Trinity Industries, Inc.
Q1 2011 Earnings Call Transcript

Published: 28 Apr 2011

[Operator:]

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 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. At this time, all participants are in a listen-only mode. Later on, you will have the opportunity to ask questions during the question-and-answer session. (Operator Instructions) Please note today’s call is being recorded. I’ll be standing by if you should need any assistance, and it’s now my pleasure to turn the conference over to Gail Peck.

[Gail M. Peck:]

Thank you, Beth. Good morning from Dallas, Texas. Welcome to Trinity Industries First Quarter 2011 Results Conference Call. I am Gail Peck, Treasurer of Trinity. Thank you for joining us today. Following the introduction, you will hear from Tim Wallace, our Chairman, Chief Executive Officer and President. After Tim, our business group leaders will provide overviews of the businesses within their respective groups. Our speakers are Steve Menzies, Senior Vice President and Group President of the Rail and Railcar Leasing Groups; and Bill McWhirter, Senior Vice President and Group President of the Construction Products and Inland Barge Groups. Following their comments, James Perry, our Vice President and Chief Financial Officer, will provide the financial summary and guidance. We will then move to the Q&A session. Antonio Carrillo, our Vice President and Group President of the Energy Equipment Group; and Mary Henderson, our Vice President and Chief Accounting Officer, are also in the room with us today. I will now turn the call over to Tim Wallace for his comments.

[Timothy R. Wallace:]

Thank you, Gail, and good morning, everyone. I’m pleased with our performance during the first quarter. We’re off to a good start. We have a significant amount of positive momentum occurring in many of the markets served by our businesses. The improvement in our earnings during the first quarter is an outcome of the economic recovery along with the ability of our businesses to generate operating leverage resulting from improving production levels and continuity. Overall, the trend lines remain positive for most of our businesses. Several of our businesses were successful during the first quarter in obtaining orders that provide consistency in their production lines. This normally leads to opportunities for operating leverage. The demand for railcars in North America was very robust during the first quarter. We were pleased to report that our rail businesses received record quarterly orders for new railcars in the first quarter. Among them was a five-year supply agreement with GATX Corporation for 12,500 railcars. This order helps provide production consistency in our railcar manufacturing businesses during the next five years. Our rail businesses are responding well to the increase in railcar demand. We’re a very flexible company and will continue to adjust as the business climate shifts and demand fluctuates for our products and services. Our railcar leasing business has seen strong demand for railcars. During robust demand periods, we are able to obtain better lease rates for extended lease terms. This helps solidify a solid base of leasing revenues for the future. Our barge business has obtained orders to fill their production openings for the majority of 2011. One of our barge manufacturing facilities is currently confronted with river flooding conditions. Bill will provide more insight during his comments. During the first quarter, our structural wind towers business stabilized production schedules at lower levels than in the past. This industry has continued to work through several fundamental issues that are affecting short-term demand for wind towers. Our wind towers business has a backlog of orders that total approximately $1 billion. Our highway products businesses continue to build momentum as they enter the construction season. Funding for federal highway programs appears to be in place through the balance of the peak construction period. We expect levels of uncertainty to surface, as our political leaders work through federal spending budgets. We have a good demand for highway products at this time. We’re prepared to respond should demand in this industry shift. Our overall performance reflects the talents and hard work of our people, the diversification of our businesses, our emphasis on operational excellence and the strength of our market leadership positions. We are fortunate to have a highly seasoned group of employees who are extremely capable. I will now turn it over to Steve Menzies for his comments.

[D. Stephen Menzies:]

