Trinity Industries, Inc. (TRN) Q4 2015 Earnings Report, Transcript and Summary

Good day, and welcome to the Trinity Industries, Inc. Fourth Quarter Results Conference Call. Currently all phone lines are in a listen-only mode. Later, there'll be an opportunity to ask questions during a question-and-answer session. Please be advised, today's program maybe recorded. 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. It is now my pleasure to turn the program over to Ms. Gail Peck. You may begin. Gail M. Peck - Treasurer & Vice President of Finance: Thank you, Aaron. Good morning, everyone. Welcome to the Trinity Industries' fourth quarter 2015 results conference call. I'm Gail Peck, Vice President, Finance and Treasurer of Trinity. Thank you for joining us today. Similar to the format we have used on our recent earnings call, we will begin with an update on the Highway Products 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. S. Theis Rice - Chief Legal Officer & Senior Vice President: Thank you, Gail, and good morning, everyone. In my comments today, I will refer to Trinity Industries and Trinity Highway Products together as Trinity. As previously reported, Trinity has appealed to the Fifth Circuit, the June 2015 False Claims Act judgment involving the ET Plus guardrail end terminal system. We will file our opening brief next month with full briefing by the parties to follow. We expect the Fifth Circuit will not issue a ruling in this case earlier than late 2016. I would like to reiterate a few points related to this appeal. First, Trinity believes strongly in its appellate arguments, we are confident that no fraud was committed and we believe there are strong legal grounds for the Fifth Circuit to overturn the judgment. Second, we stand 100% behind our product, the ET Plus System, and we are selling it today. In the fall of 2015 after completing what the Federal Highway Administration termed the most thorough evaluation of a roadside device ever conducted, the FHWA reconfirmed yet again that the ET Plus Systems in use today, on the nation's roadways meet all federal testing criteria and performance evaluation standards. And that the system has been and remains fully eligible for Federal-aid reimbursement. We have also previously reported that the Commonwealth of Virginia has intervened in the state court action under the Virginia Fraud Against Taxpayers Act filed by the same party who filed the Federal False Claims Act case. In an order entered by the Virginia court on January 27, 2016, the commonwealth's case was stayed pending resolution of the Federal False Claims Act case currently on appeal. The same party who filed the Federal False Claims Act case and the Virginia case, has also filed six other state False Claims Act cases under each states law. Each of these six states has declined to intervene in or join the case filed in their state and all six cases are currently stayed. Please refer to www.etplusfacts.com/virginia for more information on the Virginia litigation. Our 2015 10-K will be filed today. In Note 18 of the 10-K, we provide additional information on the foregoing and other company legal matters. For information and details on the company's positions on these and related issues, please refer to www.etplusfacts.com. I would like to conclude my comments today by sharing a few very important facts and making a brief statement. For over 80 years, Trinity has operated with the highest level of integrity. Our reputation for honesty and ethical business practices has beyond question and underscores the rock solid foundation on which we have built the market leading positions we earned and maintained year after year. Trinity's Highway Products business unit has played an integral role in bringing innovative life-saving products to market. We have aligned our sales with world-class researchers and engineers, who share our vision for highway safety. We employed dedicated workers, who manufacture products like the ET Plus System to the highest levels of craftsmanship. And we deliver market-leading products that meet rigorous standards. I believe accusations of fraud against Trinity are unwarranted and erroneous, and we will pursue every legal avenue to reverse the False Claims Act judgment. Thank you. I will now turn the call over to Tim. Timothy R. Wallace - Chairman, President & Chief Executive Officer: Thank you, Theis, and good morning, everyone. I'm very pleased with Trinity's financial performance during 2015. For the third straight year, we established records for revenues, net income and earnings per share. Our business has created value by leveraging their combined expertise, competencies, and manufacturing capacity to produce high-quality products for broad range of industrial market. The most recent quarter completes an impressive five-year period in which our company has demonstrated a solid track record of growth. During that five-year time period, revenues more than tripled, going from $1.9 billion to $6.4 billion. In 2015, earnings per share and net income were 11 times greater than in 2010. From 2010 to 2015, net income increased from $67 million to $797 million and earnings per share grew from $0.43 per share to $5.08 per share. Our financial performance during the last five years is a great example of the potential we have as a company. Our company is on a transformational journey and has made significant progress during the past five years towards our vision of being a premier diversified industrial company. We've added new businesses to our portfolio with long-term growth potential and we have invested in our manufacturing footprint to increase efficiency and flexibility. Pre-tax profit from our Railcar Leasing and Management Services operations has more than tripled since 2010. We have also enhanced our company's earnings and cash flow through the development of the RIV platform. Our guidance for 2016 reflects the weakening in the industrial economy that again broadly impacting our businesses late last summer. As I stated in our third quarter conference call, most of the industrial companies we serve are continuing to take wait and see approach to capital investment. At this time, it continues to be difficult to predict when demand will improve. Our 2016 earnings guidance assumes that the economic conditions will continue throughout the year. In this environment, we're placing a high priority on cost containment and various initiatives to enhance our performance. We will continue to reposition and streamline our manufacturing operations as business conditions fluctuate. Over my 40-year career at Trinity, I participated in a number of business cycles. Our business leaders have a proven track record for balancing staffing levels and all types of markets. I'm confident, our businesses will respond to the shift in demand for our products. Historically, we have made strategic investments during downturn. Our liquidity position and balance sheet strength have never been better. In summary, I'm extremely proud of our team's accomplishments during 2015 and throughout this up cycle. Trinity's corporate business model is built on the premise that we enrich companies we own by leveraging to strengths contained within our enterprise as a whole. Trinity's employees do a fabulous job of collaborating as they manufacture high-quality products for our customers, while creating value for our shareholders. Our operating and financial flexibility enabled us to pursue a variety of opportunities, as well as successfully confront market challenges. I'm confident that Trinity will emerge from a current period of uncertainty as a stronger company. Our goal is to continually improve upon the superior products and services we provide to our customers and the returns we generate for our shareholders. I'll now turn it over to Bill for his comments. William A. McWhirter - Group President-Construction Products & Senior VP: Thank you, Tim, and good morning, everyone. The Barge Group's fourth quarter performance reflects several factors. The competitive dynamics occurring within the industry, a less favorable product mix, and the closure of one of our facilities. Our Barge team is doing an outstanding job of maintaining production efficiencies and reducing costs as we align our production footprint with current demand. The Barge Group received orders for $190 million during the quarter resulting in a backlog of $416 million at the end of December. Replacement needs for dry cargo barges drove fourth quarter orders. Current inquiry levels indicate lower barge demand and subsequently lower manufacturing levels in the near-term when compared to the past few years. The investments in our Barge business in recent years have increased this group's production efficiencies and positioned our Barge team to respond effectively to changes in market demand. We are prepared to make additional adjustments to our manufacturing footprint as needed. The Construction Products Group improved quarterly profitability year-over-year despite the slowdown that typically takes place during the winter months. At the end of the year, the Federal Government passed a five-year $305 billion funding bill for highways and other related transit programs. The FAST Act authorizes funding through 2021 and will provide much needed stability for public agencies charged with planning transportation projects. Our Highway Products business anticipates an improvement in market demand over the next few years. Demand for Aggregates remains robust in the markets we serve in the South Western United States, repositioning our Construction Products business during the last few years and continuing to expand our Aggregates business has benefited this group's overall performance. We are committed to finding opportunities to expand our product portfolio and grow our market positions. The Energy Equipment Group reported another strong quarter and ended the year with record revenues and operating profit. The wind tower business continues to deliver solid results. At the end of the fourth quarter, the wind tower backlog totaled $371 million, most of which will be delivered in 2016. This level of production essentially fills the manufacturing space currently dedicated to this business. At the end of 2015, the Federal Government passed a five-year spending bill that includes a tax incentive for the wind industry through 2019. In recent years, legislation for wind power tax incentives was unpredictable and short in duration, causing volatility in the wind industry. The multi-year federal incentive provides developers and their supply-chain partners the necessary time needed to plan and develop wind projects. We are prepared to adjust our capacity should demand increase significantly. The current market for utility structures remains highly competitive and continues to experience some capacity rationalization. We expect revenues for this business to decline further in 2016. Over the long-term, investment forecast are positive. The recently passed federal tax incentive for wind power is expected to drive the development of additional transmission infrastructure to bring new wind power to market. In closing, our business is responding effectively to changing demand conditions. We believe these businesses have significant growth potential as our long-term outlook for energy and infrastructure investment in North America remains positive. And now, I'll turn the presentation over to Steve.

