![“This year's consistent performance and our team's dedication are evident in our [3Q24] financial results,” said Jean Savage, President and CEO of Trinity Industries. (Trinity Photograph)](https://www.v2.railwayage.com/wp-content/uploads/2024/10/TrinityRail_Hoppers-1.jpg.avif)
Trinity reported total company revenue of $798.8 million for the three months ending Sept. 30, 2024, down 2.7% from the prior-year period’s $821.3 million. It attributed this to “lower external deliveries in the Rail Products Group, partially offset by favorable pricing and a higher volume of external repairs, as well as improved lease rates and net additions to the lease fleet in the Leasing Group.” Additionally, quarterly income from continuing operations per common diluted share (EPS) came in at $0.44; adjusted EPS was $0.43, with a $0.17 improvement year-over-year.
Operating profit for third-quarter 2024 was $122.4 million, up 22.2% from third-quarter 2023’s $100.2 million, reflecting “improved lease rates and higher gains on lease portfolio sales in the Leasing Group, and improved efficiencies in the Rail Products Group, partially offset by lower external deliveries in the Rail Products Group,” Trinity said.
“Year to date, we have generated $384 million in net cash from operating activities, and our LTM Adjusted ROE improved to an impressive 18.3%,” Savage sad. “We are especially pleased to see the benefits of aligning our leasing and maintenance businesses into the same segment as we are realizing lower costs and better performance.”
Rail Products Group revenue came in at $603.2 million in third-quarter 2024, dipping 3.3% from $624.1 million in 2023. The company said this reflects “lower volume of sustainable railcar conversions, partially offset by the mix of railcars sold.” In the three months ending Sept. 30, 2024, the Group delivered 4,360 railcars; received orders for 1,810 railcars, valued at $201.4 million; and had a backlog value of $2.4 billion. This compares with third-quarter 2023’s 4,325 railcars delivered; 3,200 railcars ordered, valued at $401.5 million; and a backlog value of $3.6 billion.
“In the Rail Products Group, segment operating margin improved to 8.1% in the quarter due to enhanced labor and operational efficiencies,” Savage said.
For the Railcar Leasing and Services Group, revenue was $289.5 million in third-quarter 2024, up 10.6% from the prior-year period’s $261.7 million. The company attributed this to “favorable pricing and a higher volume of external repairs, as well as improved lease rates and net additions to the lease fleet.” Lease fleet utilization—including wholly-owned railcars, partially-owned railcars, and railcars under leased-in arrangements—came in at 96.6% vs. third-quarter 2023’s 98.1%. The Future Lease Rate Differential (FLRD) was positive 28.4% at the end of third-quarter 2024 vs. positive 26.6% for the prior-year period due to “continued strength in current lease rates.” According to Trinity, FLRD calculates the “implied change in lease rates for railcar leases expiring over the next four quarters” and “assumes that these expiring leases will be renewed at the most recent quarterly transacted lease rates for each railcar type”; FLRD is “useful to both management and investors as it provides insight into the near-term trend in lease rates.”
“In our Railcar Leasing and Services segment, revenues increased by 11% year-over-year, and our quarterly FLRD of 28.4% continues to show that we expect to consistently re-price renewing railcars significantly higher than expiring rates,” Savage said. “Additionally, we booked gains on lease portfolio sales of $11 million in the quarter and saw a 20% improvement in segment operating profit as compared to a year ago.”
2024 Guidance
Looking ahead, Trinity reported that it expects industry deliveries of approximately 40,000 railcars in 2024. Additionally, this year it anticipates a net fleet investment of $200 million to $300 million, and operating and administrative capital expenditures of $50 million to $60 million. The company said it also expects an EPS of $1.70 to $1.80, which “excludes items outside our core business operations.” This compares to the expected EPS of $1.55 to $1.75—also excluding “items outside of our core business operations”—which Trinity reported during its second-quarter 2024 financial report.
For more financial results, visit the Investor Relations section of the Trinity website.
