Good day, ladies and gentlemen. 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 these expressed in the forward-looking statements. It is now my pleasure to turn the program over to Gail Peck. Please go ahead, ma'am.

Thank you, Tanisha. Good morning, everyone. Welcome to the Trinity Industries' second quarter 2015 results conference call. I am Gail Peck, Vice President of Finance and Treasurer of Trinity. Thank you for joining us today. Similar to the format we used on our last earnings call, we are going to have two parts to 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 conference 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 in the room with us today. I will now turn the call over to Theis Rice.

Thank you, Gail. Good morning, everyone. As we previously reported, Trinity Industries and Trinity Highway Products received an adverse jury verdict in October 2014 in a False Claims Act case involving the ET Plus guardrail end-terminal system. For purposed of today's comments, I will refer to Trinity Industries and Trinity Highway Products together as the company. Following the jury verdict, the United States District Court for the Eastern District of Texas, Marshall Division, ordered the parties to engage in good faith negotiations in an effort to reach a settlement of this matter. Recently on June 9, the parties reported to the District Court that despite mutual best efforts, the parties were not successful in resolving their disputes. That afternoon, the District Court issued its memorandum, opinion and order in the case and then a judgment on the verdict in the total amount of $682.4 million. On June 23, the company posted a supersedeas bond in the amount of $686 million covering the total judgment and two years of post-judgment interest. The bond was approved by the District Court and has stayed execution on the judgment until all post-judgment motions and appeals are exhausted. The company's Motion for New Trial is pending. If denied, the company will vigorously pursue its rights of appeal of the judgment to the United States Court of Appeals for the Fifth Circuit. The company's Motion for New Trial is based on errors committed by the District Court in the course of the trial, the District Court's failure to apply the applicable law to the allegations in the case and substantial evidence obtained post-verdict invalidating the claims made. The company believes that the evidence presented at trial clearly showed no fraud was committed. At the Fifth Circuit, the company's position will be simple. The judgment is erroneous…

Thank you, Theis and good morning, everyone. I am very pleased with Trinity's financial performance during the second quarter. Our performance continues to reflect the strength of our diversified industrial business model and our ability to shift resources to meet our customers' needs. I am extremely proud of the exceptional performance delivered by our people. Their consolidated efforts and proven ability to execute were major contributors to the high quality results we achieved during the second quarter. Our rail group generated strong quarterly financial results, reporting record operating profit during the second quarter. I am very pleased with the level of orders the group received during the quarter. I am impressed with the group's continued ability to increase profitability while making shifts in product mix. Our railcar leasing and management services group delivered record results from operations during the second quarter. The group's results were also enhanced by a solid level of sales of leased railcars. I am pleased with the progress our team is making with high quality institutional investors who are looking to invest long-term capital in portfolios of leased railcars. Over the last several years, we have been successful building a railcar investment platform for institutional equity investors. We expect to continue to grow our railcar investment platform. I am impressed with our inland barge group's record financial performance during the second quarter. The group substantially increased profit levels compared to the first quarter as well as year-over-year. The group's ability to demonstrate manufacturing flexibility and generate productivity gains over the past couple of years has been remarkable. The second quarter financial performance of our energy equipment group improved year-over-year. The successful integration of Meyer Steel Structures contributed to the improved results. I am also pleased with our construction products group's profitability. It improved from the first quarter. From a growth point of view, we continue to search for acquisition and organic growth opportunities in markets that have products, services, technology and competencies that fit within our portfolio of industrial manufacturing businesses. Trinity's financial and operational status continues to be solid. I am pleased with the way we are balancing our current business conditions, including litigation matters, while continuing to maintain momentum towards attaining our vision of being a premier diversified industrial company. Our 2015 earnings outlook reflects the positive momentum we are experiencing within our company as well as the benefits of having solid backlogs in our primary businesses. 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 customers. I will now turn it over to Bill for his comments.