Thank you, Tim. Good morning. First quarter operating results for the Rail Group and Leasing Group reflect the improving economic and rail transportation trends. Our Leasing Group saw lease fleet utilization remain stable at 99.2%, with lease rate and renewal trends improving. Our Rail Group posted an increase in operating profit while shipping approximately 2,240 new railcars during the quarter. Our railcar order backlog grew to its highest levels since the third quarter of 2008, allowing us to plan a higher level of production for 2011. We are seeing strong demand for railcars that transport chemicals, minerals and agricultural products. The intermodal and auto rack markets are improving as well. Demand for railcars that serve the lumber, paper, and coal industries continues to be weak. Lease renewals and lease rates appear to have stabilized and continue to show improvements in key markets. Railcar cycle times are increasing, as average train speeds decrease and the overhang of idle railcars continues to decline for some railcar types in tight supply. During the first quarter, the North American railcar manufacturing industry received orders to build approximately 36,900 new railcars, raising the industry backlog to more than 51,900 railcars. Industry orders during the fourth quarter 2010 and first quarter 2011 were heavily weighted towards strategic purchases of railcars by railroads and TTX. Several lessors returned to the new railcar marketplace, making large strategic purchases, while other smaller lessors placed orders for railcars serving discrete markets. A few major railcar buyers may have accelerated some 2012 purchases to take advantage of the tax provisions favoring capital equipment investment in 2011. However, it is difficult to determine the precise impact of these tax provisions in respect to pulling forward orders that might otherwise been placed in 2012. Our current order inquiries reflect additional strategic purchases being considered by railroads and a few industrial shippers. We are also seeing strong demand drivers related to railcars serving the oil and gas industries. The agricultural, fertilizer and chemical markets are also expanding. Most of these new build opportunities will be for 2012 delivery, as remaining available production capacity for 2011 is limited. We were successful in securing orders during the first quarter that fit very well with our production plans. These orders should position us to obtain increased operating leverage. We did not aggressively pursue orders for railcars serving markets with weak pricing or orders that would require us to open new production facilities. Instead, we are focused on orders that optimize production at our facilities currently in operation, minimize line changeovers and reflect stronger pricing levels. While we expect operating margins to expand as we increase production, we face some uncertainty as to the timing of efficiency improvements. We have the flexibility to bring on additional railcar production, should market conditions support sustainable demand and pricing levels result in commensurate returns. TrinityRail received orders for approximately 18,770 new railcars during the first quarter. Our first quarter orders were from industrial shippers, railroads and third-party lessors. TrinityRail’s backlog was approximately 22,490 railcars at the end of the first quarter, up 277% from the end of the fourth quarter. Approximately 14% of the units in our railcar production backlog are for customers of our leasing business. Based upon orders received in the first quarter and current inquiry levels, we project a significant increase in railcar production in the second quarter of 2011 and a further increase in the second half of 2011. For the year, we project delivery of between 12,500 and 13,500 new railcars. As a point of comparison, we delivered 4,750 railcars in 2010, and slightly more than 9,100 railcars in 2009. As railcar builders have rapidly increased production to meet the influx of orders, component supplies had to keep pace. Historically, it has not been unusual for component shortages to occur when there is a sharp increase in railcar demand. TrinityRail has worked closely with component producers to ensure adequate supply to support our production plans and enable us to meet our customers’ 2011 delivery requirements. Thus far, we have not experienced any component shortages or delivery delays. We added 960 new railcars to our lease portfolio during the first quarter, bringing our wholly-owned lease fleet to more than 53,060 railcars, a 5.4% increase compared to the first quarter 2010. Our lease fleet utilization at the end of the first quarter 2011 was 99.2%. Our average remaining lease term remained at 3.5 years. The average age of the fleet is 6.2 years. The TRIP lease fleet totals 14,600 railcars operating at 99.8% utilization. As a reminder, Trinity owns 57% of TRIP and manages the portfolio. Trinity’s total lease portfolio is now more than 67,600 railcars. Lease renewal trends are returning to more historic norms, and renewal lease rates on average increased modestly during the first quarter. In the near term, we will seek longer lease terms, as we now have the opportunity to re-price assets last priced during the market downturn. Rising new car prices are helping to raise the ceiling on lease rates for existing railcars, thus helping to support lease renewal trends. As a result of higher lease rates, rising demand and high fleet utilization rates, we see the potential to improve our lease fleet’s financial performance. In summary, we have obtained a solid order backlog that allows us to realize the operating leverage associated with railcar production continuity. I am confident that our operations team will successfully meet the challenges of rapidly increasing railcar production to meet our customer commitments this year. Our lease portfolio, with its high fleet utilization, is positioned to raise lease rates and provide a greater return. As we look ahead to 2012, we see evidence of sustainable demand for railcars consistent with moderate economic expansion. I will now turn it over to Bill McWhirter.

