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Good day, everyone, and welcome to the Trinity Industries Third Quarter Ended September 30, 2025 Results Conference Call. [Operator Instructions] Please also note today's event is being recorded. Before we get started, let me remind you that today's conference call contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995 and includes statements as to estimates, expectations, intentions and predictions of future financial performance. Statements that are not historical facts are forward-looking. Participants are directed to Trinity's Form 10-K and other SEC filings for the description of certain of the business issues and risks, a change in any of which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. At this time, I would like to turn the conference call over to Leigh Mann, Vice President of Investor Relations. Please go ahead.

Thank you, operator. Good morning, everyone. We appreciate you joining us for the company's third quarter 2025 financial results conference call. Our prepared remarks will include comments from Jean Savage, Trinity's Chief Executive Officer and President; and Eric Marchetto, the company's Chief Financial Officer. We will hold a Q&A session following the prepared remarks from our leaders. During the call today, we will reference certain non-GAAP financial metrics. The reconciliations of the non-GAAP metrics to comparable GAAP measures are provided in the appendix of the quarterly investor slides, which are accessible on our Investor Relations website at www.trin.net. These slides are under the Events and Presentations portion of the website, along with the third quarter earnings conference call event link. A replay of today's call will be available after 10:30 a.m. Eastern Time through midnight on November 6, 2025. Replay information is available under the Events and Presentations page on our Investor Relations website. It is now my pleasure to turn the call over to Jean.

Thank you, Leigh Anne, and good morning, everyone. As we approach year-end, I want to recognize our team's dedication. Our third quarter results demonstrate Trinity's agility and strong business model. Trinity is raising and tightening full year EPS guidance to $1.55 to $1.70, reflecting our confidence in the business model and execution capabilities. Our leasing business continues to benefit from strong market dynamics, higher lease rates and favorable pricing on external repairs. We're also seeing continued opportunities in the secondary market, further reinforcing our position as an industry leader. On the manufacturing side, our team delivered impressive results, achieving a solid operating profit margin of 7.1% with a favorable mix of specialty railcars and improving operational efficiencies despite a lower delivery environment. I am proud of what we have accomplished together and confident that our continued focus and teamwork will drive future success. Before discussing our quarterly results in more detail, I would like to provide a brief market overview. Strong renewal success and steady lease fleet utilization across the industry indicate customers continue to size their fleets anticipating future demand. While persistent market uncertainty has delayed customers' decisions to invest in new railcars, customers are still holding on to existing railcars. Overall, the North American railcar fleet remains in balance and is contracting as scrapping is outpacing new railcar deliveries. I will now highlight segment performance for the quarter, beginning with the Railcar Leasing and Services segment, which includes leasing, maintenance and digital and logistics services. Leasing and Services segment revenue grew year-over-year, driven by higher fleet pricing and strong utilization of 96.8%, which continues to represent a balanced and well-utilized fleet. Renewal rates were 25.1% above expiring rates in the quarter with an 82% renewal success rate. The future lease rate differential was 8.7% in the quarter, driven by higher expiring rates and some lease rate moderation on certain railcar types. Despite this moderation, we remain optimistic about the leasing market. Furthermore, the secondary market remains very active, and we have capitalized on good opportunities to optimize and monetize our fleet. We added over $100 million of railcars into our fleet from the secondary market and sold $80 million of railcars in the quarter. We find value in utilizing the secondary market as both a buyer and the seller and remain pleased with the performance and yield on our fleet. We expect secondary market activity to accelerate in the fourth quarter, and we plan to end the year within our guidance range for our overall net lease fleet investment. Trinity's maintenance business continues to benefit from industry-leading turn times, which allows us to lower the cost per maintenance event for our lease fleet. Turning to the Rail Products segment, which includes our manufacturing and parts businesses, market conditions remain challenged. Industry railcar orders remained depressed in the third quarter. By proactively adjusting production, together with a favorable mix of railcars, we improved efficiency and achieved 7.1% operating margin in the rail products despite lower deliveries of 1,680 railcars. 46% of our deliveries in the quarter went into our lease fleet, and we expect the full year number to be between 30% and 35%. In the quarter, we received orders for 350 railcars. This order number reflects the broader market conditions. Industry orders in the quarter were 3,071, well below expectations in the replacement cycle. While industry orders remain below expectations, our conversations with customers indicate potential for future growth. With these conversations and the replacement demand, we have not changed our longer-term outlook for the industry. Our backlog stands at $1.8 billion with approximately 21% expected to deliver by year-end. We currently hold about 50% of the industry backlog. In conclusion, I am pleased with our performance in the quarter. We are delivering results consistent with our expectations and reflective of market conditions. The Trinity integrated platform of railcar leasing enabled by manufacturing and services makes it easier for our customers to use rail. We have a multitude of levers to deliver steady profitability and cash flow through a cycle. Whether it's repriced leased cars, selling leased railcars in the secondary market, investing in the fleet, building new railcars or supporting elevated railcar repair and compliance needs. Trinity is designed to deliver value to shareholders and customers alike. As we head into the last few months of 2025 and into 2026, our fleet is well positioned to generate significant and consistent cash flows, and our manufacturing footprint is rightsized and ready to efficiently meet railcar demand when it fully returns. I'll now turn the call over to Eric to talk through financial results as well as our updated guidance for 2025.

