Trinity Industries (NYSE:TRN) used its fourth-quarter earnings call to highlight a strong finish to 2025, supported by leasing strength and a significant year-end railcar partnership restructuring that boosted results and, management said, underscored the embedded value of its railcar assets.
For the full year, the company reported earnings per share of $3.14, up 73% year over year, and an adjusted return on equity of 24.4%, up from the prior year. Fourth-quarter EPS was $2.31, which CFO Eric Marchetto said included approximately $1.50 from the fourth-quarter railcar partnership restructuring.
Market backdrop: net fleet contraction and improving rail fluidity
Looking to 2026, management expects industry deliveries of approximately 25,000 railcars, which Savage described as “well below replacement levels,” but consistent with current industry backlogs. While the company’s outlook for 2026 deliveries is muted, Savage said inquiry levels and orders improved in the fourth quarter, though customer decision cycles remain longer than in the past.
On end markets, Savage said agriculture, energy, and non-residential construction were showing strength going into 2026, while consumer and certain chemical markets, including automobiles and chlor-alkali, remained headwinds.
Leasing and services: higher lease rates, strong utilization, and a major restructuring
The Railcar Leasing and Services segment remained the foundation of Trinity’s earnings stability, according to management. Savage said full-year segment revenue increased 5.5% year over year, driven by higher lease rates and net fleet growth. Net lease fleet investment totaled $350 million, at the high end of guidance, as the company used the secondary market to buy and sell railcars to “strategically grow and strengthen” the lease fleet.
Segment operating profit increased 53% year over year, supported by a railcar partnership restructuring completed with Napier Park in December. Trinity recorded a $194 million non-cash gain in the segment tied to that transaction. The company also posted $56 million in gains on railcar sales in the fourth quarter, bringing full-year gains to $91 million.
Savage reported fleet utilization of 97.1% and renewal success of 73% in the fourth quarter. While the future lease rate differential (FLRD) moderated to 6% as renewal growth normalized, renewing rates were 27% higher than expiring rates. In the Q&A, management noted FLRD remained positive for the 18th consecutive quarter, with average lease rates continuing to rise quarter over quarter and year over year.
Marchetto detailed the Napier Park restructuring, explaining that prior to the transaction, about 23,000 railcars in Trinity’s partnership vehicles were partially owned but fully consolidated on the balance sheet and carried at cost. As part of the restructuring, Trinity took full ownership of the TRP 2021 fleet (about 6,235 railcars), while Napier Park assumed full ownership of the Triumph fleet (about 10,850 railcars). The Triumph fleet’s transacted value exceeded Trinity’s book value, driving the $194 million non-cash gain.
Following the deal, Marchetto said Trinity’s leasing fleet includes 101,000 railcars on its balance sheet and 45,000 railcars under management through its railcar investment vehicles (RIVs). He said the RIV program generates approximately $20 million per year in servicing revenue and provides additional scale and market visibility.
Marchetto also said Trinity estimates the market value of its 101,000 balance-sheet railcars—carried at a cost of $6.3 billion—is about 35% to 45% higher than carrying value, reflecting an estimated 3% to 4% annual appreciation in railcar values over the last 20 years.
Rail Products: profitability despite low volumes and a one-time charge
In manufacturing, Savage said Rail Products achieved a full-year operating margin of 5.2%, within guidance, despite a 46% decline in deliveries. She attributed the performance to cost discipline, automation, and workforce actions, and said headcount rationalization in 2025 “right-sized” the organization for current demand levels.
Trinity also disclosed a one-time credit loss related to a customer receivable in the fourth quarter that was included in SG&A. Savage said the charge reduced Rail Products operating margin by 190 basis points in the quarter and described it as an isolated incident.
During Q&A, management said it expects Rail Products operating margin of 5% to 6% in 2026 and characterized the competitive environment as “aggressive,” citing some margin pressure in the market and the need to remain disciplined on order intake. Management said it does not provide quarterly guidance, but expects margins to be “fairly even” through the year.
Financial position, capital deployment, and 2026 outlook
Trinity reported fourth-quarter revenue of $611 million and full-year revenue of $2.2 billion, down year over year due to lower external railcar deliveries. Cash flow from continuing operations totaled $367 million for the year. The company returned $170 million to shareholders through dividends and share repurchases in 2025, and raised its quarterly dividend to $0.31 per share in December, marking seven consecutive years of dividend growth, which management said equates to a 9% annualized growth rate.
Marchetto said Trinity ended the year with liquidity of $1.1 billion and reported a 70.2% loan-to-value ratio for the wholly owned lease fleet, attributing the increase to an October debt restructuring and the addition of the TRP 2021 fleet. He said the company is comfortable with its leverage and regularly refinances railcars as debt amortizes.
For 2026, Trinity introduced EPS guidance of $1.85 to $2.10. Management also provided several operating expectations:
- Industry railcar deliveries of about 25,000 units, with Trinity maintaining its historical market share.
- Rail Products operating margin of 5% to 6%.
- Secondary market gains of $120 million to $140 million, including anticipated gains from a potential second-quarter transaction to contribute remaining partially owned railcars to a managed Napier Park fleet (not yet finalized, management said).
- Leasing and services segment margins of 40% to 45%, including gains and any further restructuring activity; higher lease rates expected to support margin, offset by higher fleet maintenance.
- Net lease fleet investment of $450 million to $550 million.
- Operating and administrative capital expenditures of $55 million to $65 million, including further investments in automation, technology, and facility/process modernization.
- Slightly lower SG&A costs and a tax rate of about 25% to 27%.
Management also updated progress on its 2024 Investor Day three-year targets for 2024–2026. Marchetto said Trinity has invested $531 million toward its $750 million to $1 billion net lease fleet investment target and expects to reach the top end with 2026 guidance. The company has achieved $1.1 billion to date toward its cash flow from operations with net gains on leased portfolio sales target of $1.2 billion to $1.4 billion and expects to exceed that range (excluding non-cash gains). Adjusted ROE averaged 19.5% over the first two years of the planning period, above the 12% to 15% target, despite an updated outlook for roughly 100,000 industry deliveries over the period versus the 120,000 assumed when targets were set.
In closing remarks, Savage said Trinity is “structurally stronger, more resilient, and better positioned today than in prior cycles,” and reiterated the company’s focus on disciplined lease pricing, active portfolio management, and balanced capital deployment.
About Trinity Industries (NYSE:TRN)
Trinity Industries, Inc is a diversified industrial company headquartered in Dallas, Texas, with roots dating back to its incorporation in 1933. The company principally serves the transportation, infrastructure and energy sectors through the design, manufacture and leasing of railcars and related components. Trinity operates multiple business segments that encompass railcar manufacturing, aftermarket parts production, railcar leasing and management, inland barge construction and leasing, as well as infrastructure products for highways and energy applications.
In its railcar segment, Trinity produces a broad portfolio of freight cars—including tank cars, covered hoppers, gondolas and autoracks—alongside critical system components such as braking systems, couplers and wheels.
