TRINITY INDUSTRIES INC 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide management's perspective on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. Our MD&A should be read in conjunction with the unaudited Consolidated Financial Statements and related Notes in Part I, Item 1 of this Quarterly Report on Form 10-Q and Item 8, Financial Statements and Supplementary Data, of our 2025 Annual Report on Form 10-K. This MD&A includes financial measures compiled in accordance with generally accepted accounting principles ("GAAP") and certain non-GAAP measures. Please refer to the Non-GAAP Financial Measures section herein for information on the non-GAAP measures included in the MD&A, reconciliations to the most directly comparable GAAP financial measure, and the reasons why management believes each measure is useful to management and investors. 23 Table of Contents Forward-Looking Statements This quarterly report on Form 10-Q (or statements otherwise made by the Company or on the Company’s behalf from time to time in other reports, filings with the Securities and Exchange Commission (“SEC”), news releases, conferences, website postings, or otherwise) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements contained herein that are not historical facts are forward-looking statements and involve risks and uncertainties. These forward-looking statements include expectations, beliefs, plans, objectives, future financial performances, estimates, projections, goals, and forecasts. Trinity uses the words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “forecasts,” “may,” “will,” “should,” and similar expressions to identify these forward-looking statements. Potential factors, which could cause our actual results of operations to differ materially from those in the forward-looking statements, include, among others: • market conditions and customer demand for our business products and services; • the cyclical nature of the industries in which we compete; • actions by U.S. and/or foreign governments (particularly Mexico and Canada) relative to tariffs, trade policies, federal government budgeting, taxation policies, government expenditures, borrowing/debt ceiling limits, and government shutdowns; • geopolitical events, including armed conflicts, and their impact on supply chains, pricing, and the global economy; • variations in weather in areas where our products are manufactured, delivered, or used; • naturally-occurring events, pandemics, fires, and/or disasters causing disruption to our facilities, manufacturing, product deliveries, and production capacity, thereby giving rise to an increase in expenses, loss of revenue, and property losses; • disruptions in the transportation network used to transport parts and components to our production facilities and to deliver products to our customers, particularly with respect to the delivery of finished railcars from Mexico to the U.S., which may impact our ability to manufacture and timely deliver railcars to our customers; • shortages of labor; • impacts from asset impairments and related charges; • the timing of introduction of new products; • the inability to effectively integrate acquired businesses; • the timing and delivery of customer orders, lease portfolio sales, or a breach of customer contracts; • the creditworthiness of customers and their access to capital; • product price changes; • changes in mix of products sold; • the costs incurred to align manufacturing capacity with demand and the extent of its utilization; • the operating leverage and efficiencies that can be achieved by our manufacturing businesses; • availability and costs of steel, component parts, supplies, and other raw materials; • competition and other competitive factors; • changing technologies, including our ability to effectively integrate artificial intelligence ("AI") into our business; • material failure, interruption of service, compromised data security, phishing emails, or cybersecurity breaches in our information technology (or that of the third-party vendors who provide information technology or other services); • surcharges and other fees added to fixed pricing agreements for steel, component parts, supplies, and other raw materials; • inflation, interest rates, and capital costs; • counter-party risks for financial instruments; • long-term funding of our operations; • taxes; • the stability of the governments and political and business conditions in certain foreign countries, particularly Mexico; • fluctuations in foreign currency exchange rates, particularly the Mexican peso; • changes in import