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 fact 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 risk, a change in any of which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statement. It is now my pleasure to turn the conference over to Gail Peck. Please go ahead.

Thank you, Tanisha. Good morning, everyone. Welcome to the Trinity Industries’ Second Quarter 2016 Results Conference Call. I am 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 calls, 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.

Thank you, Gail, and good morning, everyone. Today, I will provide a brief update on the litigation involving our Highway Products. As previously reported, we appealed the October 2014 adverse judgment we received in the False Claims Act case filed in the Eastern District of Texas involving our ET Plus guardrail and terminal system to the United States Court of Appeals for the Fifth Circuit. Yesterday, we filed our reply brief. This concludes the briefing phase of the appellate process. We believe our briefs present compelling arguments why this case should not have been brought to trial from the start, and why the judgment should be reversed. For those who are interested in reviewing the brief we have filed in this case and the amici briefs filed supporting our appeal, the documents can be found at etplusfacts.com. We anticipate that oral arguments, if granted by the Fifth Circuit, will take place this fall followed by a ruling from the Court no earlier than late 2016. Trinity Industries and Trinity Highway are also named in a number of other suits that we believe are groundless, and represent opportunistic filings that seek to capitalize on the False Claims Act judgment now on appeal. For a more detailed review of these suits, please see Note 18 to the financial statements in Trinity’s Form 10-Q for the period ended June 30, 2016. Please also refer to etplusfacts.com for additional information. I will now turn the call over to Tim.

Thank you, Theis, and good morning everyone. Our second quarter financial results are in line with our expectations. They reflect our ability to make quarterly transitions when market conditions shift. Our people are demonstrating operating flexibility as they confront the challenges associated with today’s business environment. Given the diversity of Trinity’s portfolio of businesses and the uncertainty within various sectors of the industrial economy, I anticipate each quarter will have unique challenges. The oversupply of railcars and barges has continued to keep demand for new equipment at lower than normal levels. I am pleased with the $940 million order we received for wind towers in the second quarter. Our electric transmission towers business is experiencing early signs of improvement in demand for its products, and our construction products businesses are doing well. Timing plays an important role in today’s market. Strategic buyers of large capital goods historically place orders during markets with low demand levels. They closely monitor economic conditions and look for attractive pricing on orders. Our businesses are highly focused on engaging with customers, so they will be positioned to negotiate transactions when customers need our products. The backlogs, our business has built during the recent upcycle, have been instrumental for an orderly transition to lower production levels. In addition, the growth of our railcar leasing business and the diversification of our manufacturing businesses are providing value. Contractions in businesses are never pleasant. When we make reductions in the size of our business, we always keep in mind the human aspect associated with these decisions as well as the long-term effects. Our decisions affect the lives of our employees and their families as well as the future of our Company. We take this responsibility very seriously. Our businesses know how to operate in fluctuating markets and I am…

Thank you, Tim, and good morning, everyone. The continued solid performance on our construction materials business and the positive effects of the Federal Highway Bill that Congress approved last December favorably impacted the second quarter results of the Construction Products Group. The Group’s operating profit, excluding a gain of $7.8 million from an asset sale on the second quarter of 2015, increased approximately 60% year-over-year on a slight decline in revenues. Our aggregates business has been positively impacted by increased infrastructure related work and population growth within our primary markets. Now moving to the Barge Group, the market for new barges for both dry and liquid cargo remains weak as the supply of available barges continues to outpace demand. The strength of the U.S. dollar continues to negatively impact the export market for agricultural products and the decline in domestic oil production has resulted in a significant overhang of tank barges. The Barge Group received approximately $51 million in orders during the second quarter, resulting in a total backlog of $251 million at the end of the quarter. The team is focused on securing orders for the first half of 2017 and beyond. Our barge business is planning for a continued decline in production through the balance of the year as we deliver our current backlog. The manufacturing flexibility incorporated into our facilities in recent years has positioned our barge team to respond quickly to changes in market demand. The Energy Equipment Group delivered a solid improvement in operating margin during the second quarter compared to last year, primarily as a result of improved efficiencies in the wind tower business. Our container product lines continue to be impacted by the low price of oil and natural gas. During the second quarter, we announced the receipt of a $940 million wind tower order that will begin shipments in 2017. At the end of the quarter, our wind tower backlog was more than $1.1 billion. Our manufacturing flexibility positions us to quickly adjust our wind tower production capacity. We are currently in the process of converting a facility to respond to the recent increase in demand. In our utility structures business, we are seeing some early indications of an uptick in demand. Over the long-term investment forecasts for electricity transmission spending remains positive. The recently passed federal tax incentive for wind power is expected to drive the development of additional transmission infrastructure. In closing, our businesses are responding effectively to mix demand conditions. Our positive long-term outlook for energy and infrastructure investment in North America underscores the value of the investments we have made in these businesses. Now I will turn the presentation over to Steve.

