Q4 2021 Trinity Industries Inc Earnings Call

Speaker 1: we are through the worst of the cycle with strong metrics to support growth in both our rail products and rail car leasing and management segments.

So cycle with strong metrics to support growth in both our rail products and rail car railcar leasing and management segments.

Speaker 1: Furthermore, considering both the supportive industry environment and our internal business optimization work, our management team and board firmly believe we entered 2022 poised for meaningful growth.

Furthermore, considering both the supportive industry environment, and our internal business optimization work, our management team and board firmly believe we enter 2022 poised for meaningful growth.

We are entering the second year of our three year plan, we introduced at our Investor day in late 2020.

Speaker 1: We are entering the 2nd year of our 3 year plan we introduced at our investor day in late 2020.

Speaker 1: And we are on track to meet the goals we presented then.

And we are on track to meet the goals we presented then.

Needless to say, we're excited to have sustained this momentum into 2022 as we seek to accelerate our growth.

Speaker 1: Needless to say, we're excited to sustain this momentum into 2022 as we seek to accelerate our group.

Speaker 1: The timing for this acceleration appears opportune. In short, we think 2022 is going to be a good year.

The timing for this acceleration appears opportune and.

In short, we think 2022 is going to be a good year.

Speaker 1: Let me summarize some key themes from our 4th quarter and the full year. Please turn.

Let me summarize some key themes from our fourth quarter and the full year.

Please turn to slide three.

Speaker 1: We remain encouraged by the improving macro conditions that affect our business. And we expect the North American economy to continue its post-pandemic recovery in 2022.

We remain encouraged by the improving macro conditions that affect our business and.

And we expect the North American economy to continue its post pandemic recovery in 2022.

Speaker 1: One of the unique aspects of this recovery has been the accelerated rate of inflation for both consumers and producers.

One of the unique aspects of this recovery has been the accelerated rate of inflation for both consumers and producers.

Speaker 1: Our business is resilient in an inflationary environment, as we have the ability to reprice our lease assets and keep up with inflation.

Our business is resilient in an inflationary environment.

As we have the ability to reprice, our lease assets and keep up with inflation.

Speaker 1: Inflation can also make existing rail cars more attractive to our end users as the price for new equipment tends to grow more quickly.

Inflation can also make existing railcars more attractive to our end users as a price for new equipment tends to grow more quickly.

Speaker 1: Higher steel prices also make older assets more valuable to scrap.

Higher steel prices also make older assets more valuable to scrap.

And significant retirement levels over the last few years, especially in key freight car markets like box cars gondolas and green covered hoppers.

Speaker 1: and significant retirement levels over the last few years, especially in teeny freight car markets like boxcars, gondolas, and grain-covered hoppers support increased demand for new rail cars.

Support increased demand for new railcars.

We expect 2022 rail traffic to be driven by agriculture chemicals, and construction materials and therefore be a freight car led recovery.

Speaker 1: We expect 2022 rail traffic to be driven by agriculture, chemicals, and construction materials, and therefore be a freight car-led recovery.

Speaker 1: This cycle is differentiated from prior cycles as there is no single rail car driving increased rail traffic.

This cycle is differentiated from prior cycles as there is no single railcar driving increased rail traffic.

Speaker 1: which gives more opportunities for lease fleet utilization as well as increased delivery.

Which gives more opportunities for lease fleet utilization as well as increased deliveries.

Speaker 1: Consistent with our peers and the industry, we think 2022 will see rail car production at or slightly above replacement levels. And we are forecasting industry deliveries of 40,000 to 50,000 annually.

Consistent with our peers in the industry, we think 2022, we'll see railcar production at or slightly above replacement levels.

And we are forecasting industry deliveries of 40000 to 50000 annually.

Speaker 1: Some highlights from our consolidated results for the quarter and the full year are highlighted on slides 4 and 5.

Some highlights from our consolidated results for the quarter and the full year are highlighted on slides four and five.

Speaker 1: As a quick note, our highway products business has been retroactively included as part of discontinued operations. And therefore not in our continuing operations.

As a quick note our highway products business has been retroactively included as part of discontinued operations and therefore, not in our continuing operations.

Speaker 1: In the 4th quarter, Trinity generated revenue of $472 million, up 31% from the 4th quarter of 2020.

In the fourth quarter Trinity generated revenue of $472 million.

31% from the fourth quarter of 2020.

Our GAAP EPS from continuing operations for the quarter was 16, seven and our adjusted EPS was eight cents.

Speaker 1: Our gap EPS from continuing operations for the quarter was 16 cents and our adjusted EPS was 8 cents.

Speaker 1: For the full year, our gap EPS was 38 cents and our adjusted EPS of 34 cents was up 18 cents over full year 2020.

For the full year, our GAAP EPS was <unk> 38 cents and our adjusted EPS of <unk> 34 was up 18% over full year 2020.

Eric will discuss the impact of the highway products business in a few minutes.

Speaker 1: Eric will discuss the impact of the highway products business in a few minutes.

Speaker 1: Cash flow from continuing operations in the quarter was $197 million and $616 million for the full year.

Cash flow from continuing operations in the quarter was $197 million and $616 million for the full year.

Speaker 1: free cash flow for the full year after investments and dividends with $539 million.

Free cash flow for the full year after investments and dividends was $539 million.

This is evidence of our successful optimization efforts.

Speaker 1: This is evidence of our successful optimization.

Speaker 1: We have proven that our business has the ability to generate substantial and stable cash.

We have proven that our business has the ability to generate substantial and stable cash.

Speaker 1: which gives us flexibility to further optimize our balance sheet and drives shareholder value through Acrena's capital allocation.

Which gives us flexibility to further optimize our balance sheet and drive shareholder value through accretive capital allocation.

Yeah.

Speaker 1: Let's turn to slide 6 and we can review the rail car market as a whole and where we are today as a business.

Let's turn to slide six and we can review the railcar market as a whole and where we are today as a business.

Rail traffic in 2021 was a marked improvement over the lows of 2020.

Speaker 1: Rail traffic in 2021 was a marked improvement over the lows of 2020.

Speaker 1: However, in the start of this year, we have seen real traffic decline relative to 2021.

However in the start of this year, we have seen rail traffic decline relative to 2021.

Speaker 1: largely due to the omicron wave of the pandemic driving labor disruptions in the United States, as well as winn scientists from the World Trade side.

Largely due to the omicron wave of the pandemic driving labor disruptions in the United States.

As well as winter weather in Canada.

We expect to see this improve as this near term disruptions are resolved.

Speaker 1: We expect to see this improve as this near-term disruptions are resolved.

Railcars in storage continued to decline with the storage rate falling below 20% in December for the first time since the summer of 2019.

Speaker 1: Rail cars and storage continued to decline with the storage rate falling below 20% in December . For the first time since the summer of 2019.

Storage rates are currently seven 4% down sequentially quarter over quarter.

Speaker 1: Storage rates are concurrently 7.4% down sequentially quarter over quarter.

These supportive market conditions are translating into improved business fundamentals for Trinity as well.

Speaker 1: These supportive market conditions are translating into improved business fundamentals for Trinity as well.

Fleet utilization is at 95, 7%, which is back to pre pandemic levels from two years ago.

Speaker 1: utilization is at 95.7%. Which is back to pre pandemic levels from 2 years ago.

Speaker 1: Additionally, after reflecting positively last quarter for the first time since we introduced the metric, our FRD improved again in the fourth quarter to a positive 2.2 percent.

Additionally, after reflecting positively last quarter for the first time since we introduced the metric our FRG improved again in the fourth quarter to a positive two 2%.

Speaker 1: Which means current lease rates are higher than the expiring rates Trinity will encounter in the next 12 months.

Which means current lease rates are higher than the expiring rates Trinity will encounter in the next 12 months.

Speaker 1: We like this metric because it is forward-looking and specific to the leases that are expiring.

We like this metric because it is forward looking and specific to the leases that are expiring.

It's also worth noting that the F. O R. D is positive even after accounting for some tough comps on select car type.

Speaker 1: It's also worth noting that the FLRD is positive even after accounting for some tough comps on select car types, like pressure cars and general service.

Like pressure cars and general service tank cars.

Speaker 1: Supporting the upward trends in rates in the fourth quarter, renewal rates increased by 12.8%.

Supporting the upward trends in rate in the fourth quarter renewal rates increased by 12, 8%.

Speaker 1: And rail products, I noted our optimism for orders and deliveries improving in 2022 and beyond.

In our rail products I noted, our optimism for orders and deliveries improving in 2022 and beyond.

In the fourth quarter, we received orders of 5360 railcars, which was 358% higher than a year ago.

Speaker 1: In the fourth quarter, we received orders of 5,360 railcars, which was 358% higher than a year ago. And deliveries of 2,805 railcars were 26% higher.

And deliveries of 2805 railcars were 26% higher.

Speaker 1: Another testament to our optimization efforts has been the commercial team's ability to sustain traditional levels of market share while implementing a more aggressive pricing strategy.

Another testament to our optimization efforts has been the commercial team's ability to sustain traditional levels of market share while implementing a more aggressive pricing strategy.

Speaker 1: Although this is a freight car driven recovery, the lower margin on freight cars will be more than offset by the improvement in volume.

Although this is a freight car driven recovery, but a lower margin on freight cars will be more than offset by the improvement in volume.

Supply chain delays are impacting the timing of some near term deliveries, but there are lasting demand dynamics, driving 2022 optimism and likely beyond as well.

Speaker 1: Supply chain delays are impacting the timing of some near-term deliveries, but there are lasting demand dynamics driving 2022 optimism and likely beyond as well.

