Trinity’s Savage: 2Q24 Results Show ‘Significant Progress Toward Financial Targets’

Trinity reported total company revenue of $841.4 million for the three months ending June 30, 2024, up 16% from the prior-year period’s $722.4 million. It attributed this to “higher external deliveries in the Rail Products Group, and improved lease rates in the Leasing Group.” Additionally, quarterly income from continuing operations per common diluted share (EPS) came in at $0.67; adjusted EPS was $0.66, with a $0.43 improvement year-over-year.

Operating profit for second-quarter 2024 was $141.9 million, up 43% from second-quarter 2023’s $99.1 million, reflecting “higher external deliveries and improved efficiencies in the Rail Products Group and improved lease rates in the Leasing Group, partially offset by lower lease portfolio sales,” Trinity said.

“Our second quarter GAAP EPS of $0.67 and adjusted EPS of $0.66 represent improvement across our business,” Savage said. “Revenues are up 16% year-over-year, we generated $243 million of cash flow from continuing operations, and our LTM [last 12 months] Adjusted ROE [return on equity] of 16.8% showcases the strength of our operations as well as our balance sheet. At our Investor Day in June, we highlighted the strength of our platform, and our second quarter results display significant progress toward our financial targets.”

Rail Products Group revenue came in at $634.2 million in second-quarter 2024, dipping 3% from $655.4 million in 2023. The company said this reflects “lower deliveries and the mix of railcars sold.” In the three months ending June 30, 2024, the Group delivered 4,755 railcars; received orders for 2,495 railcars, valued at $338.8 million; and had a backlog value of $2.7 billion. This compares with second-quarter 2023’s 4,985 railcars delivered; 4,770 railcars ordered, valued at $528.3 million; and a backlog value of $3.6 billion.

“In the Rail Products Group, segment operating margin of 7.9% was up substantially both sequentially and year-over-year, reflecting the focus we have placed on improving labor and operational efficiencies over the last several years,” Savage said.

For the Railcar Leasing and Management Services Group, revenue was $281.4 million in second-quarter 2024, up 5% from the prior-year period’s $268.3 million. The company attributed this to “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 96.9% vs. second-quarter 2023’s 97.9%. The Future Lease Rate Differential (FLRD) was positive 28.3% at the end of second-quarter 2024 vs. positive 29.5% 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.”

Trinity expects to “continue to see the benefit of a strong FLRD as we re-price the lease fleet upward, driving an 8.9% revenue increase from our leasing and management business as compared to a year ago,” Savage reported. She added that the company “completed an anticipated large portfolio sale in the quarter, utilizing another lever in fleet optimization and asset monetization.” Trinity in May, according to the financial report, sold a portfolio comprising 1,315 railcars and related leases “to a railcar investment vehicle (RIV) partner for an aggregate sales price of approximately $143 million,” recognizing “a gain of approximately $19 million on the sale.”

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 $300 million to $400 million, and operating and administrative capital expenditures of $50 million to $60 million. The company said it also expects an EPS of $1.55 to $1.75, which “excludes items outside our core business operations.” This compares to the expected EPS of $1.35 to $1.55—also excluding “items outside of our core business operations”—which Trinity reported during its first-quarter 2024 financial report.

For more financial results, visit the Investor Relations section of the Trinity website.

In a related development, Jean Savage will join Railway Age and Railway Track & Structures as a featured speaker at our 2024 Women in Rail Conference, to be held Nov. 5-6 in Chicago. She will discuss telematics and how it can improve rail safety.

Earlier this month, Savage was elected to the Board of Parker Hannifin Corporation, a motion and control technologies supplier.