May 1, 2009
Executives
James Perry - VP, Finance and Treasurer Tim Wallace - Chairman, President and CEO Steve Menzies - SVP and Group President of the Rail Group Bill McWhirter - SVP and CFO
Analysts
Steve Barger - KeyBanc Capital John Barnes - BB&T Capital Markets Art Hatfield - Morgan Keegan Louis Sapir - Oppenheimer & Company
Operator
Good day and welcome to today's teleconference. At this time, all participants are in a listen-only mode.
Later, you will have the opportunity to ask questions during our Q&A session. Please note today's call may be recorded.
It is now my pleasure to turn the call over to James Perry, Vice President of Finance and Treasurer of Trinity Industries. Please go ahead, sir.
James Perry
Thank you, Sarah. Good morning from Dallas, Texas, and welcome to the Trinity Industries first quarter 2009 results conference call.
I'm James Perry, Vice President of Finance and Treasurer for Trinity. Thank you for being with us today.
In addition to me, you will hear today from Tim Wallace, Chairman, Chief Executive Officer, and President; Steve Menzies, Senior Vice President and Group President of the Rail Group; and Bill McWhirter, Senior Vice President and Chief Financial Officer. Following that, we'll move to the Q&A session.
A replay of this conference call will be available starting one hour after the conference call ends today through midnight on Thursday, May 7th. The replay number is 402-220-0398.
Replay of this broadcast will also be available on our website located at www.trin.net. 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 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 could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements.
On March 31, 2009, we had total borrowings of $1.84 billion. Our borrowings at the corporate level were the $450 million of convertible subordinated notes, $201.5 million of senior notes, and $2.7 million of other indebtedness.
This is the first quarter in which we reflect the adoption of APB 14-1 as it applies to our $450 million of convertible subordinated debt. As a result of this $321.2 million is shown as debt on the balance sheet with $128.8 million shown as a discount.
This discount will be amortized as non-cash interest expense through 2018. An entry for $92.8 million to equity was also booked as a result of the adoption of this pronouncement.
The leasing company's debt included $551.1 million of promissory notes, $316.4 million of secured railcar equipment notes, $310.2 million outstanding under our railcar leasing warehouse facility, and $12.9 million of capital leases that were completed in the first quarter, for a total leasing company debt of $1.2 billion at March 31, 2009. This compares to a net book value for total leasing equipment of $2.7 billion.
In today's call, you will hear us refer to the non-GAAP term EBITDA. A reconciliation of EBITDA was provided in our press release yesterday.
For the first quarter, EBITDA was $124.5 million. During the first quarter, we had several key financing accomplishments that strengthened the balance sheet.
In February, we made the final $61.4 million payment on our equipment trust certificate, retiring that piece of debt. This was our highest interest rate debt and the payoff released a significant number of railcars that we can use for future financings.
In the first quarter, we entered into two sale/leaseback transactions for railcars. These provided $34.8 million of cash to the company and are attractive pieces of financing.
We closed another sale/leaseback financing for $11.1 million early in the second quarter, so have now generated $46 million of cash from these transactions. We will continue to seek similar opportunities in the capital markets.
During the first quarter, we sold $170.1 million of railcars to TRIP. Of particular significance is that we sold $132.1 million of railcars to TRIP primarily at the end of the first quarter from our lease fleet.
TRIP has been a very successful transaction for us and the first quarter's activities continue to prove its value. Through March 31st, we have sold $1.16 billion of railcars to TRIP from our manufacturing companies and from our lease fleet.
During the first quarter, we purchased 813,028 of our shares for $6.3 million. Our cumulative purchases to date total 3,532,728 shares for $67.5 million.
After all of these activities and the cash flows from our businesses, our cash position increased during the quarter to $170.4 million from $161.8 million at year end. In addition to our cash at March 31st, we had $333.8 million available under our $425 million revolving credit facility, which matures in October 2012.
The portion of the facility that is unavailable for borrowing is due to our usage of letters of credit. There were no cash borrowings under the facility at March 31st.
At quarter end, we were well within all of the covenant requirements under this facility. At March 31st, we had $289.8 million available under our leasing warehouse facility that matures in August 2009.