It is also worth noting that in 2022, we have experienced labor shortages in North America.

Speaker 1: It is also worth noting that in 2022, we have experienced labor shortages in North America. Due to absenteeism, we have experienced labor shortages in North America.

Due to absenteeism from Covid.

While this has been a headwind of 10% to 15% of the workforce and some of our facilities.

Speaker 1: Well, this has been a headwind of 10 to 15% of the workforce and some of our facilities.

Speaker 1: Declining case rates from the latest wave of COVID-19 have it optimistic that our workforce can return to regular levels of productivity in the coming weeks.

Declining case rates from the latest wave of COVID-19 have us optimistic that our workforce can be returned to regular levels of productivity in the coming week.

Speaker 1: On slide 7, let's turn to Trinity segment results for the quarter.

On slide seven, let's turn to Trinity segment results for the quarter.

And our leasing business revenue and operating profit were slightly down from the last quarter.

Speaker 1: And our leasing business, revenue, and operating profit were slightly down from the last quarter.

Speaker 1: As already mentioned, renewal rates and the were both improved in the quarter, which is a leading indicator for revenue and margin growth in 2022.

As already mentioned renewal rates and the F. O R. D were both improved in the quarter.

Which is a leading indicator for revenue and margin growth in 2022.

Speaker 1: Our ability to renew expiring contracts improves through the year. With a 2021 renewal rate of 79%.

Our ability to renew expiring contracts improve through the year.

With a 2021 renewal rate of 79%.

The best rate, we've seen since 2014.

Speaker 1: the best rate we've seen since 2014.

Now looking at the rail products group revenue and margin were both improved from last quarter and book to Bill in the quarter was one nine times.

Speaker 1: Now, looking at the rail products group, revenue and margin were both improved from last quarter and booked a bill in the quarter was 1.9 times.

As I mentioned earlier, although the supply chain disruptions and labor issues, we discussed over the last quarter still persist.

Speaker 1: As I mentioned earlier, although the supply chain disruptions and labor issues we discussed in the last quarter still persist.

Speaker 1: We have made significant progress, especially in terms of supply chain, toward improved results.

We have made significant progress, especially in terms of supply chain toward improved results.

Speaker 1: Operating margins in the rail products group were 3.3%. Up from negative 0.9% the prior quarter.

Operating margins in the rail products group were three 3%.

From negative <unk>, 9% the prior quarter.

Compared to last year, new railcar deliveries for the full year were down 23%.

Speaker 1: Compared to last year, new rail car deliveries for the full year were down 23%.

Speaker 1: This is largely due to an order that needed to deliver at the 1st of this year.

This is largely due to an order that needed to deliver at the first of this year.

Speaker 1: a supply chain issue that pushed some deliveries into 2022, and weakness in tank car demand.

Our supply chain issues that pushed some deliveries into 2022.

And weakness in tank car demand.

I'll move to slide eight with an update on our returns optimization initiatives.

Speaker 1: I'll move to slide 8 with an update on our returns optimization initiative.

Speaker 1: The highlight of the quarter from an enterprise optimization perspective was the divestiture of our highway products business.

The highlight of the quarter from an enterprise optimization perspective was the divestiture of our highway products business.

Speaker 1: So I'd like to take a minute to talk about that transaction with you.

So I'd like to take a minute to talk about that transaction with you.

In the quarter Trinity completed the sale of Trinity Highway products to a prime for its private equity fund <unk> capital partners for an aggregate purchase price of $375 million.

Speaker 1: In the quarter, Trinity completed the sale of Trinity Highway products to a private equity fund, Monomoy Capital Partners, for an aggregate purchase price of $375 million.

Speaker 1: And we recorded a net gain of 130 foot 1 million on the sale, which is reflected in discontinued operation.

And we recorded a net gain of $131 million on the sale.

Which is reflected in discontinued operations.

We had said previously that we were not the appropriate long term owner and this business was not core to Trinity.

Speaker 1: We have said previously that we were not the appropriate long-term owner and this business was not core to Trinity.

Therefore, completing this transaction represented the completion of our company's desire to be fully focused on rail related industries.

Speaker 1: Therefore, completing this transaction represented the completion of our company's desire to be fully focused on rail related industries.

We were pleased with the terms of the cell and immediately deployed to 375 million of proceeds back to our shareholders with a two pronged strategy.

Speaker 1: We were pleased with the terms of the sale and immediately deployed the 375M of proceeds back to our shareholders with a 2 prompt strategy.

First we directly purchased 250 million worth of stock or eight 8 million shares from value Act in a privately negotiated transaction.

Speaker 1: First, we directly purchased 250 million worth of stock or 8.8 million shares from value at and a privately negotiated transaction.

Second we use the remaining $125 million of proceeds to enter into an accelerated share repurchase or ASR agreement.

Speaker 1: 2nd, we use the remaining 125M of proceeds to enter into an accelerated share repurchase or ASR agreement.

Speaker 1: The ASR is part of our existing authorization. So including shares previously repurchased after completing the ASR, we will have approximately 73 million left in the authorization that we expect to repurchase before it expires at the end of the year.

The ASR is part of our existing authorization.

So including chairs previously repurchase after completing the ASR, we will have approximately $73 million left in the authorization that we expect to repurchase before it expires at the end of the year.

All in all our team did a phenomenal job getting this transaction completed and getting the proceeds immediately and effectively deployed.

Speaker 1: All in all, our team did a phenomenal job getting this transaction completed and getting the proceeds immediately and effectively deployed.

Speaker 1: Looking at 2021 as a whole, we make substantial progress toward our strategic initiatives.

Looking at 2021 as a whole.

We made substantial progress toward our strategic initiatives.

Our trimmed site development was awarded innovation of the year by the Canadian Association of rail suppliers.

Speaker 1: Our trend site development was awarded Innovation of the Year by the Canadian Association of Rail Suppliers.

Speaker 1: And we're on target as far as cars online with trend sites.

And we're on target as far as cars online would trend side.

Speaker 1: Our sustainable rail car conversion program continues to grow with 1150 cars in our backlog. And 650 delivered in the full year.

Our sustainable railcar conversion program continues to grow with 1150 cars in our backlog and 650 delivered in the full year.

Speaker 1: In the fourth quarter, we retanked approximately 80 cars and completed a heavy re-body on 210 cars.

In the fourth quarter, we re tank approximately 80 cars and completed a heavy rebuttal on 200 tank cars.

As a point of reference for our conversions, we're able to reuse varying levels of components, depending on the donor railcar.

Speaker 1: As a point of reference for our conversion, we're able to reuse varying levels of components, depending on the donor rail car. But generally, we can reuse anywhere from 10,000 to 25,000 pounds of material per rail car.

But generally we can reuse anywhere from 10000 to 25000 pounds of material per railcar.

Speaker 1: which is a meaningful source of waste minimization.

Which is a meaningful source of waste minimization.

Additionally, we view the Walker transaction, we completed in the third quarter as a major step toward lease fleet optimization.

Speaker 1: Additionally, we view the WAPR transaction we completed in the third quarter as a major step toward lease fleet optimization. And the partnership is off to a close.

And the partnership is off to a great start.

Speaker 1: And for the full year, we returned $895 million to our shareholders.

And pool for the full year, we returned $895 million to our shareholders.

Speaker 1: including $807 million in share repurposed.

Including $807 million and share repurchases.

Speaker 1: Before I hand the call over to Eric, I'd like to reinforce our purpose statement, which is delivering goods for the good of all.

Before I hand, the call over to Eric I'd like to reinforce our purpose statement, which is delivering goods for the good of ball.

The challenges of the past few years have taught us all many lessons.

Speaker 1: The challenges of the past few years have taught us all many lessons.

Speaker 1: And here at Trinity, we see the supply chain disruption and the subsequent ripple effects around the world as a good opportunity to revisit increased use of rail as part of an integrated supply chain.

And here of Trinity, we see the supply chain disruption and the subsequent ripple effects around the world as a good opportunity to revisit increased use of rail as part of an integrated supply chain.

Speaker 1: We continue to partner with railroads and shippers through programs like RailPulse to look for ways to improve rail for the greater good of the broader supply chain and overall North American economy.

We continue to partner with railroads and shippers through programs like rail Paul to look for ways to improve rail for the greater good other broader supply chain and overall North American economy.

Speaker 1: We are better positioned with our pricing and have made great strides in reducing costs, and we are focused on strong returns.

We are better positioned with our pricing and have made great strides in reducing costs.

And we are focused on strong returns.

We think the sustainability of rail as compared to other modes of transport provides a unique opportunity as our customers think about de carbonization.

Speaker 1: We think the sustainability of rail as compared to other modes of transport provides a unique opportunity as our customers think about decarbonization.

We are also committed to improving the efficiency of rail and our deliberate and our new product development process.

Speaker 1: We are also committed to improving the efficiency of rail and are deliberate in our new product development process.

Speaker 1: On average, we spend about $10 million a year on new product development and plan to do so again in 2022.

On average we spend about $10 million a year on new product development and plan to do so again in 2022.

In 2021, our new products included a horizontal side seem large covered hopper for the agricultural market.

Speaker 1: In 2021, our new products included a horizontal side seam large covered hopper for the agricultural market.

Which optimizes the clearance envelope of the railcar through corrugated side for strength and efficiency.

Speaker 1: which optimizes the clearance envelope of the rail car through corrugated sides for strength and efficiency.

The result is a railcar with more capacity and five feet shorter than a traditional covered hopper.