Thank you, Bill good morning. The second quarter operating results for TrinityRail were in line with our expectations and reflect the transition continues to adjust to weak railcar demand. The rail group delivered more than 6,000 railcars and a 12.8% operating margin during the quarter, while simultaneously executing a challenging schedule of production line changeovers. The Leasing Group continued to expand our lease fleet and RIV platform by adding new railcars to our wholly owned portfolio and selling leased railcars to institutional investors. Weak industrial end-user markets, a large American railcars, and excess railcar industry manufacturing capacity continue to negatively impact new railcar orders and pressure lease fleet utilization and rates. TrinityRail is focused on aligning our production footprint to current market demand conditions, implementing cost reduction initiatives and maintaining lease fleet utilization. Our rail group received orders for 2,910 railcars during the second quarter. We received orders from industrial shippers, lessors, and railroads. The orders we received represent a mix of tank cars, open-top and covered hoppers, and auto racks serving the chemical, petrochemical, agricultural, construction materials and automotive industries. These orders reflect pockets of demand within these industries and attrition of the aging North American railcar fleet. Our order backlog at the end of the second quarter was approximately 40,205 railcars valued at $4.3 billion. Our orders and backlog highlight the breadth of the TrinityRail product line and manufacturing flexibility of our production footprints. With orders received in the second quarter, our entire planned 2016 production schedule of approximately 27,000 railcars is sold and we are focused on securing additional orders for 2017 production and maximize production continuity and enhanced productivity. We do have the capacity to meet customer demand for additional 2016 railcar deliveries. We have worked with our frac sand customers to defer deliveries of small…

Thank you Steve and good morning everyone. Yesterday, we announced our results for the second quarter of 2016. For the quarter, the Company reported revenues of $1.2 billion and earnings per share of $0.62 compared to revenues of more than $1.6 billion and EPS of $1.33 for the same period last year. The decline in year-over-year performance was primarily due to three factors: a 61% decrease in operating profit for the rail group resulting from 29% fewer deliveries during the quarter, significant product mix changes in the rail group; and lower deliveries and profit from the Inland Barge Group. The construction products and Energy Equipment Groups reported historically strong results for the quarter, partially offsetting the lower results in the rail and barge groups. We remain highly focused on cost reductions. Our SG&A has declined year over year. We continue to see cost reductions at the corporate and operating levels across the Company. During the second quarter, we invested in new railcars with the value of $252 million that were added to our wholly owned lease portfolio. This brings our six-month total to $535 million, and we expect the full-year total to be $1.1 billion with a cash investment of approximately $880 million due to the embedded deferred profits. During second quarter, we invested $54 million of capital expenditures across our manufacturing businesses and at the corporate level. For the first six months, we have invested $80 million in these areas, and we expect to invest $140 million to $180 million for the full year. We had not repurchased any of our shares during the second quarter, and have repurchased $35 million during the first six months. We ended the second quarter with $814 million of cash, cash equivalents, and short-term marketable securities. We have access to additional capital through…

Thank you [Operator Instructions] And we’ll go ahead and take our first question from Matt Elkott with Cowen and Company. Please go ahead. Your line is open.

Thank you for taking my question. I’m going to start with a question on the construction products business, actually. It looks like your profit margin on that business was the highest in two years, since 2Q 2014. Your revenue grew sequentially, but it was down year-over-year. Can you give us some more color on what aided the margin expansion? And how does that tied to the uptick in demand from the construction – from the Highway Bill in December? And what it means also for your aggregate railcar business?

Bill?

Yes, so, let me start with the revenue, because the revenue can be a bit misleading. We did sell a business last year that had contributed $6.2 million in revenue in the second quarter of 2015. So when you eliminate that, you’ve got a little bit better growth in revenue, but you are dead on, the margin has improved considerably and I really look at it on a couple of fronts. One is over the past year, and in particular in our highway business, we have spent a lot of time on the cost associated with our facilities and rightsizing the business to the relative market and I think that has been very successful. On the aggregate side, over the past two, three years, we have made some really nice acquisitions in the lightweight business. And we’ve continued to just reposition that business to markets and products that we think enjoy a better margin. And so, it’s really a combination of a lot of events, but overall very proud of them. And you’re right. The Highway Bill itself sits in the background as a strong funding mechanism that we are starting to see positive signs associated with that.

