Trinity Industries Inc (TRN) 2008 Q4 法說會逐字稿

Welcome to today's teleconference. At this time, all participants are in a listen-only mode. Later you have the opportunity to ask questions during our Q&A session. Please note, this call may be recorded.

I would like to turn the call over to James Perry, Vice President of Finance and Treasurer. Please go ahead.

Thank you, Jimmy. Good morning from Dallas, Texas. Welcome to the Trinity Industries' fourth quarter 2008 results conference call. I'm James Perry, Vice President Finance and Treasurer for Trinity. Thank you for being with us today. In addition to me, you will hear today from Tim Wallace, Chairman, Chief Executive Officer and President, Steve Menzies, Senior Vice President and Group President of the Rail Group, and Bill McWhirter, Senior Vice President and Chief Financial Officer. Following that, we'll move to the Q&A session. Also in the room today is [Chaz Mitchell], Vice President, Controller and Chief Accounting Officer.

A replay of this conference call will be available starting one hour after the conference call ends today through midnight on Thursday February 26th. The replay number is 402-220-0121. Replay of the broadcast will also be available on our website located at www.trin.net.

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 descriptions of certain of the business issues and risk, the change in any of which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements.

In today's call, you will hear us refer to the non-GAAP term EBITDA, a reconciliation of EBITDA was provided in our press release yesterday. For the fourth quarter, EBITDA was approximately $142 million, compared to approximately $182 million in the same quarter a year ago. On December 31st, 2008, we had total debt of $1.9 billion.

Our borrowings at the corporate level for the $450 million of convertible subordinated notes, $201.5 million of senior notes, and $2.7 million of other indebtedness, for total corporate debt of $654.2 million. The leasing companies debt included $557.6 million of promissory notes, $320 million of secured railcar equipment notes, $312.7 million outstanding under our railcar leasing warehouse facility and $61.4 million of equipment trust certificates, for total leasing company debt of $1.3 billion at December 31st, 2008. This compares to a net book value for leasing equipment of $2.8 billion. Note that the $61.4 million of equipment trust certificates were repaid in full earlier this week.

Our total debt to total capital ratio was 51% on December 31, 2008, as compared to 44.3% at December 31st, 2007. Net of cash, our net debt to total capital ratio was 48.8% on December 31st, 2008, as compared to 38.6% at December 31st, 2007. On December 31st, 2008, our cash position was $161.8 million. In addition, we have $326.2 million available under our $425 million revolving credit facility which matures in October 2012. We also have $287.3 million available under our leasing warehouse facility that matures in August of 2009. We expect to renew this facility prior to its maturity. Combined, these three items provide more than $775 million in available liquidity for Trinity.

In addition, we have strong cash flows with EBITDA totaling $703.5 million over the last four quarters. In these economic times, we are positioned well the strong cash flows and balance sheet. We have worked deliberately to build and maintain our strong positions in these area so we may capitalize on business opportunities as they arise. Addressing our revolving credit facility covenant at December 31, 2008, we are well within all of the requirements.

In December 2007, Trinity announced authorization for a $200 million share repurchase program for 2009. As we have previously stated, our share repurchase program is part of our capital plan. As previously announced, during the fourth quarter repurchased 1,994,400 shares for $42.2 million. Our cumulative purchases to date totaled 2,719,700 shares for $61.2 million. We will continue to provide details of our purchases when we report our results at the end of each quarter. Now here is Tim Wallace.

Thank you, James, and good morning, everyone. The fourth quarter was a challenging period for our businesses. The economic slowdown coupled with the turmoil in the financial markets caused many of our customers to refrain from placing orders. Fortunately, our large businesses had backlogs during the fourth quarter that enabled a relatively stable operating environment. We are aggressively pursuing orders and our businesses collaborating to cut cost and optimize resources. Our low cost flexible approach is crucial during the economic downturns.

During the fourth quarter, the diversification of our portfolio helped compensate for the decrease in earnings of our rail group. Both our barge and energy equipment groups had solid fourth quarters, primarily due to the strength of their backlogs and ongoing productivity improvements. Our leasing company revenue stream helped provide earnings for it as well. Our rail routes revenues up 10% over last year's fourth quarter, but earnings were off due to competitive pricing.