Thank you, Bill, and good morning. The TrinityRail team completed another record quarter in terms of railcar deliveries, profit and operating margin, as well as its second consecutive year of record revenues, profit and railcar deliveries. In 2015, our Rail Group achieved a 20.9% operating profit margin on deliveries of 34,295 railcars. Our Leasing Group grew year-over-year revenue and profit from operations by 11% and 15%, respectively, while generating significant income and cash flow from the sales of these railcars through the railcar investment vehicle platform. TrinityRail's outstanding performance reflects the strength of our integrated railcar manufacturing, leasing, and services business model. Our operating and financial flexibility and leading market position give us confidence, we can effectively adapt to rapidly changing market conditions. The weakness in the industrial sector of the economy, along with declining railcar loadings, improved rail cycle times, and increasing numbers of railcars and storage is creating a challenging set of market dynamics. We are aligning our production footprint to a lower rate of production, while meeting our scheduled railcar backlog delivery requirements. Our Rail Group received 2,455 orders during the fourth quarter. The orders we receive represent a mix of tank cars, covered hoppers, flat cars, and autoracks. Industry orders for the fourth quarter affirmed a weaker demand trend that began in the third quarter. In total, more than 53,000 orders were placed in 2015, a healthy level by historical standards. However, industry orders in the second half of 2015 declined approximately 50% compared to the level of orders in the first half of 2015, indicating a significant shift toward a weakening demand trend. First quarter 2016 inquiry levels continue at a weakened level. We are seeing pockets of demand, however, the level of automotive related activity remains favorable. The outlook of new petrochemical capacity coming online during the next few years is positive. We remain optimistic regarding long-term railcar demand fundamentals as third-party independent forecast project industry deliveries in 2016 and 2017 above historical averages, albeit below the strong 2015 levels. During the fourth quarter, TrinityRail delivered 8,835 railcars, a favorable product mix, extended production runs, high levels of productivity, and declining material costs contributed to a record 23.6% operating margin during the quarter for our Rail Group. I'm very proud of our team's ability to maximize operational performance on a record level of railcar deliveries. Our backlog of approximately 49,000 railcars valued at $5.4 billion at the end of 2015 provides good visibility for 2016 production planning. Our current expectations for deliveries in 2016 is approximately 27,000 railcars, of which approximately 90% are already in our backlog. We project operating margins of approximately 15% for 2016, reflecting a significant shift in our planned 2016 product mix, weak pricing for orders taken in Q4 2015 scheduled for production in 2016, and projected pricing for our unsold production backlog, as well as cost and efficiencies associated with reducing our production footprint to align with current demand. I am confident our operations team will execute in this environment with the same level of skill that produced record results. Our projections assume no significant improvement in market conditions in 2016. We're closely monitoring the industry's implementation of HM-251 tank car regulations. Several factors including the continued low price of crude oil, the reduced utilization of railcars transporting crude oil and the extended timeline for the mandated schedule for modifications have caused customers to postpone decisions pertaining to modifying railcars, use inflammable commodity service. As we have indicated previously, our first priority is to ensure regulatory compliance within our lease railcar fleet. Modifications to our lease fleet are currently in process. I am pleased with the flexibility of our expanded maintenance service facilities, which are making HM-251 modifications, while also providing regulatory compliance services for our owned and managed lease fleets. We continued to engage in dialogues with our customers, a number of whom appeared to be finalizing the fleet modification plans. The Leasing Group's performance during 2015 was also impressive, reflecting solid railcar market fundamentals during the year. High lease fleet utilization, favorable lease rate pricing, and new lease fleet additions contributed to annual revenue and profit from operations growth. The leasing company ended the year with 97.7% utilization in the total of 76,765 railcars in our wholly-owned and partially-owned lease fleets. Our total managed fleet including our wholly-owned, partially-owned, and investor-owned fleets now exceeds 94,800 railcars. We expect our committed lease railcar backlog of $1.5 billion to generate further growth of our lease portfolio. Lease expirations in 2016 reflect a broad diversification of our lease fleet, as roughly 15% of our total portfolio remains up for renewal in 2016. The weaker market environment is placing pressure on these rates and may adversely impact lease fleet utilization. During the last several years, we sold a significant number of lease railcars through the railcar investment vehicle platform. These sales demonstrate the value we have created in our leasing business and have contributed significantly to Trinity's financial flexibility and earnings performance. Railcar investment vehicles, or RIVs, are discrete investments in lease railcars, developed and managed by TrinityRail, for institutional investors, who desire to invest capital on lease railcars. Lease railcars are viewed by institutional investors as stable, hard asset investments with an inflationary hedge component. We continue to engage with institutional investors, interested to invest in lease railcars. Through scale of our leasing platform and our lease origination capabilities combined with our cradle-to-grave asset expertise attracts institutional investors to the RIV platform. To meet the specific investment objectives of varied investors, Trinity develops diversified lease railcar portfolios by selecting lease railcars from our wholly-owned lease portfolio, or from railcars and our lease order backlog. Further, Trinity manages the asset on behalf of the investors, providing administrative and maintenance services. We have successfully developed the RIV platform over the last 10 years comprised of over $5 billion in lease railcars at original sale prices. The RIV platform provides TrinityRail financial capacity to enhance our lease origination capabilities and lease portfolio funding diversification and provides Trinity with additional financial flexibility. We expect to grow this platform by facilitating additional RIVs for institutional investors. During 2016, we currently plan to expand the RIV platform by selling approximately $500 million of lease railcars to institutional investors. We have inquiries from institutional investors to acquire railcars through the RIV platform that exceeds $500 million, as such we will evaluate the possibility of additional lease railcar sales through the RIV platform during 2016 as we balance investment demand from institutional investors with the size of our wholly-owned lease fleet. In summary, the Rail Group and Leasing and Management Services Group delivered exceptional results during the fourth quarter and throughout 2015. As we move into 2016, we are focused on controlling cost, maximizing our production efficiency on reduced production levels, and maintaining high fleet utilization. We will continue to build out the RIV platform. Our operating and financial flexibility continue to differentiate TrinityRail, enhancing our position as a premier provider of railcar products and services. I will now turn it over to James for his remarks. James E. Perry - Chief Financial Officer & Senior Vice President: Thank you, Steve, and good morning, everyone. Yesterday, we announced our results for the fourth quarter and full-year 2015. For the quarter, the company reported earnings per share of $1.30 and revenues of $1.55 billion, compared to EPS and revenues of $0.86 and $1.66 billion, respectively for the same period last year. During the fourth quarter, our EPS reflected strong operating performance by our businesses and the continued expansion of the railcar investment vehicle platform, which we refer to as the RIV platform. For the full year, we reported revenues of $6.39 billion and EPS of $5.08, both records for Trinity. We ended the year with $871 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 year, our liquidity position was more than $2.1 billion. During the fourth quarter, we invested $51 million in capital expenditures across the number of our manufacturing businesses and at the corporate level. For the full year, this figure totaled $196 million. During the fourth quarter, we invested approximately $338 million in lease railcar additions to our wholly-owned lease fleet. This number included new originations as well as some secondary market purchases. This investment was offset by $395 million of lease railcar sales from our lease fleet. I would like to add as a background on our RIV platform that Steve provided. The RIV platform provides Trinity with a level of financial flexibility that is unique among diversified industrial companies. The cash