Can you address the railcar?

Sure. And Matt, just to add to Bill’s, certainly we’ve seen increased demand for railcars to carry aggregates and other construction materials and received orders during the quarter for that business and have cars in our backlog for that business as well.

Okay, that’s great. I mean from your conversations with customers, do you get the sense that a lot of people are probably looking at the disappearance of the election uncertainty from the picture soon as maybe a time to make a long-term bet on infrastructure spending in the U.S.? I mean and that is something that may not materialize quickly, but it could be a multi-year thing. Is this where the strength in – the uptick in aggregate orders is coming from?

This is Tim. I think it’s premature to try to anticipate what may happen as a result of the elections. We’re still right in the early stages of that. Steve, do you have any comment?

The conversations I’ve had with customers, I think the biggest driver for their business is overall industrial demand, price of oil, price of interest rates, level of interest rates. And those are the things really driving their businesses.

Okay. And just lastly, very quickly, the 50 railcars that were canceled in the quarter, can you tell us what the end market was? And is there any indication that there could be more in that market or other markets?

Yes, thanks for the question, Matt. This is Steve. That was a customer that went into bankruptcy and therefore defaulted on their obligations to take those railcars. Those were tank cars for vegetable oil service. I think that’s a unique circumstance and I don’t view that as any pattern for our business.

Great, thank you very much.

Thank you. And our next question comes from Allison Poliniak with Wells Fargo. Please go ahead, your line is open.

Hi, guys, good morning. You touched quite a little bit on sort of this thought of stabilization on the industrial side. Now, clearly, there is some overcapacity and such. But when we look at your backlog, could you help us maybe understand that duration of the backlog? Are folks getting a little more comfortable as you look into 2017 and 2018 in terms of taking that equipment on, just given the overcapacity today?

Sure, Allison. This is Steve. First of all, our backlog does extend through periods of 2020. It is dispersed through that time period. We have confidence that we will build our backlog over that time. Keep in mind that in our backlog, we have orders that are direct sales to industrial companies and railroads and that the leasing market is not the sole source for our orders in our backlog. And that view that we have of the marketplace from selling railcars as well as leasing really gives us an enhanced view of the entire railcar market. As I’ve mentioned many other times, we have a diverse of backlog of serving a number of different markets well outside the energy sector, which seems to be a heightened focus for analysis, but we are serving a number of different markets with our backlog.

No, that’s great. That’s helpful. And then just a tick down in EBIT margin for rail, what’s driving that difference relative to last quarter’s expectations? Can you touch on that?

Sure. Really, the very major shift in our product mix as well as some significant line changeovers during the quarter did have adverse impact on our performance during the quarter.

Okay. And then just to touch on just that line changeovers, are they fairly through for 2016 at this point in terms of delivering for the back half? Or are there more line changeovers to think about there?

We don’t have additional line changeovers to the magnitude that we had in the second quarter plan for the rest of the year, so I think our production plan is stabilized. But I would point out that we have now production slots have been filled for later parts in our fourth-quarter delivery that were railcars that were sold recently at weaker market levels. That will have a negative impact as well.

Thanks so much.

Thank you. And our next question comes from Justin Long with Stephens. Please go ahead. Your line is open.

Thanks and good morning. With the wind tower announcement in the quarter, I was wondering if you could speak to your available capacity in that market. You mentioned in the prepared remarks that you’ve got one facility that could be shifting to build wind towers. But how many total wind tower facilities are you planning to operate? And could you just speak to your ability to flex up if we see incremental orders from here?

This is Bill. I think the secret to the answer is we have a lot of ability to flex up; giving Trinity’s overall footprint and the number of plants that can make multiple products. So it’s difficult to say it’s five plants or it’s six plants. I think the real answer to the question is we take plants one at a time that we think are best suited to handle the additional volume. And we keep pursuing volume in the market to the extent that we have facilities that we think could be in an idle position, keep a workforce together, and produce the products accordingly. So by no means would I classify ourselves as full based on this order.

Okay, great. That’s helpful. And how should we think about the margin profile for the wind tower business? I know you don’t break that out specifically, but high level, should it be accretive or dilutive to the margin percentage within that energy equipment segment?

I think at a high level, it is relatively consistent with the margin that already exists within the segment as a whole.

Okay, great. And I will maybe ask one more. One thing you’ve talked about this year is the mix headwind related to railcar deliveries. I know it’s still a little bit early to talk about next year, but based on what you have in the backlog today, how would you guess railcar mix trends directionally in 2017? Do you think it should start to stabilize or is there risk that mix takes another step down next year?