Speaker 1: The result is a rail car with more capacity and five feet shorter than a traditional covered hopper.

Speaker 1: This means more rail cars per train and less fuel per unit of commodity.

This means more railcars per train and less fuel per unit of commodity.

Speaker 1: We also developed a new composite floor for the refrigerated boxcar market.

We also developed a new composite floor for the refrigerated box car market.

Which allows for an easy transition from fresh food to frozen food service and improves the versatility and utilization of this car type.

Speaker 1: which allows for an easy transition from fresh food to frozen food service and improves the versatility and utilization of this card type.

Speaker 1: We believe the rail industry is poised for growth and there are opportunities up and down the supply chain to increase efficiency and remove friction.

We believe the rail industry is poised for growth.

And there are opportunities up and down the supply chain to increase efficiency and remove friction.

Speaker 1: We continue to look for opportunities to grow Trinity's presence in the supply chain, both organically and through acquisition.

We continue to look for opportunities to grow <unk> presence in the supply chain, both organically and through acquisition.

We know rail has room for improvement in terms of predictability and efficiency.

Speaker 1: We know rail has room for improvement in terms of predictability and efficiency. The treaty is committed to being part of.

But <unk> is committed to being part of the solution.

With that let me hand, the call over to Eric for more detail on our results.

Speaker 1: With that, let me hand the call over to Eric for more detail on our results.

Thank you Jim and good morning, everyone.

Toby operating environment over the last two years has been challenging.

Speaker 2: Though the operating environment over the last two years has been challenging, we made significant progress at Trinity in 2021.

We made significant progress in 2021.

Speaker 2: We completed financing activity of approximately $1.6 billion, which conformed to our green financing framework and took advantage of historically low interest rates.

We completed financing activity of approximately $1 $6 billion, which.

Which confirmed our green financing framework.

Advantage of historically low interest rates.

Speaker 2: Lowering our aggregate borrowing costs for approximately 100 basis points.

Lauder aggregate Barbara Gasper.

Approximately 100 basis points.

Speaker 2: We launched a joint venture program with Wapra targeting up to $1 billion in rail car lease investments.

We lost or joint venture program with Whopper targeting up to $1 billion railcar leasing investments.

Speaker 2: We divested our highway business, we raised our quarterly dividend, and we returned $895 million to our shareholders to repurchases and dividends.

We divested our highway business, we raised our quarterly dividend.

Returned $895 million to our shareholders through repurchases and dividends.

Speaker 2: In short, we have made a lot of progress on our strategic initiatives and are poised to take advantage of the operating leverage of our business. Dean spoke about the market improving.

In short we have made a lot of progress on our strategic initiatives.

We are poised to take advantage of the operating leverage of our business.

Jim spoke about the market improving.

This is certainly evident in key industry metrics.

Speaker 2: Quarters are up, backlog is up, scrapping remains strong. Lease rates are rising and we anticipate easing of the headwinds coming from supply chain and labor disruptions in the quarters to come.

Orders are up.

Backlog is up.

Scrapping remains strong.

Lease rates are rising and we anticipate easing of the headwinds coming from supply chain and labor disruptions in the quarters to come.

These market metrics are positive.

But I also want to reinforce my optimism about <unk>, specifically being well positioned to capitalize on these market dynamics.

Speaker 2: But I also want to reinforce my optimism about Trinity specifically being well positioned to capitalize on these market dynamics.

Speaker 2: With the 4th quarter sale of our Highway Products business and the work we have done to optimize our balance sheet, we are focused on optimizing returns in our business.

With the fourth quarter sale of our highway products business and the work we've done to optimize our balance sheet.

We are focused on optimizing returns of our business.

Speaker 2: I will begin on slide 9 with a summary of the quarter.

I'll begin on slide nine with a summary of the quarter.

Starting with the income statement.

Speaker 2: Fourth quarter consolidated revenue from continued operations totaled $472 million.

Fourth quarter consolidated revenue from continued operations totaled $472 million.

For the quarter GAAP earnings per share were 16 cents.

Speaker 2: For the quarter, GAAP earnings per share were $0.16.

Speaker 2: Adjusted earnings per share of 8 cents declined sequentially due mainly to the gain from the walk for sale in the third quarter, but improved from a negative 2 cents year over year.

Adjusted earnings per share of eight decline.

<unk> declined sequentially.

Mainly to the game from a walk for sale in the third quarter for.

But improved from a negative <unk> <unk>.

Year over year.

Full year adjusted earnings per share from continuing operations of 34.

Speaker 2: Full year adjusted earnings per share from continued operations of 34 cents were compared to full year 2020 adjusted EPS of 16 cents.

Compared to full year 2020, adjusted EPS of <unk> 16.

Turning to the cash flow statement.

Speaker 2: Full year cash flow for continuing operations totaled $616 million, with $197 million in the fourth quarter.

Full year cash flow from continuing operations totaled $616 million with $197 million in the fourth quarter.

We collected $189 million of our income tax receivable in the fourth quarter related to the cares Act.

Speaker 2: We collected 189 million dollars of our income tax receivable in the fourth quarter related to the CARES Act, which was excluded from our guidance of 450 to 475 million dollars.

Which was excluded from our guidance of $450 million to $475 million.

Speaker 2: Our cash flow was slightly down from our expectations because we made the decision to increase our working cap.

Our cash flow was slightly down from our expectations, because we made the decision to increase our working capital.

The increased working capital positions us to mitigate some of the impacts of supply chain disruptions.

Speaker 2: The increased working capital positions us to mitigate some of the impacts of supply chain disruption.

Speaker 2: In the quarter, we invested $183 million in our lease fleet, bringing us to a full year total of $547 million.

In the quarter, we invested $183 million in our lease fleet, bringing us to a full year total of $547 million.

Speaker 2: After proceeds from car sales, our net lease fleet investment for the year was $93 million.

After proceeds from car sales are net lease fleet investment for the year was $93 million.

Manufacturing capex for the quarter was $7 million, which brings our full year manufacturing capex to $24 million.

Speaker 2: Manufacturing CapEx for the quarter was $7 million, which brings our full year Manufacturing CapEx to $24 million.

Total free cash flow after investments and dividends was $28 million in the fourth quarter.

Speaker 2: Total free cash flow after investments and dividends was $28 million in the fourth quarter, which brings a full year total to $539 million.

Which brings the full year total to $539 million.

As Jim noted, we returned $895 million to shareholders. This year through share repurchases and dividends and increased our quarterly dividend by <unk> <unk> or approximately 10% in the fourth quarter.

Speaker 2: As Gene noted, we returned $895 million to shareholders this year through share repurchases and dividends and increased our quarterly dividend by 2 cents or approximately 10% in the fourth quarter.

We finalized the divestiture of Trinity Highway products on the last day of the year.

Speaker 2: We finalized the investiture of Trinity Highway Products on the last day of the year, and we moved its financial results, which was the bulk of what we previously called the all other segment, to discontinued operations.

Moved its financial results, which was the bulk of what we previously called the all other segment to discontinued operations.

Speaker 2: and now report our operating results in two reportable segments.

And now report our operating results in two reportable segments.

Speaker 2: the Rail Car Leasing and Managed Services Group, and the Rail Products Group.

Our railcar leasing and management services group and the rail and the rail products group.

Speaker 2: Higher results are now excluded from continuing operations in both the current and prior period.

Our results are now excluded from continuing operations in both the current and prior periods.

Speaker 2: Any results I discussed today, as well as any forward-looking statements, will exclude highway products unless otherwise noted.

And our results are discussed today as well as any forward looking statements will exclude highway products unless otherwise noted.

Historical financials recast in our reportable segments are available in the 10-K that we'll file today.

Speaker 2: Historical financials, recasts, and our reportable segments are available in the 10-K that will file today.

Speaker 2: Our 10K also details an accrual we booked in the fourth quarter in regards to the Highway Missouri class action lawsuit.

Our 10-K also details of accrual we booked in the fourth quarter.

<unk> the highway, Missouri class action lawsuit.

Speaker 2: We are focused on avoiding the uncertainty and further expense of this lawsuit and putting the highway litigation behind.

We are focused on avoiding the uncertainty and further expense of this lawsuit or putting the highway litigation behind us.

For clarity and to help you compare today's members with what we previously reported.

Speaker 2: For clarity and to help you compare today's numbers with what we previously reported. Slide 10 provides the view of 2021 results including highway products.

Slide 10 provides a view of 2021 results, including highway products.

Highway products earnings per share, excluding the gain on sale and the Missouri class action litigation charge.

Speaker 2: Highway products earnings per share, excluding the gain on sale and the Missouri class action litigation charge, were five cents in the fourth quarter and 28 cents for this full year.

<unk> in the fourth quarter.

<unk> 28 for the full year.

Speaker 2: Therefore, adding Trinity Highway Products adjusted EPS to our adjusted EPS from continuing operations yields 2021 EPS of 13 cents in the fourth quarter and 62 cents for the full year, which is a comparison to past results.

Therefore, adding Trinity highway products adjusted EPS to our adjusted EPS from continuing operations yields 2021, EPS of <unk> 13 in the fourth quarter.

<unk> 62 for the full year.

Which is the comparison to past results.

Future results, including the guidance 2022 guidance, we're providing today will compare to the 34.

Speaker 2: Future results, including the 2022 guidance we are providing today, will compare to the 24 cents, which is 2021 adjusted EPS, from continued operation.

Which is 2021 adjusted EPS from continued operations.

Turning to slide 11, let's review our capitalization.

Speaker 2: Turning to slide 11, let's review our capitalization.

