Zhu Wang
Brooke Working
Alexandra Zimmerman
Trinity Industries, Inc.
Trinity Industries is an industrial company that provides products and services of transportation, energy, construction, and chemical segments. Trinity has risk factors that they could come upon during production time. They use analysis of their financials and discussion with management to keep their company growing. TRN set up a business strategy within their company and their chairman writes in a letter what they are working on and what has worked in the past year.
TRN has many risk factors and uncertainties that they take into account when determining their results and could cause them to fail in the future. Volatility in the global financial markets could cause customers to delay or reduce purchases of railcars, barges, wind towers and other products and services. Volatile credit markets will prevent customer’s access to use credit if they are buying products. With that happening product order volumes may decrease or customers may default on payments owed to the company. Not only does credit markets effect customers, it effects the suppliers as well. Suppliers could face the challenge of obtaining credit with buying and selling of their products. If they cannot use credit to produce their products then that can harm us if we need one of their products to make ours. All could result in reduction of revenues, increased price competition, increased operating costs, which in turn can all affect the results of the operations and financial conditions of the company. Backlog is another risk factor that represents future production and potential revenue. Customers could decide to terminate or cancel order due to this and that would be hurtful to the company. TRN’s cyclical nature of their business results in lower revenues during economic downturns. Downturns can have a significant adverse effect on industries due to lower demand for new and replacement products. This could also result in lower sales, prices, and a loss of profits. Claims like Litigation could increase costs but could also cause the financial condition to fall. When price and demand for steel rises the margins and profitability could decrease. TRN has potential exposure to environmental liabilities, which may increase costs and lower profitability. They operate in very high competitive markets. Which may cause TRN not to be able to sustain a market leadership position, which may impact their financial results. Another risk factor is how limited they are on customers in their certain area of business. Purchase patterns in all segments and the timing of delivery, completion and customer acceptance of orders will impact the revenues and income each quarter. When the demand is low for re-marketed railcars it could cause for lower leases and reduced revenues as well. All of these reductions will hurt the operating costs and energy costs. Natural disasters, could lead to production or service stalls or shutdowns, which will cause loss of revenue or higher expenses. All of these could cause TRN to potentially fail to integrate new businesses or products into its current business.
The Company’s revenues for 2013 were $4.4 billion, representing an increase of $553.4 million or 14.5% over last year. Operating profit increased to $772.9 million compared to $574.8 million last year for an increase of 34.5%. Operating margin improved to 17.7% in 2013 from 15.1% in 2012. The increase in revenues for 2013, when compared to the prior year, resulted primarily from higher shipment volumes and a more favorable product mix in TRN’s Rail Group combined with the effects of acquisition-related volumes in our Construction Products and Energy Equipment Groups. The Leasing Group experienced higher leasing and management revenues from higher fleet additions and an increase in rental rates offset by lower revenues from external railcar sales. Lower shipment levels and a less favorable product mix