Our railcar shipments were strong during the fourth quarter. We will experience a significant reduction in shipments during the first quarter as production levels become more aligned with the economic downturn. We've idled some of our factories and are optimizing our production capacity. Steve will provide more information on Trinity rail in a few minutes during his comments.

Trinity's leasing and management services group continued to increase the size of its lease fleet during the fourth quarter. A prolonged tightness in the capital markets coupled with a surplus of railcars has caused us to modify our growth plans for our lease fleet this year. We remain very fluid in respect to this and will respond appropriately to market changes.

Our barge business performed very well during the fourth quarter. The strength of our barge backlog is allowing for a stable operating environment. We are continuing to benefit from productivity initiatives associated with having long run of consistent production. Our barge personnel have done a great job making productivity improvements. We are optimistic that bonus depreciation for equipment purchases within the stimulus bill will benefit our customers and could prompt some orders for barges.

Our construction product group's financial performance during the fourth quarter was affected by winter weather conditions and the economic slowdown. We are hopeful our concrete and highway products businesses will eventually benefit from the infrastructure portion of the economic stimulus bill. In the meantime, we expect these businesses to have a lower than normal business activity level.

Our structural wind towers business provided strong financial results in the fourth quarter. We are encouraged that President Obama has placed an emphasis on green energy as a key component of our nation's energy independence program. The stimulus bill extends the production tax credits through 2012 which bodes well for the long-term opportunities of our structural wind towers business. Orders for structural wind towers were strong last year until a financial turmoil hit a crisis stage during the fall.

Since then, we have put our growth plans on hold, delaying plans to convert some of our idle factories to wind tower production. Last year when the market was strong for wind towers, I stated that I expected our wind tower revenue to grow in five years to between $800 million and $900 million. As a result of the current industry slowdown, it is unrealistic for us to maintain expectation for revenue growth in this business. We expect the demand for structural wind towers to improve once the capital markets provide financing for additional wind farms.

In the short-term, we are highly focused on productivity and cost reduction initiatives. Our large order backlog in this business will provide us with a relatively stable operating environment during 2009. When demand returns, we will be ready. As the leading manufacturer of wind towers in North America, I'm confident we can respond quickly once conditions improve.

Last year at this time, we had better visibility in the year and provided consolidated earning guidance for the entire year. We remain cautious about providing guidance for 2009 because of the ongoing volatility of the economy and the hesitancy on the part of our customers to place orders. I'm confident in our abilities to confront the challenges associated with the economic downturn. We have worked for the past several years to position ourselves to be highly competitive in a variety of economic conditions. We have a strong multi-industry business platform with a portfolio of market leading companies.

We have good liquidity and remain highly flexible and positioned to respond. Our success during the fourth quarter reflects the talents of our people, the diversification of our businesses, our emphasis on highly efficient manufacturing and the strength of our market leadership positions. We are hopeful that the government stimulus initiatives will help jump start the economy. We are a very flexible company and we have proven our ability to respond quickly to customers' needs.

During down cycles, we have historically strengthened our portfolio of businesses. We are watching for opportunities while monitoring our businesses and our costs. We stand ready to respond when the economy begins to improve. I will now turn it over to Stephen Menzies for his comments.

Thank you, Tim. Good morning. Trinity rail produced solid operating results during the fourth quarter 2008, despite rapidly declining economic and market conditions. We shipped more than 7000 railcars during the quarter, met our expectations for operating margins, and grew the lease fleet while maintaining high speed utilization. We expect our operating margins to decline during 2009, as a result of a highly competitive market environment a significant reduced production lines. A weak economic environment may put pressure on lease rates and adversely impact lease fleet reutilization.

During the fourth quarter, we began implementing a plan to reduce our production footprint to align with forecasted and near term demand. We idled facilities in Texas and Oklahoma, announced plans to idle a facility in Missouri which we have since completed, and have reduced our labor force and additional facilities in Texas, Georgia and Mexico. We will continue to monitor the market and make adjustments to our production footprint in the staffing levels as necessary.