Speaker 2: We end the year with an liquidity of $782 million.

We ended the year with liquidity of $782 million.

Going forward, we plan to continue prioritizing returns, but are also pursuing disciplined investments in our business.

Speaker 2: Going forward, we plan to continue prioritizing returns, but are also pursuing disciplined investment in our business. Whether through a lease fleet in thearinet Link Network, an internal or federal asset or any business and Taxagascar vending machines available to you.

Whether through lease fleet investment or acquisitions.

Our cash flow.

Speaker 2: Our cash flow gives the flexibility and the ability to make investments in the business.

The flexibility.

And the ability to make investments in the business.

Speaker 2: We believe the work we have done to optimize our capital structure gives us the right to grow, and we are excited by the opportunities we see.

We believe the work we have done to optimize our capital structure gives us the right to grow and we're excited by the opportunities we see.

Speaker 2: I wanted to provide some high level guidance for 2022 on slide 12.

I wanted to provide some high level guidance for 2022 on slide 12.

Speaker 2: As Jean mentioned, we are forecasting industry deliveries of 40,000 to 50,000 railcars in 2022.

As gene mentioned, we are forecasting industry deliveries of 40 to 50000 railcars in 2022.

Speaker 2: And we expect Trinity to maintain a similar market share of rail for orders and deliveries as we have historically.

And we expect <unk> to maintain a similar market share of railcar orders and deliveries as we have historically.

Speaker 2: We are not including sustainable rail car conversions in our industry delivery projects.

We are not including sustainable railcar conversions in our industry delivery projections.

Speaker 2: We expect net lease lease investment for the year of $450 million to $550 million, which is significantly higher than 2021.

We expect net lease fleet investment for the year of 450 million to $550 million, which is.

<unk> higher than 2021.

Speaker 2: This includes sales from our lease fleet into our RV program in the secondary market.

This includes sales from our lease fleet indoor RV program in the secondary market.

Speaker 2: Fleet investments and proceeds from these transactions will be expected through the year as we actively optimize our fleet.

Fleet investments and proceeds from these transactions will be expected through the year as we actively optimize our fleet.

Speaker 2: We expect for these manufacturing capex to be 35 to 45 million dollars, which consists of investments in safety, efficiency, and automation.

We expect for these manufacturing capex to be $35 million to $45 million.

Which consists of investments in safety efficiency and automation.

Given better visibility into our business and a more predictable operating environment.

Speaker 2: Given better visibility into our business and a more predictable operating environment, we are providing EPS guidance of $0.85 to $1.05 for continued operation.

We are providing EPS guidance of 85.

Sure.

<unk> for continued operations.

Speaker 2: which represents growth of approximately 179% at the midpoint over 2021 adjusted EPS of 34 cents.

Which represents growth of approximately 179% at the midpoint over 2021, adjusted EPS of <unk> 34.

We expect our earnings to improve throughout the year.

Speaker 2: We expect our earnings to improve throughout the year.

Speaker 2: Most of the year-over-year improvement should come in rail products due to strong orders and deliveries along with recovery from labor and supply chain disruption.

Most of the year over year improvement should come in rail products due to strong orders and deliveries along with recovery from labor and supply chain disruptions.

Speaker 2: In leasing, a rising FLRD forecasts increasing revenue through the year with remarketing rates above expiring rates.

And leasing are rising SLR D forecast, increasing revenue through the year with remarketing rates above expiring rates.

Additionally, we continue to proactively manage our lease fleet to optimize returns.

Speaker 2: Additionally, we continue to proactively manage our lease fleet to optimize returns.

We are optimistic about the year ahead, as we see positive momentum around the industry, but also acknowledged lingering uncertainty around COVID-19 supply chain disruption and labor impacts.

Speaker 2: We are optimistic about the year ahead as we see positive momentum around the industry, but also acknowledge lingering uncertainty around COVID-19, supply chain disruption, and labor impact.

Furthermore, we are now delivering orders that were taken at the bottom of the cycle.

Speaker 2: Furthermore, we are now delivering orders that were taken at the bottom of the cycle, which we anticipate will create an overhang on our margins in the first half of the year.

<unk>, which we anticipate will create an overhang on our margins in the first half of the year.

Despite the unprecedented challenges of the last few years Trinity has been able to leverage its platform to deliver returns even at the bottom of the cycle.

Speaker 2: Despite the unprecedented challenges of the last few years, Trinity has been able to leverage its platform to deliver returns even at the bottom of the cycle.

With market conditions, improving we look forward to continuing to demonstrate the power of our platform and our ability to create and sustain value over the long term.

Speaker 2: With market conditions improving, we look forward to continuing to demonstrate the power of our platform and our ability to create and sustain value over the long term. As always, we thank you for your support.

As always we thank you for your support.

Operator, you will now take us to questions from our participants.

Speaker 3: Ladies and gentlemen, at this time, we'll begin the question and answer session.

Ladies and gentlemen at this time well begin the question and answer session.

In order to ask a question. Please press star and then one using a touchtone telephone.

Speaker 3: In order to ask a question, please press star and then 1 using a touchtone telephone.

Speaker 3: If you are using a speakerphone, we do ask that you please pick up the handset before pressing the keys.

You are using a speaker phone we do ask you. Please pick up the handset before pressing the keys.

So with your all your questions you May press Star two.

Speaker 3: Once again, that is star and then one to ask a question. We will pause momentarily to assemble the roster.

Once again that is star one to ask a question.

We will pause momentarily to assemble the roster.

Yeah.

And our first question today comes from.

Matt Alcott from Cowen. Please go ahead with your question.

Good morning, Thank you for taking my question.

Speaker 4: Good morning, thank you for taking my question. If I take the midpoint of your industry delivery guidance.

If I take the mid point of your industry delivery guidance.

Speaker 5: and assume the same market share as 2021. I'm coming up with about 13,600 cards. Jean, Eric, is that what you're expecting from?

Assume the same market share as 2021, I'm coming up with about 13600 cars.

Eric is that.

What you're expecting for deliveries this year.

Well, let me start by saying, we expect the industry deliveries to be closer to the higher point of our range of 40% to 50000 and I do want to bring up that that number does not include our sustainable conversions and we're expecting for the industry.

Speaker 1: Well, let me start by saying we expect the industry deliveries to be closer to the higher point of our range of 40 to 50,000. And I do want to bring up that that number does not include our sustainable conversions and we're expecting for the industry that to be from 6 to 7000 cars for this year.

That could be from 6% to 7000 cars for this year.

Speaker 1: And then when you look at it, we're expecting to be in the historical range of market share. Hopefully that helps.

And then when you look at it we're expecting to be in the historical range.

Market share hopefully that helps.

Yes, that's very helpful. And then can you give us a bit more.

Speaker 6: Yeah, that's very helpful. And then can you give us a bit more insight into where you expect the margin to go? I know the first half will be a bit lighter because of the low price cars, but how much differential from the first half of the second half? And where do you think the margin will shake out for the full year for manufacturing?

Right.

Where you expect the margin to go mobile first half will be a bit lighter because of the low priced cars.

How much upsell how much differential from the first half of the second half.

Where do you think the mark.

<unk> target for the full year for manufacturing.

So you hit it very correctly, we're going to be delivering the first half of the cars. We took at the bottom of the market and so we would expect improvement in the second half and I'm going to take you back to our Investor day, where we're expecting mid to high single digits and I would expect us to be in that range.

Speaker 1: So you hit it very correctly. We're going to be delivering the first half of some of the cars we took at the bottom of the market. And so we'd expect improvement in the second half. And I'm going to take you back to our investor day, where we're expecting mid to high single digits. And I would expect us to be in that range.

Got it so just one last follow up Jim.

Speaker 4: So just one last follow-up, Jean. If the delivery outlook is better than that $13,600 I mentioned, given you're at the higher end of the range for the industry, and then you have the other cars and a fairly healthy margin, the guidance does seem a little light. Is there something I'm missing here? For the...

The delivery outlook is better than that 13600, I mentioned given you are at the higher end of that range for the industry.

And then you have the other cars and.

Fairly healthy margin, but the guidance does seem a little light is there something I'm missing here.

For the year they are selling.

The earnings guidance.

Speaker 1: Sure, there's still a number of headwinds and uncertainty in how the year will play out. We wanna give you as much guidance as we can where we feel confident.

Sure there are still a number of headwinds and uncertainty in how the year will play out we wanted to give you as much guidance as we can where we feel confident.

Speaker 2: And let me just let me just add that when you look at.

Let me just let me just add that when you look at.

Slide 10.

Speaker 2: slide 10 in our earnings deck, when you strip out the discontinued operations and the divestiture of the highway business.

In our earnings deck.

When you strip out the discontinued operations from the.

Divestiture of the highway business.

Speaker 2: The base business, the Trinity business, the Go Forward business was 34 cents for 2021.

The base business the trading business. The go forward business was 34.

For 2021.

Speaker 2: We just take the midpoint of our guidance range, I mentioned on our script, that's 179% improvement year over year. And taken the volume, that just demonstrates the operating leverage of this business. And it's not gonna be smooth improvement, but we're confident that we're gonna get improvement throughout the year.

You just take the midpoint of our of our guidance range I mentioned on our script thats, 179% improvement year over year.

<unk> taken the volume.

It just demonstrates the operating leverage of this business.

It is it's not going to be smooth improvement, but we're confident that we're going to get improvement throughout the year.

Speaker 4: Yeah, no, that that makes sense. I mean, I definitely I'm, you know, it's unclear how much, how many of the consensus estimates include or exclude the highway business. So it makes the comparison a bit tough. Eric, just one last question on the leasing side.