[William A. McWhirter:]

Thank you, Steve, and good morning everyone. Our Construction Products Group had a nice first quarter. The group produced a profit of $8.3 million for the quarter as compared to $2.7 million a year ago. These results continue to be driven by the performance of our highway products business. On April 1st, we completed a transaction with Texas Industries that resulted in the divestiture of our Austin and Central Texas concrete assets in exchange for three aggregate operations. This transaction is indicative of our desire to grow our aggregates and highway products business line, while reducing our exposure to metropolitan concrete markets. We are anticipating improved profitability, despite a $30 million annual decrease in revenues as a result of this transaction. Moving to the Inland Barge Group. During the first quarter, we received new barge orders totaling $90 million, bringing our backlog to $461 million as compared to $361 million a year ago. Most of the orders we received continue to be prompted by the need to replace aging equipment. The barge market remains highly competitive. As a result, there is a little pricing leverage at this time, although we have a strong backlog that primarily consists of orders that were priced during the economic slowdown. As a result, we expect that further margin improvements will be challenging. With regard to the unfortunate flooding of the Mississippi River, Trinity has temporarily closed its hopper barge manufacturing plant in Missouri. We expect the plan to be operational again in approximately 4 to 5 weeks. At this time, we have no other barge plants that are affected by the flood. I will now turn the presentation back to James, who will provide more financial color on this event.

[James E. Perry:]

Thank you, Bill, and good morning everyone. My comments relate primarily to the first quarter of 2011. We will file our Form 10-Q later today. For the first quarter of 2011, Trinity reported earnings of $0.30 per common diluted share. This compares to earnings of $0.02 per common diluted share in the first quarter of 2010, which included $0.04 per common diluted share of transaction expenses related to the acquisition of Quixote Corporation. Revenues for the first quarter of 2011 were $644 million compared to $454 million in the same quarter last year. Trinity’s EBITDA during the first quarter was $134 million, compared to $99 million in the same quarter of 2010. The reconciliation of EBITDA was provided in the press release yesterday. The Rail Group reported revenues in the first quarter of $220 million, a 7% increase over revenues reported in the fourth quarter of 2010 on a comparable level of railcar deliveries. Operating profit for the Rail Group during the first quarter was $9.3 million, resulting in a margin of 4.2%. Revenue and earnings eliminations during the first quarter due to sales of railcars to our lease fleet totaled $85 million and $0.06 per diluted share respectively. The railcar order backlog, which includes the recently announced five-year order from GATX for 12,500 railcars, grew to approximately $1.8 billion as of March 31, 2011, compared to approximately $458 million as of December 31, 2010. Within this backlog, orders dedicated to our lease fleet decreased to approximately $272 million as of March 31, 2011, compared to approximately $111 million as of December 31, 2010. Our Railcar Leasing and Management Services Group reported revenues in the first quarter of $130 million, which included $10 million of revenues resulting from the sale of railcars from the lease fleet. Operating profit totaled $54.7 million in the first quarter, which included $1.1 million of profit from sales of railcars from the fleet. The Inland Barge Group generated first quarter revenues of $138 million and operating profit of $21.7 million, resulting in a margin of 15.7%. During the first quarter, our barge business received orders totaling approximately $90 million. The order backlog for this group as of March 31, 2011 was $461 million. Revenues for our Construction Products Group were $134 million in the first quarter, compared to $118 million a year ago. This group reported operating profit of $8.3 million, compared to $2.7 million in the same period a year ago. During the first quarter, the Energy Equipment Group’s revenues were $119 million, including $67 million from the wind towers business. Operating profit for the group was $10.5 million, resulting in an operating margin of 8.8%. The backlog for the wind towers business as of March 31, 2011 was approximately $1 billion. At March 31st, we had unrestricted cash and short-term marketable securities of $377 million. When combined with the funding available through our corporate revolver and Trinity’s leasing warehouse facility, our liquidity position totaled more than $1.1 billion at the end of the first quarter. We continue to make progress towards the refinancing of the TRIP warehouse loan. The TRIP portfolio continues to perform well and is an important component of our railcar leasing business. I will now discuss our forward-looking guidance. We expect earnings per share for the company to be between $0.35 and $0.40 in the second quarter of 2011 and between $1.30 and $1.50 for the full year 2011. The impact of the large number of railcar orders that we received in the first quarter is included in our annual guidance and is concentrated in the back half of the year. Deliveries under the GATX supply agreement for 12,500 railcars are expected to commence midyear and will be spread evenly over the five-year contract. Where we fall within the range of the $1.30 to $1.50 of earnings will depend on a number of factors including

[Operator:]

(Operator Instructions) Our first question comes from Allison Poliniak with Wells Fargo. Go ahead, please.

[Allison Poliniak:]

Hi, good morning.

[Timothy R. Wallace:]

Good morning.