and export quotas and regulations; • business conditions in emerging economies; • costs and results of litigation, including trial and appellate costs; • changes in accounting standards or inaccurate estimates or assumptions in the application of accounting policies; • changes in laws and regulations that may have an adverse effect on demand for our products and services, our results of operations, financial condition, or cash flows; • legal, regulatory, and environmental issues, including compliance of our products with mandated specifications, standards, or testing criteria and obligations to remove and replace our products following installation or to recall our products and install different products; 24 Table of Contents • the use of social or digital media to disseminate false, misleading and/or unreliable or inaccurate information; and • the inability to sufficiently protect our intellectual property rights. Any forward-looking statement speaks only as of the date on which such statement is made. Except as required by federal securities laws, Trinity undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made. For a discussion of risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” in our 2025 Annual Report on Form 10-K, this Form 10-Q, and future Forms 10-Q and Current Reports on Forms 8-K. 25 Table of Contents Company Overview Trinity Industries, Inc. and its consolidated subsidiaries own businesses that are leading providers of railcar products and services in North America. We market our railcar products and services under the trade name TrinityRail ® . Our platform also includes the brands of RSI Logistics, a provider of software and logistics solutions, and Holden America, a supplier of railcar parts and components. Our platform provides railcar leasing and management services; railcar manufacturing; railcar maintenance and modifications; and other railcar logistics products and services. We report our operating results in two reportable segments: (1) the Railcar Leasing and Services Group (the "Leasing 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. Executive Summary Cyclical, Seasonal and Other Trends Impacting Our Business General Business Trends Demand for many of our railcar products and services is correlated to changes in North American industrial production and international trade. We continue to actively monitor evolving tariff and trade developments, including tariffs imposed pursuant to Section 232 of the Trade Expansion Act of 1962 on steel and aluminum, and their potential impact on demand for our products. Uncertainty in these areas and in the macroeconomic environment, including the administration of trade policy in the U.S. and Mexico, is negatively impacting and could continue to negatively impact our results of operations and demand for new railcars. We remain focused on mitigating impacts to our business resulting from these evolving developments. The industries in which our customers operate are cyclical in nature. Although lease rates and lease fleet utilization remain strong, weaknesses in certain sectors of the North American and global economy may make it more difficult to sell or lease certain types of railcars. Additionally, changes in certain commodity prices, or changes in demand for certain commodities, could impact customer demand for various types of railcars. Further, disruptions in the global supply chain have impacted demand for, and the costs of, certain of our products and services. We continuously assess demand for our products and services and take steps to rationalize and diversify our leased railcar portfolio and align our operating capacity appropriately. We evaluate the creditworthiness of our customers and monitor performance of relevant market sectors; however, weaknesses in any of these market sectors could affect the financial viability of our customers, which could negatively impact our revenues, credit loss expense, and operating profits. We continue to believe that our rail platform is able to respond to cyclical changes in demand and perform throughout the railcar cycle. We believe that our leasing business provides a natural hedge against inflation and changes in interest rates; however, like many leasing companies, the debt component of our capital structure exposes us to changes in the interest rate environment. A significant portion of the earnings from our leasing business is derived from multi-year full-service leases. We consider changes in interest rates, inflation, and other relevant factors in the pricing of new and renewing leases; however, only a