Yes that makes sense.

Definitely.

No.

Unclear how much how many of the consensus estimates include or exclude the highway business. So it makes the comparison a bit tough.

Eric just one last question on the leasing side, despite increases in fleet size and utilization year lease revenue decreased quarter over quarter. So how much of this man has to do with the timing of the increases in utilization on the fleet size, but that can't explain it all it was.

Speaker 5: Despite increases in fleet size and utilization, your lease revenue decreased quarter over quarter.

Speaker 5: So how much of this may have to do with the timing of the increases in utilization and fleet size, but that can't explain it all. It was the management and services revenue decline.

The management and services revenue decline.

Speaker 2: I'm not talking about you, but just, yeah, I think I can help you. And so if you go, if you just go back throughout the year, from the fourth quarter of 2020, each quarter going forward, remember in the first part of 2021, there was still a headwind in our lease rate.

Okay.

Yes, I think I think I can help you and so if you if you just go back throughout the year.

From the fourth quarter of 2020.

Each quarter going forward remember in the first part of 2021, there was still a headwind and our lease rates and those turn positive really in the third quarter, we talked about it late in the second quarter that lease rates started to turn positive in terms of renewal activity and so what you have in the fourth quarter as well.

Speaker 2: And those turned positive really in the 3rd quarter. We talked about it. Late in the 2nd quarter, at least rate started to turn positive in terms of renewal activity. And so when you, what you have in the 4th quarter is.

Speaker 2: You know, 2 or 3 quarters of decline on lease rates offset by 2 quarters of. Of improvement, and then you get into the timing of. The timing of.

Two or three quarters of decline in lease rates offset by two quarters of.

Of improvement and then you get into the timing of.

The timing of.

Speaker 2: The fleet ads that we did, we made some secondary market purchases. Those were buried back in loaded in the 4th quarter. So that really didn't impact revenue to speed at all. In terms of the services, there's a little bit of services revenue, but I would, I would really.

The fleet adds that we did we made some secondary market purchase those were very backend loaded in the fourth quarter, So that really did impact revenue.

To speak.

At all in terms of the services.

There is a little bit of services revenue, but I would I would.

Really.

Speaker 2: In terms of decline in the 4th quarter relative to the 3rd quarter of last year, but I would, I would really point to the changes in the renewal rates. And the timing of fleet additions, you know, we had a large sale in the 3rd quarter. And so that would have been a headwind to the, to the revenue. In the 4th quarter, got it.

In terms of decline in the fourth quarter relative to the third quarter of last year, but I would I would really point to the changes in our renewal rates and the timing of fleet additions, we had a large sale in the third quarter and so that would have been a headwind to the revenue.

In the fourth quarter.

Okay.

Got it thanks very much.

Thank you.

Our next question comes from Justin Long from Stephens. Please go ahead with your question.

Speaker 3: Our next question comes from Justin Long from Stevens. Please go ahead with your question.

Thanks, and good morning.

Speaker 3: Circling back to the question on margins, so looking at the first half, do you think margins for the rail products group will take a step down sequentially versus the 3.3% that you just put up in the fourth quarter? And then the second half, we're getting to that mid to high single digit range. I just wanted to make sure I was thinking about that the right way.

Good morning, circling back to the question on margin.

So looking at the first half do you think margins for the rail products group will take a step down sequentially versus the three 3% that you just put up in the fourth quarter and then second half we're getting to that mid to high single digit range I just wanted to make sure I was thinking about that.

The right way.

Speaker 1: Well, first, Justin, we're not going to give quarterly guidance. We're trying to give you annual. We're trying to help you out a little bit talking about the fact that we do have the orders taken at the bottom of the market still coming out in the first and second quarter. So, I don't know that we're going to go a whole lot deeper than that. Except, you know, we said that at the end of the year, I'd expect this to be in the range that we gave you in investor day.

Well first yes, and we're not going to give quarterly guidance. We're trying to give you annual we're trying to help you out a little bit talking about the.

The fact that we do have the orders taken at the bottom of the market still coming out in the first and second quarter.

So I don't know that were going to go a whole lot deeper than that.

Yep.

We said that at the end of the year I'd expect us to be in the range that we gave you in Investor day.

Okay and in that comment at the end of the year you are saying by the time, it's kind of the <unk>.

Speaker 3: OK, and that comment at the end of the year, you're saying, you know, by the time it's kind of the exit rate will be in the mid to high single digits. Where are you saying for the full year 2022 will be in the mid to high single digit range?

<unk> rate will be in the mid to high single digits, where you're saying for the full year 2022 will be in the mid to high single digit range.

I'm, saying that the exit rates will be in the mid to high single digit range.

Speaker 1: I'm saying that the exit rates will be in the mid to high single digit range.

Speaker 3: Got it. That's that's helpful. And then I guess on rail car sales and gains on sale this year, anything you can share on on what's getting factored in? And then maybe we could talk about the share count as well. And where you exited the year, because I'm guessing you'll see a pretty big step down here in the first quarter. Yeah.

Got it that's helpful.

And then I guess on railcar sales and gains on sale. This year anything you can share on what's getting factored in and then maybe we could talk about the share count as well and where you exited the year because I'm guessing you'll see a pretty big step down here in the first quarter.

Yes.

No.

Speaker 2: The 1st, part of your question in terms of the fleet sales, you know, we are going to, we are expecting more investment in the least fleet. We talked about 450 to 500,000,000. 550Million dollars of net fleet investment. That's after the car sales.

The first part of your question in terms of the fleet sales.

We are going to we are expecting.

More investment in the lease fleet, we talked about $450 million to $500 million $550 million of net fleet investment that's after the car sales.

The compare to just around $90 million in it.

Speaker 2: The compared to just around 90 million in the.

Speaker 2: 2021 so that that does, you know, that means we're signaling a lot more eliminations certainly. In terms of the car sale activity, you know, we, we. We plan on doing continuing our transaction that we started in the 3rd quarter last year.

2021, so that does that mean, we're signaling to LIBOR eliminations certainly.

In terms of the car sale activity.

<unk>.

We plan on doing.

Continuing our work where transaction that we started in the third quarter of last year in my script.

Speaker 2: In my script, I talked about that both the ads and the sales from the fleet will be throughout the year. So, we're expecting it will be less lumpy and so it'll be through the year because it's just. As part of what we do in terms of we pause there.

<unk> talked about that.

The ads and the.

Sales from the fleet will be throughout the year.

So we're expecting will be less lumpy and so it will be through the year, because just as part of what we do.

In term so.

Let me pause there.

Speaker 2: answer what you needed on on fleet additions. That's great and I guess maybe just touching on the share count. Yeah, so when you look at the share count, a lot of the return to capital we did, we mentioned we did it on the last day of the year, so you had very little impact in our average share count in the fourth quarter. When you see our

The answer what you needed on on fleet additions.

Great and I guess, maybe just touching on the share count.

So when you look at the share count.

A lot of it.

Return of capital we did we mentioned we did it on the last day of the year. So you have very little impact and our average share count in the fourth quarter.

When you see our.

Speaker 2: 10K that we'll file later today. You'll see a share account with about 83 million shares, 83.3 to be exact, and so that's kind of what we're going into the year with.

K the 10-K that we'll file later today.

Youll see us a share count of about 83 million shares.

83, seven to be 83, three to be exact.

And so that's kind of what we're going into the year with.

Okay, and then Youre, assuming that you execute on the risk of that.

Speaker 3: Okay, and then you're assuming that you execute on the rest of the repurchase authorization as well. Yeah, in that in that share account, uh, you have the, the.

Our repurchase authorization as well.

And the guidance yes.

And that share count.

<unk>.

The impact of the ASR, which.

Speaker 2: the impact of the ASR, which, you know, that's.

Yes.

Three quarters of that.

Speaker 2: three quarters of that, and it was reflected in.

Reflected in.

Speaker 2: in our 21 results. And then you have about 70 to 3 million after we complete the ASR. And we talked about the ASR being completed. We expect it to be completed in the third quarter of this year.

And our 21 results.

Have about 73.

<unk> 3 million after we complete the ASR and we talked about the ASR being completed we expect it to be completed.

The third quarter of this year.

Okay.

Speaker 3: Okay. Great. That's helpful. I appreciate the time. Thank you.

Great. That's helpful. I appreciate the time.

Thank you.

Speaker 7: Our next question comes from Allison Poliniak from Wells Fargo. Please go ahead with your question. Hi, good morning.

Our next question comes from Allison <unk> from Wells Fargo. Please go ahead with your question Hi, Good morning.

Morning, Jim.

Speaker 8: Just turning to back to the supply chain and labor challenges, you know, not unique to Trinity here. Is there a way to help us understand in terms of what you planned in Q4 that you weren't able to execute because of those challenges essentially getting pushed in?

Turning to back to the supply chain and labor challenges and not unique to Trinity here is there a way to help us understand in terms of what you planned in Q4 that you weren't able to execute because of this challenge is essentially getting pushed in and then the second part of that would be supply chain I know Eric mentioned.

Speaker 8: And then the second part of that would be, you know, supply chain, I know Eric mentioned, you know, increasing working capital to kind of smooth some of that.

Increasing working capital.

Kind of a smooth some of that but are you sort of are you starting to circle outside of the existing supply chain or people that you've worked with to sort of.

Speaker 8: But are you sort of are you starting to circle outside of the existing supply chain or people that you've worked with to sort of

Speaker 8: firm up, just given some of the challenges that are out there today, just so many thoughts around that.

