Trinity Industries Inc.
10/29/2026 | Press release | Distributed by Public on 10/29/2026 10:58
Quarterly Report for Quarter Ending SEPTEMBER 30, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to provide management's perspective on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. Our MD&A should be read in conjunction with the unaudited Consolidated Financial Statements and related Notes in Part I, Item 1 of this Quarterly Report on Form 10-Q and Item 8, Financial Statements and Supplementary Data, of our 2025 Annual Report on Form 10-K.
This MD&A includes financial measures compiled in accordance with generally accepted accounting principles ("GAAP") and certain non-GAAP measures. Please refer to the Non-GAAP Financial Measures section herein for information on the non-GAAP measures included in the MD&A, reconciliations to the most directly comparable GAAP financial measure, and the reasons why management believes each measure is useful to management and investors.
Forward-Looking Statements
This quarterly report on Form 10-Q (or statements otherwise made by the Company or on the Company's behalf from time to time in other reports, filings with the Securities and Exchange Commission ("SEC"), news releases, conferences, website postings, or otherwise) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements contained herein that are not historical facts are forward-looking statements and involve risks and uncertainties. These forward-looking statements include expectations, beliefs, plans, objectives, future financial performances, estimates, projections, goals, and forecasts. Trinity uses the words "anticipates," "believes," "estimates," "expects," "intends," "forecasts," "may," "will," "should," and similar expressions to identify these forward-looking statements. Potential factors, which could cause our actual results of operations to differ materially from those in the forward-looking statements, include, among others:
•market conditions and customer demand for our business products and services;
•the cyclical nature of the industries in which we compete;
•actions by U.S. and/or foreign governments (particularly Mexico and Canada) relative to tariffs, customs administration, trade policies and the interpretation or application of customs laws, federal government budgeting, taxation policies, government expenditures, borrowing/debt ceiling limits, and government shutdowns;
•geopolitical events, including armed conflicts, and their impact on supply chains, pricing, and the global economy;
•variations in weather in areas where our products are manufactured, delivered, or used;
•naturally-occurring events, pandemics, fires, and/or disasters causing disruption to our facilities, manufacturing, product deliveries, and production capacity, thereby giving rise to an increase in expenses, loss of revenue, and property losses;
•disruptions in the transportation network used to transport parts and components to our production facilities and to deliver products to our customers, particularly with respect to the delivery of finished railcars from Mexico to the U.S., which may impact our ability to manufacture and timely deliver railcars to our customers;
•shortages of labor;
•impacts from asset impairments and related charges;
•the timing of introduction of new products;
•the inability to effectively integrate acquired businesses;
•the timing and delivery of customer orders, lease portfolio sales, or a breach of customer contracts;
•the creditworthiness of customers and their access to capital;
•product price changes;
•changes in mix of products sold;
•the costs incurred to align manufacturing capacity with demand and the extent of its utilization;
•the operating leverage and efficiencies that can be achieved by our manufacturing businesses;
•availability and costs of steel, component parts, supplies, and other raw materials;
•competition and other competitive factors;
•changing technologies, including our ability to effectively integrate artificial intelligence ("AI") into our business;
•material failure, interruption of service, compromised data security, phishing emails, or cybersecurity breaches in our information technology (or that of the third-party vendors who provide information technology or other services);
•surcharges and other fees added to fixed pricing agreements for steel, component parts, supplies, and other raw materials;
•inflation, interest rates, and capital costs;
•counter-party risks for financial instruments;
•long-term funding of our operations;
•taxes;
•the stability of the governments and political and business conditions in certain foreign countries, particularly Mexico;
•fluctuations in foreign currency exchange rates, particularly the Mexican peso;
•changes in import and export quotas and regulations;
•business conditions in emerging economies;
•costs and results of litigation, including trial and appellate costs;
•changes in accounting standards or inaccurate estimates or assumptions in the application of accounting policies;
•changes in laws and regulations that may have an adverse effect on demand for our products and services, our results of operations, financial condition, or cash flows;
•legal, regulatory, and environmental issues, including compliance of our products with mandated specifications, standards, or testing criteria and obligations to remove and replace our products following installation or to recall our products and install different products;
•the use of social or digital media to disseminate false, misleading and/or unreliable or inaccurate information; and
•the inability to sufficiently protect our intellectual property rights.
Any forward-looking statement speaks only as of the date on which such statement is made. Except as required by federal securities laws, Trinity undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made. For a discussion of risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in our 2025 Annual Report on Form 10-K, this Form 10-Q, and future Forms 10-Q and Current Reports on Forms 8-K.
Company Overview
Trinity Industries, Inc. and its consolidated subsidiaries own businesses that are leading providers of railcar products and services in North America. We market our railcar products and services under the trade name TrinityRail®. Our platform also includes the brands of RSI Logistics, a provider of software and logistics solutions, and Holden America, a supplier of railcar parts and components. Our platform provides railcar leasing and management services; railcar manufacturing; railcar maintenance and modifications; and other railcar logistics products and services.
We report our operating results in two reportable segments: (1) the Railcar Leasing and Services Group (the "Leasing Group"), which owns and operates a fleet of railcars and provides third-party fleet leasing, management, and administrative services; railcar maintenance and modification services; and other railcar logistics products and services; and (2) the Rail Products Group, which manufactures and sells railcars and related parts and components.
In April 2026, we completed a railcar partnership transaction involving our partially-owned leasing subsidiary, TRIP Rail Holdings LLC ("TRIP Holdings"). See "Executive Summary - Capital Structure Updates" below for further information regarding this transaction.
Executive Summary
Cyclical, Seasonal and Other Trends Impacting Our Business
General Business Trends
Demand for many of our railcar products and services is correlated to changes in North American industrial production and international trade. We continue to actively monitor evolving tariff and trade developments, including tariffs imposed pursuant to the application of Section 232 of the Trade Expansion Act of 1962, regarding which we remain engaged with U.S. Customs and Border Protection, and the antidumping and countervailing duty proceedings described in Note 12 of the Consolidated Financial Statements. Uncertainty in these areas and in the macroeconomic environment, including the administration of trade policy in the U.S. and Mexico, has increased during 2026 and may continue to influence customer purchasing decisions, our commercial arrangements, and demand for new railcars, which has and could continue to negatively impact our results of operations. We remain focused on mitigating impacts to our business resulting from these evolving developments.
The industries in which our customers operate are cyclical in nature. Although lease rates and lease fleet utilization remain strong, weaknesses in certain sectors of the North American and global economy may make it more difficult to sell or lease certain types of railcars. Additionally, changes in certain commodity prices, or changes in demand for certain commodities, could impact customer demand for various types of railcars. Further, disruptions in the global supply chain have impacted demand for, and the costs of, certain of our products and services.
