Trinity Industries Inc (TRN) 2015 Q3 法說會逐字稿

Before we get started, let 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 a 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.

Good day and welcome to the Trinity Industries, Incorporated third-quarter results conference call.

(Operator Instructions)

Please be advised today's program may be recorded. It is now my pleasure to turn the program over to Ms. Gail Peck. You may begin.

Thank you, Aaron. Good morning, everyone. Welcome to the Trinity Industries third-quarter 2015 results conference call. I am Gail Peck, Vice President, Finance and Treasurer of Trinity. Thank you for joining us today.

Just to note, we are experiencing severe weather in Dallas this morning. In the unlikely event that the call is disrupted, we will reconnect as quickly as possible.

Similar to the format we used on our last earnings call, we're going to have two parts for our conference call remarks. First, we will begin with an update on the highway litigation matter. We will then follow with our normal quarterly earnings call format.

Today's speakers are Theis Rice, Senior Vice President and Chief Legal Officer; Tim Wallace, our Chairman, Chief Executive Officer, and President; Bill McWhirter, Senior Vice President and Group President of the Construction Products, Energy Equipment, and Inland Barge Groups; Steve Menzies, Senior Vice President and Group President of the Rail and Railcar Leasing Groups; and James Perry, our Senior Vice President and Chief Financial Officer. Following their comments, we will then move to the Q&A session. Mary Henderson, our Vice President and Chief Accounting Officer, is also with us in the room today.

I will now turn the call over to Theis Rice.

Thank you, Gail, and good morning. For purposes of today's remarks, I will refer to Trinity Industries and Trinity Highway Products together, as the Company. The Federal Highway Administration as the FHWA. And, the American Association of State Highway and Transportation Officials as AASHTO.

I will also refer to Texas A&M Transportation Institute as TTI. And, the National Cooperative Highway Research Program Report 350 as Report 350.

As previously reported, the Company has received an adverse jury verdict in a False Claims Act case involving claims of fraud and product defect pertaining to the Company's ET Plus guardrail end terminal System. In June 2015, the Federal District Court entered judgment on the verdict. Because the Company believes the evidence presented at trial clearly showed no fraud was committed, the Company has filed a notice of appeal with United States Court of Appeals for the Fifth Circuit. We currently anticipate the Fifth Circuit will issue a briefing schedule before the end of the first quarter of 2016, at which time we will better understand the timing of the appellate process for this matter.

With respect to the product itself, the FHWA reported earlier this year that the ET Plus System has successfully passed eight additional crash tests performed in accordance with Report 350 test matrices, the applicable and nationally recognized testing criteria and performance evaluation standards.

Additionally, an FHWA and AASHTO joint task force was formed to evaluate certain features of the ET Plus System. Upon completing its evaluation, the task force confirmed, contrary to allegations in the False Claims Act case, that there was no evidence of multiple versions of the ET Plus System and that the ET Plus Systems used in the eight crash test were representative of the ET Plus System installed on the nation's roadways.

The FHWA also formed a separate joint task force to conduct an in-service evaluation of the ET Plus System. The task force was comprised of representatives from the FHWA, AASHTO, state departments of transportation and several independent experts. As part of this evaluation, the task force was to determine if there was any evidence of performance limitations, unique to the ET Plus System. And the degree to which any such performance limitations extended to other brands of extruding, double beam guardrail terminals.

On September 11 of this year, the joint task force published its findings and conclusions, which included, among others, that there are no in-service performance limitations unique to the ET Plus System. That there will be real-world crash conditions which exceed the performance expectations of all brands of w-beam guardrail end terminals, such as improper system placement or installation and improper or delayed maintenance or repair, to name a few. And, that after months of reviewing real-world crash data from across the country, there was no reason to conduct further testing of the ET Plus System or other Report 350 compliant extruding w-beam guardrail end terminal systems.

A separate false claims case has been filed under state law in the Commonwealth of Virginia by the same party who filed the federal False Claims Act case in the Eastern District of Texas. The Commonwealth has elected to join the litigation.

In a decision we believe was motivated by this litigation, the Virginia Department of Transportation or, VDOT, recently conducted six separate crash tests of the ET Plus System. All six tests were nonstandard under Report 350 test criteria. Two Company representatives, and a representative from TTI, the products designer, were allowed to conduct limited inspections at the test site. During these inspections, the Company and TTI observed, and noted to VDOT, multiple conditions that were inconsistent with Report 350 test criteria.

However, VDOT generally ignored the inconsistencies the Company brought to their attention. In the Company's opinion, the last two crash tests were staged with arbitrary impact conditions, contrived to provoke a failed test.

TTI stated it has no confidence in the six crash tests performed by VDOT and also characterized VDOT's tests as arbitrary and nonstandard. The Company shares TTI's lack of confidence. Further, TTI and the Company agree that changing the criteria under which crash tests are conducted, is not only unsound and of utmost concern, but, altogether indefensible when one roadside safety product is tested to a different set of standards than all others.

The results of VDOT's tests have not yet been published. However, based on the Company's and TTI's limited inspections and review of video footage of each test, there was no spearing or other intrusion of any test vehicle by the ET Plus System. Please refer to www.etplusfacts.com/Virginia for more information on this issue.

The Company is also aware of five False Claims Act related cases filed under state law by the same party. In each of these five cases, the respective state Attorney General has filed a notice of election to decline intervention in the matter. In conclusion, the ET Plus System is the most crash tested guardrail end terminal of its type. Two joint task forces charged with evaluating the ET Plus System and its in-service performance have reported their respective findings and conclusions.

In what has been described as the most thorough evaluation ever conducted on a single class of roadside hardware, the FHW has confirmed that the ET Plus System has been thoroughly crash tested, that the product complies with Report 350 crash test criteria and performance evaluation standards. And, that it has undergone an in-service performance review, validating that in-service performance limitations associated with all extruding end terminal systems are not unique to the ET Plus System.

This confirmation of ET Plus crashworthiness, when properly installed, maintained, and repaired, further ratifies the FHWA's consistent position since 2005. That the ET Plus System is acceptable for use on the nation's roadways and has an unbroken chain of eligibility for reimbursement under the Federal-Aid Highway Program. The Company is currently receiving inquiries from customers for potential purchases of ET Plus Systems and will resume shipment of the product as orders are received and accepted.

