Thank you, operator. Good morning, everyone.

We appreciate you joining us for the company's first quarter 2026 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 first 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 May 7th, 2026.

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. We grew earnings per share year-over-year 10% in a quarter where revenue was down 16%.

That's the operating leverage we've been building toward, and it shows up in a 24.6% adjusted return on equity over the last 12 months. Cash flow from continuing operations was $100 million.

The business is performing the way we designed it to perform. Before I get into results, I want to recognize the team for closing a transaction after the quarter closed related to our railcar investment partnership with Napier Park.

As a result of the transaction, approximately 6,100 railcars moved from our partially owned fleet to investor-owned fleet, and we took an 11.2% limited partnership interest in the Napier Park entity that owns the majority of Napier Park's railcar holdings. We expect to record a non-cash pretax gain of approximately $130 million in the second quarter related to this transaction.

This transaction highlights the embedded value of our fleet and is another step in simplifying our balance sheet. Based on strong first quarter performance and our outlook for the balance of the year, we are raising and tightening our full-year EPS guidance from a previous range of $1.85 to $2.10 to a new range of $2.20 to $2.40.

At the midpoint, this represents a 16% increase in our EPS expectations. Portfolio sales are an integral part of how our leasing platform creates value, and we now expect a higher level of gain on sale activity this year than we originally planned.

We expect full-year gains to be in the range of $160 million to $180 million, which includes $22 million in the first quarter and approximately $130 million from the railcar investment partnership that we will book in the second quarter. Now, let me walk you through what we're seeing in the market.

The rail economy is improving. Industrial production grew at an annual rate of 2.4% in the first quarter.

The manufacturing PMI, a key monthly economic indicator, was above 50 for three straight months. That's the first back-to-back positive reading in over 40 months and has been expanding for 17 straight months.

Inquiries have been trending up since the start of the year. Furthermore, railcars in storage moved below 20% as the industry fleet continues to contract and carloads rise.

The picture isn't all clean, however. Inflation is still elevated and employment has flattened.

That continues to weigh on consumer-driven markets, particularly autos and intermodal, and tariff uncertainty remains. The direction is the right one, and we're positioned for it.

I'll take you through both segments, starting with Leasing and Services. Leasing performed.

Lease rates were higher, utilization was higher, and the segment delivered a 37.9% operating margin in the quarter. Revenue was down year-over-year, and the reason is structural.

We closed a railcar partnership exchange in the fourth quarter, which reduced our consolidated fleet. Our owned fleet ended the quarter at 101,960 railcars, down about 7% year-over-year.

The number that matters strategically is our combined owned and investor-owned fleet at 146,670 railcars, which is up 1.6% year-over-year. We are growing the platform, and lease rates continue to rise.

Renewal rates were 6.6% above expiring rates in the quarter. We continue to invest.

Net fleet investment was $68 million in the quarter. Over the last six years, we've added more than 18,000 new builds and over 14,000 cars from the secondary market.

We were active in the secondary market again this quarter, completing $83 million of leased portfolio sales. Fleet utilization improved to 97.3%.

Renewal success was 60%, and higher assignment activity allowed us to place cars with new customers at higher rates. The future lease rate differential, or FLRD, was a positive 1.2%.

The FLRD has been positive for 19 consecutive quarters, allowing for continuing growth in lease rates and leasing revenues. The average lease rate continued to increase quarter-over-quarter and year-over-year.

Rail Products is where the cost work shows up. We delivered 1,970 railcars at a 7.4% operating margin.

On these volumes, that margin is a proof point. It reflects favorable Q1 mix, but more importantly, it reflects several years of rightsizing, automation, and breakeven reduction in this business.

The cost structure has changed. With the remaining mix of car types to be built, we expect full-year rail products group margins to average 5% to 6%.

We received orders for 1,660 new railcars. Both orders and deliveries remain within our usual market share range.