portion of our leased railcar portfolio is repriced each year. Consequently, our earnings could be impacted by timing differences between when interest rate changes and changes in the inflationary environment occur and when we are able to factor these changes into our lease rates. Due to their transactional nature, lease portfolio sales are the primary driver of fluctuations in results in the Leasing Group. Input Costs We periodically experience volatility in the costs of steel, components, and certain other inputs that represent a substantial portion of our cost of revenues. We typically use contract-specific purchasing practices, existing supplier commitments, contractual price escalation provisions, and other arrangements with our customers to reduce the impact of the volatility of certain input costs on our operating profit. Further, the cost and volume of lease fleet maintenance and compliance events remain elevated, which we expect to continue in the near term. We continually assess the impact of input costs on our operational efficiency, margins, and overall profitability. 26 Table of Contents Transportation Network Disruptions We have, from time to time, been impacted by disruptions in the rail transportation network, including rail traffic closures or congestion in Eagle Pass, Texas, the primary border crossing used for railcar deliveries from our manufacturing facilities in Mexico. We continuously monitor rail traffic at the U.S.-Mexico border, and we take appropriate steps within our control to mitigate the potential impacts on our delivery timelines. However, any future challenges related to transportation network disruptions could negatively impact our operations or our ability to timely deliver railcars to our customers. Financial and Operational Highlights • Our revenues for the three months ended March 31, 2026 were $492.0 million, representing a decrease of 16.0%, compared to the three months ended March 31, 2025. Our operating profit for the three months ended March 31, 2026 was $101.1 million, representing an increase of 1.3%, compared to $99.8 million for the three months ended March 31, 2025. • The Leasing Group's lease fleet of 101,960 company-owned railcars was 97.3% utilized as of March 31, 2026, compared to a lease fleet utilization of 96.8% on 110,150 company-owned railcars as of March 31, 2025. Our company-owned lease fleet includes wholly-owned railcars, partially-owned railcars, and railcars under leased-in arrangements. • For the three months ended March 31, 2026, we made a net fleet investment of approximately $67.7 million, which primarily includes new railcar additions, railcar modifications, and other betterments, net of deferred profit, as well as secondary market purchases; and is net of proceeds from lease portfolio sales. • The total value of the new railcar backlog at March 31, 2026 was $1.6 billion, compared to $1.9 billion at March 31, 2025. The Rail Products Group received orders for 1,660 railcars and delivered 1,970 railcars in the three months ended March 31, 2026, in comparison to orders for 695 railcars and deliveries of 3,060 railcars in the three months ended March 31, 2025. See "Consolidated Results of Operations" and "Segment Discussion" below for additional information regarding our operating results. (1) Dividend yield is calculated as dividends declared for the four previous quarters divided by the closing stock price on the last trading day of each respective quarter. (2) Non-GAAP financial measure. See the Non-GAAP Financial Measures section within this Form 10-Q for a reconciliation to the most directly comparable GAAP measure and why management believes this measure is useful to management and investors. Dollar amounts are presented for the three months ended March 31, 2026 and 2025. Litigation Updates See Note 12 of the Consolidated Financial Statements for an update on the status of certain litigation. 