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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
☑
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2024
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________ .
Commission File Number 1-6903
trnlogoverticalhrblacaa12.jpg
(Exact name of registrant as specified in its charter)
Delaware75-0225040
(State or Other Jurisdiction of Incorporation or Organization)(I.R.S. Employer Identification No.)
14221 N. Dallas Parkway, Suite 1100
Dallas,Texas75254-2957
(Address of principal executive offices)
(Zip Code)
(214) 631-4420
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange
on which registered
Common StockTRNNew York Stock Exchange
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ  No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes þ   No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer þ Accelerated filer ¨ Non-accelerated filer ¨
Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No þ
At October 24, 2024, the number of shares of common stock, $0.01 par value, outstanding was 82,163,037.


TRINITY INDUSTRIES, INC.
FORM 10-Q
TABLE OF CONTENTS
 



2
PART I
Item 1. Financial Statements
Trinity Industries, Inc. and Subsidiaries
Consolidated Statements of Operations
(unaudited)
Three Months Ended
September 30,		Nine Months Ended
September 30,
 2024202320242023
 (in millions, except per share amounts)
Revenues:
Manufacturing$509.6 $560.0 $1,595.8 $1,423.6 
Leasing & Services289.2 261.3 854.0 761.8 
798.8 821.3 2,449.8 2,185.4 
Operating costs:
Cost of revenues:
Manufacturing460.7 523.0 1,442.8 1,349.0 
Leasing & Services168.6 156.5 493.8 470.2 
629.3 679.5 1,936.6 1,819.2 
Selling, engineering, and administrative expenses:
Manufacturing8.7 7.3 24.2 21.8 
Leasing & Services18.7 16.6 56.8 48.7 
Corporate & other33.1 25.2 93.1 82.8 
60.5 49.1 174.1 153.3 
Gains on dispositions of property:
Lease portfolio sales11.4 3.1 36.2 46.4 
Other2.0 4.4 4.2 6.8 
13.4 7.5 40.4 53.2 
Restructuring activities, net— — — (2.2)
Total operating profit122.4 100.2 379.5 268.3 
Other (income) expense:
Interest expense, net67.4 68.8 206.6 197.8 
Other, net (1.4)(0.9)(1.4)2.0 
66.0 67.9 205.2 199.8 
Income from continuing operations before income taxes56.4 32.3 174.3 68.5 
Provision (benefit) for income taxes:
Current18.3 22.2 45.2 26.2 
Deferred(2.7)(16.2)(1.5)(24.3)
15.6 6.0 43.7 1.9 
Income from continuing operations40.8 26.3 130.6 66.6 
Loss from discontinued operations, net of benefit for income taxes of $1.7, $0.7, $3.5, and $2.2
(5.3)(2.7)(11.3)(8.1)
Net income35.5 23.6 119.3 58.5 
Net income attributable to noncontrolling interest4.1 1.8 9.8 15.3 
Net income attributable to Trinity Industries, Inc.$31.4 $21.8 $109.5 $43.2 
Basic earnings per common share:
Income from continuing operations$0.45 $0.30 $1.48 $0.63 
Loss from discontinued operations(0.07)(0.03)(0.14)(0.10)
Basic net income attributable to Trinity Industries, Inc.$0.38 $0.27 $1.34 $0.53 
Diluted earnings per common share:
Income from continuing operations$0.44 $0.29 $1.44 $0.62 
Loss from discontinued operations(0.07)(0.03)(0.13)(0.10)
Diluted net income attributable to Trinity Industries, Inc.$0.37 $0.26 $1.31 $0.52 
Weighted average number of shares outstanding:
Basic82.2 81.6 81.9 81.2 
Diluted84.1 83.5 83.9 83.5 
See accompanying notes to Consolidated Financial Statements.
3
Trinity Industries, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income (Loss)
(unaudited)
Three Months Ended
September 30,		Nine Months Ended
September 30,
 2024202320242023
 (in millions)
Net income$35.5 $23.6 $119.3 $58.5 
Other comprehensive income (loss):
Derivative financial instruments:
Unrealized gains (losses) arising during the period, net of tax benefit (expense) of $3.9, $(1.4), $2.2, and $(4.2)
(13.2)5.0 (7.3)14.4 
Reclassification adjustments for gains included in net income, net of tax (expense) benefit of $(1.3), $(1.4), $(4.2), and $8.5
(3.8)(4.8)(13.1)(23.6)
Defined benefit plans:
Amortization of net actuarial losses, net of tax benefit of $—, $—, $—, and $—
0.1 — 0.1 — 
(16.9)0.2 (20.3)(9.2)
Comprehensive income18.6 23.8 99.0 49.3 
Less: comprehensive income attributable to noncontrolling interest4.2 1.9 10.1 8.1 
Comprehensive income attributable to Trinity Industries, Inc.$14.4 $21.9 $88.9 $41.2 
See accompanying notes to Consolidated Financial Statements.
