- New Infrastructure Company to Focus on
Infrastructure Products and Services in North America
- Trinity Industries to Operate
Industry-Leading Integrated Rail Leasing, Manufacturing, and
Services Business, Providing Single Source for Comprehensive Rail
Transportation Solutions and Services in North America
- Standalone Companies to Pursue Distinct
Business Strategies and Investment Decisions Best Suited to Enhance
Long-Term Growth and Shareholder Value Creation
- Announces Substantial Increase in Share
Repurchase Authorization from $250 Million to $500 Million over Two
Years
- Announces Quarterly Dividend of 13
Cents Per Share
Trinity Industries, Inc. (NYSE: TRN) (“Trinity”) today announced
that its Board of Directors has unanimously approved a plan to
pursue a spin-off of the Company’s infrastructure-related
businesses to Trinity shareholders. The separation is planned as a
tax-free spin-off transaction to the Company's shareholders for
U.S. federal income tax purposes and is expected to be completed in
the second half of 2018.
The transaction is expected to result in two separate public
companies that will benefit from leading positions in their
respective industries, strong free cash flow generation, and
compelling growth opportunities. Following the transaction, each
company will have distinct corporate strategies and capital
allocation priorities:
- Trinity’s portfolio of businesses will
be comprised primarily of Trinity’s industry-leading rail-related
businesses which are marketed under the trade name TrinityRail®.
TrinityRail’s integrated business model consisting of rail
manufacturing, leasing, and services provides customers with a
comprehensive offering of rail transportation solutions, products,
and services. TrinityRail’s financial profile is expected to
generate stable cash flows and earnings growth opportunities
throughout the manufacturing cycle, giving the company an ability
to pursue an optimized capital structure, efficiently allocate
capital, and effectively leverage its multiple rail platforms.
- The new infrastructure company will be
a growth-oriented company that is focused on infrastructure-related
products and services. Trinity’s infrastructure businesses have
leading positions in construction, energy, and marine markets
throughout North America and are also positioned to grow free cash
flows. The new infrastructure company will have the balance sheet
strength and capital allocation flexibility to pursue growth
through acquisitions and to capitalize on the large and growing
market opportunity in North American infrastructure spending.
Timothy R. Wallace, Trinity’s Chairman, CEO and President, said:
“We believe establishing two separate, independently focused public
companies will allow each company to more closely align its
strategic objectives and capital allocation priorities. This will
also give the investment community better insight into the
potential value our businesses can continue to create. We expect
the two companies to be strong, high-performing businesses with the
operating acumen and culture to thrive, creating employment
opportunities while continuing to provide customers with the high
quality products and services they have always expected from
Trinity’s businesses.”
“I am very excited about the opportunities and potential
shareholder value we are creating by reconfiguring our portfolio of
market-leading industrial companies,” added Mr. Wallace. “While
there is still significant work to be done before we can complete
the spin-off transaction, we are confident that we can set each
business on the path to create long-term shareholder value.”
Mr. Wallace continued, “The $500 million share repurchase
program we announced today is an important step in investing our
capital for long-term value creation and emphasizes our commitment
to disciplined capital allocation policies to enhance growth,
liquidity, and total shareholder returns.”
Mr. Wallace concluded, “In 2018, Trinity will reach its 85th
year as a company, and its 60th year as a public company. As
Trinity has grown through the years, we have attracted incredible
teams of dedicated employees who have worked together to build an
unparalleled portfolio of industry-leading businesses. Trinity’s
senior leadership and Board, along with a team of external advisors
have spent a great deal of time analyzing our portfolio of
companies. We are proud of Trinity Industries’ breadth, scale, and
strength and believe that our success to date establishes an
excellent foundation for our businesses to continue to build upon
our rich legacy. We will continue to update our stakeholders as we
progress through this process.”
Benefits of the Spin-off
Transaction
Enhances Overall Growth Potential through Focused
CompaniesTrinity believes that both the growth potential and
overall valuation of its businesses will be enhanced as a result of
separating its current portfolio into two separate companies.
Trinity Industries and the new infrastructure company will each be
more focused and competitive as leading standalone companies in
their respective industries.
Enables Each Company to Optimize Balance Sheet and Capital
Allocation PrioritiesEach company plans to pursue distinct
investment decisions with capital structures based on their needs
and potential opportunities, and will be able to create value by
allocating capital to the alternatives that achieve the best
returns for their respective shareholders.
Allows Businesses to Advance Differentiated Investment
ThesesEach company will be positioned to focus attention on a
distinct investment thesis, enabling investors to more clearly
evaluate the inherent value of each company's portfolio of assets
and invest accordingly.
