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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________ .
Commission File Number 1-6903
(Exact name of registrant as specified in its charter)
Delaware75-0225040
(State or Other Jurisdiction of Incorporation or Organization)(I.R.S. Employer Identification No.)
14221 N. Dallas Parkway, Suite 1100
Dallas,Texas75254-2957
(Address of principal executive offices)
(Zip Code)
(214) 631-4420
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange
on which registered
Common StockTRNNew York Stock Exchange
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ  No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes þ   No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer þ Accelerated filer ¨ Non-accelerated filer ¨
Smaller reporting company  Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  No þ
At April 20, 2021, the number of shares of common stock, $0.01 par value, outstanding was 109,335,696.



TRINITY INDUSTRIES, INC.
FORM 10-Q
TABLE OF CONTENTS
 
CaptionPage



2

Table of Contents
PART I
Item 1. Financial Statements
Trinity Industries, Inc. and Subsidiaries
Consolidated Statements of Operations
(unaudited)
 Three Months Ended
March 31,
 20212020
 (in millions, except per share amounts)
Revenues:
Manufacturing$215.5 $379.1 
Leasing183.3 236.1 
398.8 615.2 
Operating costs:
Cost of revenues:
Manufacturing199.3 343.4 
Leasing96.7 138.6 
296.0 482.0 
Selling, engineering, and administrative expenses:
Manufacturing20.4 21.9 
Leasing11.3 14.3 
Other22.7 28.1 
54.4 64.3 
Gains on dispositions of property:
Lease portfolio sales (Note 1)1.7 8.7 
Other9.8 0.9 
11.5 9.6 
Restructuring activities, net(0.3)5.5 
Total operating profit60.2 73.0 
Other (income) expense:
Interest income (0.1)(2.4)
Interest expense51.4 61.3 
Other, net 1.2 (0.8)
52.5 58.1 
Income from continuing operations before income taxes7.7 14.9 
Provision (benefit) for income taxes:
Current4.8 (372.8)
Deferred1.2 225.2 
6.0 (147.6)
Income from continuing operations1.7 162.5 
Loss from discontinued operations, net of provision (benefit) for income taxes of $0.4 and $(0.1)
(0.4)(0.2)
Net income1.3 162.3 
Net income (loss) attributable to noncontrolling interest(2.0)0.6 
Net income attributable to Trinity Industries, Inc.$3.3 $161.7 
Basic earnings per common share:
Income from continuing operations$0.03 $1.36 
Income (loss) from discontinued operations  
Basic net income attributable to Trinity Industries, Inc.$0.03 $1.36 
Diluted earnings per common share:
Income from continuing operations$0.03 $1.33 
Income (loss) from discontinued operations  
Diluted net income attributable to Trinity Industries, Inc.$0.03 $1.33 
Weighted average number of shares outstanding:
Basic110.2 118.0 
Diluted112.6 119.9 
See accompanying notes to Consolidated Financial Statements.
3

Table of Contents
Trinity Industries, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income (Loss)
(unaudited)
Three Months Ended
March 31,
 20212020
 (in millions)
Net income$1.3 $162.3 
Other comprehensive income (loss):
Derivative financial instruments:
Unrealized gains (losses) arising during the period, net of tax benefit (expense) of $(2.0) and $7.7
6.2 (25.6)
Reclassification adjustments for (gains) losses included in net income, net of tax benefit of $0.9 and $0.5
(0.9)1.0 
Defined benefit plans:
Amortization of prior service cost, net of tax benefit of $ and $0.1
 0.2 
Amortization of net actuarial losses, net of tax benefit of $ and $0.3
0.1 1.2 
5.4 (23.2)
Comprehensive income6.7 139.1 
Less: comprehensive income (loss) attributable to noncontrolling interest(1.7)0.9 
Comprehensive income attributable to Trinity Industries, Inc.$8.4 $138.2 
See accompanying notes to Consolidated Financial Statements.
4

Table of Contents
Trinity Industries, Inc. and Subsidiaries
Consolidated Balance Sheets
March 31, 2021December 31, 2020
(unaudited)
 (in millions)
ASSETS
Cash and cash equivalents$178.1 $132.0 
Receivables, net of allowance197.3 199.0 
Income tax receivable440.5 445.8 
Inventories:
Raw materials and supplies174.3 176.4 
Work in process59.5 52.2 
Finished goods87.1 92.6 
320.9 321.2 
Restricted cash, including partially-owned subsidiaries of $32.9 and $31.1
107.4 96.4 
Property, plant, and equipment, at cost, including partially-owned subsidiaries of $1,931.1 and $1,931.6
9,259.8 9,193.0 
Less accumulated depreciation, including partially-owned subsidiaries of $537.6 and $525.7
(2,233.0)(2,189.6)
7,026.8 7,003.4 
Goodwill215.7 208.8 
Other assets288.8 295.2 
Total assets$8,775.5 $8,701.8 
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable$159.2 $156.4 
Accrued liabilities276.3 314.7 
Debt:
Recourse398.2 448.2 
Non-recourse:
Wholly-owned subsidiaries3,550.5 3,340.5 
Partially-owned subsidiaries1,216.4 1,228.3 
5,165.1 5,017.0 
Deferred income taxes1,051.5 1,047.5 
Other liabilities155.5 150.2 
Total liabilities6,807.6 6,685.8 
Preferred stock – 1.5 shares authorized and unissued
  
Common stock – 400.0 shares authorized
1.1 1.1 
Capital in excess of par value6.1  
Retained earnings1,749.4 1,769.4 
Accumulated other comprehensive loss(25.8)(30.9)
Treasury stock(38.4)(0.8)
1,692.4 1,738.8 
Noncontrolling interest275.5 277.2 
Total stockholders' equity1,967.9 2,016.0 
Total liabilities and stockholders' equity$8,775.5 $8,701.8 
See accompanying notes to Consolidated Financial Statements.
5

Table of Contents
Trinity Industries, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(unaudited)
Three Months Ended
March 31,
 20212020
 (in millions)
Operating activities:
Net income$1.3 $162.3 
Loss from discontinued operations, net of provision (benefit) for income taxes0.4 0.2 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization66.6 66.9 
Stock-based compensation expense5.4 7.3 
Provision for deferred income taxes1.2 225.2 
Net gains on lease portfolio sales(1.7)(8.7)
Gains on dispositions of property and other assets (10.5)(4.7)
Non-cash impact of restructuring activities 5.2 
Non-cash interest expense3.0 3.7 
Loss on early extinguishment of debt 5.0 
Other5.5 2.0 
Changes in operating assets and liabilities:
(Increase) decrease in receivables1.0 (37.8)
(Increase) decrease in income tax receivable1.2 (374.4)
(Increase) decrease in inventories2.5 (8.6)
(Increase) decrease in other assets6.4 159.4 
Increase (decrease) in accounts payable2.8 3.3 
Increase (decrease) in accrued liabilities(10.4)(30.8)
Increase (decrease) in other liabilities(4.6)(1.7)
Net cash provided by operating activities – continuing operations70.1 173.8 
Net cash used in operating activities – discontinued operations(0.4)(0.2)
Net cash provided by operating activities69.7 173.6 
Investing activities:
Proceeds from dispositions of property and other assets19.8 9.8 
Proceeds from lease portfolio sales17.3 68.5 
Capital expenditures – leasing (net of sold lease fleet railcars owned one year or less with a net cost of $42.5 for the three months ended March 31, 2020)
(107.9)(129.2)
Capital expenditures – manufacturing and other(8.5)(14.0)
Acquisitions, net of cash acquired(16.6) 
Other(0.1)0.3 
Net cash used in investing activities(96.0)(64.6)
Financing activities:
Payments to retire debt(185.3)(471.4)
Proceeds from issuance of debt327.7 452.4 
Shares repurchased(35.7)(35.4)
Dividends paid to common shareholders(23.2)(22.7)
Purchase of shares to satisfy employee tax on vested stock(0.1) 
Net cash provided by (used in) financing activities83.4 (77.1)
Net increase in cash, cash equivalents, and restricted cash57.1 31.9 
Cash, cash equivalents, and restricted cash at beginning of period228.4 277.6 
Cash, cash equivalents, and restricted cash at end of period$285.5 $309.5 
See accompanying notes to Consolidated Financial Statements.
6

Table of Contents
Trinity Industries, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity
(unaudited)
Common
Stock
Capital in
Excess of
Par Value
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Treasury
Stock
Trinity
Stockholders’
Equity
Noncontrolling
Interest
Total
Stockholders’
Equity
 Shares
$0.01 Par Value
SharesAmount
 (in millions, except par value and per common share amounts)
Balances at
   December 31, 2020
111.2 $1.1 $ $1,769.4 $(30.9)(0.1)$(0.8)$1,738.8 $277.2 $2,016.0 
Net income (loss)— — — 3.3 — — — 3.3 (2.0)1.3 
Other comprehensive income— — — — 5.1 — — 5.1 0.3 5.4 
Cash dividends declared on common stock (1)
— — — (23.3)— — — (23.3)— (23.3)
Stock-based compensation expense
— — 5.4 — — — — 5.4 — 5.4 
Shares repurchased— — — — — (1.3)(36.8)(36.8)— (36.8)
Settlement of share-based awards, net— — 0.7 — — — (0.8)(0.1)— (0.1)
Balances at
   March 31, 2021
111.2 $1.1 $6.1 $1,749.4 $(25.8)(1.4)$(38.4)$1,692.4 $275.5 $1,967.9 

Common
Stock
Capital in
Excess of
Par Value
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Treasury
Stock
Trinity
Stockholders’
Equity
Noncontrolling
Interest
Total
Stockholders’
Equity
 Shares
$0.01 Par Value
SharesAmount
 (in millions, except par value and per common share amounts)
Balances at
   December 31, 2019
119.7 $1.2 $ $2,182.9 $(153.1)(0.1)$(0.9)$2,030.1 $348.8 $2,378.9 
Net income— — — 161.7 — — — 161.7 0.6 162.3 
Other comprehensive income (loss)— — — — (23.5)— — (23.5)0.3 (23.2)
Cash dividends declared on common stock (1)
— — — (24.6)— — — (24.6)— (24.6)
Stock-based compensation expense
— — 7.3 — — — — 7.3 — 7.3 
Shares repurchased— — — — — (1.9)(35.4)(35.4)— (35.4)
Settlement of share-based awards, net— — 0.7 — — — (0.9)(0.2)— (0.2)
Cumulative effect of adopting new accounting standard
— — — 0.5 — — — 0.5 — 0.5 
Other
— — — 0.5 — — — 0.5 — 0.5 
Balances at
   March 31, 2020
119.7 $1.2 $8.0 $2,321.0 $(176.6)(2.0)$(37.2)$2,116.4 $349.7 $2,466.1 
(1) Dividends of $0.21 and $0.19 per common share for the three months ended March 31, 2021 and 2020, respectively.