4
Trinity Industries, Inc. and Subsidiaries
Consolidated Balance Sheets
September 30, 2024December 31, 2023
(unaudited)
 (in millions)
ASSETS
Cash and cash equivalents$222.4 $105.7 
Receivables, net of allowance413.8 363.5 
Income tax receivable5.0 5.2 
Inventories:
Raw materials and supplies359.2 419.4 
Work in process141.2 142.4 
Finished goods48.7 122.5 
549.1 684.3 
Restricted cash, including partially-owned subsidiaries of $29.6 and $30.6
110.0 129.4 
Property, plant, and equipment, at cost, including partially-owned subsidiaries of $1,923.2 and $1,922.5
9,643.0 9,539.6 
Less accumulated depreciation, including partially-owned subsidiaries of $679.6 and $644.7
(2,714.4)(2,534.8)
6,928.6 7,004.8 
Goodwill221.5 221.5 
Other assets392.5 392.1 
Total assets$8,842.9 $8,906.5 
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable$270.2 $305.3 
Accrued liabilities325.8 302.3 
Debt:
Recourse597.7 794.6 
Non-recourse:
Wholly-owned subsidiaries4,007.4 3,819.2 
Partially-owned subsidiaries1,094.6 1,140.4 
5,699.7 5,754.2 
Deferred income taxes1,096.8 1,103.5 
Other liabilities151.9 165.7 
Total liabilities7,544.4 7,631.0 
Commitments and contingencies (Note 14)
Preferred stock – 1.5 shares authorized and unissued
— — 
Common stock – 400.0 shares authorized
0.8 0.8 
Capital in excess of par value23.4 15.4 
Retained earnings1,050.2 1,010.5 
Accumulated other comprehensive income (loss)(9.6)11.0 
Treasury stock(7.4)(0.6)
Trinity stockholders' equity1,057.4 1,037.1 
Noncontrolling interest241.1 238.4 
Total stockholders' equity1,298.5 1,275.5 
Total liabilities and stockholders' equity$8,842.9 $8,906.5 
See accompanying notes to Consolidated Financial Statements.
5
Trinity Industries, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(unaudited)
Nine Months Ended
September 30,
 20242023
 (in millions)
Operating activities:
Net income$119.3 $58.5 
Loss from discontinued operations, net of income taxes11.3 8.1 
Adjustments to reconcile net income to net cash provided by operating activities – continuing operations:
Depreciation and amortization220.2 219.9 
Stock-based compensation expense17.3 18.8 
Provision (benefit) for deferred income taxes(1.5)(24.3)
Net gains on lease portfolio sales(36.2)(46.4)
Gains on dispositions of property and other assets (4.2)(1.9)
Gains on insurance recoveries from property damage— (4.9)
Non-cash impact of restructuring activities— (2.2)
Non-cash interest expense9.8 9.1 
Loss on extinguishment of debt1.5 — 
Other(3.9)(3.7)
Changes in operating assets and liabilities:
(Increase) decrease in receivables(50.5)(54.4)
(Increase) decrease in inventories135.2 (50.0)
(Increase) decrease in other assets(3.0)— 
Increase (decrease) in accounts payable(35.1)22.6 
Increase (decrease) in accrued liabilities0.3 60.5 
Increase (decrease) in other liabilities3.0 6.1 
Net cash provided by operating activities – continuing operations383.5 215.8 
Net cash used in operating activities – discontinued operations(11.3)(8.1)
Net cash provided by operating activities372.2 207.7 
Investing activities:
Proceeds from dispositions of property and other assets15.5 13.0 
Proceeds from lease portfolio sales253.7 245.8 
Capital expenditures – lease fleet(340.2)(483.3)
Capital expenditures – operating and administrative(32.3)(29.4)
Acquisitions, net of cash acquired— (66.2)
Proceeds from insurance recoveries1.7 4.9 
Equity investments(3.6)(1.1)
Net cash used in investing activities(105.2)(316.3)
Financing activities:
Payments to retire debt(1,831.0)(1,279.0)
Proceeds from issuance of debt1,762.4 1,444.3 
Payments to settle contingent consideration liability(8.0)— 
Shares repurchased(6.9)— 
Dividends paid to common shareholders(70.1)(64.7)
Purchase of shares to satisfy employee tax on vested stock(8.7)(6.9)
Distributions to noncontrolling interest(7.4)(12.7)
Net cash provided by (used in) financing activities(169.7)81.0 
Net increase (decrease) in cash, cash equivalents, and restricted cash97.3 (27.6)
Cash, cash equivalents, and restricted cash at beginning of period235.1 294.3 
Cash, cash equivalents, and restricted cash at end of period$332.4 $266.7 
See accompanying notes to Consolidated Financial Statements.