[Allison Poliniak:]

Just going back to the Rail Group and the margins specifically, I know obviously production ramp-up costs are keeping a lid on that in the second quarter. How should we be thinking about that towards the back half of the year, as production levels are firming up?

[Timothy R. Wallace:]

James, do you want to take that one?

[James E. Perry:]

Sure. Allison, as you know, we have a process we go through each month to forecast the results for the remainder of the year. We just updated that last week, and the current view reflects that process. We’re having good demand for our products, but where we fall in the range is going to depend on the efficiencies, as we’ve talked about. As Steve mentioned, we’re going to have a significant ramp-up over the next couple of quarters, and we’ll be able to provide that detail as we go forward.

[Allison Poliniak:]

Okay. And I guess with this production level, I think last we talked you had about three out of ten of your facilities online, and I know you guys are trying to sort of lengthen those production lines. Would you need to open more facilities to satisfy these increased orders as of today, or are we comfortable with those three and just filling those production lines, specifically?

[Timothy R. Wallace:]

Steve, you want to handle that?

[D. Stephen Menzies:]

Yeah, sure, Allison, the orders and the current demand levels, we think we’re properly positioned with the facilities that we have open. We do have the flexibility to open additional production facilities as we continue to see demand grow. But right now, we think we’re positioned well.

[Allison Poliniak:]

Okay, great. Thank you.

[Operator:]

Thank you. Our next question comes from Steve Barger with KeyBanc Capital Markets. Go ahead, please.

[Steve Barger:]

Hi, good morning.

[Timothy R. Wallace:]

Good morning.

[Steve Barger:]

How much of your barge production does that Missouri plant represent, and do you expect that barge will be a lot, will be less profitable in the back half because of these issues?

[Timothy R. Wallace:]

Bill?

[William A. McWhirter:]

Yeah. The Missouri plant is one of our largest plants. And I won’t go into detail of how much of the production, but it is a significant part of the dry hopper barge production. I think in the back half of the year, as we said, we’ll, 4 to 5 weeks we should be up and going, we’ll have a little bit of learning curve coming back on, but shouldn’t see much interruption in the back half of the year. Our team has done a really good job of getting prepared for this flood, so we got the equipment out that we need to get out and we’ll get it back in as soon as possible.

[Steve Barger:]

Right. So this is should just be a one-quarter impact, and you’ve got plenty of backlog for the back half of the year, so no ill effects going forward from that. And just returning to the rail question, I understand it’s tough to call the timing of how you get those production inefficiencies, but you guys have been doing this for a long time, with, barring any really unusual situation, is it reasonable to think that margins and operating leverage won’t be a good bit better in the back half for the Rail Group, given the size of the production ramp you’re talking about?

[Timothy R. Wallace:]

Steve, you want to take that one?

[D. Stephen Menzies:]

Well, sure Steve. Clearly, our back half is expected to be stronger than our first half, and we’d love to give you a crystal look at margin expansion. I think certainly beyond just seeing operating efficiencies, car types and mix and also the profitability of earlier orders taken versus where we’re seeing margins now on current pricing, all has a direct impact on how margins will end up in the third and fourth quarters for us. But again, we’re optimistic about improving efficiencies and seeing the operating leverage in our business.

[Steve Barger:]

Sure. And I think you’ve been seeing sequential improvements in your lease rates, and I know you’re adding some cars to the fleet this year. Are you seeing positive year-over-year comps in some of the lease rates? And can you talk about pricing for the cars that you’re putting in this year relative to contracts that are rolling over?

[D. Stephen Menzies:]

Sure, Steve. I guess the thing to keep in mind, and don’t mean to dodge the question with the answer of mix, but what cars we have rolling off leases and what markets obviously impacts the strength of renewal rates. We are seeing a trend with a higher new car prices, being able to raise the ceiling for existing lease rates. So that’s contributing to a positive trend in renewal rates as well. Overall strong demand and high fleet utilization should allow us to continue to improve the profitability of our existing fleet.

[Steve Barger:]

Sure. And it’s fair to say that most of the revenue and operating profit in the lease fleet is relatively stable anyway, right?

[D. Stephen Menzies:]

Yes, it is.

[Steve Barger:]

So just as I think about the prospect for what will probably be better operating leverage in the back half for rail by a good bit, barge is not going to be impacted by these near-term effects in the back half. Lease is probably flat to up. Should I think about your guidance of implied back half being relatively even with the first half is probably being pretty conservative?

[Timothy R. Wallace:]

James?

