Trinity reported total company revenues of $503.5 million in the three months ended Sept. 30, 2021, up 9.60% from prior-year period’s $459.4 million. It attributed this to “increased demand and higher pricing in our highway products business and higher external deliveries in the Rail Products Group.” Company operating profit came in at $92.2 million compared with $72.9 million in third-quarter 2020, a 26.47% increase. This reflects a “higher volume of railcar sales from our lease portfolio, partially offset by higher costs associated with external deliveries in the Rail Products Group, and lower lease rates and higher depreciation expense in the Leasing Group,” according to Trinity.

For the Rail Products Group, revenues were $339.9 million in third-quarter 2021, a decline of 10.83% from $381.2 million in 2020. The company said this was a result of “lower deliveries and a shift in the mix of railcar products and services sold.” In the three months ended Sept. 30, 2021, the Group delivered 2,410 railcars; received orders for 2,530 railcars, valued at $218.6 million; and had a backlog value of $1.228 billion. This compares with third-quarter 2020’s 2,605 railcars delivered; 2,000 railcars ordered, valued at $186.8 million; and a backlog value of $1.155 billion. Trinity attributed the order value in third-quarter 2021 to a “higher number of units and differences in product mix.”

“While market activity continues to improve, Trinity’s third-quarter results were negatively impacted by labor shortages and turnover as well as supply chain disruptions, diluting the impact of margin improvement initiatives in the Rail Products Group,” Savage said. “It is important to note that while this quarter was challenged, we continue to expect improving demand for railcars and profitability.”

For the Railcar Leasing and Management Services Group, revenues were $185.5 million, up 0.87% from third-quarter 2020’s $183.9 million. Fleet utilization came in at 95.0% in third-quarter 2021 vs. 94.8% in the same period last year.

The Group’s “Future Lease Rate Differential climbed again in the third quarter to 1.4%, compared with –2.5% and –14.8% in the past two quarters,” Savage noted.

Among Trinity’s other financial and operational highlights for third-quarter 2021:

• Income from continuing operations per common diluted share (EPS) of $0.33 and adjusted EPS of $0.29.

• Completed initial railcar portfolio sale of $325 million to Signal Rail Holdings LLC, a new railcar investment vehicle (RIV) partner.

• Year-to-date cash flow from operations and total free cash flow after dividends and investments came in at $428 million and $516 million, respectively.

• Repurchases of approximately 2.8 million shares at a cost of $77 million.

• Committed liquidity of $1.1 billion as of Sept. 30, 2021

Management Insight

“Trinity continues to execute well on our strategy to enhance returns and shareholder value,” Savage said. “The company continued to advance toward our initiatives to improve returns, highlighted by the $325 million portfolio sale in our latest RIV partnership. The Signal Rail portfolio sale this past quarter and its resulting benefit to our earnings and balance sheet are a prime example of this dynamic.”

She noted that “[i]t has been nearly a year since we introduced our strategic vision, and I am pleased with the progress we have made. We are continuing to execute on our goals, and despite a challenging quarter in Rail Products, the Company’s enthusiasm to achieve the goals we set out in last year’s Investor Day presentation has never been stronger.”