Trinity Industries Inc Q2 2025 Earnings Call Transcript

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

Question: Bascome Majors - Susquehanna. - Analyst : Thanks for taking our questions here. Congratulations on getting production aligned with orders, and it's encouraging to hear that you continue to think that goes up from here. Can you talk a little bit about the production plans for the second half? And how the build rates should probably trend versus where you were in the quarter? And ultimately, are you aligning that to where orders are now or where you think they're going as the economy improves?

Question: Bascome Majors - Susquehanna. - Analyst : And to the cadence of deliveries and margins, do you expect it to be fairly stable through the next two quarters? Or will there be some lumpiness as you continue to build in the new configuration? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 31, 2025 / 12:00PM, TRN.N - Q2 2025 Trinity Industries Inc Earnings Call

Question: Bascome Majors - Susquehanna. - Analyst : Margins and deliveries? Or is that a margin comment?

Question: Bascome Majors - Susquehanna. - Analyst : Thank you. Can we go to taxes? You talked about purchasing some federal tax credits to reduce the tax rate. My understanding was, as a leasing company, the cash tax burden is pretty light to start with. And then you've gotten this big, beautiful bill, full expensing which I'm guessing is improving that framework for you. Can you talk a little bit about tax management, why that made sense for Trinity? And ultimately, do you have a run rate estimate of the cash tax saving from the full expensing deduction versus where you were before?

Question: Bascome Majors - Susquehanna. - Analyst : And also tying it back into sort of the sentiment and the fundamental sort of customer response as we could see that come through in the next year just one last one for me, and I'll pass it on. I mean you have at an Investor Day target for margins for next year, I mean, if we start where we are this year, you're a little below what you promised then but not massively, what, 5% to 6% versus 7% to 9%. And ultimately, it seems that the big delta is build rates and absorption. I think you promised -- or sorry, sort of had an outlook tied to 40,000 annual railcar deliveries on average, and we're tracking 30-ish, give or take, right now for the industry. How do you level set sort of the 9% to 11% margin REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 31, 2025 / 12:00PM, TRN.N - Q2 2025 Trinity Industries Inc Earnings Call expectation from the Investor Day for next year, looking out with kind of where we are today and maybe some improvement from that, but maybe not all the way back into that 40,000-plus range?

Question: Andrzej Tomczyk - Goldman Sachs - Analyst : Morning everybody. Thanks for taking my questions. Maybe just one quick one to follow up on Bascome's earlier question on the margins for the full year, the 5% to 6% in manufacturing. Should we expect -- and I know you said improvement through the year but should we expect to be below the low end of the range in the third quarter and ramp more into the fourth quarter? Or would you expect to be within that range through the second half, just to clarify there.

Question: Andrzej Tomczyk - Goldman Sachs - Analyst : No, that makes sense. And I guess putting those pieces together, does the delivery picture in the back half then look more like that first quarter level? Or should we be thinking more between the two quarters? I'm just trying to get a sense for the full year deliveries relative to the total industry delivery guidance because I think you said 28,000 to 33,000. If we come in at 28,000 and you guys maintain your market share that you did last year at 41%, that would assume roughly 11,500 deliveries for you this year. I'm just curious if you can comment on the relative back half deliveries, if that's looking closer to the first quarter or if we should expect to ramp more into the fourth quarter. Any additional color there would be super helpful. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 31, 2025 / 12:00PM, TRN.N - Q2 2025 Trinity Industries Inc Earnings Call

Question: Andrzej Tomczyk - Goldman Sachs - Analyst : Understood. Thank you. And maybe just switching to leasing. Could you speak a little bit more to the current competitive environment and what you're seeing in terms of the secondary market perspective in lease rates I know you said that you should expect that to tick up into the second half, but any additional commentary into the quarter relative to the beginning of the year would be helpful as well.

Question: Andrzej Tomczyk - Goldman Sachs - Analyst : Yeah, that makes sense. And then maybe just two sort of higher-level questions, one for me to close out. The first one, is it -- on the tariff situation, I'm just curious, is it too simplistic to think higher steel prices could limit customer demand for new cars in the near term? Or is that -- does that sort of speak to the delayed decision-making that you guys were talking about earlier? Just trying to think through that longer term? And then if you could share thoughts on the recent news on the potential transcontinental rail merger, if that were ultimately to go through, how do you see that impacting the leasing and manufacturing business or the industry overall for the time, everybody.

Question: Andrzej Tomczyk - Goldman Sachs - Analyst : Thank you, Gene and Eric. Appreciate it.