flow generated from this platform provides flexibility to reinvest in our railcar leasing and management services platform. Our portfolio of diversified industrial businesses and in other opportunities that enhanced shareholder returns. Expanding this platform is a core element of our strategy, with the associated earnings and cash flows enhancing our financial flexibility. In addition to financial flexibility, we garner other benefits when we sell a lease railcar to the RIV platform. When we do so, we maintain the management of the railcar. This generates recurring management fees for Trinity that are expected to grow as we continue to expand the platform. This management role allows us to maintain closed relationships with the end users of the railcars, giving us real time information on the markets we serve and our customer's ongoing needs. As managers we also coordinate the maintenance of the railcars through our maintenance facilities and facilities owned by third parties. The accounting treatment for sales of lease railcars can be complex and difficult for our investors to understand. When railcars are manufactured by Trinity and sold to our leasing company, they're transferred at market pricing levels. The revenue and profit are recorded in the Rail Group. When we consolidate Trinity's financial statements, the revenue from the railcar sale is eliminated and the profit is deferred. If a railcar is later sold from our lease fleet to an RIV or another third party, the remaining deferred profit on our balance sheet for particular railcar is recognized as income at that time. In addition, we recognized the gain on the sale as compared to the book value of the railcar. There is another accounting treatment that applies to the revenue recognition for railcar sold with leases. This is determined by how long the railcar was in the lease fleet. For railcars that have been in our lease fleet for one year or less, revenues recognized in the leasing group. For railcars in the lease fleet for more than one year, no revenues recognized. The profit on the sale of the lease railcar is fully recognized, no matter what the length of time the railcar was in our fleet. During the fourth quarter, we sold $470 million of lease railcars to the RIV platform, including $85 million sold directly from the Rail Group. For the full year, we sold approximately $1.1 billion of lease railcars to the RIV platform. Over the last decade, we've placed approximately $5 billion of lease railcars at the time of the sale to various RIVs. In 2015, we sold almost $1.2 billion of lease railcars to RIVs and other third parties. Of this total, $260 million was sold directly from our manufacturing business. This figure was included in the Rail Group's revenue. Another $405 million worth of railcars were sold from the lease fleet and has only been in the fleet for one year or less, so we're including in the Leasing Group's revenues. The final $515 million of lease railcar sales where railcars that have been in the fleet for more than one year, so no revenue was booked. These proceeds were shown on our cash flow statement. Now, I will move to our guidance for 2016. This year is expected to be more challenging in terms of the demand in the markets we serve. Historically, we achieve high levels of operating leverage as our volumes rise in the strong economic cycle. The last few years are prime example of our ability to achieve record earnings during the solid industrial demand environment. On the other hand, we historically lose some of the operating leverage and efficiencies we gained during the up cycle as we begin the cycle down. When this occurs, we're focused on preserving as much of the momentum and benefits that we gain from the previously strong demand environment. We have costs associated with the shifts in our product mix and rationalization of our footprint. As a result, our margins are impacted and it's difficult to precisely predict how much. Our businesses have been highly focused on responding to the current economic conditions and have been taking the appropriate steps. In our October conference call, we mentioned that we're seeing a slowdown in the industrial markets we serve and thus hesitancy from our customers to place orders. This trend has continued into early 2016. When we experienced several months of persistent economic conditions, we incorporate that trend into our guidance and provide our insight accordingly. It's difficult for us to provide guidance in such a challenging environment. At this time, our guidance does not assume that economic conditions improve in 2016. In our press release yesterday, we provided EPS guidance of $2 to $2.40 in 2016. This represents several factors. Our current firm backlogs, expectations for our operations against the weak industrial outlook, and a lower level of lease railcar sales to the RIV platform. We expect our Rail Group to deliver approximately 27,000 railcars in 2016. This is a decrease of over 7,000 railcars from 2015. We expect revenues in the Rail Group of approximately $3.1 billion, this is a decrease of almost $1.4 billion year-over-year. Our operating leverage will decline due to the lower level of production and certain costs associated with aligning our manufacturing footprint with demand, resulting in an operating margin of approximately 15%. In 2016, we expect to eliminate approximately $1.1 billion of revenues related to railcar sales for our leasing company and defer approximately $215 million of operating profit. These revenue eliminations and profit deferrals result from the accounting treatment I just reviewed for sales for our manufacturing company to our leasing company. In 2016, we expect our Leasing Group to record operating revenues excluding lease railcar sales of approximately $700 million with profit from operations of approximately $300 million. In 2016, our forecast includes approximately $500 million of sales of lease railcars to RIVs with a profit of approximately $100 million. As these sales are dynamic, we've yet to identify which cars will be sold to the RIVs, so we cannot provide guidance as to the group in which the transaction will be recorded for the accounting treatment related to the revenues and profits. Our guidance at this time assumes the sales occurred from the lease fleet. The demand for lease railcars among institutional investors remains high. So, we may have the opportunity for a higher level of lease railcar sales this year, as we balanced the strong level of demand with our owned ownership of lease assets and market demand for new lease railcars. We expect our Energy Equipment Group to have 2016 revenues of approximately $1 billion with an operating margin of approximately 12%. We are pleased with the $371 million backlog we have in our wind towers business, which essentially fills our production facilities dedicated to that product line during 2016. We expect our Construction Products Group to report 2016 revenues of approximately $560 million with an operating margin of approximately 11%. As Bill mentioned, the country now has a federal highway build, which provides some longer-term benefits to this group as projects began. We continue to be pleased with the performance and opportunities within our Aggregates businesses. Our Inland Barge Group is expected to generate revenues of approximately $445 million in 2016 with an operating margin of approximately 10%. Low commodity prices and the strong U.S. dollar have reduced demand for products transported in barges. Combining these factors with lower steel prices, we expect revenues and profits in this group to be lower than in the last few years. We continue to monitor demand and line our production footprint accordingly in this group as we do in all of our businesses. Our annual EPS guidance also includes the following assumptions. A tax rate of approximately 36%, corporate expenses of $130 million to $150 million, which include ongoing litigation-related expenses. The deduction of approximately $20 million of non-controlling earnings due to our partial ownership in TRIP and RIV 2013. A reduction of approximately $0.07 per share due to the two-class method of accounting compared to calculating Trinity's EPS directly from the face of the income statement. And no dilution from the convertible notes based on the current stock price. As it pertains to cash flow, we expect the annual net cash investment in railcars added to our lease fleet to be approximately $385 million in 2016. Our guidance incorporates the guidance we discussed for 2016 from the sales of leased railcars from the Leasing Group. Full year manufacturing and corporate capital expenditure for 2016 are expected to be between $150 million and $200 million. Our share repurchases in 2015 totaled $115 million with no repurchases occurring during the fourth quarter. In December, the board authorized a $250 million share repurchase program through 2017 and we expect to be in the market repurchasing shares this year. At this time, we expect for our total cash flow to be positive in 2016. In conclusion, we entered this economic down cycle with the strong balance sheet and $2.1 billion of liquidity. We continue to seek organic and acquisition investment opportunities that enhance shareholder value. We are confident that Trinity will respond appropriately to the weak industrial markets this year as we continue to pursue our vision to be a premier industrial diversified company. Our operator will now prepare us for the question-and-answer session.

