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Trinity's Demise Has Only Just Begun

Summary

Trinity reported Q1 earnings last week. Segment revenue fell 24% Q/Q.

Railcar orders fell 67% Y/Y and its backlog has peaked.

Cost-cutting efforts helped maintain EBITDA margins at 23%.

With shipments far exceeding new orders, TRN's demise has only just begun.

Trinity Industries (NYSE:TRN) reported Q1 earnings last week. I thought the company's explosive growth was coming to an end but the results were worse than expected. I had the following takeaways on the quarter:

Free Falling Railcar Orders

Total revenue of $1.6 billion was off 4% Y/Y and 24% sequentially. The company's largest segment -- the Rail Group -- experienced a 19% sequential decline in shipments to 7,145. Railcar revenue fell 25% sequentially due to lower shipments.

Revenue from each product segment fell except for Construction (up 10%) and Energy (up 13%). Leasing tumbled the hardest, falling 52% sequentially. I thought this segment could be a problem...


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