6
Trinity Industries, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity
(unaudited)
Common Stock Capital in
Excess of
Par Value		Retained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Treasury StockTrinity
Stockholders’
Equity		Noncontrolling
Interest		Total
Stockholders’
Equity
 Shares
$0.01 Par Value
SharesAmount
 (in millions, except par value and per common share amounts)
Balances at
   December 31, 2023
81.8 $0.8 $15.4 $1,010.5 $11.0 — $(0.6)$1,037.1 $238.4 $1,275.5 
Net income— — — 23.7 — — — 23.7 3.7 27.4 
Other comprehensive income— — — — 7.4 — — 7.4 0.1 7.5 
Cash dividends declared on common stock (1)
— — — (23.3)— — — (23.3)— (23.3)
Distributions to noncontrolling interest
— — — — — — — — (3.0)(3.0)
Stock-based compensation expense
— — 4.7 — — — — 4.7 — 4.7 
Settlement of share-based awards, net— — 0.1 — — — (0.4)(0.3)— (0.3)
Balances at
   March 31, 2024
81.8 $0.8 $20.2 $1,010.9 $18.4 — $(1.0)$1,049.3 $239.2 $1,288.5 
Net income— — — 54.4 — — — 54.4 2.0 56.4 
Other comprehensive income (loss)— — — — (11.0)— — (11.0)0.1 (10.9)
Cash dividends declared on common stock (1)
— — — (23.3)— — — (23.3)— (23.3)
Distributions to noncontrolling interest
— — — — — — — — (2.8)(2.8)
Stock-based compensation expense
— — 5.9 — — — — 5.9 — 5.9 
Settlement of share-based awards, net0.9 — 0.2 — — (0.3)(9.1)(8.9)— (8.9)
Shares repurchased— — — — — — (0.9)(0.9)— (0.9)
Retirement of treasury stock
(0.3)— (10.4)— — 0.3 10.4 — — — 
Balances at
   June 30, 2024
82.4 $0.8 $15.9 $1,042.0 $7.4 — $(0.6)$1,065.5 $238.5 $1,304.0 
Net income— — — 31.4 — — — 31.4 4.1 35.5 
Other comprehensive income (loss)— — — — (17.0)— — (17.0)0.1 (16.9)
Cash dividends declared on common stock (1)
— — — (23.2)— — — (23.2)— (23.2)
Distributions to noncontrolling interest— — — — — — — — (1.6)(1.6)
Stock-based compensation expense
— — 6.7 — — — — 6.7 — 6.7 
Settlement of share-based awards, net— — 0.8 — — — (0.6)0.2 — 0.2 
Shares repurchased— — — — — (0.2)(6.2)(6.2)— (6.2)
Balances at
   September 30, 2024
82.4 $0.8 $23.4 $1,050.2 $(9.6)(0.2)$(7.4)$1,057.4 $241.1 $1,298.5 
(1) Dividends of $0.28 per common share for all periods presented in 2024.
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Common StockCapital in
Excess of
Par Value		Retained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Treasury StockTrinity
Stockholders’
Equity		Noncontrolling
Interest		Total
Stockholders’
Equity
 Shares
$0.01 Par Value
SharesAmount
 (in millions, except par value and per common share amounts)
Balances at
   December 31, 2022
81.1 $0.8 $— $992.6 $19.7 — $(0.7)$1,012.4 $257.2 $1,269.6 
Net income— — — 4.4 — — — 4.4 9.3 13.7 
Other comprehensive loss— — — — (7.0)— — (7.0)(7.4)(14.4)
Cash dividends declared on common stock (1)
— — — (21.4)— — — (21.4)— (21.4)
Distributions to noncontrolling interest— — — — — — — — (2.9)(2.9)
Stock-based compensation expense
— — 6.2 — — — — 6.2 — 6.2 
Settlement of share-based awards, net— — 0.4 — — — (0.8)(0.4)— (0.4)
Balances at
   March 31, 2023
81.1 $0.8 $6.6 $975.6 $12.7 — $(1.5)$994.2 $256.2 $1,250.4 
Net income— — — 17.0 — — — 17.0 4.2 21.2 
Other comprehensive income— — — — 4.9 — — 4.9 0.1 5.0 
Cash dividends declared on common stock (1)
— — — (21.6)— — — (21.6)— (21.6)
Distributions to noncontrolling interest
— — — — — — — — (6.1)(6.1)
Stock-based compensation expense
— — 6.5 — — — — 6.5 — 6.5 
Settlement of share-based awards, net1.0 — — — — (0.3)(6.4)(6.4)— (6.4)
Retirement of treasury stock
(0.3)— (7.2)— — 0.3 7.2 — — — 
Balances at
   June 30, 2023
81.8 $0.8 $5.9 $971.0 $17.6 — $(0.7)$994.6 $254.4 $1,249.0 
Net income— — — 21.8 — — — 21.8 1.8 23.6 
Other comprehensive income— — — — 0.1 — — 0.1 0.1 0.2 
Cash dividends declared on common stock (1)
— — — (21.7)— — — (21.7)— (21.7)
Distributions to noncontrolling interest— — — — — — — — (3.7)(3.7)
Stock-based compensation expense
— — 6.1 — — — — 6.1 — 6.1 
Settlement of share-based awards, net— — 0.2 — — — (0.3)(0.1)— (0.1)
Balances at
   September 30, 2023
81.8 $0.8 $12.2 $971.1 $17.7 — $(1.0)$1,000.8 $252.6 $1,253.4 
(1) Dividends of $0.26 per common share for for all periods presented in 2023.