Thank you, Tim and good morning, everyone. The energy equipment group reported another solid level of profit during the second quarter. The wind tower business continued to perform well. During the second quarter, the wind tower business received $184 million of orders. Wind industry continues to make advancements in reducing the installed cost of wind however the current order environment is still primarily driven by the extension of the production tax credit late last year. The current market for utility structures remains competitive, but long-term investment projections for this industry show positive fundamentals. We are well positioned to respond to increased transmission infrastructure spending in North America. Overall, we are pleased with the performance of the energy equipment segment, but do expect some variability within the segment's performance from quarter-to-quarter as a result of product mix and volumes. I am proud of the construction products group's efforts during the second quarter. The group faced a challenging operating environment due to significant rainfall during the start of the construction season. In addition, the lack of a longer term highway bill and ongoing litigation matters in the highway business created headwinds. Despite these pressures, the group maintained revenues during the quarter in-line with last year. Our aggregates business is benefiting from a robust southern U.S. market and our recent lightweight acquisitions strengthen our ability to serve our customers. Moving to the inland barge group. During the second quarter, our barge group reported record levels of revenue and profit. I am impressed with this group's ability to achieve such a strong performance in a dynamic market environment where demand conditions are constantly changing. At the end of the quarter, we began converting one of our manufacturing facilities to increase capacity for hopper barges. Barge demand continues to reflect steady inquiry levels for both dry cargo barges for agricultural market and smaller tank barges for the chemical market. Demand for large tank barges, that transport oil, is currently soft. During the second quarter, the barge group received orders for $76 million. In closing, our businesses are responding effectively to varying demand conditions. Our long-term outlook for energy and infrastructure investment in North America remains positive. Our businesses have a great deal of potential for future growth. We continue to watch the market for opportunities to add to our portfolio of industrial businesses. And now, I will turn the presentation over to Steve.

Thank you, Bill. Good morning. I continue to be very pleased with the strong operating results generated by our dedicated TrinityRail team and the strength of our integrated business model which includes railcar manufacturing, leasing, parts and services. For the first time, our rail group topped a 20% operating profit margin during the quarter and, once again, achieved record profit levels for its tenth consecutive quarter. Our leasing group also reported record profit levels from operations during the quarter. These are all outstanding accomplishments. Our operating and financial flexibility and leading market position allowed us to quickly react to shifting market demand patterns and customer needs, as evidenced by our order backlog increase. During the second quarter, the industry received orders for approximately 20,000 railcars and maintained a steady level of backlog. TrinityRail received orders for 11,170 railcars, increasing our backlog to 59,830 railcars with a value of $6.9 billion. We received orders for open top hoppers, covered hoppers of varying capacities, box cars, auto racks, flat cars and tank cars reflecting broad market demand for a wide variety of railcar types. The diversity of these orders reflects demand beyond the energy sector. Activity in the upstream energy markets propelled the railcar industry out of the last downturn and generated a robust level of demand for the last several years. More recently, the demand environment has shifted away from this catalyst and is now supported by increased activity in the downstream petrochemical markets, as well as the agriculture, construction, consumer and automotive markets. The rotation in current railcar market demand drivers toward these broad markets, combined with increased replacement needs for an aging fleet of general purpose freight cars, supports our view of an extended railcar cycle. Order inquiry levels into the third quarter thus far have been consistent with…

Thank you, Steve and good morning, everyone. Yesterday, we announced our results for the second quarter of 2015. For the quarter, the company reported earnings per share of $1.33 and record revenues of $1.68 billion, compared to EPS and revenues of $1.01 and $1.49 billion respectively, for the same period last year. During the second quarter, our EPS reflected strong operating performance by most of our businesses. During the second quarter, the company repurchased 1.7 million shares of its common stock for $50 million. This year, we have repurchased $75 million of our stock and have $143.6 million of availability under our current authorization. We prepaid in full during the second quarter approximately $340 million of secured railcar leasing debt, known as TRL VI, that we issued in 2008. We used a portion of the railcars from TRL VI to secure a $250 million borrowing under our $1 billion leasing warehouse facility at a current interest rate that is more than 350 basis points lower than the TRL VI interest rate. The railcar assets used to secure the warehouse advance and those that remain fully unencumbered are available for use in future financings or sales to institutional investors. This loan prepayment and warehouse borrowing were included in our previous earnings guidance. During the second quarter, as previously announced, we divested the assets of our galvanizing business for $51 million and recorded a pretax gain of $7.8 million within the construction products group. The impact of this divestiture was not included in our previous earnings guidance. We invested approximately $179 million in leased railcar additions to our own lease fleet during the second quarter. This investment was partially offset by $149 million of leased railcar sales from our lease fleet. Leased railcars remain a very good investment for us, offering attractive…

