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Trinity Industries (NYSE:TRN)

Q4 2013 Earnings Call

February 20, 2014 11:00 am ET

Executives

Gail M. Peck - Vice President and Treasurer

Timothy R. Wallace - Chairman, Chief Executive Officer and President

William A. McWhirter - Senior Vice President and Group President of The Construction Products & Inland Barge Groups

D. Stephen Menzies - Senior Vice President and Group President of Trinityrail

James E. Perry - Chief Financial Officer and Senior Vice President

Analysts

Steve Barger - KeyBanc Capital Markets Inc., Research Division

Allison Poliniak-Cusic - Wells Fargo Securities, LLC, Research Division

Justin Long - Stephens Inc., Research Division

Eric Crawford - UBS Investment Bank, Research Division

Bascome Majors - Susquehanna Financial Group, LLLP, Research Division

Salvatore Vitale - Sterne Agee & Leach Inc., Research Division

Matthew S. Brooklier - Longbow Research LLC

Arthur W. Hatfield - Raymond James & Associates, Inc., Research Division

Barry George Haimes - Sage Asset Management, LLC

Operator

Good day, everyone, and welcome to today's fourth quarter results conference call. [Operator Instructions] Please note, this call may be recorded.

Today's conference call contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995 and include 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 would cause actual results or outcomes to differ materially from those expressed in the forward-looking statements.

[Operator Instructions] It is now my pleasure to turn the conference over to Ms. Gail Peck. Please go ahead.

Gail M. Peck

Thank you, Erica. Good morning, everyone. Welcome to the Trinity Industries fourth quarter 2013 results conference call. I'm Gail Peck, Vice President and Treasurer of Trinity. Thank you for joining us today.

Following the introduction, you will hear from Tim Wallace, our Chairman, Chief Executive Officer and President. After Tim, our business group leaders will provide overviews of the businesses within their respective groups. Our speakers are: Bill McWhirter, Senior Vice President and Group President of the Construction Products, Energy Equipment and Inland Barge Groups; and Steve Menzies, Senior Vice President and Group President of the Rail and Railcar Leasing Group. Following their comments, James Perry, our Senior Vice President and Chief Financial Officer, will provide the financial summary and guidance. We will then moved 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 Tim Wallace for his comments.

Timothy R. Wallace

Thank you, Gail, and good morning, everyone. I'm pleased with our accomplishments and a strong financial results for the fourth quarter and for the entire year. We achieved a number of key financial milestones.

During the quarter and the full year, our revenues, net income and EPS all reached new record levels. Our businesses are continuing to create value by leveraging their combined expertise, competencies and manufacturing capacity to produce their products. We are also making great progress in the business development area. We have a great deal of positive momentum occurring within our company.

Our Rail Group generated strong financial results in the fourth quarter, reporting a record level of quarterly revenue and operating profit. I remain impressed with the group's ability to continue to improve its performance while converting manufacturing space, making line changeovers and increasing production levels.

Our Railcar Leasing company delivered another quarter of solid results. In December, we announced a strategic alliance with Element Financial Corporation. Under the terms of this agreement, we are assisting Element to develop a diversified portfolio of up to $2 billion of leased railcars over a multiyear period.

The agreement also provides for our leasing company to be the servicer of their railcar fleet. This alliance is consistent with our strategy to continue growing our leasing platform while maintaining ongoing relationship with our lessees.

I'm pleased with the way our Inland Barge Group maintained consistent margins on a lower revenue run rate during the fourth quarter. The group illustrated its operational flexibility in 2013 by successfully converting a portion of its manufacturing capacity from dry cargo barges to tank barges. This conversion was a significant accomplishment.

Our Construction Products Group is continuing to make good progress to improve its overall performance. We expect to realize benefits from the repositioning of this segment.

The fourth quarter financial performance of our Energy Equipment Group continued to show significant improvement year-over-year. We continue to reposition our Energy Equipment Group by expanding its product offerings to serve customers in the oil, gas and chemicals industries. In January, we announced the acquisition of 2 companies that manufactured cryogenic products.

In addition, in early February, we announced the acquisition of Platinum Energy Services. Platinum manufactures a variety of products that are used at the wellsite and midstream locations. These 3 companies expand our portfolio of Energy Equipment products and bring strong competencies, as well as energy industry expertise to our businesses.

The energy renaissance in the U.S. and Canada has created strong demand for many of our storage and transportation products. During the past few years, our customers have ordered railcars and barges to transport crude oil, as well as storage tanks to hold various forms of gas products. We anticipate there will be demand for storage and transportation of products supporting the production of chemicals and petrochemicals. Our companies are in a strong position to serve this demand.

Over the long term, we expect to see additional demand developing in Mexico for our transportation and storage products that serve the oil, gas and chemicals industries.

Trinity's financial health remains solid and we're in a strong position with a large backlog of orders in our major businesses. Our businesses are driven by sustainable progress and are constantly striving to reach new levels of achievement. We're continuing to devote resources to identify acquisition candidates that have products, services, technology and competencies that enrich and expand our industrial manufacturing platforms.

Our people make a major difference in the performance of our company. We have a very strong team and we continue to add resources that will help us perform better. I'm especially proud of the accomplishments of the industrial athletes who work in our manufacturing facilities. They have performed exceptionally well as we continue to flex our production lines in order -- to pursue orders for products in the oil, gas and chemical industries.

I'll now turn it over to Bill McWhirter for his comments.

William A. McWhirter

Thank you, Tim, and good morning, everyone. I'm pleased with our Inland Barge Group's fourth quarter results, which showed solid improvement over the third quarter of 2013 in large part due to our recent investment in our facilities. These investments enhanced our flexibility, allowing us to produce a more favorable product mix.

During the fourth quarter, our barge group took orders totaling approximately $97 million, bringing the barge backlog to $430 million at the end of the year. Demand for hopper barges is still weak despite the relatively strong harvest last fall, which typically stimulates equipment purchases. We believe this is in part due to coal barges being converted to transport agriculture products. We are watching these demand drivers closely and are well positioned should a pick up in activity occur.

Demand drivers for tank barge orders continues to be favorable. However, our customers are closely monitoring the absorption of new equipment into the marketplace. As upstream infrastructure investments are completed, we expect downstream markets to begin to expand, resulting in increased shipments of chemical and petrochemical commodities, which should have a positive effect on tank barge demand.