Certainly. And we can take our first question from Matt Elkott with Cowen & Company. Your line is open. Matt Elkott - Cowen & Co. LLC: Good morning. Thank you for taking my question Timothy R. Wallace - Chairman, President & Chief Executive Officer: Good morning. Matt Elkott - Cowen & Co. LLC: I want you guys to help me understand, dig deeper into the guidance here. I know you guided for a 20% decline in deliveries in 2016, which is I don't think anyone was expecting flat deliveries or up deliveries, maybe slightly worse than expectation, but it's in line with the industry. But your margin assumption for the Rail Group is almost 600 basis points deterioration in the operating income. And then the midpoint of the EPS is about 57% down from 2015. So there seems to be discrepancy between the delivery decline and the earnings and margin decline. Can you put more color into why margins are going to be so pressured?

Sure, Matt. This is Steve. I'll start with the answer. Margin is ultimately a reflection of the product mix produced in the quarter and the productivity we're able to achieve through operational efficiencies. We are experiencing a significant shift in our product mix with the expected railcar deliveries in 2016. Our margin guidance includes the costs and efficiencies associated with the aligning a smaller production footprint with lower demand. And we also are assuming weaker market prices on unsold railcar production slots. While down from our most recent margin performance, our current projections for 2016 margins compare quite favorably to prior peak margins in 2007 and 2008. For example, our 2007 annual margin was 14.6% at approximately the same level of production. (37:24) Timothy R. Wallace - Chairman, President & Chief Executive Officer: The decline in shipments?

And decline in shipments, yes, from the prior year. Matt Elkott - Cowen & Co. LLC: All right. So, now that you guys have set the bar – reset the bar much lower for 2016, I know you – this is the first time you gave guidance, but I think most people are expecting a bigger EPS number, but the bar has been reset. As you kind of look out to 2017, is 2016 looking now more like the year where pricing bottoms out, because a lot of the weakness in the level of orders may be stemming from kind of wait and see attitude by customers, because of all the uncertainty in the industrial markets. So should we look for 2016 for – 2016 may being kind of the bottom for pricing, which could spur some opportunistic buying from large investors? And what does that mean for deliveries in 2017? Does this mean that we're not going to see a decline or not as big of a decline in deliveries in 2017 off of this lower number?