[James E. Perry:]

Really, Steve, I think as we’ve pointed out, there is a wide range in the guidance we provided. We’re still early in the economic recovery and ramping up our plant. So I think we’d simply say, as we did earlier, that’s where our current forecast shows where we are. We did give a pretty good range for the back half of the year. And so how we perform as we ramp up, and how things like the weather, the flood recovery, those type things impact those earnings are going to be where we fall in the range.

[Steve Barger:]

All right. Thanks. I’ll get back in line.

[Operator:]

Thank you. Our next question comes from Paul Bodnar with Longbow Research. Go ahead, please.

[Paul Bodnar:]

Hi, good morning.

[Timothy R. Wallace:]

Good morning.

[Paul Bodnar:]

I wanted to follow up, I know you said you were working on TRIP refinancing. I mean, any kind of further details you can give us on that, I mean, at this point, or are you just still early in the process?

[Timothy R. Wallace:]

James?

[James E. Perry:]

Yeah. We’re still in the process, Paul, as you know, we have some midyear amortization that begins on TRIP. We are making good progress in working with our equity and debt partners on that. But there is no more further details we can provide at this time until we have something to talk about.

[Paul Bodnar:]

I don’t know if you could tell me, I missed, I mean, is the bank, or is there any kind of concern in terms of lenders that just, it’s obviously a little more levered than your regular lease fleet. I mean, is that something they’re going to let you maintain that level of leverage or have they kind of given you any indications one way or the other?

[James E. Perry:]

Yeah. I don’t think we can get into detail on leverage or anything. The capital markets are open for us. We did a nice financing last year, of course. But again, I don’t think we want to get into detail yet on negotiations or what terms might look like until we have something further resolved that we can talk about publicly.

[Paul Bodnar:]

Okay, thanks. And then just in terms of the pace of inquiries, I mean, obviously, the first quarter was pretty strong for you guys in terms of order activity, even excluding the large order, the 12,500 cars. Has that maintained itself or has it subsided at all or kind of where do we stand right now?

[Timothy R. Wallace:]

Steve, you want to take that?

[D. Stephen Menzies:]

Well, I think generally we are seeing continued strength in orders, both for new cars and existing equipment, although whether or not the industry is going to have the same order level that it had in the first quarter, given several very large strategic purchases, I think that might be unlikely. But we still see good strength in our inquiries and consistent with the fundamentals in the rail transportation market and fundamentals in our economy.

[Paul Bodnar:]

So if we kind of remove these big orders, it still looks like we’re staying the same --?

[D. Stephen Menzies:]

I would say that trend would be consistent, yet.

[Paul Bodnar:]

And then also just a little more specific on that. I mean, in the first quarter, did you guys have anything on the coal car side or what are you seeing in that market right now, in terms of orders?

[D. Stephen Menzies:]

I think, Paul, even in my comments, I see continued weakness in that marketplace. We are seeing some export of coal. The low natural gas price is competing as a feedstock for energy, for electricity production. So we continue to see that market as oversupplied with railcars and demand not catching up as quickly.

[Paul Bodnar:]

Okay. So you haven’t seen much action on that side for you guys?

[D. Stephen Menzies:]

No.

[Paul Bodnar:]

And then also, I know you guys have, usually one of your larger barge customers places an annual order, has that happened yet this year or where are you at in that process?

[Timothy R. Wallace:]

Bill?

[William A. McWhirter:]

Yeah. The order for 2012 has not occurred yet. It typically occurs some time in the second to third quarter. But it’s not in the backlog as of now.

[Paul Bodnar:]

Okay. Thanks a lot.

[Timothy R. Wallace:]

Thank you.

[Operator:]

Thank you. Our next question comes from Tom Albrecht with BB&T Capital Markets. Go ahead, please.

[Thomas Albrecht:]

Hey, guys. Good morning to everyone. Steve, did I hear you give an actual second quarter production number for the Rail Group? I certainly heard the full year number.

[D. Stephen Menzies:]

No, Tom, I did not give a specific number for the second quarter.

[Thomas Albrecht:]

Can you do that?

[D. Stephen Menzies:]

I think James did give expected revenues of, for the Rail Group, between $250 million and $275 million during the second quarter of 2011.

[Thomas Albrecht:]

Okay. I just wasn’t sure, given the difference in car price types that exists, I was hoping for a little bit more there, but that’s fine. Let me go back to the TRIP situation, is it possible that you may end up putting more equity in the business and/or be considering buying out – or buying additional stake as you’ve taken your ownership in the company up a couple times?

