

Noncontrolling interest — 252.6 252.6 — 252.6

Total Equity $ 1,186.4 $ 118.9 $ 1,305.3 $ ( 592.5 ) $ 712.8

December 31, 2022

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

Adjusted Total Leasing Group

(in millions)

Cash and cash equivalents $ 2.6 $ — $ 2.6 $ — $ 2.6

Accounts receivable 89.9 10.8 100.7 — 100.7

Property, plant, and equipment, net 5,788.1 1,521.3 7,309.4 ( 763.3 ) 6,546.1

Restricted cash 140.3 74.4 214.7 — 214.7

Other assets 150.3 2.2 152.5 — 152.5

Total assets $ 6,171.2 $ 1,608.7 $ 7,779.9 $ ( 763.3 ) $ 7,016.6

Accounts payable and accrued liabilities $ 109.7 $ 44.1 $ 153.8 $ — $ 153.8

Debt, net 3,800.7 1,182.8 4,983.5 — 4,983.5

Deferred income taxes 1,152.3 1.1 1,153.4 ( 173.1 ) 980.3

Other liabilities 38.8 — 38.8 — 38.8

Total liabilities 5,101.5 1,228.0 6,329.5 ( 173.1 ) 6,156.4

Noncontrolling interest — 257.2 257.2 — 257.2

Total Equity $ 1,069.7 $ 123.5 $ 1,193.2 $ ( 590.2 ) $ 603.0

(1) Net deferred profit on railcars sold to the Leasing Group consists of intersegment profit that is eliminated in consolidation.

Net deferred profit and the related deferred tax impact are included as adjustments to the property, plant, and equipment, net and deferred income taxes line items, respectively, in the Eliminations – Lease Subsidiary column above to reflect the net book value of the railcars purchased by the Leasing Group from the Rail Products Group based on manufacturing cost.

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

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

2023 2022 Percent 2023 2022 Percent

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

Leasing and management $ 222.6 $ 194.8 14.3 % $ 649.3 $ 573.2 13.3 %

Operating profit (1) :

Railcar Leasing and Services Group

The Railcar Leasing and Services Group owns and operates a fleet of railcars and provides third-party fleet leasing, management, and administrative services;

railcar maintenance and modification services;

and other railcar logistics products and services.

Information related to the Leasing Group is as follows:

Three Months Ended March 31,

2024 2023 Percent

($ in millions) Change

Leasing and management $ 209.0 $ 194.7 7.3 %

Lease portfolio sales (2)

Maintenance services (1)

65.2 29.4 121.8 %

Digital and logistics services 11.0 8.8 25.0 %

Total revenues $ 285.2 $ 232.9 22.5 %

Cost of revenues (2)

169.6 146.8 15.5 %

Selling, engineering, and administrative expenses 18.1 16.9 7.1 %

Gains on dispositions of property:

Lease portfolio sales 2.1 13.5 *

Other 0.7 1.9 *

Total operating profit $ 100.3 $ 84.6 18.6 %

Total operating profit margin 35.2 % 36.3 %

Leasing and management operating profit margin

Total operating profit margin, excluding lease portfolio sales 34.4 % 30.5 %

Selected expense information for Company-owned railcars (3) :

Depreciation and amortization expense (4)

$ 59.9 $ 61.6 ( 2.8 ) %

Selected expense information:

Depreciation and amortization (3)

Maintenance and compliance expense (5)

$ 30.4 $ 34.8 ( 12.6 ) %

Maintenance and compliance $ 36.4 $ 28.2 29.1 % $ 107.2 $ 84.7 26.6 %

Rent and ad valorem taxes $ 4.0 $ 5.2 ( 23.1 ) % $ 12.5 $ 15.5 ( 19.4 ) %

Selling, engineering, and administrative expenses

Other fleet operating costs (6)

$ 7.7 $ 9.2 ( 16.3 ) %

Interest expense (7)

$ 57.4 $ 54.8 4.7 %

* Not meaningful

(1) Operating profit includes:

depreciation and amortization;

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

rent and ad valorem taxes;

and selling, engineering, and administrative expenses.

Amortization of deferred profit on railcars sold from the Rail Products Group to the Leasing Group is included in the operating profit of the Leasing Group, resulting in the recognition of depreciation expense based on our original manufacturing cost of the railcars.

(1) Revenues related to services performed by the maintenance services business to support the railcars in our lease fleet are eliminated within the Railcar Leasing & Services Group and are excluded from the totals reported on this line.