Our third-quarter 10-Q will be filed today. In note 18 of the 10-Q, we provide additional information on the foregoing and other Company legal matters. For additional information and details on the Company's positions, on these and related issues, please refer to www.etplusfacts.com. I will now turn the call over to Tim.

Thank you, Theis and good morning, everyone. I'm pleased with Trinity's financial performance during the third quarter. Our performance continues to reflect the strength of our diversified industrial business model and our ability to shift resources to meet customers' needs. I'm proud of the performance delivered by our employees.

Our Rail Group generated strong quarterly financial results during the third quarter, reporting a record profit margin for the second consecutive quarter. I'm impressed with the way this group continues to maintain a high level of profitability, while shifting its product mix. During the third quarter, our Railcar and Leasing and Management Services Group delivered strong year-over-year financial results. The group's results were enhanced by sales of leased railcars.

I remain pleased with the progress our team is making with high-quality institutional investors, who are looking to invest long-term capital and portfolios of leased railcars. We expect to continue growing our railcar investment platform.

Our Inland Barge Group's financial performance during the third quarter reflects a changing product mix. The group continues to demonstrate manufacturing flexibility by shifting production lines, as necessary, to meet customer demands for specific barge types. The Energy Equipment Group set a new record quarterly operating profit during the third quarter, substantially improving its results year-over-year. The successful integration of Meyer Steel Structures contributed to this group's improved result.

Our Construction Products Groups maintained a comparable profit margin on lower revenues compared to the third quarter last year. During the third quarter, an increased level of uncertainty in the micro -- macroeconomic environment reduced the pace of new order volumes in our business. As the quarter progressed, we observed an increasing level of hesitancy on the part of a number of our customers to make capital investments. The extended downturn in the price of oil, combined with the recent price -- oil price volatility, is a factor in much of the uncertainty we see.

Weakness in other commodity prices is also weighing on customers' decisions. At the same time, we see positive fundamentals in the automotive and petrochemical sectors.

The mixed macro environment is resulting in levels of uncertainty occurring at the order placement level. It's difficult to predict how long this hesitancy will linger. I'm very confident our businesses are prepared to respond to the shifts in demand for our products.

As we look to the future, Trinity is in a position of strength because of the size and quality of the order backlog within our Railcar Group. Deliveries of railcars in our backlog will extend through 2020. Our railcar backlog provides a solid base of production for planning purposes in 2016 and 2017. In addition, our wind tower business has an order backlog that runs through 2016.

Our strong balance sheet and cash flow provides us the ability to remain optimistic in respect to growth opportunities. We continue to search for acquisition and organic growth opportunities in markets that have products, services, technologies, and competencies that fit within our portfolio of manufacturing businesses. During the past few years, Trinity has been successful in establishing higher earnings platforms relative to our historical performance. Our current 2015 earning guidance range indicates a new record level for Trinity. Surpassing record results achieved during the last two years.

Our accomplishments are due to the capabilities and expertise of our dedicated employees, our ability to respond effectively to shifts in demand, and our ongoing commitment to provide high-quality products and services to our customer. I'll now turn it over to Bill for his comments.

Thank you, Tim and good morning, everyone. During the third quarter, the Barge Group reported another solid performance.

The Barge Group received orders for $84 million during the quarter. Resulting in a backlog of $373 million.

The majority of these orders were for barges serving the dry cargo market. Which continues to be driven by replacement needs and the agriculture industry. There is less demand for barges that carry liquid cargo due to the large number of tank barges delivered during the last few years.

We are adjusting our production to better serve demand. Including, idling one of our four manufacturing facilities.

The investments we have made over the past decade have increased our production efficiencies and positioned us to respond effectively as market demand changes. We are prepared to make additional adjustments to our manufacturing footprint as needed.

The Construction Products Group continues to make the most of a challenging operating environment. Despite the scheduled expiration of the Federal Highway Bill at the end of this month, and ongoing litigation matters, the group maintained operating margins during the third quarter on lower revenues compared with last year. This performance is driven by the strength of the construction market in the Southern US.

A proposed, long-term Federal Highway Bill would provide our customers the visibility to plan and fund infrastructure projects. We are closely following the status of the bill.

During the last several years, we have been repositioning our Construction Products Group to focus on products with more consistent demand drivers. The aggregate business, an example of this focus, has performed very well during 2015. And, we continue to see positive near-term demand drivers.

The Energy Equipment Group reported another record level of profit during the third quarter. Most of the businesses in this group improved their performance quarter-over-quarter.

The wind tower business continued to deliver solid results and has strong visibility for 2016 production plants. At the end of the third quarter, the wind tower backlog totaled $424 million. While the wind industry has made advancements in reducing the installed cost of wind power, near-term demand will likely be dependent on another federal production tax credit. We are prepared to respond should Congress approve another tax credit in the next few months.

The current market for utility structures remains competitive and has recently experienced some consolidation and industry capacity rationalization. We continue to see positive, long-term investment projections for this industry. The acquisition of Meyer Steel Structures, which we purchased last year during the third quarter, positions us well to respond to increased transmission infrastructure spending in both the US and Mexico.

In closing, our businesses are responding effectively to mixed demand conditions. We believe these businesses have a great deal of potential as our long-term outlook for energy and infrastructure investment in North America remains positive. I will now turn the presentation over to Steve.

Thank you, Bill. Good morning.

Our Trinity -- our talented Trinity Rail team delivered another quarter of excellent operating results. Further testimony to the strength of our integrated railcar manufacturing, leasing, and services business model.

During the quarter, our Rail Group once again exceeded a 20% operating profit margin and our Leasing Group generated another quarter of strong results. Our operating and financial flexibility and leading market position give us confidence we can effectively adapt to changing market conditions.

As Tim indicated in his remarks, uncertainty exists in the industrial economy. As the third quarter progressed, this environment, combined with the challenges of navigating new tank car safety regulations, is creating hesitancy on the part of industrial customers, while in the process of evaluating their capital equipment requirements.

As the quarter progressed, orders slowed and have remained below recent order levels into the fourth quarter. It is too early to discern whether current demand conditions will persist.

Our Rail Group received 3,655 orders during the third quarter. The orders we received during the third quarter represent a diverse mix of railcars, including tank cars, covered hoppers, flat cars, and auto racks. As a reminder, our auto rack orders are not included in the ARCI industry order report.