This is Steve again, it's really difficult to start to talk about 2017. Again, we're looking at macroeconomic environment with significantly lower railcar loadings, lower industrial output, higher U.S. dollar, all impacting our business, and typically, when those – a large number of idle railcars are in storage, you have to wait for those railcars to be absorbed in the system before we see any meaningful increase in demand for new railcars and maybe pricing traction associated with that market. With that said, as I mentioned in my comments there are several pockets of our markets that show good demand. And we'll concentrate and focus on those, but it's really difficult to talk about 2017 this early in 2016. Matt Elkott - Cowen & Co. LLC: Okay. Fair enough. And then just one last question. What are – do you have certain macro assumptions that are – that your guidance for 2016 is based on as far as oil prices, maybe rail traffic? And when you were doing your forecast for 2016, did you have multiple scenarios, and if so did you pick the kind of average scenario, did you pick the more conservative scenario for your guidance?

Matt, Steve again. I think we've said that our guidance as well as our plans assume no material improvement in the economic circumstances that we're under right now. So we'll continue to monitor those economic drivers for our business and adjust our plans as those drivers might change over the course of the year. Matt Elkott - Cowen & Co. LLC: Okay. Great. Thank you very much.

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

Hi, guys. Good morning. Timothy R. Wallace - Chairman, President & Chief Executive Officer: Good morning.

Going back to that Rail Group margin, I think mix and pricing and sort of that reduction of footprint were highlighted. Anyway to rank those and obviously, as everything mix it sounds like is most important maybe. And sort of the cadence as we go through 2016, I mean, are we substantially dropping in Q1 or do we sort of trend back or below that sort of year-end number?

Yeah. Good morning, Allison. This is Steve. Clearly, the significant shift in our product mix, and the pricing associated with that product mix is having the biggest impact on our decline in margins. I think, we would expect that our cadence over the course of 2016, both our deliveries and margins will probably be better in the first half than it will in the second half.

Okay. That's helpful. And then just touching on the secondary market, I know you guys talked about sort of you guys selling equipment, but thoughts maybe from history, opportunities maybe for you guys to buy some equipment at some of these newer players in the leasing market besides they really don't want to be here anymore. I mean, how does that sort of play out in your mind?

Sure, Allison. Steve again, we have been active in acquiring railcars in the secondary market as an important component of our RIV platform to show investors, our interest in acquiring those cars, along with cars that we produced new. With the amount of institutional capital and active participants in the market, it is highly competitive. And we want to be disciplined in the railcars that we acquired to put into our RIV platform.

Sure. And then I guess, James, this one is for you, $2 billion of liquidity, you touched a little bit on share repurchases, but maybe talks on capital deployment here in this environment, do you think the properties start becoming more attractive through year-to-year, maybe you layout your priorities for 2016? James E. Perry - Chief Financial Officer & Senior Vice President: Allison, thanks. This is James. I appreciate you being on the call today. In terms of priorities, we certainly maintained a strong balance sheet, strong liquidity, and as Tim mentioned, as we go through down cycles, we've strengthened the company through strategic investments. As I said, we'll look at organic opportunities through building our businesses from within, acquisition opportunities as we look at the pipeline evaluations of companies that would add to our diversified industrial portfolio, enhance our shareholder value through that. And then as we've talked about, we've historically looked at share repurchases as a component of that as well. So we're not able to provide any specific guidelines we have or outline what our plans out for the year, but we really look at this as an all the above type strategy as opportunities for us as we look at different opportunities and valuations as we have those conversations with our board of directors.

Great. Thanks, guys.

And we can take our next question from Justin Long with Stephens. Your line is open.

Thanks, and good morning. So, you mentioned about 15% of your lease fleet is renewing this year, but could you talk about the assumption that you have baked into the guidance in terms of the change in renewal rates and utilization as well? Timothy R. Wallace - Chairman, President & Chief Executive Officer: Steve?

Yeah. Justin, this is Steve. Well, first of all our guidance does include our assumptions for renewal percentages as well as lease rates. And no, there's no question that there's downward pressure on lease rates given the number of available cars in certain markets. And we would expect utilization could be adversely affected as well. We've been very successful historically maintaining high fleet utilization in our business. We are also be adding a number of fully utilized cars. So I would expect that we'll have a reasonable year as far as utilization is concerned.

Okay. And in terms of renewal rate change, is there any way you could speak to that in terms of the general magnitude, I know it varies by car types, so it's a tough question?

It is, Justin, but our expirations are diversified amongst the number of different markets and car types. So, we don't have any specific industry concentrations that would concern me. And I believe our sales and marketing team would be successful in remarketing our lease renewals.

And Steve, you have a fairly elaborate business planning process that you go through in order to identify the cars that are coming up for renewals, you make assumptions of what you think the renewals are going to be, and those all get incorporated into the guidance that we provide.

Yeah, we do Tim (sic) [Justin] (45:38) – we really do a bottoms-up analysis on our lease renewal. We really look at each individual car and each individual rider and do our prognostications, so we don't make general macro assumptions in our lease renewals that falls into our forecast, we really do it very deep dive on a car-by-car, lease-by-lease basis.

Okay, great. That's helpful. Secondly, one of the questions that have come up a lot in this environment is the potential for residual value risk for the railcar lessors, especially when you look at the tank car fleet. I'm just curious do you see this as a potential headwind? Or is your residual value assumption so low that it really won't be an issue?

Steve again, Justin, interesting question. I think it's so easy for us to be influenced by near-term economic conditions. But we're talking about railcars that we expect to have 35-year life, 40-year life, and perhaps even 50-year life. So, we really look at these assets over a much longer-term and I think we're comfortable with the residual positions we've taken in our lease fleet.

Okay, great. I'll leave it at that. Thanks for the time today.

And we can take our next question from Gordon Johnson with Axiom Capital Management. Your line is now open.

Thanks for taking my question. Good morning. Timothy R. Wallace - Chairman, President & Chief Executive Officer: Good morning.

So, first, I guess with respect to the Element deal in 2013, I thought that the guarantee was $2 billion in sales through the end of 2015. That looks like roughly $133 million worth of lease railcars are sold in Q4 when we thought the number was going to be $400 million. Are we thinking about that right? Is that just a push out? Can you guys help us understand that? James E. Perry - Chief Financial Officer & Senior Vice President: Gordon, this is James. When we announced the alliance in late 2013 we said that through 2015 we were looking at about $2 billion. I think it's strong to call that a commitment on either side. From that perspective, we were a little short to the $2 billion, but we in the fourth quarter announced a new $1 billion agreement over the next several years. So that's very fluid in our relationship with Element. And looking at that is good dialogue.