See accompanying notes to Consolidated Financial Statements.
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Trinity Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Note 1. Summary of Significant Accounting Policies
Basis of Presentation
The foregoing Consolidated Financial Statements are unaudited and have been prepared from the books and records of Trinity Industries, Inc. and its consolidated subsidiaries (“Trinity,” “Company,” “we,” “our,” or "us") including the accounts of our wholly-owned subsidiaries and partially-owned subsidiaries, TRIP Rail Holdings LLC (“TRIP Holdings”) and RIV 2013 Rail Holdings LLC ("RIV 2013"), in which we have a controlling interest. In our opinion, all normal and recurring adjustments necessary for a fair presentation of our financial position as of March 31, 2021, and the results of operations for the three months ended March 31, 2021 and 2020, and cash flows for the three months ended March 31, 2021 and 2020, have been made in conformity with generally accepted accounting principles. All significant intercompany accounts and transactions have been eliminated.
Due to seasonal and other factors, including the impacts of the coronavirus pandemic (“COVID-19”) and the related governmental response, the results of operations for the three months ended March 31, 2021 may not be indicative of expected results of operations for the year ending December 31, 2021. These interim financial statements and notes are condensed as permitted by the instructions to Form 10-Q and should be read in conjunction with our audited Consolidated Financial Statements included in our Form 10-K for the year ended December 31, 2020.
Revenue Recognition
Revenue is measured based on the allocation of the transaction price in a contract to satisfied performance obligations. The transaction price does not include any amounts collected on behalf of third parties. We recognize revenue when we satisfy a performance obligation by transferring control over a product or service to a customer. Payments for our products and services are generally due within normal commercial terms. The following is a description of principal activities from which we generate our revenue, separated by reportable segments. See Note 3 for a further discussion regarding our reportable segments.
Railcar Leasing and Management Services Group
In our Railcar Leasing and Management Services Group ("Leasing Group"), revenue from rentals and operating leases, including contracts that contain non-level fixed lease payments, is recognized monthly on a straight-line basis. Leases not classified as operating leases are generally considered sales-type leases as a result of an option to purchase.
We review our operating lease receivables for collectibility on a regular basis, taking into consideration changes in factors such as the lessee’s payment history, the financial condition of the lessee, and business and economic conditions in the industry in which the lessee operates. In the event that the collectibility of a receivable with respect to any lessee is no longer probable, we derecognize the revenue and related receivable and recognize future revenue only when the lessee makes a rental payment. Contingent rents are recognized when the contingency is resolved.
Selling profit or loss associated with sales-type leases is recognized upon lease commencement, and a net investment in the sales-type lease is recorded on the Consolidated Balance Sheet. Interest income related to sales-type leases is recognized over the lease term using the effective interest method. We had no sales-type leases as of March 31, 2021 and December 31, 2020.
During the fourth quarter of 2020, we began presenting sales from our lease fleet in the Railcar Leasing and Management Services Group on a net basis regardless of the age of railcar that is sold. Historically, in accordance with ASC 606, Revenue from contracts with customers, we presented sales of railcars from the lease fleet on a gross basis in Revenues – Leasing and Cost of revenues – Leasing in our Consolidated Statements of Operations if the railcars had been owned for one year or less at the time of sale. Sales of railcars from the lease fleet owned for more than one year had historically been presented as a net gain or loss from the disposal of a long-term asset. We will now report all sales of railcars from the lease fleet as a net gain or loss from the disposal of a long-term asset in accordance with ASC 610-20, Gains and losses from the derecognition of non-financial assets. These sales will be presented in the Lease portfolio sales line in our Consolidated Statements of Operations; however, because this change in presentation was effected on a prospective basis beginning in the fourth quarter of 2020, lease portfolio sales for the three months ended March 31, 2020 only include sales of railcars from the lease fleet owned for more than one year. We have concluded that the new presentation is appropriate given the significant change in the strategic focus of the Company. The new presentation had no effect on the Company’s operating profit, net income, earnings per share, or Consolidated Balance Sheet.
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We account for shipping and handling costs as activities to fulfill the promise to transfer the good; as such, these fees are recorded in revenue. The fees and costs of shipping and handling activities are accrued when the related performance obligation has been satisfied.
Rail Products Group
Our railcar manufacturing business recognizes revenue when the customer has submitted its certificate of acceptance and legal title of the railcar has passed to the customer. Certain contracts for the sales of railcars include price adjustments based on steel-price indices; this amount represents variable consideration for which we are unable to estimate the final consideration until the railcar is delivered.
Within our maintenance services business, revenue is recognized over time as repair and maintenance projects are completed, using an input approach based on the costs incurred relative to the total estimated costs of performing the project. We recorded contract assets of $6.2 million and $4.4 million as of March 31, 2021 and December 31, 2020, respectively, related to unbilled revenues recognized on repair and maintenance services that have been performed, but for which the entire project has not yet been completed, and the railcar has not yet been shipped to the customer. These contract assets are included within the Receivables, net of allowance line in our Consolidated Balance Sheets.
All Other
Our highway products business recognizes revenue when shipment has occurred and legal title of the product has passed to the customer.
Unsatisfied Performance Obligations
The following table includes estimated revenue expected to be recognized in future periods related to performance obligations that are unsatisfied or partially satisfied as of March 31, 2021 and the percentage of the outstanding performance obligations as of March 31, 2021 expected to be delivered during the remainder of 2021:
Unsatisfied performance obligations at March 31, 2021
Total
Amount
Percent expected to be delivered in 2021
 (in millions)
Rail Products Group:
Rail products:
External customers$694.1 
Leasing Group295.8 
$989.9 55.3 %
Maintenance services$3.3 100.0 %
Railcar Leasing and Management Services Group$78.2 17.6 %
The remainder of the unsatisfied performance obligations for the Rail Products Group is expected to be delivered through 2024. Unsatisfied performance obligations for the Railcar Leasing and Management Services Group are related to servicing, maintenance, and management agreements and are expected to be performed through 2029.
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Lease Accounting
Lessee
We are the lessee of operating leases predominantly for railcars, as well as office buildings, manufacturing equipment, and office equipment. Our operating leases have remaining lease terms ranging from one year to sixteen years, some of which include options to extend for up to five years, and some of which include options to terminate within one year. As of March 31, 2021, we had no material finance leases in which we were the lessee. Certain of our operating leases include lease incentives, which reduce the right-of-use asset and are recognized on a straight-line basis over the lease term. As applicable, the lease liability is also reduced by the amount of lease incentives that have not yet been reimbursed by the lessor.
The following table summarizes the impact of our operating leases on our Consolidated Financial Statements (in millions, except lease term and discount rate):
Three Months Ended
March 31,
20212020
Consolidated Statements of Operations
Operating lease expense$3.7 $3.9 
Short-term lease expense$ $0.2 
March 31, 2021December 31, 2020
Consolidated Balance Sheets
Right-of-use assets (1)
$86.9 $77.1 
Lease liabilities (2)
$110.2 $96.9 
Weighted average remaining lease term10.9 years11.3 years
Weighted average discount rate3.1 %3.3 %
Three Months Ended
March 31,
20212020
Consolidated Statements of Cash Flows
Cash flows from operating activities$3.7 $3.9 
Right-of-use assets recognized in exchange for new lease liabilities$13.8 $2.1 
(1) Included in other assets in our Consolidated Balance Sheet.
(2) Included in other liabilities in our Consolidated Balance Sheet.
Future contractual minimum operating lease liabilities will mature as follows (in millions):
Leasing GroupNon-Leasing GroupTotal
Remaining nine months of 2021$7.6 $3.1 $10.7 
20229.3 8.0 17.3 
20237.6 8.1 15.7 
20244.3 6.9 11.2 
20252.4 6.2 8.6 
Thereafter3.8 64.8 68.6 
Total operating lease payments$35.0 $97.1 $132.1 
Less: Present value adjustment(21.9)
Total operating lease liabilities$110.2 

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Lessor
Our Leasing Group enters into railcar operating leases with third parties with terms generally ranging between one year and ten years. The majority of our fleet operates on leases that earn fixed monthly lease payments. Generally, lease payments are due at the beginning of the applicable month. A portion of our fleet operates on per diem leases that earn usage-based variable lease payments. Some of our leases include options to extend the leases for up to five years, and a small percentage of our leases include options to terminate within one year with certain notice requirements and early termination penalties. As of March 31, 2021, non-Leasing Group operating leases were not significant, and we had no sales-type leases and no direct finance leases.
We manage risks associated with residual values of leased railcars by investing across a diverse portfolio of railcar types, staggering lease maturities within any given railcar type, avoiding concentration of railcar type and industry, and are active participants in secondary markets. Additionally, our lease agreements contain normal wear and tear return condition provisions and high mileage thresholds designed to protect the value of our residual assets. Our lease agreements do not contain any material residual value guarantees or restrictive covenants.
The following table summarizes the impact of our leases on our Consolidated Statement of Operations:
Three Months Ended
March 31,
20212020
(in millions)
Operating lease revenues$163.0 $172.2 
Variable operating lease revenues$13.4 $12.6 
Interest income on sales-type lease receivables$ $1.7 

Future contractual minimum revenues for operating leases will mature as follows (in millions)(1):
Remaining nine months of 2021$423.5 
2022457.5 
2023339.8 
2024252.7 
2025174.9 
Thereafter307.6 
Total$1,956.0 
(1) Total contractual minimum rental revenues on operating leases relates to our wholly-owned and partially-owned subsidiaries and sub-lease rental revenues associated with the Leasing Group's operating lease obligations.
Financial Instruments
We consider all highly liquid debt instruments to be either cash and cash equivalents if purchased with a maturity of three months or less, or short-term marketable securities if purchased with a maturity of more than three months and less than one year.
Financial instruments that potentially subject us to a concentration of credit risk are primarily cash investments including restricted cash and receivables. We place our cash investments in bank deposits and investment grade, short-term debt instruments and limit the amount of credit exposure to any one commercial issuer. The carrying values of cash, receivables, and accounts payable are considered to be representative of their respective fair values.
Concentrations of credit risk with respect to receivables are limited due to control procedures that monitor the credit worthiness of customers, the large number of customers in our customer base, and their dispersion across different end markets and geographic areas. Receivables are generally evaluated at a portfolio level based on these characteristics. As receivables are generally unsecured, we maintain an allowance for credit losses using a forward-looking approach based on historical losses and consideration of current and expected future economic conditions. Historically, we have observed that the likelihood of loss increases when receivables have aged beyond 180 days. When a receivable is deemed uncollectible, the write-off is recorded as a reduction to allowance for credit losses. The balance for allowance for credit losses that are in the scope of ASC 326 was $9.4 million and $9.3 million at March 31, 2021 and December 31, 2020, respectively. This balance excludes the general reserve for operating lease receivables that is permitted under ASC 450.
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Acquisitions
In January 2021, we completed the acquisition of a company that owns and operates proprietary railcar cleaning technology systems. This transaction was recorded as a business combination within the Rail Products Group, based on preliminary valuations of the acquired assets and liabilities at their acquisition date fair value using Level 3 inputs. The acquisition did not have a significant impact on our Consolidated Financial Statements. This transaction resulted in goodwill of $6.9 million. There was no acquisition activity for the three months ended March 31, 2020.
Goodwill
As of March 31, 2021 and December 31, 2020, the carrying amount of our goodwill totaled $215.7 million and $208.8 million, respectively, which is primarily attributable to the Rail Products Group.
Warranties
We provide various express, limited product warranties that generally range from one year to five years depending on the product. The warranty costs are estimated using a two-step approach. First, an engineering estimate is made for the cost of all claims that have been asserted by customers. Second, based on historical claims experience, a cost is accrued for all products still within a warranty period for which no claims have been filed. We provide for the estimated cost of product warranties at the time revenue is recognized related to products covered by warranties and assess the adequacy of the resulting reserves on a quarterly basis. The changes in the accruals for warranties for the three months ended March 31, 2021 and 2020 are as follows:
 Three Months Ended
March 31,
20212020
 (in millions)
Beginning balance$11.7 $8.1 
Warranty costs incurred(0.5)(0.9)
Warranty originations and revisions(3.6)0.6 
Warranty expirations(0.2)(0.1)
Ending balance$7.4 $7.7 
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Note 2. Derivative Instruments and Fair Value Accounting
Derivative Instruments
We use derivative instruments to mitigate the impact of changes in interest rates, both in anticipation of future debt issuances and to offset interest rate variability of certain floating rate debt issuances outstanding. We also may use derivative instruments to mitigate the impact of changes in natural gas and diesel fuel prices and changes in foreign currency exchange rates. Derivative instruments that are designated and qualify as cash flow hedges are accounted for by recording the effective portion of the gain or loss on the derivative instrument in accumulated other comprehensive loss ("AOCL") as a separate component of stockholders' equity and reclassified into earnings in the period during which the hedged transaction affects earnings. We continuously monitor our derivative positions and the credit ratings of our counterparties and do not anticipate losses due to non-performance. See Note 7 for a description of our debt instruments.
Interest Rate Hedges
   
Included in accompanying balance sheet
at March 31, 2021
AOCL – loss/(income)
 Notional Amount
Interest Rate (1)
Asset/(Liability) Controlling InterestNoncontrolling Interest
 (in millions, except %)
Expired hedges:
2018 secured railcar equipment notes$249.3 4.41 %$ $0.8 $ 
TRIP Holdings warehouse loan$788.5 3.60 %$ $1.1 $1.5 
TRIP Master Funding secured railcar equipment notes
$34.8 2.62 %$ $ $0.1 
2017 promissory notes - interest rate cap
$169.3 3.00 %$ $(0.5)$ 
Open hedge:
2017 promissory notes - interest rate swap$481.3 2.66 %$(33.4)$32.9 $ 
(1) Weighted average fixed interest rate, except for the interest rate cap on the 2017 promissory notes.
 Effect on interest expense-increase/(decrease)
 Three Months Ended
March 31,
Expected effect during next twelve months
 20212020
 (in millions)
Expired hedges:
2006 secured railcar equipment notes$ $(0.1)$ 
2018 secured railcar equipment notes
$0.1 $0.1 $0.2 
TRIP Holdings warehouse loan$0.5 $0.5 $1.7 
TRIP Master Funding secured railcar equipment notes
$ $0.1 $0.1 
2017 promissory notes - interest rate cap
$ $ $(0.1)
Open hedge (1):
2017 promissory notes - interest rate swap
$3.1 $1.7 $12.4 
(1) Based on the fair value of open hedges as of March 31, 2021.
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Other Derivatives
  
Included in 
accompanying balance sheet at March 31, 2021
Effect on cost of revenues – increase/(decrease)
Notional
Amount
Asset/(Liability)AOCL –
loss/(income)
Three Months Ended
March 31,
Expected effect during next twelve months (1)
 20212020
 (in millions)
Foreign currency hedge
$40.0 $1.6 $(3.1)$(3.7)$(0.8)$(3.1)
(1) Based on the fair value of open hedges as of March 31, 2021.
Our exposure related to foreign currency transactions is currently hedged for up to a maximum of twelve months. The effect of commodity hedge transactions was immaterial to the Consolidated Financial Statements for all periods presented herein.
Fair Value Measurements
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for that asset or liability in an orderly transaction between market participants on the measurement date. An entity is required to establish a fair value hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value are listed below.
Level 1 – This level is defined as quoted prices in active markets for identical assets or liabilities. Our cash equivalents and restricted cash are instruments of the U.S. Treasury or highly-rated money market mutual funds. The assets measured as Level 1 in the fair value hierarchy are summarized below:
Level 1
 March 31, 2021December 31, 2020
(in millions)
Assets:
Cash equivalents$8.3 $24.2 
Restricted cash107.4 96.4 
Total assets$115.7 $120.6 
Level 2 – This level is defined as observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Interest rate hedges are valued at exit prices obtained from each counterparty. Foreign currency hedges are valued at exit prices obtained from each counterparty, which are based on currency spot and forward rates and forward points. The assets and liabilities measured as Level 2 in the fair value hierarchy are summarized below:
Level 2
 March 31, 2021December 31, 2020
(in millions)
Assets:
Foreign currency hedge (1)
$1.6 $4.8 
Total assets$1.6 $4.8 
Liabilities:
Interest rate hedge (2)
$33.4 $45.2 
Total liabilities$33.4 $45.2 
(1) Included in other assets in our Consolidated Balance Sheets.
(2) Included in accrued liabilities in our Consolidated Balance Sheets.