See accompanying notes to Consolidated Financial Statements.
8
Trinity Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Note 1. Summary of Significant Accounting Policies
Basis of Presentation
The foregoing Consolidated Financial Statements are unaudited and have been prepared from the books and records of Trinity Industries, Inc. and Subsidiaries (“Trinity,” “Company,” “we,” “our,” or "us"), including the accounts of our wholly-owned subsidiaries and partially-owned subsidiaries, TRIP Rail Holdings LLC (“TRIP Holdings”), RIV 2013 Rail Holdings LLC ("RIV 2013"), and Trinity Global Ventures Limited ("Trinity Global Ventures"), in which we have a controlling interest. In our opinion, all normal and recurring adjustments necessary for a fair presentation of our financial position as of September 30, 2024, the results of operations for the three and nine months ended September 30, 2024 and 2023, and cash flows for the nine months ended September 30, 2024 and 2023 have been made in conformity with generally accepted accounting principles. All significant intercompany accounts and transactions have been eliminated. Certain prior year balances have been reclassified to conform to the 2024 presentation.
Due to seasonal and other factors, the results of operations for the nine months ended September 30, 2024 may not be indicative of expected results of operations for the year ending December 31, 2024. These interim financial statements and notes are condensed as permitted by the instructions to Form 10-Q and should be read in conjunction with our audited Consolidated Financial Statements included in our Form 10-K for the year ended December 31, 2023.
Our Reportable Segments
Effective January 1, 2024, the Company modified its organizational structure to better leverage our maintenance services capabilities to support lease fleet optimization and to grow our services and parts businesses. The new structure resulted in a change to our reportable segments beginning in 2024. In connection with this organizational update, we aligned the maintenance services business, which was previously reported in the Rail Products Group, to now be presented within our leasing business. This change aligns with the way in which our Chief Operating Decision Maker ("CODM") assesses performance and allocates resources. Consequently, beginning January 1, 2024, we report our operating results in two reportable segments: (1) the Railcar Leasing and Services Group, formerly the Railcar Leasing and Management Services Group, and (2) the Rail Products Group. These changes had no impact to our previously reported consolidated results of operations, financial position, or cash flows. All prior period segment results set forth herein have been recast to reflect these changes and present results on a comparable basis.
Revenue Recognition
In accordance with Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, revenue is measured based on the allocation of the transaction price in a contract to satisfied performance obligations. The transaction price does not include any amounts collected on behalf of third parties. We recognize revenue when we satisfy a performance obligation by transferring control over a product or service to a customer. For all contracts with customers, we evaluate whether we are the principal (i.e., report revenues on a gross basis) or agent (i.e., report revenues on a net basis). Generally, we are the principal in our contracts with customers and report revenues on a gross basis as we control the product or service before it is transferred to a customer. We act as an agent for a small number of service contracts and report those revenues on a net basis as we do not control the services before they are provided to the customer. Payments for our products and services are generally due within normal commercial terms. The following is a description of principal activities from which we generate our revenue, separated by reportable segments. See Note 4 for a further discussion regarding our reportable segments.
Railcar Leasing and Services Group
In our Railcar Leasing and Services Group ("Leasing Group"), revenue from rentals and operating leases, including contracts that contain non-level fixed lease payments, is recognized monthly on a straight-line basis. Leases not classified as operating leases are generally considered sales-type leases as a result of an option to purchase.
9
We review our operating lease receivables for collectibility on a regular basis, taking into consideration changes in factors such as the lessee’s payment history, the financial condition of the lessee, and business and economic conditions in the industry in which the lessee operates. In the event that the collectibility of a receivable with respect to any lessee is no longer probable, we derecognize the revenue and related receivable and recognize future revenue only when the lessee makes a rental payment. Contingent rents are recognized when the contingency is resolved.