Okay. That's helpful. And then I guess with respect to your shipment guidance, 27,000 cars assuming the market share at 40% that's just roughly 17,000 cars for the industry. If we look at 17,000 cars per quarter rather for the industry, if you look at the last down cycle, I guess shipments of cars averaged about 5,400 (48:19) cars, that's in 2009. So clearly, maybe they don't get as bad as 2009, but shouldn't the guidance be slightly worse than you guys are projecting or are we thinking about that incorrectly?

Gordon, this is Steve. I think the difference in your comparison is the backlog when we entered previous downturns. We did not have the extended backlog that we currently have today. And so I think the planning and the insights that we have in the 2016 are better than what we had at that time. James E. Perry - Chief Financial Officer & Senior Vice President: And Gordon, this is James. As Steve mentioned our 27,000, about 90% of that is already in our current backlog, out of the total 49,000 in our backlog.

Okay. That's helpful. And then lastly just looking at the lease business the margin this quarter, I think a little weaker than we expected. Was that due to maintenance expense? And was that due to the retrofit of the tank cars? And if so, how long does that take? And thanks, again for the questions, guys. Good luck.

Gordon, thanks. This is Steve. Maintenance expense in our lease fleet isn't necessarily smooth over quarters. And then particularly, in the fourth quarter, we probably incurred some initial expenses and trying to make sure that annual regulatory compliance is completed. So that may have an inordinate influence on maintenance expense in any one quarter.

And we can take our next question from Bascome Majors with Susquehanna. Your line is open.

Good morning. So, on your call in October, you said about 85% of the 27,000 cars that you're expecting to deliver this year. They're already in the backlog. And I would assume that there was still very attractive pricing on most of what you build in that 85%. And on the call today, you're pretty candid about the challenges with pricing that you already took in 4Q, and the slots are still opened to be ordered for next year, but only 15% of what you're going to deliver, it would seem that the pricing and the margins on those orders must have fallen really dramatically to get you to the outlook that you provided on margins here. So it's a longwinded way to kind of get into – to how competitive is pricing now? Are we looking at breakeven like levels on some of the orders that are being placed today? Or is that just getting too dire?

Yeah, Bascome, it's Steve. First of all, I think I said 80% of our 2016 production was in our backlog during our last conference call. That is now 90%. I would tell you that pricing is extremely competitive in the marketplace. Some of our competitors have much less backlog than we have, working very hard and the pricing to fuel their production capacity during the year. So, the orders we took in the fourth quarter had – I would say lesser margins than what we have in our backlog. And again, we have forecast that our unsold production plants will also be a weak margin.

I mean, is the delta so big that we can be talking single-digit margins on some of the stuff that's being ordered today?

I don't know that I can be that specific, but also keep in mind, I'm highlighting a very significant shift in our product mix for 2016, a very significant shift.

Okay. Understood, thanks for the color there. Another margin question here, how much of the decline we're looking at in your rail margins for 2016? Are part of the cost of aligning the production with lower demand? So this question specifically, trying to dig out what kind of restructuring type costs could be in there or other cost related to workforce adjustments that may not repeat once capacity gets level with demand?

Sure, Bascome, Steve again. The significant reduction in our margins from 2015 and 2016 is related to pricing and product mix. Certainly, we have costs associated with rightsizing our production foot print to meet a lower level of demand. And again, our teams are very adapt in how we handle labor issues and utilizing our facilities efficiently.

Okay. And following-up on our earlier question on the cadence of the margins, I mean you closed out 4Q 2015 with around 23% in the Rail Group, maybe get a 15% for full year 2016 in sequentially declining market, which you implied to the other question. And it feels like you'd have to start the year close to 20% and end it closer to 10% or even below. And that's such a wide delta in margins in such a short amount of time. Are we thinking about that right, is that spread too wide or would you expect to kind of a tighter range around 15% that you're guiding throughout the year on a quarter-to-quarter basis? James E. Perry - Chief Financial Officer & Senior Vice President: Bascome, this is James. Yeah. We're not at this time giving detailed pricing. Steve talked about the cadence of deliveries stepping down. So we wouldn't comment on the specific quarterly margins that they were projecting at this time.

Okay. One more on margin and then I'll run. Looking at the implied margin and what you're eliminating. I know there is always a bit of a differential between that and what you're reporting for the entire Rail Group, but the spread I think was about four points or five points higher margin in your eliminations than what you're guiding for the Rail segment as a whole. What's driving that? James E. Perry - Chief Financial Officer & Senior Vice President: Yeah, Bascome. This is James. It can be a number of things, primarily it's product mix. The cars that are in our lease backlog versus the manufacturing backlog, the external direct customers without leases. There are certain costs that don't come through with the transferred to the leasing company with that market pricing, but primarily is the mix on pricing of the specific cars that are currently identified to go to our leasing company.

Understood. Thanks for the time this morning, guys. James E. Perry - Chief Financial Officer & Senior Vice President: Thank you.

And we will take our next question from Art Hatfield with Raymond James. Your line is open. Art W. Hatfield - Raymond James & Associates, Inc.: Hi. Thanks for taking the time this morning. Hi, Steve, you had a lot of questions thrown at you about pricing and margin, but if I could just ask one last one regarding that, obviously pricing and margin contend to be cyclical in this business. But would you say the environment is rational or irrational at this point in time with regards to what competitors are doing?

I think, rationale is in the eye of the beholder. Isn't it? Art W. Hatfield - Raymond James & Associates, Inc.: Yes. No, absolutely, but I feel that you guys have always been very rational in how you view things, so your comment should be well taken actually?

Sure, well, I mean, clearly we've got a period of weaker demand. I think the rationality scale probably changes based upon the type of backlog you have as the manufacturer. So hopefully we will continue to be disciplined and rational in our approach to the marketplace given our backlogs. Art W. Hatfield - Raymond James & Associates, Inc.: Okay. That's helpful. A quick question on the RIV platform. I mean, when you talk to institutional investors about the opportunities here, what are they looking for, how do they view the platform, are they indifferent to assets, are they just very focused on the type of yield that they can accrue over time? How do – and I ask that, so that I can think about what their decision making process is in allocating capital with this type of investments.

