Trinity Industries Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Bascome Majors - Susquehanna Financial Group - Analyst : Thanks for taking my questions. The FLRD measure is still quite high but has come down from, I think, you were at 24% last quarter and a few points higher than that, the quarters before that. Could you help us bridge between what's happening in the expiring lease rate comps as we move forward to make that fall and what's happening in the sequential sort of spot lease rate? And then on that second question, if there's any delineation between what you're seeing in tank and freight, that would be helpful as well. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 12:00PM, TRN.N - Q1 2025 Trinity Industries Inc Earnings Call

Question: Bascome Majors - Susquehanna Financial Group - Analyst : And just to clarify, 29.5%, can you articulate how that's different than the FLRD at 18% and what's driving such a gap between two supposedly similar measures?

Question: Bascome Majors - Susquehanna Financial Group - Analyst : Okay, that's helpful. And I would assume that just looking out 12 months and the FLRD would probably be more representative of the overall mix of the fleet with more time there.

Question: Bascome Majors - Susquehanna Financial Group - Analyst : Oh, that's a great number and thank you for reconciling and clarifying that. Just one more for me and I'll hop back in queue. You made some comments on cadence, Eric, I think, 2Q, on both deliveries, I believe you said margin and overall earnings would probably be the weakest in your expectation. Can you walk through that in a little more detail of what's driving that cadence? And maybe bridge to sort of where you exit the year in 4Q. Why do you think there is some improvement from the 2Q trough? What do you have visibility into to drive that improvement, and ultimately, anything else that gives you conviction that we kind of go down and then go up from here? Thank you.

Question: Bascome Majors - Susquehanna Financial Group - Analyst : I think there was a comment in that discussion and the prepared remarks about pricing on the railcars and rolling them through. I don't want to pick that out of context. Can you expand on that a little bit and then I'll pass it down to queue? Thank you.

Question: Andrzej Tomczyk - Goldman Sachs - Analyst : Hey. Good morning. Thanks for taking my questions. I just wanted to start with the point that you mentioned earlier -- guidance assumes some of the inquiries turning to orders in the next few months. Can you just talk about how customer conversations have sort of developed through the quarter and here into April and what's leading you to believe the inquiries will turn to orders? Thanks.

Question: Andrzej Tomczyk - Goldman Sachs - Analyst : Got it. Okay, and maybe when just when we think about sort of orders versus deliveries, when can we expect orders to outpace deliveries? Would it be safe to say that that might not occur until 2026, or could we see an inflection still this year?

Question: Andrzej Tomczyk - Goldman Sachs - Analyst : Okay, and, maybe just to clarify, do I have it right that I think 17% of the deliveries went to internal fleet in the first quarter, if I just take your own leasing fleet change quarter over quarter. Just seeing if that's correct. And then, do you still expect the 25% to 30% of the full year deliveries to go to the internal fleet this year, implying sort of the larger internal deliveries and eliminations for the remainder of this year relative to the first quarter?

Question: Andrzej Tomczyk - Goldman Sachs - Analyst : Got it. So the deliveries to the internal fleet in the first quarter were closer to like 1,000. Is that correct?

Question: Andrzej Tomczyk - Goldman Sachs - Analyst : Got it. Okay, makes sense. So that does clarify that. So how do we think of, I guess, total delivery sequentially through the year relative to the 3,100 that you did in the first quarter? I know you said it's going to, I think, step down potentially into the second quarter and then sequentially improving from there. Is that -- do I have that right?

Question: Andrzej Tomczyk - Goldman Sachs - Analyst : Okay. It makes sense. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 12:00PM, TRN.N - Q1 2025 Trinity Industries Inc Earnings Call And then one more question just on the manufacturing side. if the industry deliveries were closer to down -- to 28,000 this year, down 34% versus 2024 for the industry, how should we think about margins for Trinity in that scenario? Should that be closer to the 5% level? And then conversely, if industry deliveries were at the higher end, we'd be closer to the 6%. Just trying to think about the margins this year.

Question: Andrzej Tomczyk - Goldman Sachs - Analyst : Okay. Thanks. And then last for me was just any more share repurchases to think about this year, just to think opportunistically there?

Question: Bascome Majors - Susquehanna Financial Group - Analyst : Hey, Eric. You talked a little bit about the term loan and the refinancing of the ABS. Can you just talk a little bit about what you're seeing and have been recently on the credit market? Why you chose to go with the term loan instead of an ABS structure and any impact to either, if you want to call on the balance sheet or interest expense from that refi going forward? Thank you.

Question: Bascome Majors - Susquehanna Financial Group - Analyst : Any impact on that interest short term? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 12:00PM, TRN.N - Q1 2025 Trinity Industries Inc Earnings Call