Inquiries are accelerating, and we're ready to ramp up when inquiries convert to orders. Backlog stands at $1.6 billion, just under half of the industry backlog.

We're not going to chase volume at the wrong price. When the market turns, we'll be there.

Here's where we stand. We did what we said we'd do this quarter.

Margins held up, the fleet is in good shape at 97.3% utilization, lease rates moved in our direction, and Rail Products delivered a 7.4% operating margin on lower volumes, which is evidence that the cost work we've done over the past several years is paying off. The order book is the watch item.

Inquiries are picking up, and we're ready when customers are ready. I'm proud of how this team is executing, and I'm confident in where we're headed.

Eric will take you through the financials and our guidance for the rest of the year.

Thank you, Jean, and good morning, everyone. I will begin by discussing our first quarter financial highlights.

Our operating margins expanded in both segments. Cash generation was strong at $100 million from continuing operations.

Our business is generating good returns and has proven its ability to outperform the market through the cycle. We have $1.1 billion of liquidity and we continue to return capital to shareholders.

Let me walk you through the income statement, cash flow, and balance sheet, and then I'll cover guidance for the rest of the year. First, quarter revenues of $492 million reflected lower external deliveries in the Rail Products Group.

However, as Jean mentioned, GAAP EPS from continuing operations improved as compared to last year to 32 cents, which reflects higher gains on leased portfolio sales and higher lease rates, generating higher operating margins. We generated proceeds of $83 million in the quarter from leased portfolio sales and recorded a gain of $22 million.

Moving to the cash flow statement, cash flow from continuing operations was $100 million, benefited from a reduction in working capital. Our total net fleet investment was $68 million in the quarter, which included new railcar additions, secondary market adds, and fleet modifications and betterments.

This includes $83 million of railcar sales in the secondary market. Shareholder returns were $32 million in the quarter, largely driven by our quarterly dividend payment as well as share repurchases.

For the three-year period 2024 to 2026, we set a target for our cash flow metric, which adds cash flow from continuing operations and net gains on portfolio sales, of $1.2 to $1.4 billion. With three quarters remaining in the planning period, we expect to exceed this range.

That is a significant amount of cash generation, and we are constantly working to make optimal choices on how we grow our fleet and improve the returns of our business. Moving to our balance sheet, we have solid liquidity of $1.1 billion.

The loan-to-value for our wholly owned fleet is 69.1%. It is worth noting that the market value of our fleet is much higher than the book value of our fleet, and our LTV is based on the net book value.

The debt structure on our balance sheet gives us significant flexibility and liquidity as we execute on our capital allocation framework demonstrated by our latest financing. After the quarter closed, we issued $481 million of ABS notes and used the proceeds to redeem $377 million in outstanding debt, generating approximately $100 million of excess cash and providing further evidence of our cash generation abilities.

Now, I'd like to give some updated guidance for the rest of the year. We expect industry deliveries of 25,000 railcars in 2026 and expect Trinity to maintain its historical share of deliveries.

While there is still some available space to be sold for the end of 2026, current inquiry levels support maintaining this guidance. We are slightly lowering our expected full-year net leased fleet investment to a range of $350 million to $450 million, reflecting expected higher proceeds from railcar sales.

As a reminder, this is a cash metric, this would not include the sale of railcars in the Napier Park RIV program. We are investing $55 million to $65 million in operating and administrative capital expenditures.

As Jean mentioned, we are raising our full-year EPS guidance to a range of $2.20 to $2.40, a 16% increase at the midpoint. This comes from higher than expected gains in the railcar partnership transaction as well as higher forecasted gains from the secondary market.

We expect full-year gains to be in the range of $160 to $180 million. Our first quarter demonstrates the operating leverage we've been building.

The business is built to perform throughout the cycle. Our disciplined cash flow management and optimized balance sheet give us flexibility in capital allocation and working capital management.

Our leased fleet utilization is high, generating consistent, predictable revenue and cash flow. In short, our platform is performing and today's results and 2026 guidance reflect our conviction in Trinity's ability to continue to generate above-market returns for our shareholders.