We continuously assess demand for our products and services and take steps to rationalize and diversify our leased railcar portfolio and align our operating capacity appropriately. We evaluate the creditworthiness of our customers and monitor performance of relevant market sectors; however, weaknesses in any of these market sectors could affect the financial viability of our customers, which could negatively impact our revenues, credit loss expense, and operating profits. We continue to believe that our rail platform is able to respond to cyclical changes in demand and perform throughout the railcar cycle.
We believe that our leasing business provides a natural hedge against inflation and changes in interest rates; however, like many leasing companies, the debt component of our capital structure exposes us to changes in the interest rate environment. A significant portion of the earnings from our leasing business is derived from multi-year full-service leases. We consider changes in interest rates, inflation, and other relevant factors in the pricing of new and renewing leases; however, only a portion of our leased railcar portfolio is repriced each year. Consequently, our earnings could be impacted by timing differences between when interest rate changes and changes in the inflationary environment occur and when we are able to factor these changes into our lease rates.
Due to their transactional nature, lease portfolio sales are the primary driver of fluctuations in results in the Leasing Group.
Input Costs
We periodically experience volatility in the costs of steel, components, and certain other inputs that represent a substantial portion of our cost of revenues. We typically use contract-specific purchasing practices, existing supplier commitments, contractual price escalation provisions, and other arrangements with our customers to reduce the impact of the volatility of certain input costs on our operating profit. Further, the cost and volume of lease fleet maintenance and compliance events remain elevated, which we expect to continue in the near term. We continually assess the impact of input costs on our operational efficiency, margins, and overall profitability.
Transportation Network Disruptions
We have, from time to time, been impacted by disruptions in the rail transportation network, including rail traffic closures or congestion in Eagle Pass, Texas, the primary border crossing used for railcar deliveries from our manufacturing facilities in Mexico. We continuously monitor rail traffic at the U.S.-Mexico border, and we take appropriate steps within our control to mitigate the potential impacts on our delivery timelines. However, any future challenges related to transportation network disruptions could negatively impact our operations or our ability to timely deliver railcars to our customers.
Financial and Operational Highlights
•Our revenues for the nine months ended September 30, 2026 were $1,512.2 million, representing a decrease of 2.2%, compared to the nine months ended September 30, 2025. Our operating profit for the nine months ended September 30, 2026 was $396.5 million, representing an increase of 26.4%, compared to $313.8 million for the nine months ended September 30, 2025.
•The Leasing Group's lease fleet of 97,160 company-owned railcars was 97.0% utilized as of September 30, 2026, compared to a lease fleet utilization of 96.8% on 112,850 company-owned railcars as of September 30, 2025. Our company-owned lease fleet includes wholly-owned railcars, partially-owned railcars, and railcars under leased-in arrangements.
•For the nine months ended September 30, 2026, we made a net fleet investment of approximately $240.8 million, which primarily includes new railcar additions, sustainable railcar conversions, railcar modifications, and other betterments, net of deferred profit, as well as secondary market purchases; and is net of proceeds from lease portfolio sales.
•The total value of the new railcar backlog at September 30, 2026 was $1.6 billion, compared to $1.8 billion at September 30, 2025. The Rail Products Group received orders for 5,410 railcars and delivered 5,570 railcars in the nine months ended September 30, 2026, in comparison to orders for 3,355 railcars and deliveries of 6,555 railcars in the nine months ended September 30, 2025.
See "Consolidated Results of Operations" and "Segment Discussion" below for additional information regarding our operating results.
(1) Dividend yield is calculated as dividends declared for the four previous quarters divided by the closing stock price on the last trading day of each respective quarter.
(2) Non-GAAP financial measure. See the Non-GAAP Financial Measures section within this Form 10-Q for a reconciliation to the most directly comparable GAAP measure and why management believes this measure is useful to management and investors. Dollar amounts are presented for the nine months ended September 30, 2026 and 2025.
Capital Structure Updates
TRL-2025 Series 2026-1 Secured Railcar Equipment Notes - In April 2026, Trinity Rail Leasing 2025 LLC ("TRL-2025"), a limited purpose, indirect wholly-owned subsidiary of the Company owned through Trinity Industries Leasing Company ("TILC"), issued an aggregate principal amount of $480.8 million of its Series 2026-1 Green Secured Railcar Equipment Notes (the "Series 2026-1 Notes"). The Series 2026-1 Notes bear interest at an all-in interest rate of 5.36%, are payable monthly, and have a stated final maturity date of April 2056. Net proceeds received in connection with the issuance of the Series 2026-1 Notes were used to redeem the outstanding debt of Trinity Rail Leasing 2019 LLC's ("TRL-2019") Series 2019-1 Secured Railcar Equipment Notes (the "Series 2019-1 Notes") and for general corporate purposes. The all-in interest rate for the Series 2019-1 Notes was 3.82% per annum.
2026 Railcar Partnership Exchange - In April 2026, TILC executed a contribution agreement (the "Contribution Agreement") with, among others, Napier Park Rail Evergreen Fund GP LLC ("Napier Park"), a subsidiary of Napier Park Global Capital, one of our railcar investment partners since 2013 and a leading alternative credit platform. Pursuant to the Contribution Agreement, TILC contributed (i) a 42.56% membership interest in TRIP Holdings and (ii) a 0.2% interest in Triumph Rail Holdings LLC ("Triumph") to NP SPE Holdings LP ("NP SPE") in exchange for an 11.2% limited partnership interest in NP SPE (the "2026 Exchange Transaction"). As a result of these transactions, TILC no longer has any direct ownership interest in TRIP Holdings; its wholly-owned subsidiary, Tribute Rail LLC ("Tribute"); or Triumph. The Company recognized a non-cash pre-tax gain of $131.6 million during the nine months ended September 30, 2026. TRIP Holdings and Tribute and its related debt, which totaled $270.6 million as of December 31, 2025, are no longer included in our Consolidated Financial Statements.
In December 2025, the Leasing Group divested substantially all of its ownership interest in Triumph, formerly a subsidiary of TRIP Holdings (together with the 2026 Exchange Transaction, the "Railcar Partnership Transactions").
Litigation Updates
See Note 12 of the Consolidated Financial Statements for an update on the status of certain litigation.