(2) Includes depreciation and amortization expense, maintenance and compliance expense, and other fleet operating costs related to our lease fleet, as well as cost of revenues for our maintenance services and digital and logistics services businesses.

(3) Includes wholly-owned railcars, partially-owned railcars, and railcars under leased-in arrangements.

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

Additionally, amortization of deferred profit on railcars sold from the Rail Products Group to the Leasing Group is included in depreciation and amortization expense, resulting in the recognition of depreciation expense based on our original manufacturing cost of the railcars.

(5) Maintenance and compliance expense is reported at cost with respect to the work that is completed by our maintenance services business to support the railcars in our lease fleet.

(6) Other fleet operating costs include freight, storage, rent, and ad valorem taxes.

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

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

(3) Depreciation 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.

Information related to lease portfolio sales is as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

($ in millions)

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Operating profit on lease portfolio sales $ 2.1 $ 13.5

$ 3.1 $ 34.3 $ 46.4 $ 71.7

Operating profit margin on lease portfolio sales 8.7 % 23.8 %

(1) Excludes $ 1.3 million selling profit associated with sales-type leases for the nine months ended September 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 three months of 2023 2024 2025 2026 2027 Thereafter Total

Remaining nine months of 2024 2025 2026 2027 2028 Thereafter Total

(in millions)

1 unchanged sentence

Wholly-owned subsidiaries.

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.

The Leasing Group’s debt at March 31, 2024 consisted primarily of non-recourse debt.

As of March 31, 2024, Trinity’s wholly-owned subsidiaries included in the Leasing Group held equipment with a net book value of $ 5,634.0 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, 2024 was $ 368.6 million.

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

Partially-owned subsidiaries.

Debt owed by TRIP Holdings and RIV 2013 and their respective subsidiaries is nonrecourse to Trinity and TILC.

Debt owed by TRIP Holdings and RIV 2013 and their respective subsidiaries is non-recourse to Trinity and TILC.

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

As of September 30, 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.

As of March 31, 2024, TRIP Holdings held equipment with a net book value of $ 1,035.1 million, which is pledged solely as collateral for the TRIP Holdings' debt held by its subsidiaries.

As of March 31, 2024, TRP-2021 equipment with a net book value of $ 422.9 million is pledged solely as collateral for the TRP-2021 debt.

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

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

Remaining three months of 2023 2024 2025 2026 2027 Thereafter Total

Remaining nine months of 2024 2025 2026 2027 2028 Thereafter Total

(in millions)

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and certain subsidiaries.

The Leasing Group also has future amounts due for operating lease obligations related to office space of approximately $ 0.1 million, which is excluded from the table above.

Property, Plant, and Equipment

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

(in millions)

Manufacturing/Corporate:

Land $ 16.2 $ 15.7

Buildings and improvements 374.8 384.6

Machinery and other 388.6 405.5

Construction in progress 13.9 18.1

accumulated depreciation ( 450.0 ) ( 483.2 )

Railcars in our lease fleet:

Wholly-owned subsidiaries:

Machinery and other 25.9 21.7

Equipment on lease $ 7,657.7 $ 7,536.7

7,510.1 7,269.0

accumulated depreciation ( 1,655.1 ) ( 1,604.9 )

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1,458.0 1,473.2

Deferred profit on railcars sold to the Leasing Group ( 1,063.5 ) ( 1,050.7 )

accumulated amortization 304.8 287.4

Deferred profit on railcar products sold (1)

( 1,061.7 ) ( 1,061.3 )

accumulated amortization 318.6 311.1

( 743.1 ) ( 750.2 )

Total railcars in our lease fleet 6,717.5 6,654.8

Operating and administrative assets:

Land 16.4 16.1

Buildings and improvements 380.1 380.4

Machinery and other 421.8 419.8

Construction in progress 8.2 11.3

accumulated depreciation ( 484.4 ) ( 477.6 )

Total operating and administrative assets 342.1 350.0

Total property, plant, and equipment, net $ 7,059.6 $ 7,004.8

(1) Includes deferred profit related to new railcar additions, sustainable railcar conversions, railcar modifications, and other betterments.

The deferred profit is subsequently eliminated in consolidation.

The carrying amounts of our debt are as follows:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

(in millions)

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Total recourse debt 795.0 794.6

Leasing – Non-recourse:

Lease fleet – Non-recourse:

Wholly-owned subsidiaries:

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TILC warehouse facility 701.8 529.3

Other equipment financing 51.8 52.3

3,962.0 3,836.5

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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.

