Trinity Industries, Inc.

Good day, everyone, and welcome to the Trinity Industries first quarter results conference call. At this time, all participants are in a listen-only mode. Later, you'll have the opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing the star and 1. Please note this call may be recorded, and I will be standing by if you should need any assistance. Today's conference call contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995 and includes statements as to estimates, expectations, intentions, and predictions of future financial performance. Statements that are not historical facts are forward-looking. Participants are directed to Trinity's Form 10-K and other SEC filings for a description of certain business issues and risks a change in which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. It is now my pleasure to turn today's conference over to your Vice President of Investor Relations and Communications, Jessica Greiner. Please go ahead.

Thank you, David, and good morning, everyone. I'm Jessica Greiner, Vice President of Investor Relations and Communications for Trinity. We appreciate you joining us for the company's first quarter 2020 financial results conference call. We will begin our prepared remarks with comments from Trinity's Chief Executive Officer and President, Gene Savage, followed by Melindey Levitt, our Chief Administrative Officer. Eric Marchetto, the company's new Chief Financial Officer, will provide the financial highlights. We will hold a Q&A session following the prepared remarks from the leadership team. During the call today, we will refer to a few slides highlighting key points of discussion. These supplemental materials are accessible on our IR website at www.tren.net. These slides can be found under the events and presentations portion of the site, along with the first quarter earnings call event link. It's now my pleasure to turn the call over to Jean.

Thank you, Jessica, and good morning, everyone. The economic events and governmental action surrounding the coronavirus are unprecedented, and I'm extremely proud of the response from the men and women at Trinity. Trinity Rail is designated as an essential business by the North American Federal Authority. The executive leadership team and I, first and foremost, would like to commend our employees for their service and commitment to health and safety, to business continuity, and to keeping critical supply chains operational. We thank you for your work, your spirit, and your dedication to excellence, which all reflect the strong culture and heart of Trinity. We'd also like to thank our customers, suppliers, and all of the businesses working to ensure our communities stay safe and have access to all of our daily needs. Of course, we want to express our deepest appreciation for all of those on the front lines in fighting COVID-19. We are most grateful for your commitment and service. We are proud of the function our employees and our rail cars perform in sustaining our communities. Not only does the rail industry play an important role in preserving our planet as the most sustainable mode of land-based transportation, rail transportation is the livelihood of the North American economy. Rail cars are a critical part of the supply chain of nearly every market. We all depend daily on food, treated water, energy-generating commodities, and medical-grade products. all goods delivered through the rail supply chain. When the going gets tough, the tough get going. I believe Trinity's commitment to excellence and the rail platform will once again prove our ability to withstand an economic crisis. In my prepared remarks today, I want to cover three main points. The impact of COVID-19 on our business and our actions to address it, the financial resiliency of Trinity's railcar platform, our cost structure and liquidity position, and the strength of Trinity's leadership team to manage through this crisis, and our scenario assumptions for managing our business performance and capital allocation decisions amid market uncertainty. In the first two months of the first quarter, Trinity was executing on a number of optimization efforts, which we had previously communicated to the market. The purpose of these efforts was to improve our go-forward cost structure and decrease our cost of capital to accelerate our competitiveness in the marketplace. Certain of our COVID-19 response actions, which I'll address next, are highlighted in the supplemental materials on slide three. As the gravity of the implications surrounding COVID-19 began to unfold, Trinity's leaders took significant steps to protect the health and safety of our employees and to support the communities in which we live and operate. We instituted policies and procedures that adhere to CDC and WHO guidelines for social distancing, cleaning and sanitizing, restricting visitation at our manufacturing facilities, and establishing remote work arrangements for our corporate and services workforce. We restricted employee travel and have shifted most of our customer interactions to virtual methods. We have maintained our ongoing operations. To date, we have not experienced any production delays in delivering products or services to our customers, and we continue to work closely with our customers to understand their needs. Procurement teams have also monitored our supply chains for potential disruptions, and I'm pleased that they have been able to ensure continuity of operations to date. Our first tier suppliers are predominantly based in North America and have yet to be significantly affected by the restricted flow of goods from other countries. We have established contingency plans should we begin to see major disruptions in our second and third tier supply network. On our last conference call, we discussed the right-sizing actions we anticipated from the industrial slowdown and decline in railcar demand in 2019. In March, as we began seeing the impacts from COVID-19, we re-evaluated the potential for lower railcar volumes and equipment demand in the near term. As a result, we took additional action and further reduced our manufacturing workforce by 30% from year end to align with our production capacity. Based on our current backlog visibility, we believe our manufacturing platform is appropriately sized to serve our customers. The second point I wanted to be sure we addressed today is our belief in the financial resiliency of Trinity's business model. During our COVID-19 preparedness actions, we extensively reviewed our financial models and assumptions, stress testing our balance sheet and liquidity against various scenarios as deep or deeper than those experienced during the financial crisis in 2009 and 2010. We'll go into more detail on the analysis later in the prepared remarks. During railcar down cycles, the long-term nature of the contracts in Trinity's leasing business protect the company from short-term market disruptions and are critical to the relative stability and cash flow generation of the company. There are also counter-cyclical aspects of our operational cash flow from working capital release, given the highly variable cost structure of our manufacturing business. another driver of value creation for our business model is the significant tax efficiencies that come from combining our leasing company and our manufacturing business as we continue to grow the lease fleet the accelerated depreciation of rail cars offsets taxable income from our other businesses the net operating losses generated are then generally carried forward to reduce future taxable income The recently passed CARES Act further enhances the tax synergies of the rail platform. Trinity will utilize the tax losses generated in 2018 and 2019, primarily from accelerated depreciation associated with our lease lead investment, to recover taxes paid in prior years at higher tax rates. By year end, we expect to receive $300 million in tax refunds resulting from the lost carryback provisions in the legislation. I could not have imagined that in my first few months as Trinity's new CEO, I would be leading this great company through one of the biggest financial and economic crises our markets have seen. Our leadership team has deep experience in managing through rail cycle volatility, and they are prepared for the challenge at hand. Based on our current knowledge and analysis of market conditions, we believe Trinity's platform and cash generation capability can withstand the global pandemic and take advantage of value creation opportunities we may find. I expect that through it all, we will emerge with a champion spirit and prove that a rail platform is built to deliver, to deliver essential goods to society, to deliver innovative solutions, products, and world-class service to our customers, and also to deliver long-term value creation and returns to shareholders. I'll now turn the call over to Melinda and Eric to talk through our operational and financial remarks in more detail before closing with my final point on our go-forward business assumption.