We're making good progress on the renewal and expect to close the facility during the second quarter. With the lower demand for railcars in the marketplace, we will renew the facility at a lower commitment amount than the current $600 million due to a lower need for such financing.
This will save Trinity the financing expenses associated with a larger facility that we would not intend to fully utilize. In summary, we've had success with our financing activities and had EBITDA totaling approximately $667 million over the last four quarters.
We are positioned well with a strong balance sheet and cash flows. We've worked deliberately to build and maintain our strong positions in these areas, so that we may capitalize on business opportunities as they arise.
Now, here is Tim Wallace.
Tim Wallace
Thank you, James, and good morning. The first quarter was challenging for our company.
Our overall financial results were good considering the difficulties associated with the economic environment. Most of our customers have reduced their capital spending programs until they get a better sense of the economy's direction.
Our businesses with small order backlogs decreased their shipments in the first quarter. Our railcar manufacturing and construction products businesses fit into this category.
Our Rail Group's revenues decreased 50% over last year's first quarter. As a result, our railcar manufacturing businesses continue to reduce and consolidate their operations.
Our Rail Group continues to reduce their shipments as they work off their order backlogs and align their production with lower market demand levels. I was not pleased with our Construction Products Group's financial performance during the first quarter.
It was affected by economic slowdown and some abnormally-high material costs that this group carried over from last fall. We worked off the higher material costs in our first quarter shipments and this should not be a factor in the future.
We're hopeful our highway products-related businesses will benefit from the infrastructure portion of the economic stimulus bill. Until that occurs or the economy improves, we expect these businesses to have lower than normal business activity and profitability.
Our businesses with large backlogs were able to maintain their momentum. This applies to our barge and our structural wind towers businesses.
The diversification created by our barge, structural wind towers and leasing businesses helped compensate for the decrease in earnings in our rail and construction products segments. Our Barge Group produced record operating profits and performed very well during the first quarter.
We had a great deal of positive momentum in this business during 2008 that continued into the first quarter. The size of our barge backlog is allowing our barge business to operate at a high level of productivity.
We continue to pursue customers for orders that will extend our production continuity into 2010. We expect our level of profitability to decrease in the barge business as we progress through the year.
Bill will provide our margin projections during his comments. Our energy equipment segment generated profit comparable to the first quarter of 2008.
Our large order backlog for structural wind towers allowed us to maintain stable production. The demand for wind towers is tracked with the economic decline.
We expect orders for structural wind towers to improve when North American wind energy industry begins its next stage of growth. It's difficult to precisely determine when the demand for wind towers will return.
We are taking a conservative position in our planning for this business. We're assuming the recovery will not occur until the first half of 2010.
In short, we remain highly focused on productivity and cost reduction initiatives as we produce towers from our large backlog of orders. Our railcar leasing company also generated very solid earnings for the quarter.
The downturn in the economy coupled with a surplus of idle railcars has caused us to remain very fluid in respect to growth of our lease fleet. We will respond appropriately as market changes.
Steve will provide more information on TrinityRail during his comments. At this point, Trinity as a whole is weathering the economic downturn better than we did during the last cycle in 2001.
The strategic investments we made during the past few years have proven sound. Our multi-industry portfolio of businesses is more diversified, our liquidity is stronger and we're able to leverage off our cost-effective manufacturing platforms.
We're hopeful that the government's stimulus initiatives will begin to positively impact the infrastructure-related industries we compete in. For the duration of the downturn, our goal is to maintain as much momentum as possible that we established during the last few years as we focus on initiatives to enhance our balance sheet and aggressively pursue orders.
We're continually searching for ways to build strength during the down cycle. We're identifying opportunities to improve our business' competitive positions by utilizing the resources we have as a company.
We will continue to monitor and review a variety of growth opportunities. We're very experienced at successfully navigating through an economic downturn.
The diversification of our multi-industry platform and our liquidity are providing us with time to plan. We have launched a variety of initiatives to strengthen our financial position.
James mentioned a few of these initiatives in his report, and we still have several on the horizon. In addition, we are taking action to reduce our costs.
This includes idling some factories, reducing staff throughout our company, and other normal cost reduction initiatives. As we right-size our businesses, we know we are making decisions that affect the lives of our employees and their families and we don't take this lightly.