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Level 3 – This level is defined as unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. As of March 31, 2021 and December 31, 2020, we have no assets measured as Level 3 in the fair value hierarchy.
See Note 7 for the estimated fair values of our debt instruments. The fair values of all other financial instruments are estimated to approximate carrying value.
Note 3. Segment Information
We report our operating results in three principal business segments: (1) the Railcar Leasing and Management Services Group, which owns and operates a fleet of railcars and provides third-party fleet leasing, management, and administrative services; (2) the Rail Products Group, which manufactures and sells railcars and related parts and components, and provides railcar maintenance and modification services; and (3) All Other, which includes our highway products business and legal, environmental, and maintenance costs associated with non-operating facilities.
Gains and losses from the sale of property, plant, and equipment are included in the operating profit of each respective segment. Our Chief Operating Decision Maker ("CODM") regularly reviews the operating results of our reportable segments in order to assess performance and allocate resources. Our CODM does not consider restructuring activities when evaluating segment operating results; therefore, restructuring activities are not allocated to segment profit or loss.
Sales and related net profits ("deferred profit") from the Rail Products Group to the Leasing Group are recorded in the Rail Products Group and eliminated in consolidation and are reflected in "Eliminations – Lease Subsidiary" in the tables below. Sales between these groups are recorded at prices comparable to those charged to external customers, taking into consideration quantity, features, and production demand. Amortization of deferred profit on railcars sold to the Leasing Group is included in the operating profit of the Leasing Group, resulting in the recognition of depreciation expense based on our original manufacturing cost of the railcars. Lease portfolio sales are included in the Leasing Group, with related gains and losses computed based on the net book value of the original manufacturing cost of the railcars.
The financial information for these segments is shown in the tables below (in millions). We operate principally in North America.
Three Months Ended March 31, 2021
Railcar Leasing and Management Services GroupRail Products GroupAll OtherEliminations – Lease SubsidiaryEliminations – OtherConsolidated Total
External Revenue$183.3 $147.4 $68.1 $— $— $398.8 
Intersegment Revenue0.2 113.6  (111.3)(2.5) 
Total Revenues$183.5 $261.0 $68.1 $(111.3)$(2.5)$398.8 

Three Months Ended March 31, 2020
Railcar Leasing and Management Services GroupRail Products GroupAll OtherEliminations – Lease SubsidiaryEliminations – OtherConsolidated Total
External Revenue$236.1 $317.2 $61.9 $— $— $615.2 
Intersegment Revenue0.2 192.2 1.5 (190.4)(3.5)— 
Total Revenues$236.3 $509.4 $63.4 $(190.4)$(3.5)$615.2 

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The reconciliation of segment operating profit to consolidated net income is as follows:
 Three Months Ended March 31,
 20212020
 (in millions)
Operating profit (loss):
Railcar Leasing and Management Services Group$78.3 $92.9 
Rail Products Group(8.8)25.1 
All Other15.3 9.3 
Segment Totals before Eliminations, Corporate Expenses, and Restructuring activities84.8 127.3 
Corporate(22.7)(28.1)
Restructuring activities, net0.3 (5.5)
Eliminations – Lease Subsidiary(1.8)(19.9)
Eliminations – Other(0.4)(0.8)
Consolidated operating profit$60.2 $73.0 
Other (income) expense52.5 58.1 
Provision (benefit) for income taxes6.0 (147.6)
Loss from discontinued operations, net of provision (benefit) for income taxes(0.4)(0.2)
Net income$1.3 $162.3 
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Note 4. Partially-Owned Leasing Subsidiaries
Through our wholly-owned subsidiary, Trinity Industries Leasing Company ("TILC"), we formed two subsidiaries, TRIP Holdings and RIV 2013, for the purpose of providing railcar leasing services in North America for institutional investors. Each of TRIP Holdings and RIV 2013 are direct, partially-owned subsidiaries of TILC in which we have a controlling interest. Each is governed by a seven-member board of representatives, two of whom are designated by TILC. TILC is the agent of each of TRIP Holdings and RIV 2013 and, as such, has been delegated the authority, power, and discretion to take certain actions on behalf of the respective companies.
At March 31, 2021, the carrying value of our investment in TRIP Holdings and RIV 2013 totaled $145.0 million. Our weighted average ownership interest in TRIP Holdings and RIV 2013 is 38% while the remaining 62% weighted average interest is owned by third-party, investor-owned funds. The investment in our partially-owned leasing subsidiaries is eliminated in consolidation.
Each of TRIP Holdings and RIV 2013 has wholly-owned subsidiaries that are the owners of railcars acquired from our Rail Products and Leasing Groups. These wholly-owned subsidiaries are TRIP Master Funding LLC ("TRIP Master Funding") (wholly-owned by TRIP Holdings) and Trinity Rail Leasing 2012 LLC ("TRL-2012", wholly-owned by RIV 2013). Railcar purchases by these subsidiaries were funded by secured borrowings and capital contributions from TILC and third-party equity investors. TILC is the contractual servicer for TRIP Master Funding and TRL-2012, with the authority to manage and service each entity's owned railcars. Our controlling interest in each of TRIP Holdings and RIV 2013 results from our combined role as both equity member and agent/servicer. The noncontrolling interest included in the accompanying Consolidated Balance Sheets represents the non-Trinity equity interest in these partially-owned subsidiaries.
Trinity has no obligation to guarantee performance under any of our partially-owned subsidiaries' (or their respective subsidiaries') debt agreements, guarantee any railcar residual values, shield any parties from losses or guarantee minimum yields.
The assets of each of TRIP Master Funding and TRL-2012 may only be used to satisfy the particular subsidiary's liabilities, and the creditors of each of TRIP Master Funding and TRL-2012 have recourse only to the particular subsidiary's assets. Each of TILC and the third-party equity investors receive distributions from TRIP Holdings and RIV 2013, when available, in proportion to its respective equity interests, and has an interest in the net assets of the partially-owned subsidiaries upon a liquidation event in the same proportion. TILC is paid fees for the services it provides to TRIP Master Funding and TRL-2012 and has the potential to earn certain incentive fees. TILC and the third-party equity investors have commitments to provide additional equity funding to TRIP Holdings that are scheduled to expire in May 2021, contingent upon certain returns on investment in TRIP Holdings and other conditions being met. There are no remaining equity commitments with respect to RIV 2013.
See Note 7 regarding the debt of TRIP Holdings and RIV 2013 and their respective subsidiaries.
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Note 5. Railcar Leasing and Management Services Group
The Railcar Leasing and Management Services Group owns and operates a fleet of railcars as well as provides third-party fleet leasing, management, and administrative services. Selected consolidated financial information for the Leasing Group is as follows:
March 31, 2021
Wholly-
Owned
Subsidiaries
Partially-Owned SubsidiariesTotal Leasing Group
Eliminations Lease Subsidiary(1)
Adjusted Total Leasing Group
(in millions)
Cash and cash equivalents$5.1 $ $5.1 $ $5.1 
Accounts receivable81.2 10.6 91.8  91.8 
Property, plant, and equipment, net5,830.3 1,611.9 7,442.2 (813.0)6,629.2 
Restricted cash74.4 32.9 107.3  107.3 
Other assets48.6 1.0 49.6  49.6 
Total assets$6,039.6 $1,656.4 $7,696.0 $(813.0)$6,883.0 
Accounts payable and accrued liabilities$112.5 $34.0 $146.5 $ $146.5 
Debt, net3,550.5 1,216.4 4,766.9  4,766.9 
Deferred income taxes1,067.8 1.1 1,068.9 (188.6)880.3 
Other liabilities33.2  33.2  33.2 
Total liabilities4,764.0 1,251.5 6,015.5 (188.6)5,826.9 
Noncontrolling interest 275.5 275.5  275.5 
Total Equity$1,275.6 $129.4 $1,405.0 $(624.4)$780.6 
December 31, 2020
Wholly-
Owned
Subsidiaries
Partially-Owned SubsidiariesTotal Leasing Group
Eliminations Lease Subsidiary(1)
Adjusted Total Leasing Group
(in millions)
Cash and cash equivalents$3.5 $ $3.5 $ $3.5 
Accounts receivable82.0 8.4 90.4  90.4 
Property, plant, and equipment, net5,795.9 1,626.3 7,422.2 (820.3)6,601.9 
Restricted cash65.2 31.1 96.3  96.3 
Other assets38.1 1.6 39.7  39.7 
Total assets$5,984.7 $1,667.4 $7,652.1 $(820.3)$6,831.8 
Accounts payable and accrued liabilities$141.4 $30.9 $172.3 $ $172.3 
Debt, net3,340.5 1,228.3 4,568.8  4,568.8 
Deferred income taxes1,062.3 1.1 1,063.4 (186.2)877.2 
Other liabilities25.7  25.7  25.7 
Total liabilities4,569.9 1,260.3 5,830.2 (186.2)5,644.0 
Noncontrolling interest 277.2 277.2  277.2 
Total Equity$1,414.8 $129.9 $1,544.7 $(634.1)$910.6 
(1) Net deferred profit on railcars sold to the Leasing Group consists of intersegment profit that is eliminated in consolidation. Net deferred profit and the related deferred tax impact are included as adjustments to the property, plant, and equipment, net and deferred income taxes line items, respectively, in the Eliminations – Lease Subsidiary column above to reflect the net book value of the railcars purchased by the Leasing Group from the Rail Products Group based on manufacturing cost. See Note 4 and Note 7 for a further discussion regarding our investment in our partially-owned leasing subsidiaries and the related indebtedness.

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 Three Months Ended March 31,
 20212020Percent
($ in millions)Change
Revenues:
Leasing and management$183.5 $192.0 (4.4)%
Sales of railcars owned one year or less at the time of sale (1)
 44.3 (100.0)%
Total revenues$183.5 $236.3 (22.3)%
Operating profit (2):
Leasing and management$76.6 $82.5 (7.2)%
Lease portfolio sales (1)
1.7 10.4 (83.7)%
Total operating profit$78.3 $92.9 (15.7)%
Total operating profit margin42.7 %39.3 %
Leasing and management operating profit margin
41.7 %43.0 %
Selected expense information:
Depreciation (3)
$54.6 $53.6 1.9 %
Maintenance and compliance$25.6 $25.9 (1.2)%
Rent$1.7 $3.0 (43.3)%
Selling, engineering, and administrative expenses
$11.3 $14.3 (21.0)%
Interest $45.7 $55.1 (17.1)%
(1) Beginning in the fourth quarter of 2020, we made a prospective change in the presentation of sales of railcars from the lease fleet. Therefore, all railcar sales for the three months ended March 31, 2021 are presented as a net gain or loss from the disposal of a long-term asset regardless of the age of railcar that is sold. See Note 1 for more information.
(2) Operating profit includes: depreciation; maintenance and compliance; rent; and selling, engineering, and administrative expenses. Amortization of deferred profit on railcars sold from the Rail Products Group to the Leasing Group is included in the operating profit of the Leasing Group, resulting in the recognition of depreciation expense based on our original manufacturing cost of the railcars. Interest expense is not a component of operating profit and includes the effect of hedges.
(3) Depreciation expense related to our small cube covered hopper railcars decreased by approximately $3.5 million for the three months ended March 31, 2021 relative to the three months ended March 31, 2020 as a result of the impairment charge recorded in the second quarter of 2020 related to these railcars.
Information related to lease portfolio sales is as follows:
Three Months Ended
March 31,
20212020
(in millions)
Lease portfolio sales$17.3 $112.8 
Operating profit on lease portfolio sales$1.7 $10.4 
Operating profit margin on lease portfolio sales9.8 %9.2 %