All of these reductions were implemented in a way that will enable us to continue to produce a substantial portion of our broad product. This gives us the type of operating flexibility Tim referenced in his comments that enables us to meet shifting customer demand. We are also positioned to quickly ramp up production when market conditions improve.

During the fourth quarter, Trinity rail shipped approximately 7050 railcars; 18% less than the 8560 railcars shipped in the third quarter 2008, but 5% greater than the 6740 railcars shipped in the fourth quarter 2007. For the year 2008, we shipped approximately 28,200 railcars compared to approximately 27,370 in 2007. We expect shipments of between 5500 and 6500 railcars during the first half of 2009, reflecting weak market demand. Some of these shipments may come from our finished good inventory railcars built in advance of customers needs.

railcar orders industrywide weakened during the fourth quarter. Approximately 4260 new railcars new railcar orders were placed. This was the lowest quarterly order levels since first quarter 2002, and indicative of the severe economic downturn. Industry orders for all of 2008 totaled 33,800 railcars. This represents a 37% decline of the approximately 54,300 railcar orders placed in 2007. At year end, the total industry backlog stood at approximately 32,000 railcars, down 39% compared to the backlog at the end of the third quarter.

We continue to experience weak demand in current order inquiries across most major railcar types. This is because of lower railcar earnings, increased railcar cycle times due to railroad system validity and an over hang of idle railcars in the rail system. Furthermore, we are seeing fewer inquiries because of actual orders as customer defer railcar decisions to preserve company liquidity, and seek clarity about ongoing demand for their products. Some industry analysts have recently adjusted their 2009 industry production forecast downward to the 25,000 to 30,000 railcar range which is consistent with the market inputs we review.

In addition to the sharp decline of railcar production in 2009 for railcars intended to carry biofuels, forecasts indicate very weak demand for auto racks, covered [houses] for residents, intermodal and boxcars. Improved railcar cycle times and reduced demand for electricity have caused weaker demand for additional coal cars. Covered hoppers for cement, aggregate and minerals are in modest demand as are covered hoppers for cultural products. In addition, we have recently received inquiries regarding replacing older tin cars in response to new guidelines for hazardous commodity tank cars designed to haul poison bi-inhalation commodities.

During the fourth quarter 2008, Trinity rail received approximately 1180 railcar orders, raising our order total for 2008 to approximately 16,700 railcars. Many of these orders extend current production lines for a variety of railcars. Specifically, we received orders for covered hoppers, coal cars, open top hoppers and tin cars. The diversity of our orders reflects the breadth of Trinity rail product line, customer base and existing production lines. At the end of the fourth quarter, Trinity rail order backlog was approximately 8260 railcars, a 65% decrease from the third quarter of 2008. Our order backlog for the balance of 2009 is approximately 7000 railcars, and approximately 1250 railcars for 2010.

We announced recently that Trinity rail has adjusted it's backlog by indefinitely deferring the production of roughly 10,000 railcars for the ethanol industry. These cars were to be manufactured in 2010 and 2011, and added to our lease agreement. Given the volatility of the ethanol industry, this was a proactive move to manage our portfolio of credit and fleet concentration exposure to the ethanol industry, as it intended to help insure that the market for ethanol cars does not become overly saturated with additional new built tank cars.

We believe the ethanol industry will stabilize, as the renewable fuel standards and industry production capacity better align and corp prices moderate as they have in recent months. The deferral does not affect our 2009 production or shipment schedules. Our order backlog is very dynamic and will change from quarter to quarter. We are focused on securing orders to fill production gaps in 2009 to maintain production continuity and to extend existing production lines.

Our railcar leasing and management services groups continue to grow its railcar fleet during the fourth quarter. Rails shipped 4360 new railcars to customers of our leasing outfit during the fourth quarter. This represented about 62% of Trinity growth fourth quarter railcar shipments.

During the fourth quarter, we also sold approximately 450 railcars from our lease fleet to [Trip] and other various leasing companies and financial institutions. As a result, our lease fleet grew 33% in 2008 to approximately 47,850 railcars, compared with approximately 36,090 railcars in our lease fleet at the end of 2007. Our committed lease backlog is as of the end of 2008 was approximately 3380 railcars or 41% of our total production backlog. We continue to see a long-term trend for railroads and industrial producers to use their capital resources to acquire assets that are quoted their business while relying on leasing for operating -- such as railcars.