We continue to see inquiries among a broad array of railcar types reflecting a shift from upstream energy markets to downstream petrochemical, chemical, and agricultural markets. The level of automotive-related activity is also favorable. We remain optimistic about long-term demand fundamentals. These demand drivers, combined with the needs to replace aging general purpose freight cars, continue to support our view of an extended railcar cycle.

While production levels may be lower during the next few years, compared with recent elevated levels, third party forecasts continue to expect above-average levels of industry railcar production through 2018. During the third quarter, extended production runs positioned our Rail Group to generate high levels of productivity and lead to superior operating performance. Eclipsing a 20% operating profit margin for the second consecutive quarter.

We delivered 8,220 railcars in the third quarter. We expect to deliver between 8,300 and 9,000 railcars in the fourth quarter. This would result in full year 2015 deliveries of between 33,750 and 34,500 railcars in 2015, setting a new record level for Trinity.

Our industry-leading backlog of more than 55,000 railcars, valued at $6.25 billion at the end of the third quarter, gives us very good visibility into future years. Even in this time of uncertainty in the industrial economy. We already have more than 23,000 railcars in our backlog planned for delivery next year and we are planning deliveries of 27,000 to 30,000 railcars in 2016. Our operating flexibility positions us to respond to further shifts in market demand.

The industry's implementation of the new HM 251 tank car regulations is still taking shape. Various complexities are affecting customers' decisions whether to build new tank cars or to modify existing tank cars for flammable service. These include the railcar industry's implementation of positive train control systems, HM 251 regulatory administrative appeals and litigation challenging new tank car regulations, as well as recently implemented railroad tariff actions.

The continued low price of crude oil is further complicating the evaluation process. As we have indicated previously, our first priority is to ensure regulatory compliance of our own railcar fleet.

We have completed HM 251 modifications to our first group of DOT-111s, converting them to meet the new regulations. We are also in later stage discussions with several industrial shippers to modify significant portions of their fleets who have in recent years purchased new DOT-111s used in flammable service. They seem most inclined to work with the original railcar manufacturer to meet their potential modification requirements.

We have received several orders for new DOT-117s as well. We continue to believe the new regulations will ultimately be a demand catalyst for new tank cars, as well as tank car modifications as the compliance deadlines draw near and challenges to the new regulations are resolved.

The performance of our Leasing Group continues to reflect solid railcar fundamentals, resulting from high fleet utilization and extended industry backlogs. Revenue and profit from operations, which excludes railcar sales, increased by 12% and 10% respectively year-over-year. Leased fleet utilization is down slightly from last quarter, but, remains high at 98.5%.

New additions to the wholly-owned lease fleet, high fleet utilization levels, and healthy lease renewal increases all contributed to a strong third-quarter performance. Our owned and partially owned lease fleet now stands at 77,140 railcars. At the end of September, 28% of the railcars in our order backlog were committed to customers of our leasing business, bringing our leased railcar backlog to approximately $1.8 billion. During the last 15 years, we established a strong lease origination platform, integrated our manufacturing and leasing operations, and built significant scale in our railcar leasing and management services platform.

In addition, we diversified the funding sources for our lease fleet growth to include equity partnerships as well as debt securitizations. As we did so, we saw the opportunity to develop a unique business model that involves originating and managing railcar investment vehicles for institutional investors. Which in turns the support -- which in turn, excuse me, supports the growth of our railcar leasing and services platform.

We recently announced a $1 billion extension of our strategic alliance with Element Financial Corporation. The alliance now extends through 2019, with new purchases under the extension beginning in 2016. We are delighted to continue to work with Element. Our team is also making progress in expanding our interface with other key institutional investors in support of our railcar investment vehicle platform.

In summary, Trinity Rail's integrated business platform is well-positioned and responding effectively to the current demand environment. The Rail Group and Leasing Management Services Group delivered exceptional results during the third quarter. Our operating and financial flexibility continues to differentiate Trinity Rail, enhancing our position as a premier provider of railcar products and services.

I will now turn it over to James for his comments.

Thank you, Steve, and good morning, everyone. Yesterday, we announced our results for the third quarter of 2015.

For the quarter, the Company reported earnings per share of $1.31 and revenues of $1.54 billion. Compared to EPS and revenues of $0.91 and $1.56 billion, respectively, for the same period last year.

During the third quarter, our EPS reflected strong operating performance by most of our businesses. During the third quarter, the Company repurchased 1.56 million shares of its common stock for $40 million. This year, we have repurchased a total of 3.95 million shares of our stock for $115 million. And, have $104 million available under our current authorization through year end.

We also invested $44 million in capital expenditures during the quarter, across a number of our manufacturing businesses and at the corporate level. Year-to-date, this figure totals $145 million. During the third quarter, we invested approximately $223 million in leased railcar additions to our owned leased fleet. This investment was offset by $219 million of leased railcar sales from our leased fleet.

Leased railcars remain a very good investment for us. Offering attractive returns and cash flow while the railcars are in our fleet. Then, the opportunity for additional profit recognition when sold to third parties including institutional investors.

Last week, we were pleased to announce extension of our strategic railcar alliance with Element Financial Corporation. As Steve indicated, this extension calls for approximately $1 billion of leased railcars to be sold to Element in 2016 through 2019. Year-to-date sales of leased railcars to Element total approximately $617 million, bringing the cumulative total under the existing alliance to more than $1.6 billion, since the program began in 2013.

The level of interest in acquiring leased railcars remains high among institutional investors and we continue to make progress in building portfolios of leased railcars for institutional investors who are looking to invest long-term capital in this asset class. Our railcar investment vehicle platform provides Trinity with a level of financial flexibility that is unique among diversified industrial companies. The capital generated through our railcar investment vehicle platform provides us with the financial flexibility to reinvest in our railcar leasing and management services platform, our portfolio of diversified industrial businesses, or, in other investments to enhance shareholder returns.

We ended the quarter with $678 million of cash on hand and have access to additional capital through our committed lines of credit at both the corporate and leasing levels. At the end of the third quarter, our liquidity position remains strong at $1.9 billion.

As provided in our press release yesterday, we increased our annual guidance for 2015. Our current EPS guidance is $4.65 to $4.90. Compared to our prior guidance of $4.45 to $4.75. This range implies fourth-quarter EPS of $0.87 to $1.12.