Thank you, Jean, and good morning, everyone. I will begin by discussing our third quarter financial statements, starting with the income statement. Total revenues in the third quarter were $454 million, down both sequentially and year-over-year due to lower external deliveries in the Rail Products Group. However, despite lower deliveries, earnings per share in the quarter of $0.38 are up sequentially due to the favorable margin performance in the Rail Products Group. As previously noted, we are seeing the benefits of the decisions we made earlier this year to rightsize our organization. We are expecting full year SG&A savings of approximately 20% as compared to 2024 and we will end the year at a lower run rate as we move into 2026. Moving to the cash flow statement. Year-to-date cash flow from continuing operations was $187 million. Our net fleet investment year-to-date is $387 million, above our full year guidance of $250 million to $350 million, implying a negative fleet investment in the fourth quarter as timing of railcar sales are heavily weighted in the fourth quarter. Year-to-date gains on lease portfolio sales are $35 million, and we anticipate full year gains of $70 million to $80 Year-to-date, we have returned $134 million of capital to our shareholders through a combination of dividends and share buybacks. We continue to be opportunistic in our return of capital and continuously evaluate our capital allocation options to generate favorable shareholder returns. Moving to the balance sheet. Our cash balance is $66 million and total liquidity is $571 million. Our asset balance includes $162 million of finished goods inventory, the majority of which we expect to deliver in the fourth quarter and convert to cash. Our loan-to-value ratio of 68.5% remains within our target range of 60% to 70%. Earlier this week, we completed the financing of our TRL 2025 notes and used the proceeds to repay borrowings under our warehouse, redeem the outstanding debt of TRL 2010 notes and for general corporate purposes. We are pleased to have strong investor demand for these notes and benefited from lower benchmarks and tightening spreads. And now moving on to our expectations for the fourth quarter and the full year 2025. We maintain our outlook of full year industry deliveries of 28,000 to 33,000 railcars, reflecting the muted current railcar environment. We expect the industry to scrap about 40,000 railcars this year, which means we expect contraction in the North American fleet this year. As previously mentioned, we are maintaining our net fleet investment guidance of $250 million to $350 million for the full year, implying a negative net fleet investment in the fourth quarter. We expect substantial railcar sales in the fourth quarter, more than offsetting additions to the fleet from origination and secondary market purchases. However, we still expect overall fleet growth for the year, meeting our 1-year target and keeping us on track for our 3-year target of $750 million to $1 billion of net fleet investment between 2024 and 2026. We continue to prioritize investment in our fleet as this provides sustainable long-term returns. And finally, we are raising and tightening our full year EPS guidance from a range of $1.40 to $1.60 to a range of $1.55 to $1.70. We are on track to our forecast for deliveries and expect Rail Products segment margin performance of 5% to 6% for the full year. Additionally, our leasing margin before gains is on track with prior expectations. Therefore, with conviction in our margin performance as well as expected higher gains on railcar sales in the fourth quarter, we are raising our full year EPS guidance. In closing, I want to emphasize that we are growing our lease fleet while capitalizing on strong secondary market conditions. Additionally, we have reduced costs, which allows us to operate more efficiently and profitably and improve our returns. In short, our platform provides flexibility and resilience, which are demonstrated in today's results and commentary. We look forward to sharing our full year results with you in February, and we'll provide our expectations for 2026 at that time. Operator, we are now ready to take our first question.

[Operator Instructions] Our first question comes from Andrzej Tomczyk from Goldman Sachs.