For the full year of 2014, we currently expect a revenue run rate similar to 2013 and a slight decline in profit due to our planned production mix. We have a steady backlog of orders and our facilities are well positioned to respond to any additional changes in demand.

Moving to our Construction Products Group. Revenue increased modestly due to acquisition-related volumes. Operating margin declined year-over-year to 6.2% from 8.5%, primarily due to weather-related issues.

The first quarter of 2014 continues to be relatively slow due to poor weather conditions. In the fourth quarter, we acquired a galvanizing business located in San Antonio, Texas. This facility provides a full range of galvanizing services to a diverse group of industrial and energy end markets in the surrounding area. Our galvanizing operations are primary located in the southern U.S. We will continue to seek opportunities in the galvanizing business.

Inquiry levels for highway products are stable, with activity in 2014 expected to be similar to 2013. There continues to be uncertainty due to the expiration of the current federal highway bill in October. Until these issues are addressed, revenue and earnings growth from this segment will likely be acquisition related.

Moving to our Energy Equipment Group. During the fourth quarter, the group set new records for both quarterly and annual revenues. I am pleased with the group progress in growing its portfolio of businesses. Fourth quarter revenue increased approximately 13% year-over-year, primarily due to increased shipments in domestic containers serving agricultural, industrial and residential markets and storage containers serving the energy sector. The group reported an operating profit of $17 million and a margin of 9.1%.

Our wind tower business is well positioned to realize operating leverage during 2014 due to the strong backlog of $554 million. Since the start of this year, we completed 3 acquisitions in the Energy Equipment Group. These businesses are expected to add a combined revenue of $90 million to $100 million on an annual basis.

The acquisition of WesMor Cryogenic and Alloy Custom Products broadens our presence in the cryogenics container market. Combined, these 2 acquisitions have placed Trinity as one of the market leaders in cryogenic transportation equipment. Cryogenic products are double-walled tanks used to store and transport liquefied gases for a variety of uses. One of the growing uses is for liquefied natural gas or LNG.

In addition, we also acquired Platinum Energy Services, which expands our product portfolio to include energy-related equipment used at the wellsite and in midstream locations.

We continue to invest resources to identify and pursue opportunities to add new businesses to our portfolio that enhance our competencies, complement our product offering and expands our reach in the markets we are pursuing. Overall, I am pleased with the performance during the fourth quarter.

At this time, I'll turn the presentation over to Steve.

D. Stephen Menzies

Thank you, Bill. Good morning. I'm very pleased with the accomplishments of the TrinityRail team during the fourth quarter and throughout 2013. Our Rail Group reported its fourth consecutive quarter of record operating profit and our highest ever operating margin driven by a 17% increase in railcar shipments compared with the third quarter. Our Leasing Group continues to generate strong returns and contribute steady cash flows to the company, resulting from strong lease renewals, regrowth and our alliance with Element Financial. I continue to be encouraged with the way our North American industrial markets are developing and the resulting opportunities for TrinityRail.

We are very pleased to have completed the formation of our $2 billion strategic alliance with Element Financial during the fourth quarter. Our alliance enhances our ability to continue growing our leasing platform in a capital efficient manner, while maintaining ongoing relationships with our commercial customers.

Elements' desire to invest in leased railcars and the confidence they have placed in Trinity to originate and manage these assets is an exciting opportunity.

Along with RIV 2013, the $1 billion railcar investment partnership we announced last May, these 2 transactions expand the funding relationships we have developed with institutional investors desiring to invest in portfolios of leased railcars. These lease funding alternatives, along with Trinity's strong balance sheet, increases our leasing capacity.

Our overall leasing strategy has not changed. TrinityRail has developed -- was developed to offer comprehensive, integrated railcar products and service solutions to our customers, a one-stop shop business model, including leasing services. Our model has 2 key objectives: Providing a steady flow of equipment orders for our manufacturing operations, and generating a stable stream of earnings and cash flow for Trinity.

Over the last 12 years, we have invested significant capital to grow our leased portfolio from approximately 13,000 railcars in 2001 to the size and scale that it has today with over 75,000 railcars under lease to over 500 industrial shippers.

The RIV 2013 and Element transactions increase Trinity's financial flexibility to strengthen our ability to originate leases with our industrial customers while maintaining those direct commercial relationships. As we originated railcar lease, we now have the flexibility to retain the asset in our wholly-owned portfolio, sharing the investment with third-party investors as in RIV 2013, or sell the asset and retain the management and servicing like we are doing with Element. This flexibility enhances our ability to grow our lease portfolio. I am very pleased with the growth of our leasing platform and the progress we've made in expanding our access to capital to support our strong lease origination capability.

Our Leasing Group earned record operating profit during the fourth quarter resulting from lease fleet additions, solid increases in lease rates and secondary market sales of railcars under the initial phase of the program agreement with Element. Our lease fleet utilization at the end of the fourth quarter increased to 99.5%.

During the fourth quarter, the Rail Group delivered approximately 1,670 new railcars to our lease fleet portfolio. Our total lease portfolio, including partially owned subsidiaries, now stands at approximately 75,685 railcars after secondary railcar sales, an increase of 6% year-over-year.

At the end of the quarter, approximately 17% of the units in our railcar order backlog, with a total value of approximately $827 million, was slated for customers of our leasing business.

During the fourth quarter, the Rail Group delivered 7,280 railcars and generated our highest ever quarterly operating profit and margin. In spite of several product line changeovers and further capacity additions during the fourth quarter, our workforce did an amazing job realizing strong operating efficiencies while meeting stringent customer delivery requirements.

For the full year 2013, we delivered 24,335 railcars, a 26% increase over 2012 deliveries. We anticipate unit deliveries during 2014 to be in the range of 25,500 to 27,500.

North American railcar industry orders in the fourth quarter were solid and continue to reflect improving demand for a broader mix of freight cars. The industry backlog declined slightly as capacity increases outpaced orders but still remains at a very healthy 72,900 railcars.

During the fourth quarter, TrinityRail received orders for 7,125 new railcars, including tank cars, covered hoppers and auto racks from railroads, third-party lessors and industrial shippers. Our backlog now stands at 39,895 railcars with a value of approximately $5 billion.

Current inquiry levels reflect continuing demand for covered hoppers to serve the frac sand and construction markets, grain and petrochemicals, such as resins. Auto racks continue to be in steady demand resulting from increased North American automobile production.