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Railcar Leasing Equipment Portfolio. The Leasing Group's equipment consists primarily of railcars leased by third parties. The Leasing Group purchases equipment manufactured predominantly by the Rail Products Group and enters into lease contracts with third parties with terms generally ranging between one year and ten years. The Leasing Group primarily enters into operating leases. Future contractual minimum rental revenues on operating leases related to our wholly-owned and partially-owned subsidiaries are as follows:
Remaining nine months of 20212022202320242025ThereafterTotal
 (in millions)
Future contractual minimum rental revenues$419.2 $453.6 $337.9 $251.7 $174.6 $307.4 $1,944.4 
Debt. Wholly-owned subsidiaries. The Leasing Group’s debt at March 31, 2021 consisted primarily of non-recourse debt. As of March 31, 2021, Trinity’s wholly-owned subsidiaries included in the Leasing Group held equipment with a net book value of $4,740.3 million, which is pledged solely as collateral for Leasing Group debt held by those subsidiaries. The net book value of unpledged equipment at March 31, 2021 was $1,078.8 million. See Note 7 for more information regarding the Leasing Group debt.
Partially-owned subsidiaries. Debt owed by TRIP Holdings and RIV 2013 and their respective subsidiaries is nonrecourse to Trinity and TILC. Creditors of each of TRIP Holdings and RIV 2013 and their respective subsidiaries have recourse only to the particular subsidiary's assets. TRIP Master Funding equipment with a net book value of $1,139.8 million is pledged solely as collateral for the TRIP Master Funding debt. TRL-2012 equipment with a net book value of $472.1 million is pledged solely as collateral for the TRL-2012 secured railcar equipment notes. See Note 4 for a description of TRIP Holdings and RIV 2013.
Operating Lease Obligations. Future amounts due as well as future contractual minimum rental revenues related to the Leasing Group's railcar operating lease obligations are as follows:
Remaining nine months of 20212022202320242025ThereafterTotal
 (in millions)
Future operating lease obligations
$7.3 $9.0 $7.2 $3.9 $2.1 $3.5 $33.0 
Future contractual minimum rental revenues$4.3 $3.9 $1.9 $1.0 $0.3 $0.2 $11.6 
Operating lease obligations totaling $1.9 million are guaranteed by Trinity Industries, Inc. and certain subsidiaries. The Leasing Group also has future amounts due for operating lease obligations related to office space of approximately $2.0 million, which is excluded from the table above.
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Note 6. Property, Plant, and Equipment
The following table summarizes the components of property, plant, and equipment:
March 31, 2021December 31, 2020
 (in millions)
Manufacturing/Corporate:
Land$22.9 $23.2 
Buildings and improvements435.2 428.6 
Machinery and other486.5 485.1 
Construction in progress22.1 42.5 
966.7 979.4 
Less: accumulated depreciation(569.1)(577.9)
397.6 401.5 
Leasing:
Wholly-owned subsidiaries:
Machinery and other19.4 19.5 
Equipment on lease7,090.6 7,010.6 
7,110.0 7,030.1 
Less: accumulated depreciation(1,279.7)(1,234.2)
5,830.3 5,795.9 
Partially-owned subsidiaries:
Equipment on lease2,247.8 2,248.2 
Less: accumulated depreciation(635.9)(621.9)
1,611.9 1,626.3 
Deferred profit on railcars sold to the Leasing Group(1,064.7)(1,064.7)
Less: accumulated amortization251.7 244.4 
(813.0)(820.3)
$7,026.8 $7,003.4 
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Note 7. Debt
The carrying amounts of our long-term debt are as follows:
March 31, 2021December 31, 2020
 (in millions)
Corporate – Recourse:
Revolving credit facility$ $50.0 
Senior notes, net of unamortized discount of $0.2 and $0.2
399.8 399.8 
399.8 449.8 
Less: unamortized debt issuance costs(1.6)(1.6)
Total recourse debt398.2 448.2 
Leasing – Non-recourse:
Wholly-owned subsidiaries:
Secured railcar equipment notes, net of unamortized discount of $0.5 and $0.6
2,018.5 2,042.4 
2017 promissory notes, net of unamortized discount of $9.5 and $10.1
792.1 802.7 
TILC warehouse facility763.9 519.4 
3,574.5 3,364.5 
Less: unamortized debt issuance costs(24.0)(24.0)
3,550.5 3,340.5 
Partially-owned subsidiaries:
Secured railcar equipment notes1,225.2 1,237.5 
Less: unamortized debt issuance costs(8.8)(9.2)
1,216.4 1,228.3 
Total non–recourse debt4,766.9 4,568.8 
Total debt$5,165.1 $5,017.0 
Estimated Fair Value of Debt – The estimated fair value of our 4.55% senior notes due 2024 ("Senior Notes") is based on a quoted market price in a market with little activity (Level 2 input). The estimated fair values of our secured railcar equipment notes are based on our estimate of their fair value using unobservable input values provided by a third party (Level 3 inputs). The respective carrying values of our revolving credit facility, TILC warehouse facility, and 2017 promissory notes approximate fair value because the interest rate adjusts to the market interest rate. The estimated fair values of our long-term debt are as follows:
March 31, 2021December 31, 2020
(in millions)
Level 1$1,556.0 $1,372.1 
Level 2418.0 420.3 
Level 33,383.9 3,462.4 
$5,357.9 $5,254.8 
Revolving Credit Facility – We have a $450.0 million unsecured corporate revolving credit facility. During the three months ended March 31, 2021, we had total borrowings of $75.0 million and total repayments of $125.0 million under the revolving credit facility. Additionally, we had outstanding letters of credit issued in an aggregate amount of $35.2 million. Of the $414.8 million remaining unused amount, $358.2 million is available for borrowing as of March 31, 2021. The outstanding letters of credit as of March 31, 2021 are scheduled to expire in July 2021. The revolving credit facility bears interest at a variable rate which resulted in an interest rate of LIBOR plus 1.75%, with a LIBOR floor of 0.30%, as of March 31, 2021. A commitment fee accrues on the average daily unused portion of the revolving facility at the rate of 0.175% to 0.40% (0.25% as of March 31, 2021).
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The revolving credit facility requires the maintenance of ratios related to minimum interest coverage for the leasing and manufacturing operations and maximum leverage. In March 2021, we amended our revolving credit facility to increase the maximum leverage ratio through March 31, 2022 and to decrease the minimum interest coverage ratio through December 31, 2021 to provide additional near-term flexibility. As of March 31, 2021, we were in compliance with all such financial covenants.
TILC Warehouse Loan Facility – TILC has a $1.0 billion warehouse loan facility, which was established to finance railcars owned by TILC. In March 2021, the facility was extended through March 15, 2024, the total commitment was increased from $750 million to $1.0 billion, with a potential increase of up to an additional $250 million, subject to certain conditions, and provided for a facility margin of 185 basis points. During the three months ended March 31, 2021, we had total borrowings of $257.3 million and total repayments of $12.8 million under the TILC warehouse loan facility. Under the renewed facility, the entire unused facility amount of $236.1 million was available as of March 31, 2021 based on the amount of warehouse-eligible, unpledged equipment. Advances under the facility bear interest at a defined index rate plus a margin, for an all-in interest rate of 1.97% at March 31, 2021.
Terms and conditions of our long-term debt, including recourse and non-recourse provisions and scheduled maturities, are described in Note 8 of our 2020 Annual Report on Form 10-K.
Note 8. Income Taxes
The effective tax expense rate from continuing operations for the three months ended March 31, 2021 was 77.9% primarily due to an adjustment to the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") carryback benefit previously recognized. Our effective tax expense rate, without the impact of the CARES Act adjustment, was 28.6% for the three months ended March 31, 2021, which differs from the U.S. statutory rate of 21.0% primarily due to state income taxes, non-deductible executive compensation, and other permanent tax differences. Our effective tax rate from continuing operations for the three months ended March 31, 2020 was a benefit of 990.6%, primarily due to carryback claims as permitted under the CARES Act. Our effective tax expense rate, without the impact of the CARES Act, was 47.7% for the three months ended March 31, 2020, which differs from the U.S. statutory rate primarily due to the impacts of state income taxes, the incremental tax on profits of branches taxed in both U.S. and foreign jurisdictions, tax return true-ups, and non-deductible executive compensation.
Income tax payments, net of refunds received, during the three months ended March 31, 2021 totaled $0.1 million. The total income tax receivable position as of March 31, 2021 was $440.5 million, primarily related to carryback claims that have been filed.
Our 2016 and 2017 tax years are effectively settled. The statutes of limitations for auditing the 2013-2015 and 2018-2020 tax years will remain open due to tax loss carryback claims that have been filed. We have state tax returns that are under audit in the normal course of business, and our Mexican subsidiaries' tax return statutes of limitations remain open for auditing 2014 forward. We believe we are appropriately reserved for any potential matters.
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Note 9. Employee Retirement Plans
The following table summarizes the components of our net retirement cost:
Three Months Ended
March 31,
20212020
(in millions)
Expense Components
Service cost$ $ 
Interest0.1 3.7 
Expected return on plan assets (5.2)
Amortization of actuarial loss0.1 1.5 
Amortization of prior service cost 0.3 
Net periodic benefit cost0.2 0.3 
Profit sharing2.8 2.7 
Net expense$3.0 $3.0 
The non-service cost components of net periodic benefit cost in the table above are included in other, net (income) expense in our Consolidated Statements of Operations. For the three months ended March 31, 2021, net periodic benefit cost relates to the Supplemental Executive Retirement Plan.
Pension Plan Termination
On September 4, 2019, our Board of Directors approved the termination of the Trinity Industries, Inc. Consolidated Pension Plan (the "Pension Plan"), effective December 31, 2019. The Pension Plan was settled in the fourth quarter of 2020 which resulted in the Company no longer having any remaining funded pension plan obligations. Upon settlement, we recognized a pre-tax non-cash pension settlement charge in the fourth quarter of 2020 of $151.5 million, which was inclusive of all unamortized losses previously recorded in AOCL.
During the first quarter of 2021, as permitted by applicable regulations, we used $10.2 million of the Pension Plan surplus to fund obligations associated with the Company's profit sharing plans and $1.2 million to fund pension administrative expenses required to finalize the settlement of the Pension Plan. The remaining surplus of the Pension Plan of $12.2 million will be used to fund final pension administrative expenses. We expect that any remaining surplus would be used for other corporate purposes, subject to applicable taxes.
Note 10. Restructuring Activities
During the three months ended March 31, 2021, restructuring activities resulted in a net gain of $0.3 million, primarily as a result of a $0.7 million disposition of certain non-operating facilities included in previous restructuring plans, partially offset by $0.4 million in employee severance costs.
During the three months ended March 31, 2020, we recorded total restructuring charges of $5.5 million, consisting of $5.2 million of non-cash charges from the write-down of our corporate headquarters campus and $4.1 million in cash charges for severance costs, partially offset by a $3.8 million gain on the disposition of a non-operating facility.
The following table sets forth the restructuring activity and balance of the restructuring liability, which is included in other liabilities in our Consolidated Balance Sheets:
Accrued charges as of
December 31, 2020
Charges and adjustmentsPayments
Accrued charges as of
March 31, 2021
(in millions)
Cash charges:
Employee severance costs$1.4 $0.4 $(1.0)$0.8 
$1.4 $0.4 $(1.0)$0.8 
Non-cash charges:
Gain on disposition of assets$(0.7)
Total restructuring activities$(0.3)
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Although restructuring activities are not allocated to our reportable segments, the following table summarizes the restructuring activities by reportable segment:
Three Months Ended March 31, 2021
Employee Severance CostsGain on Disposition on AssetsTotal
(in millions)
Railcar Leasing and Management Services Group$ $ $ 
Rail Products Group0.3  0.3 
All Other (0.7)(0.7)
Corporate0.1  0.1 
Total restructuring activities$0.4 $(0.7)$(0.3)
Three Months Ended March 31, 2020
Employee Severance CostsGain on Disposition of AssetsWrite-down of AssetsTotal
(in millions)
Railcar Leasing and Management Services Group$ $ $ $ 
Rail Products Group2.6   2.6 
All Other0.1 (3.8) (3.7)
Corporate1.4  5.2 6.6 
Total restructuring activities$4.1 $(3.8)$5.2 $5.5 
Note 11. Accumulated Other Comprehensive Loss
Changes in AOCL for the three months ended March 31, 2021 are as follows:
Currency translation adjustmentsUnrealized gains/(losses) on derivative financial instrumentsNet actuarial gains/(losses) and prior service costs of defined benefit plansAccumulated Other Comprehensive Loss
 (in millions)
Balances at December 31, 2020
$(1.3)$(25.6)$(4.0)$(30.9)
Other comprehensive income, net of tax, before reclassifications 6.2  6.2 
Amounts reclassified from AOCL, net of tax benefit of $, $0.9, $, and $0.9
 (0.9)0.1 (0.8)
Less: noncontrolling interest— (0.3)— (0.3)
Other comprehensive income 5.0 0.1 5.1 
Balances at March 31, 2021
$(1.3)$(20.6)$(3.9)$(25.8)
See Note 2 for information on the reclassification of amounts in AOCL into earnings. Reclassifications of unrealized before-tax gains and losses on derivative financial instruments are included in interest expense for our interest rate hedges and in cost of revenues for our foreign currency hedges in our Consolidated Statements of Operations. Reclassifications of before-tax net actuarial gains/(losses) and prior service costs of defined benefit plans are included in other, net (income) expense in our Consolidated Statements of Operations.
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Note 12. Common Stock and Stock-Based Compensation
Stockholders' Equity
In October 2020, our Board of Directors authorized a new share repurchase program effective October 23, 2020 through December 31, 2021. The new share repurchase program authorized the Company to repurchase up to $250.0 million of its common stock. Share repurchase activity under this program is as follows:
Shares RepurchasedRemaining Authorization to Repurchase
PeriodNumber of sharesCost
(in millions)
Cost
(in millions)
October 23, 2020 Authorization$250.0 
October 23, 2020 through December 31, 20202,974,922 $67.8 $182.2 
January 1, 2021 through March 31, 20211,291,860 36.8 $145.4 
Total4,266,782 $104.6 
Certain shares of stock repurchased during March 2021, totaling $2.9 million, were cash settled in April 2021 in accordance with normal settlement practices. During the three months ended March 31, 2020, share repurchases totaled 1.9 million at a cost of approximately $35.4 million under the previous share repurchase program, which was completed in the third quarter of 2020.
Stock-Based Compensation
Stock-based compensation totaled approximately $5.4 million and $7.3 million for the three months ended March 31, 2021 and 2020, respectively. The Company's annual grant of share-based awards generally occurs in the first or second quarter under our 2004 Fourth Amended and Restated Stock Option and Incentive Plan (the "Plan”). Our stock options have contractual terms of ten years. Expense related to stock options issued to eligible employees under the Plan is recognized on a straight-line basis over their vesting period. Expense related to restricted stock units ("RSUs") issued to eligible employees under the Plan is recognized ratably over the vesting period, generally between three years and four years. Certain RSU grants made during 2020 and 2021 provide for full vesting when the award recipients reach 60 years of age and have provided at least 10 years of service to the Company, provided that the awards remain outstanding for a period of six months from the date of grant. The expense for these awards is recognized over the applicable service period for each of the eligible award recipients. Expense related to RSUs and restricted stock awards ("RSAs") granted to non-employee directors under the Plan is recognized ratably over the vesting period, generally one year. Expense related to performance units is recognized ratably from their award date to the end of the performance period, generally three years.
The following table summarizes stock-based compensation awards granted during the three months ended March 31, 2021:
Number of Shares GrantedWeighted Average Grant-Date Fair Value per Award
Restricted stock units1,351 $32.96 
Restricted stock awards2,230 $29.16 
Performance units125,273 $35.42 
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Note 13. Earnings Per Common Share
Basic net income attributable to Trinity Industries, Inc. per common share ("EPS") is computed by dividing net income attributable to Trinity remaining after allocation to unvested restricted shares by the weighted average number of basic common shares outstanding for the period. Except when the effect would be antidilutive, the calculation of diluted EPS includes the net impact of potentially dilutive common shares. The Company has certain unvested RSAs that participate in dividends on a nonforfeitable basis and are therefore considered to be participating securities. Consequently, diluted net income attributable to Trinity Industries, Inc. per common share is calculated under both the two-class method and the treasury stock method, and the more dilutive of the two calculations is presented.
The following table sets forth the computation of basic and diluted net income attributable to Trinity Industries, Inc. for the three months ended March 31, 2021 and 2020.
 Three Months Ended March 31,
 20212020
(in millions, except per share amounts)
Income from continuing operations$1.7 $162.5 
Less: Net (income) loss attributable to noncontrolling interest2.0 (0.6)
Unvested restricted share participation – continuing operations (1.9)
Net income from continuing operations attributable to Trinity Industries, Inc.3.7 160.0 
Net loss from discontinued operations, net of income taxes
(0.4)(0.2)
Unvested restricted share participation – discontinued operations  
Net loss from discontinued operations attributable to Trinity Industries, Inc.
(0.4)(0.2)
Net income attributable to Trinity Industries, Inc., including the effect of unvested restricted share participation$3.3 $159.8 
Basic weighted average shares outstanding110.2 118.0 
Effect of dilutive securities2.4 1.9 
Diluted weighted average shares outstanding
112.6 119.9 
Basic earnings per common share:
Income from continuing operations$0.03 $1.36 
Income (loss) from discontinued operations  
Basic net income attributable to Trinity Industries, Inc.$0.03 $1.36 
Diluted earnings per common share:
Income from continuing operations$0.03 $1.33 
Income (loss) from discontinued operations  
Diluted net income attributable to Trinity Industries, Inc.$0.03 $1.33 
Potentially dilutive securities excluded from EPS calculation:
Antidilutive restricted shares0.1 0.1 
Antidilutive stock options 0.1 
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Note 14. Contingencies
Highway products litigation
We previously reported the filing of a False Claims Act (“FCA”) complaint in the United States District Court for the Eastern District of Texas, Marshall Division (“District Court”) styled Joshua Harman, on behalf of the United States of America, Plaintiff/Relator v. Trinity Industries, Inc., Defendant, Case No. 2:12-cv-00089-JRG (E.D. Tex.). In this case, in which the U.S. Government declined to intervene, the relator, Mr. Joshua Harman, alleged the Company violated the FCA pertaining to sales of the Company's ET-Plus® System, a highway guardrail end-terminal system (“ET Plus”). On October 20, 2014, a trial in this case concluded with a jury verdict stating that the Company and its subsidiary, Trinity Highway Products, LLC (“Trinity Highway Products”), “knowingly made, used or caused to be made or used, a false record or statement material to a false or fraudulent claim," and the District Court entered judgment on the verdict in the total amount of $682.4 million.
On September 29, 2017, the United States Court of Appeals for the Fifth Circuit ("Fifth Circuit") reversed the District Court’s $682.4 million judgment and rendered judgment as a matter of law in favor of the Company and Trinity Highway Products. On January 7, 2019, the United States Supreme Court denied Mr. Harman's petition for certiorari seeking review of the Fifth Circuit's decision. The denial of Mr. Harman's petition ended this action.
State, county, and municipal actions
Mr. Harman also has separate state qui tam actions currently pending pursuant to: the Virginia Fraud Against Taxpayers Act (Commonwealth of Virginia ex rel. Joshua M. Harman v. Trinity Industries, Inc. and Trinity Highway Products, LLC, Case No. CL13-698, in the Circuit Court, Richmond, Virginia); the Massachusetts False Claims Act (Commonwealth of Massachusetts ex rel. Joshua M. Harman Qui Tam v. Trinity Industries, Inc. and Trinity Highway Products, LLC, Case No. 1484-CV-02364, in the Superior Court Department of the Trial Court); and the California False Claims Act (State of California ex rel. Joshua M. Harman Qui Tam v. Trinity Industries, Inc. and Trinity Highway Products, LLC, Case No. RG 14721864, in the Superior Court of California, Alameda County). In each of these cases, Mr. Harman alleged the Company violated the respective states' false claims act pertaining to sales of the ET Plus, and he is seeking damages, civil penalties, attorneys’ fees, costs and interest. Also, the respective states’ Attorneys General filed Notices of Election to Decline Intervention in all of these matters, with the exception of the Commonwealth of Virginia Attorney General, who intervened in the Virginia matter. Following the United States Supreme Court’s denial of Mr. Harman’s petition for certiorari, the stays have expired or been lifted by court order in each of the above-referenced state qui tam cases.
The Company believes these state qui tam lawsuits are without merit and intends to vigorously defend all allegations. Other states could take similar or different actions, and could be considering similar state false claims or other litigation against the Company.
As previously reported, state qui tam actions filed by Mr. Harman in the states of Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Minnesota, Montana, Nevada, Rhode Island, Tennessee, and New Jersey were dismissed.
The Company has been served in a lawsuit filed November 5, 2015, titled Jackson County, Missouri, individually and on behalf of a class of others similarly situated vs. Trinity Industries, Inc. and Trinity Highway Products, LLC, Case No. 1516-CV23684 (Circuit Court of Jackson County, Missouri). The case is being brought by plaintiff for and on behalf of itself and all Missouri counties with a population of 10,000 or more persons, including the City of St. Louis, and the State of Missouri’s transportation authority. The plaintiff alleges that the Company and Trinity Highway Products did not disclose design changes to the ET Plus and these allegedly undisclosed design changes made the ET Plus allegedly defective, unsafe, and unreasonably dangerous. The plaintiff alleges product liability negligence, product liability strict liability, and negligently supplying dangerous instrumentality for supplier’s business purposes. The plaintiff seeks compensatory damages, interest, attorneys' fees and costs, and in the alternative plaintiff seeks a declaratory judgment that the ET Plus is defective, the Company’s conduct was unlawful, and class-wide costs and expenses associated with removing and replacing the ET Plus throughout Missouri. On December 6, 2017, the Court granted plaintiff's Motion for Class Certification, certifying a class of Missouri counties with populations of 10,000 or more persons, including the City of St. Louis and the State of Missouri's transportation authority that have or had ET Plus guardrail end terminals with 4-inch wide guide channels installed on roadways they own or maintain. A trial date has been scheduled in this case for April 4, 2022.
The Company believes this lawsuit is without merit and intends to vigorously defend all allegations. While the financial impacts of these state, county, and municipal actions are currently unknown, they could be material.
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Based on information currently available to the Company and previously disclosed, we currently do not believe that a loss is probable in any one or more of the actions described under "State, county, and municipal actions," therefore no accrual has been included in the accompanying Consolidated Financial Statements. Because of the complexity of these actions as well as the current status of certain of these actions, we are not able to estimate a range of possible losses with respect to any one or more of these actions.
Product liability cases
The Company is currently defending product liability lawsuits in several different states that are alleged to involve the ET Plus as well as other products manufactured by Trinity Highway Products. These cases are diverse in light of the randomness of collisions in general and the fact that each accident involving a roadside device, such as an end terminal, or any other fixed object along the highway, has its own unique facts and circumstances. The Company carries general liability insurance to mitigate the impact of adverse judgment exposures in these product liability cases. To the extent that the Company believes that a loss is probable with respect to these product liability cases, the accrual for such losses is included in the amounts described below under "Other matters".
Other matters
The Company is involved in claims and lawsuits incidental to our business arising from various matters, including product warranty, personal injury, environmental issues, workplace laws, and various governmental regulations. The Company evaluates its exposure to such claims and suits periodically and establishes accruals for these contingencies when a range of loss can be reasonably estimated. The range of reasonably possible losses for such matters is $8.7 million to $17.2 million, which includes our rights in indemnity and recourse to third parties of approximately $5.3 million, which is recorded in other assets on our Consolidated Balance Sheet as of March 31, 2021. This range includes any amounts related to the Highway Products litigation matters described above in the section titled “Highway products litigation." At March 31, 2021, total accruals of $9.2 million, including environmental and workplace matters described below, are included in accrued liabilities in the accompanying Consolidated Balance Sheets. The Company believes any additional liability would not be material to its financial position or results of operations.
Trinity is subject to remedial orders and federal, state, local, and foreign laws and regulations relating to the environment and the workplace. The Company has reserved $1.0 million to cover our probable and estimable liabilities with respect to the investigations, assessments, and remedial responses to such matters, taking into account currently available information and our contractual rights to indemnification and recourse to third parties. However, estimates of liability arising from future proceedings, assessments, or remediation are inherently imprecise. Accordingly, there can be no assurance that we will not become involved in future litigation or other proceedings involving the environment and the workplace or, if we are found to be responsible or liable in any such litigation or proceeding, that such costs would not be material to the Company. We believe that we are currently in substantial compliance with environmental and workplace laws and regulations.
Georgia tornado
On March 26, 2021, a tornado damaged the Company’s rail maintenance facility in Cartersville, Georgia. We have incurred costs related to cleanup and damage remediation activities in order for the facility to resume operations in the second quarter. We believe our insurance coverage is sufficient to cover property damage costs related to the event. Accordingly, at March 31, 2021, we recorded an insurance receivable of approximately $1.2 million for property damage recoveries that we have concluded are probable of collection. We expect to begin receiving insurance recoveries related to these losses in the second quarter.
Any property damage insurance proceeds received in excess of the net book value of property lost and related cleanup costs will be accounted for as a gain. Additionally, the Company may be entitled to business interruption proceeds related to the event. We will not record these recoveries until final settlement has been reached with the insurance company.