Just a little curious, maybe starting at a higher level, if you could just discuss the current railcar delivery and order environment in a little more detail. And in particular, how many quarters -- I know book-to-bill still is below 1 this quarter, but how many quarters of book-to-bill above 1 should you guys expect to see before sort of having confidence in a more sustainable upward trajectory in demand for railcars? And would you expect to see that in 2026?

Andre, thanks for the question. When you look at our backlog, remember, we've got a multiyear order out there that's got about 50% of the industry backlog sitting there. So for us, when you're looking at order entry, it may mean something a little bit different because you have to take that into consideration. When you look at our projection for this year for industry deliveries, it's 28,000 to 33,000, which is below replacement level demand right now. And we're looking to see something similar in 2026 right now. And so I think on the book-to-bill, I can't tell you when it's going to be above 1 again. We're still having strong inquiries. We're having really good discussions with customers. It's just taking them longer in this uncertain environment to make the decision to take it from an inquiry to an order.

Understood. And maybe just on that guidance for the 28,000 to 33,000 industry deliveries, how much of that delivery gap versus replacement level demand of around 35,000 to 40,000 would you say is driven by customers already having what they need relative to their expectations for freight demand versus customers just delaying orders that they know they need to make, but are maybe more just holding off now due to policy uncertainty around tariffs and trade.

So what we are seeing is really a delay in placing those orders. If you look at the pace of scrapping, we're expecting about 40,000 cars to be scrapped this year, which means we'll have a contraction in the fleet -- North American fleet again this year. And so at some point, they're going to have to order. So we believe it's more delaying, and we'll see a pickup later on once certainty becomes more prevalent on the car orders.

Got it. And then once that delayed demand sort of comes back, would that lead to a scenario in your mind where deliveries sort of get back to above replacement level demand? And I guess, just in that context, would that -- is that a scenario that takes sort of several years to get back to the next peak from current levels, which maybe you consider closer to trough?

Well, earlier, I said we expect -- and we're not giving '26 guidance yet, but we expect 2026 to be similar to this year for the industry. And when you look at that, I think you have to, again, take into consideration that orders can be lumpy. We get a multiyear order sitting out there with 50% of the industry backlog. So it really depends on the scenario of how that plays into what some of the orders are going to be. But again, '26 similar to 2025. And then after that, we'll give guidance as we understand and see more with the certainty.

Understood. And I guess just as far as potential for Class 1 rail consolidation, if networks move to be predominantly single line in nature in the future with less interchanging, does that effectively speed up the network and enhance rail industry asset utilization? And if so, how do you expect rails to balance the potential need for fewer cars due to better utilization versus the potential for a longer-term need for more cars if the networks sort of speed up to the degree that rails can sort of extract share gains from trucks?

Yes, Andrzej, this is Eric. I'll take that, and good question. That is fundamentally a question the industry is asking. And that is, will a transconinental railroad -- you're right, it should -- with less interchange points, it should increase fluidity, increase speed. And the question is, will that give the opportunity for modal share growth. And the modal share growth opportunity, we think, can offset any of the impacts from moving the same freight faster and that ultimately, it can lead to industry growth in both carload growth and fleet growth. But that's been difficult to prove out in prior mergers. But -- so the [indiscernible] have their work cut out to prove that out, but that's certainly what they're laying out as their rationale for the combination, and we're certainly hopeful that that's the case.

I appreciate that. And maybe just switching to leasing. I noticed that the FLRD dropped to, I think, about 9% from 18% last quarter. It seemed fairly sharp. I'm just curious on what caused that and if you sort of expect FLRD to trend similarly to here?

So let me start out with saying that we're really happy with the leasing results in the quarter. Renewal rates were 25.1% above the expiring rates. We had an 82% renewal success rate and fleet utilization remained very strong at 96.8%. And we continue to see runway for lease revenue growth, both from repricing the fleet and ongoing fleet investment. When you look at the FLRD for Q3, it was the 17th consecutive quarter of positive FLRD. When you look at the step down, it was driven by higher expiring rates and some moderation in market rates for certain railcar types. And as you've seen in the past, this metric can be lumpy quarter-to-quarter. With 50% of the industry backlog, we have good visibility in what's going on there, and we believe the leasing environment remains favorable, and our portfolio is well positioned to continue the performance that we've had.

Got it. And then maybe just lastly for me on the leasing. If you could just bring us up to speed on how much of the book has been resigned at the higher COVID rates and maybe how much is left to reprice from here?