We are receiving an increasing level of inquires for a greater variety of freight cars as the economy continues to grow and fleet replacement opportunities develop. The markets that we serve are dynamic. Our highly flexible railcar manufacturing and strong leasing platform is uniquely positioned to respond to market demand changes quickly and effectively. We have additional production capacity available to respond to increased freight car demand should current market trends continue.

We continue to see attributes of this railcar's cycle as different from previous cycles because of the energy renaissance occurring in North America. Inquiries for tank cars are continuing at high levels as additional crude oil loading facilities and petrochemical production expansion comes online. As the energy market matures and investments for infrastructure are completed, opportunities for rail transportation will develop throughout the crude oil and petrochemical supply chains.

I would like to provide a brief update on the potential industry regulatory changes pertaining to DOT-111 tank cars that transport flammable liquids. According to the Railway Supply Institute, as of September 30, 2013, there are approximately 272,120 DOT-111 tank cars in the North American fleet. Of that total, approximately 94,180 tank cars transport flammable liquids. Over 70% of the DOT-111 tank cars that transport flammable liquids carry either ethanol or crude oil.

Let me provide some history for you as context for the issues our industry faces. Following several derailments involving ethanol unit trains and subsequent recommendations from the National Transportation Safety Board, in May of 2011, the Association of American Railroads Tank Car Committee petitioned the Pipeline and Hazardous Material Safety Administration, PHMSA, regarding the reexamination of the existing tank car design transporting hazardous materials, including flammable materials. The AAR tank car committee is comprised of representatives from railroads, railcar manufacturers, railcar lessors, industrial shippers and railcar owners and collaborates closely with the Federal Railway Administration, PHMSA, and Transport Canada on tank car designs. A new enhanced tank car design involving thicker steel, hedge shields and enhanced top fittings protection was proposed at that time by the AAR Tank Car Committee. In the absence of PHMSA's issuing a ruling, the AAR, in good faith, adopted the new tank car design for new DOT-111 tank cars ordered after 2011 for flammable service. These tank cars are referred to in the industry as the good faith tank cars. The tank cars ordered prior to October 2011 are referred to in the industry as the legacy cars.

As of December 31, 2013, there were approximately 12,200 DOT-111 tank cars in flammable service in Trinity's wholly- and partially-owned lease fleets. Of these tank cars, approximately 2,600 are good faith tank cars built to the current AAR standard adopted in October 2011, and approximately 9,600 are legacy cars.

Following the derailment of crude oil unit train in Québec in 2013 and additional derailments that occurred after that time, PHMSA issued an advanced notice of proposed rulemaking in September requesting interested parties to comment on recommendations proposed by the National Transportation Safety Board and other petitions regarding regulatory requirements for DOT-111 tank cars. PHMSA is currently reviewing the comments submitted in response to the advanced notice for proposed rulemaking.

There are 3 categories of tank cars that a proposed rulemaking may likely address. Proposed rules that may apply to legacy tank cars, good faith tank cars and a next-generation tank car. We are closely monitoring the regulatory process of potential outcomes. Trinity is a member of the Railway Supply Institute and an active participant on the American Association of Railroads Tank Car Committee.

It is still too early to discuss the possible regulatory changes to DOT-111 tank cars and flammable service that may result or when a ruling may be made. These are very complex and technical public safety issues that require extensive review, as they should. The rulemaking process is thorough as it is crucial to get input from a wide variety of stakeholders, including shippers and carriers, railcar owners and builders and state and local officials. As we gain further clarity, we will provide an update on how we plan to address any changes and continue to offer premier railcar products and services to our customers.

I'll now turn it over to James.

James E. Perry

Thank you, Steve, and good morning, everyone. Yesterday, we announced strong fourth quarter and full year 2013 financial results, reporting record revenues and earnings per share for both periods.

During the quarter, we reported revenues of $1.3 billion and earnings of $1.44. Quarterly net income increased by more than 58% compared to last year, resulting in the most profitable quarter in Trinity's history.

During the fourth quarter, we repurchased 639,000 shares of our common stock in the open market for a total cost of $34 million. For the full year, we repurchased approximately 2.5 million shares for a total cost of $108 million. The 15% increase in the quarterly dividend we announced in September became effective during the fourth quarter, bringing the total increase in the dividend during 2013 to 36%. The actions taken in 2013 reflect our ongoing commitment to return capital to our shareholders.

The $2 billion strategic railcar lines that we formed with Element Financial during the fourth quarter was an important accomplishment for Trinity. The alliance enhances our flexibility to continue growing our leasing presence in a capital efficient manner while maintaining ongoing commercial relationships with our lessees. The capital generated through the alliance can be invested in our Railcar Leasing and Management Services platform, our portfolio of diversified industrial businesses or other investments that will enhance shareholder returns.

Since we announced the agreement in December, Element has purchased $500 million of railcars from the lease fleet, generating earnings per share of approximately $1.12 to $1.22, of which $0.12 per share was recorded in the fourth quarter.

During the next 12 months, we plan to deliver another $500 million of leased railcars to Element, primarily from our current leasing backlog. At this time, it is difficult to precisely project the exact timing and composition of each group of leased railcars that we will sell to Element. Revenue and profit from these new railcar sales will be recorded in our Rail Group, either as a direct sale to Element or as a sale to the Leasing Group. If the cars are sold to the Leasing Group, we will eliminate the revenue and defer the profit as a consolidated level during that quarter. The sale of the railcar from the lease fleet to Element in the future quarter will then be recorded in the Leasing Group as a car sale.

Under the terms of the program agreement, Element is expected to add another $1 billion of leased railcars to its portfolio during 2015. These railcars will come from our leasing backlog, the wholly-owned lease fleet and from other secondary market sources.

During 2013, we invested capital across a number of areas. We invested approximately $150 million in capital expenditures for our manufacturing and corporate operations and $581 million in the lease fleet. We returned approximately $145 million to shareholders through share repurchases and dividends and invested $73 million in acquisitions during the year.

In 2014, we expect to identify additional investment opportunities in all of these areas. The timing of our investments will be determined by our ability to fund quality opportunities as the year progresses.

During the last decade, we invested nearly $4.8 billion in our Railcar Leasing business. Its scale now provides a base float of business for our rail manufacturing companies and a steady level of earnings and cash flow for our shareholders. The Element alliance, along with the RIV 2013 investment partnership that we formed last May, provides us with additional financial flexibility. Given our strong financial position, the followed backlog of orders in our major businesses, and a stable leasing operations platform, the time is right to pursue growth opportunities that will enhance the other business segments within our diversified industrial portfolio.

