Completed $375 million sale of highway products business

Reports quarterly GAAP and adjusted earnings from continuing operations of $0.16 and $0.08 per diluted share, respectively

Generates full year operating and total free cash flow of $616 million and $539 million, respectively

Returned $895 million of capital to stockholders during 2021 and raised quarterly dividend to $0.23 per share

Trinity Industries, Inc. (NYSE:TRN) today announced earnings results for the fourth quarter and year ended December 31, 2021.

Financial and Operational Highlights – Fourth Quarter

• Quarterly total company revenues of $472 million
• Quarterly income from continuing operations per common diluted share ("EPS") of $0.16 and quarterly adjusted EPS of $0.08
• Lease fleet utilization of 95.7% and Future Lease Rate Differential ("FLRD") of positive 2.2% at quarter end
• New railcar orders of 5,360 and railcar deliveries of 2,805
• Repurchases of approximately 13.9 million shares at a cost of $402 million

Financial and Operational Highlights – Full Year

• Full year total company revenues of $1.5 billion
• Reported EPS of $0.38 and adjusted EPS of $0.34
• Full year cash flow from continuing operations and total free cash flow after investments and dividends ("Free Cash Flow") were $616 million and $539 million, respectively
• Repurchases of approximately 28.5 million shares at a cost of $807 million

2022 Guidance

• Industry deliveries of 40,000 to 50,000 railcars
• Net investment in the lease fleet of $450 million to $550 million
• Manufacturing capital expenditures of $35 million to $45 million
• EPS of $0.85 to $1.05

Management Commentary

“Trinity’s strong fourth quarter highlights improving market conditions and reinforces the Company’s commitment to optimize its portfolio and return substantial capital to its shareholders,” stated Trinity’s Chief Executive Officer and President, Jean Savage. “The Company completed the divestiture of its highway products business and immediately returned the $375 million in proceeds through share buybacks. Additionally, Trinity once again raised its quarterly dividend. For the full year, Trinity returned $895 million to shareholders through dividends and share repurchases.”

“In our Railcar Leasing and Management Services Group, we continue to see lease rate improvement and strong utilization. We once again saw the Future Lease Rate Differential sequentially improve this quarter to a positive 2.2% showing strong momentum for replacement rates.”

"In the fourth quarter, Rail Products Group margins were positive, and railcar orders and deliveries were strong,” Ms. Savage continued. “The labor and supply chain challenges that have affected performance continued in the fourth quarter, but the Company is seeing improvement as market conditions start to normalize.”

“Market activity is improving, and this trend should continue into 2022. We expect replacement level demand for railcars, and we continue to utilize our sustainable railcar conversion program to optimize our lease fleet and meet changing demand.” Ms. Savage concluded, “I am proud of the way our Company has navigated the challenges of 2021, and I am optimistic about the year ahead. The Company is on target to reach the goals we have laid out, and Trinity’s integrated platform gives us great positioning to take advantage of the current market.”

Consolidated Financial Summary

Additional Business Items

• In the fourth quarter of 2021, we completed the sale of Trinity Highway Products, LLC (“THP”), a wholly-owned subsidiary of the Company, and certain direct and indirect subsidiaries of THP, to Rush Hour Intermediate II, LLC ("Rush Hour"), an entity owned by an affiliated investment fund of Monomoy Capital Partners, for an aggregate purchase price of $375 million, subject to certain adjustments. Accordingly, we have presented the operating results and cash flows of THP as discontinued operations for all periods presented herein. Results of prior periods have been recast to reflect these changes and present results on a comparable basis.
  • In connection with the sale of THP, the Company has agreed to indemnify Rush Hour for certain liabilities related to the highway products business; related legal settlement costs and expenses are included in discontinued operations.
• In December 2021, our Board of Directors declared an increase of approximately 10% to our quarterly dividend from $0.21 per share to $0.23 per share.
• During the quarter, Trinity repurchased approximately $402 million of shares, which included 8.8 million shares valued at $250 million from ValueAct Capital Master Fund, L.P. in a privately negotiated transaction; 3.3 million shares valued at approximately $100 million as part of our $125 million accelerated share repurchase agreement; and $52 million in the open market.
• During the quarter, Trinity received a $189 million income tax refund associated with the tax loss carryback for the 2020 tax year as permitted under recent tax legislation. The Company's income tax receivable at the end of the fourth quarter was $5 million.
• Total committed liquidity of $782 million as of December 31, 2021.

THP Litigation Updates

• As previously disclosed, the Company is a party to a class action lawsuit in Missouri related to THP's ET-Plus system. We are currently in discussions regarding a potential settlement in an effort to resolve the matter before incurring significant additional legal fees and costs. Based on the Company's assessment that a settlement is probable, we recorded a pre-tax charge of $24 million ($18 million, net of income taxes) during the fourth quarter of 2021, which is included in income from discontinued operations, net of income taxes, on our Consolidated Statement of Operations. However, there is no assurance that a settlement will be reached or, if a settlement is reached, that the charge will represent the amount of the settlement. If a settlement is unable to be reached, the Company will continue to vigorously defend the action.

