Trinity Industries Inc Q3 2025 Earnings Call Transcript

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

Question: Andrzej Tomczyk - Goldman Sachs Group Inc - Analyst : Hey, everyone. Good morning. Thanks for taking my questions. Just a little curious, maybe starting at a higher level, if you could just discuss the current railcar delivery and order environment in a little more detail. And in particular, how many quarters -- I know book-to-bill still is below 1 this quarter, but how many quarters of book-to-bill above 1 should you guys expect to see before sort of having confidence in a more sustainable upward trajectory in demand for railcars? And would you expect to see that in 2026? Thanks.

Question: Andrzej Tomczyk - Goldman Sachs Group Inc - Analyst : Understood. And maybe just on that guidance for the 28,000 to 33,000 industry deliveries, how much of that delivery gap versus replacement level demand of around 35,000 to 40,000 would you say is driven by customers already having what they need relative to their expectations for freight demand versus customers just delaying orders that they know they need to make, but are maybe more just holding off now due to policy uncertainty around tariffs and trade.

Question: Andrzej Tomczyk - Goldman Sachs Group Inc - Analyst : Got it. And then once that delayed demand sort of comes back, would that lead to a scenario in your mind where deliveries sort of get back to above replacement-level demand? And I guess, just in that context, would that -- is that a scenario that takes sort of several years to get back to the next peak from current levels, which maybe you consider closer to trough? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. OCTOBER 30, 2025 / 12:00PM, TRN.N - Q3 2025 Trinity Industries Inc Earnings Call

Question: Andrzej Tomczyk - Goldman Sachs Group Inc - Analyst : Understood. And I guess just as far as potential for Class 1 rail consolidation, if networks move to be predominantly single line in nature in the future with less interchanging, does that effectively speed up the network and enhance rail industry asset utilization? And if so, how do you expect rails to balance the potential need for fewer cars due to better utilization versus the potential for a longer-term need for more cars if the networks sort of speed up to the degree that rails can sort of extract share gains from trucks?

Question: Andrzej Tomczyk - Goldman Sachs Group Inc - Analyst : Thanks, Eric. I appreciate that. And maybe just switching to leasing, I noticed that the FLRD dropped to, I think, about 9% from 18% last quarter. It seemed fairly sharp. I'm just curious on what caused that and if you sort of expect FLRD to trend similarly to here?

Question: Andrzej Tomczyk - Goldman Sachs Group Inc - Analyst : Got it. And then maybe just lastly for me on the leasing, if you could just bring us up to speed on how much of the book has been resigned at the higher COVID rates? And maybe how much is left to reprice from here? Thanks for the time. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. OCTOBER 30, 2025 / 12:00PM, TRN.N - Q3 2025 Trinity Industries Inc Earnings Call

Question: Andrzej Tomczyk - Goldman Sachs Group Inc - Analyst : Got it. Thanks, everybody, for the time. I appreciate it.

Question: Bascome Majors - Susquehanna Financial Group LLLP - Analyst : Yes, good morning and thanks for taking our questions. I'd love to start where Andrzej left off there. Jean, I think you said that renewal rates were 25% this quarter. I just want to do maybe a more detailed job of kind of reconciling that with the FLRD going down to 8%, 9% here. I imagine it has a lot to do with the denominator and the forward-looking nature of that. But just -- I think walking through that and with a bit more granularity would help us set better expectations for what leasing could do next year. Thank you.

Question: Bascome Majors - Susquehanna Financial Group LLLP - Analyst : It helps a lot. So if we square ultimately, that's telling us that your expiring rates are going to be about 15% higher next year.

Question: Bascome Majors - Susquehanna Financial Group LLLP - Analyst : All right. So the -- this is both a combination of maybe doing some short-term leases at the low part of the market and just the vintage of getting past the weaker part of the cycle.

Question: Bascome Majors - Susquehanna Financial Group LLLP - Analyst : No, understood. Yes. And the other piece you mentioned was a little quarter-over-quarter moderation in car types. Can you give us a little more fidelity in where things are stable to increasing and where things are a little bit softer sequentially?

Question: Bascome Majors - Susquehanna Financial Group LLLP - Analyst : And moving down, you talked about the earnings increase being largely a function for the full-year guidance of both the higher gains expectation. I think you took that to -- was up from what -- they were roughly 80 to 60 or something -- yes. And also, you mentioned margins. Can you talk a little bit about the fundamental drivers in the market that helped you kind of surprise your own expectation on both gains and the OEM side of the margins just as we think through the sustainability and run rate of that next year? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. OCTOBER 30, 2025 / 12:00PM, TRN.N - Q3 2025 Trinity Industries Inc Earnings Call

Question: Bascome Majors - Susquehanna Financial Group LLLP - Analyst : Right. If you'll humor me, I just have two more.

Question: Bascome Majors - Susquehanna Financial Group LLLP - Analyst : Eric, you were recently in the market with an ABS deal, I think this was your first of the year, and you'll correct me if I'm wrong there. But can you walk through the -- I mean, you talked about the equity investor appetite just then on the gains on sale piece. Can you talk through the credit investor appetite for railcar assets? What you were seeing in the feedback you've got on not just the key terms of rate and term, but any of the other sort of maybe drivers of flexibility and value for you as an owner that likes to keep your fleet flexible while financing it with steady term debt? Thank you. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. OCTOBER 30, 2025 / 12:00PM, TRN.N - Q3 2025 Trinity Industries Inc Earnings Call

Question: Bascome Majors - Susquehanna Financial Group LLLP - Analyst : Thank you for that. And just maybe tying up some of the other questions together, I know you're not going to give guidance for next year nor should you at this point. But high level, from what we've heard today, it seems like from a manufacturing perspective, things feel kind of steady at a soft level. I just want to make sure that I'm not missing any sort of inflection in one direction or the other heading into next year. From a leasing perspective, things' still pretty good. Although just taking the FLRD at face value, it feels like we might get less sort of renewal income growth from leasing next year than this year. And from a secondary market perspective, things feel pretty gangbusters and that's not changing. I mean, are there any other things you'd kind of point us to on the puts and takes, high-level directionally as we think about what Trinity can do next year versus this year?

Question: Bascome Majors - Susquehanna Financial Group LLLP - Analyst : Thank you both. Appreciate the time.