We were off to a strong start in 2014 with respect to investing our capital for growth. We've already completed 3 acquisitions in our Energy Equipment Group for a total investment of approximately $120 million. WesMor Cryogenics, Alloy Custom Products and Platinum Energy manufacture products that provide us with important competencies as we grow our presence in the energy markets. As we work with our Board of Directors on the investment of capital, our focus is on enhancing the long-term growth of the company and increasing shareholder value.

I will now turn to our current outlook for the year 2014. For the first quarter of 2014, we anticipate earnings per share of between $2.45 and $2.65, which includes between $1 and $1.10 per share of profit from sales of leased railcars to Element already closed during the quarter. Our anticipation for EPS for the full year is between $6.30 and $7.

In the Rail Group, our 2014 revenue guidance is between $3.1 billion and $3.4 billion based on our delivery guidance of between 25,500 and 27,500 railcars. We expect a full year operating margin of between 17.5% and 19% for the Rail Group. This group continues to achieve strong margins and maintains an order backlog of $5 billion of railcars for future deliveries.

In the Inland Barge Group, we expect full year revenues of between $550 million and $580 million in 2014, with an operating margin of between 14% and 16% for the year.

In the Energy Equipment Group, our 2014 revenue guidance is between $840 million and $885 million. This represents expected growth of 26% to 33% and would result in record revenues for this group. We expect the range of operating margin for the year to be between 11% and 12%. The year-over-year improvement in both the revenues and profit reflects the expected solid performance of our wind towers business, strong demand for storage containers and results from the recent acquisitions made in this group.

In the Construction Products Group, we expect full year revenues of between $530 million and $560 million in 2014 with an operating margin of between 12% and 13.5%. The improvement in results reflects the benefits from repositioning activities that have been occurring in this group.

In the Railcar Leasing and Management Services Group, we expect 2014 operating level revenue of between $585 million and $615 million, and operating profit of between $260 million, $280 million, similar to 2013 levels. As a result of the sale of the first $500 million of railcars to Element, our profit from leasing operations is expected to be between $30 million and $35 million lower than have the cars remained in our lease fleet.

As a reminder, the operating results for our Railcar Leasing joint ventures, TRIP and our RIV 2013, are fully consolidated within the Railcar Leasing and Management Services Group. The earnings related to the equity not held by Trinity are deducted from Trinity's net income to the noncontrolling interest line at the bottom of the income statement. As a result of this, we expect to deduct between $27 million and $35 million of earnings in 2014. As we have indicated on previous earnings calls, TRIP and RIV 2013's partnership tax status results in no taxes applied to the amount of noncontrolling earnings deducted from Trinity's income statement.

In addition to the guidance I just provided for the Leasing Group, we expect to report revenue from railcars sales from the lease fleet of between $315 million and $330 million, and operating profit of between $165 million to $180 million, primarily from the program agreement with Element. Our railcars sales reported in revenue if the railcar has been in the fleet for less than 1 year. Otherwise, it is reported as a disposition of a long-term asset with no revenue recorded.

Of the $396 million of railcars that were sold to Element during January, approximately $174 million will be reported in first quarter revenue and the remaining amount will be reported on the cash flow statement as proceeds from car sales. As I mentioned earlier, the amount of revenue and profit recognized from car sales in 2014 will depend on the timing of lease railcar deliveries to Element. There could be a shift from car sale revenue and profit to leasing eliminations and deferrals or vice versa in any one quarter with no impact on the overall level of consolidated profit recorded, though the timing may vary from one quarter to another.

For 2014, we expect to eliminate between $645 million and $675 million of revenue and defer between $100 million and $115 million of operating profit due to the addition of new railcars to the wholly- and partially-owned lease fleet, including railcars sold to RIV 2013. The level of eliminations is lower than last year, primarily due to the program agreement with Element.

For 2014, we do not expect the net investment in new railcars to consume any cash due to expected proceeds received from railcar sales during the year.

Full year manufacturing and corporate capital expenditures for 2014 are expected to be between $200 million and $250 million as we maintain our facilities and invest in organic growth to meet market demand for our products. We expect between $250 million and $270 million of revenue eliminations for other intercompany transactions.

In addition, corporate expenses are expected to range from $87 million to $97 million for the year, as a result of our growing business operations and acquisitions.

For 2014, our guidance assumes a tax rate of between 35% and 36% for the year.

Before I conclude, let me address the accounting treatment on our earnings per share calculation for the company's $450 million of convertible notes issued in 2006. Details pertaining to these notes are included in Note 11 of our 10-K. These convertible notes will have a dilutive effect on quarterly EPS if the average market price of our common stock during the quarter exceeds the convertible note's conversion price. At the end of 2013, the conversion price was $50.78.

Since issuance of the notes, our quarterly average stock price has been below the conversion price. Thus, we have not included any additional shares in the denominator of our diluted EPS calculation for any historical quarterly reporting period.

Our common stock is currently trading above the conversion price. If the average price of the stock for the quarter remains above the conversion price, we will report additional shares as part of our diluted EPS calculation. For example, a $60 average stock price would result in an additional 1.4 million shares being added to our diluted share count for the purposes of calculating EPS.

Our annual guidance uses the full year weighted average share count of approximately 77 million shares for the purpose of calculating fully diluted EPS. This share count includes the potential dilutive impact from our convertible notes at the $60 price that was used in my example.

As a reminder, we are required to report EPS using the 2-plus method of accounting. The result of which should be the reduction of EPS attributable to Trinity by approximately $0.23 per share for the full year 2014 compared to calculating Trinity's EPS directly from the face of the income statement. This is included in our EPS guidance as well.

Our full year guidance range reflects earnings per share growth of 33% to 47% compared to last year, and was the result of the achievement of a new level of record annual earnings for Trinity. We remain very pleased with the focused dedication of all of our employees who helped deliver impressive growth and high quality earnings during 2013.

Our operator will now prepare us for the question-and-answer session.

Question-and-Answer Session

Operator

[Operator Instructions] And we'll go first to the side of Steve Barger with Keybanc Capital.

