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Trinity Industries to Spin-off Infrastructure-Related Businesses

December 15, 2017, 07:05 AM
Filed Under: Rail Transportation

Trinity Industries announced that its Board of Directors has unanimously approved a plan to pursue a spin-off of the Company’s infrastructure-related businesses to Trinity shareholders. The separation is planned as a tax-free spin-off transaction to the Company's shareholders for U.S. federal income tax purposes and is expected to be completed in the second half of 2018.

The transaction is expected to result in two separate public companies that will benefit from leading positions in their respective industries, strong free cash flow generation, and compelling growth opportunities. Following the transaction, each company will have distinct corporate strategies and capital allocation priorities:

  • Trinity’s portfolio of businesses will be comprised primarily of Trinity’s industry-leading rail-related businesses which are marketed under the trade name TrinityRail®. TrinityRail’s integrated business model consisting of rail manufacturing, leasing, and services provides customers with a comprehensive offering of rail transportation solutions, products, and services. TrinityRail’s financial profile is expected to generate stable cash flows and earnings growth opportunities throughout the manufacturing cycle, giving the company an ability to pursue an optimized capital structure, efficiently allocate capital, and effectively leverage its multiple rail platforms.
  • The new infrastructure company will be a growth-oriented company that is focused on infrastructure-related products and services. Trinity’s infrastructure businesses have leading positions in construction, energy, and marine markets throughout North America and are also positioned to grow free cash flows. The new infrastructure company will have the balance sheet strength and capital allocation flexibility to pursue growth through acquisitions and to capitalize on the large and growing market opportunity in North American infrastructure spending.

Timothy R. Wallace, Trinity’s Chairman, CEO and President, said: “We believe establishing two separate, independently focused public companies will allow each company to more closely align its strategic objectives and capital allocation priorities. This will also give the investment community better insight into the potential value our businesses can continue to create. We expect the two companies to be strong, high-performing businesses with the operating acumen and culture to thrive, creating employment opportunities while continuing to provide customers with the high quality products and services they have always expected from Trinity’s businesses.”

“I am very excited about the opportunities and potential shareholder value we are creating by reconfiguring our portfolio of market-leading industrial companies,” added Wallace. “While there is still significant work to be done before we can complete the spin-off transaction, we are confident that we can set each business on the path to create long-term shareholder value.”

Wallace continued, “The $500 million share repurchase program we announced today is an important step in investing our capital for long-term value creation and emphasizes our commitment to disciplined capital allocation policies to enhance growth, liquidity, and total shareholder returns.”

Wallace concluded, “In 2018, Trinity will reach its 85th year as a company, and its 60th year as a public company. As Trinity has grown through the years, we have attracted incredible teams of dedicated employees who have worked together to build an unparalleled portfolio of industry-leading businesses. Trinity’s senior leadership and Board, along with a team of external advisors have spent a great deal of time analyzing our portfolio of companies. We are proud of Trinity Industries’ breadth, scale, and strength and believe that our success to date establishes an excellent foundation for our businesses to continue to build upon our rich legacy. We will continue to update our stakeholders as we progress through this process.”

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