Our lease utilization 98.6% at the end of 2008. Lease renewals and successful remarketed railcars available from leases not renewed helped our high fleet maintain utilization. These rates for renewals and assignments remain stable. The average age of the railcars in our lease fleet is 4.6 years, and the average remaining lease term is approximately 4.5 years.

In summary, rapidly declining market conditions, excess industry capacity and the overhang of idle railcars is creating a very challenging environment for our rail business. Trinity rail is positioned to compete successfully in the current market environment, as a result of the initiatives and investments we have implemented during the past several years. The scale of our lease fleet provides a stable cash flow stream that can offset the decline in revenues and earnings of our OEM business. Our broad customer base, operating flexibility, diverse product line, combined with our leasing capabilities gives us us the flexibility to meet customer demand and market challenges. I will now turn it over to Bill McWhirter.

Thank you, Steve, and good morning, everyone. My comments relate primarily to the fourth quarter 2008. We will follow our Form 10-K this morning.

For the fourth quarter 2008, we reported earnings of $0.58 per diluted share for continuing operations. This compares with $0.97 per share from continuing operations in the same quarter of 2007. Revenues for the fourth quarter 2008 were $884 million.

Earnings from continuing operations were below the low end of our guidance by $0.02 per share. This was in part due to a higher tax rate and reduced earnings by $0.04. Additionally during the fourth quarter, we incurred approximately $2.5 million in costs, related to due diligence on two potential acquisitions. We have elected at this time to discontinue pursuit of these opportunities.

Moving to our rail group, revenues for this group increased on a quarter over quarter basis by 10% to $652 million. Rail group sales for Trinity's leasing and management services $370 million in the fourth quarter 2008 with profits of $22.1 million or approximately $0.18 per diluted share. This compares with sales to our leasing group in the fourth quarter 2007 of $138 million from profits of $22.2 million or $0.18 per diluted share. These [rail] company sales and profits are eliminated in consolidation. Our margin results for rail group were 6.3%.

Looking forward, we anticipate the rail group will report operating profit margin between break even and loss of 2% for the first quarter 2009. This projection reflects the competitive pricing environment and the number of cars to be shipped during the period. The rail group backlog as of December 31, 2008 consisted of approximately 8260 railcars with an estimated sales value of $720 million. Our railcar backlog is broken down approximately as follows; backlogs to our leasing company $310 million, backlog to Trip $125 million, and backlog to third parties $285 million.

Now turning to our inland barge group. The inland barge group's fourth quarter performance was very strong, posting revenues of $176 million and operating profit was $35.7 million for a margin of 20.3%. This group's backlog as of December 31, 2008 totaled approximately $528 million. This compares with $753 million one year ago. We anticipate inland barge group revenues of $160 million and $170 million in the first quarter. Operating profit margins for this group are expected to range between 18% and 20% for the same period.

Now, moving to the energy equipment group. During the fourth quarter, this group's revenue rose 14% quarter over quarter to $161 million. Operating profits were $24.2 million with an operating profit margin of 15%. The energy equipment group's revenue growth continues to be driven by our structural wind tower business.

Wind tower revenues for 2008 was approximately $422 million. We look for wind tower revenue to decline slightly to approximately $370 million in 2009. The decline is primarily due to project delays resulting in lack of profit.

Revenues from our construction barge group declined by 15% when compared to the same quarter for the previous year, due to the overall slowdown in infrastructure spending coupled with poor weather conditions during the fourth quarter. Operating profit $7.6 million for the quarter which was 43% lower than last year. The high fixed cost of this business segment resulted in profits that vary to a greater degree than sales declines. We anticipate this trend to further decline in the first quarter of 2009. We are hopeful of a recovery in the remainder of the year.

Our railcar leasing management services group reported revenues of $122 million, compared with $194 million in the same quarter 2007. Operating profit for the fourth quarter was $35 million with $4 million resulting from railcar sales. The decline in fourth quarter sales was due to fewer cars sold in the fleet.