Our performance during the first quarter reflects the talents and hard work of our people, the diversification of our businesses, our emphasis on highly-efficient manufacturing, and the strength of our market leadership positions. In a rapidly-changing business climate like the one we're experiencing today, it is extremely difficult to establish firm forecasts.
In light of this, we are evaluating business conditions daily and making decisions on a month-to-month basis. We are a very flexible company and we'll continue to shift and direct our resources with the demands of our markets.
We've proven our ability to strengthen our company's competitive position regardless of where we are in the business cycle. I expect this trend to continue.
I'll now turn it over to Steve Menzies for his comments.
Steve Menzies
Thank you, Tim. Good morning.
Operating results for TrinityRail during the first quarter of 2009 reflected the impact of the rapid decline in railcar market conditions, which began in the second half of 2008. We shipped approximately 3,050 railcars during the quarter and maintained a high lease fleet utilization at 98.4%.
However, our manufacturing margin dropped from 6.3% in the fourth quarter of 2008 to a 2% loss during the first quarter. Operating results during the quarter were adversely affected by lower railcar production volumes, plant closing costs, and employee severance expense.
We expect our operating margins to remain in this range during 2009 as a result of a highly-competitive market environment and significantly reduced production levels. Going forward, the weak economic environment may also place pressure on lease rates and adversely impact lease fleet utilization.
During the first quarter, we continue to execute our plan to reduce our railcar production footprint to align with forecasted near-term demand. Our production facilities still in operation are capable of producing a substantial portion of our broad product line.
Our operating flexibility positions us to meet shifting customer demand as well as quickly ramp-up production when market conditions improve. We'll continue to monitor the market and make further adjustments to staffing levels as necessary.
During the first quarter, TrinityRail shipped approximately 3,050 railcars, 49% less than the 6,010 railcars shipped in the first quarter of 2008. We expect shipments of approximately 2,500 to 3,000 railcars during the second quarter of 2009, and significantly lower production levels in the second half of the year as we work off our order backlog and align car production with weak market demand.
Some of these shipments may come from our finished goods of inventory of railcars built in advance of customers' needs. Orders for new railcars continue to weaken during the first quarter.
Industry orders for new railcars totaled approximately 2,370 railcars. We continue to experience weak demand in new railcar order inquiries across most major railcar types.
This is because of significantly lower railcar loadings, improved railcar cycle times due to railroad system [fluidity] and a large overhang of idle railcars in the rail system. In addition, fewer inquiries became orders as customers continued to defer railcar purchasing decisions to preserve liquidity and until they gain greater clarity about ongoing demand for their products.
During the first quarter, TrinityRail received 995 new railcar orders. Specifically, we received orders to build covered hoppers, coal cars, mill gondolas, and tank cars.
The diversity of our orders reflects the breadth of TrinityRail's product line, customer base, and existing production lines. At the end of the first quarter, TrinityRail's order backlog was approximately 6,210 railcars, a 25% decrease from the fourth quarter of 2008.
We expect approximately 5,000 of those railcars to be delivered during the balance of 2009. During the first quarter, TrinityRail shipped approximately 1,450 new railcars to customers of our leasing company.
This represented about 48% of TrinityRail's first quarter new railcar shipments. We also sold approximately 1,650 railcars from our lease fleet primarily to TRIP.
As a result, our lease fleet totaled 47,650 railcars at the end of the first quarter of 2009, 25% higher than the approximately 38,030 railcars in our lease fleet at the end of the first quarter of 2008. Our committed lease backlog at the end of the first quarter was approximately 2,850 railcars, or 46% of our total production backlog.
We continue to see a long-term trend for railroads and industrial producers to use their capital resources to acquire assets that are core to their businesses, while relying on leasing for operating assets such as railcars. Our lease fleet utilization was 98.4% at the end of the first quarter, compared to 98.6% at the end of the fourth quarter.
Lease renewals and successful remarketing of railcars available from leases not renewed and railcars returned by lessees in bankruptcy have helped maintain our high fleet utilization. Lease rates for renewals and assignments are highly competitive.
The average age of the railcars in our fleet is 4.8 years and the average remaining lease term is approximately 4.3 years. In summary, rapidly declining market conditions, excess industry production capacity, and an overhang of idle railcars has created a very challenging environment for our rail business.