Steve Barger - KeyBanc Capital Markets Inc., Research Division

I think I'm going to just jump into the acquisitions first. As you mentioned, on a trailing 12-month basis, you've added almost $100 million. Without drilling down into each of the 3 deals, can you give us a general operating margin profile for those acquired properties, excluding onetime items or on a purely operational basis?

William A. McWhirter

Yes, Steve, this is Bill. I think when we look at those operations from a margin perspective, they're probably relatively consistent with where you see our Energy Equipment Group today. We would hope longer term there's opportunity for margin expansion as we integrate the businesses, particularly the 2 cryogenics businesses as we put those together.

Steve Barger - KeyBanc Capital Markets Inc., Research Division

Should we be thinking there are other deals of this type to get scale in those specific applications? Or are those part of a broader product and service spectrum that you're trying to fill in to pursue a strategy?

Timothy R. Wallace

Steve, this is Tim. I think the answer is yes to both of your questions. We like to focus on certain products that we're -- we think are adjacent to our businesses, like the cryogenic products. And then we also like to look for some newer ones, as well as we're going to be expanding some of our existing ones.

Steve Barger - KeyBanc Capital Markets Inc., Research Division

All right. And how should we think about growth rates for those cryogenic companies? And I guess same question for Platinum. And if you can't talk about those properties specifically, can you help us think about the industry growth rates that you see?

Timothy R. Wallace

James, do you want to take that?

James E. Perry

Sure. Steve, this is James. I think it's a little early for us to forecast growth rates and potential we have. We certainly see a lot of potential in the cryogenic space, as well as the oilfield equipment space that Platinum gets us into, as well as the Canadian market that Platinum helps us enter in a bigger way as well. So again, a little too early to forecast that. This year's embedded in the guidance we provided. But as we seek more market opportunities and seek expansion opportunities, as we develop the enrichment between existing businesses as we have in these new businesses, we'll be able to provide that as we go forward.

Steve Barger - KeyBanc Capital Markets Inc., Research Division

All right. And just one other and then I'll jump back in line. How much of this is reacting to or, I guess, anticipating requirements for companies where you already have a relationship in one of your other lines of business? And does that really help you kickstart growth here? Or are you more assembling capabilities to put together a service package or a product package that you can then take to market?

Timothy R. Wallace

Bill?

William A. McWhirter

Yes. Steve, I think when you look at our 2 acquisitions, they really complement each other well. One has strengths on the stainless steel side, another had strengths on the aluminum side. And so as we look forward, and particularly in the usage of LNG, we see a lot of applications. Certainly, there's been a fair amount of talk about the use of LNG through locomotives in the rail side. There's fair amount of talk in the marine business and the barge business as well. And so I think as we think broadly downstream for Trinity, we see a lot of opportunities in these business lines in the cryogenic technology. And so for us, it was getting the competencies together and then plotting a plan as we move forward.

Timothy R. Wallace

Yes. And, Steve, this is Tim. We already are producing cryogenic tanks in Mexico serving that market for stationary tanks. So we really feel like there's a great domino effect associated with these acquisitions.

Operator

And we'll go next to the side of Allison Poliniak from Wells Fargo.

Allison Poliniak-Cusic - Wells Fargo Securities, LLC, Research Division

James, I just want to understand a little bit more your guidance range. And I know the uncertainty about that second tranche of Element coming through. Can we assume more of these are going to TILC through -- target level is going to TILC to, I just assume, a lower end of that guidance range? I'm just trying to think -- just see how I should think about that.

Timothy R. Wallace

You're referring to our overall guidance range for the company or for the specific Element...

Allison Poliniak-Cusic - Wells Fargo Securities, LLC, Research Division

For the company specific, I guess either however you wanted to address it. I'm just trying to get a sense of -- I know it's hard for you guys to say yes now, but does that lower end assume more go to TILC versus Element?

Timothy R. Wallace

Yes. I think what we said is in terms of the overall guidance range for the company, we always at this early point of the year try to give a pretty wide range and a sense of where we are. The guidances I gave for each businesses gives you the scale of how large a company we've become and how much opportunity we have within those ranges to perform. In terms of the second tranche of Element cars, the $500 million as we said, the exact timing and composition is still being worked through with Element. As we said, the majority of that will be from our leasing backlog. Now because of timing of when a car is produced and delivered, whether it gets sold to Element during the quarter or the next quarter will depend on whether you see it come out as a car sale or purely a new car sale from the OEM segment. So that won't impact the margin range within the guidance that we've given you or the profitability of the transaction itself. That's simply going to be geography. And we can certainly help you with that on a quarter-by-quarter basis when we report those results.

Allison Poliniak-Cusic - Wells Fargo Securities, LLC, Research Division

Okay, that's terrific. And then, Steve, you gave a number of the leasings as it stands. Is that at the end of Q4 or did that include the sales to Element in Q1 as well?

D. Stephen Menzies

This is of the end of the fourth quarter 2013.

Allison Poliniak-Cusic - Wells Fargo Securities, LLC, Research Division

Okay. Are you willing to provide the Q as it is today?

D. Stephen Menzies

Not today, no.

Operator

We'll go next to the side of Justin Long from Stephens Inc.

Justin Long - Stephens Inc., Research Division

Are you more confident in some of the non-tank rail car markets coming back the next several years? It seems like you are based on the increase you're seeing in the market. And also, if you look at the manufacturing operation today in the Rail Group, what are some of the non-tank railcar types where you have latent capacity?

Timothy R. Wallace

Steve, do you want to take that?

D. Stephen Menzies

Yes. Sure, Justin, good question. We really are seeing a broadening in demand for railcars beyond just tank cars for crude oil service. Let me just talk about tank cars for a moment before I get into the freight cars. Again, crude oil is the initial phase of tank car demand. But as refined products continue to expand, and the petrochemical complex expands, we're going to see additional need for tank cars to carry those refined products as well. So I think there's still growth and legs [ph] to the tank car demand. Now freight cars, we're seeing strong demand really across-the-board. We're seeing significant demand for small cube covered hoppers, for frac sand and construction product. We're also seeing demand for covered hoppers that will carry grain products. And again, part of the expansion of the petrochemical sector, we expect that demand will only grow for covered hoppers for resins and plastics. So we are very well positioned to address any additional freight car demand from a capacity standpoint. And we really do see some growth in that area to complement what we're doing on the tank car side.