Yeah, thanks, really good question, I appreciate you're focusing on the RIV platform. I think institutional investors, first and foremost, do have their yield requirements, they're looking at this asset class and how it fits in their overall stack of different types of investments. They really like the long-term nature of these assets and I mentioned the inflationary hedge component of the nature of these assets as well. I think the other critical components they're looking at is diversification. They want to make sure they have a diversified portfolio and so Trinity with our broad product line is able to provide that type of asset diversification in a lease railcar portfolio. I think the other thing they're looking at is the quality of the servicer, the quality of the manager, someone who has, as I mentioned greater degree of capabilities, which from engineering through servicing the railcars and all points in between. I think we've established that TrinityRails are a premier provider of those services. And I guess, to add, they want to have confidence in our ability to be able to market and remarket the railcars over the long-term life of these assets. And we've clearly demonstrated a strong capability in our field sales organization to maintain high-fleet utilization for these type of assets. Art W. Hatfield - Raymond James & Associates, Inc.: That's very helpful. When you – when I – when we think, and I know it's a small portion of kind of – or a small number in the grand scheme of things. But does management fee vary by potential investor based on what they ask you to do or if they can take on any of the stuff themselves?

Good question. We're pretty disciplined in the services that we're offering. I think our institutional investors see the value we provide in the broad array of services that we provide. And I think the fees that we charge are – reflect the value that we provide and the service we provide. Art W. Hatfield - Raymond James & Associates, Inc.: Great. Thank you. Last question, and it's kind of a big picture question and that – and I'm asking everybody I can. And I really appreciate your thoughts on this. I respect your knowledge of the industry and kind of how you see these cycles and being an observer from the outside, sometimes it's tough to see what's really going on, but as I sit back and look at the turn in direction here and where this down cycle may settle out. I go back and think about the – having been an observer of three or four of these cycles. One of the things that strikes me as we kind of enter this period, we're probably seeing an end of a global commodity super cycle, and that's having, going to have an effect on rail volumes. Additionally, we have this issue here in the U.S. of secular decline in coal. And over the long haul, that may drive better asset productivity, better utilization of assets within the rail network. Just – I'd like to get your thoughts on how to think about this as we move forward and how these changing dynamics could change the demand within your industry and what may or may not need to occur within the industry to make things a little bit more matched, I guess as we go over time from a supply demand standpoint and maybe get some players who maybe have shown a propensity to be a rational to get that rationality factor up. And as you do so, I would just ask that given the fact that I mentioned I've seen three of four of these cycles, if you can comment without commenting on my age? Timothy R. Wallace - Chairman, President & Chief Executive Officer: This is Tim, you've asked real loaded question there. And our portfolio is diversified enough that our business leaders see a wide variety of market, and we get together once a month with the business leaders in our company and we have lunch, and then we go around the room and everybody talks about their margins and what they're seeing and what they're hearing and this could be the barge markets, the electric utility markets, the railcar markets and the rail's has got a real broad spectrum of it. And one thing that we've really focusing on is the demand and the inquiry levels from our customers and then the build rate of what our customers are looking on their horizon of where they're going to be putting their capital. So we have a very robust dynamic dashboard of inputs that we've received, and we try to receive it more or so from the customers' mouth and deal with their demand and where they're going in their various businesses. And so it's not really – we take in consideration the macro global economic situations, but since the customers we deal with, most of them, a lot of them have global footprints. We're able to get it distilled down through their people of to what their needs are for our products. So, basically that's what gets incorporated into the guidance that we give to reflect like the statement that we made that this year, we're assuming the markets going to stay at the same pace that it has been for the last six months for the next 12 months. Once we start seeing and hearing from our customers that demand is on the horizon, and you always have customers that want to do some bottom fishing and come in, and make strategic purchases during down cycles, and we negotiate really well with them, and we align ourselves well with them. And they usually will come to us first and say, hey we're thinking about acquiring some of these products, what kind of deal would you cut with us, and we'll get into a negotiation with them. That usually happens during the bottom type part of the cycle, and then you end up having kind of the herd effect that other people will jump on at a later point. So for us it's not so much a large global macroeconomic analysis, it's a touch and feel, and listen and hear what the customers have to say. Steve, do you want to add anything?

Well, yes, more specific to rail, I agree everything Tim said there. It's not only the commodity super cycle we enjoyed, but right now we're also suffering from the value of the U.S. dollar, and those things aren't going to stay in the position they are forever. When we had the boom in ethanol demand, I'm not sure anybody really saw that coming in 2004 and 2005. And I don't think anybody forecasted the shale boom when we were in the doldrums in 2009 and 2010. So what's the next big driver's going to be for demand for railcars, may not be visible to us today, but as Tim said, we stay very, very close to our customers. We're adept at managing through these type of cycles. And I'm confident that over the long-term, we'll be very successful. Timothy R. Wallace - Chairman, President & Chief Executive Officer: Bill, do you have anything to add? William A. McWhirter - Group President-Construction Products & Senior VP: I would echo, Steve's, comments and say that certainly many of the products that we sell to our customers are large durable goods that can be deferred for a period of time, but that builds up demand ultimately. And I think you're seeing just some general uncertainty in the market where companies are reducing their CapEx budgets for a period of time. And I think ultimately that doesn't mean they don't need the product, but just means they don't need the product necessarily today. And they don't want to take that liquidity off their balance sheet at this point in time.

No. That's a really good point, Bill, and something we haven't talked about today is we still have an aging North American rail fleet that will require replacement over time. And so we'll always be well positioned to work with our customers in that regard, still looking after that for new drivers of growth, but you do have an aging replacement opportunity that I think that is good for our business too. Timothy R. Wallace - Chairman, President & Chief Executive Officer: Yes. And we are well suited to serve our customers' needs for replacement as well as be partners with them when they're going to expand and be able to move with them. And our manufacturing flexibility is designed to take advantage of opportunities when growth is there as well as, while like Bill was saying his wind power production right now is at capacity based on his current allocation. But if he gets some demand that has been spurred from the new legislation that was passed and the production tax credit then we can easily convert some of our facilities to move in that direction. James, do you have anything to offer? James E. Perry - Chief Financial Officer & Senior Vice President: No, I think, Art, your question is a very big picture one and the good thing is we see the big picture in talking to the customers. We certainly watch the macroeconomic factors, but we have a much finer lens in having those day-to-day conversations. Art W. Hatfield - Raymond James & Associates, Inc.: I think all your comments and how you approach it was very, very helpful and I appreciate the transparency and candor in a difficult environment that you offered us today. Thanks. James E. Perry - Chief Financial Officer & Senior Vice President: Thank you, Art. Timothy R. Wallace - Chairman, President & Chief Executive Officer: Thank you.

And we can take our next question from Matt Brooklier with Longbow Research. Your line is open.

