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Jun 30, 2020
Trinity Q2 2020 Earnings Report
Trinity Industries reported mixed results for Q2 2020, with a GAAP loss but positive adjusted EPS, amidst challenging market conditions and strategic realignments.
Key Takeaways
Trinity Industries reported a GAAP loss of $(1.76) per share but an adjusted EPS of $0.02. The company faced headwinds from the COVID-19 pandemic and economic downturn, but maintained a lease fleet utilization of around 95%. Cost optimization initiatives are underway, expected to yield $70 million in annualized savings.
Reported quarterly GAAP and Adjusted earnings (loss) from continuing operations of $(1.76) and $0.02 per diluted share, respectively.
Generated year-to-date operating and free cash flow before leasing investment of $328 million and $372 million, respectively.
Total committed liquidity of $709 million at the end of the second quarter.
Pre-tax non-cash asset impairment charges of $369 million related to small cube covered hopper railcars.
Trinity
Trinity
Trinity Revenue by Segment
Revenue by Segment
Railcar Leasing and Services Revenue
CapyFin.comRail Products Revenue
CapyFin.com Forward Guidance
Trinity anticipates that the structural and cyclical administrative cost reductions completed and identified as of the date of this release will generate approximately $70 million in future annualized cost savings. The Company expects to recognize a pre-tax pension settlement charge in the fourth quarter of 2020 totaling between $155 million to $185 million.
Positive Outlook
- Annualized cost savings of $70 million underway, encompassing both structural and cyclical savings
- Expects $303 million in federal income tax refunds in 2020, and an additional $150 million in 2021, as a result of utilizing loss carryback provisions included in the CARES Act
- Expanded lease fleet borrowings by $225 million subsequent to quarter-end
- Trinity delivered second quarter cash flow from operations of $154 million
- Liquidity stayed strong at $709 million at quarter end, and has been further enhanced by the recent completion of the $225 million rail financing and amendments to our corporate revolver in the month of July.
Challenges Ahead
- Businesses are facing challenging market dynamics resulting from the historic decline in railcar loadings and the resulting underutilized railcars in North America.
- Pricing pressure on lease rates
- The timeline for a recovery in the rail sector remains unclear as increasing COVID-19 cases in the U.S. potentially threaten the recent improvement in economic and rail market activity.
- Recorded a pre-tax non-cash impairment charge of $369.4 million during the second quarter ended June 30, 2020.
- Company expects to recognize a pre-tax pension settlement charge in the fourth quarter of 2020 totaling between $155 million to $185 million
Revenue & Expenses
Visualization of income flow from segment revenue to net income