Firm up just given some of the challenges that are out there today, just some any thoughts around that.

Sure. So when you look at it for the deliveries at the end of the year that got pushed into this year. There were basically a couple of things that happened we had a large order that needed to deliver in January so the first of the year. So we had to build those and then hold them until January .

Speaker 1: Sure, so when you look at it for the deliveries at the end of the year that got pushed into this year, there were basically a couple of things that happened. We had a large order that needed to deliver in January . So, the 1st of the year, so we had to build those and then hold them until January . We also had some.

We also had some hatch covers that supply chain issue that was going on third quarter is still something we're working through right now that caused us to delay some delivery of some cars in the fourth quarter that will happen first quarter of this year.

Speaker 1: that supply chain issue that was going on third quarter still something we're working through right now that caused us to delay some delivery of some cars in the fourth quarter that will happen first quarter of this year.

Speaker 1: When we look at the overall supply chain, on some of the items we were having problems with, hatch covers, valves, a few other things, we did decide to try to go a little bit longer on some of those, to try to make sure we had those to not disrupt the line during the year. Not saying that everything's completely covered. It seems to be improving, but we'll continue to work to stay ahead of that.

When we look at the overall supply chain on some of the items, we were having problems with hatch hovers valves. A few other things we did decide to try to go a little bit longer on some of those to.

To try to make sure we had those to not disrupt the line during the year not saying that everything is completely covered it seems to be improving but.

We will continue to work to stay ahead of that.

Speaker 8: Got it, helpful. And then those sustainable rail car conversions, I know that backlog of just over 1000. Are we assuming these those get delivered this year or is it a multi year? I'm just trying to understand the cadence there.

Got it helpful. And then those sustainable railcar conversions I ended up backlog of just over 1000 are we assuming those get delivered this year or is it a multiyear I'm just trying to understand the cadence there.

Speaker 1: Okay, so when I was talking about the industry number for this year, it was six to seven thousand that would get delivered this year and we related to our backlog. Those will get delivered.

Okay. So when I was talking about the industry number for this year. It was 6% to 7000 that would get delivered this year.

Related to our backlog.

Those will get delivered this urals they will okay. Perfect and then just one last question I know a lot of rationalization happened U S latest downturn geographically as we think about upcoming.

Speaker 8: They will. Okay, perfect. And then just one last question. I know a lot of rationalization happened, you know, in this latest downturn, geographically, you know, as we think about, you know, us coming, you know, the industry coming back to replacement level, is, you know, within your footprint, is there any, I would say reopening of facilities that you need to do? Or could you manage the capacity influx with your current, you know, geographical footprint today, in terms of manufacturing?

Coming back to replacement level is with it.

And your footprint is there any I would say reopening of facilities that you need to do or could you manage the capacity in flux with your current geographical footprint today in terms of manufacturing.

Speaker 1: We're confident we can handle the upturn to the replacement level with our current manufacturing space. Perfect. Thank you.

We're confident we can handle the upturn to the replacement level with our current manufacturing space.

Thank you.

Yeah.

Speaker 7: And our next question comes from Gordon Johnson from GLJ Research. Please go ahead with your question.

And our next question comes from Gordon Johnson from G. Research. Please go ahead with your question.

Hey, guys. Thanks for taking the question.

Speaker 4: Hey guys, thanks for taking the question. I guess just a few, I guess more macro questions from me. Can you guys talk about the trend first in car storage? I think the high we reached prior was 500,000. I didn't hear you guys talk about kind of where we're at now and kind of how you expect that to trend and then have a follow-up.

I guess, just a few I guess more macro questions for me.

Can you guys talk about the trend in car storage I think the high reach prior was 500000 I didn't hear you guys talk about kind of where we're at now and kind of how you expect that the trend and then I have a follow up.

Okay. So right now there is about 312000 railcars in storage at about 81% of those are still active.

Speaker 1: Okay, so right now there's about 312,000 rail cars in storage. About 81% of those are still...

Speaker 1: So that leaves 19% that haven't moved in the last year around. So the other ones are really just on the.

So that leaves 19% that haven't moved in the last year around so the other ones are really just on the last 60 days, sorry last 60 days.

Speaker 1: Sorry, last 60 days, that means the other ones are just in and out. They've got to do maintenance, they're switching service. There's other things going on with them. So the 19, we've had 19 straight months of reduced storage of rail cars.

That means the other ones are just in and now they've got to do maintenance. There are switching service. So there's other things going on with them. So the 19, we had 19 straight months of reduced storage of railcars.

Okay.

Speaker 2: And I would just add that when you look at train speeds and some of the issues that the railroads have had, whether it's weather. I think clearly 1 of the things that's happened is cars are coming out of storage to serve that serve those. That demand, which is an ideal long term, we'd like the rail system be much more efficient. But in the near term, that is 1 of the things that's making the supply tighter and also allowing lease rates to increase.

I would just add that when you look.

Train speeds.

Some of the.

Issues with the railroads have had whether it's weather.

I think clearly one of the things Thats happening is cars are coming out of storage to serve that.

Serve those.

That demand, which is an ideal long term, we'd like the rail system be much more efficient sort of the near term that is one of the things thats, making the supply tighter and also allowing lease rates to increase.

Speaker 2: So I think the railroads, as they figure out some of their own supply chain constraints, we think the demand is there for railcar loads to kind of grow into the fleet.

So I think the railroads as they.

Figure out.

Some of their own.

Ply chain constraints, we think the demand is there for railcar loads.

To kind of grow into the grow into the fleet.

Okay. That's helpful.

Speaker 4: Okay, that's helpful. And you know, there's been a trucker shortage for the better part of the past.

There's been a trucker shortage for the better part of the past decade, yet I would argue that the railroads have been fully capitalized on that do you guys have plans to address that.

Speaker 4: yet I would argue that the railroads haven't fully capitalized on that. Do you guys have plans to address that? And then lastly, you know, I recently spoke to one of the bigger skeptics in the industry and I was surprised to hear him say we're in the best spot we've seen in the railcar industry over the past six years, but then he caveated that by saying,

And then lastly.

I recently spoke to one of the biggest skeptics in the industry and I was surprise here and say we are in the best of what we've seen in the railcar industry over the past six years, if any caveat that by saying he hopes that the industry doesn't build more than 40000 cars. This year, adding the overbuild and it seems like you guys are suggesting.

Speaker 4: He hopes that the industry doesn't build more than 40,000 cars this year, adding to overbuild. It seems like you guys are suggesting 50,000 cars.

Speaker 4: Don't know if 10,000 cars moves the needle, but can you address those two questions? Thanks for the time.

Well know a 10000 cars moves the needle, but can you address those two questions. Thanks for the time guys.

Speaker 1: Sure, and I'm going to start out with your second question, just to say over the past three years.

Sure and I'm going to start out with your second question just to say over the past three years.

Speaker 1: Approximately 150,000 cars have been scrapped, so taken out of the system.

Approximately 150000 cars have been scrapped so taken out of the system. So when you look at that some people for the scrapping because of the high scrap rates that they can get for those cars that led for a need to get back in that range of 40% to 50000 cars and even if you look at the beginning.

Speaker 1: So when you look at that, some people pull forward the scrapping because of the high scrap rates that they can get for those cars.

Speaker 1: That led for a need to get back in that range of 40 to 50,000 cars. And even if you look at the beginning of this year.

This year it started out a pretty hefty pace, we think that's going to start to slow down, especially as Eric just mentioned it is getting a lot tighter out there to find the cars. So until there is some replacement in the industry.

Speaker 1: It started out at a pretty hefty pace, we think that's going to start to slow down, especially as Eric just mentioned, it's getting a lot tighter out there to find the cars. So until there's some replacements in the industry, they're going to have to delay at least, we believe the second half delay some more of that scrapping.

They're going to have to delay at least we believe the second half delay some more of that scrapping. So we think it's very reasonable to look at the next few years, two or three years being in that $40 to 50000 range.

Speaker 1: So we think it's very reasonable to look at the next few years, two or three years, being in that 40 to 50,000 range.

Speaker 1: At least that's our look at what's going to happen. We don't see a super cycle coming in. And Gordon, let me just add to that. We are a large manufacturer. We have a large lease fleet.

At least that's our look at what's going to happen, we don't see a super cycle coming in and Gordon Let me just add to that.

We are a large manufacturer we have a large lease fleet.

Speaker 2: I believe we have very good visibility in the commercial activity in the North American market. We don't see a lot of speculative ordering and when we look at our lease fleet returns.

I believe we have very good visibility in the commercial activity in the North American market, we don't see a lot of speculative ordering.

And when we look at our lease fleet the returns.

Speaker 2: to add something to our fleet, to book space, it's got to meet returns and we have a big residual position. And so I think there's, I think you, I would expect to see more disappointment in this market this cycle than what we've seen in the past just because of where we are. There's not, you know, there's demand that matches what we're building.

To add something to our fleet to book space, It's got a neat returns in.

We have a big residual positions and so.

I think there is I think I would expect to see more disappointed this market this cycle than what we've seen in the past just because of where we are is not.

There is demand that matches, what we're building.

Speaker 1: And we'll go back to your first question. And we stated in the prepared remarks that we want to be part of the solution to solving the inefficiencies that are currently going on in the rail system. One way that we're looking at doing that is rail pulse. I know you've heard about that, but if you can get away for the

And we will go back to your first question and we stated in the prepared remarks that we want to be part of the solution to solving the inefficiencies and are currently going on in the rail system. One way that we're looking at doing that Israel pulse I know you've heard about that but if you can get away for that.

