Debt

6 Months Ended

Jun. 30, 2024

Debt Disclosure [Abstract]

Debt

Debt

The carrying amounts of our debt are as follows:

	June 30, 2024		December 31, 2023
	(in millions)
Corporate – Recourse:
Revolving credit facility	$	—	$	—
Senior notes due 2024, net of unamortized discount of $— and $0.1	—		399.9
Senior notes due 2028, inclusive of unamortized premium of $4.9 and $—	604.9		400.0
	604.9		799.9
Less: unamortized debt issuance costs	(7.4)		(5.3)
Total recourse debt	597.5		794.6
Lease fleet – Non-recourse:
Wholly-owned subsidiaries:
Secured railcar equipment notes, net of unamortized discount of $0.3 and $0.2	2,516.6		2,246.7
2017 promissory notes, net of unamortized discount of $2.5 and $3.5	652.5		673.7
TRL-2023 term loan	329.0		334.5
TILC warehouse facility	488.2		529.3
Other equipment financing	51.2		52.3
	4,037.5		3,836.5
Less: unamortized debt issuance costs	(17.9)		(17.3)
	4,019.6		3,819.2
Partially-owned subsidiaries:
Secured railcar equipment notes, net of unamortized discount of $0.1 and $0.1	1,116.5		1,147.8
Less: unamortized debt issuance costs	(6.2)		(7.4)
	1,110.3		1,140.4
Total non-recourse debt	5,129.9		4,959.6
Total debt	$	5,727.4	$	5,754.2

Estimated Fair Value of Debt – The estimated fair values of our 7.75% senior notes due 2028 ("Senior Notes due 2028") and our 4.55% senior notes due 2024 ("Senior Notes due 2024") are based on a quoted market price in a market with little activity (Level 2 input). The estimated fair values of our secured railcar equipment notes are based on our estimate of their fair value using unobservable input values provided by a third party (Level 3 inputs). The respective carrying values of our revolving credit facility, 2017 promissory notes, TRL-2023 term loan, and TILC warehouse facility approximate fair value because the interest rate adjusts to the market interest rate. As of June 30, 2024, we evaluated the fair value of the other equipment financing liability using Level 3 inputs and determined that the carrying value approximates fair value. The estimated fair values of our debt are as follows:

	June 30, 2024		December 31, 2023
	(in millions)
Level 2	$	620.1	$	812.1
Level 3	$	3,465.9	$	3,192.7

Revolving Credit Facility – We have a $600.0 million unsecured corporate revolving credit facility. During the six months ended June 30, 2024, we had total borrowings of $190.0 million and total repayments of $190.0 million under the revolving credit facility. Additionally, we had outstanding letters of credit issued in an aggregate amount of $5.2 million, leaving $594.8 million available for borrowing as of June 30, 2024. The majority of our outstanding letters of credit as of June 30, 2024 are scheduled to expire in November 2024. Our letters of credit obligations support performance bonds related to certain railcar orders. The revolving credit facility bears interest at a variable rate of SOFR plus (1) a benchmark adjustment of 10 basis points and (2) a facility margin of 1.75%, for an all-in interest rate of 7.19% as of June 30, 2024. A commitment fee accrues on the average daily unused portion of the revolving credit facility at the rate of 0.175% to 0.40% (0.25% as of June 30, 2024).

The revolving credit facility requires the maintenance of ratios related to minimum interest coverage for the leasing and manufacturing operations and maximum leverage. As of June 30, 2024, we were in compliance with all such financial covenants.

Senior Notes due 2028 – In June 2023, we issued $400.0 million aggregate principal amount of 7.75% senior notes due July 2028. In June 2024, we issued an additional $200.0 million aggregate principal amount of 7.75% senior notes due July 2028 (the "Additional Senior Notes"), which increased the aggregate principal amount from $400.0 million to $600.0 million. The Additional Senior Notes were issued at a price of 102.5% of the principal amount. Proceeds received from the issuance totaled approximately $209.0 million and included the premium described above and interest deemed to have accrued from January 15, 2024 through June 4, 2024. The Additional Senior Notes have identical terms and conditions (other than the original issue date, issue price, the first interest payment date and the first date from which interest will accrue) as the original issuance. Interest on the Additional Senior Notes is payable semiannually commencing July 15, 2024. We incurred $3.0 million in debt issuance costs from the issuance of the Additional Senior Notes, which will be amortized to interest expense over the term of the Senior Notes due 2028. Net proceeds received from the issuance, together with cash on hand, were used to repay $400.0 million of our Senior Notes due 2024, as described below, and to pay related fees, costs, premiums, and expenses in connection with the issuance.