[Operator Instructions]. We will go ahead and take our first question from Bascome Majors with Susquehanna. Please go ahead. Your line is open.

Thank you and good morning. I was curious how has the shift or the mix of buyer shifted the local marketplace over the last three to six months? With these very strong orders, are you seeing a heavier mix of leasing companies with multi-year orders looking to secure longer-term capacity here?

Bascome, this is Steve Menzies. Certainly, different car types are utilized by different industrial shippers. So there is some change in mix there from an industrial shipper's standpoint. Some of our lessee's are different from that standpoint. We have seen lessors place orders for freight cars. There have been some announcements about multi-year orders from lessors as well. And then of course, the railroads are large owners of freight cars. So right now, I would say that the not only are the number of car types and markets that we are responding to very broad, but the customer base is very diverse as well.

All right. Well, thanks for that. I guess what I am focused on is, can you help us understand how you have generated such a strong railcar order outcome, both on absolute basis and certainly relative to the rest of the industry this quarter, given near-term demand fundamentals on the rails which have been pretty poor for the last three to six months here?

Well, Bascome, I think there was a compliment in there somewhere. So thank you for that. I think I said it my remarks, the operating flexibility that we have demonstrated gives us really the chance to be able to respond to shifts in the marketplace, to be able to seize opportunities with our customers. I am very, very pleased with the results from our operating folks for the leverage that it gives us when we are able to go out and pursue these orders. So we have seen the shift in demand and operationally we have been able to respond very quickly to be able to satisfy our customers' needs.

Okay. Well, I appreciate that. One more, just looking at plate steel pricing, that looks like it's down 30% to 40% over the last year, maybe 20% to 30% over the last six months. How has this impacted margins in your various businesses? And maybe is it impacting the average price embedded in your railcar backlog that we can see?

Yes. This is James, Bascome. I think in general, to your point, steep prices are down. We generally have our steel prices covered through our customer contracts and with our steel suppliers themselves. So it could impact pricing a little bit as it shifts through the system. From a percentage perspective, as we talked about before, your margins maybe a little bit higher because we have the same level of profit on potentially little lower cost in price. But overall, it is going through the system very comfortably.

Okay. So to your comments about the percentage margins, if stronger dollar and structurally lower steel prices are the new normal, longer-term, I guess it follows from that mid-cycle normal margins could be a little bit higher in some of your businesses going forward?

Bascome, this is Steve. Let me just add to that with respect to steel prices. While we talked about steel plates and those prices moving down, we are still in a very tight supply demand situation for railcar components and we have not seen those core prices decrease and they have remained very strong and very solid.

Yes. And Bascome, with respect to your margin question, we are not projecting anything beyond what we have given for 2015. So it would be pretty mature in long-term perspective there.

All right, guys. Thanks for the color this morning. Take care.

And we will go ahead and take our next question from Allison Poliniak with Wells Fargo. Please go ahead. Your line is open.

Hi guys. Good morning.

Good morning.

Just back to the margin question, particularly on rail, obviously very strong margin there. I just want to understand the sequential impact with the lift driving a little less there. It seems like a little bit of moderation in the back half of the year. Can you just help me better understand through the pits and peaks there, I guess for this quarter as well as looking forward into the next two?