Operator, we are now ready for our first question.

Hi, thanks for taking my questions today. Maybe just to start off with the gains.

Backing into what you did in the first quarter and what's expected from the transaction in the second quarter, there's only a range of 10 to 30 million in terms of gains for the rest of the year on the second half and maybe excluding the deal in the second quarter. Could you just maybe walk through where you think there might be some declines in secondary market activity, what's maybe one of the reasons why that you would expect lower gains in the second half of the year potentially?

Good morning, Harrison, this is Eric. I'll take that.

As the gains can be a little lumpy. Certainly in the second quarter with the tribute transaction that they will be a little lumpier.

You're right, in terms of the guidance, it does imply a lower level of gains in the back half of the year. I'd just say, it is still a very elevated number.

We are really focused on our net fleet ads and our growth of our fleet. We're in the upper range of our three-year target.

We did bring that down this quarter by $100 million, which reflects a little more selling activity out of the portfolio. Mostly the raise is certainly attributable to our outlook on gains going forward.

Overall the secondary market is still strong.

Understood. Can you give us maybe a sense of where that transaction with Napier Park ended up relative to your initial expectations in terms of either the structure or the amount of the non-cash gain that you expect?

First on the structure, the structure is a little different than the last one. We took a 11% interest in all of the Napier assets.

They're both structured as non-cash. Certainly we like having that alignment of that interest in the broader portfolio.

It'll be a little different accounting. It'll be equity method accounting going forward, and so you won't have the minority interest.

From that standpoint, it'll simplify things. In terms of our expectations, on our fourth quarter earnings call, we signaled this, it was included in our guidance, but we certainly didn't have anything completed at that point.

Part of the raise is attributable to a higher gain with the Napier Park transaction. It came in a little better than we expected, and that was just through our negotiations.

Great. Maybe just shifting to the FLRD.

Obviously, that number trended down a little bit. It is forward-looking, but there are some mixed dynamics.

Could you maybe paint a picture how you would expect or could expect earnings in the leasing segment to potentially grow even if your renewal rates tend to flatten out? You've called out some cost pressures in that business.

Maybe if you can offer how you would expect the FLRD to maybe trend with gains or level of secondary market over time if a stagnation in that number might also correlate with some just general lower secondary market activity.

Sure, I'll take that one. When you look at the FLRD, we stated it had been positive for the 19 consecutive quarters.

That's a good trend. Utilization went up to 97.3%.

Cars in storage went down. Inflation is still high.

Overall, the parameters around our lease rate are still positive. We had a 6.6% uptick in the renewal rate versus expiring rate in the quarter.

Our average lease rate went up quarter-over-quarter and year-over-year. All of those are still trending in the right direction.

In the first quarter, we did have a little bit of the mix that affected us. If I was a betting person, I bet we're going to beat that percentage going forward.

It really comes down to the mix of cars and then what's expiring in the next four quarters. Sometimes the mix helps us, sometimes it brings it down a little bit.

We still see headroom for increasing the overall lease rates, especially since new car costs are continuing to be elevated, and that gives us some of that headroom.

Great. Thanks for the color.

Then maybe just to close for me, you mentioned elevated new car costs and shifting over to the manufacturing segment. It's nice to see the results strong there in a lower delivery environment.

Could you maybe give us some updated thoughts around the recent Section 232 tariffs on full value of imported tank cars? What are the implications for your business, if there's any costs associated that are factored into your guidance at all?

Maybe just with that, if you can update us on your tank car production mix, how much of it might be produced in your Longview plant versus Mexico, and then just any general thoughts around your tank car production and what this potential tariff might mean for your business? Thank you.

Sure. We've been dealing with the uncertainty of tariffs for a while now, and the team has gotten really good at looking at that.

We'll continue to look and see what may affect us, help, may affect us, and then adjust what we're doing based off of that that information that we find. Uncertainty remains.