As Steve mentioned, we expect our Rail Group to deliver between 8,300 and 9,000 railcars in the fourth quarter, resulting in approximate annual deliveries of between 33,750 and 34,500 railcars. We expect fourth-quarter revenues of between $1.1 billion and $1.75 billion, with an operating margin of between 19.5% and 20.5%. This results in record results for the year, with annual revenues of between $4.4 billion and $4.5 billion, with an operating margin of approximately 20%. Trinity Rail's railcar backlog remain strong at over $6.2 billion and continues to provide production visibility for our railcar operations in 2016 and beyond.

Industry railcar orders were reported by ARCI as 7,375 in the third quarter. As a reminder, we do not report our auto rack figures in our submission to ARCI, because there's not a specific category provided for this input.

In our press release yesterday, and as Steve mentioned, Trinity reported 3,655 orders for the third quarter. This unit count includes 1,250 auto racks. These auto rack orders are in addition to the total figure reported by ARCI.

We are reminding everyone of this detail this quarter due to the larger-than-normal percentage of our auto rack orders as compared to the total railcar orders reported by ARCI this quarter. Auto racks currently comprise 3.5% of our railcar backlog, as compared to 3% at this time last year and 2% at this time year ago.

Since 2004, when we began producing auto racks, we informed the investment community that we would include auto racks in our quarterly railcar unit figures. We did this in order to reconcile our revenue and profit figures with our unit counts. For informational purposes, auto racks are superstructures that are installed on top of a railcar and manufactured on our railcar assembly lines. The pricing for auto racks is very comparable to the average sales price of other freight railcars that we manufacture.

We expect our Leasing Group to record fourth-quarter operating revenues, excluding leased rail car sales, of between $165 million and $185 million. With profit from operations of between $65 million and $75 million. This results in annual operating revenues of between $685 million and $705 million, with operating profit from operations of between $320 million and $330 million. As we indicated on our last call, maintenance expense is expected to be higher in the back half of the year due to timing of the services performed.

In the fourth quarter, we expect proceeds from the sales of leased railcars from the Leasing Group of between $105 million and $315 million, with profit of $35 million to $85 million. Year to date, the Leasing Group has reported proceeds from the sales of leased railcars of $525 million, with profit of $164 million. The wide range around the fourth quarter guidance reflects the transactional nature of these sales and the potential for timing to change. Our guidance assumes we substantially fulfill our existing alliance with Element.

As a reminder, sales to third parties may be recorded in the Rail and Leasing Groups. Sales of leased railcars to third parties that were recorded within the Rail Group have been $176 million year-to-date.

In the fourth quarter, we expect to eliminate between $400 million and $430 million of revenues and defer between $90 million and $110 million of operating profit. Year-to-date, revenue and profit eliminations were $783 million and $164 million, respectively. We expect eliminations be higher in the fourth quarter than previously expected due to the timing of railcars sold from the lease fleet.

We expect our Energy Equipment Group to generate fourth-quarter revenues of between $250 million and $275 million, with operating profit of between $30 million and $35 million. These expectations result in 2015 revenues of between $1.12 billion and $1.15 billion. With an operating margin of 13% to 13.5% due to productivity improvements.

We expect our Construction Products Group to record fourth-quarter revenues of between $100 million and $125 million, resulting in annual revenues of between $520 million and $545 million. We expect operating profit of between $52 million and $57 million for the full year. This group continues to experience headwinds with uncertainty around state and federal highway funding in addition to the ongoing highway litigation. We continue to be pleased with the performance and opportunities within our aggregates business.

Our Inland Barge Group is expected to report fourth-quarter revenues of between $135 million and $150 million, resulting in 2015 revenues of between $640 million and $655 million. Fourth-quarter operating profit is expected to be between $20 million and $25 million. With the full-year operating margin and 18% to 18.5%.

Our annual EPS guidance also includes the following assumptions. A tax rate of approximately 33.7%. Corporate expenses expected to range from $125 million to $135 million which includes ongoing litigation expenses. The deduction of between $30 million and $35 million of non-controlling earnings due to our partial ownership in TRIP and RIV 2013.

A reduction of $0.17 per share due to the two-class method of accounting compared to calculating Trinity's EPS directly from the face of income statement. And, dilution of approximately $0.06 per share from the convertible notes.

As it pertains to cash flow, we now expect the annual net cash investment in railcars added to our lease fleet to be between $280 million and $2 -- and $480 million in 2015. Our guidance incorporates the range we discussed for fourth-quarter proceeds from the sales of leased railcars from the Leasing Group. Full-year manufacturing and corporate capital expenditures for 2015 are now expected to be between $200 million and $240 million.

We believe Trinity is uniquely positioned within the industrial sector compared to prior periods of economic uncertainty. Backlogs in our railcar manufacturing and wind towers businesses provide support to our production planning in 2016 and railcar manufacturing has backlog into 2020. However, as we plan for 2016, we anticipate the slow down in the industrial economy we are currently absorbing to impact our businesses, especially those that have limited visibility into next year. In keeping with our normal practice, we plan to provide specific earnings guidance for 2016 when we report our fourth-quarter earnings. We look forward to the opportunities ahead of us.

As we prepare for our question-and-answer session, please note that Theis' remarks today pertaining to our highway litigation were very thorough. We would ask that your questions today focus on our operations and financial performance. Our operator will now prepare us for the question-and-answer session.

(Operator Instructions)

Allison Poliniak, Wells Fargo.

Hi, guys, good morning.

Morning.

Just going back on to the Element deal. I think the original commitment was $2 billion and $1.6 billion was done to date. Is the batch -- should we assume the balance being fully completed in 2015, or is some of that moving as part of that extension at this point?

Allison, what we've said, the new -- this is James, the new agreement is $1 billion that starts in 2016. We expect to substantially complete the initial strategic alliance with Element this year and we've given a wide range of sales which includes Element, as well as potential sales to other third party institutional investors.

Okay. Fair enough. And then, also you talked about, on a high level, changes potentially in mix. Are there any sort of line changeovers? Or anything that we need to be aware of in Q4 that could impact the rail manufacturing margin?

Allison, this is Steve. Sure, we have some line changeovers. I'm just so pleased with our organization's ability to make those changes effectively. We've become very productive and efficient in doing those and I don't think they quite have the adverse effect that they once had. So, certainly and all that's been included in any of our projections, both go on the volume and operating margin standpoint.

Great, thank you.

Bascome Majors, Susquehanna.