27 Table of Contents Subsequent Events TRL-2025 Series 2026-1 Secured Railcar Equipment Notes – In April 2026, Trinity Rail Leasing 2025 LLC ("TRL-2025"), a limited purpose, indirect wholly-owned subsidiary of the Company owned through Trinity Industries Leasing Company ("TILC"), issued an aggregate principal amount of $480.8 million of its Series 2026-1 Green Secured Railcar Equipment Notes (the "Series 2026-1 Notes). The Series 2026-1 Notes bear interest at an all-in interest rate of 5.36%, are payable monthly, and have a stated final maturity date of April 2056. Net proceeds received in connection with the issuance of the Series 2026-1 Notes were used to redeem the outstanding debt of Trinity Rail Leasing 2019 LLC Series 2019-1 Secured Railcar Equipment Notes (the "Series 2019-1 Notes") and for general corporate purposes. The all-in interest rate for the Series 2019-1 Notes was 3.82% per annum. Railcar Partnership Transaction – In April 2026, TILC entered into a Contribution Agreement (the “Contribution Agreement”) with, among others, Napier Park Rail Evergreen Fund LLC, a subsidiary of Napier Park Global Capital, one of our railcar investment partners since 2013 and a leading alternative credit platform. Pursuant to the Contribution Agreement, TILC contributed (i) a 42.56% membership interest in TRIP Rail Holdings LLC ("TRIP Holdings") and (ii) a 0.2% interest in Triumph Rail Holdings LLC ("Triumph Holdings") to NP SPE Holdings LP ("NP SPE") in exchange for a 11.2% limited partnership interest in NP SPE. As a result of these transactions, TILC no longer has any direct ownership interest in TRIP Holdings; its wholly-owned subsidiary, Tribute Rail; or Triumph. As a result of the divestiture of its interests in TRIP Holdings and Triumph Holdings, the Company expects to recognize a non-cash pre-tax gain of approximately $130 million during the second quarter of 2026, and TRIP Holdings, Triumph Holdings, and Tribute and its related debt will no longer be included in our Consolidated Financial Statements. 28 Table of Contents Consolidated Results of Operations The following table summarizes our consolidated results of operations for the three months ended March 31, 2026 and 2025: Three Months Ended March 31, 2026 2025 (in millions) Revenues $ 492.0 $ 585.4 Cost of revenues 363.1 443.2 Selling, engineering, and administrative expenses 50.7 50.0 Gains on dispositions of property 22.9 7.6 Total operating profit 101.1 99.8 Interest expense, net 65.4 66.1 Other, net 0.6 (2.7) Income from continuing operations before income taxes 35.1 36.4 Provision for income taxes 8.5 7.4 Income from continuing operations $ 26.6 $ 29.0 Revenues The tables below present revenues by segment for the three months ended March 31, 2026 and 2025: Three Months Ended March 31, 2026 Revenues Percent External Intersegment Total Change (in millions) Railcar Leasing and Services Group $ 285.3 $ 0.5 $ 285.8 (0.6) % Rail Products Group 206.7 93.3 300.0 (28.7) % Segment Totals 492.0 93.8 585.8 (17.2) % Eliminations — (93.8) (93.8) Consolidated Total $ 492.0 $ — $ 492.0 (16.0) % Three Months Ended March 31, 2025 Revenues External Intersegment Total (in millions) Railcar Leasing and Services Group $ 287.2 $ 0.2 $ 287.4 Rail Products Group 298.2 122.3 420.5 Segment Totals 585.4 122.5 707.9 Eliminations — (122.5) (122.5) Consolidated Total $ 585.4 $ — $ 585.4 29 Table of Contents Operating Costs Operating costs are comprised of cost of revenues; selling, engineering, and administrative costs; and gains or losses on property disposals. Operating costs by segment for the three months ended March 31, 2026 and 2025 were as follows: Three Months Ended March 31, 2026 2025 (in millions) Railcar Leasing and Services Group (1) $ 177.6 $ 182.9 Rail Products Group 277.9 394.6 Segment Totals 455.5 577.5 Corporate and other 25.7 24.4 Eliminations (90.3) (116.3) Consolidated Total $ 390.9 $ 485.6 (1) Includes gains on lease portfolio sales of $22.0 million and $5.9 million for the three months ended March 31, 2026 and 2025, respectively. Operating Profit Operating profit by segment for the three months ended March 31, 2026 and 2025 was as follows: Three Months Ended March 31, 2026 2025 (in millions) Railcar Leasing and Services Group $ 108.2 $ 104.5 Rail Products Group 22.1 25.9 Segment Totals 130.3 130.4 Corporate and other (25.7) (24.4) Eliminations (3.5) (6.2) Consolidated Total $ 101.1 $ 99.8 Discussion of Consolidated Results Revenues – Our revenues for the three months ended March 31, 2026 were $492.0 million, representing a decrease of $93.4 million, or 16.0%, over the prior year period primarily due to lower external deliveries in the Rail Products Group. Cost of revenues – Our cost of revenues for the three months ended March 31, 2026 was $363.1 million, representing a decrease of $80.1 million, or 18.1%, over the prior year period primarily due to lower external deliveries in the Rail Products Group. Gains on dispositions of property – Gains on dispositions of property increased by $15.3 million for the three months ended March 31, 2026, when compared to the prior year period primarily due to higher gains on lease portfolio sales. Operating profit – Operating profit for the three months ended March 31, 2026 totaled $101.1 million, representing an increase