Allison, this is Steve. As we move through the balance part of the year, we do have a shift in our production mix and along with that shift in production mix, we do have some challenges these with line changeovers. But we are also still incurring the ramp-up cost associated with the expansion of our maintenance service business. So those are some of the things we are looking at going into the second half of 2015. Again, I will point too, our operations team has really been remarkable in what they have accomplished and so we continue to present more challenges in front of them, they respond exceptionally well. I wouldn't expect anything different.

That's great. And then just turning to barge. Bill, I think you had mentioned transitioning that one facility back to dry. Did that happen yet? Or is that sort of what's driving some of these line changeovers in the back half of year for the barge industry?

Yes. Allison, the line changeover is actually completing as we talk. So I would suspect by the end of the month that line changeover is complete.

Okay. Perfect. So then there will be the two and two back to what you historically had in terms of manufacturing?

There will actually be a three and one when that changes.

A three and one. Okay. Perfect. Thank you.

And we will go ahead and take our next question from Justin Long. Please go ahead. Your line is open.

Thanks and good morning. I wanted to ask a question, now that we have the final rule on tank car regulations. Have you taken any strategic steps to either increase your capacity for tank car builds and/or utilize your maintenance facilities to potentially perform third-party maintenance work?

Justin, Steve. I think we have demonstrated in our production platform and footprint a lot of flexibility to be able to respond to shifts in demand and I am quite certain that if we see a substantial number of orders for new tank cars that we will be able to handle those in good stead. As we previously discussed, we are making investment in our maintenance services capacity to be able to support our own leased and managed fleet, which is our first priority and then we have key strategic customers who required tank cars from us that we want to able to support. But at this point in time, we don't envision our business model on a for-hire, take all comers basis. So that's where we are at from that standpoint.

Okay. That's helpful. And of the 11,800 DOT-111 that are in flammable service that you mentioned, do you have you have a sense for how many of those you anticipate to retrofit versus scrap and replace?

I really don't at this time, Justin. It's all part of our analysis. This is really a very, very complex issue with may different stakeholders and many different perspectives. And we are continuing to work through that. I think I mentioned, we are in extensive discussions with our customers with respect to the purchase of new DOT-117 or modifications. Again, I think they are still doing their business assessment needs as well. So we will see how that unfolds over the coming months.

Okay. I can appreciate that. And last question, the order number was strong here in the quarter and I was wondering if you have a sense of how much of that demand is coming from growth versus replacement? And maybe as a follow-up to that, I also wanted to ask about the impact of improving velocity on the rail network and how that could impact demand? I don't know if you guys have a rule of thumb that you think about for a one mile per hour improvement on the rail network, how that could impact demand for railcars, but anything you could share on that topic would be helpful.

Justin, Steve again. On the latter part of your question, it really depends upon the car types and the traffic lanes. I think it's really dangerous to try to make broad generalizations about the railcar market. Our analysis gets much more in individual markets and individual car types and projecting growth in demand from that standpoint. So I think as the rail rods become more fluid, it just simply creates greater opportunity for them to grow their business and we certainly share in that success.

Okay. And then on the growth versus replacement and in terms of the order book, do you have a sense for the mix between the two?

Yes. And this is just a rough number. We might say two-thirds to three-quarters of the orders were growth. A lot of that being driven by the investment in petrochemical complexes down in the Gulf Coast and of course from a replacement standpoint, we have been projecting a long-term meaningful replacement cycle for railcars as well. Automotive would be another area of real growth as well. It's quite an interesting story that's going on there. And of course with more production being moved to Mexico and assembly to Mexico, that changes some of the logistics and requires longer cycle times for railcars, which implies more railcars as well.

Okay. That's very helpful. Thanks so much for the time.

And we will go ahead and take our next question from Art Hatfield with Raymond James. Please go ahead. Your line is open.

Good morning. Thank you, everyone. I kind of wanted to follow-up on this whole longer-term demand thing as we see a continued secular decline in coal volumes. Steve, have you guys looked at it from that perspective that if we see more of a stronger secular decline in coal volumes how that may impact network velocity within those specific claims and how that may change the dynamics for railcar turns within the industry?