Yes, congrats, guys, on another great quarter and a year that's definitely exceeded some high expectations where we entered in the year. Looking to 2016, where you gave some comments. I want to dig in a little more. What's your strategy for managing the downslope from the railcar peak that we're looking at in 2015 here? Or any other segments that you'd like to comment on?

This is Tim. As far as managing decreases in orders and demand, we're really proficient at that. We have routine meetings with all of our business leaders. We talk about capacity that we have available in our -- enterprisewise, as well as demand that we may have. So, we really count on our manufacturing flexibility to kick in as best that we can. And then in some cases, we have to idle production lines, and as Bill mentioned, we have idled a facility. And so we are highly equipped to be able to deal with the ups and the downs.

And Bascome, this is Steve, just to add on to that. Certainly, line changeovers and product conversions are a normal course of our business. And I think Trinity's proven that the breadth of the entire product line for the Company allows us additional flexibility. We've converted plants from producing wind towers to tank cars back to freight cars and back to wind towers. So, we really are very dynamic in that regard, and I think our manufacturing flexibility of our footprint really allows us to respond to shifts in the marketplace very effectively.

Understood, and we've certainly seen that in the past. I appreciate that you don't want to guide anything more explicit and you gave a lot of color on 2016 already. But from a modeling standpoint, when we think about decremental margins as revenues start to come down, should we think about planning for something similar to the incremental you achieved on the way up? Or is the math in there a little fuzzier and we need to consider some things we may not be?

Well, this is Steve again. Bascome, with respect to, at least margins in the railcar business, certainly, margins are ultimately going to be a reflection of the product mix that is produced in any given quarter. And we're going to continue to work on productivity and improve those operating profit margins. And again, our team really has to distinguished themselves in those achievements. I'd also like to remind you that the railcars we produce or plan to produce in 2016 are for cars that we took orders for in 2014 and 2015 during very, very strong market demand dynamics. So, we have expectations that we'll continue to perform well and our business will reflect those margins.

All right. So, I guess you're alluding to the pricing you'll see on that decent portion of next year's production plan that's already in the backlog will be similar to the pricing that you're producing right now that's generating some of these really excellent margins?

Generally, yes.

Yes. And this is TIm. When we're ratcheting up or ratcheting down, it's always very difficult for us to predict precisely where the margin will end up. We have a lot of competent people that are involved with this. But, as we get closer, as James said, at the end of the fourth quarter when we're giving our guidance, at that time we'll give -- be able to give more specific insight on what we're anticipating as far as margins go. Right now, we're just talking about production planning and how we're looking at our business and what we are planning for.

Understood. I really appreciate the color today, guys. Thank you.

Thank you.

Justin Long, Stephens.

Thanks, and good morning, guys.

Morning.

You gave some helpful commentary on 2016 expectations for the Rail Group. But, I was wondering if you could share how much visibility you have in your tank car backlog for 2016? I know there are some longer-term orders, like the agreement with GATX. But, I wanted to get a sense of your visibility specifically related to tank cars over the next year or so?

Steve?

Sure. Justin, we historically haven't broken out our production plans and backlogs by tank car, freight car, what have you. But, I would suffice it to say that we're very confident about our production plans given where we are today. And in our backlog we have a very healthy mix of tank cars, as well as a healthy mix of freight cars.

And we do have some plants. This is Tim. We do have some plants that have being able to demonstrate that they can shift from tank cars to freight cars. And this is rather new to our Company over the last five years. I've been very impressed how our barge people have been able to shift from tank barge to hopper barge and how our railcar manufacturing plants have being able to shift from tank car to freight car. In fact, I think there's a shift going on right now in that particular area and that was what Steve was saying how impressed he was. I echo that.

Okay, that's helpful. And maybe to ask it a different way. You mentioned 23,000 rail car orders that you have locked in for next year. Based on that, would you say that the percentage between tank deliveries and non-tank deliveries is pretty similar to what you're seeing here in 2015, or do you expect that mix to change?

When we talk about the deliveries we're planning of 27,000 to 30,000 for 2016, certainly, we're also seeing a shift in demand, as I mentioned, from the upstream energy markets to downstream petrochemical and agricultural in the automotive markets. And in there implies a shift, perhaps, to more freight cars from tank cars.

Okay, great. That's helpful. And last question. Now that the GE fleet has been sold and we got that announcement during the quarter. I was wondering if you could comment on how you think this could impact the competitive dynamics in the leasing market? Do you view this as a positive, negative, or neutral to your business?

Sure, Justin, thanks. Steve again. First of all, GE has been a good customer of ours, and we've built a number of new cars for them. Wells Fargo/First Union has also been a very good customer of ours, and we currently have cars in our backlog for them as well. So, I don't think it really has a material effect on our manufacturing business. And we've demonstrated on the leasing side that we've been able to compete effectively with those folks as well. So, I clearly don't have any concerns from it and we're just moving forward, business as usual.

Great, that's helpful. I appreciate the time.

Matt Brooklier, Longbow Research.

Thanks. Good morning. So, a follow up question on Element. The $1 billion of extension. Can you provide a little bit of color in terms of the potential cadence of railcar sales to Element over those four years? And maybe more color on what 2016 could look like?

Matt, this is James. We really can't at this time. We work with Element on specific portfolios as we go throughout the year. Now that we have a long-term agreement, just as we did the last two years, we will work with them to be sure that we and they have diversified portfolios. And we're not really providing any specific guidance this early into the agreement as to what that cadence may look like. But we're very pleased and, as Steve said, delighted to continue to work with Element. Their confidence in us to continue to build, deliver, and manage railcars for them is very good for us.

Okay. And then, the extension itself. Does anything change with this particular agreement, the extension? I'm just trying to think about, not only the sales, but the profit contribution potential with this incremental $1 billion moving forward?

Yes, Matt, this is James again. I'd say generally it's the same type of agreement. Just a nice extension of what we already had in place.

Okay. And on the DOT-117 orders that you took in the quarter. Can you provide a little bit of color in terms of where those cars are bound from an end market perspective? And then, any further update in terms of regulation and the timing of potential incremental orders would be helpful?

Matt, Steve again. Yes, we have taken orders for new DOT-117s. Those cars are all going into flammable service and a number of them going into flammable service beyond crude oil. So, we're certainly starting to see some of the other customers who ship flammable products make decisions about their fleets.

Okay, appreciate the time.

Thanks, Matt.

Art Hatfield, Raymond James.

Hello. Thanks. Morning, everyone.

Morning.