<unk> to have more visibility of where their cars are to allow them to control their supply chain better I think youre going to see much more of the.

Speaker 1: To have more visibility of where their cars are to allow them to control their supply chain better. I think you're going to see much more of the. Traffic or carloads move to a rail car instead of off the highway, but that's just 1 way that we're trying to work.

Traffic or carloads moved to railcar incentive off the highway, but that's just one way that we're trying to work.

Speaker 1: within the system to make the whole industry better. This is not just something for Trinity. It's an industry effort.

Within the system to make the whole industry better. This is not just something for Trinity, It's an industry effort.

Thanks again for the questions.

Thank you.

And our next question comes from <unk> majors from Susquehanna. Please go ahead with your question.

Speaker 7: And our next question comes from Atkin Majors from Susquehanna. Please go ahead with your question.

Yes. Good morning, you have triangulated some of your standing long term outlooks with your view this year already on with industry deliveries and manufacturing margins.

Speaker 2: Yes, good morning. You know, you've triangulated some of your, you know, standing long term outlooks with with with your view this year already on both industry deliveries and manufacturing margin.

Speaker 2: I was hoping we could look a little bit about the net portfolio lease investment. I believe you had said, you know, five to six hundred million over three years.

If you look a little bit about the net portfolio lease investment I believe you had said five to 600 million over three years and.

Speaker 2: So this year plus what you did last would get you well within that range. I'm just curious if there's maybe some conservatism in modeling sales before you have that deal inked or if you think that investment is just going to rise above that range. Is there anything you could share to help us calibrate that over this year and next would be helpful.

This year plus what you did last week, it's you're well within that range and I'm. Just curious if there's maybe some conservatism in modeling sales before you have that deal inked or if you think that investment is just going to rise above that range. Just anything you could could share to help us calibrate that over this year and next would be helpful. Thanks.

Hey, basketball, Eric very good question.

Speaker 2: Hey, very good question. You're right in your assumptions that when you take our guidance and what we did last year, that would get us basically a 3 year plan and I, you know, there, there is a lot of activity.

Youre right in your assumptions.

When you take our guidance and what we did last year that would get us basically the three year plan.

Yes.

There is a lot of activity still to be still to happen and so I would say a lot of it is timing I don't think our outlook over a three year plan has changed.

Speaker 2: Still to be still to happen and so I'd say a lot of it is timing. I don't think our outlook over a 3 year plan has changed. You know, we, we, with the wafer transaction, we plan on selling about a 1Billion dollars in rail cars over the 3 year period. We are.

With the wall for transaction, we plan on selling about $1 billion of railcars over the three year period.

We are projecting.

Speaker 2: Uh, based on our, uh, our projections include, uh.

Based on our.

Our projections include.

Assumptions about what will be leased and what will be direct sale.

Speaker 2: Assumptions about what will be leased and what will be direct sale. And the timing of when those ads are, you can't just add a car on lease and sell it the same day. And so I think when you think about over the over the 3 year period. I would say that.

The timing of when those ads are you can't just add a car on lease and sell at the same day.

So I think when you think about over the over the three year period, I would say that.

Speaker 2: I'm still comfortable with our three-year guide and it gets into timing. I am encouraged by lease pricing.

I'm still comfortable with our three year guide and it gets and the timing I am encouraged by lease pricing.

And the lease pricing.

Speaker 2: that has improved and that, you know, as we look at our capital allocation framework.

That has improved.

And that as we look at our capital allocation framework.

Speaker 2: You know, investing in leasing is much more attractive than it was.

<unk> invested in leasing is much more attractive than it was.

Speaker 2: Last year, for example, and so that's that's a good problem to have and it's something that we'll continue to evaluate. If we change our, our outlook on that, we'll let, you know.

Last year for example, and so that's a good problem to have and it's something that we'll continue to evaluate it.

We change our outlook on that we'll let you know.

Well I mean to triangulate that just want to follow up on Justin's comment earlier.

Speaker 2: Well, I mean, to triangulate that, just want to follow up. Because on Justin's comment earlier, I believe you talked a little bit about having a steadier sort of.

I believe you talked a little bit about having a steadier sort of.

Speaker 2: gains on sale in both investment and in dispersion cadence as far as the lease fleet goes but you know those comments there suggest there might be some lumpiness

Gains on sale in both investment and dispersion cadence as far as the lease fleet goes but those comments. There suggests there might be some lumpiness and in year to year and kind of getting to that net five to 600 million over a year can you just.

Speaker 2: and year to year, and kind of getting to that net five to six hundred million over a year. Can you just, you know.

Consolidate those two and just make sure that we are hearing the consistent message here. Thank you, yes I think.

Speaker 2: Consolidate those two and just make sure that we're hearing the consistent message here. Thank you. Yeah, I think, you know, as there will be timing of when you add a rail car to our fleet and when we might sell it out of the fleet. And so it's hard to model a rail car sale when you don't have a rail car at water, especially as part of a syndication.

As.

There will be timing of when you add a railcar to our fleet and when it when we might sell it out of the fleet and so.

It's hard to model a railcar sale when you don't have a rep per order.

Especially as part of a syndication please.

Speaker 9: And so, and you do have to make sure everything delivers and everything like that. So, I do think when you triangulate...

And so.

You do have to make sure everything delivers and everything like that so I do think.

When you when you triangulate as you said all of our assumptions against a one year assumption youre going to have some lumpiness year to year.

Speaker 9: As you said, all of our assumptions against a 1 year assumption, you are going to have some lumping this year to year. In terms of those 3 year assumptions.

In terms of those three year assumptions I do think that our ads and our sales will be much smoother. This year than they were last year last year. We did we did basically most of it in the third quarter.

Speaker 9: I do think that our ads and our sales will be much smoother this year than they were last year. Last year we did, you know, we did basically most of it in the third quarter. When you compare it to 21, we would expect 22 to be smoother. It won't be, it's not going to be straight line by any stretch, but it should be smoother. All right.

When you compare <unk> to 'twenty, one we would expect 22 to be smoother it wont be its not going to be straight line by any stretch, but it should be smoother.

Alright, thank you for that.

And.

Speaker 2: And, you know, lastly, you know, you talked a little bit about the operating margin on an exit rate back within.

Lastly, you talked a little bit about the operating margin on an exit rate back within the range that you had guided I believe it was mid to high single digits.

Speaker 2: the range that you had guided. I believe it was mid to high single digits.

Yes.

Speaker 2: Do you feel better or worse about where this thing is going as far as the manufacturing cycle and margins?

Do you feel better or worse about where this thing is going as far as the manufacturing cycle and margins on that quote unquote mid cycle, whether that's 2023 or beyond or just curious versus six to 12 months ago. How you feel about where the cycle is heading today. Thank you.

Speaker 2: on that quote-unquote mid-cycle, whether that's 2023 or beyond, or just curious, you know, versus six, 12 months ago, how you feel about where the cycle is heading today. Thank you.

Thanks, I'll take that one so we feel much better that we recycled head heading versus the last couple of years.

Speaker 1: Thanks, I'll take that one. So we feel much better about where the cycle is heading versus the last couple of years.

Speaker 1: You know, we just hit the bottom. We inflected and started seeing orders third quarter of last year. So.

Just hit the bottom, we inflected and started seen orders third quarter last year. So definitely a different feel we did a lot of heavy lifting during that first year and a half to where we were going through and.

Speaker 1: definitely a different feel. We did a lot of heavy lifting during that first year and a half too, where we were going through and closing some facilities, making sure that we right-sized everything in those facilities, we moved supply chain.

Closing some facilities, making sure that we right sized everything those facilities, we need supply chain all of them. We put in some automation to new technology all of that cost us some money to get that done we were doing that at the bottom of the cycle now what we're looking forward to as the cycle starts to recover.

Speaker 1: All of it, we put in some automation, some new technology, all of that cost us some money to get that done. We were doing that at the bottom of the cycle. Now what we're looking forward to as the cycle starts to recover, we should see the benefits from that. And that's why we're saying as the volume comes up.

Should see the benefits from that and Thats why were saying as the volume comes up.

Speaker 1: It's going to be better pores and especially if it's stabilized.

It's going to be better for us and especially as it stabilizes.

Hopefully that helps alright.

Speaker 2: Hopefully, that helps. All right. You know, in last one, you know, I won't ask for numbers. You can't guide. I understand. You're still anchored to your 3 year outlook and there's not an APS number in it.

Last one I won't ask for numbers you can't guide I understand you're still anchored to your three year outlook and there is not an EPS number in it but.

Speaker 2: What needs to happen to get to a point where you'd like to kind of update that a little more crisply about where this is heading?

What needs to happen to get to a point, where you'd like to kind of update that a little more crisply about where this is heading in year three and is that really a Jan fab 2023 event or is there a point, where you get through some things you'd like to see happen. This year, where maybe an investor day type meeting in a little more visibility on year three.

Speaker 2: Is that really a JanFab 2023 event or is there a point where you get through some things you'd like to see happen this year where maybe an investor day type meeting and a little more visibility on year three might be appropriate? Thank you.

<unk> might be.

It might be appropriate thank you.

Speaker 1: Well, thanks for clarifying that we would expect as we get closer to the 3rd year that we would start updating some of our assumptions and be able to tell you what we think is going to happen where we're at overall in completing the 3 year plan, but starting to talk about the next.

Well, thanks for clarifying that we would expect as we get closer to the third year. Then we would start updating some of our assumptions and being able to tell.

Tell you what we think is going to happen, where we're at overall and completing the three year plan, but starting to talk about the next few years in that cycle. So look for that coming and your timing sounded about right.