of $1.3 million, or 1.3%, from the prior year period primarily due to higher gains on lease portfolio sales and higher lease rates, partially offset by higher operating costs for the lease fleet. Additionally, the prior year period included the operating profit of a partially-owned leasing subsidiary that was divested in the fourth quarter of 2025. For further information regarding the operating results of individual segments, see "Segment Discussion" below. Income taxes – The effective tax rate from continuing operations for the three months ended March 31, 2026 was an expense of 24.2%, which differs from the U.S. statutory rate of 21.0% primarily due to state income taxes, foreign income taxes, and non-deductible executive compensation, partially offset by foreign tax return to provision adjustments. The effective tax rate from continuing operations for the three months ended March 31, 2025 was an expense of 20.3%, which differs from the U.S. statutory rate of 21.0% primarily due the benefit of noncontrolling interest for which we do not provide income taxes and foreign tax return to provision adjustments, partially offset by state income taxes and other permanent differences. 30 Table of Contents Segment Discussion Railcar Leasing and Services Group Three Months Ended March 31, 2026 2025 Percent ($ in millions) Change Revenues: Leasing and management $ 210.3 $ 219.0 (4.0) % Maintenance services (1) 63.2 59.2 6.8 % Digital and logistics services 12.3 9.2 33.7 % Total revenues $ 285.8 $ 287.4 (0.6) % Cost of revenues (2) 183.0 171.8 6.5 % Selling, engineering, and administrative expenses 17.5 18.7 (6.4) % Gains on dispositions of property: Lease portfolio sales 22.0 5.9 * Other 0.9 1.7 * Total operating profit $ 108.2 $ 104.5 3.5 % Total operating profit margin 37.9 % 36.4 % Total operating profit margin, excluding lease portfolio sales 30.2 % 34.3 % Selected expense information for Company-owned railcars (3) : Depreciation and amortization expense (4) $ 59.2 $ 61.1 (3.1) % Maintenance and compliance expense (5) $ 41.1 $ 38.0 8.2 % Other fleet operating costs (6) $ 10.4 $ 8.0 30.0 % Interest expense (7) $ 55.7 $ 56.4 (1.2) % * Not meaningful (1) Revenues related to services performed by the maintenance services business on Company-owned railcars under full-service lease agreements are eliminated within the Railcar Leasing and 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 operating costs 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 deferred profit related to new railcar additions, sustainable railcar conversions, railcar modifications, and other betterments, resulting in the recognition of depreciation expense based on the original cost of the railcars and services. (5) Maintenance and compliance expense is reported at cost with respect to the services performed 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. Information related to lease portfolio sales is as follows: Three Months Ended March 31, 2026 2025 ($ in millions) Lease portfolio sales $ 83.3 $ 33.7 Operating profit on lease portfolio sales $ 22.0 $ 5.9 Operating profit margin on lease portfolio sales 26.4 % 17.5 % Total revenues for the Railcar Leasing and Services Group decreased by 0.6% for the three months ended March 31, 2026, compared to the prior year period. Leasing and management revenues decreased by 4.0% for the three months ended March 31, 2026, when compared to the prior year period primarily due to reduced revenues resulting from the fourth quarter 2025 divestiture of a partially-owned leasing subsidiary, partially offset by higher lease rates. 31 Table of Contents Our maintenance services business is primarily dedicated to servicing our lease fleet. Revenues related to maintenance services performed on Company-owned railcars under full-service lease agreements are eliminated within the Railcar Leasing and Services Group. Services that are not included in the full-service lease agreement, such as repairs of railcar damage or other customer-specific requirements, as well as maintenance and repair activities on railcars owned by third parties, including our investor-owned fleet, are reflected in the maintenance services revenues line above and are not eliminated in consolidation. Revenues in our maintenance services business increased by 6.8% for the three months ended March 31, 2026, when compared to the prior year period as a result of higher pricing, partially offset by the mix of repairs. Cost of revenues for the Railcar Leasing and Services Group increased by 6.5% for the three months ended March 31, 2026, compared to the prior year period