Just a couple questions. First, on the lease fleet utilization decline. Can you give us some color as to whether that's just demand related? Or is that part of the issue surrounding you retrofitting some of your own tank cars to meet the new standards?

Art, this is Steve. I think the answer to your question is actually yes. It's a little bit of both. Where we've had, perhaps, some cars returned to us from either ethanol or crude oil shippers. We've taken the advantage of that time off lease to prepare those to be ready for deployment, and some of those have been cars that we've performed modifications to.

Right, thank you. And then secondly, I just want to touch on the Element extension as well. That $1 billion is not currently in the backlog, is that correct?

Yes, Art, this is James. Remember, orders from an agreement like Element don't create backlog. Orders from Element will be cars that we originate leases on. We have $1.8 billion of leasing backlog already on our books. Some of that will potentially go to Element. Some is to be originated, most likely, and some is already in our existing fleet. So, what Element does is give us confidence in capital sources as we enter the market to originate leases. So, we know now that for each of the next several years, we've got a good level of sales of leased railcars to a good partner.

Great, thank you. Just actually, one other one, if I could, and it goes back to the flexibility you have in your manufacturing operations. As you talked about in one of the -- in the parts business you shuttered a facility for the moment. But, as you go forward and if you start to take down lines in the railcar side or maybe close facilities there, how do you handle the labor situation? I know it's always tough, if things were to turn on you, to get quality labor back. Are you able to transfer labor? And, if so, does that create a little bit of an overhang? Or you just let everybody go and make a long-term decision about closing a facility?

Yes, Art, Steve again. Yes. Good question. Certainly, we've been very, very successful when we ramped up our operations from 2009 to the levels we have today. And that's been a tremendous undertaking from our operations team in developing a highly productive labor force. It's certainly our intent to work very, very hard to try to keep that labor force in place. In instances where we may be paring back production at our manufacturing facilities, we have some opportunities to transfer some of that labor into our maintenance services business where we're making investment and expanding operations there. So, we're very, very conscious of wanting to maintain our experience and talented labor. We'll do so as best we can.

Yes, Art, this is Tim. It's also geographically -- a geographical question. In certain communities where we have other types of manufacturing operations occurring, then sometimes we can shift employees from one location to another location. Or we can do, as Steve said, is maybe shift a product and bring in a new product line. And recently we even shifted a plant to where it was helping in our research and development and some building some of our tooling and fixturing. So, we really look at the workforce as a resource and some -- value -- and the value that they bring. And then we deal with what type of demand for products we have and what we can -- what work we can place in there to maintain the highly skilled people.

Hey, thank you so much, that's great color on that. And thanks for taking my questions.

Thanks, Art. Morning.

Eric Crawford, UBS.

Hello. Thanks. Good morning, guys. Following up on Bascome's line of questioning. I was curious about the cadence on deliveries you're envisioning for 2016. I'm sure it's flexible, but as you're envisioning it now, any first half, second half, split would be helpful.

Are you talking about cadence of railcar deliveries or what product are you talking about?

Right. Railcar deliveries, yes.

Okay. James, you want to?

Yes, sure, Eric. We're not able to give cadence at this time. We certainly have production planning in place. The good thing about a backlog of more than 23,000 railcars for 2016, we certainly have some good production planning visibility. And I think I would just point back to Steve's guidance of 27,000 to 30,000 railcars next year. But at this point, given product mix and those type things, we're not able to give more specifics at this time. We'll do that when we get to our fourth-quarter conference call.

Okay. Fair enough. On leasing, what was the average length of lease term for the renewals in the quarter? Can you share that?

We don't typically share that, Eric, but, appreciate your interest. I will tell you we're seeing healthy renewals. Both as a percentage of those cars expiring, and we're also pleased with the renewal rate increases we saw in our fleet during that period.

Eric, the average remaining term has been right around 3.3, 3.4 years for several quarters now. And then as you always have leases coming off and then putting on new leases and renewing, that's been pretty steady for more than a year now.

Okay, no, thank, I appreciate that. And that's what I suspected, but, just was -- was wanted confirm that. And then lastly for me, the profit in the Energy Group was really strong this quarter. It sounds like the utility business is still a little competitive out there. Was it more storage or wind towers or were there any one-time items to call out there for the strength in profitability?

Yes, there are no one-time items to call out -- this is Bill -- for the strength. Overall, as I said early in the conference call script, that all the businesses did particularly good. There is some weakness or tightness in the utility market. But, the rest of the businesses came along strong and covered the segment as a whole.

All right. Fair enough. Great quarter, guys, thanks.

Thanks, Eric.

Thom Albrecht, BB&T Capital Markets.

Hello guys, most of my questions have been answered. I just wanted to clarify something I thought I heard. Relative to the production or delivery goal of 27,000 to 30,000 for next year, I don't know if you exactly said this or not. Would you expect tanks to be about the same percentage of those deliveries as they were in 2015?

Tom, Steve. I don't think we gave an indication as to a split of tank or freight cars in those projections. And, I think I did mention that, surely, in demand we're seeing a shift to a broader array of freight cars and that would probably manifest itself in orders and production in 2016 and 2017.

Yes, I think I did catch that. But I thought I also heard that maybe the revenue per car might be similar in 2016 to 2015, despite the car type shift?

I don't --

Or did I not hear that?

I don't think you heard that, Tom.

Okay. All right. Thank you.

Kristine Kubacki, Avondale Partners.

Hi, good morning. I just had a question. It sounds like you do have a little bit of build slots open in the fourth quarter or in the -- for 2016? How is the pricing environment out there? I know mix is a component of that, but it's -- has the pricing environment softened, given that things seem to be opening up a little bit more in 2016?

Yes, Kristine, this is Steve. Certainly, it's difficult to make broad generalization statements about pricing because different markets have different behavioral characteristics based upon lease fleet utilization, based upon production backlogs. In those areas where we have shorter backlogs and lease fleet utilization's weak, you can expect some weaker pricing. Where we see strong demand, we're seeing good pricing. Generally, it's hard to make those generalizations, and we're really looking at a market by market car type basis.

Okay. And then just a quick question I had. I think it's probably been beat to death. But just my question is on the orders that were placed in the 2013 and 2014 timeframe that you say are for delivery in 2016 now. Have you seen a critical mass of -- you said it's shifted to more freight car specific. Where those placed as tank cars and now being shifted to other car types? And then I guess a follow on to that would be, have you had many push outs? In terms of, are you working with customers to delay delivery into 2017 and beyond?