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Item 2. 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 2020 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.
Matters Affecting Comparability
During the fourth quarter of 2020, we began presenting sales from our lease fleet in the Railcar Leasing and Management Services Group on a net basis regardless of the age of railcar that is sold. Historically, in accordance with ASC 606, Revenue from contracts with customers, we presented sales of railcars from the lease fleet on a gross basis in Revenues – Leasing and Cost of revenues – Leasing in our Consolidated Statements of Operations if the railcars had been owned for one year or less at the time of sale. Sales of railcars from the lease fleet owned for more than one year had historically been presented as a net gain or loss from the disposal of a long-term asset. We will now report all sales of railcars from the lease fleet as a net gain or loss from the disposal of a long-term asset in accordance with ASC 610-20, Gains and losses from the derecognition of non-financial assets. These sales will be presented in the Lease portfolio sales line in our Consolidated Statements of Operations; however, because this change in presentation was effected on a prospective basis beginning in the fourth quarter of 2020, lease portfolio sales for the three months ended March 31, 2020 only include sales of railcars from the lease fleet owned for more than one year. We have concluded that the new presentation is appropriate given the significant change in the strategic focus of the Company. The new presentation had no effect on the Company’s operating profit, net income, earnings per share, or Consolidated Balance Sheet.
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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;
variations in weather in areas where our products are sold, used, or installed;
naturally-occurring events, pandemics, and/or disasters causing disruption to our manufacturing, product deliveries, and production capacity, thereby giving rise to an increase in expenses, loss of revenue, and property losses;
the impact of the coronavirus pandemic (“COVID-19”) and the response thereto, on, among other things, demand for our products and services, our customers' ability to pay, disruptions to our supply chain, our liquidity and financial position, results of operations, stock price, payment of dividends, our ability to generate new railcar orders, our ability to originate and/or renew leases at favorable rates, our ability to convert backlog to revenue, and the operational status of our facilities;
impacts from asset impairments and related charges;
the timing of introduction of new products;
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;
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 services);
surcharges and other fees added to fixed pricing agreements for steel, component parts, supplies, and other raw materials;
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;
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 manufactured by us or our competitors;
actions by U.S. and/or foreign governments (particularly Mexico and Canada) relative to federal government budgeting, taxation policies, government expenditures, borrowing/debt ceiling limits, tariffs, and trade policies;
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.
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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 2020 Annual Report on Form 10-K, this Form 10-Q and future Forms 10-Q and Current Reports on Forms 8-K.
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Company Overview
Trinity Industries, Inc. and its consolidated subsidiaries (“Trinity,” “Company,” “we,” “our,” or "us") own businesses that are leading providers of railcar products and services in North America. Our rail-related businesses market their railcar products and services under the trade name TrinityRail®. The TrinityRail platform provides railcar leasing and management services, railcar manufacturing, and railcar maintenance and modification services. We also own businesses engaged in the manufacturing of products used on the nation's roadways and in traffic control.
We report our operating results in three principal business segments: (1) the Railcar Leasing and Management Services Group (the "Leasing Group"), which owns and operates a fleet of railcars and provides third-party fleet leasing, management, and administrative services; (2) the Rail Products Group, which manufactures and sells railcars and related parts and components, and provides railcar maintenance and modification services; and (3) All Other, which includes our highway products business and legal, environmental, and maintenance costs associated with non-operating facilities.
Executive Summary
Recent Market Developments
COVID-19
The COVID-19 pandemic has significantly impacted global and North American economic conditions. The social and economic effects of the pandemic have been widespread and are ongoing. We continue to monitor the operational and financial impacts of the pandemic and other economic factors, and have taken appropriate measures to preserve cash and ensure sufficient liquidity. In addition to cost savings initiatives underway, we have streamlined our workforce in response to current operating conditions. As described in the Liquidity and Capital Resources section below, as of March 31, 2021, we have total committed liquidity of approximately $772 million. We believe we have sufficient liquidity and capital resources to fund our operating requirements as well as the other capital allocation and investment activities planned for 2021. We are currently, and believe we will continue to be, in compliance with any applicable debt covenants.
Although we have not experienced significant interruptions to our daily operations or a material impact to our operating costs, the economic pressures created by the pandemic have negatively impacted our results of operations for the three months ended March 31, 2021. We expect that our results of operations will remain under pressure in the near term.
We will continue to monitor business conditions, including the impact of the pandemic, and will make appropriate adjustments to our operations and related financial projections and estimates as necessary. We can provide no assurance that we will not have impairment charges in future periods as a result of changes in market conditions, our operating results, or changes in the assumptions utilized in our financial projections.
Please refer to the "Forward-Looking Statements" section above and Part I, Item 1A “Risk Factors” of the 2020 Annual Report on Form 10-K for additional information regarding the potential impacts of COVID-19 on our business.
Other Cyclical and Seasonal Trends Impacting Our Business
The industries in which we operate are cyclical in nature. 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, adverse changes in commodity prices, including depressed prices in the crude oil market, or lower demand for certain commodities, could result in a decline in customer demand for various types of railcars. We continuously assess demand for our products and services and take steps to rationalize and diversify our leased railcar portfolio and align our manufacturing capacity appropriately. We diligently evaluate the creditworthiness of our customers and monitor performance of relevant market sectors; however, additional weaknesses in any of these market sectors could affect the financial viability of our underlying Leasing Group customers, which could continue to negatively impact our recurring leasing revenues and operating profits.
Additionally, current economic conditions within the industries in which our customers operate have resulted in reduced demand for railcars. Although railcar loading volumes and levels of railcars in storage are beginning to improve, railcar lease rates and utilization, as well as orders for new railcar equipment, remain under pressure. While we currently expect this trend to continue in the near term, we believe that our rail platform is designed to respond to cyclical changes in demand and perform throughout the railcar cycle.
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Steel prices have experienced an unprecedented increase since the fourth quarter of 2020 and are a significant component of our cost of sales. We typically use contract-specific purchasing practices, existing supplier commitments, contractual price escalation provisions, and other arrangements with our customers to mitigate the effects of steel price volatility on our operating profit. However, current steel prices could negatively impact demand for new railcars and create potential headwinds to operating profit in our near-term deliveries. We will continue to monitor the impact of steel price changes on our business.
Due to their transactional nature, lease portfolio sales are the primary driver of fluctuations in results in the Leasing Group. Results in our All Other Group are affected by seasonal fluctuations, with the second and third quarters historically being the quarters with the highest revenues.
Financial and Operational Highlights
Our revenues for the three months ended March 31, 2021 were $398.8 million, representing a decrease of 35.2%, compared to the three months ended March 31, 2020. Our operating profit for the three months ended March 31, 2021 was $60.2 million compared to operating profit for the three months ended March 31, 2020 of $73.0 million.
The Leasing Group reported additions to the wholly-owned and partially-owned lease fleet of 4,155 railcars, for a total of 107,970 railcars as of March 31, 2021, an increase of 4.0% compared to March 31, 2020.
The Leasing Group's lease fleet of 107,970 company-owned rail cars was 94.5% utilized as of March 31, 2021, in comparison to a lease fleet utilization of 95.4% on 103,815 company-owned railcars as of March 31, 2020. Our company-owned railcars include wholly-owned, partially-owned, and railcars under sale-leaseback arrangements.
For the three months ended March 31, 2021, we made a net investment in our lease fleet of approximately $90.6 million, which primarily includes new railcar additions and railcar modifications, net of deferred profit, and secondary market purchases; and is net of proceeds from lease portfolio sales.
The total value of the railcar backlog at March 31, 2021 was $1.0 billion, compared to $1.6 billion at March 31, 2020. The Rail Products Group received orders for 1,410 railcars and delivered 1,895 railcars in the three months ended March 31, 2021, in comparison to orders for 1,970 railcars and deliveries of 3,705 railcars in the three months ended March 31, 2020.
For the three months ended March 31, 2021, we generated operating cash flows from continuing operations and Free Cash Flow After Investments and Dividends ("Free Cash Flow") of $70.1 million and $90.2 million(1), respectively, in comparison to $173.8 million and $57.4 million(1), respectively, for the three months ended March 31, 2020.
(1) 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.
See "Consolidated Results of Operations" and "Segment Discussion" below for additional information regarding our operating results.