In the fourth quarter 2007, we sold approximately $85 million more in cars from the fleet than we did in the same quarter of 2008. For 2009, we anticipate approximately $325 million to $400 million, in net fleet additions to our lease fleet. As a form of clarity, net fleet additions are the fair market value of cars added to our fleet, less the proceeds of cars sold in the fleet. This level of investment compares with $950 million in net fleet additions during 2008.

Moving to our consolidated results, for 2009, we expect nonleasing capital expenditures between $60 million and $70 million. This compares to $132 million of nonleasing capital expenditures for 2008. During the first quarter, we expect to defer approximately $155 million in revenue, and between $4 million and $5 million in operating profits as we grow our leasing business and sell cars to Trip. We anticipate earnings from continuing operations for the first quarter to range between $0.20 and $0.30 per dilute share. Included in our assumptions for 2009, are normal weather conditions and no unanticipated adverse resolution of (inaudible).

Turning the discussion to cost control for a moment. The Company has engaged in an active program to adjust our cost structure for both near-term and the long-term. From a long-term perspective, we recently froze our defined pension plan, as well as our supplemental retirement program.

From a near term view, the Company continues to right size its employee base to match our anticipated production levels. We are aggressively pursuing cost reductions across all elements of [railcars]. The salaries for the executive team have been unchanged since 2007. The CEO salary has been unchanged since 2006. At this time, I will turn the presentation back to James for the question-and-answer session.

Thanks, Bill. Now the operator will prepare us for the Q&A session.

(Operator Instructions). We will take our first question from Steve Barger with KeyBanc Capital Markets.

Good morning, guys.

Good morning.

For the rail group, I'm trying to get a sense for fixed overhead that remains after you idle the plant. For example, if you were producing 24,000 railcars our of 10 plants, and now you're going to produce 12,000 out of five for argument sake, will the portion of fixed overhead that you can't defer make it impossible to have a positive operating margin at those levels or can margins still be positive as you right the footprint to demand?

I think the question is a pretty broad question. Certainly if we get the right mix of cars and numbers of cars through the remaining plants, the enterprise could be profitable. The rail business as a whole would be profitable. As you're going through the transition period that we are now going through, when you're adjusting the facilities for the car owners that you have, it's a little more difficult. We would be optimistic towards profitability.

If I hear what you are saying, it's going to be tougher in the first half of the year given the demand expectations that you have to be profitable in this businesses and that's more of a back half statement?

I think the question is what order intake do you get in Q1 and Q2. Obviously we laid out a production number for the first half of the year, and if you look at our backlog, that takes a substantial piece of the backlog. You got to have good orders in Q1 and Q2 to get better results in Q3 and Q4.

Bill, you're correct on this. This is Tim. He also had an assumption of saying that we were going to produce 12,000 cars, is that what you said, Steve?

For argument sake, I'm assuming you that you've idled the number of plants relative to the demand that's out there. I'm trying to get a sense for the fixed overhead that still exists outside of the plant.

Okay. I thought you had assumption for -- our shipments were going down.

I think the broad answer is that we will have a lot of fixed costs in the business. We have a lot of variable costs that once you idle a facility and take that variable cost down, it's difficult to bring back. Those are tough decisions to make as to when you want to take the cost level down. We look at order inquiry before we make those decisions.

Okay. Thanks. In the prepared remarks, you were talking about lease renewals being stable. If that's a comment on the percentage of expiring leases that get renewed, can you discuss the renewal terms in terms of are customers locking in shorter or longer leases than you typically see? And maybe talk about pricing.

This is Steve. My comment was specific to -- we see lease rates as being stable than renewals and assignments. And where we are seeing is the age old battle that when times are weak, you're lessees want to go long and lock in lower lease rates, and we would like to stay short. Our average rating lease term I think is 4.6 years or 4.5 years, we have been able to stabilize that because we do have a good base of longer lease terms, less exposed to the downturn in our renewals. But clearly, our sales force is focused on maintaining our utilization in our lease fleet. We will be under pressure through 2009 on to lease rates and terms and fairly successful in holding our own in those negotiations.

Okay. If I'm hearing your right, you're saying that going forward it is more likely you are going to have longer leases at less attractive rates just to lock in the utilization?