As of March 31, 2024, we evaluated the fair value of the other equipment financing liability using Level 3 inputs and determined that the carrying value approximates fair value.

The estimated fair values of our debt are as follows:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

(in millions)

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

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

We incurred $ 0.7 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 due 2024 have not been repaid in full by that date.

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 $ 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.

During the three months ended March 31, 2024, we had total borrowings of $ 130.0 million and total repayments of $ 130.0 million under the revolving credit facility.

Additionally, we had outstanding letters of credit issued in an aggregate amount of $ 18.2 million, leaving $ 581.8 million available for borrowing as of March 31, 2024.

The majority of our outstanding letters of credit as of March 31, 2024 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 7.16 % as of September 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).

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, 2024).

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 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.

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 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.

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 7.29 % at September 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 one-month term 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.

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 7.21 % as of September 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.

As of March 31, 2024, we were in compliance with all such financial covenants.

TILC Warehouse Loan Facility – TILC has historically maintained a warehouse loan facility to finance railcars owned by TILC.

In March 2024, we entered into a new warehouse loan facility with a total commitment amount of $ 800.0 million, a revolving termination date of March 15, 2027, and a maturity date of March 15, 2028.

This warehouse loan facility replaced the prior $ 1.0 billion warehouse loan facility.

We incurred $ 3.6 million in debt issuance costs, which are recorded in other assets in our Consolidated Balance Sheets as of March 31, 2024, and are being amortized to interest expense over the facility term.

During the three months ended March 31, 2024, we had total borrowings of $ 783.7 million and total repayments of $ 611.2 million under the current and prior TILC warehouse loan facilities.

The entire unused facility amount of $ 98.2 million was available as of March 31, 2024 based on the amount of warehouse-eligible, unpledged equipment.

Advances under the facility bear interest at one-month term SOFR plus a facility margin of 1.75 %, for an all-in interest rate of 7.12 % at March 31, 2024.

Terms and conditions of our other debt, including recourse and non-recourse provisions and scheduled maturities, are described in Note 9 of our 2023 Annual Report on Form 10-K.

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.

The effective tax rate from continuing operations for the three months ended March 31, 2024 was an expense of 25.8 %, which differs from the U.S.

statutory rate of 21.0 % primarily due to state income taxes and foreign income taxes, partially offset by the benefit of noncontrolling interest, for which we do not provide income taxes.

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

statutory rate of 21.0 % primarily due to the release of residual taxes out of AOCI;

the re-measurement of our net deferred tax liabilities due to the acquisition of RSI and state tax law changes and rate reductions enacted during the year;

the re-measurement of our net deferred tax liabilities due to the acquisition of a subsidiary;

changes in our valuation allowances;

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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.

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 nine months ended September 30, 2023.

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.

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.

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 a subsidiary 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 period, which was recorded through deferred income tax expense.

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.

The tax provision for the three months ended March 31, 2023 also reflects a $ 4.0 million tax benefit related to the net impact of an adjustment to valuation allowances, primarily for deferred tax assets in Mexico, state tax loss carryforwards, and federal tax credits.

The total income tax receivable position as of March 31, 2024 was $ 4.9 million primarily for state tax overpayments.

Our income tax payable for federal, state, and foreign income taxes is $ 11.6 million as of March 31, 2024.

Deferred income taxes related to railcars in our lease fleet were $ 1.1 billion as of both March 31, 2024 and December 31, 2023.

Our federal tax return years through 2020 are closed under statute and the years 2021-2023 remain open.

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.

We believe we are appropriately reserved for any potential matters.

Beginning in 2024, certain jurisdictions have enacted a 15% minimum tax on all companies that operate in their jurisdiction, consistent with one or more Organization for Economic Co-operation and Development Global Anti-Base Erosion Model Rules ("Pillar Two").

Because the Pillar Two legislation has not been enacted in jurisdictions in which we operate, there is no impact to our effective tax rate;

however, we will continue to monitor our potential exposure to Pillar Two in the jurisdictions in which we operate.