Yes. So Andrzej, this is Eric. We have -- one of the other things we have started to lap some of our renewals that we've done in this environment that's also impacted the FLRD. But when you look at how much we've repriced going back to the double digits, it's about 65% of the fleet that's repriced. And we continue to see about 15% of that reprice in the year. So it's still got a tail. And then when you look at where rates are today versus when it started to be double digits, you still got some opportunity there. So as Jean mentioned, we're very encouraged by the outlook for renewals and what we expect from revenue growth on leasing.

Our next question comes from Bascome Majors from Susquehanna.

I'd love to start where Andrzej left off there. Jean, I think you said that renewal rates were 25% this quarter. I just want to do maybe a more detailed job of kind of reconciling that with the FLRD going down to 8%, 9% here. I imagine it has a lot to do with the denominator and the forward-looking nature of that. But just I think walking through that and with a bit more granularity would help us set better expectations for what leasing could do next year.

Yes. Bascome, I'll take that one. So you're right. And so when you look at what Jean was referencing is just comparing in the current quarter, the expiring -- the new contracted rates with the expiring rates. And those were -- we renewed had an 82% success rate, and it was up 25%. So strong. People are paying up to keep their railcars, and that really gets into our sentiment. When you get into the FLRD, this is where the nuances, and you've got different metrics out there that are indexes for lease rates. What our FLRD takes is the current rates in the quarter for 25 different car types, and we compare it to those same -- the current rates that we contracted in the third quarter, we compare that to the expiring rates for those same car types for the next 4 quarters. So you're right, when you're comparing the -- it's the same numerator in both cases in the 8% calculation and the 25% calculation. The denominator is different. The denominator in the 25% is the contracts we did in the quarter. The 8% is the contracts that are expiring in the next 4 quarters -- same mix and everything else. So you do get a little bit -- you get -- the FLRD will get some volatility because we don't control for mix. It's not an index on our fleet. It's our actual expirations. So it's more of an indication of what's going to happen on the lease pricing on those actual expirations. But from a market standpoint, you have your 25% up on the expiring rate. So does that help with kind of explain the difference?

It helps a lot. So if we square ultimately, that's telling us that your expiring rates are going to be about 15% higher next year.

Yes, there's exactly. And that's a little bit of lapping and it's a little bit of -- they're just higher.

All right. So the -- this is both a combination of maybe doing some short-term leases at the low part of the market and just the vintage of getting past the weaker part of the cycle.

Yes. The lapping would indicate if you did a -- 3 years ago, if you did a 3-year lease, then you're starting to lap it. And so that's an element of it. I don't want to over-index on that. That's a part of it.

No, understood. And the other piece you mentioned was a little quarter-over-quarter moderation in car types. Can you give us a little more fidelity in where things are stable to increasing and where things are a little bit softer sequentially?

So generally speaking, tank car rates for the most part are still very strong. We've seen a little bit of softness in some of the ag sector, which is kind of to be expected with what's going on with trade on the agricultural piece. So that -- there's a little bit of that. But it's slight. It's not -- we're not seeing big changes. We're still -- when we look at all our different car types, we see many car types trending upward, and we see some trending downward. And so the mix of -- when you get to the mix and with the FLRD, there was a little bit of a trend downward on some of the car types.

And moving down -- you talked about the earnings increase being largely a function for the full year guidance of both the higher gains expectation. I think you took that to -- was up from what -- they were roughly 80 to 60 or something -- yes. And also, you mentioned margins. Can you talk a little bit about the fundamental drivers in the market that helped you kind of surprise your own expectation on both gains and the OEM side of the margins just as we think through the sustainability and run rate of that next year?

Sure. I'll go ahead and start with that. When you look at the performance of the Rail Products segment, they had a really good quarter. Some of that was driven by a favorable mix of some specialty cars but other parts were the disciplined operational execution that they had. And remember, earlier in the year, we had deliberately aligned our production with the expected volumes. So we took some of those reductions in workforce or realign that early on. That really helped us maintain those margins despite lower deliveries. In the prepared remarks, we also talked about the fact that we expect to end the year at the 5% to 6% range. And in the fourth quarter, we're expecting it to be in that 5% to 6% range. Reason for that is really the mix of cars that we're going to be producing in the quarter. But we think that -- one, they're performing well. We think that with the programs we have in place for efficiencies, for automation, we should see that continue to improve. We're not giving '26 guidance yet, so I'm going to stop there and let Eric talk to you a little bit about the gains.