Yes, thanks again, Kristine, for the question. This is Steve. Let me answer the last question first. Our projections reflect any conversations we've had with customers in trying to accommodate their delivery timing, and that really is a normal course of business for us. These railcars, in many times, are tied to the completion of capital expansion projects and the timing of those railcars has to coordinate with production flows for our customers. So, that is not an unusual activity for us. And again, the projections that we've given to you for our plans next year include any consideration in that regard.

The first part of your question. We're really -- the orders that we were referring to were, orders taking in 2014 and 2015 for production in 2016, while there was significant tank cars orders at those time, we also took a number of freight car orders there. Reflecting interest in the downstream petrochemical markets and those are also railcars that we'll be producing in 2016.

Okay, that's helpful. Thank you very much for the time. I appreciate it.

Cleo Zagrean, Macquarie.

Good afternoon. Good morning. Thank you. My first question relates to the leasing portfolio and to the comments you've just made in terms of different behaviors by different markets. Can you just show that broadly how much of your portfolio is exposed to -- tied to these upstream markets that are slowing versus the growing areas that you mentioned? Downstream, pet chem, agro? And compare how lease renewals are performing in each of the two areas? Thank you.

Yes, Cleo, this is James. We've not, nor do we disclose specific car types that are in the portfolio other than that it's a very diverse portfolio. In any given year, we have a certain number of leases that expire and are up for renewal. We're very successful in that respect with an average lease term of 3 to 3.5 years. About 15% to 20% rolls over in any given year and that's across all car types. So, as Steve said, certain markets have their own characteristics in any different type of cycle. We have given some indication of how many cars we have in flammable service, which is between 11,000 and 12,000. But beyond upstream, downstream, and other car types, we just don't get that specific. But it's a broad mix of cars and we're pleased with the diversification that our team has put together.

And again, I would reiterate earlier that I said we're very pleased with our renewal activity. It was a high percentage of the cars that were expiring and we're very pleased with the renewal rate increases we saw on those cars.

Okay, thank you for that. Then my second question relates to institutional interest. I'm wondering what are the dynamics that, in your opinion, are perhaps slowing the speed at which these deals could be signed with GE, especially, setting a reference point in the market at least? Why is there maybe what I perceive as a wait-and-see attitude? Is it people are looking to see what demand shapes, engines of demand into 2016? I'm thinking every time China cuts rates, there are lots of portfolios should appear more and more attractive?

Cleo, this is Steve. I said, first of all, I think the acquisition of the GE fleet by Wells Fargo/First Union continues to reflect strong interest in these type of assets. And certainly, Wells Fargo is a very, very fine financial institution. There continues to be significant institutional capital interest in investing in this asset class. What we're really looking for is institutional investors who have a long-term perspective on the business and who are prepared to work with us on a long-term basis. I think there's a lot of institutions who would like to buy railcars near-term. We're really looking to develop long-term partnerships to support our railcar investment platform. And those are the type of investors we continue to talk with. And as we have other partnerships developed, we'll bring those to the market and make those announcements at that time.

And do you see yourselves possibly co-investing with them? Or more you think this is a source of capital to go into other areas?

Cleo, this is James. I don't think we're at this point ready to talk about what future plans might be. But we've certainly invested with our partners in the past and we've done investment vehicles where we're not an investor. But as we said, we have a large wholly-owned lease fleet, a large partially-owned leased fleet, and the nature of these transactions going forward is to be determined. It's a very dynamic, good market for us.

Yes, and my last question was, at an industry conference last week, there seemed to be a very dynamic debate about boxcars with some railroads trying to encourage their customers to order a homogenous type for ease of their operations. And even suggesting they might be willing to support a mini bubble to encourage their replacement. Whereas other opinions were that we are not in a boxcar shortage, but, a speed -- railroad speed shortage, or turnover shortage. So, what do you think -- where do you see that particular car type shaping up in terms of demand, and how are you looking to potentially participate in that? And thank you very much.

Sure, Cleo, Steve again. I think it's important to recognize, these are long-lived assets, and I think decisions that are made to invest in these assets have to have a long-term perspective. I think many times we hear comments about what's going on in the spot market tends to influence some people's long-term perspectives. More importantly, I think with respect to boxcars, as an aged fleet, it has not seen much investment over recent years. And inevitably, I think there will be additional investment in the boxcar fleet.

In fact, you have a boxcar --

I'm sorry, I forgot to ask about, you mentioned the proposed life extension for 65 years. What could that do to orders?

At this point, Cleo, I really don't have an opinion on that. Railcars, statutory life is 50 years as it is. So, that's still an awfully long time. Perhaps when you're looking at modifications or making investment in existing cars, the extended life helps the analysis.

-- very much.

Steve Barger, KeyBanc Capital.

Hi, thanks. First, just a clarification. If I heard right, you expect deliveries of 27,000 to 30,000 next year and 23 of those are in backlog right now? Is that right?

That's correct.

Is that outlook based on you maintaining current market share for new orders, plus or minus?

Yes, Steve, I -- you've been following us for a long time. You know that we don't really drive our business based upon market share. But, certainly, at -- even at these demand levels, we're -- we have confidence that we can achieve our plan of producing between 27,000 and 30,000 railcars in 2016.

Right. Well, and just from a planning perspective, do you expect that most of the orders you take next year will be for delivery next year? Or are you expecting to take them across a spectrum of multiple years?

I think it's most likely a spectrum over multiple years. Again, it ties to when capital projects are being completed for our customers. And there's an awful lot of spending still going on in the Gulf Coast with projects coming onstream between 2016 and 2019. And so we're going to stage our production and deliveries to meet the needs of our customers which ranges over a period of time.

Got it. Next, capital allocation question. Obviously, you have a lot of current liquidity, a lot of cash flow in backlog. I'm sure you're seeing deals come across your desk. Can you talk about the revenue range for those deals in general from the -- from a small to the big end?

Steve, this is James. You've seen us with acquisitions in the relatively small level, the $20 million, $30 million, $40 million transactions we did early in 2013. As large as the $600 million Meyer Steel Structures acquisition we did August last year. So, we've got a wide range for us, as Tim talked about.