Employee Retirement Plans

Amounts related to our employee retirement plans are as follows:

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

2023 2022 2023 2022

Three Months Ended

(in millions)

Defined contribution expense $ 3.0 $ 2.4

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

$ 0.2 $ 0.2 $ 0.5 $ 0.5

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

Accumulated Other Comprehensive Income

Changes in AOCI for the nine months ended September 30, 2023 are as follows:

Changes in AOCI for the three months ended March 31, 2024 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 income, net of tax, before reclassifications 11.4 — 11.4

Amounts reclassified from AOCI, net of tax benefit of $ 8.5 , $ — , and $ 8.5

Amounts reclassified from AOCI, net of tax expense of $ 1.2 , $ — , and $ 1.2

( 3.9 ) — ( 3.9 )

noncontrolling interest ( 0.1 ) — ( 0.1 )

Other comprehensive loss ( 2.0 ) — ( 2.0 )

Balances at September 30, 2023

Other comprehensive income 7.4 — 7.4

Balances at March 31, 2024

$ 19.8 $ ( 1.4 ) $ 18.4

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

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

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

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

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

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.

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

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Stockholders' Equity

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

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

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.

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

The 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, 2024 and 2023.

Stock-Based Compensation

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”).

Stock-based compensation expense totaled approximately $ 4.7 million and $ 6.2 million for the three months ended March 31, 2024 and 2023, respectively.

The Company's annual grants of share-based awards generally occur in the first and second quarters 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.

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

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

The following table summarizes stock-based compensation awards granted during the three months ended March 31, 2024:

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

Restricted stock units 12,155 $ 24.93

Restricted stock awards 22,937 $ 21.32

Performance units 130,610 $ 31.15

The fair value of RSUs granted is based on the Company's closing stock price on the date of grant.

The fair value of the performance units for relative total shareholder return granted during the three months ended March 31, 2024 was estimated at the date of grant using a Monte Carlo simulation with assumptions that reflect market conditions at the date of grant, including stock price, risk-free interest rate, expected term, expected volatility, and dividend yield.

Earnings Per Common Share

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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 September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended

(in millions, except per share amounts)

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

24.5 29.2 51.3 48.2

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

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

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

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Net income attributable to Trinity Industries, Inc.

$ 21.8 $ 25.8 $ 43.2 $ 28.8

Basic weighted average shares outstanding 81.6 80.8

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Diluted weighted average shares outstanding

83.5 83.3 83.5 84.4

Basic earnings per common share:

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Harman's petition ended this action.

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

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

State actions

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

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

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

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

Harman ( State of Tennessee ex rel.

Trinity Industries, Inc., and Trinity Highway Products, LLC , Case No.

14C2652, in the Circuit Court for Davidson County, Tennessee), Mr.

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

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

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

Harman’s complaint with prejudice.

On February 7, 2022, Mr.

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

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

Harman's Second Amended Complaint with prejudice.

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.

On February 7, 2024, the trial court granted the Company's motion for summary judgment and ordered that the trial dates and hearing dates in this matter be removed from the court's docket.

On March 26, 2024, the trial court granted the Commonwealth of Virginia’s motion to suspend entry of a final order pending the trial court’s review of Mr.

Harman’s forthcoming motion for reconsideration of the order granting the Company’s motion for summary judgment.

In a similar New Jersey state qui tam action ( State of New Jersey ex rel.

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Harman's appeal remains pending.

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

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

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

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

Because of the complexity of these actions, as well as the current status of certain of these actions, we are not able to estimate a range of possible losses with respect to any one or more of these actions.

While the financial impacts of these state actions are currently unknown, they could be material.

Missouri class action

On November 5, 2015, a lawsuit was filed against the Company titled Jackson County, Missouri, individually and on behalf of a class of others similarly situated vs.

Trinity Industries, Inc.

and Trinity Highway Products, LLC , Case No.

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

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

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

The plaintiff alleged that the Company and THP did not disclose design changes to the ET Plus and these allegedly undisclosed design changes made the ET Plus allegedly defective, unsafe, and unreasonably dangerous.

The plaintiff alleged product liability negligence, product liability strict liability, and negligently supplying dangerous instrumentality for supplier’s business purposes.

The plaintiff sought compensatory damages, interest, attorneys' fees, and costs, and in the alternative plaintiff sought a declaratory judgment that the ET Plus is defective, the Company’s conduct was unlawful, and class-wide costs and expenses associated with removing and replacing the ET Plus throughout Missouri.

On December 6, 2017, the Court granted plaintiff's Motion for Class Certification, certifying a class of Missouri counties with populations of 10,000 or more persons, including the City of St.

Louis and the State of Missouri's transportation authority that have or had ET Plus guardrail end terminals with 4-inch wide guide channels installed on roadways they own or maintain.

