TRINITY INDUSTRIES INCTRN
TRINITY INDUSTRIES INC Revenue Disclosure
Revenue associated with our railcar lease contracts is recognized in accordance with ASC 842, Leases. Revenue associated with our railcar manufacturing, maintenance services, and digital and logistics services businesses, as well as certain servicing, maintenance, and management agreements, is recognized in accordance with ASC 606, Revenue from Contracts with Customers. Below is a description of principal activities from which we generate our revenue, separated by reportable segments.
Railcar Leasing and Services Group
In our Railcar Leasing and Services Group ("Leasing Group"), revenue from rentals and operating leases, including contracts that contain non-level fixed lease payments, is recognized monthly on a straight-line basis. When certain criteria are met, leases not classified as operating leases are generally classified as sales-type leases.
We review our operating lease receivables for collectibility on a regular basis, taking into consideration changes in factors such as the lessee’s payment history, the financial condition of the lessee, and business and economic conditions in the industry in which the lessee operates. In the event that the collectibility of a receivable with respect to any lessee is no longer probable, we derecognize the revenue and related receivable and recognize future revenue only when the lessee makes a rental payment. Contingent rents are recognized when the contingency is resolved.
Selling profit or loss associated with sales-type leases is recognized upon lease commencement, and a net investment in the sales-type lease is recorded in the Consolidated Balance Sheets. Interest income related to sales-type leases is recognized over the lease term using the effective interest method. Selling profit or loss associated with sales-type leases is presented in the gains on dispositions of other property line in our Consolidated Statements of Operations. See "Lease Accounting" below for additional information regarding sales-type leases.
We report all sales of railcars from the lease fleet as a net gain or loss from the disposal of a long-term asset in accordance with ASC 610-20, Gains and losses from the derecognition of non-financial assets. Sales of railcars from the lease fleet are presented in the Lease portfolio sales line in our Consolidated Statements of Operations.
Our maintenance services business is primarily dedicated to servicing our lease fleet. Revenues related to maintenance services performed on Company-owned railcars under full-service lease agreements are eliminated within the Railcar Leasing and Services Group. Services that are not included in the full-service lease agreement, such as repairs of railcar damage or other customer-specific requirements, as well as maintenance and repair activities on railcars owned by third parties, including our investor-owned fleet, are reflected in the Leasing Group's revenues and are not eliminated in consolidation.
Within maintenance services, revenue is recognized over time as repair and maintenance projects are completed, using an input approach based on the costs incurred relative to the total estimated costs of performing the project. We recorded contract assets of $10.9 million and $9.6 million as of December 31, 2025 and 2024, respectively, related to unbilled revenues recognized on repair and maintenance activities that have been performed, but for which the entire project has not yet been completed, and the railcar has not yet been shipped to the customer. These contract assets are included within the Receivables, net of allowance line in our Consolidated Balance Sheets.
In connection with an acquisition that occurred during the first quarter of 2023, we evaluated whether we are acting as a principal or an agent for certain logistics services provided to a small number of customers. During the fourth quarter of 2023, we concluded that we act as an agent in these transactions as we do not control the services before they are provided to the customer, and as a result, revenues that were previously recognized on a gross basis should be recognized on a net basis. We elected to effect this accounting change on a prospective basis as it was not quantitatively or qualitatively material to our consolidated financial statements, and beginning in the fourth quarter of 2023, revenues associated with these services are now recognized on a net basis. The accounting change had no effect on the Company's previously reported operating profit, net income, earnings per share, Consolidated Balance Sheets, or Consolidated Statements of Cash Flows.
Rail Products Group
Our railcar manufacturing business recognizes revenue related to new railcars at a point in time when the customer has submitted its certificate of acceptance and legal title of the railcar has passed to the customer. Certain contracts for the sales of railcars include price adjustments based on changes to input costs; this amount represents variable consideration for which we are generally unable to estimate the final consideration until the railcar is delivered.
Revenue related to sustainable railcar conversions is recognized over time as sustainable railcar conversions are completed, using an input approach based on the costs incurred relative to the total estimated costs of performing the project. Revenue related to certain support services is recognized over time based on our stand-ready obligation to provide such services. We recorded contract assets of $4.9 million and $3.4 million as of December 31, 2025 and 2024, respectively. These contract assets are included within the Receivables, net of allowance line in our Consolidated Balance Sheets.
We account for shipping and handling costs as activities to fulfill the promise to transfer the good; as such, these fees are recorded in revenue. The fees and costs of shipping and handling activities are accrued when the related performance obligation has been satisfied.
Disaggregation of Revenue
We disaggregate our revenue from contracts with customers by major product or service line, as this depicts how the nature, amount, timing, and uncertainty of our revenue and cash flows are affected by economic factors. The following table presents our disaggregated revenues by major product or service line for each reportable segment:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in millions) | |||||||||||||||||
| Railcar Leasing and Services Group: | |||||||||||||||||
| Leasing and management | $ | 919.1 | $ | 867.8 | $ | 813.8 | |||||||||||
| Maintenance services | 247.4 | 234.0 | 170.1 | ||||||||||||||
| Digital and logistics services | 40.1 | 41.4 | 57.1 | ||||||||||||||
| 1,206.6 | 1,143.2 | 1,041.0 | |||||||||||||||
| Rail Products Group: | |||||||||||||||||
| Rail products | 1,302.5 | 2,321.7 | 2,363.7 | ||||||||||||||
| Parts & components | 117.0 | 109.4 | 115.7 | ||||||||||||||
| 1,419.5 | 2,431.1 | 2,479.4 | |||||||||||||||
| Elimination of intersegment revenues | (469.2) | (495.1) | (537.1) | ||||||||||||||
| Total consolidated revenues | $ | 2,156.9 | $ | 3,079.2 | $ | 2,983.3 | |||||||||||
Unsatisfied Performance Obligations
The following table includes estimated revenue expected to be recognized in future periods related to performance obligations that are unsatisfied or partially satisfied as of December 31, 2025 and the percentage of the outstanding performance obligations as of December 31, 2025 expected to be delivered during 2026:
Unsatisfied performance obligations at December 31, 2025 | |||||||||||
| Total Amount | Percent expected to be delivered in 2026 | ||||||||||
| (in millions) | |||||||||||
Rail Products Group: | |||||||||||
| New railcars: | |||||||||||
| External customers | $ | 1,548.1 | |||||||||
Leasing Group | 113.5 | ||||||||||
| $ | 1,661.6 | 49 | % | ||||||||
| Sustainable railcar conversions | $ | 35.2 | 100 | % | |||||||
Railcar Leasing and Services Group: | |||||||||||
| Leasing and management | $ | 64.6 | 31 | % | |||||||
The remainder of the unsatisfied performance obligations for the Rail Products Group is expected to be delivered through 2028. The orders in the Rail Products Group's backlog from the Leasing Group are fully supported by lease commitments with external customers. The final amount of backlog attributable to the Leasing Group may vary by the time of delivery as customers may elect to modify their procurement decision.
Unsatisfied performance obligations for the Railcar Leasing and Services Group are related to servicing, maintenance, and management agreements and are expected to be performed through 2035.
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.