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Returns of Capital to Shareholders
Returns of capital to shareholders in the form of dividends and share repurchases are summarized below:
(1) Dividend yield is calculated as dividends paid for the four previous quarters divided by the closing stock price on the last trading day of each respective quarter.
(2) There were no shares repurchased during the second quarter of 2020.
(3) In the third quarter of 2020, we completed the previous share repurchase program.
(4) In the fourth quarter of 2020, our Board of Directors authorized a new $250.0 million share repurchase program.
Capital Structure Updates
TILC warehouse facility – In March 2021, the TILC warehouse facility was extended through March 15, 2024, and the total facility commitment was increased from $750 million to $1.0 billion.
See "Liquidity and Capital Resources" below for further information regarding these activities.
Litigation Updates
See Note 14 of the Consolidated Financial Statements for an update on the status of our Highway Products litigation.

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Consolidated Results of Operations
The following table summarizes our consolidated results of operations for the three months ended March 31, 2021 and 2020:
 Three Months Ended
March 31,
 20212020
 (in millions)
Revenues$398.8 $615.2 
Cost of revenues296.0 482.0 
Selling, engineering, and administrative expenses54.4 64.3 
Gains on dispositions of property11.5 9.6 
Restructuring activities, net(0.3)5.5 
Total operating profit60.2 73.0 
Interest expense, net51.3 58.9 
Other, net 1.2 (0.8)
Income from continuing operations before income taxes7.7 14.9 
Provision (benefit) for income taxes6.0 (147.6)
Income from continuing operations$1.7 $162.5 
Revenues

The tables below present revenues by segment for the three months ended March 31, 2021 and 2020:
 Three Months Ended March 31, 2021
RevenuesPercent
ExternalIntersegmentTotalChange
(in millions)
Railcar Leasing and Management Services Group$183.3 $0.2 $183.5 (22.3)%
Rail Products Group147.4 113.6 261.0 (48.8)%
All Other68.1 — 68.1 7.4 %
Segment Totals before Eliminations398.8 113.8 512.6 (36.6)%
Eliminations – Lease Subsidiary— (111.3)(111.3)
Eliminations – Other— (2.5)(2.5)
Consolidated Total$398.8 $— $398.8 (35.2)%
Three Months Ended March 31, 2020
Revenues
ExternalIntersegmentTotal
(in millions)
Railcar Leasing and Management Services Group$236.1 $0.2 $236.3 
Rail Products Group317.2 192.2 509.4 
All Other61.9 1.5 63.4 
Segment Totals before Eliminations615.2 193.9 809.1 
Eliminations – Lease Subsidiary— (190.4)(190.4)
Eliminations – Other— (3.5)(3.5)
Consolidated Total$615.2 $— $615.2 
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Operating Costs
Operating costs are comprised of cost of revenues; selling, engineering, and administrative costs; gains or losses on property disposals; and restructuring activities. Operating costs by segment for the three months ended March 31, 2021 and 2020 were as follows:
 Three Months Ended
March 31,
 20212020
 (in millions)
Railcar Leasing and Management Services Group$105.2 $143.4 
Rail Products Group269.8 484.3 
All Other52.8 54.1 
Segment Totals before Eliminations, Corporate Expenses, and Restructuring activities427.8 681.8 
Corporate22.7 28.1 
Restructuring activities, net(0.3)5.5 
Eliminations – Lease Subsidiary(109.5)(170.5)
Eliminations – Other(2.1)(2.7)
Consolidated Total$338.6 $542.2 
Operating Profit
Operating profit (loss) by segment for the three months ended March 31, 2021 and 2020 was as follows:
 Three Months Ended
March 31,
 20212020
 (in millions)
Railcar Leasing and Management Services Group$78.3 $92.9 
Rail Products Group(8.8)25.1 
All Other15.3 9.3 
Segment Totals before Eliminations, Corporate Expenses, and Restructuring activities84.8 127.3 
Corporate(22.7)(28.1)
Restructuring activities, net0.3 (5.5)
Eliminations – Lease Subsidiary(1.8)(19.9)
Eliminations – Other(0.4)(0.8)
Consolidated Total$60.2 $73.0 
Discussion of Consolidated Results
Revenues – Our revenues for the three months ended March 31, 2021 were $398.8 million, representing a decrease of $216.4 million, or 35.2%, over the prior year period. The decrease in revenues primarily related to lower deliveries in the Rail Products Group and the change in the presentation of sales of railcars from the lease fleet. See Matters Affecting Comparability above and Note 1 of the Consolidated Financial Statements for further information regarding the change in presentation.
Cost of revenues – Our cost of revenues for the three months ended March 31, 2021 were $296.0 million, representing a decrease of $186.0 million, or 38.6%, over the prior year period. The decrease in cost of revenues was primarily due to lower deliveries in the Rail Products Group and the change in the presentation of sales of railcars from the lease fleet.
Selling, engineering, and administrative expenses – Selling, engineering, and administrative expenses decreased by 15.4% for the three months ended March 31, 2021, when compared to the prior year period primarily due to lower employee-related costs, including headcount reductions, and lower litigation-related expenses. Additionally, expenses were favorably impacted in the three months ended March 31, 2021 by consulting costs incurred in the prior year period associated with realigning our operating structure to support our rail-focused strategy.
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Restructuring activities, net – Our restructuring activities for the three months ended March 31, 2021 resulted in a net gain of $0.3 million, primarily as a result of the disposition of certain non-operating facilities, partially offset by employee transition costs. We had restructuring expenses of $5.5 million during the three months ended March 31, 2020 primarily as a result of asset write-downs related to our corporate headquarters facility and employee transition costs, partially offset by a gain on the disposition of a non-operating facility.
Operating profit – Operating profit for the three months ended March 31, 2021 totaled $60.2 million, representing a decrease of 17.5% from the prior year period. The decrease in operating profit resulted primarily from lower deliveries in the Rail Products Group, and a lower volume of railcar sales in the Leasing Group, partially offset by lower selling, engineering, and administrative expenses.
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 March 31, 2021 totaled $51.3 million, compared to $58.9 million for the three months ended March 31, 2020. The decrease in interest expense, net for the three months ended March 31, 2021 was primarily driven by lower overall borrowing costs associated with the Company's debt facilities, partially offset by higher overall average debt. Additionally, interest expense in the prior year period included a $4.7 million early redemption premium associated with the extinguishment of debt.
Income taxes – The effective tax expense rate from continuing operations for the three months ended March 31, 2021 was 77.9% primarily due an adjustment to the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") carryback benefit previously recognized. Our effective tax expense rate, without the impact of the CARES Act adjustment, was 28.6% for the three months ended March 31, 2021, which differs from the U.S. statutory rate of 21.0% primarily due to state income taxes, non-deductible executive compensation, and other permanent tax differences. Our effective tax rate from continuing operations for the three months ended March 31, 2020 was a benefit of 990.6%, primarily due to carryback claims as permitted under the CARES Act. Our effective tax expense rate, without the impact of the CARES Act, was 47.7% for the three months ended March 31, 2020, which differs from the U.S. statutory rate primarily due to the impacts of state income taxes, the incremental tax on profits of branches taxed in both U.S. and foreign jurisdictions, tax return true-ups, and non-deductible executive compensation.
Income tax payments, net of refunds received, during the three months ended March 31, 2021 totaled $0.1 million. The total income tax receivable position as of March 31, 2021 was $440.5 million, primarily related to carryback claims that have been filed.
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Segment Discussion
Railcar Leasing and Management Services Group
 Three Months Ended March 31,
 20212020Percent
 (in millions)Change
Revenues:
Leasing and management$183.5 $192.0 (4.4)%
Sales of railcars owned one year or less at the time of sale (1)
— 44.3 (100.0)%
Total revenues$183.5 $236.3 (22.3)%
Operating profit (2):
Leasing and management$76.6 $82.5 (7.2)%
Lease portfolio sales (1)
1.7 10.4 (83.7)%
Total operating profit$78.3 $92.9 (15.7)%
Total operating profit margin42.7 %39.3 %
Leasing and management operating profit margin
41.7 %43.0 %
Selected expense information:
Depreciation (3)
$54.6 $53.6 1.9 %
Maintenance and compliance$25.6 $25.9 (1.2)%
Rent$1.7 $3.0 (43.3)%
Selling, engineering, and administrative expenses
$11.3 $14.3 (21.0)%
Interest $45.7 $55.1 (17.1)%
(1) Beginning in the fourth quarter of 2020, we made a prospective change in the presentation of sales of railcars from the lease fleet. Therefore, all railcar sales for the three months ended March 31, 2021 are presented as a net gain or loss from the disposal of a long-term asset regardless of the age of railcar that is sold. See Note 1 of the Consolidated Financial Statements for more information.
(2) Operating profit includes: depreciation; maintenance and compliance; rent; and selling, engineering, and administrative expenses. Amortization of deferred profit on railcars sold from the Rail Products Group to the Leasing Group is included in the operating profits of the Leasing Group, resulting in the recognition of depreciation expense based on our original manufacturing cost of the railcars. Interest expense is not a component of operating profit and includes the effect of hedges.
(3) Depreciation expense related to our small cube covered hopper railcars decreased by approximately $3.5 million for the three months ended March 31, 2021 relative to the three months ended March 31, 2020 as a result of the impairment charge recorded in the second quarter of 2020 related to these railcars.
Total revenues for the Railcar Leasing and Management Services Group decreased by 22.3% for the three months ended March 31, 2021, compared to the prior year period. Revenues related to sales of leased railcars owned one year or less decreased due to the change in the presentation of sales of railcars from the lease fleet. Additionally, leasing and management revenues decreased 4.4% for the three months ended March 31, 2021, as a result of lower lease rates and lower utilization, partially offset by growth in the lease fleet when compared to the three months ended March 31, 2020.
Information related to lease portfolio sales is as follows:
Three Months Ended
March 31,
20212020
(in millions)
Lease portfolio sales$17.3 $112.8 
Operating profit on lease portfolio sales$1.7 $10.4 
Operating profit margin on lease portfolio sales9.8 %9.2 %