Well, that's a really good question. I don't know that I have ever really looked at it from that perspective. Coal, if you look at the history of railcar orders, there has always been a major car type or two that has been the leading driver for demand at that time. As I mentioned in my remarks, the energy sector pushed us out of the 2008 to 2010 recession, prior to that we had the ethanol boom. You can go back to other pockets in time. We have had exceptionally strong intermodal production, auto racks, you can go back even further into the coal. So we have had rotation over a period of time from car type to car type as market shift under themselves. We don't see any demand currently for coal. For new coal cars we are working effectively to keep our existing coal assets utilized, but I doubt coal will be leading any new car production anytime soon.

My second question is more of a technical question, probably for James. When you guys report the $6.9 billion in revenue inherent in the backlog, for longer-term orders that may adjust, whether it's more to a specific car type that hasn't been defined as yet or maybe potential adjustments for price, how do you deal with that in the current numbers? Do you take a range and hit the midpoint of that? Or do you try and take out some of the downside and focus on the lower end of ranges on those potential adjustments?

Yes. Art, this is James. I will try to tackle that one for you. Our backlog will adjust a little bit as we get closer to production of those specific cars. The longer-term contracts that generally have a certain car type that we put into the backlog as a default. If that were to shift with quite a bit of advance notice then we will shift the pricing of what's in the backlog. So with these kind of numbers you don't see a whole lot of moving around quarter-to-quarter. Normally a price changes due to componentry, as Steve mentioned those kinds of things, you will see a little bit of shifting. But primarily, those longer term deals have a set car type for now. And they will shift as we get a little bit closer to them.

Outside of steel, have there been any of those other types of adjustments in the most recent quarters?

I don't think we can get real specific but if as get closer to producing those specific cars, you will see some tweaks around the margin. But at these levels, it's not going to move the needle a whole lot at these types of $6.9 billion backlog.

Okay. Fair enough. That's very helpful. Thanks for the time this morning.

Thanks, Art.

And we will go ahead and take our next question from Matt Brooklier with Longbow Research. Please go ahead. Your line is open.

Hi. Thanks. Good morning. Steve, another couple of regulation questions for you. First one, do you have a sense for when the retrofit work would start on the DOT-111 that you have in current service?

Sure. We are currently retrofitting cars for our own lease fleet as we speak today, Matt.

And I know there's a lot of moving parts to it, but any sense as to, I guess, the cadence of work going forward?

Yes. We are really proving that out right now. It's too early to really give you much projection there.

Okay. Understood. And then with respect to replacement orders, you talked to having conversations with your customers. This is another timing question. And again I realize it's a tough one. But I am trying to get a sense for the potential timing of when we start to see these replacement orders. We know there's a very large fleet of DOT-111 that need to get either retrofitted or replaced in the next two-and-a-half years. I am just trying to get my arms around when those potential orders could hit? If it's sometime this year? Or if we think it's more of a 2016 event?

Yes. A good question, Matt. I am not real certain of when these are going to start to materialize. We have built DOT-117 train cars and we are currently building DOT-117 train cars. And the discussion we are having with our customers are really as much driven by the price of crude oil as it is HM-251. And so that's an important variable that goes into their business assessments that would be very difficult for me to project here on this call. But I think this will start to unfold slowly and certainly you look to the bigger fleet operators and the bigger owners of these cars to make some moves here, certainly in the near future.

Okay. Good color. I appreciate the time.

And we will take our next question from Aleks Kotsubey with Brookfield. Please go ahead. Your line is open.

Hi guys. It's actually Angelo, filling in for Aleks. But I just want to say, nice quarter and I did notice that LTV, with regards to the wholly-owned fleet is actually decreasing. So just want to see if you could put a little bit more meat around what is that capacity there, assuming a more normal 75% kind of industry level? And then just also following that up with given the cash flow back half, the debt capacity at the corporate level, what just run though for us the priorities where you see on the M&A side? And then with regards to buybacks, what else could you do there? You just have an extreme amount of liquidity, in our view.