That's certainly what lessees want. Our intention is to balance our portfolio and our renewals exposure as we move forward. And don't want to be locked into long-term leases and low lease rates, we'd like to be in a position that when the market improves, we will have a chance to reprice those assets and increase the lease rates at that time.

Okay. Last one; I will jump in queue. If I heard correctly during the prepared remarks, you said in past down cycles you strengthened the portfolio. What does that mean for this down cycle? Are you looking at M&A activity? Is there anything you would divest and how do you intend to manage through the cycle?

You're talking about strengthening the portfolio of businesses in the down cycle? We historically have always looked at opportunistic acquisitions during down cycles and we are fairly active right now at looking at some. In fact, in Bill's figures, he stated that we had looked at some during the fourth quarter and we passed on those. We are being very selective at various opportunities that we look at. But it's just a full time focus for a few people in our company to continue to cycle through the opportunities that are out there.

What segment would you focus on if you were looking to expand the business line?

We're like a football team or a sports team that says, the best available candidate that comes along that we think long-term will strategically enhance our portfolio then we would look at them. We don't really have a specific target that we are saying we would like to grow.

Okay. Thanks very much.

We will take our next question from Paul Bodnar with Longbow Research. Please go ahead.

Good morning. A follow up on that question. You wouldn't be opposed to getting out there and building a lease fleet or expanding that business through an acquisition?

Yes. At the right pricing, when we see assets that are available, we will respond accordingly.

Okay. A little bit of the inland barge business, this year you starting to work through some of this backlog. You mentioned the stimulus bill. One, just want a little more color on that business. And two, what -- you've had pretty strong margins there, could you maintain those at a little -- much lower levels? Back in '07, you had a similar margin in '08. With the growth, can you have pretty low decrementals in that business or just some additional color there?

Our barge business is very flexible with the way we operate it. Fortunately, we have a backlog that carries us through a large portion of this year. We are currently talking with customers who said they were very interested in placing some orders for some barges. and it was contingent upon receiving benefits out of the stimulus bill that would carry them forward. There is opportunities there, and we will just flex our barge business just like we do with our other businesses with the demands in the marketplace. And we will be very aggressive at trying to maintain the level of productivity that we have right now.

You haven't done anything in that business in expanding, in terms of adding on or capacity or bringing up the fixed cost side, have you?

In the last up cycle, we have put in a substantial number of improvements in our barge facilities. As an example, probably three years ago we put in a state of the art paint facility in our tank barge facility where we could paint the barges under cover. Where in the past, we were painting the barges outdoors and subject to slowdowns due to weather and rain. We've been able to maintain quite a bit of consistency and enhanced productivity as result of that investment. We've tried to make investments in the barge business that provide us with productivity and quality improvements, and some areas even safety improvements during this past up cycle.

Okay. I think that's all the questions right now.

We will take our next question from John Barnes with BB&T Capital Markets. Please go ahead.

Good morning, guys. A couple of things here. On the barge side, just continuing along that lines. Can you give us an update on your long-term contract with Ingram? Have you received the order for 2009? In our long-term contract, I believe that's -- order placement is in the second, third quarter time period when they place it. They did place their order back here last summer, so the production that we have going for 2009 is in place. When we are in the second, third quarter of this year, they will be doing a forward looking placement of orders for 2010.

Very good. Can you elaborate a little bit with some of your idling some of the capacity and that type of thing? Can you give us an idea of what percent of your total production for the rail group is going to be in the US versus Mexico?

That's really a hard number to identify because of the flexibility that we try to maintain and the various car types on the line. Steve, I don't think it's realistic to say that during a given time, as we have been downsizing that we are not striving to keep any ratios or anything. You're really just doing a rationalization based on productivity. Wouldn't that be safe to say?

This is Steve. You're right. What we done also over the last couple of years is increase our flexibility in our Mexico plants so they can make a greater numbers of the different types of cars in our portfolio. We are probably seeing 2009, roughly half of the cars that we'll produce will come out of Mexico which is a little higher than the percentages that we had the last couple of years.

Very good. Is that similar for wind?