Subsequent Events
TRL-2026 Term Loan - In October 2026, Trinity Rail Leasing 2026 LLC, a limited purpose, indirect wholly-owned subsidiary of the Company owned through Trinity Industries Leasing Company ("TILC"), entered into a $349.8 million term loan agreement (the "TRL-2026 term loan"). The TRL-2026 term loan bears interest at a variable rate of daily simple Secured Overnight Financing Rate ("SOFR") plus a facility margin of 1.30% and has a stated maturity date of October 2031. Net proceeds received from the transaction were used to redeem the outstanding debt of TRL-2019's Series 2019-2 Secured Railcar Equipment Notes (the "Series 2019-2 Notes") and to repay borrowings under TILC's warehouse loan facility. The all-in interest rate for the Series 2019-2 Notes was 3.10% per annum.
Consolidated Results of Operations
The following table summarizes our consolidated results of operations for the three and nine months ended September 30, 2026 and 2025:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Revenues | $ | 535.1 | $ | 454.1 | $ | 1,512.2 | $ | 1,545.7 | |||||||||||||||
| Cost of revenues | 408.3 | 312.7 | 1,146.6 | 1,128.7 | |||||||||||||||||||
| Selling, engineering, and administrative expenses | 55.1 | 45.2 | 156.9 | 144.6 | |||||||||||||||||||
|
Gains on dispositions of property and other divestitures (1)
|
23.9 | 22.4 | 187.8 | 41.4 | |||||||||||||||||||
| Total operating profit | 95.6 | 118.6 | 396.5 | 313.8 | |||||||||||||||||||
| Interest expense, net | 65.8 | 69.8 | 195.5 | 203.6 | |||||||||||||||||||
| Other, net | (0.5) | 0.6 | 1.6 | (0.4) | |||||||||||||||||||
| Income from continuing operations before income taxes | 30.3 | 48.2 | 199.4 | 110.6 | |||||||||||||||||||
| Provision for income taxes | 8.8 | 11.1 | 49.1 | 22.6 | |||||||||||||||||||
| Income from continuing operations | $ | 21.5 | $ | 37.1 | $ | 150.3 | $ | 88.0 | |||||||||||||||
(1) Includes a $131.6 million gain on the divestiture of TRIP Holdings for the nine months ended September 30, 2026. See Note 5 of the Consolidated Financial Statements for additional information.
Revenues
The tables below present revenues by segment for the three and nine months ended September 30, 2026 and 2025:
| Three Months Ended September 30, 2026 | |||||||||||||||||||||||
| Revenues | Percent | ||||||||||||||||||||||
| External | Intersegment | Total | Change | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Railcar Leasing and Services Group | $ | 286.0 | $ | 0.3 | $ | 286.3 | (4.9) | % | |||||||||||||||
| Rail Products Group | 249.1 | 90.4 | 339.5 | 21.8 | % | ||||||||||||||||||
| Segment Totals | 535.1 | 90.7 | 625.8 | 7.9 | % | ||||||||||||||||||
| Eliminations | - | (90.7) | (90.7) | ||||||||||||||||||||
| Consolidated Total | $ | 535.1 | $ | - | $ | 535.1 | 17.8 | % | |||||||||||||||
| Three Months Ended September 30, 2025 | |||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| External | Intersegment | Total | |||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Railcar Leasing and Services Group | $ | 300.8 | $ | 0.2 | $ | 301.0 | |||||||||||||||||
| Rail Products Group | 153.3 | 125.5 | 278.8 | ||||||||||||||||||||
| Segment Totals | 454.1 | 125.7 | 579.8 | ||||||||||||||||||||
| Eliminations | - | (125.7) | (125.7) | ||||||||||||||||||||
| Consolidated Total | $ | 454.1 | $ | - | $ | 454.1 | |||||||||||||||||
| Nine Months Ended September 30, 2026 | |||||||||||||||||||||||
| Revenues | Percent | ||||||||||||||||||||||
| External | Intersegment | Total | Change | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Railcar Leasing and Services Group | $ | 851.9 | $ | 1.3 | $ | 853.2 | (4.2) | % | |||||||||||||||
| Rail Products Group | 660.3 | 237.7 | 898.0 | (9.5) | % | ||||||||||||||||||
| Segment Totals | 1,512.2 | 239.0 | 1,751.2 | (7.0) | % | ||||||||||||||||||
| Eliminations | - | (239.0) | (239.0) | ||||||||||||||||||||
| Consolidated Total | $ | 1,512.2 | $ | - | $ | 1,512.2 | (2.2) | % | |||||||||||||||
| Nine Months Ended September 30, 2025 | |||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| External | Intersegment | Total | |||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Railcar Leasing and Services Group | $ | 890.1 | $ | 0.7 | $ | 890.8 | |||||||||||||||||
| Rail Products Group | 655.6 | 337.2 | 992.8 | ||||||||||||||||||||
| Segment Totals | 1,545.7 | 337.9 | 1,883.6 | ||||||||||||||||||||
| Eliminations | - | (337.9) | (337.9) | ||||||||||||||||||||
| Consolidated Total | $ | 1,545.7 | $ | - | $ | 1,545.7 | |||||||||||||||||
Operating Costs
Operating costs are comprised of cost of revenues; selling, engineering, and administrative costs; and gains or losses on property disposals and other divestitures. Operating costs by segment for the three and nine months ended September 30, 2026 and 2025 were as follows:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
|
Railcar Leasing and Services Group (1)
|
$ | 188.3 | $ | 172.9 | $ | 422.7 | $ | 539.6 | |||||||||||||||
| Rail Products Group | 308.8 | 258.9 | 841.8 | 938.1 | |||||||||||||||||||
| Segment Totals | 497.1 | 431.8 | 1,264.5 | 1,477.7 | |||||||||||||||||||
| Corporate and other | 29.7 | 23.5 | 82.5 | 74.4 | |||||||||||||||||||
| Eliminations | (87.3) | (119.8) | (231.3) | (320.2) | |||||||||||||||||||
| Consolidated Total | $ | 439.5 | $ | 335.5 | $ | 1,115.7 | $ | 1,231.9 | |||||||||||||||
Operating Profit
Operating profit by segment for the three and nine months ended September 30, 2026 and 2025 was as follows:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Railcar Leasing and Services Group | $ | 98.0 | $ | 128.1 | $ | 430.5 | $ | 351.2 | |||||||||||||||
| Rail Products Group | 30.7 | 19.9 | 56.2 | 54.7 | |||||||||||||||||||
| Segment Totals | 128.7 | 148.0 | 486.7 | 405.9 | |||||||||||||||||||
| Corporate and other | (29.7) | (23.5) | (82.5) | (74.4) | |||||||||||||||||||
| Eliminations | (3.4) | (5.9) | (7.7) | (17.7) | |||||||||||||||||||
| Consolidated Total | $ | 95.6 | $ | 118.6 | $ | 396.5 | $ | 313.8 | |||||||||||||||
Discussion of Consolidated Results
Revenues - Our revenues for the three months ended September 30, 2026 were $535.1 million, representing an increase of $81.0 million, or 17.8%, over the prior year period. Significant drivers of the change are as follows:
•A $95.8 million increase in the Rail Products Group primarily due to an 84.1% increase in external deliveries, and
•A $9.5 million increase in our maintenance services business primarily due to the mix of external repairs; partially offset by
•$32.6 million in lower revenues associated with the divestitures of two partially-owned leasing subsidiaries in the Railcar Partnership Transactions.