We are focused on operating our railcar production as efficiently as possible at reduced volume levels and maintaining high lease fleet utilization. TrinityRail is positioned to achieve these results in the current market environment as a result of the initiatives and investments we have implemented during the past several years.
Our broad customer base, operating flexibility, and diverse product line combined with our leasing capabilities gives us the flexibility to meet customer demand throughout the business cycle. I'll now turn it over to Bill McWhirter.
Bill McWhirter
Thank you, Steve, and good morning, everyone. My comments relate primarily to the first quarter of 2009.
We will file our Form 10-Q this morning. For the first quarter of 2009, we reported earnings of $0.43 per diluted share.
This compares with $0.78 per share in the same quarter of 2008. Revenues for the first quarter of 2009 were $794 million.
Earnings were above the upper end of the guidance by $0.13 per share. This was primarily due to a higher level of car sales to TRIP that closed near quarter-end, increasing earnings by $0.15.
Moving to our Rail Group, revenues for this group decreased on a quarter-over-quarter basis by 50% to $284 million. Rail Group sales to Trinity's Leasing and Management Services Group totaled $117 million in the first quarter of 2009 with profits of $8.9 million or approximately $0.07 per diluted share.
This compares with sales to our leasing group in the first quarter of 2008 with $217 million with profits of $31.2 million or $0.25 per diluted share. This intercompany sales and profits are eliminated in consolidation.
Margin results for the Rail Group were a loss of 2%. Looking forward, we anticipate that the Rail Group will report an operating margin loss of between 1% and 3% for the second quarter of 2009.
This projection reflects the lower pricing environment, the number of cars to be shipped during the period, and the costs related to right-sizing the business. The Rail Group backlog as of March 31, 2009 consisted of approximately 6,210 railcars with an estimated sales value of $545 million.
Our railcar backlog is broken down approximately as follows: Backlog to our leasing company, $260 million; backlog to TRIP, $85 million; and backlog to third parties, $200 million. Now turning to our Inland Barge Group.
The Inland Barge Group's first quarter performance was very strong, posting revenues of $157 million and operating profit of $38.9 million for a margin of 24.8%. This group's backlog as of March 31, 2009 totaled approximately $402 million.
We anticipate Inland Barge revenues of between $135 million and $145 million in the second quarter. Operating profit margins for this group are expected to range between 16% and 18% for the same period.
Now, moving to the Energy Equipment Group. During the first quarter, this group's revenues were flat quarter-over-quarter at $129 million.
Operating profits were $18.3 million with an operating profit margin of 14.2%. We look for wind tower revenue to total approximately $370 million in 2009.
Backlog for the wind tower business remained healthy at $1.3 billion as of March 31, 2009. Revenues for our Construction Products Group declined 27% compared to the same quarter of the previous year due to the overall slowdown in infrastructure spending during the first quarter.
This group experienced margin compression resulting from the reduced volumes coupled with the sale of higher-priced inventory into a highly competitive, low-priced market. We also had a $1.7 million write-down of inventory.
The end result was an operating profit loss of $1.9 million for the quarter. We anticipate a pick-up in this business beginning in the second quarter and a return to profitability.
Our Railcar Leasing and Management Services Group reported revenues of $222 million compared with $120 million in the same quarter of 2008. Operating profit for the first quarter was $53 million with $17 million resulting from railcar sales.
Of the increase in first quarter sales, $87 million is due to cars sold from the fleet, while the remaining $15 million is attributable to increases in our fleet size during the past year. For 2009, we anticipate approximately $275 million to $325 million in net fleet additions to our lease fleet.
As a form of clarity, net fleet additions are the fair market value of cars added to our fleet less the proceeds of cars sold from the fleet. This level of investment compares with $940 million in net fleet additions during 2008.
Moving to our consolidated results. For 2009, we expect non-leasing capital expenditures of between $60 million and $70 million.
This compares to $132 million of non-leasing capital expenditures in 2008. During the second quarter, we expect to eliminate approximately $150 million in revenue and between $11 million and $13 million in operating profits as we grow our leasing business and sell cars to TRIP.