Selling profit or loss associated with sales-type leases is recognized upon lease commencement, and a net investment in the sales-type lease is recorded in the Consolidated Balance Sheets. Interest income related to sales-type leases is recognized over the lease term using the effective interest method. See "Lease Accounting" below for additional information regarding sales-type leases as of September 30, 2024 and 2023.
We report all sales of railcars from the lease fleet and selling profit or loss associated with sales-type leases as a net gain or loss from the disposal of a long-term asset in accordance with ASC 610-20, Gains and losses from the derecognition of non-financial assets. These sales are presented in the Lease portfolio sales line in our Consolidated Statements of Operations.
Our maintenance services business is primarily dedicated to servicing our lease fleet of Company-owned railcars pursuant to the provisions of our lease contracts. This may include services that are not included in the full-service lease agreement, such as repairs of railcar damage or other customer-specific requirements. We also perform maintenance and repair activities on railcars owned by third parties, including our investor-owned fleet.
Within maintenance services, revenue is recognized over time as repair and maintenance projects are completed, using an input approach based on the costs incurred relative to the total estimated costs of performing the project. We recorded contract assets of $11.8 million and $8.8 million as of September 30, 2024 and December 31, 2023, respectively, related to unbilled revenues recognized on repair and maintenance activities that have been performed, but for which the entire project has not yet been completed, and the railcar has not yet been shipped to the customer. These contract assets are included within the Receivables, net of allowance line in our Consolidated Balance Sheets.
In connection with an acquisition that occurred during the first quarter of 2023, we evaluated whether we are acting as a principal or an agent for certain logistics services provided to a small number of customers. During the fourth quarter of 2023, we concluded that we act as an agent in these transactions as we do not control the services before they are provided to the customer, and as a result, revenues that were previously recognized on a gross basis should be recognized on a net basis. We elected to effect this accounting change on a prospective basis as it was not quantitatively or qualitatively material to our consolidated financial statements, and beginning in the fourth quarter of 2023, revenues associated with these services are now recognized on a net basis. The accounting change had no effect on the Company's previously reported operating profit, net income, earnings per share, Consolidated Balance Sheets, or Consolidated Statements of Cash Flows.
Rail Products Group
Our railcar manufacturing business recognizes revenue related to new railcars when the customer has submitted its certificate of acceptance and legal title of the railcar has passed to the customer. Certain contracts for the sales of railcars include price adjustments based on changes to input costs; this amount represents variable consideration for which we are generally unable to estimate the final consideration until the railcar is delivered.
Revenue is recognized over time as sustainable railcar conversions are completed, using an input approach based on the costs incurred relative to the total estimated costs of performing the project. We recorded contract assets of $4.1 million and $12.6 million as of September 30, 2024 and December 31, 2023, respectively, which primarily relate to unbilled revenues recognized on sustainable railcar conversions that have been performed, but for which the entire project has not yet been completed, and the railcar has not yet been shipped to the customer. These contract assets are included within the Receivables, net of allowance line in our Consolidated Balance Sheets.
We account for shipping and handling costs as activities to fulfill the promise to transfer the good; as such, these fees are recorded in revenue. The fees and costs of shipping and handling activities are accrued when the related performance obligation has been satisfied.
10
Unsatisfied Performance Obligations
The following table includes estimated revenue expected to be recognized in future periods related to performance obligations that are unsatisfied or partially satisfied as of September 30, 2024 and the percentage of the outstanding performance obligations as of September 30, 2024 expected to be delivered during the remainder of 2024:
Unsatisfied performance obligations at September 30, 2024
Total
Amount
Percent expected to be delivered in 2024
 (in millions)
Rail Products Group:
New railcars:
External customers$1,998.9 
Leasing Group
365.6 
$2,364.5 19.9 %
Sustainable railcar conversions$6.5 53.8 %
Railcar Leasing and Services Group:
Leasing and management$60.8 8.2 %
Maintenance services$6.9 100.0 %
The remainder of the unsatisfied performance obligations for the Rail Products Group is expected to be delivered through 2028. The orders in the Rail Products Group's backlog from the Leasing Group are fully supported by lease commitments with external customers. The final amount of backlog attributable to the Leasing Group may vary by the time of delivery as customers may elect to change their procurement decision.
Unsatisfied performance obligations for the Railcar Leasing and Services Group are related to servicing, maintenance, and management agreements and are expected to be performed through 2029.