Our revenues for the nine months ended September 30, 2026 were $1,512.2 million, representing a decrease of $33.5 million, or 2.2%, over the prior year period. Significant drivers of the change are as follows:
•$85.1 million in lower revenues associated with the divestitures of two partially-owned leasing subsidiaries in the Railcar Partnership Transactions; partially offset by
•A $17.6 million increase in our maintenance services business primarily due to the mix of, and favorable pricing on, external repairs, and
•Higher lease rates and net additions to the lease fleet.
Cost of revenues - Our cost of revenues for the three months ended September 30, 2026 was $408.3 million, representing an increase of $95.6 million, or 30.6%, over the prior year period primarily due to a $95.3 million increase in the Rail Products Group as a result of an 84.1% increase in external deliveries.
Our cost of revenues for the nine months ended September 30, 2026 was $1,146.6 million, representing an increase of $17.9 million, or 1.6%, over the prior year period primarily due to a $13.5 million increase in the Leasing Group as a result of higher operating costs for the lease fleet, as well as the mix of external repairs and operational inefficiencies in our maintenance services business, partially offset by lower costs associated with the divestitures of two partially-owned leasing subsidiaries in the Railcar Partnership Transactions.
Selling, engineering, and administrative expenses - Selling, engineering, and administrative expenses for the three months ended September 30, 2026 were $55.1 million, representing an increase of $9.9 million, or 21.9%, when compared to the prior year period. Selling, engineering, and administrative expenses for the nine months ended September 30, 2026 were $156.9 million, representing an increase of $12.3 million, or 8.5%, when compared to the prior year period. These increases were primarily due to higher employee-related costs, including higher incentive-based compensation.
Gains on dispositions of property and other divestitures - Gains on dispositions of property and other divestitures increased by $1.5 million for the three months ended September 30, 2026 when compared to the prior year period primarily due a $13.4 million gain on the sale of a manufacturing facility, partially offset by a $13.2 million decrease in gains on lease portfolio sales.
Gains on dispositions of property and other divestitures increased by $146.4 million for the nine months ended September 30, 2026, when compared to the prior year period primarily due to the $131.6 million gain on the divestiture of TRIP Holdings and a $13.4 million gain on the sale of a manufacturing facility.
Operating profit - Operating profit for the three months ended September 30, 2026 totaled $95.6 million, representing a decrease of $23.0 million, or 19.4%, from the prior year period. Significant drivers of the change are as follows:
•A $13.2 million decrease in gains on lease portfolio sales, and
•$9.9 million in higher selling, engineering, and administrative expenses; partially offset by
•A $13.4 million gain on the sale of a manufacturing facility in the Rail Products Group.
•Additionally, the prior year period included approximately $13.9 million in operating profit associated with partially-owned leasing subsidiaries that were divested in the Railcar Partnership Transactions.
Operating profit for the nine months ended September 30, 2026 totaled $396.5 million, representing an increase of $82.7 million, or 26.4%, from the prior year period. Significant drivers of the change are as follows:
•A $131.6 million gain on the divestiture of TRIP Holdings,
•A $13.4 million gain on the sale of a manufacturing facility in the Rail Products Group, and
•Higher lease rates and net additions to the lease fleet; partially offset by
•Higher operating costs for the lease fleet, and
•$12.3 million in higher selling, engineering, and administrative expenses.
•Additionally, the prior year period included $35.9 million in operating profit associated with partially-owned leasing subsidiaries that were divested in the Railcar Partnership Transactions.
For further information regarding the operating results of individual segments, see "Segment Discussion" below.
Interest expense, net - Interest expense, net for the three months ended September 30, 2026 totaled $65.8 million, compared to $69.8 million for the three months ended September 30, 2025. Interest expense, net for the nine months ended September 30, 2026 totaled $195.5 million, compared to $203.6 million for the nine months ended September 30, 2025. These decreases for the three and nine months ended September 30, 2026 were primarily driven by lower average debt primarily due to the Railcar Partnership Transactions, partially offset by higher interest rates.
Income taxes - The effective tax rates from continuing operations for the three and nine months ended September 30, 2026 were expenses of 29.0% and 24.6%, respectively, which differ from the U.S. statutory rate of 21.0% primarily due to foreign and state income taxes and non-deductible executive compensation, partially offset by equity-based compensation and return to provision adjustments.
The effective tax rate from continuing operations for the three months ended September 30, 2025 was an expense of 23.0%, which differs from the U.S. statutory rate of 21.0% primarily due to state income taxes, foreign income taxes, and other permanent differences, partially offset by the benefit of noncontrolling interest for which we do not provide income taxes.
The effective tax rate from continuing operations for the nine months ended September 30, 2025 was an expense of 20.4%, which differs from the U.S. statutory rate of 21.0% primarily due to the benefit of noncontrolling interest for which we do not provide income taxes and the benefit of tax credits purchased at a discount, partially offset by state income taxes, foreign income taxes, and other permanent differences. See Note 8 for further information regarding the purchase of transferable tax credits.
