Revenue, Margin Improvement Expected in 2023, Says Trinity’s Savage
Trinity reported total company revenues of $591.2 million for the three months ending Dec. 31, 2022, up 25.20% from the prior-year period’s $472.2 million. For full-year 2022, revenues were $1.977 billion, rising 30.41% from 2021’s $1.516 billion. The company attributed both increases to “higher volume of external deliveries and improved pricing in the Rail Products Group.”
Rail Products Group revenues came in at $655.7 million in fourth-quarter 2022, up 63.07% from $402.1 million in 2021. Trinity said this reflects a “higher volume of deliveries and favorable pricing and product mix.” In the three months ended Dec. 31, 2022, the Group delivered 4,400 railcars; received orders for 3,015 railcars, valued at $350.8 million; and had a backlog value of $3.903 billion. This compares with fourth-quarter 2021’s 2,805 railcars delivered; 5,360 railcars ordered, valued at $597.7 million; and a backlog value of $1.517 billion.
For the Railcar Leasing and Management Services Group, revenues were $197.4 million, up 8.94% from fourth-quarter 2021’s $181.2 million. The company attributed this to “net lease fleet investment activities, higher utilization and improved renewal rates.” Fleet utilization came in at 97.9% in fourth-quarter 2022 vs. 95.7% in the prior-year period.
Among Trinity’s other financial and operational highlights:
For fourth-quarter 2022:
- Quarterly income from continuing operations per common diluted share (EPS) was $0.46; quarterly adjusted EPS was $0.44.
- Future Lease Rate Differential (FLRD) was positive 25.1% at year-end, “showing the strength in current lease rates,” said Jean Savage, who noted that the company’s fleet utilization of 97.9% “supports our positive views on the railcar leasing market.”
- Trinity in December 2022 acquired Holden America, a manufacturer of multi-level vehicle securement and protection systems, gravity-outlet gates, and gate accessories for freight rail in North America, “for an initial cash payment of $71 million, with minimum additional consideration of $10 million, payable in installments of $5 million per year for the next two years.”
For full-year 2022:
- Reported EPS was $1.02. Adjusted EPS was $0.94, “up 176% over 2021 despite unexpected headwinds in 2022,” according to Savage.
- Full-year cash flow from continuing operations and adjusted free cash flow after investments and dividends (Adjusted Free Cash Flow) were $9 million and $138 million, respectively.
- Trinity completed a $254 million railcar sale to Wafra Inc. in third-quarter 2022, and recorded a gain of $25 million.
2023 Outlook
Trinity offered the following guidance for this year:
- Industry deliveries of 40,000-45,000 railcars.
- Net investment in the lease fleet of $250 million-$350 million.
- Manufacturing capital expenditures of $40 million-$50 million.
- EPS of $1.50-$1.70, which the company said “excludes items outside of our core business operations.”
“With market conditions normalizing, combined with a steady run rate of deliveries, we expect both revenue and margin improvement in 2023,” Savage said. “I’m proud of our employees’ ability to execute in an unpredictable year, and I look forward to sharing our continued progress with you in 2023.”
More details can be found on the Trinity Industries Investor Relations site.