We anticipate earnings per share for the company to range between $0.20 and $0.30 per diluted share in the second quarter. While the current economic climate is challenging, I'm encouraged by our financial position, liquidity and the overall strength of our business platform.
Our organic growth investments in railcar leasing and wind energy have proven to be earning enhancements. The accomplishments of our finance staff in tapping the capital markets as a seasoned issuer continue to provide our company strength during these economic times.
At this time, I'll turn the presentation back to James for the question-and-answer session.
James Perry
Thanks, Bill. Now, the operator will prepare us for the Q&A session.
Operator
(Operator Instructions). We'll go first to the site of Steve Barger with KeyBanc Capital.
Your line is open. Please go ahead.
Steve Barger - KeyBanc Capital
Thinking about how some of the volumes in the segments are going to come down, I just want to pose a hypothetical. If you run 1,000 cars through one or two plants per quarter in the back half, how should we think about the margin profile of the rail segment?
Does it get a lot worse from here or should we be thinking negative 2% or negative 12%?
Bill McWhirter
Yes. Steve, I think it's a little early for us to talk about margins in the back half.
Key for us is rationalizing the business to the footprint in that kind of output. The rail guys have done a really exceptional job in bringing the plants down that needed to be brought down, but at this time we're not prepared to give margins to the back half.
Steve Barger - KeyBanc Capital
Just directionally speaking, could you limit it, hypothetically speaking, to a low single-digit number?
Bill McWhirter
No. I don't think at this time we can comment on the margin of the back half.
Tim Wallace
Yes. Well, especially a hypothetical?
Bill McWhirter
Yes.
Steve Barger - KeyBanc Capital
Well, you told us you're going to deliver 5,000 for the rest of the year and 2,500 to 3,000 in your next quarter, so it's not that hypothetical.
Tim Wallace
That's right and I think, Bill, didn't you give them margins for what we're anticipating?
Bill McWhirter
I gave margins for the second quarter of a loss between 1% and 3% in the second quarter.
Steve Barger - KeyBanc Capital
Thinking about the utilization for the next couple of quarters in the leasing fleet, what can we expect for lease renewals for stuff that's coming off? And can you just kind of talk about market conditions there?
Tim Wallace
Steve, why don't you take that one?
Steve Menzies
Sure. Well, certainly it's a highly-competitive market out there, there's a lot of cars available in the marketplace and we're having to work through that.
The market is choppy and we're managing, really, our fleet on a month-to-month basis. We don't have a disproportioned number of renewals this year, a reminder that our fleet is primarily comprised of tank cars, covered hoppers and coal cars.
When you look at what we think could be the largest group of types of cars that are idle, we don't have a lot of exposure to those markets. But to try to predict utilization going forward is very difficult and again, we're just evaluating business conditions on a daily basis and making our decisions about renewals and assignments as they come about.
Steve Barger - KeyBanc Capital
But if I heard you right, you said you don't have that many cars coming off lease this year?
Steve Menzies
We don't have a disproportionate number that anything beyond what's implied with our average remains in lease terms.
Steve Barger - KeyBanc Capital
Got it. So one more on the leasing.
I mean, the margins look pretty good after excluding the sale. Is that likely peak for a while or there's really no reason to extrapolate out worst performance given what you just said?
Tim Wallace
Bill, you want to tackle that one?
Bill McWhirter
Yes. Steve, I think you're right.
The margins were particularly good in the first quarter moving up to 41% when you pull out the lease versus 35% that we came off of. I think if you look at the business, historically we've kind of ranged between 35% and 40%.
A lot of it has to do with the maintenance that flows through in any one given period of time, so I would think we'd be consistent in that range.
Steve Barger - KeyBanc Capital
Any inquiries coming in the barge fleet? Last one and I'll get back in line.
Tim Wallace
Yes. The barge business does have inquiries that we are processing and talking with a lot of our customers on potential business, and so we're not saying that business is not dead, but it's not vivacious like it's been in the past.
It's kind of reflective to where the economy is.
Steve Barger - KeyBanc Capital
Could you talk about the credit risk that there is in your lease fleet, potentially? Are you looking at any customers that are having problems right now and how should we be thinking about that issue?
Tim Wallace
Steve, you want to take that one?