primarily due to higher maintenance and compliance costs for the lease fleet and increased depreciation. This increase was partially offset by operating costs incurred in the prior year period associated with a partially-owned leasing subsidiary that was divested in the fourth quarter of 2025. Leasing Group operating profit increased by 3.5% for the three months ended March 31, 2026 when compared to the prior year period, primarily due to higher gains on lease portfolio sales and higher lease rates, partially offset by higher maintenance and compliance costs for the lease fleet and increased depreciation. Additionally, the prior year period included the operating profit of a partially-owned leasing subsidiary that was divested in the fourth quarter of 2025. The Leasing Group generally uses its non-recourse warehouse loan facility or cash to provide initial funding for a portion of the purchase price of the railcars. After initial funding, the Leasing Group may obtain long-term financing for the railcars in the lease fleet through non-recourse asset-backed securities; long-term recourse debt; long-term non-recourse promissory notes and term loans; or third-party equity. Information regarding the Leasing Group’s lease fleet is as follows: March 31, 2026 March 31, 2025 Number of railcars (1) : Wholly-owned (2) 95,825 86,885 Partially-owned 6,135 23,265 Company-owned 101,960 110,150 Investor-owned 44,710 34,215 Total 146,670 144,365 Company-owned railcars: Average age in years 14.5 13.9 Average remaining lease term in years 2.9 2.9 Fleet utilization 97.3 % 96.8 % (1) Reflects railcars transferred from partially-owned to wholly-owned and investor-owned as a result of a railcar partnership transaction completed in the fourth quarter of 2025. (2) Includes 2,230 railcars and 2,240 railcars under leased-in arrangements as of March 31, 2026 and 2025, respectively. 32 Table of Contents Rail Products Group Three Months Ended March 31, 2026 2025 Percent ($ in millions) Change Revenues: Rail products $ 275.2 $ 387.8 (29.0) % Parts & components 24.8 32.7 (24.2) % Total revenues $ 300.0 $ 420.5 (28.7) % Operating costs: Cost of revenues 270.4 387.7 (30.3) % Selling, engineering, and administrative expenses 7.5 6.9 8.7 % Operating profit $ 22.1 $ 25.9 (14.7) % Operating profit margin 7.4 % 6.2 % Revenues and cost of revenues for the Rail Products Group decreased for the three months ended March 31, 2026 by 28.7% and 30.3%, respectively, when compared to the prior year period primarily due to lower deliveries. Operating profit for the Rail Products Group decreased for the three months ended March 31, 2026 by 14.7%, when compared to the prior year period primarily due to lower deliveries, partially offset by a higher mix of high-margin railcars. Information related to our Rail Products Group backlog of new railcars is set forth below. In addition to the amounts below, as of March 31, 2026, our backlog related to sustainable railcar conversions totaled $37.7 million, representing 440 railcars. March 31, 2026 2025 Percent (in millions) Change External customers $ 1,510.2 $ 1,702.2 Leasing Group 99.9 184.4 Total $ 1,610.1 $ 1,886.6 (14.7) % Three Months Ended March 31, 2026 2025 Percent (in units, $ in whole dollars) Change Beginning balance 11,660 16,005 Orders received 1,660 695 138.8 % Deliveries (1,970) (3,060) (35.6) % Ending balance 11,350 13,640 (16.8) % Average selling price in ending backlog $ 141,859 $ 138,314 2.6 % Total backlog dollars decreased by 14.7% when compared to the prior year period. We expect to deliver approximately 42% of our railcar backlog value during the remaining nine months of 2026 and 34% during 2027, with the remainder to be delivered through 2028. The orders in our backlog from the Leasing Group are fully supported by lease commitments with external customers. The final amount of backlog attributable to the Leasing Group may vary by the time of delivery as customers may elect to modify their procurement decision. 