Trinity Industries, Inc.

Good day and welcome to the Trinity Industries third quarter ended September 30, 2024 results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a comfort specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. Before we get started, let me remind you that 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. The 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... the business issues and risks, a change in any of which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. I would now like to turn the conference over to Leigh Ann Mann, Vice President, Investor Relations. Please go ahead.

Thank you, Operator. Good morning, everyone. We appreciate you joining us for the company's third quarter 2024 financial results conference call. Our prepared remarks will include comments from Jane Savage, Trinity's chief executive officer and president, and Eric Marchetto, the company's chief financial officer. We will hold a Q&A session following the prepared remarks from our leader. During the call today, we will reference certain non-GAAP financial metrics. The reconciliations of the non-GAAP metrics to comparable GAAP measures are provided in the appendix of the quarterly investor slides. which are accessible on our investor relations website at www.tren.net. These slides are under the events and presentations portion of the website, along with the third quarter earnings conference call event link. A replay of today's call will be available after 1030 a.m. Eastern time through midnight on November 7th, 2024. Replay information is available under the events and presentations page on our investor relations website. It is now my pleasure to turn the call over to Jean.

Thank you, Leanne, and good morning, everyone. Trinity's third quarter results once again demonstrate strong performance across our business. Our quarterly adjusted EPS of 43 cents represents a 17-cent increase year over year, and operating profit has risen by 22% compared to the previous year. These impressive results are driven by steady progress and consistent performance throughout 2024, which we expect to continue in the fourth quarter. Consequently, we are raising and tightening our full-year EPS guidance to a range of $1.70 to $1.80. Eric will provide more details on fourth quarter expectations in his prepared remarks. Before talking about Trinity's segment results, I'd like to provide an overview of the current market conditions. With just two months remaining in the year, we are confident in our forecast of roughly 40,000 industry deliveries in 2024. Car loads increased in the third quarter as compared to the third quarter of the previous year, primarily driven by the agriculture and chemical end markets. We expect a large corn and soybean crop harvest, which is also contributing to this carload growth. Plate expansion and improvements in railroad service have been key themes in 2024. Rail service continues to trend positively, and as the railroads sustain this type of performance, it should encourage shippers to incorporate more rail shipments in their supply chain management. And now let's pivot to the performance of our business in the third quarter. Trinity's business consists of two main segments, the Railcar Leasing and Services Group and the Rail Products Group. I'll start my comments in the Leasing and Services segment, which includes our leasing, maintenance, and logistics services businesses. I'd like to note that we are particularly pleased with the benefits of aligning our leasing and maintenance businesses into the same segment. This move has resulted in better performance with lower costs. For the segment, revenues increased by approximately 11% compared to the previous year, driven by favorable pricing and a higher volume of external repairs, as well as improved lease rates and net additions to the lease fleet. Additionally, segment operating profit is 20% higher than a year ago. Segment operating margin, including gains, was 39.8% in the quarter, which aligns with our forecasted guidance. Complete utilization remains favorable at 96.6% for the quarter. We have observed an improvement in utilization so far in the fourth quarter and anticipate concluding the year with a higher utilization rate. We completed $67 million of lease portfolio sales in the quarter, resulting in gains of $11 million. Our quarterly net fleet investment was $41 million, and year-to-date, we have invested $87 million in our lease fleet. The future lease rate differential, or FLRD, was 28.4% for the quarter, marking 10 consecutive quarters of double-digit positive FLRD, During these 10 quarters, we have repriced 48% of our fleet, and the impact of the repricing is becoming more evident in our top-line results. We expect this trend to continue as we are consistently repricing our fleet upward to market rates, and the North American fleet remains in balance supporting these rates. The renewal success rate was 78% for the quarter, highlighting that railcar demand remains high and in-market economics are supportive of higher lease rates. As we continue to expand our service offerings, we are encouraged by the progress we are making. Our efforts are gaining traction with our customers as they recognize the value our services bring to their operational efficiency. Moving to the rail product segment, Our third quarter operating margin of 8.1% reflects year-over-year improvement in labor and operational efficiencies and favorable railcar mix. Revenues in the segment were $603 million. This quarter, we observed a slight shift toward tank car deliveries, though production still continues to be significantly led by freight cars. Additionally, as we expected, we shifted more of our production into our fleet as compared to the second quarter. We anticipate these trends to continue in the fourth quarter. We expect to finish the year with an operating margin in the high end of the forecasted range of 6% to 8% in the rail product segment. During the quarter, we successfully delivered 4,360 new and received 1,810 new grab car orders, ending the quarter with a backlog of $2.4 billion. In the third quarter, we saw several customers deferring their order decisions to the fourth quarter. As a result, we are experiencing strong order activity in the fourth quarter to date. Additionally, customers are expanding their existing orders with tap-on orders. In conclusion, I'm pleased with our business performance this quarter and throughout 2024. Our leasing business continues to operate consistently and favorably, bolstered by a more efficient production operation, a robust maintenance network, and a growing parts and services business that supports our fleet of 144,000 owned and managed rail cars. I will now turn to Eric to discuss the financial statements and provide an update to our outlook for the remainder of the year.