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Operating profit decreased by 15.7% for the three months ended March 31, 2021, compared to the prior year period primarily due to a lower volume of railcar sales, lower lease rates on renewals, and lower utilization, partially offset by growth in the lease fleet.
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 non-recourse operating leases pursuant to sale-leaseback transactions; long-term recourse debt such as equipment trust certificates; long-term non-recourse promissory notes; or third-party equity.
Information regarding the Leasing Group’s lease fleet is as follows:
 March 31, 2021March 31, 2020
Number of railcars:
Wholly-owned (1)
83,43079,245 
Partially-owned24,54024,570 
107,970103,815 
Investor-owned26,61025,840 
134,580129,655 
Company-owned railcars (2):
Average age in years10.4 9.8 
Average remaining lease term in years3.2 3.2 
Fleet utilization94.5 %95.4 %
(1) Includes 2,045 railcars and 2,176 railcars under sale-leaseback arrangements as of March 31, 2021 and 2020, respectively.
(2) Includes wholly-owned and partially-owned railcars and railcars under sale-leaseback arrangements.

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Rail Products Group
 Three Months Ended March 31,
 20212020Percent
 (in millions)Change
Revenues:
Rail products$203.5 $407.5 (50.1)%
Maintenance services48.1 81.1 (40.7)%
Other9.4 20.8 (54.8)%
Total revenues261.0 509.4 (48.8)%
Operating costs:
Cost of revenues261.2 472.5 (44.7)%
Selling, engineering, and administrative expenses
8.6 11.8 (27.1)%
Operating profit (loss)$(8.8)$25.1 (135.1)%
Operating profit (loss) margin(3.4)%4.9 %
Information related to our Rail Products Group backlog of railcars is summarized below:
 March 31,
 20212020Percent
 (in millions)Change
External Customers$694.1 $976.1 
Leasing Group295.8 581.7 
Total (1)
$989.9 $1,557.8 (36.5)%
 Three Months Ended
March 31,
 20212020Percent
Change
Beginning balance8,985 15,085 
Orders received1,410 1,970 (28.4)%
Deliveries(1,895)(3,705)(48.9)%
Other adjustments (1)
— (540)
Ending balance8,500 12,810 (33.6)%
Average selling price in ending backlog$116,459 $121,608 (4.2)%
(1) For the three months ended March 31, 2020, the adjustment includes 540 railcars valued at $81 million that were removed from the backlog because of a change in the underlying financial condition of the customers.
Revenues and cost of revenues for the Rail Products Group decreased for the three months ended March 31, 2021 by 48.8% and 44.7%, respectively, when compared to the prior year period. These decreases primarily resulted from lower deliveries, pricing pressures, and a shift in the mix of railcars sold, as well as a lower volume of railcar modifications in our maintenance services business. Additionally, cost of revenues for the three months ended March 31, 2021 was further impacted by supply chain and operational cost savings initiatives, partially offset by inefficiencies associated with lower volumes and the impacts of weather-related events.
Total backlog dollars decreased by 36.5% when compared to the prior year period primarily from a reduction in orders received, as well as a 4.2% lower average selling price on railcars included in backlog as a result of pricing pressures. Approximately 55.3% of our railcar backlog value is expected to be delivered during 2021 with the remainder to be delivered thereafter into 2024. 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 choose to change their procurement decision.
During the three months ended March 31, 2021, railcar shipments included sales to the Leasing Group of $92.5 million with nominal deferred profit, representing 946 railcars, compared to $164.5 million with a deferred profit of $16.8 million, representing 1,303 railcars, in the comparable period in 2020.
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All Other
 Three Months Ended March 31,
 20212020Percent
 (in millions)Change
Revenues:
Highway Products$68.1 $63.4 7.4 %
Operating costs:
Cost of revenues49.7 44.1 12.7 %
Selling, engineering, and administrative expenses
11.8 10.1 16.8 %
Gains on dispositions of property(8.7)(0.1)*
Operating profit$15.3 $9.3 64.5 %
Operating profit margin22.5 %14.7 %
* Not meaningful
Revenues and cost of revenues increased for the three months ended March 31, 2021 when compared to the prior year period primarily from increased demand in our highway products business. Operating profit was favorably impacted in the three months ended March 31, 2021 by gains associated with the disposition of a non-operating facility. As we continue to streamline our operational footprint, we may have additional gains or losses on the disposition of other non-operating facilities.
Corporate
 Three Months Ended March 31,
 20212020Percent
 (in millions)Change
Operating costs$22.7 $28.1 (19.2)%
Operating costs for the three months ended March 31, 2021 decreased 19.2%, compared to the prior year period primarily from lower litigation-related expenses and reduced costs associated with streamlining our corporate structure to support our rail-focused strategy, partially offset by higher employee-related costs associated with the realignment of certain support functions.
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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 facility, senior notes, convertible subordinated notes, asset-backed securities, non-recourse promissory notes, sale-leaseback transactions, and our revolving credit facility.
As of March 31, 2021, we have total committed liquidity of $772.4 million. Our total available liquidity includes: $178.1 million of unrestricted cash and cash equivalents; $358.2 million unused and available under our revolving credit facility; and $236.1 million unused and available under the TILC warehouse 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
TILC warehouse facility – In March 2021, the TILC warehouse facility was extended through March 15, 2024, and the total facility commitment was increased from $750 million to $1.0 billion.
Dividend Payments – We paid $23.2 million in dividends to our common stockholders during the three months ended March 31, 2021.
Share Repurchase Authorization – In October 2020, our Board of Directors authorized a new share repurchase program effective October 23, 2020 through December 31, 2021. The new share repurchase program authorized the Company to repurchase up to $250.0 million of its common stock. Share repurchase activity under this program is as follows:
Shares RepurchasedRemaining Authorization to Repurchase
PeriodNumber of sharesCost
(in millions)
Cost
(in millions)
October 23, 2020 Authorization$250.0 
October 23, 2020 through December 31, 20202,974,922 $67.8 $182.2 
January 1, 2021 through March 31, 20211,291,860 36.8 $145.4 
Total4,266,782 $104.6 
Cash Flows
The following table summarizes our cash flows from operating, investing, and financing activities for the three months ended March 31, 2021 and 2020:
 Three Months Ended
March 31,
 20212020
 (in millions)
Net cash flows from continuing operations:
Operating activities$70.1 $173.8 
Investing activities(96.0)(64.6)
Financing activities83.4 (77.1)
Net cash flows from discontinued operations(0.4)(0.2)
Net increase in cash, cash equivalents, and restricted cash$57.1 $31.9 
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Operating Activities. Net cash provided by operating activities from continuing operations for the three months ended March 31, 2021 was $70.1 million compared to net cash provided by operating activities from continuing operations of $173.8 million for the three months ended March 31, 2020. The decrease was driven primarily by changes in our operating assets and liabilities.
Three Months Ended
March 31,
20212020
(in millions)
(Increase) decrease in receivables, inventories, and other assets$9.9 $113.0 
(Increase) decrease in income tax receivable1.2 (374.4)
Increase (decrease) in accounts payable, accrued liabilities, and other liabilities(12.2)(29.2)
Changes in operating assets and liabilities $(1.1)$(290.6)

The changes in our operating assets and liabilities resulted in a net use of $1.1 million for the three months ended March 31, 2021, as compared to a net use of $290.6 million for the three months ended March 31, 2020. The decrease in the income tax receivable was primarily driven by anticipated tax refunds recorded in the prior year period related to the loss carryback provisions included in recent tax legislation. Additionally, in the prior year period, the changes in our operating assets and liabilities were impacted by a customer's election to exercise a purchase option on a sales-type lease.
Investing Activities. Net cash used in investing activities for the three months ended March 31, 2021 was $96.0 million compared to $64.6 million for the three months ended March 31, 2020. Significant investing activities are as follows:
We made a net investment in the lease fleet of $90.6 million during the three months ended March 31, 2021, compared to $60.7 million in the prior year period. Our net investment in the lease fleet primarily includes new railcar additions and railcar modifications, net of deferred profit, and secondary market purchases; and is net of proceeds from lease portfolio sales.
We acquired a company that owns and operates proprietary railcar cleaning technology systems during the three months ended March 31, 2021 for net cash of $16.6 million. We had no acquisitions during the three months ended March 31, 2020.
Financing Activities. Net cash provided by financing activities during the three months ended March 31, 2021 was $83.4 million compared to $77.1 million of net cash used in financing activities for the same period in 2020. Significant financing activities are as follows:
During the three months ended March 31, 2021, we had total borrowings of $327.7 million and total repayments of $185.3 million, for net proceeds of $142.4 million, primarily from debt proceeds to support our investment in the lease fleet. During the three months ended March 31, 2020, we had total borrowings of $452.4 million and total repayments of $471.4 million, for net repayments of $19.0 million, primarily related to the early redemption of debt, partially offset by debt proceeds to support our investment in the lease fleet.
We paid $23.2 million and $22.7 million in dividends to our common stockholders during the three months ended March 31, 2021 and 2020, respectively.
We repurchased common stock under our authorized share repurchase programs totaling $35.7 million and $35.4 million during the three months ended March 31, 2021 and 2020, respectively. Certain shares of stock repurchased during March 2021, totaling $2.9 million, were cash settled in April 2021 in accordance with normal settlement practices.
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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 March 2021, we amended our revolving credit facility to increase the maximum leverage ratio through March 31, 2022 and to decrease the minimum interest coverage ratio through December 31, 2021 to provide additional near-term flexibility. A summary of our financial covenants is detailed below:
RatioCovenant
Actual at
March 31, 2021
Maximum leverage (1)
No greater than 4.50 to 1.002.37
Minimum interest coverage (2)
No less than 1.50 to 1.003.44
(1) Defined as the ratio of consolidated total indebtedness 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 March 31, 2021.
(2) Defined as the ratio of the difference of (A) consolidated EBITDA less (B) consolidated capital expenditures – manufacturing and other 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 March 31, 2021.
As of March 31, 2021, 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.