[James E. Perry:]

Yeah, Tom, as we’ve talked about long the way and earlier, we’re still working through the process. We’ve not talked about any options yet publicly about what we may do with that. It’s an important portfolio to us, but we’re still working through what that refinancing looks like.

[Thomas Albrecht:]

Okay. I assume the 10-Q is going to have some details this afternoon on your latest thoughts.

[James E. Perry:]

Well, the 10-Q will give the update as to where we are right now, but it’s really basically what I’ve said, that we continue to make progress and we’re working through that as we go forward.

[Thomas Albrecht:]

Okay. And then Steve, back at TRIP, did I hear you say 14,600? It’s been a little over 14,700 cars in the lease fleet there, but I just want to make sure I heard you correctly.

[D. Stephen Menzies:]

Yes, you did hear me correctly, and we had a minor small car sale during the quarter out of that portfolio, which brought the total down.

[Thomas Albrecht:]

Okay. Can you go back to the order discussions, I know this has been asked a little bit, but I want to just talk about obviously there has been the accelerated depreciation opportunity. How much of that is still in the mindset of potential buyers as we look forward, or did everyone that was motivated by that show up in the 36,000 orders and then the rest of the orders from here on out are more normal economic conditions not driven by tax considerations?

[D. Stephen Menzies:]

Yeah. I mean I don’t think anyone bought railcars purely based upon the tax issues. I think they were contributing factors as to the timing of some of those orders and giving people impetus to perhaps take some of their 2012 purchases and put them into 2011. Again, to precisely tell you exactly how much of the orders in the quarter were related to tax provisions, it’s really, really hard to do. If there are others waiting for order slots to take advantage of 2011, there’s a good chance they’re going to be disappointed, because I also mentioned that I would say across the industry, remaining production slots in 2011 are very, very few. So the impetus for 100% bonus depreciation in 2011, you probably already have your orders in and you’re under a different tax scenario in 2012 when you take delivery of your cars.

[Thomas Albrecht:]

And that 2012, there’s still a 50% acceleration, right?

[D. Stephen Menzies:]

That’s my understanding, yes.

[Thomas Albrecht:]

So would you say, I know you said barge is essentially sold out for ‘11, would you describe rail – the Rail Group as being sold out for 2011, at this disjuncture?

[D. Stephen Menzies:]

Well, this is Steve again, Tom. We’re very close to being in that position. As you know, we have flexibility in our production footprint to bring on more capacity, but one of the constraints in getting 2011 delivery is the availability of components to support increased production. So while right now we think we’re in good shape on our component supply, it would be difficult to have a meaningful increase in production in 2011 and still get the components to support that increase.

[Thomas Albrecht:]

And then lastly, I understand that what I call functional capacity fill. But have you given some thought to ‘012 yet, where production might go next year from let’s say 13,000 this year? Could we be looking at 20,000, or is it just too early to say?

[D. Stephen Menzies:]

I really think it’s too early to say, Tom, at this point in time. We’re starting to see inquiries now and receive orders that are beginning to give us some visibility into 2012, but it’s clearly too early to really tell you what the entire year would look like.

[Thomas Albrecht:]

Okay. Thank you for your time.

[Operator:]

Thank you. Our next question is a follow-up from Paul Bodnar with Longbow Research. Go ahead, please.

[Paul Bodnar:]

Yeah, just real quick, and I think you had said this in your prepared remarks, I maybe didn’t write it down right. What would, in terms of the sales from the fleet, was it – did you say $10 million, or was that sales from TILC or from TRIP?

[Timothy R. Wallace:]

James?

[James E. Perry:]

Yeah, it was $10 million, and the sales were primarily from TRIP. And you’ll see that detail in the 10-Q.

[Paul Bodnar:]

It was from TRIP, so that, and then also the operating profit elimination there, the $1.1 million I think it was, would be from TRIP as well?

[James E. Perry:]

Yes.

[Paul Bodnar:]

Yes, okay. Thanks.

[Operator:]

Thank you. At this time, there are no further questions in queue. I would like to turn back to our speakers for any closing remarks.

[Gail M. Peck:]

That concludes today’s conference call. A replay of this call will be available after 1 o’clock Eastern Standard Time today through midnight on Thursday, May 5, 2011. The access number is 402-220-0121. Also, the replay will be available on the website located at www.trin.net. We look forward to visiting with you again on our next conference call. Thank you for joining us this morning.