We're looking for organic growth opportunities, acquisition opportunities, as you said, as they come across our desk. We do have good capital that we can invest and we continue to generate good cash flow. We've done well in the share repurchase this year in terms of how much of our authorization we've used. We've raised our dividend, and we continue to invest in maintenance CapEx and growth CapEx internally here. So, it's a broad spectrum of opportunities in front of us and as the Management team sits and works with our Board, we consider those things that we go out and seek proactively and those things that we see in the market as well.

Yes, the motivation for the question was just trying to think about the high end. Would you do a $600 million-plus deal or $1 billion deal if you found something attractive? Or do you really favor smaller deals where you can just tuck things in?

This is Tim. It's really about the quality of the fit and the quality of the company and the value that we think that the entity will bring to us. We do have a preference for larger deals. We're very pleased with the deal we did last year.

Okay, and what --

So, we'll, well, -- we're out there fishing and we don't hesitate to bring in a big fish. Or if there's a smaller fish that's going to add a lot of value, then we'll bring that one is as well.

Got it. And, last question. You've paid down about $300 million in debt this year, and leverage on the wholly-owned lease fleet has been coming down. What's the thought process behind reducing debt versus putting that cash towards the buyback or just keeping it on the balance sheet?

Well, Steve, I think -- this is James. Certainly, some has gone to share repurchase, as well as reinvesting in our lease fleet and other types of things we've done this year, including organic CapEx. The debt paid downs were opportunistic. There's some scheduled amortization. We had some opportunistic debt repurchases early in the year. That gives us a nice number of unencumbered leased railcars, which is about $1.5 billion right now, as you see in our 10-Qs quarter to quarter. That allow us to really be able to have nice, diversified offerings for our railcar investment vehicle partners. So, as those investors see new cars coming off of the production line, having railcars unencumbered also allows us to offer those in that same portfolio. We would not hesitate to use some leverage, as we have in the past, if we have the opportunity and need the capital. But right now we've been able to generate cash flow to cover those needs this year.

Got it. Thanks for the time.

Thanks, Steve.

Mike Baudendistel, Stifel.

Thank you. Just wanted to ask you, is there much difference in the cost structure of your various railcar manufacturing facilities? And if so, is there any opportunity to produce, with the decline in rail car production next year, to produce fewer cars at the higher cost facilities? Or is that not something that comes into play?

Sure, Mike, this is Steve again. We're constantly evaluating and optimizing our production mix. Different competencies, different skill levels, different costs and also access to market. So, those are all considerations but conceivably, yes. We have to have that ability to optimize.

Okay, great. And then, also wanted to ask you on the leasing, the lease rates or [offer highs]. If you get to a point, could you see a point in the next year or so where lease rates continue to come down, and then, it wouldn't make it economic to put additional cars in your lease fleet? It doesn't sound like from your prepared comments that you had any changes to strategy in terms of managing your lease fleet?

Mike, Steve again. It's hard to answer that question. But in general, I think we have to put the market conditions into general perspective.

From a historical perspective, rail car production's expected to be greater than historical averages. And we still have very strong fleet utilization and we still have extended backlogs. Typically, those are underlying fundamentals for good renewal rate increases and overall a solid rail car leasing. Obviously, when you look at different car types there's different dynamics in each one of those.

Yes, this is Tim. Also, the railcars are a long life asset, as you all were talking before. And during time periods where we have customers that we've done business with for quite a while and they've got good credit ratings, and they're wanting to place cars and the market conditions are such that we may not be able to get as much as we were able to attain in a higher market, we'll go ahead and lease the car for a shorter period of time. We did that in the 2008, 2009, 2010 time period, and a lot of those leases expired in the 2012, 2013, and 2014 time period, and we were able to renew them at higher rates. And we look at it as a long life asset. And so, we stay in the market during pretty much the good seasons and the slower time periods.

Great. That's helpful. That's all for me. Thank you.

Bill Baldwin, Baldwin Anthony Securities.

Hi, good morning, gentlemen.

Morning.

Steve, did I hear you say, or am I just thinking this, that you're seeing some productivity improvements in your Meyer Steel operation?

That'd be Bill. Yes, it's for Bill.

I mean, Bill, I'm sorry.

Yes, we certainly have -- we've now had Meyer right at a year and had an opportunity to have the Trinity manufacturing team assist the Meyer team with efficiencies and lean layouts where we can, and we've been pleased with what we see. The market itself is still tight and highly competitive. But I like what I'm seeing on the shop floor.

Are we fairly early on, you think, Bill, in our learning curve there, in our lean manufacturing issues there with Meyer? Is there more to come?

Yes, I think, call it third, fourth. Anyways, we've still got a lot of opportunity to go, but I'm pleased with what we've in it done so far.

An amazing thing about lean is, you put a new group of people looking at a production process and the ideas that they come up with. We've been practicing this for -- in my career for 20, 30 years at least. And our people come up with some very clever innovative ways of streamlining and reducing cost and enhancing the quality of the products. And so, we -- there's really never an end to that. I don't think the game ever stops.

Well, you've shown that with your manufacturing in the railcar area, Tim and Steve, that's for darn sure.

Yes, thank you.

As far as the plants that came with the Meyer acquisition, Bill, are you still basically operating out of those same plants, or has that changed somewhat also in terms of where you -- .

There were four facilities that came with the Meyer transaction, and then Trinity had one facility. We have announced a warrant notice for one shift at one of the four Meyer facilities right now, just as we optimize the production for the demand that's in the marketplace as well as the delivery area for the products that are being ordered.

Okay. Steve, I might of missed this, but a couple of housekeeping items. Did you indicate how many cars were shipped to the lease fleet from your railcar manufacturing this quarter?

I don't think I mentioned that, but we certainly have that number available.

It's about 2,300, so it was right about 30%, which is normal for us, Bill, this is James.

Okay. Okay. Do you all disclose how many cars were sold out of the fleet, or is that just a dollar number?

It's more of a dollar number. Again, this quarter you had a general offset, you invested about $220 million, you sold about $218 million, so a general offset. But we don't get quite that granular.

Okay, thank you much, good job.

Thank you, Bill.

Thank you.

With no more questions, that concludes today's conference call. A replay of this call will be available after 1.00 o'clock Eastern Standard Time today through midnight on October 30, 2015. The access number is 402-220-0116. Also, the replay will be available on the website located at www.trin.net. We look forward with visiting with you again on our next conference call. Thank you for joining us this morning.

Thank you for your participation, this does conclude today's program. You may disconnect at any time.