Segment Discussion
Railcar Leasing and Services Group
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Percent | 2026 | 2025 | Percent | ||||||||||||||||||||||||||||||
| ($ in millions) | Change | ($ in millions) | Change | ||||||||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||||||||
| Leasing and management | $ | 206.7 | $ | 231.8 | (10.8) | % | $ | 623.0 | $ | 684.3 | (9.0) | % | |||||||||||||||||||||||
|
Maintenance services (1)
|
68.6 | 59.1 | 16.1 | % | 195.2 | 177.6 | 9.9 | % | |||||||||||||||||||||||||||
| Digital and logistics services | 11.0 | 10.1 | 8.9 | % | 35.0 | 28.9 | 21.1 | % | |||||||||||||||||||||||||||
| Total revenues | $ | 286.3 | $ | 301.0 | (4.9) | % | $ | 853.2 | $ | 890.8 | (4.2) | % | |||||||||||||||||||||||
|
Cost of revenues (2)
|
$ | 181.0 | $ | 180.5 | 0.3 | % | $ | 545.5 | $ | 531.3 | 2.7 | % | |||||||||||||||||||||||
| Selling, engineering, and administrative expenses | 17.7 | 14.6 | 21.2 | % | 51.5 | 47.2 | 9.1 | % | |||||||||||||||||||||||||||
| Gains on dispositions of property and other divestitures: | |||||||||||||||||||||||||||||||||||
| Lease portfolio sales | 8.5 | 21.7 | * | 38.7 | 35.4 | * | |||||||||||||||||||||||||||||
|
Gain on divestiture of partially-owned leasing subsidiary (3)
|
- | - | * | 131.6 | - | * | |||||||||||||||||||||||||||||
| Other | 1.9 | 0.5 | * | 4.0 | 3.5 | * | |||||||||||||||||||||||||||||
| Total operating profit | $ | 98.0 | $ | 128.1 | (23.5) | % | $ | 430.5 | $ | 351.2 | 22.6 | % | |||||||||||||||||||||||
| Total operating profit margin | 34.2 | % | 42.6 | % | 50.5 | % | 39.4 | % | |||||||||||||||||||||||||||
| Total operating profit margin, excluding lease portfolio sales and gain on divestiture of partially-owned leasing subsidiary | 31.3 | % | 35.3 | % | 30.5 | % | 35.5 | % | |||||||||||||||||||||||||||
|
Selected expense information for Company-owned railcars (4):
|
|||||||||||||||||||||||||||||||||||
|
Depreciation and amortization expense (5)
|
$ | 57.9 | $ | 63.6 | (9.0) | % | $ | 174.1 | $ | 186.5 | (6.6) | % | |||||||||||||||||||||||
|
Maintenance and compliance expense (6)
|
$ | 37.1 | $ | 43.3 | (14.3) | % | $ | 120.4 | $ | 124.4 | (3.2) | % | |||||||||||||||||||||||
|
Other fleet operating costs (7)
|
$ | 8.8 | $ | 10.8 | (18.5) | % | $ | 28.5 | $ | 28.6 | (0.3) | % | |||||||||||||||||||||||
|
Interest expense (8)
|
$ | 55.4 | $ | 58.7 | (5.6) | % | $ | 165.5 | $ | 173.1 | (4.4) | % | |||||||||||||||||||||||
* Not meaningful
(1) Revenues related to services performed by the maintenance services business on Company-owned railcars under full-service lease agreements are eliminated within the Railcar Leasing and Services Group and are excluded from the totals reported on this line.
(2) Includes depreciation and amortization expense, maintenance and compliance expense, and other fleet operating costs related to our lease fleet, as well as operating costs for our maintenance services and digital and logistics services businesses.
(3) See Note 5 of the Consolidated Financial Statements for additional information regarding this transaction.
(4) Includes wholly-owned railcars, partially-owned railcars, and railcars under leased-in arrangements.
(5) Depreciation and amortization expense includes deferred profit related to new railcar additions, sustainable railcar conversions, railcar modifications, and other betterments, resulting in the recognition of depreciation expense based on the original cost of the railcars and services.
(6) Maintenance and compliance expense is reported at cost with respect to the services performed by our maintenance services business to support the railcars in our lease fleet.
(7) Other fleet operating costs include freight, storage, rent, and ad valorem taxes.
(8) Interest expense is not a component of operating profit and includes the effect of hedges.
Information related to lease portfolio sales is as follows:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| ($ in millions) | |||||||||||||||||||||||
| Lease portfolio sales | $ | 54.4 | $ | 79.9 | $ | 168.7 | $ | 142.9 | |||||||||||||||
| Operating profit on lease portfolio sales | $ | 8.5 | $ | 21.7 | $ | 38.7 | $ | 35.4 | |||||||||||||||
| Operating profit margin on lease portfolio sales | 15.6 | % | 27.2 | % | 22.9 | % | 24.8 | % | |||||||||||||||
Total revenues for the Railcar Leasing and Services Group decreased by $14.7 million, or 4.9%, and $37.6 million, or 4.2%, for the three and nine months ended September 30, 2026, respectively, compared to the prior year periods.
Leasing and management revenues decreased by $25.1 million, or 10.8%, for the three months ended September 30, 2026, when compared to the prior year period primarily due to reduced revenues of $32.6 million associated with the divestitures of two partially-owned leasing subsidiaries in the Railcar Partnership Transactions, partially offset by higher lease rates and net additions to the lease fleet.
Leasing and management revenues decreased by $61.3 million, or 9.0%, for the nine months ended September 30, 2026, when compared to the prior year period primarily due to reduced revenues of $85.1 million associated with the divestitures of two partially-owned leasing subsidiaries in the Railcar Partnership Transactions, partially offset by higher lease rates and net additions to the lease fleet.
Our maintenance services business is primarily dedicated to servicing our lease fleet. Revenues related to maintenance services performed on Company-owned railcars under full-service lease agreements are eliminated within the Railcar Leasing and Services Group. Services that are not included in the full-service lease agreement, such as repairs of railcar damage or other customer-specific requirements, as well as maintenance and repair activities on railcars owned by third parties, including our investor-owned fleet, are reflected in the maintenance services revenues line above and are not eliminated in consolidation. Revenues in our maintenance services business increased by $9.5 million, or 16.1%, and $17.6 million, or 9.9%, for the three and nine months ended September 30, 2026, respectively, when compared to the prior year periods as a result of the mix of external repairs. Additionally, the increase in revenues for the nine months ended September 30, 2026 was favorably impacted by higher pricing.
Cost of revenues for the Railcar Leasing and Services Group increased by $0.5 million, or 0.3%, for the three months ended September 30, 2026, when compared to the prior year period primarily due to the mix of external repairs and operational inefficiencies in our maintenance services business, as well as increased depreciation. The increase was substantially offset by operating costs incurred in the three months ended September 30, 2025 associated with two partially-owned leasing subsidiaries that were divested in the Railcar Partnership Transactions.
Cost of revenues for the Railcar Leasing and Services Group increased by $14.2 million, or 2.7%, for the nine months ended September 30, 2026, when compared to the prior year period primarily due to higher operating costs for the lease fleet, as well as the mix of external repairs and operational inefficiencies in our maintenance services business. The increase was partially offset by operating costs incurred in the nine months ended September 30, 2025 associated with two partially-owned leasing subsidiaries that were divested in the Railcar Partnership Transactions.
Leasing Group operating profit decreased by $30.1 million, or 23.5%, for the three months ended September 30, 2026, when compared to the prior year period primarily due to a $13.2 million decrease in gains on lease portfolio sales, as well as the mix of external repairs and operational inefficiencies in our maintenance services business, including costs associated with footprint optimization. Additionally, the prior year period included operating profit of $13.9 million associated with partially-owned leasing subsidiaries that were divested in the Railcar Partnership Transactions.