Speaker 1: few years in that cycle. So look for that coming and your timing sounded about right. Thank you.

Thank you.

Speaker 7: And our final question today comes from Steve Barger from KeyBank Capital Markets. Please go ahead with your question.

Okay.

And our final question today comes from Steve Barger from Keybanc Capital markets. Please go ahead with your question.

Good morning, everyone.

Speaker 10: Based on customer conversations, do you expect that conversion activity accelerates or realistically do you think you deliver more than the $11.50 this year?

Good morning.

Based on customer conversations do you expect that conversion activity accelerates or realistically do you think you deliver more than the $11 50 this year.

Speaker 1: So, I think it's going to be accelerating. There's a lot more appetite for it now. If people are starting to see those go out, start running and see the utility of doing that. So it helps with utilization of what you have. And it also helps overall with some of the rates.

So I think it's going to be accelerating there's a lot more appetite for now people are starting to see those go out.

Running and see the utility of doing that so it helps limit utilization of <unk>.

You have added also helped overall with some of the rate.

And with the contribution from conversions growing can you talk about how we should think about revenue and margin contribution from that.

Speaker 10: And with the contribution from conversions growing, can you talk about how we should think about revenue and margin contribution from that?

Speaker 1: So actually, it's pretty consistent with the new products. Remember, this is really a freight car driven market, but margins overall for the conversions are very similar to what you would expect to see on new cars.

So actually it's pretty consistent with the new products remember this is really a freight car driven market, but margins overall for the conversions are very similar to what you would expect to see on your car.

Speaker 10: we think the revenue is half of an average new car, 70%.

And should we think that revenue is half of an average new car 70%.

Speaker 1: It varies depending on what's going to happen. If it's a heavy modification, it's about half.

It varies depending on what's going to happen if it's a heavy modification it's about half.

Speaker 1: half to 70 percent. Yeah. And as you think about the margin profile you've talked about and the net fleet additions, how are you thinking about working cap this year and more broadly, just what do you expect for operating cash flow in 2020?

Have the 70% yes.

And as you think about the margin profile you've talked about in the net fleet additions. How are you thinking about working cap this year and more broadly just what do you expect for operating cash flow in 2022.

Yes, Steve So as I mentioned, we did see working capital build in the fourth quarter.

Speaker 9: Yes, Steve. So, as I mentioned, we did see working capital build in the 4th quarter and I would expect it will continue to build this year as our production rates increase and so.

And I would expect it will continue to build this year as our production rates increase.

And so.

Speaker 9: You know, there's we did not provide guidance on operating cash flow. Obviously, when you look at 2021, we are aided by significant tax refunds.

We did not provide guidance on operating cash flow. Obviously, when you look at 2021 were aided by significant tax refunds.

Speaker 9: that is behind us, so you will not have that. So it's really going to be more of a traditional operating cash flow, which this business will produce significant operating cash. And so

It is behind US. So you will not have that so it's really going to be more of a traditional operating cash flow, which this business will produce significant operating cash.

And so.

Speaker 9: But there will be a headwind in terms of working capital and what we produce in operating cash.

But there will be a headwind in terms of working capital at what we.

What we produce and operating cash flow.

Speaker 10: Right. So, so those two things will reverse it. You don't have the tax benefit and then you'll have a working cap billed as you go through the year relative to that.

Right. So so those two things will reverse you don't have the tax benefit and then you'll have a working cap build as you go through the year relative to the echelon.

Speaker 10: Right. And sorry if I missed this. Do you expect the delivery cadence is equally spread across the quarters for whatever the number is that you deliver?

Right.

And sorry, if I missed this do you expect the delivery cadence is equally spread across the quarters for whatever the number is that you deliver.

Speaker 1: Now, as we look at through the year, I would expect to see it grow quarter over quarter.

Now as we look at through the year I would expect to see it grow quarter over quarter.

Okay.

Speaker 10: And then just last one for me, earnings have been pretty constrained over the past four years. The 2022 guide came in below consensus.

And then just last one for me earnings have been pretty constrained over the past four years. The 2022 guide came in below consensus.

Speaker 10: And since 2017, we've seen a really significant reduction in shares outstanding. Do you think if 2023 deliveries are up again and lease rates continue to improve, that earnings can start to look more like 2017 again? Or just, I guess, how are you thinking about the progression? Because it just feels like that this has been, you know, obviously industry conditions have been tough, but this has been a very slow kind of ramp in recovery.

Since 2017, we've seen a really significant reduction in shares outstanding do you think if 2023 deliveries are up again and lease rates continue to improve that earnings can start to look more like 2017 again or just I guess, how are you thinking about the progression because it just feels like that.

It has been obviously industry conditions have been tough, but this has been a very slow.

Kind of ramp and recovery.

Speaker 1: Real quick, I'll start and let Eric go ahead and add, but when you look at it, we knowingly in 2020 during the pandemic and fall off the borders.

Real quick I'll start and let Eric go ahead and add but when you look at it we knowingly.

In 2020 during the pandemic and the falloff of borders made the choice to go ahead and make some radical changes within the company to set it up where the recovery.

Speaker 1: Made the choice to go ahead and make some radical changes within the company to set it up for the recovery.

Speaker 1: Even though those actions continue the majority finished 2020 and 2021, which would hamper the.

Even though this.

Actions continue the majority finished.

2020 in 2021, which would hamper the EPS if the market continues to recover we finish all of the initiatives that we have which we do intend on doing.

Speaker 1: If the market continues to recover, we finish all of the initiatives that we have, which we do intend on doing, I think it'll get you into our range and then we'll start talking about once that's done, what you should expect on an ongoing basis from the EPS.

I think it will get you into a range and then we'll start talking about once that's done what you should expect on an ongoing basis from the EPS that remember the purpose of doing all of that work in 2020 in 2021.

Speaker 1: But remember the purpose of doing all that work in 2020 and 2021.

Speaker 1: was to help us on the next down cycle, so we wanted to ensure that manufacturing did not take away during the bottom of a normal cycle and then was accretive as the cycle went up. And the dynamics are just starting to happen on that, so this year you're going to finally see volumes start to go up.

It was to help us on the next down cycle. So we wanted to ensure that manufacturing did not take away.

In the bottom of a normal cycle and then was accretive at the cycle went up and the dynamics are just starting to happen on that so this year you are going to finally see volumes start to go up.

Speaker 1: Again, we're predicting volumes to at least stay between the 40 and 50 the next couple years after that. So, I think you'll see how our platform performs much better in that type of an environment.

Again were predicting volumes to at least stay between the 40 and 50.

Next couple of years after that so I think youll see how our platform performed much better in that type of an environment.

Speaker 9: And Steve, I just, I would add, I think your underlying, I'm not going to comment on how it compares to 2017, but your underlying thesis, I think, is correct in that this business has a lot of operating leverage and post-COVID.

And Steve I would just I would add I think your underlying.

I'm not going to comment on what it how it compares to 2017 with your underlying thesis I think is is correct and that this business has a lot of operating leverage and post.

Speaker 9: Highway divestiture, you know, the business is much simpler in terms of it is a pure rail business.

Highway divestiture.

The business is much much simpler in terms of it as a pure rail business.

Speaker 9: repair manufacturer, repair leasing, repair maintenance services. And we do have a lot of operating leverage in the business. I think when you go back over the last few years.

Railcar manufacturer railcar leasing railcar maintenance services and we do have a lot of operating leverage in the business I think when you go back over the last few years.

Speaker 9: Since then, our share count is down significantly. Probably 40, 45, 50 million shares that it's gone down. And so, I think once the earnings start, you are going to see more leverage in terms of the earnings per share. Just the math says it will be. You can see that the earnings are down significantly. And so, I think once the earnings start, you are going to see more leverage in terms of the earnings per share. Just the math says it will be. Probably 40, 45, 50 million shares that it's gone down.

Since spin our share count is down significantly.

Probably 40, 45 50 million shares that it has gone down.

So I think our once the earnings start you are going to see more and more leverage in terms of earnings per share.

The math says it will be.

Yeah.

Yes.

Thanks.

Thank you.

Speaker 7: And ladies and gentlemen, at this time, we'll conclude today's question and answer session. I'd like to turn the floor back over to Gene Savage for any closing remarks.

And ladies and gentlemen at this time, we'll conclude today's question and answer session I'd like to turn the floor back over to Jean Savage for any closing remarks.

Speaker 1: Well, thank you for joining us this morning. We're now in the 2nd year of the 3 years strategic plan and are on track to meet the goals presented at our analyst day in late 2020.

Well. Thank you for joining us. This morning, we're now in the second year of the three year strategic plan and are on track to meet the goals presented at our analyst day in late 2020.

Speaker 1: 2021 was a year of optimization at Trinity. Optimization of our balance sheet, our lease fleet, and our overall enterprise.

2021 was a year of optimization of Trinity optimization of our balance sheet, our lease fleet and our overall enterprise.

Speaker 1: We are confident that our execution to date and through the remaining strategic plan position trinity to drive significant growth in the years ahead, especially in an improving railcar market. So thank you again and we look forward to updating you on our progress on our next conference call.

We are confident that our execution to date and through the remaining strategic plan to position Trinity to drive significant growth in the years ahead.

Specially in an improving railcar market.

Thank you again, and we look forward to updating you on our progress on our next conference call.

Ladies and gentlemen, the conference has now concluded we do thank you for attending today's presentation. You may now disconnect your lines.

Speaker 7: Ladies and gentlemen, the conference has now concluded. We do thank you for attending today's presentation. You may now disconnect.