11
Lease Accounting
Lessee
We are the lessee of operating leases predominantly for office buildings and railcars, as well as manufacturing equipment and office equipment. Our operating leases have remaining lease terms ranging from one year to thirteen years, some of which include options to extend for up to five years, and some of which include options to terminate within one year. As of September 30, 2024, we had no material finance leases in which we were the lessee. Certain of our operating leases include lease incentives, which reduce the right-of-use asset and are recognized on a straight-line basis over the lease term.
The following table summarizes the impact of our operating leases on our Consolidated Financial Statements (in millions, except lease term and discount rate):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Consolidated Statements of Operations
Operating lease expense$5.2 $4.6 $15.8 $13.3 
Consolidated Statements of Cash Flows
Cash flows from operating activities$15.8 $13.3 
Right-of-use assets recognized in exchange for new lease liabilities$8.0 $9.6 
September 30, 2024December 31, 2023
Consolidated Balance Sheets
Right-of-use assets (1)
$97.0 $100.6 
Lease liabilities (2)
$112.6 $118.2 
Weighted average remaining lease term8.7 years9.3 years
Weighted average discount rate (3)
3.7 %3.6 %
(1) Included in other assets in our Consolidated Balance Sheets.
(2) Included in other liabilities in our Consolidated Balance Sheets.
(3) As the rate implicit in our leases is not readily determinable, we use the incremental borrowing rate of our Trinity Industries Leasing Company ("TILC") warehouse loan facility for railcar leases or our revolving credit facility for operating and administrative leases at lease commencement to determine the present value of lease payments.
Future contractual minimum operating lease liabilities will mature as follows (in millions):
Railcars in our Lease FleetOperating and AdministrativeTotal
Remaining three months of 2024$2.3 $3.1 $5.4 
20258.7 11.4 20.1 
20268.0 10.1 18.1 
20277.5 9.3 16.8 
20285.0 7.9 12.9 
Thereafter6.8 51.3 58.1 
Total operating lease payments$38.3 $93.1 $131.4 
Less: Present value adjustment(18.8)
Total operating lease liabilities$112.6 
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Lessor
Our Leasing Group enters into railcar operating leases with third parties with terms generally ranging between one year and ten years. The majority of our fleet operates on leases that earn fixed monthly lease payments. Generally, lease payments are due at the beginning of the applicable month. A portion of our fleet operates on per diem leases that earn usage-based variable lease payments. Some of our leases include options to extend the leases for up to five years, and a small percentage of our leases include early termination options with certain notice requirements and early termination penalties. As of September 30, 2024, non-lease fleet operating leases in which we are the lessor were not significant, and we had no direct finance leases.
We manage risks associated with residual values of leased railcars by investing across a diverse portfolio of railcar types, staggering lease maturities within any given railcar type, avoiding concentration of railcar type and industry, and actively participating in secondary markets. Additionally, our lease agreements contain normal wear and tear return condition provisions and high mileage thresholds designed to protect the value of our residual assets. Our lease agreements do not contain any material residual value guarantees or restrictive covenants.
The following table summarizes the impact of our leases on our Consolidated Statements of Operations:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
(in millions)
Operating lease revenues$194.5 $183.4 $582.3 $542.0 
Variable operating lease revenues$14.7 $18.3 $49.2 $51.0 
Interest income on sales-type lease receivables$0.2 $0.1 $0.5 $0.5 
Future contractual minimum revenues for operating leases will mature as follows (in millions)(1):
Remaining three months of 2024$186.1 
2025660.8 
2026535.2 
2027406.1 
2028258.0 
Thereafter402.3 
Total$2,448.5 
(1) Total contractual minimum rental revenues on operating leases relates to our wholly-owned and partially-owned subsidiaries and sub-lease rental revenues associated with the Leasing Group's operating lease obligations.
Future contractual minimum lease receivables for sales-type leases will mature as follows (in millions):
Remaining three months of 2024$0.3 
20251.1 
20261.1 
20271.1 
20281.1 
Thereafter9.0 
Total13.7 
Less: Unearned interest income(3.8)
Net investment in sales-type leases (1)
$9.9 
(1) Included in other assets in our Consolidated Balance Sheets.
Financial Instruments
We consider all highly liquid debt instruments to be either cash and cash equivalents if purchased with a maturity of three months or less, or short-term marketable securities if purchased with a maturity of more than three months and less than one year.
13
Financial instruments that potentially subject us to a concentration of credit risk are primarily cash investments, including restricted cash and receivables. We place our cash investments in bank deposits, investment grade short-term debt instruments, highly-rated money market funds, and highly-rated commercial paper. We limit the amount of credit exposure to any one commercial issuer. The carrying values of cash, receivables, and accounts payable are considered to be representative of their respective fair values.