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Supplemental Guarantor Financial Information
Our Senior Notes are fully and unconditionally and jointly and severally guaranteed by certain of Trinity’s 100%-owned subsidiaries: Trinity Industries Leasing Company; Trinity North American Freight Car, Inc.; Trinity Rail Group, LLC; Trinity Tank Car, Inc.; Trinity Highway Products, LLC; and TrinityRail Maintenance Services, Inc. (collectively, the "Guarantor Subsidiaries”).
The Senior Notes indenture agreement includes customary provisions for the release of the guarantees by the Guarantor Subsidiaries upon the occurrence of certain allowed events including the release of one or more of the Combined Guarantor Subsidiaries as guarantor under our revolving credit facility. See Note 8 of our 2020 Annual Report on Form 10-K. The Senior Notes are not guaranteed by any of our remaining 100%-owned subsidiaries or partially-owned subsidiaries (“Non-Guarantor Subsidiaries”).
As of March 31, 2021, assets held by the Non-Guarantor Subsidiaries included $87.3 million of restricted cash that was not available for distribution to Trinity Industries, Inc. (“Parent”), $6,543.1 million of equipment securing certain non-recourse debt, and $123.0 million of assets located in foreign locations. As of December 31, 2020, assets held by the Non-Guarantor Subsidiaries included $76.7 million of restricted cash that was not available for distribution to the Parent, $6,238.3 million of equipment securing certain non-recourse debt, and $126.9 million of assets located in foreign locations.
The following tables include the summarized financial information for Parent and Guarantor Subsidiaries (together the obligor group) on a combined basis after elimination of intercompany transactions within the obligor group (in millions). Investments in and equity in the earnings of the Non-Guarantor Subsidiaries (the non-obligor group) have been excluded.
Summarized Statement of Operations:
Three Months Ended March 31, 2021
Revenues (1)
$216.2 
Cost of revenues (2)
$191.9 
Income (loss) from continuing operations$(26.4)
Net income (loss)
$(26.8)
Summarized Balance Sheets:
March 31, 2021
December 31, 2020
Assets:
Receivables, net of allowance (3)
$265.8 $223.0 
Inventories$286.2 $289.1 
Property, plant, and equipment, net$1,141.9 $1,424.8 
Goodwill and other assets$437.4 $453.7 
Liabilities:
Accounts payable and accrued liabilities (4)
$269.4 $286.9 
Debt$398.2 $448.2 
Deferred income taxes$863.0 $862.8 
Other liabilities$154.4 $148.7 
Noncontrolling interest$275.5 $277.2 
(1) There were no net sales from the obligor group to Non-Guarantor Subsidiaries during the three months ended March 31, 2021.
(2) Cost of revenues includes $30.7 million of purchases from Non-Guarantor Subsidiaries during the three months ended March 31, 2021.
(3) Receivables, net of allowance includes $97.8 million and $86.7 million of receivables from Non-Guarantor Subsidiaries as of March 31, 2021 and December 31, 2020, respectively.
(4) Accounts payable includes $24.1 million and $24.0 million of payables to Non-Guarantor Subsidiaries as of March 31, 2021 and December 31, 2020, respectively.

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Capital Expenditures
For the full year 2021, we anticipate a net investment in our lease fleet of between $300 million and $350 million. Capital expenditures related to manufacturing and other activities, including expansion of our fleet maintenance capabilities and systems upgrades, are projected to range between $45 million and $60 million for the full year 2021.
Equity Investment
See Note 4 of the Consolidated Financial Statements for information about our investment in partially-owned leasing subsidiaries.
Off Balance Sheet Arrangements
As of March 31, 2021, we had letters of credit issued under our Credit Agreement in an aggregate amount of $35.2 million, the full amount of which is expected to expire in July 2021. Our letters of credit obligations support our various insurance programs and generally renew by their terms each year. See Note 7 of the Consolidated Financial Statements for further information about our corporate revolving credit facility.
Derivative Instruments
We may use derivative instruments to mitigate the impact of changes in interest rates, both in anticipation of future debt issuances and to offset interest rate variability of certain floating rate debt issuances outstanding. We also may use derivative instruments from time to time to mitigate the impact of changes in natural gas and diesel fuel prices and changes in foreign currency exchange rates. Derivative instruments that are designated and qualify as cash flow hedges are accounted for in accordance with applicable accounting standards. See Note 2 of the Consolidated Financial Statements for discussion of how we utilize our derivative instruments.
LIBOR Transition
The United Kingdom's Financial Conduct Authority, which regulates the London Interbank Offered Rate ("LIBOR"), has announced that it will no longer persuade or require banks to submit rates for the calculation of LIBOR after June 2023. In the U.S., the Alternative Reference Rates Committee has identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative to LIBOR. We currently have LIBOR-based contracts that extend beyond June 2023 including derivative instruments, promissory notes for Trinity Rail Leasing 2017 LLC, TILC's warehouse loan facility, and our revolving credit facility. After LIBOR is phased out, the interest rates for these obligations might be subject to change. The replacement of LIBOR with an alternative benchmark reference rate may adversely affect interest rates and result in higher borrowing costs under these agreements and any future agreements.
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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 reporting 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.
Free Cash Flow
Total Free Cash Flow After Investments and Dividends ("Free Cash Flow") is a non-GAAP financial measure. The change in presentation of sales of railcars from the lease fleet, which was effected on a prospective basis beginning in the fourth quarter of 2020, had no effect on the Company’s previously reported Free Cash Flow.
We believe Free Cash Flow is useful to both management and investors as it provides a relevant measure of liquidity and a useful basis for assessing our ability to fund our operations and repay our debt. Free Cash Flow is reconciled to net cash provided by operating activities from continuing operations, the most directly comparable GAAP financial measure, in the following tables.
For the three months ended March 31, 2021, Free Cash Flow is defined as net cash provided by operating activities from continuing operations as computed in accordance with GAAP, plus cash proceeds from lease portfolio sales, less capital expenditures for manufacturing, dividends paid, and Equity CapEx for new leased railcars. Equity CapEx for new leased railcars is defined as leasing capital expenditures, adjusted to exclude net proceeds from (repayments of) debt.
Three Months Ended March 31, 2021
(in millions)
Net cash provided by operating activities – continuing operations$70.1 
Proceeds from lease portfolio sales17.3 
Adjusted Net Cash Provided by Operating Activities87.4 
Capital expenditures – manufacturing and other(8.5)
Dividends paid to common stockholders(23.2)
Free Cash Flow (before Capital expenditures – leasing)
55.7 
Equity CapEx for new leased railcars34.5 
Total Free Cash Flow After Investments and Dividends$90.2 
Capital expenditures – leasing$107.9 
Less:
Payments to retire debt(185.3)
Proceeds from issuance of debt327.7 
Net proceeds from (repayments of) debt142.4 
Equity CapEx for new leased railcars$(34.5)
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For the three months ended March 31, 2020, Free Cash Flow is defined as net cash provided by operating activities from continuing operations as computed in accordance with GAAP, plus cash proceeds from sales of leased railcars owned more than one year at the time of sale, less capital expenditures for manufacturing, dividends paid, and Equity CapEx for new leased railcars. Equity CapEx for new leased railcars is defined as leasing capital expenditures, net of sold lease fleet railcars owned one year or less, adjusted to exclude net proceeds from (repayments of) debt.
Three Months Ended March 31, 2020
(in millions)
Net cash provided by operating activities – continuing operations$173.8 
Proceeds from railcar lease fleet sales owned more than one year at the time of sale68.5 
Adjusted Net Cash Provided by Operating Activities242.3 
Capital expenditures – manufacturing and other(14.0)
Dividends paid to common stockholders(22.7)
Free Cash Flow (before Capital expenditures – leasing)
205.6 
Equity CapEx for new leased railcars(148.2)
Total Free Cash Flow After Investments and Dividends$57.4 
Capital expenditures – leasing, net of sold lease fleet railcars owned one year or less of $42.5
$129.2 
Less:
Payments to retire debt(471.4)
Proceeds from issuance of debt452.4 
Net proceeds from (repayments of) debt(19.0)
Equity CapEx for new leased railcars$148.2 
Contractual Obligations and Commercial Commitments
Except as described below, as of March 31, 2021, there have been no material changes to our contractual obligations from December 31, 2020:
In March 2021, the TILC warehouse facility was extended through March 15, 2024, and the total facility commitment was increased from $750 million to $1.0 billion. See Note 7 of the Consolidated Financial Statements for additional information regarding the TILC warehouse facility.
Recent Accounting Pronouncements
There have been no material changes in recently issued or adopted accounting standards from those disclosed in our 2020 Annual Report on Form 10-K.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
There has been no material change in our market risks since December 31, 2020 as set forth in Item 7A of our 2020 Annual Report on Form 10-K. Refer to Note 7 and Note 2 of the Consolidated Financial Statements for a discussion of debt-related activity and the impact of hedging activity, respectively, for the three months ended March 31, 2021.
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Item 4. Controls and Procedures
Disclosure Controls and Procedures
We maintain disclosure controls and procedures designed to ensure that we are able to collect and record the information we are required to disclose in the reports we file with the SEC, and to process, summarize, and disclose this information within the time periods specified in the rules of the SEC. Our Chief Executive and Chief Financial Officers are responsible for establishing and maintaining these procedures and, as required by the rules of the SEC, evaluating their effectiveness. Based on their evaluation of our disclosure controls and procedures that took place as of the end of the period covered by this report, the Chief Executive and Chief Financial Officers concluded that these procedures are effective to 1) ensure that we are able to collect, process, and disclose the information we are required to disclose in the reports we file with the SEC within the required time periods and 2) accumulate and communicate this information to our management, including our Chief Executive and Chief Financial Officers, to allow timely decisions regarding this disclosure.
Internal Controls over Financial Reporting
During the period covered by this report, there have been no changes in our internal controls over financial reporting that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting.

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PART II
Item 1. Legal Proceedings
The information provided in Note 14 of the Consolidated Financial Statements is hereby incorporated into this Part II, Item 1 by reference.
Item 1A. Risk Factors
There have been no material changes from the risk factors previously disclosed in Item 1A of our 2020 Annual Report on Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
This table provides information with respect to purchases by the Company of shares of its Common Stock during the quarter ended March 31, 2021:
Period
Number of Shares Purchased (1)
Average Price Paid per Share (1)
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)
Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (2)
(in millions)
January 1, 2021 through January 31, 2021
171,066 $27.28 170,863 $177.5 
February 1, 2021 through February 28, 2021
2,757 $31.89 — $177.5 
March 1, 2021 through March 31, 2021
1,122,286 $28.61 1,120,997 $145.4 
Total1,296,109 1,291,860 
(1) These columns include the following transactions during the three months ended March 31, 2021: (i) the surrender to the Company of 3,553 shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock issued to employees, (ii) the purchase of 696 shares of common stock by the Trustee for assets held in a non-qualified employee profit sharing plan trust, and (iii) the purchase of 1,291,860 shares of common stock on the open market as part of our share repurchase program.
(2) In October 2020, our Board of Directors authorized a new share repurchase program effective October 23, 2020 through December 31, 2021. The share repurchase program authorized the Company to repurchase up to $250.0 million of its common stock. The Company repurchased 1,291,860 shares under the share repurchase program during the three months ended March 31, 2021, at a cost of approximately $36.8 million. As of March 31, 2021, the Company had a remaining authorization to repurchase up to $145.4 million of its common stock under the share repurchase program. Certain shares of stock repurchased during March 2021, totaling $2.9 million, were cash settled in April 2021 in accordance with normal settlement practices. The approximate dollar value of shares that were eligible to be repurchased under such share repurchase program is shown as of the end of such month or quarter.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
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Item 6. Exhibits
NO.DESCRIPTION
3.1
10.1
10.2
22.1
31.1
31.2
32.1
32.2
101.INS
Inline XBRL Instance Document  the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCHInline XBRL Taxonomy Extension Schema Document (filed electronically herewith).
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document (filed electronically herewith).
101.LABInline XBRL Taxonomy Extension Label Linkbase Document (filed electronically herewith).
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document (filed electronically herewith).
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document (filed electronically herewith).
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
_____________________________


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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
TRINITY INDUSTRIES, INC.By/s/ Eric R. Marchetto
Registrant 
 Eric R. Marchetto
 Executive Vice President and Chief Financial Officer
 April 27, 2021
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