Don't see that going away. Just know the team is on it, and they've done a great job so far working on that.

We typically don't disclose what percentage of cars are being produced where, we're not going to do that. We're we're still continuing with the 25,000 industry deliveries for the the year, and our portion of that in our normal range, which is somewhere between 30% and 40%.

Not a lot of major changes on that.

Thank you, Jean. Thank you, Eric.

I'll hop back in the queue. Thanks for the answering questions today.

Thanks, Harrison.

Thank you.

Hey, thanks, everybody. Morning.

Just kind of curious on leasing to start out. First, maybe just more broadly in the context of a potentially sticky inflation environment, particularly given higher energy prices globally more recently, how do you communicate with customers who lease railcars from you currently that asset prices are higher?

Are you thinking ahead to the next wave of resigning leases and expecting another positive cycle of growing lease rates and potentially re-accelerating that FLRD?

Andrzej, I'll take that one. The last question, I did say if I was a betting person, I would bet it'd be above the 1.2%.

It really comes down to the mix in that quarter and what it's going to show. When we're looking at overall the environment, again, the metrics are in favor of being able to continue to raise the lease rates.

Now, we are lapping some rates that had already been raised during this time period during that 19 consecutive quarters of positive FLRD, we get to keep that in mind. Overall, all the things we're looking at, agriculture and energy markets are really strong.

If I look at some of the weaker markets, in chemical, it's weaker not from carloads, but it's weaker from their margins. There's a little bit of weakness there.

Then consumer products, which we don't have a lot of cars in our fleet that are the consumer-facing type products. Overall, when we look at our mix, we still see an opportunity to raise those rates.

Andrej, I'd just add, the energy prices you're alluding to, I'm assuming is related to oil and what's going on in Iran. While that is starting to come through in some of our supply chain costs, it probably hasn't worked its all the way through.

If that continues, that I think you're leading to, that could be a next wave of inflationary pressures. The interest rates are starting to signal that as well with what Treasuries are doing.

The fleet remains very tight. It's in balance.

That will start to potentially price through in the future.

Understood. I think last call you talked about the market value of your fleet, and that's, I think, 40% to 50% above book value.

Any updates to those numbers? The other question there is, have you looked at that historically to determine sort of on average how much the market values exceed book values?

Just trying to get a sense for market value versus book value this cycle, how that dynamic might be different.

Andrzej, this is Eric. We talked last quarter about if our estimate was 35% to 45% higher than our carrying values.

We have not updated that view. That is still our view.

If you go back over the last four or five years, you've had more inflation in this industry than if you go back the prior five years. It probably has accelerated.

I haven't gone back and backtested it, but certainly it is trended higher, the inflation rates. Just to mention, long-term, we see 3% to 4% inflation in railcar asset prices, and long-term we've seen lower inflation in lease rates at 1% to 2%.

That does imply that there is still a lot of room for lease rates to catch up, if you will, to what we've seen on the asset side. Certainly financing cost and Treasury rates certainly support our view that will happen over time.

Understood. Just on that last point on leasing, how are you thinking about the spread sort of between lease rates and your cost of capital today and maybe looking forward, how that's influencing your appetite to grow the leased fleet?

We are always evaluating our hurdle rates against our weighted average cost of capital. It certainly changes often with the volatility you've seen, especially in the Treasury rates.

In terms of the spread over our weighted average cost of capital, we're being fairly consistent around that. It may vary by different car types, but we are certainly seeing that.

We're seeing fairly disciplined lease pricing in the market. That's been good.

Got it. Maybe shifting gears a little bit to the manufacturing side.

It did seem like a really nice margin performance there despite volumes down 36%. You improved EBIT margin 120 bips year-over-year.

Could you just talk a little bit more about the cost takeout initiatives there as to what's driving that? Then also, maybe why you would still expect the 5% to 6% full-year average margins given the sort of 1Q outperformance there?