Justin Long - Stephens Inc., Research Division

That's helpful. My second question was on the balance sheet. So your debt today is mainly nonrecourse debt associated with the lease fleet. And I was wondering how you think about the level of leverage you feel comfortable bringing on as you pursue acquisitions going forward.

James E. Perry

Yes, Justin, this is James. I think as you point out that, we have a strong balance sheet. The majority of the debt is non-recourse on the leasing side. You've seen the leverage on that side continue to come down as we have financed a lot of our growth in the lease fleet with our cash flow from operations and from the capital that we've generated through our alliances and partnerships over the last year. From the corporate side of the balance sheet, as you mentioned really, the only piece there is the convertible debt and the cash we have puts us in a net cash position on the balance sheet. In terms of comfort around leverage, we are an investment-grade company from S&P and Fitch now. That's a good position for us to be in and it broadens our excess to the financial markets. We wouldn't put ourselves in a position of stating exactly what level of leverage we're comfortable with. Having that investment-grade rating gives us a lot of opportunities. But as we're making acquisitions or investing in the company, that's also bringing with it cash flow and earnings so that that increases your capacity there. So I think I'd say we have a lot of room, we have $1.3 billion of liquidity between our cash and immediately available facilities, certainly more on the debt and equity markets if we had that need. But I don't think we'd be able to give you a number on how much leverage we're comfortable with. But we'd certainly feel confident that we've got the ability to pursue opportunities for growth in the company with the balance sheet we have and the cash flow.

Justin Long - Stephens Inc., Research Division

Okay, great. That's fair. I guess, one last one. I just wanted to clarify, so is the next tranche of $500 million of sales going to Element, is that reflected in your guidance?

James E. Perry

Yes, it is. And again, it's expected over the next 12 months. It's going to come primarily from the leasing backlog, vis-a-vis primarily new cars. And it is included in the guidance. We're not breaking out the specific component from that because it's a Leasing Group of customers and then a third-party sale to Element of that railcar. So it is included in the guidance, yes.

Operator

And we'll take our next question from the side of Eric Crawford from UBS.

Eric Crawford - UBS Investment Bank, Research Division

Just want a quick point of clarification on the deliveries guidance. I think the midpoint implies a 9% decline in deliveries from the 4Q run rate. Is that just a function of Element deliveries coming from lease fleet rather than backlog? How should we be thinking about that?

D. Stephen Menzies

Eric, this is Steve. Yes, I wouldn't necessarily relate our delivery cadence with Element in that backlog. As I mentioned, we had some significant delivery requirements to meet customers' needs to have cars in service by the end of 2013, which caused us to ratch up a little bit more in the fourth quarter. I think the run rate of 25,500 to 27,500 is the right rate that you'll see on average over the 4 quarters.

Eric Crawford - UBS Investment Bank, Research Division

Okay, that's helpful. But should we be thinking about a constant average run rate for the 4 quarters? Or do any quarters in particular stand out?

D. Stephen Menzies

Well, generally our deliveries are within a fairly narrow range. We're going to have some changes in delivery numbers based upon product mix and potential line changeovers. But again, I feel good about the range of deliveries we've given you for the year.

Eric Crawford - UBS Investment Bank, Research Division

Okay, got it. No, that's helpful. And I guess next, it's a common theme for everyone, but if you could speak more broadly to the opportunity you're seeing with respect to tank car safety, seeing reports of some customers looking to buy new rather than retrofit. And other OEMs have commented they're hopeful to see some movement on the regulatory front in the next 60 to 90 days. So I was just wondering if you could speak to what you're seeing there.

D. Stephen Menzies

Yes. Eric, I mean, it's all speculation. The PHMSA has a very clear process that they must go through. They're in a quiet period following the request for peers' opinions and submittals under the advanced notice of proposal we're making. We're very much engaged in any conversations within the industry with our customers. We're looking at a number of different scenarios. I think we'll be prepared for whatever outcome comes to us from a rulemaking. But I still think we're a little bit in the offering before we know what those are.

Eric Crawford - UBS Investment Bank, Research Division

Got it. And then last for me. Just switching over to barge. I guess that coal-to-ag barge switching dynamic that you called out, is that gaining momentum or has it been more limited? I guess with the big harvest and the higher nat gas prices that we're seeing at least now, I think that there might be less momentum there.

Timothy R. Wallace

Yes, Eric, I think the momentum has definitely slowed down on the conversions. We did see it pretty strong for a period of time. But we are seeing a slowdown at this point in time.

Operator

And we'll go next to Bascome Majors from Susquehanna.

Bascome Majors - Susquehanna Financial Group, LLLP, Research Division

I wanted to ask another one on sort of the acquisition front. You've talked a little bit about leverage and where you're seeking to deploy capital. But now that Element's out there, we have some of the same visibility you do into some of the cash inflows from your leasing monetization efforts over the next couple of years. I mean, can you help us think about sizing up the amount of capital you and your board are comfortable with deploying over the next couple of years here? And just give us a little sense to the cadence or pace of that that you guys had as you think about growing the business outside of rail.

Timothy R. Wallace

Okay, Bascome, this is Tim. We were very focused in our business development process within our company, and we know our markets and our industries real well that our businesses participate in. And we've got a broad group of relationships that provide a large number of opportunities for us. So in the business development, in the business growth area, we always have something going on in that particular area. We're either participating in a formal bidding process for a company or we're taking some delivered steps to discuss opportunities with principles of companies that we're interested in. It's just a very dynamic environment and it's hard for us to pinpoint one particular item at this time. Sometimes our transactions occur very quickly, and in other times, they take a long time to finalize the deal. And that's how the history of our company has been for decades. We're fortunate to have a highly flexible and collaborative manufacturing platform that we build upon. And when we look at an acquisition candidate, we always analyze their enrichment value, and that's the value that they bring to us and the value that our manufacturing platform will add to their business. And this enrichment flows both ways. And so on some of the smaller deals, we may get some competencies and we may get some technology that's very crucial to us. The acquisitions that we did in the cryogenic business were very small, but they have opportunities with the seeds that have been planted to grow into something very large and make a significant impact. A lot of times when we acquire a company, we may have an idle facility that we think we can convert some manufacturing space over to. We're just constantly reviewing growth opportunities that fit within our current business or adjacent to our manufacturing platforms in that area. So it's just really hard for us to quantify them and put the dollar and cents to the size. We're not afraid of doing a large acquisition. In fact, we have a pretty good appetite in that particular area, but it's a matter of finding something that fits really well with our culture and fits with the manufacturing platform that we have. And we're very confident that we will have some very interesting opportunities this year and next year as we -- on a go-forward basis.