Leasing Group operating profit increased by $79.3 million, or 22.6%, for the nine months ended September 30, 2026, when compared to the prior year period primarily due to the $131.6 million gain on the divestiture of TRIP Holdings and higher lease rates, partially offset by higher operating costs for the lease fleet. Additionally, the prior year period included operating profit of $35.9 million associated with partially-owned leasing subsidiaries that were divested in the Railcar Partnership Transactions.
The Leasing Group generally uses its non-recourse warehouse loan facility or cash to provide initial funding for a portion of the purchase price of the railcars. After initial funding, the Leasing Group may obtain long-term financing for the railcars in the lease fleet through non-recourse asset-backed securities; long-term recourse debt; long-term non-recourse promissory notes and term loans; or third-party equity.
Information regarding the Leasing Group's lease fleet is as follows:
| September 30, 2026 | September 30, 2025 | ||||||||||
|
Number of railcars (1):
|
|||||||||||
|
Wholly-owned (2)(3)
|
97,160 | 89,595 | |||||||||
|
Partially-owned (3)(4)
|
- | 23,255 | |||||||||
| Company-owned | 97,160 | 112,850 | |||||||||
|
Investor-owned (4)
|
50,260 | 33,645 | |||||||||
| Total | 147,420 | 146,495 | |||||||||
| Company-owned railcars: | |||||||||||
| Average age in years | 14.8 | 14.3 | |||||||||
| Average remaining lease term in years | 2.7 | 2.8 | |||||||||
| Fleet utilization | 97.0 | % | 96.8 | % | |||||||
(1) Reflects railcars transferred from partially-owned to wholly-owned and investor-owned as a result of the Railcar Partnership Transactions.
(2) Includes 2,230 railcars and 2,330 railcars under leased-in arrangements as of September 30, 2026 and 2025, respectively.
(3) Approximately 6,235 railcars were transferred from partially-owned to wholly-owned related to the acquisition of the noncontrolling interest in RIV 2013 Rail Holdings LLC in December 2025.
(4) Approximately 17,020 railcars reported in partially-owned as of September 30, 2025 were transferred from partially-owned to investor-owned related to the Railcar Partnership Transactions.
Rail Products Group
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Percent | 2026 | 2025 | Percent | ||||||||||||||||||||||||||||||
| ($ in millions) | Change | ($ in millions) | Change | ||||||||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||||||||
|
Rail products (1)
|
$ | 311.5 | $ | 251.6 | 23.8 | % | $ | 816.8 | $ | 902.2 | (9.5) | % | |||||||||||||||||||||||
| Parts & components | 28.0 | 27.2 | 2.9 | % | 81.2 | 90.6 | (10.4) | % | |||||||||||||||||||||||||||
| Total revenues | $ | 339.5 | $ | 278.8 | 21.8 | % | $ | 898.0 | $ | 992.8 | (9.5) | % | |||||||||||||||||||||||
| Operating costs: | |||||||||||||||||||||||||||||||||||
| Cost of revenues | $ | 314.6 | $ | 252.0 | 24.8 | % | $ | 832.4 | $ | 917.6 | (9.3) | % | |||||||||||||||||||||||
|
Selling, engineering, and administrative expenses
|
7.8 | 7.1 | 9.9 | % | 22.9 | 20.7 | 10.6 | % | |||||||||||||||||||||||||||
| Gains on dispositions of property | 13.6 | 0.2 | * | 13.5 | 0.2 | * | |||||||||||||||||||||||||||||
| Operating profit | $ | 30.7 | $ | 19.9 | 54.3 | % | $ | 56.2 | $ | 54.7 | 2.7 | % | |||||||||||||||||||||||
| Operating profit margin | 9.0 | % | 7.1 | % | 6.3 | % | 5.5 | % | |||||||||||||||||||||||||||
*Not meaningful
(1) Includes sustainable railcar conversion revenues of $27.8 million, representing 355 railcars, for the three months ended September 30, 2026. Includes sustainable railcar conversion revenues of $38.5 million, representing 470 railcars, for the nine months ended September 30, 2026. Includes sustainable railcar conversion revenues of $2.1 million, representing 25 railcars, for the nine months ended September 30, 2025. There were no sustainable railcar conversion revenues for the three months ended September 30, 2025.
Revenues for the Rail Products Group increased for the three months ended September 30, 2026 by $60.7 million, or 21.8%, when compared to the prior year period. Cost of revenues for the Rail Products Group increased for the three months ended September 30, 2026 by $62.6 million, or 24.8%, when compared to the prior year period. These increases were primarily due to a 20.8% increase in new railcar deliveries, as well as a higher volume of sustainable railcar conversions.
Revenues for the Rail Products Group decreased for the nine months ended September 30, 2026 by $94.8 million, or 9.5%, when compared to the prior year period. Cost of revenues for the Rail Products Group decreased for the nine months ended September 30, 2026 by $85.2 million, or 9.3%, when compared to the prior year period. These decreases were primarily due to a 15.0% decrease in new railcar deliveries, partially offset by a higher volume of sustainable railcar conversions.
Operating profit for the Rail Products Group increased for the three months ended September 30, 2026 by $10.8 million, or 54.3%, when compared to the prior period primarily due to a $13.4 million gain on the sale of a manufacturing facility and a 20.8% increase in new railcar deliveries, partially offset by operational inefficiencies. Additionally, the prior year period was favorably impacted by a higher mix of, and production efficiencies associated with, high-margin specialty railcars.
Operating profit for the Rail Products Group increased for the nine months ended September 30, 2026 by $1.5 million, or 2.7%, when compared to the prior period primarily due to a $13.4 million gain on the sale of a manufacturing facility, as well as a higher mix of high-margin railcars. The increase was partially offset by operational inefficiencies, including an incident at our Longview, Texas manufacturing facility that resulted in a production interruption, as well as a 15.0% decrease in new railcar deliveries.