Angelo. This is James. Thank you. There is a lot there. I will try to tackle those in two pieces. As far as the LTV is concerned, I would really link into two things. One, we haven't done long-term borrowings on the fleet. We made a bit of a warehouse advance but that was after paying down and even larger piece of the principle on TRL VI. Secondly, we have scheduled amortization on our debt. And so while the fleet has grown, our unencumbered fleet has grown and our debt has come down. So, it's as simple as continuing to delver that side of the balance sheet at this time. As far as the corporate balance sheet, I don't think we would have opine on specific debt capacity. We have quite a bit of liquidity. We do feel we have good access to the capital markets. And I think the priorities would be unchanged from what we talked about before. Tim had certainly talked about and we all have, looking for at good valuations within our portfolio of businesses, continuing to grow our leasing platform and there's a lot of different ways we can do that. And then you have certainly seen a return of capital to shareholders through share repurchases and increased dividends this year. So I think, as you have heard from us before on calls that we have had. It's a very broad-based capital investment plan, that the executive team and the Board of Directors visit on very regularly.

All right, I appreciate that. But just getting back to, I guess, the piece I was more hitting on is, I understand you are still delevering and you have the amortization in that wholly-owned lease fleet, but if I look at a lot of your comps, they are running 75% LTV across that platform and if our numbers are right, as per our analysis, you are sub-40%. So it just seems that there's quite a bit of debt capacity at that level.

Yes. I think we recognize there's liquidity and capacity there. We have had higher levers level in the past and we have been comfortable with that. But at this time, delevering and not baring those interest expense cost within our P&L makes more sense for us. We know that's available to us.

Okay. Thank you.

Thank you, Angelo.

And we will go ahead and take our next question from Cleo Zagrean with Macquarie Capital. Please go ahead. Your line is open.

Good morning. Thank you. I have a few questions and thank you for your patience. To pick up on your earlier statement about two-thirds to three-fourths of growth coming from petchem, can you help us see what you see in terms of next level of growth there in types of customers? Is it now mostly industrial shippers rather than a leasing company? What could follow in this petchem wave?

Cleo, this is Steve. Let me just first of all clarify my response. Well, I think the question that was asked is, what percentage of the orders we received during the quarter were associated with growth versus replacement. I think my answer was somewhere between two-thirds and three-quarters of those orders were related to growth. With respect to growth, some of those elements of growth are related to the petrochemical sector. Not all of that growth is related to petrochemicals. The amount of investment the tens of billions that are being expensed for capacity expansion in the Gulf Coast, I think, will continue to be a catalyst for railcar demand. Those customers there are typically large petrochemical producers, both domestic and foreign. So we are looking to buy and lease railcars to support their expanded operations, which includes both covered hoppers for resins as well as train cars for refined products and other specialty chemicals that they will produce. Automotive has been a very clear driver for growth. As we have mentioned, extended auto racks. The beauty of an auto rack is when an auto rack is ordered, there is also a flat car that goes along with it. So every time we hear about an auto rack order, it's really almost two-for-one from that standpoint. And we are seeing some of the specialty grains areas also continue to expand requiring new types of equipment that's suited for those capacity for those commodity densities. So those are some of the areas for growth. A lot of those are industrial shippers as a customer base and other leasing companies, obviously are looking for opportunities to invest in those sectors too.

Thank you. My next question relates to the backlog yesterday on GATX call. We heard their assessment that still a lot of the tank cars in the backlog were related to flammable liquids, I think they put out a number of 80%, but then quickly said, but don't hold me to that, probably those are shifting, maybe some orders are been pushed out, replaced with other types of cars. Can you tell us what you see in your order book in that regard?