Bascome Majors - Susquehanna Financial Group, LLLP, Research Division

Maybe -- could you help us get a sense for what the boundaries of small, medium or large would be in your eyes?

Timothy R. Wallace

No. Because like I said, we don't really categorize something as a small, medium and large. We look at it as to the potential that we think that business can bring to us and then the value that we can create on a go-forward basis. But as James said, we've got significant liquidity. Our balance sheet capacity is great, we've got cash flow coming in. So we can handle a relatively large acquisition.

Bascome Majors - Susquehanna Financial Group, LLLP, Research Division

All right. Understood. And I'll just ask one more on a different angle. This morning, the largest crude carrier among the Class Is confirmed that they were seeking to purchase their own fleet of newer tank cars in light of some of the public and regulatory safety concerns that you addressed earlier in your call. Rails owning tank cars would be a pretty dramatic shift from the traditional operating lessor-and-shipper ownership structure here. Could you confirm if you're getting inquiries from multiple railroads on the tank car side today?

D. Stephen Menzies

Bascome, this is Steve. We don't comment on specific orders or order inquiries. I agree with you that a major railroad taking ownership of tank cars is something different in our industry. And I have seen where BNSF have made their large announcement earlier this morning about an interest to purchase tank cars. We'll certainly look at this business opportunity like we look in the other orders. And yes, there's going to be a number of people looking to buy a lot of tank cars following regulatory change.

Bascome Majors - Susquehanna Financial Group, LLLP, Research Division

All right. Understood. Do you think -- I mean, hypothetically, since it's early at this point, I mean, could this impact or could this change the safety debate in any way in your eyes and how that plays out if they emerge as buyers and owners in this asset class, which they historically haven't been?

D. Stephen Menzies

I don't think so. I mean, railroads have always been concerned about tank cars safety whether they own them or not. And there's 330,000, 340,000 tank cars in North America. So I think the tank car segment is a strong market segment, it's going to continue to grow.

Timothy R. Wallace

At the same time, Steve -- this is Tim. Berkshire already owns tank cars. So it's just really one of their units owning tank cars versus another one.

D. Stephen Menzies

Good point. Union Tank Car, of course, another subsidiary of Marmon group, which is owned by the Berkshire companies, Berkshire Hathaway which also owns Burlington Northern Santa Fe.

Operator

And we'll go next to Sal Vitale from Sterne Agee.

Salvatore Vitale - Sterne Agee & Leach Inc., Research Division

Just a quick clarification. When you say the next tranche of the $500 million to Element that will come from the leased backlog, so just to make sure I understand that, that is -- will not be eliminated, so the profit will not be eliminated on that, correct?

Timothy R. Wallace

Ultimately, that's correct. You may see in 1 quarter the profit eliminated as it goes into our lease fleet and then is sold to Element, that's simply a matter of timing and geography, as I mentioned. But once the cars are sold to Element, you'll see a full recognition of the profit at a consolidated level.

Salvatore Vitale - Sterne Agee & Leach Inc., Research Division

Okay. So then when you say that the guidance that you gave on all the categories, so basically the profit on the $500 million would be included in the leased profit, right, rather than the manufacturing profit?

Timothy R. Wallace

The majority of that would be in the manufacturing profit as the majority of this will come out of the Rail Group directly. There may be some that move to leasing first and come from that. And again, we'll update that on a quarterly basis if we see that shift.

Salvatore Vitale - Sterne Agee & Leach Inc., Research Division

Okay, understood. And then the other question is if I just look at your backlog, you have about 40,000 cars in the backlog and the midpoint of your guidance for '14 is 26,500. How do I think about this? Does all of that 26,500, should we assume that all comes from the backlog? Or is some of it or are you envisioning some of those deliveries to come from current year orders?

D. Stephen Menzies

Sal, this is Steve. Good question. We certainly expect a significant number of our deliveries to come from our backlog. We do have unsold space on several of our product lines, production lines in 2014. So there may be some additional sales that will come from those opportunities.

Operator

And we'll go next to the side of Matt Brooklier from Longbow Research.

Matthew S. Brooklier - Longbow Research LLC

In your prepared remarks, you talked about potential opportunity within Mexico. And I'm just curious to hear kind of your overall thoughts on what that opportunity could look like. That's an energy market. Currently, they're going pretty radical change here. Just curious to hear where potentially Trinity fits into that market, which, in particular, businesses and what's your level of, I guess, conviction that you can grab incremental business in that particular market?

Timothy R. Wallace

Okay. This is Tim. As I said during the past few years, our customers have ordered railcars and barges to transfer crude oil and they're ordering tanks for the storage of it. And if you look at our product line, it fits real well to serve all of our products, fit real well to serve the oil, gas and chemical industries. And so we're just closely monitoring the opportunities in Mexico. We've got great relationships down in Mexico, we've got a board member that used to be the CEO of Pemex at one time. And so we're following the proposed legislation and the changes that could open up the energy markets and increase the privatization down there. So it's more of a longer term, "let's sit on the sidelines and look at what opportunities are there, and then let's be prepared to strike when we think the appropriate time fits." We're building right now in Mexico loads of frac sand cars, as an example, and we're building tank cars down there. So we're geographically desirably set up. We're building tanks right now of all different types that serve that particular market. So our Mexico companies that we have are really strategically located to serve that market on a very rapid basis, should the demand increase.

Matthew S. Brooklier - Longbow Research LLC

Okay. I mean, is the opportunity more on the railcar side or is it more on the tank storage side? Or is it a little bit of both maybe?

Timothy R. Wallace

I think it's across-the-board from the Energy Equipment business segment that we have, as well as the Railcar segment that we have.

Matthew S. Brooklier - Longbow Research LLC

Okay. And then just another question about regulation. Is there any other, I guess, preemptive measures that tank car buyers are currently making ahead of potential regulation? I mean, for the most part, we don't know what the final rule could look like. We do have kind of a sense of what the requirements may be. And I'm just curious to hear of kind of the equipment mix on the tank car side that shifted further towards jacketed cars versus nonjacketed cars and kind of the overall potential benefit for Trinity.