No. That's not similar. Wind is more tied to the geographical region as to where the wind towers are being produced, as well as customers. We have facilities in the US and we have facilities in Mexico that have capability and it's all tied to orders that we receive for the type of towers we would produce that would fit with them. There's some similarities there, but there a little bit of differences.

Okay. Lastly, I apologize if I missed this. I got on a couple of minutes late. When you did your initial run through on your' 09 outlook, your first quarter guidance was $0.25 to $0.35, and now it's over $0.05. Could you talk about why the change a little bit lower? Is there a particular business that you got more concerned about? What changed in just a couple of weeks there?

Bill, why don't you take that?

I will take it. John, because in these difficult markets, it's hard to accurately forecast, particularly in the production and efficiency areas. We have plants cycling down or cycling back up, the efficiencies can drive the numbers to breaking -- it's a fairly sophisticated system that requires monthly updates by all the businesses. As those updates starting coming in in February for the call, we had some decline in the numbers. We felt like more appropriate range was a decline of a nickel. There is certainly come uncertainty around the businesses that do not have backlogs as they come in. One in particular would be the construction products which tends to operate on very short backlogs as compared to the wind towers.

Okay. All right. Thanks for your time, guys. I appreciate it.

We will take our next question from Alex Blanton with Ingalls & Snyder.

Good morning.

Morning.

Tim, right now you're operating still off the backlog to quite an extent because for example in the railcar business you had 1100 orders in the quarter. I needn't point out that if the order doesn't pick up, your production railcars in the second half will be about one-half what they are going to be in the first half, and one quarter of what they were a year before. In the wind tower business, again you're operating off the backlog. Not sure what the order rate in the barges might be.

But you're starting the year with an earnings figure of $0.20 to $0.30 with a lot of the sales coming from backlogs, so seems to me that you are going to need a significant improvement in the order rate going forward to have any earnings in the second half. The question really is; what is the situation in your markets that would lead you to think you might have such a improvement in the order rate or not?

Okay. Alex, you're defining the situation very good for challenges that we are confronted with during a down cycle. Fortunately in several of our businesses, we have had backlogs and were able to take time to put some plans in place, talk with some customers. In my comments, I covered a number of the different businesses that we think will be enhanced through the economic stimulus bill that was passed. And it is going to take sometime for that bill and the funds to make their way through. There's certain things like depreciation -- the double depreciation that businesses get. We saw last year, Steve, in railcar orders and I know in the barge business, we received a number of orders that customers just commented and said, double depreciation substantially helped -- maybe helped them make a decision. Isn't that correct?

I think there was some pent up demand that can be spurred by the stimulus package for railcar buying and building. Those customers are the industrial companies or those utilities, they're still looking for clarity in their markets as to what the demand for their products is going to be. The stimulus package, I think is one of part of spurring what could be some additional orders in the rail business for the second half of the year. But there needs to be some economic stability and people have some clarity as to what is happening in their businesses longer term.

Yes. Steve also mentioned in the rail, there has been some new in and the tank car area that are providing some requirements to replace a portion of the tank car fleet over the next --is that 10 or 12 years?

Eight years.

Over the next eight years. Some companies may look at this down cycle as an opportunity to place orders for equipment, while pricing is highly competitive and you get the bonus depreciation. Also, steel pricing has moved down, and a lot of our customers are looking at that as an opportunity. No one knows how long steel pricing will stay down at these levels, but when you compare to where they were -- steel prices were a year ago compared to where they are now.

There's a lot of elements that we are monitoring. The thing that we try to focus on the most is keeping our customers -- our salespeople out with the customers, talking to them very closely, and then bringing potential deals back to us where we can make quick decisions to enhance our backlog. This is a time period where refilling the backlog is crucial to us. That's one of the key area years we are focused on as a company throughout all of our businesses.

When do you expect to get the benefit of steel cost declines or steel price declines? Have you seen any yet and if not, when?

Steel price decline has been occurring over the last quarters two to three quarters. Wouldn't you say, Bill?

Particularly, over the last three or four months.

Have you seen a benefit in your delivery -- in your profit margins? Because the timing is sometimes -- delayed there.