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

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

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

Pursuant to the settlement, the Company will pay for the past replacement of certain ET Plus systems, for locating and replacing certain existing undamaged ET Plus systems, and for attorneys’ fees and costs.

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

To date, the Company has funded $ 17.5 million in connection with the settlement and refined certain estimates, resulting in a remaining liability of $ 7.7 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.

Consequently, the corresponding liability will be periodically reviewed and adjusted, when appropriate, for a number of factors, including differences between actual and estimated costs.

The accrual and related range of reasonably possible loss related to this matter are included in the amounts described below under "Other matters."

Product liability cases

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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

East Palestine, OH Train Derailment

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

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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.

3 unchanged sentences

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

On March 6, 2024, the trial court granted TILC’s motion to dismiss Norfolk Southern’s Third-Party Complaint and entered an order dismissing Norfolk Southern’s complaint against TILC.

On March 26, 2024, Norfolk Southern filed a Motion for Entry of Partial Final Judgment, which remains pending.

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 .

4:23-CV-00242 ("Consolidated Class Action").

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

1 unchanged sentence

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.

On March 13, 2024, the trial court granted in part and denied in part TILC’s motion to dismiss Norfolk Southern’s third-party complaint and TILC’s motion to dismiss plaintiffs’ First Amended Complaint.

On April 9, 2024, plaintiffs and Norfolk Southern announced a settlement in principal of plaintiffs’ claims against Norfolk Southern and the Railcar Defendants.

Norfolk Southern preserved its third-party claims against the Railcar Defendants.

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 and direct claims asserted against TILC in these matters are without merit and intends to vigorously defend against all allegations.

On December 8, 2023, a lawsuit was filed against TILC titled Ambridge Area School District et al.

Norfolk Southern Corporation et al.

2:23-cv-01530-CB, in the United States District Court for the Western District of Pennsylvania.

Plaintiffs in this putative class action lawsuit assert claims against Norfolk Southern Corporation, Norfolk Southern Railway Company, Oxy Vinyls, LP, GATX Corporation, General American Marks Company, and TILC for negligence, negligence per se, strict liability, public and private nuisance, future health monitoring, trespass, and punitive damages.

On February 23, 2024, TILC filed a motion to dismiss plaintiffs’ amended complaint, which remains pending.

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

On March 8, 2024, a lawsuit was filed against TILC titled Patricia Almasy et al.

Norfolk Southern Corporation et al.

4:24-cv-00452, in the United States District Court for the Northern District of Ohio (“Almasy Lawsuit”).

Plaintiffs assert claims against Norfolk Southern Corporation, Norfolk Southern Railway Company, Oxy Vinyls, LP, GATX Corporation, General American Marks Company, and TILC.

Plaintiffs assert claims against TILC for negligence, gross negligence, future health monitoring, and willful and wanton conduct.

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

On March 13, 2024, this lawsuit was consolidated into the Consolidated Class Action lawsuit.

The Company believes it has substantial defenses and intends to vigorously defend itself against all allegations in the third-party and direct claims asserted against TILC.

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.

We do not believe at this time that a loss is probable in these matters, nor can a range of possible 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.

The Company maintains liability insurance coverage and commercial contractual indemnity rights to protect the Company’s assets from losses arising from these types of litigation claims.

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 $ 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 range of reasonably possible losses for such matters is $ 7.9 million to $ 19.4 million, which includes our rights to indemnity and recourse to third parties of approximately $ 0.1 million, which is recorded in other assets in our Consolidated Balance Sheets as of March 31, 2024.

This range includes any amounts related to the Highway Products litigation matters described above in the section titled “Highway products litigation." At March 31, 2024, total accruals of $ 8.8 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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We believe that we are currently in substantial compliance with environmental and workplace laws and regulations.

Georgia tornado

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

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

On January 16, 2024, a fire damaged a portion of the Company's facility in Cartersville, Georgia.

We have incurred costs related to cleanup and damage remediation activities in order for the facility to resume limited operations, and we expect to return to normal production levels in the second half of 2024.

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

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

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.

Accordingly, at March 31, 2024, we recorded an insurance receivable of approximately $ 1.0 million for property damage recoveries that we have concluded are probable of collection.

As of March 31, 2024, we have received advanced payments from insurance of approximately $ 1.5 million for cleanup and damage remediation activities.

Any property damage insurance proceeds received in excess of the net book value of property lost and related cleanup costs will be accounted for as a gain.

Additionally, the Company may be entitled to business interruption proceeds related to the event.

We will not record these recoveries until settlements have been reached with the insurance company.

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