Business Group Summary

Conference Call

Trinity will hold a conference call at 8:30 a.m. Eastern on February 17, 2022 to discuss its fourth quarter and full year results. To listen to the call, please visit the Investor Relations section of the Company's website at www.trin.net and access the Events & Presentations webpage, or the live call can be accessed at 1-888-317-6003 with the conference passcode "8554816". Please call at least 10 minutes in advance to ensure a timely connection. An audio replay may be accessed through the Company’s website or by dialing 1-877-344-7529 with passcode "5826703" until 11:59 p.m. Eastern on February 24, 2022.

Additionally, the Company will provide Supplemental Materials to accompany the earnings conference call. The materials will be accessible both within the webcast and on Trinity's Investor Relations website under the Events and Presentations portion of the site along with the Fourth Quarter Earnings Call event weblink.

Non-GAAP Financial Measures

We have included financial measures compiled in accordance with generally accepted accounting principles ("GAAP") and certain non-GAAP measures in this earnings press release to provide management and investors with additional information regarding our financial results. Non-GAAP measures should not be considered in isolation or as a substitute for our reporting results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures for other companies. For each non-GAAP financial measure, a reconciliation to the most comparable GAAP measure has been included in the accompanying tables. When forward-looking non-GAAP measures are provided, quantitative reconciliations to the most directly comparable GAAP measures are not provided because management cannot, without unreasonable effort, predict the timing and amounts of certain items included in the computations of each of these measures. These factors include, but are not limited to: the product mix of expected railcar deliveries; the timing and amount of significant transactions and investments, such as lease portfolio sales, capital expenditures, and returns of capital to stockholders; and the amount and timing of certain other items outside the normal course of our core business operations, such as restructuring activities and the potential financial and operational impacts of the COVID-19 pandemic.

About Trinity Industries

Trinity Industries, Inc., headquartered in Dallas, Texas, owns businesses that are leading providers of rail transportation products and services in North America. Our businesses market their railcar products and services under the trade name TrinityRail®. The TrinityRail platform provides railcar leasing and management services, as well as railcar manufacturing, maintenance and modifications. Trinity reports its financial results in two reportable segments: the Railcar Leasing and Management Services Group and the Rail Products Group. For more information, visit: www.trin.net.

Some statements in this release, which are not historical facts, are “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements about Trinity's estimates, expectations, beliefs, intentions or strategies for the future, and the assumptions underlying these forward-looking statements, including, but not limited to, future financial and operating performance, future opportunities and any other statements regarding events or developments that Trinity believes or anticipates will or may occur in the future, including the potential financial and operational impacts of the COVID-19 pandemic. Trinity uses the words “anticipates,” “assumes,” “believes,” “estimates,” “expects,” “intends,” “forecasts,” “may,” “will,” “should,” “guidance,” “projected,” “outlook,” and similar expressions to identify these forward-looking statements. Forward-looking statements speak only as of the date of this release, and Trinity expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in Trinity’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based, except as required by federal securities laws. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from historical experience or our present expectations, including but not limited to risks and uncertainties regarding economic, competitive, governmental, and technological factors affecting Trinity’s operations, markets, products, services and prices, and such forward-looking statements are not guarantees of future performance. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” and “Forward-Looking Statements” in Trinity’s Annual Report on Form 10-K for the most recent fiscal year, as may be revised and updated by Trinity’s Quarterly Reports on Form 10-Q, and Trinity’s Current Reports on Form 8-K.

Trinity has certain unvested restricted stock awards that participate in dividends on a nonforfeitable basis and are therefore considered to be participating securities. Consequently, diluted net income (loss) attributable to Trinity Industries, Inc. per common share is calculated under both the two-class method and the treasury stock method, and the more dilutive of the two calculations is presented. There were no restricted shares and stock options included in the computation of diluted EPS for the three months and year ended December 31, 2020 as we incurred a loss for these periods, and any effect on loss per common share would have been antidilutive.

Trinity Industries, Inc.

Reconciliations of Non-GAAP Measures

(in millions, except per share amounts)

(unaudited)

Adjusted Operating Results

We have supplemented the presentation of our reported GAAP operating profit (loss), income (loss) from continuing operations before income taxes, provision (benefit) for income taxes, income (loss) from continuing operations, net income (loss) from continuing operations attributable to Trinity Industries, Inc., and diluted income (loss) from continuing operations per common share attributable to Trinity Industries, Inc. with non-GAAP measures that adjust the GAAP measures to exclude the impact of gains on dispositions of other property, impairment of long-lived assets, restructuring activities, loss on extinguishment of debt, pension plan settlement, the income tax effects of the CARES Act, and certain other transactions or events (as applicable). These non-GAAP measures are derived from amounts included in our GAAP financial statements and are reconciled to the most directly comparable GAAP financial measures in the tables below. Management believes that these measures are useful to both management and investors for analyzing the performance of our business without the impact of certain items that are not indicative of our normal business operations. Non-GAAP measures should not be considered in isolation or as a substitute for our reporting results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures for other companies.