Justin, this is Steve. Really hard to say; orders shift, markets shift over time. We’ve had a significant shift from tank cars to freight cars over this year, and I would expect that trend to continue and perhaps see more normalized levels of tank car production going forward.

Okay, great. I will leave it at that. Thanks for the time.

Thank you. And we’ll go ahead and take our next question from Gordon Johnson with Axiom Capital. Please go ahead, your line is open.

Hey, guys. This is James Bardowski in for Gordon. Thanks for taking my questions. I guess first, just following up on the wind tower order – congratulations on that, by the way. It’s a nice accomplishment. If we assume a 14% EBIT margin in applying today’s share count, I think it’s about roughly $0.89 in cash EPS. Do you expect to realize that more towards the beginning of the three-year period evenly or more towards the end?

I think difficult to say what the cash realization is going to be over a period of time. Obviously we’ll have a moment in time where we’ve got to ramp up the working capital, and then we will have a moment in time where the working capital dissipates towards the end. The order itself is relatively even throughout the three-year period, but not exactly even. So there definitely are quarters where we have more production demand and quarters where we will have a little less demand.

Okay, that’s very helpful. And then I guess turning towards your 2016 guidance. Clearly you reiterated it at $2 to $2.30. Looking at 2H, basically it implies that 2H earnings are going to be lower than 1H clearly. I think it’s like $0.45 per share linearly. But with freight volumes still falling, coal demand, which is I think 30% of last year’s total volumes, likely not coming back, agricultural shipments hurting from a stronger dollar. And also, if I heard you correct, I am not sure if I transcribed this correctly, but it sounds like you slightly lowered your revenue outlook for the construction and the Leasing Group? I guess basically what gives you confidence that you can still meet this full-year guide?

This is James. The guidance takes into account a lot of pieces. As we said, we did give you our updated guidance for revenue and margins. In some areas, it was slightly down; in some areas, it was slightly up. This incorporates where our current view is of the product mix for the back half of the year and the backlogs we have, the costs associated with rightsizing our production footprint in the various businesses, mix changes and cost associated with that, as well as where the industrial economy is and our expectations for the rest of the year. In several businesses, it’s simply a matter of some volume or mix changes as we go through our facilities the next two quarters. And as we mentioned earlier and Steve mentioned specifically in rail, some of these orders were taken earlier this year at lower margins, lower pricing that we’ll be delivering in the back part of the year. The guidance range also anticipates where we think that we will be in terms of sales of leased railcars. We have a pretty wide range of guidance there. And so there’s still some uncertainties in the business where precisely we’ll be. But the $2 to $2.30 we still feel comfortable with that range.

Thanks. And then looking at your RIV portfolio, can you guys tell us what you are seeing in terms of the fleet utilization for that managed fleet? Basically is this comparable to Trinity’s wholly owned fleet?

This is James. We don’t publish those type of numbers. I would point out that as cars go into the fleet, they are fully utilized at the outset. But some of those fleets are becoming a little more mature, but we don’t publish the number for the managed but not owned or partially owned cars.

Yes, understandable. And for those cars, are they similar durations – lease durations that the wholly owned fleet offers?

Yes, James, Steve Menzies. The diversification and length of term of leases would be of very similar in profile to our wholly owned portfolio.

Okay, great. Thank you, gentlemen. I guess just a couple of more quick ones. A bit of a housekeeping question: can you just remind us what pushed up the maintenance cost in the Leasing Group? I think it was the last three quarters? And also where you see this expense going in 2H.

Sure. Steve again, James. First of all, we – each quarter, our fleet gets older and older, and as the fleet gets older, you have increased maintenance requirements. We also have a high level of regulatory and compliance requirements for the fleet as we go forward. I would also tell you that given the weakness in the market, we are seeing higher maintenance expenses to support our commercial activities to reassign our fleet and to keep the fleet fully employed.

Excellent. Thank you, Steve. I will jump back in queue. Thank you, guys.

Thank you.

Thank you. And our next question comes from Matt Brooklier with Longbow Research. Please go ahead, your line is open.

Yes, thanks. Good morning. The lease fleet utilization deterioration on a sequential basis during 2Q, can you give me a little bit more color in terms of what weighed on the fleet during the quarter?

Sure. Matt, Steve again. To no surprise, railcars that we have operating in energy sector, particularly coal and crude oil, we are seeing significant pressure to keep those cars employed. And I would cite that as probably the weaker part of our fleet from a utilization standpoint.

Okay, understandable. And what – I guess what percentage of the fleet right now is represented by coal cars?

We typically don’t break out the composition of our lease fleet.