Yes. So Bascome, on the secondary market on the gains, you're right. Just to say it, we changed our guidance from $50 million to $60 million to $70 million to $80 million. And that is -- it is, as you mentioned, higher than we expected. We're seeing a really strong secondary market. We are looking in the fourth quarter, a continuation of our RV program. So we have on some planned sales from one of our RV partners that gives us a lot of confidence. But we're seeing -- we put assets out in the secondary market, and we were pleased with what we saw in terms of the pricing, the expectations. The secondary market has been -- has turned into the primary way that other operating lessors are growing their fleet because of the softness in the new car market. And so from that standpoint, we're seeing it. And then secondary, but probably not to be forgotten is this summer, you had a transaction between Brookfield, GATX and Wells Fargo. I think that's driven more interest in the space. And so we're seeing good activity, and we're looking to take advantage of it. So we increased guidance on it. We feel really good about that number. And there's potential to do even more, whether that's this year or into next year. So we're excited about the opportunities.

If you'll humor me, I just have 2 more. Eric, you were recently in the market with an ABS deal, I think this was your first of the year, and you'll correct me if I'm wrong there. But can you walk through the -- I mean, you talked about the equity investor appetite just then on the gains on sale piece. Can you talk through the credit investor appetite for railcar assets? What you were seeing in the feedback you've got on not just the key terms of rate and term, but any of the other sort of maybe drivers of flexibility and value for you as an owner that likes to keep your fleet flexible while financing it with steady term debt?

Thank you. Great question. There's a lot in there. But yes, this was the first time we accessed the ABS market this year. We did access the bank market on the rail secured side earlier in the second quarter. But this is the first time in over a year, we had accessed the ABS market and demand was really strong. There hadn't been a lot of rail paper in the market recently. We haven't had a Trinity name, which the Trinity name, our issued -- our TRL issuance always gets very positive reception. So from that standpoint, it did very encouraged. It's flattering how the investors really want to invest in our paper. When you look at the key terms, we do have a lot of flexibility with the asset trading that we like to do in the ABS market, and those are continuing to be there. We actually had some green issuance come in, some green investors. So we do issue these under a green framework. And we had some of that, which was encouraging to see even in the current environment that people are increasing allocations because of the sustainable nature of railcar leasing. And so that was all really good. We were pleased. We got fortunate with where the benchmarks were, and we were able to tighten our spreads. So that was a really nice combination and really encouraged that, that market has been there with us for 25 years, and it's going to be there in the future.

And just maybe tying up some of the other questions together. I know you're not going to give guidance for next year nor should you at this point. But high level, from what we've heard today, it seems like from a manufacturing perspective, things feel kind of steady at a soft level. I just want to make sure that I'm not missing any sort of inflection in one direction or the other heading into next year. From a leasing perspective, things still pretty good, although just taking the FLRD at face value, it feels like we might get less sort of renewal income growth from leasing next year than this year. And from a secondary market perspective, things feel pretty gangbusters and that's not changing. I mean are there any other things you'd kind of point us to on the puts and takes, high level directionally as we think about what Trinity can do next year versus this year?

Well, I'm going to go to the fourth quarter and talk a little bit there. So in the Rail Products segment, we're going to deliver about 21% of the backlog, plus we had some near-term deliveries on top of that, that will occur. So you should expect a little bit of a step-up there because we're expecting to end in our normal market share for deliveries. And I've already said similar industry deliveries for next year, not expecting much change on the market share. So that's probably all I'm going to give you on that part of it. When you look at leasing, again, we still see opportunities. We'll have cars we'll buy in the secondary market. We'll have new build cars that we'll put in there to grow, plus there's still room in a lot of car types to get higher rates. There's just some that are moderating more on that. And so I think all of that is good. Secondary market is, we indicated really strong. We're going to be opportunistic throughout this year. And I would expect it not to change a lot, but we're not giving guidance for next year yet.

And I would add, Bascome, I think your framing was fair and accurate. And Jean's color is, I think, helpful. And then I would just add to that, that's in a backdrop where we had a very flat industrial economy. Industrial production is still flat. So we're pretty positive in a flat industrial production environment. And I think as you look ahead, I think that's going to improve at some point. I can't say when yet because of that uncertainty overhang. But I think the next move is positive. And so that's where we see the operating leverage in this business potential that could really be helpful.

And ladies and gentlemen, with that, we'll be concluding today's question-and-answer session. I'd like to turn the floor back over to the management team for any closing remarks.

Well, thank you. As you can tell, we remain confident in our strategy and our ability to deliver value as the market conditions evolve. Also want to thank you for your continued support.