Trinity Industries (TRN) investor relations material

Business overview and differentiation

• Operates as a major North American railcar lessor and manufacturer, managing over 110,000 owned and 30,000-35,000 managed railcars.

• Offers a full-service platform including leasing, manufacturing, maintenance, and logistics for industrial shippers and third-party lessors.

• Maintains a capital-light, high-margin services segment and a broad market view due to its dual role as manufacturer and lessor.

• Manufacturing business has reduced costs and break-even points, aiming for positive earnings and cash flow through cycles.

• Integrated structure provides operating and tax advantages, with most lease originations coming from new builds.

Market conditions and demand trends

• Railcar demand remains below replacement levels, with 2025 deliveries expected at 28,000-33,000 units and scrappage outpacing new builds.

• Customers are deferring capital investments due to tariff and economic uncertainty, but long-term U.S. growth prospects remain positive.

• Inquiry levels for new and existing railcars are strong, but decision-making is slow; lease renewals are robust with 25% rate increases.

• Fleet balance supports lease rates, and a demand rebound is expected to quickly translate into new orders.

Manufacturing and leasing performance

• Q3 manufacturing margins exceeded 7%, driven by favorable mix (notably tank cars) and efficiency gains.

• Full-year operating profit margin guidance is 5-6%, with similar expectations for 2026 if volumes hold steady.

• Leasing business utilization is around 97%, with lease rates expected to continue rising due to asset inflation and repricing cycles.

• Future Lease Rate Differential (FLRD) remains positive, indicating continued rental inflation and yield improvement.