Okay. And then just turning back to the wind tower language and some of the earlier questions, the facility or facilities that you are booking to transition to meet the demand and what’s in the backlog. Can you talk to what, maybe provide a little bit more color on what types of facilities those are, if it is former railcar facilities or storage tank facilities? Just trying to get a sense for how the – your manufacturing footprint is shifting into this order.

So, two of the facilities are currently just wind tower facilities, that are achieving a very high level of production based on a lot of lean activities that have occurred at those facilities over the last three, four, five years. The third facility was a Trinity multiuse facility, so it was a facility that participated in making part of a tank car and making very large storage tanks and making some wind towers. So as it moves to being primarily a wind tower facility, it times well with the idling down of some of the tank car business and times well with a slower market on the container side based on the activity associated with oil and NGLs in particular.

Okay, that’s good color. Appreciate the time.

Thank you.

Thank you. And we’ll go ahead and take our next question from Willard Milby with BB&T Capital Markets. Please go ahead, your line is open.

Hey, good morning everybody. You mentioned you were working with customers that have ordered frac sand cars looking to extend those deliveries. Can you remind us what percentage of your backlog that represents, if you are willing to disclose that?

Well, this is Steve. We have not provided that information and have not.

Okay. And on I guess rail group deliveries for rest of this year, can you provide some color on delivery cadence there with Q3, Q4? And same question on the margin for those quarters?

Sure. Again, we have confirmed our approximately 27,000 deliveries for the year. Obviously we are going to have to ramp up from our 6,000 delivery units in the second quarter. And I would suggest that they’re fairly evenly delivered over the third and fourth quarter, with maybe a few more in the fourth quarter.

All right. And so similar assumptions with the margin on those?

I think that’s fair, Will.

All right. And with the – I guess the adjustment on the leasing performance, not the sale of railcars, but the core leasing business kind of having a weaker second half compared to first half. Is that going to be more a utilization issue or a rate-per-car issue?

It’s probably a function of both, and we are certainly going to continue to be challenged to keep energy sector cars employed. There’s a lot of pressure on utilization and lease rates both. So I would expect that both would contribute to margin compression.

Willy this is James. We provide that guidance, obviously we now have in the rearview mirror what we’ve renewed in the second quarter, what we added as well as a little bit in the third quarter. So it’s just a current perspective of where things are.

All right. And one quick housekeeping thing. Did you update full-year CapEx from $150 million to $200 million? Did that change at all?

We changed that to $140 million to $180 million, down just a little bit from previously.

All right. That’s it for me. Thanks very much.

Thank you.

Thank you. And we’ll go ahead and take our last question from Bascome Majors with Susquehanna. Please go ahead, your line is open.

Thanks for squeezing me in here. You said that your full 27,000 production plan was in backlog as of the end of the quarter. If I back out what you’ve guided to for the second half of the year, I am showing maybe 26,000, 27,000 cars in backlog today for 2017 and beyond. Can you give us an indication of the build plans and the cadence as we look forward? How much for 2017 is already in the backlog today, and once we get past 2017, how far do we stretch out? Is it lumpy or kind of straight line after that?

Bascome, this is Steve. Your math is correct. But at this time, we are really not prepared to go into details for 2017.

Okay. Maybe a higher-level question. We’ve heard from your customer in the leasing business about some of the pressures they are seeing. You’ve been pretty candid about some of the pressures you are seeing in lease rates and the overall weaker railcar market. But there seems to be a pretty significant steady amount of activity from portfolio investors looking to buy leased railcars. Can you talk a little bit about where the demand is coming from, what you think is driving it, and maybe what kind of yields you are seeing on the transactions you are structuring for your customers in the last couple of quarters?

Sure, Bascome, this is Steve again. I think in this low interest rate environment, there is a number of different types of financial institutions that are seeking yield. And I think they see that hard assets such as leased railcars can provide that type of yield and also potentially provide an inflationary hedge, should we see long-term inflationary pressures. So these are very attractive investments on a long-term basis for insurance companies, pension funds, and those are the type of people we’re typically working with in large part. So they continue to express a lot of interest in these assets and see them as really valuable long-term investments.

And with financing terms out there today and lease rates where they sit, can you give us just a directional indication as to what kind of yield you are seeing people achieve on these types of transactions in today’s market?

It really would be hard to do that and give you a clear answer because it really changes with each type of investor. And so I think I would probably mislead you more than I would clarify for answering the question.

Okay. Well, appreciate the time today guys. Thank you.

Thank you.

This is Gail. 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 July 29. The access number is 402-220-0682. 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.

That does conclude today’s program. We would like to thank you for your participation. Have a wonderful day and you may disconnect at any time.