Yes. This is Steve again, Cleo. I am not sure how GATX would have insight into order backlogs, other than anecdotal. But I think we have said several times that the tank cars destined for crude oil comprise a very nominal portion of our backlog and most are scheduled for delivery yet this year and that remains consistent. Right now we are seeing only a few inquiries for crude oil cars. These are in discussions with customers looking at alternatives with respect to DOT-117. So I think the crude oil backlog, as far as Trinity is concerned, is not an area of concern for us and we are very comfortable that those orders are solid and those customers are prepared to take their equipment.

Okay. My next question relates to lease fleet. Can you please remind us just broadly maybe the mix of cars that's in there? And what you are seeing for pricing and extensions at this time?

Yes. Cleo, this is Steve again. We don't really give detailed breakouts of portfolio composition. And I think we have said in our comments, we are seeing strong lease renewal rate increases across our portfolio and have had very good experience in these renewals with our customers. The fleet continues to be highly utilized and I would say that's the case for most of the lease fleets in North America.

Okay. And again many thanks for your patience and my last question relates to institutional invested interest. Could you help us get a big picture in our minds about the mix of earnings related to this customer segment? Do see them coming and I know it's to a great extent accounting, but given just what they are willing to take and what you are willing to offer, should we see earnings related to the sales number mostly from manufacturing, for manufacturing type earnings or sales from your leased backlog or leased fleet, more again that would be harder for us to assess?

Cleo, this is James. I think you will certainly see a mix between new railcar production with leases that are sold directly to institutional investors as well as out of our lease fleet. We have given you the level of proceeds we expect from the lease fleet. We obviously, as you well know, have a little over $600 million, $650 million remaining on the $2 billion Element strategic alliance. We said, that would be roughly evenly split between rail and leasing. As far as the others, we have not given a real firm breakdown there. And we have said, the investors, as we talk to them and the portfolio of cars we have available and that's going to be a quarter-to-quarter, year-to-year type of conversation. We look at our rail investment platform as a long-term strategy for the company and we are starting to see the benefits of that with the multiple relationships that we have.

Okay. And then in terms of maybe an early peek into next year, would you say that next year will be compatible in terms of interest with this, like a steady flow or materially different in any way from 2015?

I don't think, Cleo, again this is James, we get specific on giving any guidance for 2016. But as I said, we do expect earnings from leased railcar sales to be a normal part of our earnings model going forward.

Many thanks.

Thank you.

And we will go ahead and take our next question from Steve Barker with KeyBanc Capital. Please go ahead. Your line is open.

Thanks. Good morning, everybody.

Good morning.

There's been a lot of pressure on industrial multiples in the public market recently. Can you talk what you are seeing in the private market in terms of the pipeline and how those conversations may have changed?

Steve, this is James. You are referring in the M&A world?

Yes. Exactly.

Yes. I don't think we comment too much on what we seeing there. We have been able to put several acquisitions into the company over the last couple of years, largest one being about this time last year with Meyer, pleased with that integration as we have had said. We have had divestitures and acquisitions this year, especially within the construction products business. So I don't think we give a lot of insight in terms of what we are seeing. It's going to totally vary, market-to-market and opportunity-to-opportunity. But we continue to see opportunities at good valuations.

Is the slate full for the pipeline? Are you engaged in more conversations than you were six months go? Any way to firm that up?

Well, this is Tim. We are just constantly engaged in conversations with people who have had interest of either buying or selling businesses. We have an ongoing dialogue with a number of different opportunities and we have always been that way and I think that will always exist and many times we will be talking with somebody that we have had a multi-year relationship with or an interest in a particular business. And then we just have to wait for the right timing to come along until we think it fits with our internal conditions as well as the external conditions.

Well, Tim, I guess to that point, we have already seen talk about an extended railcar cycle and you obviously have great cash flow visibility from the backlog right now. When the Board meets, do the discussions lean towards cycle concerns at all? Or is it really a capital allocation strategy to stabilize EBITDA and EPS or GAAP earnings going forward?

We have a variety of discussion with our Board. We talk about numerous topics and it really just depends on the opportunity or the challenge or issue that we are confronted with at the time. So we engage with our Board regularly and have, I wouldn't say that there is one type of conversation that we have with our Board or that we are currently having with our Board.

