Trinity Industries (TRN), the $3 Billion marketcap entity based out of Texas, is a DIVERSIFIED industrial company by every sense of the word. Its Business Segments include :
* Rail : manufacturer of railcars + provider railcar leasing services
* Construction Products : manufacturer of highway equipment, provider of highway services, supplier of construction materials including concrete and asphalt
* Inland Barge : manufacturer of large, inland sea platforms needed for the shipping of both dry goods (grain, coal, etc.) and liquid cargo (crude oil, ethanol, fertilizer, chemicals, etc.)
* Energy Equipment : manufacturer of structural WIND towers + propane tanks
While its Largest business unit by FAR is RAIL (per the below, 'Rail-related' operations accounted for over 70% of the company's total 2Q08 sales), I find the company's Energy Equipment business to be the most promising and exciting. Trinity is the country's largest manufacturer of structured WIND Towers. Per their 2Q08 earnings report, the company's WIND Tower division DOUBLED its Sales year over year and now accounts for approx 11% of the company's total revenues. Perhaps more significant is the fact that the company's Wind Tower order backlog grew 88% year over year (to $1.5 Billion) and Trinity now expects total 2008 WIND division sales of about $425 million.
For my future reference, below are some more interesting TRN 2Q08 Earnings Report #'s :
* Total 2Q08 Sales: Up 6% to $945 million (from 2Q07's $892 m)
Rail Related Sales: Down 11% to $677 m (from $762)
Construction: Up 11% to $219 m (from $197)
Energy Equipment: Up 58% to $157 m (from $99)
Inland Barge: Up 25% to $151 m (from $121)
WIND Tower Division: Up 100% to $106 m (up from $53)
* Total 2Q08 Operating Profits: Up 35% to $150 million ($111 m)
Rail Related Profits: Down 21% to $108 m ($137)
Construction: Up 31% to $21 m ($16)
Energy Equipment: Up 117% to $25 m ($12)
Inland Barge: Up 286% to $27 m ($7)
WIND Tower Divison: Not disclosed
* Total 2Q08 Operating Margins: 15.9% (12.4% a year ago)
Rail Related: 15.9% (18.0)
Construction: 9.6% (8.1)
Energy Equipment: 16.1% (12.1)
Inland Barge: 17.9% (5.8)
* 'Rail-related' sales and profits above are derived from combining the results of two of TRN's Rail-Related business units - 'Rail Group' and 'Railcar Leasing and Management Services'
* TRN's 'Wind Tower' sales and profit results are seperately broken out above but are actually included in the company's 'Energy Equipment Services' business unit
* Wind Tower BACKLOG grew 88% yoy to $1.5 Billion (from 2Q07's $800 million)
* Wind Tower Sales as a % of Total Energy Equipment revenues grew from 54% in 2Q07 to 68% in 2Q08
* Wind Tower Sales as a % of Total Company Sales grew from 6% of TRN's total 2Q07 to 11% in 2Q08 (in other words, the sales impact of TRN's WIND tower business doubled year over year in terms of influence to the company's Top Line)
* Energy Equipment Sales as a % of Total Company Sales grew from 11% of TRN's total 2Q07 to 17% in 2Q08
* Rail-related Sales as a % of Total Company Sales decreased from 85% in 2Q07 to 72% in 2Q08
* Rail-related Profits as a % of Total Company Profits decreased from 91% in 2Q07 to 72% in 2Q08
* Energy Equipment Profits as a % of Total Company Profits increased from 11% in 2Q07 to 17% in 2Q08
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* TRN expects Railcar (not including Rail leasing services) margins to decline from 12.3% in 2Q08 to 6-8% in 3Q and 3-5% in 4Q due to higher commodity costs ('plate' steel) and a more competitive pricing environment...TRN's 2Q07 railcar margin was 16.1%...TRN's previous provided railcar margin guidance for the 2nd half of 2008 was 6-9%
* TRN's railcar order backlog of $2.4 Billion (28,600 railcars) comprise 46% of the Industry's TOTAL
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* CEO Timothy Wallace on TRN's WIND division: "I remain very optimistic about our structural Wind Towers business. We continue to explore additional ways to expand our participation in the wind energy market. We are very pleased with the Texas Public Utility Commission’s decision to fund additional transmission lines for wind energy. Texas is at the heart of our market and we expect the TUC’s action will encourage our customers to pursue additional wind farms. We have targeted Mexico and the central part of the United States, as our key markets. Order enquiries remain very strong and we expect our backlog to grow, as we progress through the year. A large backlog enables us to stage our growth and maximize our efficiencies. Later this year, we will start converting two existing railcar facilities to Wind Tower production. This is part of an expansion plan that we have in progress to satisfy the growing demand for wind towers. Our ability to convert a facility from one product to another is a key strength in our company. It allows us to aggressively pursue orders for a variety of products. We can select products, which provide the best returns and then quickly ramp up facilities. Our highly skilled workforce makes this possible...We do know though that, We are the Largest Producer of Wind Towers in the Country."
Full Disclosure: I own shares of TRN.
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