D. Stephen Menzies

Matt, this is Steve. Yes, certainly, we're in dialogues with all of our customers about potential outcomes and about orders they may have placed with us. We really haven't had a situation where a major customer shifted from a non-jacketed car to a jacketed car because the non-jacketed cars are acceptable under the regulations. And I think you have to understand from the shippers' standpoint, because oil continues to come out of the ground. They have refineries, they have to be able to continue to feed. So just halting railcar shipments, whether that's new equipment that they have earmarked for expansion or whether it's existing equipment, just not very feasible. And so I think we continue to make what we make and then assuming as the regulations are available, we're going to make that shift and produce those cars for our customers.

Operator

And we'll go next to the side of Art Hatfield from Raymond James.

Arthur W. Hatfield - Raymond James & Associates, Inc., Research Division

James, I know you don't want another question on Element and your guidance. But just on your elimination guidance, are you currently assuming all $500 million will be direct sale or is a portion of that you have going through the lease fleet at this point in time? And I know you'll update us as time goes on, but just kind of for an understanding of where the guidance stands now.

James E. Perry

Sure, Art. Thanks for that. And that's why we give ranges. The guidance we gave is that the vast majority of that is through the elimination line directly from the Rail Group. But the car sale figure that we gave you and then the elimination figure that we gave you does include some of that flowing through. But for the most part, the vast majority is directly from the Rail Group. And again, we'll update that each quarter as we move along and get more precise timing around that. Recall that we already have a piece of that recorded in the first quarter that we reported previously, what shows up in revenues versus what shows up not as revenues, those kinds of things. We're happy to walk you through that after the call as well. But hopefully that helps.

Arthur W. Hatfield - Raymond James & Associates, Inc., Research Division

Okay. No, no, that actually that -- no, that helps me a lot just to get that clarification. Just another thing, and I don't know if this is just an accounting thing, but can you kind of help me understand. In the fourth quarter of '13, you sold about -- from the lease fleet, you sold about $112 million worth of cars and generated a profit of $16 million, whereas a year ago, you sold $50 million and generated about $15 million of profit. Can you just walk me through kind of what happened year-over-year there and if I'm not really...

Timothy R. Wallace

I'll mention that in a few different ways, Art. Clearly, one thing is simply mix and which cars you're selling and what leases are attached. Another thing is and again, we can walk you through this, the revenue piece of this, whether a car is less than 1 year old and recorded as revenue versus a car that's more than 1 year old and not shows up as revenue, can make a big difference in that margin. It's all going to show up as profit, the only portion that may show up is revenue. The cars that we sold in the fourth quarter this year could have a different mix in that perspective in terms of ages fourth quarter a year ago. So we can track that with you as we file our 10-K later today and help you with that math.

Operator

And we'll go next to the side of Willard Milby. It sounds like Willard Milby's phone may be having some problems. We'll take our next question from Barry Haimes with Sage Asset Management.

Barry George Haimes - Sage Asset Management, LLC

A couple of questions. One, if there is a retrofit market that develops when the safety regulations come out, is there anyway you can give us a broad range per car, let's say, to size that? And would you need to bring out some more capacity to handle that since you're pretty full on your tank car capacity now? That's the first question.

D. Stephen Menzies

Barry, it's really hard to speculate on the nature of a retrofit until we know what the retrofit is. Recall that in the fourth quarter, we made an acquisition in maintenance services when we acquired Seaboard, which expanded our maintenance service capabilities. Specifically, retrofit work will be done at a maintenance facility as opposed to a new car production facility. So we're looking at alternatives to be able to support our fleet and any customers if and when our retrofits are required.

Barry George Haimes - Sage Asset Management, LLC

Okay, great. And then my second question was on the acquisition program that you talked about, can you -- and obviously, each profit will be somewhat different. But can you give us a sense of what sort of IR hurdle rate you're looking at or what kind of spread across the capital you're looking at?

James E. Perry

Sure, Barry, this is James. Thanks for that. We really just don't dive in to what our hurdle rates might be, what IRR rates might be. We clearly look at all of those factors when we discuss potential investments across the company, internal and external, with our Board of Directors. But we take into account those exact types of things, as well as the long-term benefits we have, enrichment opportunities we have, as Tim mentioned, and what it's going to do for the company and the shareholder value. So we just don't dive into that, certainly externally.

Barry George Haimes - Sage Asset Management, LLC

Okay. And then last question for me. The new ethylene plants that are scheduled to come on in the second half of the decade, about when would you start to see railcar orders to service those new plants?

D. Stephen Menzies

Barry, this is Steve. Certainly, there's a lot of investment plan to expand ethylene cracker capacity, that's exciting for us. We started to see the initial inquiries for rail cars to transport resins out of several of those expanded facilities. And we expect that to continue. I would look, and I think we said in previous conference calls, that 2015, '16, we would expect to see a good flow of railcars for those operations.

Operator

And we'll go next to -- we'll do a follow-up from Bascome Majors.

Bascome Majors - Susquehanna Financial Group, LLLP, Research Division

I just wanted to ask your thoughts on cash taxes for the year given that some of the lease fleet is aging and the composition is changing a bit. I'm just curious if you expect the cash versus book tax mix to change dramatically this year.

Timothy R. Wallace

Sure, Bas. I think you have seen that change over the last few years. As you've seen, the depreciation of our lease fleet flow through the system. As you've seen, the bonus depreciation opportunities for the last couple of years, we've looked at that, certainly with our partnerships as well. Now they have tax partnership status. So we would expect the cash tax aspect as opposed to the GAAP tax aspect to continue to increase this year as we go through the quarters.

Bascome Majors - Susquehanna Financial Group, LLLP, Research Division

Is there any guidance you can give us about a cash tax rate or perhaps a directional trend in deferred taxes this year?

Timothy R. Wallace

No. I think it's a little early to go through that. We're still working through the 2013 taxes, of course, as we file that later this year. And then as we see what opportunities present themselves in terms of how we handle lease fleet sales, how we look at the depreciation of our own lease fleet, acquisitions we might make, those kind of thing. There's a lot of variables there that impact that quite a bit. So I don't think we'd be able to, here in February, provide any detailed guidance for much direction beyond what I said earlier.

Gail M. Peck

It looks like that concludes today's conference call. A replay of this call will be available after 1:00 Eastern Standard time today through midnight on February 27, 2014. The access number is (402) 220-0117. 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.

Operator

Thank you for your participation in today's conference call. Please feel free to disconnect at anytime.

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