Maintains Benefits of TrinityRail’s Vertically Integrated
Railcar Leasing and Manufacturing StructureAs a premier
provider of rail products and services in North America,
TrinityRail’s integrated business model offers an unparalleled
value proposition for customers, creating a “one-stop-shop”
experience and a comprehensive range of railcar services for
industrial producers, railroads, lessors, and institutional
investors. The structure of the spin-off will preserve the
TrinityRail integrated business model and its expansive market
platforms, allowing Trinity to continue to deliver valuable
products and solutions to customers.
Additional Details and Next StepsThe separation process
will include a thorough review of the necessary Board membership,
executive leadership, and management teams in order to provide the
optimal management structure for each business. Specific details
about Board members, executive leadership, and management teams
will be made available in due course.
The spin-off will be subject to finalization of the entity
structure of the spun-off business, assurance that the separation
will be tax-free to the Company’s shareholders for U.S. federal
income tax purposes, finalization of the capital structure of the
two companies, the effectiveness of appropriate filings with the
Securities and Exchange Commission, final approval from the
Company’s Board of Directors, and other customary conditions. The
Company may, at any time and for any reason until the proposed
transaction is complete, abandon the separation or modify or change
its terms, including the individual businesses and components of
each of the two companies. The separation is expected to be
completed in the second half of 2018, but there can be no assurance
regarding the ultimate timing of the separation or that the
separation will ultimately occur.
Share Repurchase Program and Quarterly DividendThe
Company also announced that its Board of Directors has authorized a
new $500 million share repurchase program, doubling the size of the
Company’s existing authorization which expires on December 31,
2017. The new $500 million program will be effective January
1, 2018 through December 31, 2019.
The Company also declared its quarterly dividend to be 13 cents
per share on its $0.01 par value common stock. The quarterly cash
dividend, representing Trinity’s 215th consecutively paid dividend,
is payable January 31, 2018 to stockholders of record on January
12, 2018.
AdvisorsJ.P. Morgan Securities, LLC is serving as
financial advisor to Trinity Industries; Skadden, Arps, Slate
Meagher & Flom LLP is serving as legal counsel; and KPMG LLP is
serving as tax advisor. Evercore Group L.L.C. is also advising the
Company in this process.
About Trinity Industries, Inc.Trinity Industries, Inc.,
headquartered in Dallas, Texas, is a diversified industrial company
that owns complementary market-leading businesses providing
products and services to the energy, chemical, agriculture,
transportation, and construction sectors, among others. Trinity
reports its financial results in five principal business segments:
the Rail Group, the Railcar Leasing and Management Services Group,
the Inland Barge Group, the Construction Products Group, and the
Energy Equipment Group. For more information, visit:
www.trin.net.
Some statements in this release, which are not historical facts,
are “forward-looking statements” as defined by the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements include statements about Trinity's estimates,
expectations, beliefs, intentions or strategies for the future, and
the assumptions underlying these forward-looking statements.
Forward-looking statements may include, but are not limited to,
statements regarding the anticipated separation of Trinity into two
separate public companies, the expected timetable for completing
the transaction, future financial and operating performance of each
company, benefits and synergies of the transaction, strategic and
competitive advantages of each company, future opportunities for
each company and any other statements regarding events or
developments that Trinity believes or anticipates will or may occur
in the future. Trinity uses the words “anticipates,” “assumes,”
“believes,” “estimates,” “expects,” “intends,” “forecasts,” “may,”
“will,” “should,” “guidance,” “outlook,” and similar expressions to
identify these forward-looking statements. Forward-looking
statements speak only as of the date of this release, and Trinity
expressly disclaims any obligation or undertaking to disseminate
any updates or revisions to any forward-looking statement contained
herein to reflect any change in Trinity’s expectations with regard
thereto or any change in events, conditions or circumstances on
which any such statement is based. There is no assurance that the
proposed transaction will be completed, that the Company's Board of
Directors will continue to pursue a proposed transaction (even if
there are no impediments to completion), that the Company will be
able to separate its businesses, or that the proposed transaction
will be the most beneficial alternative considered. Forward-looking
statements involve risks and uncertainties that could cause actual
results to differ materially from historical experience or our
present expectations, including but not limited to risks and
uncertainties regarding economic, competitive, governmental, and
technological factors affecting Trinity’s operations, markets,
products, services and prices, as well as any changes in or
abandonment of the proposed separation or the ability to effect the
separation and satisfy the conditions to the proposed separation,
and such forward-looking statements are not guarantees of future
performance.
For a discussion of such risks and uncertainties, which could
cause actual results to differ from those contained in the
forward-looking statements, see “Risk Factors” and “Forward-Looking
Statements” in the Company's Annual Report on Form 10-K for the
most recent fiscal year, and as may be revised and updated by our
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
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version on businesswire.com: http://www.businesswire.com/news/home/20171212005712/en/
Trinity Industries, Inc.Investor Contact:Preston Bass,
214-631-4420Director, Investor RelationsorMedia Contact:Jack
Todd, 214-589-8909Vice President, Public Affairs
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