We are trying to bring the benefits that we have right now to our customers of being able to say, will these prices be enough to encourage you to place orders for the products? I think it's unrealistic in the type of market that we're in to expect that we will pocket a lot of the benefits that are associated with the steel price reductions when you're trying to refeel and replenish your backlogs like we are.

Thank you.

Mr. Blanton, do you have any further questions?

No. Thank you.

We will go next to [Louis Lapeer] with Oppenheimer. Please go ahead.

Will you kindly advise of what you have available to -- funds you have available to purchase additional stock in the open market? And if you purchase it at a particular level or does it depend upon your cash availability?

James, do you want to handle that?

Sure. We have a $200 million program through the end of the year. We've purchased $61 million worth of stock through the end of the fourth quarter under that program. We did initial liquidity at year end of $775 million between cash and our available credit facilities.

Do you buy at a specific price or just -- ?

We don't comment on our plans, other than to report those at the end of each quarter.

Thank you.

Do you have any further questions?

No. Thank you.

We have another question from Paul Bodnar with Longbow Research.

This is just to clarify something on the -- you said you may deliver some cars from your finished goods inventory in 1Q. I assume those cars have already been ordered and you're holding them for delivery and you just -- walk around that. Is that accurate?

This is Steve. I think the clarification is we do have cars that we've built in advance of customers needs and are in our finished goods inventory. When we have a customer to sell those cars specifically to, obviously we will do that. We do expect that some of those advanced order cars or finished goods inventory will be part of the shipments in the first quarter.

Those were built in to expectation? Right?

Yes. But -- this is Tim, they are not in our backlog.

Okay.

Until we get orders from customers -- for third party customers for cars, we don't put those advance orders in our backlog. Steve has a very elaborate system of planning that we review on a routine basis of various cars that he has advance ordered. This is something we even review with our Board and it's something we watch very closely. It's been very strategic and helpful to us over a period of time.

Then by the concrete aggregate business if you could just talk -- I know you're a very specific market there. How it was in the quarter and what your outlook is. Can you guys continue in the concrete aggregate business -- get pricing. Is that something you are looking for in '09? What volume declines you will see there?

Bill, you want to take that one?

Sure. I think it's fair to say that the concrete and aggregates business has had a bit of a tough challenge here. Certainly, overall infrastructure spending is down, residential is down, so there is a lot of pockets of softness along the way.

In addition, we did not have particular good weather conditions in the fourth quarter which we would dramatically help. We do look for the stimulus bill and some of the infrastructure spending to flow through, probably not in the first quarter but maybe towards the second and the third. A lot of the money is earmarked for jobs that are ready to get. We remain positive on the business from a overall perspective, but certainly it's a challenging environment right now.

Okay. On the pricing side, is that something you are still -- I know pricing in that market has been pretty strong over recent years. Is that something we can still get?

Yes. Pricing is competitive. Our guys are doing a good job of maintaining their price when they can. There's rising costs across the board. You see softness in raw materials and perhaps some of the aggregates. And any time there is not enough overall demand for construction products, you get the soft situation.

Okay. Thanks.

We will go next to Steve Barger with KeyBanc Capital Markets. Please go ahead.

Just follow up on the wind tower business. I know the planning window for one of those is pretty long so it's helpful to get a three-year extension of the PTC. As you talk to customers, are they still waiting for the credit markets to open up? Do you think that's really the inflection point, even though we have the PTC pension to get new orders going?

This is Bill. Certainly, the credit markets need to open up. These are big projects, a lot of capital involved. They tend to be long return type projects that need a long-term financing structure underneath them. The PTC is tremendously helpful towards that. The stimulus bill looks like it has some other opportunities that lead to the point of investment tax credits. We will be scrubbing the bill over the next week or two, but our general anticipation is we do need some support on the credit markets. But the PTC is a really nice start.

Thanks. That's all I have.

I will now turn the call over to the speaker for any closing remarks.

Thank you, Jimmy. This concludes the conference call. Remember, a replay of this call will be available, starting one hour after this call ends today through midnight Thursday, February 26th. The access number is 402-220-0121. Also, a replay will be available on our website located at www.trin .net. Look forward to visiting with you again on your next conference call. Thank you for joining us this morning.

This does concludes today's teleconference. You may disconnect your lines. Thank you and have a great day