Redemption of Senior Notes due 2024 – In June 2024, we redeemed in full $400.0 million aggregate principal amount of our 4.55% senior notes due 2024. Additionally, in connection with the redemption of the Senior Notes due 2024, during the three and six months ended June 30, 2024, we recognized a loss on extinguishment of debt of $0.1 million, which related to the write-off of unamortized discount and debt issuance costs. These charges are reflected in the interest expense, net line of our Consolidated Statements of Operations for the three and six months ended June 30, 2024. As a result of the redemption of the Senior Notes due 2024, we are no longer required to report supplemental guarantor financial information in this Quarterly Report on Form 10-Q.

TILC Warehouse Loan Facility – TILC has historically maintained a warehouse loan facility to finance railcars owned by TILC. In March 2024, we entered into a new warehouse loan facility with a total commitment amount of $800.0 million, a revolving termination date of March 15, 2027, and a maturity date of March 15, 2028. This warehouse loan facility replaced the prior $1.0 billion warehouse loan facility. We incurred $3.6 million in debt issuance costs, which are recorded in other assets in our Consolidated Balance Sheets as of June 30, 2024, and are being amortized to interest expense over the facility term. During the six months ended June 30, 2024, we had total borrowings of $905.6 million and total repayments of $946.7 million under the current and prior TILC warehouse loan facilities. Of the remaining unused facility amount of $311.8 million, $133.3 million was available as of June 30, 2024 based on the amount of warehouse-eligible, unpledged equipment. Advances under the facility bear interest at one-month term SOFR plus a facility margin of 1.75%, for an all-in interest rate of 7.08% at June 30, 2024.

TRL-2024 Secured Railcar Equipment Notes – In May 2024, Trinity Rail Leasing 2021 LLC, a Delaware limited liability company ("TRL-2021") and a limited purpose, indirect wholly-owned subsidiary of the Company owned through TILC, issued an aggregate principal amount of $432.4 million of its Series 2024-1 Class A Green Secured Railcar Equipment Notes (the "TRL-2024 Notes"). The TRL-2024 Notes bear interest at a fixed rate of 5.78%, are payable monthly, and have a stated final maturity date of May 19, 2054. We incurred $4.2 million in debt issuance costs, which will be amortized to interest expense through the anticipated repayment date of the TRL-2024 Notes. The TRL-2024 Notes are obligations of TRL-2021 and are non-recourse to Trinity. The obligations are secured by a portfolio of railcars and operating leases thereon, certain cash reserves, and other assets acquired and owned by TRL-2021. Net proceeds received from the railcars acquired in connection with the issuance of the TRL-2024 Notes were used to repay approximately $218.9 million of borrowings under TILC's warehouse loan facility; to redeem the outstanding debt of Trinity Rail Leasing VII LLC, as described below; and for general corporate purposes.

Redemption of TRL-VII Secured Railcar Equipment Notes – In May 2024, with the net proceeds of the TRL-2024 Notes, we redeemed in full Trinity Rail Leasing VII LLC's Series 2009-1 Secured Railcar Equipment Notes (the "TRL VII Notes"), of which $94.1 million was outstanding at the redemption date. The all-in interest rate for the TRL VII Notes was 6.66% per annum. In connection with the redemption of the TRL VII Notes, during the three and six months ended June 30, 2024, we recognized a loss on extinguishment of debt of $1.4 million, which included a $0.6 million early redemption premium and a write-off of $0.8 million in unamortized debt issuance costs. These charges are reflected in the interest expense, net line of our Consolidated Statements of Operations for the three and six months ended June 30, 2024.

Each of our secured railcar equipment notes, including the TRL-2024 Notes, generally has an anticipated repayment date and a stated final maturity date. While the stated final maturity date of these notes is in 2054, the cash flows from the encumbered assets of TRL-2021 will be applied, pursuant to the payment priorities of their respective indentures, so as to amortize their respective notes to achieve monthly targeted principal balances. If the cash flow assumptions used in determining the targeted balances are met, it is anticipated that the notes will be repaid well in advance of their stated final maturity date. There can be no assurance, however, that such cash flow assumptions will be realized. If these notes are not repaid by the anticipated repayment date, the respective interest rate on these notes would increase from the fixed rate stated above.

Terms and conditions of our other debt, including recourse and non-recourse provisions and scheduled maturities, are described in Note 9 of our 2023 Annual Report on Form 10-K.