Hey, thanks, good morning. I'll try to be quick here. Are you providing any color in terms of your expectations for Element sales in 2016? James E. Perry - Chief Financial Officer & Senior Vice President: Matt, this is James. We're not breaking down the sales of RIVs other than $500 million in total, we're not providing allocations or where those railcars may go.

Okay. Is it fair to assume though that the billion dollars, the extension, we should be thinking about that being spread out kind of ratably over the next four years, or is there a potential for some of that to get pushed out just given we're in a much more challenging environment currently. James E. Perry - Chief Financial Officer & Senior Vice President: Yeah. Again Matt, this is James. Hard to – as I said we've not specifically identify the cars or the humps (66:29) for those cars, there are strong institutional investor demand, Elements among those of course. The $1 billion over four years gives us both flexibility and we'll see as we – as the year progresses, what our desires are and their desires are to match up cars that go to them and cars that go to other third parties including the new fund that we've talked about in our press release earlier today.

Okay. That's helpful. And then my last question here, I'm trying to get a sense for how much of the margin headwind this year within railcar is a function of the cycle, i.e., building less tank cars and less sand cars and building more free cars and kind of the ASP and the mix there to how that changes and it's a natural margin headwind. And then how much of the margin headwind is potentially a function of shifting some of the backlog for these energy cars out further and maybe pulling forward some freight cars in the meanwhile just given current environment we're looking at currently?

Matt, I think I've said. This is Steve – a couple of times today that really the significant shift in our production mix and the margins associated with that production mix really is the big headwind in our margin decline. And I think that's much detail, we'll get into on that but that's – when I say a significant shift in mix I mean it's a very significant shift.

Okay. That's helpful. Thank you.

And we can take our next question from Kristine Kubacki with Avondale Partners. Your line is open.

Thank you for squeezing me in. I just wanted to piggyback on Art's question a little bit about RIV. I guess I am surprised that the secondary market is hanging in there so strong and you talked about that you had inquiries over the $500 million and I was just wondering what would keep you or prevent you from selling more cars at this point, is it a function of what the cars are actually in demand?

Well, thank you Kristine. This is Steve Menzies. We will evaluate opportunities to sell more railcars through our RIV platform beyond the $500 million we've talked about. Institutional investors, in my opinion, the conversations that we had with them are shunning financial instrument investments and really looking for hard assets like lease railcars. They like the asset class, they like the risk profile, and we're working with the number of institutions to continue to express an interest in aligning with our RIV platform. James E. Perry - Chief Financial Officer & Senior Vice President: Now, I think, Steve said it well, I think as Steve said part of it is the level of interest out there remains strong. We continue to balance our own portfolio needs with those of the third party investors. So we and our investors have diversified portfolios and as we look at the order volumes, our backlog and what's in our existing wholly-owned fleet, we're able to select cars, so be sure both of those portfolios and all of those with the investors who are well diversified. Timothy R. Wallace - Chairman, President & Chief Executive Officer: This is Tim. We're in a strong position because we've got a large reservoir, when you take our backlog and our existing wholly-owned fleet to be able to select and choose from.

Okay. That's helpful. And then my question – I know, you'll hate this on the margin, I guess, but I'm going to come out a little different way. Can you talk – can you just answer the question about the mix shift was so dramatic this year and then going back a quarter ago, it seems like we had a lot more visibility. And I guess I'm wondering is why the shift so dramatic, is it because car buyers have come back in and changed what car types? And can they renegotiate the price on that? Or are those energy cars or the tank cars that are getting pushed out, are they going to be eventually build as a tank car or so, how should we think about the backlog, is it more fluid than we all expected, I guess. James E. Perry - Chief Financial Officer & Senior Vice President: And this is James. Kristine, I don't think it's fluidity as much. Steve talked about it in our last couple of conference calls that a lot of our crude oil tank cars specifically would pretty much to be out of the backlog by the end of 2015, that's the case. So that's one of the significant shift that he talks about as you're moving more from tank to freight and you're moving from those high value crude oil cars and certainly the pricing environment in the last two quarters. Your average sales price comes down and then on top of that the compounding effect of operational leverage coming down with a lower volumes as to the lower overall margins.

Okay. That's very helpful. Thank you for squeezing me in. Timothy R. Wallace - Chairman, President & Chief Executive Officer: Thank you.

And we can take our next question from Mike Baudendistel with Stifel. Your line is open. Mike J. Baudendistel - Stifel, Nicolaus & Co., Inc.: Thank you. The eliminations you expect in 2016 related to leasing segment were a little bit higher than I was anticipating. I was just wondering if you could talk a little bit about how much equipment you expect to put in your leasing fleet in 2016. And I know it's a little bit up in the year with RIV situations, or maybe if you could talk about how much of the 90% of the cars – 90% of the deliveries you have booked for 2016 are going to go into the lease fleet? James E. Perry - Chief Financial Officer & Senior Vice President: Sure. Mike, this is James. Thank you. Yeah, the guidance we gave was $1.1 billion of eliminations. So that would be the value of the cars going into the lease fleet. We had about a little more than that in the backlog for leasing at the end of the year. So the vast majority of that's in the backlog. We've talked about selling about $500 million from the lease fleet to RIV is how we have that guided right now. So that would add a net of $600 million of market value of railcars during the year. So, we would expect at this time for the fleet to grow based on that guidance. Mike J. Baudendistel - Stifel, Nicolaus & Co., Inc.: That's helpful. That's all I had. Thank you.

And we can take our next question from Steve Barger with KeyBanc Capital. Your line is open.

Hi. Thanks for sticking around guys. Just one quick one from me. You've been clear, you're projecting recent weaker demand trends through the rest of the year. I'm curious if you've booked any railcars or barges in the first six weeks of the year? Is there really any activity out there?

This is Steve. Steve, thanks for your questions. Yes. We have booked orders through the first six weeks of this year. William A. McWhirter - Group President-Construction Products & Senior VP: Yes, Steve, this is Bill. On the barge side, we have booked orders, although, I would say very few at this point in time.

Super. And just one follow-up, for the orders that you are booking, are they for delivery in 2016?

This is Steve again. Yes. William A. McWhirter - Group President-Construction Products & Senior VP: And this is Bill. Yes as well.

Okay. Thanks very much.

And ladies and gentlemen, this does conclude today's question-and-answer session. I'd like to turn the program back over to Gail Peck for any closing remarks. Gail M. Peck - Treasurer & Vice President of Finance: Thank you, Aaron. 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 February 26, 2016. The access number is 402-220-2686. 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.

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