Sure, I'll take that one. First on the cost initiatives.

Team's done a great job for several years working on continuous improvement, reducing setup time, automation that we're putting into the facilities. All of that comes together to help us with both efficiency and overall productivity for those facilities.

That work continues. We're always looking to see what else we can do, help us from the safety and productivity standpoint.

When you look at Q1, we had some favorable mix. We had more specialty cars that we produced in that quarter.

In the second through the fourth quarter, we're expecting more standards, less specialty cars that are going to be produced. Looking at where we're at, 5% to 6% performance at these volumes shows a structural change in our facilities and our ability to produce.

That is something I'm very happy with and something that we've been talking about for several years to you all about things we were going to do. It's lowered that breakeven cost for us.

I think the Rail Products Group is performing very well. When we get some volume back, I think you're going to see that leverage come through.

Understood. Thanks for clarifying that there.

Just on the head count, I was curious in manufacturing. That doesn't get talked about often on the call, but could you maybe talk about where head count is at today versus maybe say the peak?

Then following onto that, was curious to know what the lag might be to hiring and bringing new labor online relative to when you sort of see orders and backlog start to improve?

Sure. A couple things.

Typically, when orders or backlog come up and the production rate has to improve, we'll go to overtime to start with, and that's about a 20% to 30% uptick that you can get from that. The other good thing we've got in our favor is during the downturn, a lot of the employees said that they want to come back.

When we start rehiring, we'll go to those employees first. Now, that doesn't mean they come in and they're 100% productive right away.

We'll have to go through some retraining. There will be the time to get their efficiency back up as they get used to where they're working on the lines.

We think we'll have a easier time getting those employees and getting them back into the factory. We see the ability to move a little quicker than we did coming out of COVID and getting production rates up.

When you look at where we were several years ago, I'm just going to do total employment for the company. We were about 10,000 employees, and right now it's closer to 6,000 employees.

A lot of that would have been in the production space in that swing. Some of that again though, coming out of COVID, was new employees coming in who had never worked in the industry, you had to hire more to get over that efficiency and productivity increase that we needed.

I think it'll be less than that as we ramp back up for the next increase in volume.

Understood. I appreciate the color there.

Maybe just for me to close off, two final questions. One was just what's the earliest sort of indicator that you guys are watching internally that would tell you demand is going to inflect either positively or negatively soon, hopefully positively?

I know ISM has done better recently, maybe historically that's a good indicator. Anything just specific that you guys are tracking, want to call out?

That's the first. Then secondly, just looking ahead, the $160 to $180 million of gains this year, is that sustainable sort of on an annual basis if we look beyond 2026?

Thanks, everybody. Appreciate the time.

Sure. You mentioned a couple of the key metrics to watching, but utilization is one, the tightness in the market overall, for the industry, cars in storage.

Then when you go to the inquiry levels, and we were positive since the first of the year, inquiry levels have picked up. Now, they do have to convert to orders, but the first quarter we had saw some of that conversion.

We're having positive conversations again this quarter. Looking at that, we see positive signs that the volume could move.

When you look at PMI, when you're looking at the manufacturing indexes, we closely follow that. All of those are good indicators for you to watch to say we think things look positive.

We still have to see the order rate get up to get us back to what we thought next year might be closer to 30 or 35,000 industry builds. When you go to the second question—

Gains.

Gains, okay. On the gains, we're not going to talk a lot about '27.

When you look at the fact that selling in the secondary market and buying in the secondary market are integral to the way we run our business, I would expect that you're going to see us in some form doing both of those every year. When we get closer to '27, we'll give you more guidance on what we think will happen in 2027.

Jean and Eric, thanks so much for the time. Appreciate it.

Thank you very much.

Thank you for joining us today. Our first quarter results highlight the operating leverage we've been building and the progress we're making across the business.

We remain focused on what got us here: disciplined execution, delivering for our customers, and creating value for our shareholders. Thank you for your continued interest in Trinity.