Concentrations of credit risk with respect to receivables are limited due to control procedures that monitor the credit worthiness of customers, the large number of customers in our customer base, and their dispersion across different end markets and geographic areas. Receivables are generally evaluated at a portfolio level based on these characteristics. As receivables are generally unsecured, we maintain an allowance for credit losses using a forward-looking approach based on historical losses and consideration of current and expected future economic conditions. Historically, we have observed that the likelihood of loss increases when receivables have aged beyond 180 days. When a receivable is deemed uncollectible, the write-off is recorded as a reduction to the allowance for credit losses. During the nine months ended September 30, 2024, we recognized approximately $3.3 million of credit loss expense and wrote off $1.6 million related to our trade receivables that are in the scope of ASC 326, Financial Instruments – Credit Losses, bringing the allowance for credit losses balance from $12.8 million at December 31, 2023 to $14.5 million at September 30, 2024. This balance excludes the general reserve for operating lease receivables that is permitted under ASC 450, Contingencies.
Supply Chain Finance Program
In cooperation with a participating financial institution, we facilitate a voluntary supply chain finance ("SCF") program for several of our suppliers. We negotiate payment terms with suppliers that are in line with average industry terms. We have not pledged any assets as security or provided other forms of guarantees to the financial institution. Under the SCF program, participating suppliers may choose to sell, at a discounted price, receivables due from us to the financial institution, at the sole discretion of both the suppliers and the financial institution, prior to the invoices’ scheduled due dates. The payment terms that we negotiate with all suppliers are consistent regardless of whether the supplier chooses to participate in the SCF program for a particular invoice. The SCF program is administered by a third-party financial institution, and our responsibility is limited to making payments based on the terms originally negotiated with participating suppliers, regardless of whether such suppliers sell receivables to the financial institution.
Amounts due to our participating suppliers in the SCF program totaled $12.3 million and $18.3 million as of September 30, 2024 and December 31, 2023, respectively, and are included in accounts payable in our Consolidated Balance Sheets. Payments made under the SCF program are reflected in net cash provided by operating activities from continuing operations in our Consolidated Statements of Cash Flows.
Goodwill
Goodwill by segment is as follows:
September 30, 2024December 31, 2023
Railcar Leasing and Services Group$50.6 $50.6 
Rail Products Group170.9 170.9
$221.5 $221.5 
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Warranties
We provide various express, limited product warranties that generally range from one year to five years depending on the product. The warranty costs are estimated using a two-step approach. First, an engineering estimate is made for the cost of all claims that have been asserted by customers. Second, based on historical claims experience, a cost is accrued for all products still within a warranty period for which no claims have been filed. We provide for the estimated cost of product warranties at the time revenue is recognized related to products covered by warranties and assess the adequacy of the resulting reserves on a quarterly basis. The changes in the accruals for warranties for the three and nine months ended September 30, 2024 and 2023 are as follows:
 Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
 (in millions)
Beginning balance$2.8 $5.2 $3.3 $3.3 
Warranty costs incurred— (0.7)(0.4)(1.2)
Warranty originations and revisions0.2 0.5 0.4 3.5 
Warranty expirations(0.1)— (0.4)(0.6)
Ending balance$2.9 $5.0 $2.9 $5.0 
Recent Accounting Pronouncements
Not Yet Adopted
ASU 2023-07 – In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU No. 2023-07, "Improvements to Reportable Segment Disclosures," which improves disclosures about a public entity's reportable segments through enhanced disclosures about significant segment expenses. ASU 2023-07 requires disclosures, on an annual and interim basis, of significant segment expenses that are regularly provided to the CODM, the amount for other segment items by reportable segment and a description of its composition, the title and position of the CODM, and interim period disclosure of all current ASC 280, Segment Reporting, annual disclosures about a reportable segment's profit or loss and assets. ASU 2023-07 is effective for public companies during annual reporting periods beginning after December 15, 2023 and during interim reporting periods beginning after December 15, 2024 and is to be adopted on a retrospective basis. We are currently evaluating the impact ASU 2023-07 will have on our segment reporting disclosures.
ASU 2023-09 – In December 2023, the FASB issued ASU No. 2023-09, "Improvements to Income Tax Disclosures," which enhances transparency and decision usefulness of income tax disclosures. ASU 2023-09 requires, on an annual basis, a tabular disclosure using specific categories in the rate reconciliation and providing additional information for reconciling items that meet a quantitative threshold, as well as the disaggregation of income taxes paid by federal, state, and foreign jurisdictions. ASU 2023-09 is effective for public companies during annual reporting periods beginning after December 15, 2024 on a prospective basis, with an option for retrospective application. Early adoption is permitted. We are currently evaluating the impact ASU-2023-09 will have on our income tax disclosures.