Information related to our Rail Products Group backlog of new railcars is set forth below. In addition to the amounts below, as of September 30, 2026, our backlog related to sustainable railcar conversions totaled $5.8 million, representing 60 railcars.
| September 30, | |||||||||||||||||
| 2026 | 2025 | Percent | |||||||||||||||
| (in millions) | Change | ||||||||||||||||
| External customers | $ | 1,313.0 | $ | 1,579.9 | |||||||||||||
|
Leasing Group
|
333.7 | 182.5 | |||||||||||||||
| Total | $ | 1,646.7 | $ | 1,762.4 | (6.6) | % | |||||||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Percent | 2026 | 2025 | Percent | ||||||||||||||||||||||||||||||
| (in units) | Change | (in units, $ in whole dollars) | Change | ||||||||||||||||||||||||||||||||
| Beginning balance | 11,340 | 14,135 | 11,660 | 16,005 | |||||||||||||||||||||||||||||||
| Orders received | 2,190 | 350 | 525.7 | % | 5,410 | 3,355 | 61.3 | % | |||||||||||||||||||||||||||
| Deliveries | (2,030) | (1,680) | 20.8 | % | (5,570) | (6,555) | (15.0) | % | |||||||||||||||||||||||||||
| Ending balance | 11,500 | 12,805 | 11,500 | 12,805 | (10.2) | % | |||||||||||||||||||||||||||||
| Average selling price in ending backlog | $ | 143,191 | $ | 137,634 | 4.0 | % | |||||||||||||||||||||||||||||
Total backlog dollars decreased by 6.6% when compared to the prior year period. We expect to deliver approximately 25% of our railcar backlog value during the remaining three months of 2026 and 50% during 2027, with the remainder to be delivered through 2028. The orders in our 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 modify their procurement decision.
Transactions between the Rail Products Group and the Leasing Group are as follows:
| Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| ($ in millions) | |||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| New railcars | $ | 54.2 | $ | 117.9 | $ | 177.1 | $ | 312.7 | |||||||||||||||
| Sustainable railcar conversions | $ | 27.8 | $ | - | $ | 38.5 | $ | - | |||||||||||||||
| Parts & components | $ | 8.4 | $ | 7.7 | $ | 22.1 | $ | 24.6 | |||||||||||||||
| Deferred profit | $ | 3.4 | $ | 5.9 | $ | 7.7 | $ | 17.7 | |||||||||||||||
| Number of new railcars (in units) | 355 | 770 | 1,300 | 2,130 | |||||||||||||||||||
| Number of sustainable railcar conversions (in units) | 355 | - | 470 | - | |||||||||||||||||||
Corporate and other
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Percent | 2026 | 2025 | Percent | ||||||||||||||||||||||||||||||
| (in millions) | Change | (in millions) | Change | ||||||||||||||||||||||||||||||||
| Operating costs: | |||||||||||||||||||||||||||||||||||
|
Selling, engineering, and administrative expenses
|
$ | 29.7 | $ | 23.5 | 26.4 | % | $ | 82.5 | $ | 76.7 | 7.6 | % | |||||||||||||||||||||||
| Gains on dispositions of property | - | - | * | - | (2.3) | * | |||||||||||||||||||||||||||||
| Operating loss | $ | (29.7) | $ | (23.5) | 26.4 | % | $ | (82.5) | $ | (74.4) | 10.9 | % | |||||||||||||||||||||||
*Not meaningful
Selling, engineering, and administrative expenses for the three and nine months ended September 30, 2026 increased by 26.4% and 7.6%, respectively, when compared to the prior year periods primarily from higher employee-related costs, including higher incentive-based compensation. Total operating costs for the nine months ended September 30, 2025 were favorably impacted by gains associated with the disposition of non-operating facilities.
Liquidity and Capital Resources
Overview
We expect to finance future operating requirements with cash, cash equivalents, and short-term marketable securities; cash flows from operations; and short-term debt, long-term debt, and equity. Debt instruments that we have utilized include the TILC warehouse loan facility, senior notes, convertible subordinated notes, non-recourse asset-backed securities, non-recourse promissory notes and term loans, and our revolving credit facility.
As of September 30, 2026, we have total committed liquidity of $897.2 million. Our total available liquidity includes: $158.3 million of unrestricted cash and cash equivalents; $592.4 million unused and available under our revolving credit facility; and $146.5 million unused and available under the TILC warehouse loan facility based on the amount of warehouse-eligible, unpledged equipment. We believe we have access to adequate capital resources to fund operating requirements and are an active participant in the capital markets.
Liquidity Highlights
TRL-2025 Series 2026-1 Secured Railcar Equipment Notes - In April 2026, TRL-2025 issued an aggregate principal amount of $480.8 million of its Series 2026-1 Notes. The Series 2026-1 Notes bear interest at an all-in interest rate of 5.36% and have a stated final maturity date of 2056. Net proceeds received in connection with the issuance of the Series 2026-1 Notes were used to redeem the outstanding debt of the Series 2019-1 Notes and for general corporate purposes.
Redemption of TRL-2019 Series 2019-1 Secured Railcar Equipment Notes - In April 2026, with the net proceeds of the Series 2026-1 Notes described above, we redeemed in full the Series 2019-1 Notes, of which $377.1 million was outstanding at the redemption date. The all-in interest rate for the Series 2019-1 Notes was 3.82% per annum.
Cash Flows
The following table summarizes our cash flows from operating, investing, and financing activities for the nine months ended September 30, 2026 and 2025:
|
Nine Months Ended September 30, |
|||||||||||
| 2026 | 2025 | ||||||||||
| (in millions) | |||||||||||
| Net cash flows from continuing operations: | |||||||||||
| Operating activities | $ | 242.7 | $ | 187.2 | |||||||
| Investing activities | (290.1) | (398.4) | |||||||||
| Financing activities | 11.5 | 80.4 | |||||||||
| Net cash flows from discontinued operations | (9.7) | (4.9) | |||||||||
| Net decrease in cash, cash equivalents, and restricted cash | $ | (45.6) | $ | (135.7) | |||||||
Operating Activities. Net cash provided by operating activities from continuing operations for the nine months ended September 30, 2026 was $242.7 million compared to net cash provided by operating activities from continuing operations of $187.2 million for the nine months ended September 30, 2025. The changes in our operating assets and liabilities are as follows:
|
Nine Months Ended September 30, |
|||||||||||
| 2026 | 2025 | ||||||||||
| (in millions) | |||||||||||
| (Increase) decrease in receivables, inventories, and other assets | $ | (37.9) | $ | (14.9) | |||||||
| (Increase) decrease in income tax receivable | 13.8 | (26.9) | |||||||||
| Increase (decrease) in accounts payable, accrued liabilities, and other liabilities | 15.3 | (83.8) | |||||||||
| Changes in operating assets and liabilities | $ | (8.8) | $ | (125.6) | |||||||
The changes in our operating assets and liabilities resulted in a net use of $8.8 million for the nine months ended September 30, 2026, as compared to a net use of $125.6 million for the nine months ended September 30, 2025. The changes in operating assets and liabilities were impacted primarily by income tax refunds received in the current year period, the purchase of tax credits in the prior year period, and the timing of payments associated with operating liabilities.