33 Table of Contents Transactions between the Rail Products Group and the Leasing Group are as follows: Three Months Ended March 31, 2026 2025 ($ in millions) Revenues: New railcars $ 86.8 $ 113.8 Parts & components $ 6.5 $ 8.5 Deferred profit $ 3.4 $ 6.2 Number of new railcars (in units) 680 830 Corporate and other Three Months Ended March 31, 2026 2025 Percent (in millions) Change Operating costs: Selling, engineering, and administrative expenses $ 25.7 $ 24.4 5.3 % Operating loss $ (25.7) $ (24.4) 5.3 % 34 Table of Contents Liquidity and Capital Resources Overview We expect to finance future operating requirements with cash, cash equivalents, and short-term marketable securities; cash flows from operations; and short-term debt, long-term debt, and equity. Debt instruments that we have utilized include the TILC warehouse loan facility, senior notes, convertible subordinated notes, non-recourse asset-backed securities, non-recourse promissory notes and term loans, and our revolving credit facility. As of March 31, 2026, we have total committed liquidity of $1.1 billion. Our total available liquidity includes: $132.6 million of unrestricted cash and cash equivalents; $595.6 million unused and available under our revolving credit facility; and $339.6 million unused and available under the TILC warehouse loan facility based on the amount of warehouse-eligible, unpledged equipment. We believe we have access to adequate capital resources to fund operating requirements and are an active participant in the capital markets. Cash Flows The following table summarizes our cash flows from operating, investing, and financing activities for the three months ended March 31, 2026 and 2025: Three Months Ended March 31, 2026 2025 (in millions) Net cash flows from continuing operations: Operating activities $ 99.6 $ 78.4 Investing activities (70.2) (91.6) Financing activities (98.6) (124.2) Net cash flows from discontinued operations (1.8) (1.9) Net decrease in cash, cash equivalents, and restricted cash $ (71.0) $ (139.3) Operating Activities . Net cash provided by operating activities from continuing operations for the three months ended March 31, 2026 was $99.6 million compared to net cash provided by operating activities from continuing operations of $78.4 million for the three months ended March 31, 2025. The changes in our operating assets and liabilities are as follows: Three Months Ended March 31, 2026 2025 (in millions) (Increase) decrease in receivables, inventories, and other assets $ 56.4 $ 44.9 (Increase) decrease in income tax receivable (0.7) (0.1) Increase (decrease) in accounts payable, accrued liabilities, and other liabilities (45.9) (64.3) Changes in operating assets and liabilities $ 9.8 $ (19.5) The changes in our operating assets and liabilities resulted in a net source of $9.8 million for the three months ended March 31, 2026, as compared to a net use of $19.5 million for the three months ended March 31, 2025. The changes in operating assets and liabilities were impacted primarily by lower receivables balances as a result of lower deliveries in the current year period and changes in inventory balances to support planned production levels. Investing Activities. Net cash used in investing activities for the three months ended March 31, 2026 was $70.2 million compared to $91.6 million of net cash used in investing activities for the three months ended March 31, 2025. Significant investing activities are as follows: • We made a net fleet investment of $67.7 million during the three months ended March 31, 2026, compared to $86.5 million in the prior year period primarily due to the timing of lease portfolio sales and fleet additions. Our investment in the lease fleet primarily includes new railcar additions, railcar modifications, and other betterments, net of deferred profit, as well as secondary market purchases; and is net of proceeds from lease portfolio sales. 35 Table of Contents Financing Activities. Net cash used in financing activities during the three months ended March 31, 2026 was $98.6 million compared to $124.2 million of net cash used in financing activities for the three months ended March 31, 2025. Significant financing activities are as follows: • During the three months ended March 31, 2026 and 2025, we had total debt repayments of $62.2 million and $77.3 million, respectively, related to normal amortization activity. • We paid $24.8 million and $24.6 million in dividends to our common stockholders during the three months ended March 31, 2026 and 2025, respectively. • During the three months ended March 31, 2026, we repurchased common stock totaling $7.2 million, resulting in a remaining authorization to repurchase up to $150.3 million of our common stock under the share repurchase program as of March 31, 2026. Certain shares of stock repurchased during March 2026, totaling $0.2 million, were cash settled in April 2026 in accordance with normal settlement practices. During the three months ended March 31, 2025, we repurchased common stock totaling $8.2 million under the share repurchase program. Current Debt Obligations The revolving credit facility contains several financial covenants that require the maintenance of ratios