Okay. And James, back to the question about leverage on the lease fleet, are you limited to use of capital in terms of leverage on the lease fleet? Or I guess said another way, could you use the lease fleet as collateral to raise funds for other purposes?

Steve, this is James. When we raise capital through securing railcars whether in the warehouse or on long-term financing, it's corporate cash. So the cash is very fungible and can be used for a variety of purposes. There is not limitations in that respect.

All right. Thanks very much.

Thank you, Steve.

And we will go ahead and take our next question from Mike Baudendistel with Stifel. Please go ahead. Your line is open.

Thank you. Just wanted to get your philosophy on just number of deliveries you expect the next several quarters with backlogs being as long as they are. I mean would you expect that they would stay in the sort of 8,500 unit per quarter range? Or given that you think the cycle is going to be extended, would you increase capacity further to get more out the door?

Mike, this is Steve. I have given you guidance for the balance of the year which takes us to 33,000 and 34,500 cars, which implies a very similar run rate in the second half to the first half, give or take a few hundred railcars. And that's certainly where we see our production footprint position, at least to move into first part of 2016.

Okay. And then related to that, as far as third-party finance institutions where you may have Element-like deals, should we expect those to be announcements to be forthcoming during the back half of this year?

Well, certainly Mike, as we continue to work on these things and build the relationships. When we come to something formative, really substantial engagements with these financial institutions, then we certainly do make an announcement and share those with the public and will so as we move forward.

Great. That's all I have. Thank you.

And we will go ahead and take our next question from Bill Baldwin with Baldwin Anthony Securities. Please go ahead. Your line is open.

Good morning.

Good morning.

Thank you for your time. A couple of items. Steve, can you give us some color on how the ramp up is going in Cartersville and how that's progressing?

Sure. The ramp up at Cartersville is going very well. We were successful in hiring a number of the management team that have been with us prior to the closing of facility. We have done very good in our labor hiring. So I am pleased with what's going on at that facility. And that facility is a great example of the type of operating flexibility that we have throughout our platform. And we are looking to do some other things at that facility as the market may dictate. And when I get questions about additional capacity, I think we also have the ability to take Cartersville a little further than where it's going right now. So that's been a really great facility for us.

So it's up and running and producing cars and at a pretty competitive rate, I mean pretty competitive efficiency?

It has, Bill, yes.

Very good, very good. And secondly, I haven't talked in a while about this, but can you talk about the dynamics of what's going on with your railcar production operations in Mexico and how important that is to your overall rail manufacturing business?

Sure. Well, we have had great success in our Mexico production platform. We have seen great operating flexibility and shifting from other Trinity products to tank cars and our fleet car facility down there is operating at peak levels. So we have demonstrated to a greater efficiency in moving materials across the border and handling all of the issues associated with importation and exportation there. And our network is operating very efficiently. So it's a very important part of our production footprint and one that's operating at a very effective level.

Is this supply about the same percentage of your railcars today as it did a few years ago? Or how has that trended?

It fluctuates depending upon product mix. So it's probably a little greater portion of our cars right now are coming out of Mexico. But that can shift, again, depending upon product mix.

Do you make just certain car types down there, Steve? Or can you pretty much make your broad product line in Mexico?

Great question, Bill. If you had asked that a few years ago, we were limited on the number of product types and railcar types we can make there. I would tell you that we feel confident being able to make any of the railcars in our facilities in Mexico today. It is really one of the success stories in the growth and development of our Mexico footprint.

Very good. You guys have done an outstanding job.

Thank you, Bill.

And that does conclude our Q&A session for today. I will now hand the program back over to Gail for any additional or closing remarks.

Thank you. That concludes today's conference call. A replay of this call will be available after 1:00 Eastern Standard Time today through midnight on July 31. The access number is 402-220-1346. 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. And thank you for joining us this morning.

And that does conclude today's program. We like to thank you for your participation. Have a wonderful day and you may disconnect at anytime.