Investing Activities. Net cash used in investing activities for the nine months ended September 30, 2026 was $290.1 million compared to $398.4 million of net cash used in investing activities for the nine months ended September 30, 2025. Significant investing activities are as follows:
•We made a net fleet investment of $240.8 million during the nine months ended September 30, 2026, compared to $387.4 million in the prior year period primarily due to the timing of lease portfolio sales and fleet additions. Our investment in the lease fleet primarily includes new railcar additions, sustainable railcar conversions, railcar modifications, and other betterments, net of deferred profit, as well as secondary market purchases; and is net of proceeds from lease portfolio sales.
•During the nine months ended September 30, 2026, we acquired a 32.0% interest in Touax Texmaco Railcar Leasing Private Limited, a railcar leasing company in India, for $37.6 million.
Financing Activities. Net cash provided by financing activities during the nine months ended September 30, 2026 was $11.5 million compared to $80.4 million of net cash provided by financing activities for the nine months ended September 30, 2025. Significant financing activities are as follows:
•During the nine months ended September 30, 2026, we had total borrowings of $701.8 million and total debt repayments of $559.4 million, for net proceeds of $142.4 million, to support our investment in the lease fleet and for general corporate purposes. During the nine months ended September 30, 2025, we had total borrowings of $1,284.1 million and total debt repayments of $1,039.2 million, for net proceeds of $244.9 million, primarily from debt proceeds to support our investment in the lease fleet and for general corporate purposes.
•We paid $75.4 million and $74.6 million in dividends to our common stockholders during the nine months ended September 30, 2026 and 2025, respectively.
•During the nine months ended September 30, 2026, we repurchased common stock totaling $42.0 million, resulting in a remaining authorization to repurchase up to $114.4 million of our common stock under the share repurchase program as of September 30, 2026. Certain shares of stock repurchased during September 2026, totaling $1.3 million, were cash settled in October 2026 in accordance with normal settlement practices. During the nine months ended September 30, 2025, we repurchased common stock totaling $58.9 million under the share repurchase program.
Current Debt Obligations
The revolving credit facility contains several financial covenants that require the maintenance of ratios related to minimum interest coverage for the leasing and manufacturing operations and maximum leverage. In June 2026, we amended our revolving credit facility to, among other things, modify the leverage ratio calculation to give effect to certain cash balances, which may lower the applicable margin and commitment fee. A summary of our financial covenants is detailed below:
| Ratio | Covenant |
Actual at
September 30, 2026
|
||||||||||||
|
Maximum net leverage (1)
|
No greater than 3.75 to 1.00 | 0.75 | ||||||||||||
|
Minimum interest coverage (2)
|
No less than 2.25 to 1.00 | 13.13 | ||||||||||||
(1) Defined as the ratio of consolidated indebtedness, net of unrestricted cash in excess of $50.0 million up to a maximum of $300.0 million, to consolidated earnings before interest, taxes, depreciation and amortization ("EBITDA") for the Borrower and its restricted subsidiaries for the period of four consecutive quarters ending with September 30, 2026.
(2) Defined as the ratio of the difference of (A) consolidated EBITDA less (B) consolidated capital expenditures - operating and administrative to consolidated interest expense to the extent paid in cash, in each case for the Borrower and its restricted subsidiaries for the period of four consecutive quarters ending with September 30, 2026.
As of September 30, 2026, we were in compliance with all such financial covenants. Please refer to Note 7 of the Consolidated Financial Statements for a description of our current debt obligations.
Capital Expenditures
For the full year 2026, we anticipate a net fleet investment of between $300 million and $350 million. Capital expenditures related to operating and administrative activities, including supporting automation, technology, and modernization of our facilities and processes, are projected to range between $55 million and $65 million for the full year 2026.
Off Balance Sheet Arrangements
As of September 30, 2026, we had outstanding letters of credit issued under our revolving credit facility in an aggregate amount of $7.6 million, which support performance bonds related to certain railcar orders. See Note 7 of the Consolidated Financial Statements for further information about our corporate revolving credit facility. Additionally, we had a letter of credit issued outside our revolving credit facility for $8.5 million to satisfy a liquidity reserve requirement associated with our TILC warehouse loan facility, which renews by its terms each year.
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 are accounted for in accordance with applicable accounting standards. See Note 3 of the Consolidated Financial Statements for discussion of how we utilize our derivative instruments.
Non-GAAP Financial Measures
We have included financial measures compiled in accordance with GAAP and certain non-GAAP measures in this Quarterly Report on Form 10-Q 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 reported 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, we provide a reconciliation to the most comparable GAAP measure.
Cash Flow from Operations with Net Gains on Lease Portfolio Sales
Cash flow from operations with net gains on lease portfolio sales is a non-GAAP financial measure. We believe this measure is useful to both management and investors as it provides a relevant measure of liquidity and a useful basis for assessing the breadth of the cash flow generation capabilities across our operating platform, as well as our ability to fund our operations and repay our debt. This measure is defined as net cash provided by operating activities from continuing operations as computed in accordance with GAAP, plus net gains on lease portfolio sales and is reconciled to net cash provided by operating activities from continuing operations, the most directly comparable GAAP financial measure, in the following table.
|
Nine Months Ended September 30, |
|||||||||||
| 2026 | 2025 | ||||||||||
| (in millions) | |||||||||||
| Net cash provided by operating activities - continuing operations | $ | 242.7 | $ | 187.2 | |||||||
| Net gains on lease portfolio sales | 38.7 | 35.4 | |||||||||
|
Cash flow from operations with net gains on lease portfolio sales
|
$ | 281.4 | $ | 222.6 | |||||||
Contractual Obligations and Commercial Commitments
Except as described below, as of September 30, 2026, there have been no material changes to our contractual obligations from December 31, 2025.
•In April 2026, TRL-2025 issued $480.8 million of its Series 2026-1 Notes. These notes have a stated final maturity date of 2056.
•In April 2026, we redeemed in full the Series 2019-1 Notes, of which $384.0 million was outstanding as of December 31, 2025.
•In April 2026, TILC entered into a Contribution Agreement with Napier Park, contributing its interests in TRIP Holdings and Triumph to NP SPE in exchange for an 11.2% limited partnership interest in NP SPE. As of December 31, 2025, TRIP Holdings had outstanding debt of $270.6 million, which is no longer included in our Consolidated Financial Statements.
Recent Accounting Pronouncements
See Note 1 of the Consolidated Financial Statements for information about recent accounting pronouncements.
Trinity Industries Inc. published this content on October 29, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on October 29, 2026 at 16:58 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]