related to minimum interest coverage for the leasing and manufacturing operations and maximum leverage. A summary of our financial covenants is detailed below: Ratio Covenant Actual at March 31, 2026 Maximum leverage (1) No greater than 3.75 to 1.00 1.18 Minimum interest coverage (2) No less than 2.25 to 1.00 9.80 (1) Defined as the ratio of consolidated total indebtedness to consolidated earnings before interest, taxes, depreciation and amortization ("EBITDA") for the Borrower and its restricted subsidiaries for the period of four consecutive quarters ending with March 31, 2026. (2) Defined as the ratio of the difference of (A) consolidated EBITDA less (B) consolidated capital expenditures – operating and administrative to consolidated interest expense to the extent paid in cash, in each case for the Borrower and its restricted subsidiaries for the period of four consecutive quarters ending with March 31, 2026. As of March 31, 2026, we were in compliance with all such financial covenants. Please refer to Note 7 of the Consolidated Financial Statements for a description of our current debt obligations. Capital Expenditures For the full year 2026, we anticipate a net fleet investment of between $350 million and $450 million. Capital expenditures related to operating and administrative activities, including supporting automation, technology, and modernization of our facilities and processes, are projected to range between $55 million and $65 million for the full year 2026. Off Balance Sheet Arrangements As of March 31, 2026, we had outstanding letters of credit issued under our revolving credit facility in an aggregate amount of $4.4 million, which support performance bonds related to certain railcar orders. See Note 7 of the Consolidated Financial Statements for further information about our corporate revolving credit facility. Additionally, we had a letter of credit issued outside our revolving credit facility for $8.5 million to satisfy a liquidity reserve requirement associated with our TILC warehouse loan facility, which renews by its terms each year. Derivative Instruments We use derivative instruments to mitigate interest rate risk, including risks associated with the impact of changes in interest rates in anticipation of future debt issuances and to offset interest rate variability of certain floating rate debt issuances outstanding. We also use derivative instruments to mitigate the impact of changes in foreign currency exchange rates. Derivative instruments are accounted for in accordance with applicable accounting standards. See Note 3 of the Consolidated Financial Statements for discussion of how we utilize our derivative instruments. 36 Table of Contents Non-GAAP Financial Measures We have included financial measures compiled in accordance with GAAP and certain non-GAAP measures in this Quarterly Report on Form 10-Q to provide management and investors with additional information regarding our financial results. Non-GAAP measures should not be considered in isolation or as a substitute for our reported results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures for other companies. For each non-GAAP financial measure, we provide a reconciliation to the most comparable GAAP measure. Cash Flow from Operations with Net Gains on Lease Portfolio Sales Cash flow from operations with net gains on lease portfolio sales is a non-GAAP financial measure. We believe this measure is useful to both management and investors as it provides a relevant measure of liquidity and a useful basis for assessing the breadth of the cash flow generation capabilities across our operating platform, as well as our ability to fund our operations and repay our debt. This measure is defined as net cash provided by operating activities from continuing operations as computed in accordance with GAAP, plus net gains on lease portfolio sales and is reconciled to net cash provided by operating activities from continuing operations, the most directly comparable GAAP financial measure, in the following table. Three Months Ended March 31, 2026 2025 (in millions) Net cash provided by operating activities – continuing operations $ 99.6 $ 78.4 Net gains on lease portfolio sales 22.0 5.9 Cash flow from operations with net gains on lease portfolio sales $ 121.6 $ 84.3 Contractual Obligations and Commercial Commitments As of March 31, 2026, there have been no material changes to our contractual obligations from December 31, 2025. Recent Accounting Pronouncements See Note 1 of the Consolidated Financial Statements for information about recent accounting pronouncements.