15
Note 2. Acquisitions and Discontinued Operations
Acquisitions
Acquisition of Holden America
In December 2022, we acquired Holden America, a manufacturer of market-leading multi-level vehicle securement and protection systems, gravity-outlet gates, and gate accessories for freight rail in North America. The purchase agreement included minimum additional consideration of $10.0 million, which is payable in installments of $5.0 million per year in each of 2024 and 2025. The purchase agreement also contained a provision whereby additional consideration could become payable based on the achievement of certain revenue targets, up to a maximum payout of $10.0 million.
The total additional consideration, which is included in other liabilities in our Consolidated Balance Sheets, had an estimated fair value of $20.0 million as of December 31, 2023 and is remeasured at each reporting period using Level 3 inputs. During the nine months ended September 30, 2024, the first installment of the additional consideration, totaling $10.0 million, was paid. This payment is reflected in our Consolidated Statements of Cash Flows, of which $8.0 million related to the initial estimated fair value is included in financing activities, and $2.0 million related to the remeasurement of the initial estimated fair value is included in operating activities. As of September 30, 2024, the estimated fair value of the remaining additional consideration was $10.0 million.
Acquisition of RSI Logistics
In March 2023, we acquired RSI Logistics, a data-centric provider of proprietary software and logistics and terminal management solutions to the North American rail industry. This transaction was recorded as a business combination within the Leasing Group, based on valuations of the acquired assets and liabilities at their acquisition date fair value using Level 3 inputs. Based on our purchase price allocation, we recorded identifiable intangible assets of $35.7 million, goodwill of $25.6 million, and certain other immaterial assets and liabilities. The identifiable intangible assets, with the exception of the trade name, which is considered an indefinite-lived intangible asset, are being amortized over their estimated useful lives, ranging from 5 years to 15 years.
Discontinued Operations
Sale of Highway Products Business
In the fourth quarter of 2021, we completed the sale of Trinity Highway Products, LLC (“THP”). Upon completion of the sale, the accounting requirements for reporting THP as a discontinued operation were met. In connection with the sale, the Company agreed to indemnify Rush Hour Intermediate II, LLC ("Rush Hour") for certain liabilities related to the highway products business, including certain liabilities resulting from or arising out of the ET-Plus® System, a highway guardrail end-terminal system (the “ET Plus”). Consequently, results from discontinued operations include certain legal expenses that are directly attributable to the highway products business. Similar expenses related to these retained obligations that may be incurred in the future will likewise be reported in discontinued operations. For the three and nine months ended September 30, 2024, we recorded expenses related to these obligations of $7.0 million ($5.3 million, net of income taxes) and $14.8 million ($11.3 million, net of income taxes), respectively. For the three and nine months ended September 30, 2023, we recorded expenses related to these obligations of $3.4 million ($2.7 million, net of income taxes) and $10.3 million ($8.1 million, net of income taxes), respectively. These expenses are included in loss from discontinued operations, net of income taxes in our Consolidated Statements of Operations. See Note 14 for further information regarding obligations retained in connection with the THP sale.
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Note 3. Derivative Instruments and Fair Value Measurements
Derivative Instruments
We use derivative instruments to mitigate interest rate risk, including risks associated with the impact of changes in interest rates in anticipation of future debt issuances and to offset interest rate variability of certain floating rate debt issuances outstanding. We also use derivative instruments to mitigate the impact of changes in foreign currency exchange rates. Derivative instruments that are designated and qualify as cash flow hedges are accounted for by recording the effective portion of the gain or loss on the derivative instrument in accumulated other comprehensive income or loss ("AOCI") as a separate component of stockholders' equity. These accumulated gains or losses are reclassified into earnings in the periods during which the hedged transactions affect earnings. Derivative instruments that are not designated as hedges are accounted for by recording the realized and unrealized gains or losses on the derivative instrument in other, net (income) expense in our Consolidated Statements of Operations. We continuously monitor our derivative positions and the credit ratings of our counterparties and do not anticipate losses due to non-performance. See Note 8 for a description of our debt instruments.
Derivatives Designated as Hedging Instruments
Interest Rate Hedges
   
Included in accompanying balance sheet
at September 30, 2024
AOCI – loss/(income)
 Notional Amount
Interest Rate (1)
Asset/(Liability) Controlling InterestNoncontrolling Interest
 ($ in millions)
Expired hedges:
2018 secured railcar equipment notes$249.3 4.41 %$— $0.1 $— 
Tribute Rail secured railcar equipment notes $256.0 2.86 %$— $0.2 $0.3 
2017 promissory notes – interest rate cap$169.3 3.00 %$— $(0.1)$— 
Open hedges:
2017 promissory notes – interest rate swap$388.1 2.31 %$6.3 $(5.9)$— 
TRL-2023 term loan$261.0 3.79 %$(4.5)$4.6 $