Steve Menzies
Sure. Well, I mean, to no surprise the current financial downturn is placing pressure on our customers' businesses.
We've had historically low levels of credit defaults in our leasing business. The delinquencies have increased over the last six months, higher than our historical norms, again, as one would expect in the economic downturn.
There's more risk in the market today, but we're closely monitoring those accounts receivable balances at all times. The diversification of our fleet by customer, by car type, and by industry served will certainly help to mitigate our exposure there, and we've been successful thus far in working with those customers who are in bankruptcy to maintain our railcars in their service post-bankruptcy, but this is a very slow process and every bankruptcy is an individual case to be handled as such.
But thus far, the financial downturn and its impact on the creditworthiness of our customers had only a very minimal impact on our lease fleet utilization.
Steve Barger - KeyBanc Capital
So, you don't necessarily have a disproportionate exposure to ethanol customers, for instance, in the tank fleet?
Steve Menzies
We certainly have an exposure to that industry in our portfolio. We think over time that we've built a portfolio with perhaps stronger creditworthy customers in that market.
We'll survive an industry consolidation. We're certainly monitoring that aspect of our portfolio very, very closely.
Steve Barger - KeyBanc Capital
Okay. I don't want to take the whole call if anybody else is queued up.
Operator
And we'll go next to the site of John Barnes with BB&T Capital Markets. Your line is open.
Please go ahead.
John Barnes - BB&T Capital Markets
Hey, good morning. You mentioned in your discussion on aligning the rail production with demand.
You mentioned that in the margin this quarter was included a plant shutdown cost. Could you give us an idea of the magnitude of those costs and are those costs going to be kind of ongoing or are they more one-time in nature?
Tim Wallace
Bill, would you want to take that?
Bill McWhirter
Sure. John, I think when you look at the margin, the reason we kind of laid out the two or three items that were involved in the margin pieces, it's difficult to kind of just assess what piece is associated with bringing a plant down.
Most of these plants kind of slowly come down or we change production rates from one to another, so it's a bit of a challenge. We're not disclosing how much we think that particular number is.
It's a good-sized number, but it's not the vast majority of the loss in those businesses.
John Barnes - BB&T Capital Markets
So, the majority of the loss was just from the lower production.
Bill McWhirter
That's right.
John Barnes - BB&T Capital Markets
And I don't know if I'm asking a prior question a little different way or, I'm just trying to gauge. What do you believe is the number of units necessary for breakeven results out of the rail division on an annual basis, I mean given what your infrastructure looks like today as you've brought these plants down?
Clearly, it's not 5,000 units because you're guiding to some margin weakness in the second quarter. Could you give us some magnitude of what you think it is?
Tim Wallace
John, this is Tim. It's very difficult for us with the product mixes that we have and the dynamics of the market and the way pricing has been moving, for us to establish one set number that says if we produce between this range of cars and that range of cars that we will produce a breakeven or a loss or a small gain.
That's why because things have changed so rapidly and there's still quite a bit of uncertainty in here, we're just taking this on a daily basis and making our decisions as best we can when the orders are out there. So, we'll look out the one quarter that we can, and I think that's the guidance that Bill gave, so you can do your planning around that but we don't have an annual number of cars that we're producing because of the volatility and the dynamics of the market in the mix.
John Barnes - BB&T Capital Markets
In terms of railcar pricing, could you just talk a little bit about kind of what market activity you are seeing? I mean, 995 orders in the quarter wasn't bad in comparison to some of your competitors, just what you're seeing in terms of pricing, what you're seeing in terms of the kind of customers that are placing orders.
I'm really kind of curious as we've seen in past downturns opportunistic buyers come in when the backlogs get this lean. Is that what you're looking at right now?
Is that the kind of customer bids you're seeing right now?
Steve Menzies
John, it's kind of broken out into three parts. Number one, what's happening with railcar pricing, whether it's railcar pricing or lease rates, and clearly those prices and lease rates are coming down and it's hard to make generalizations because of the mix.
But we've also had a reduction in materials prices as well, materials costs, so that helps bring down the pricing for railcars. This is a highly competitive market.
Again, the overhang of existing cars really has a great deal of influence on pricing of new cars and pricing of lease rates, and without getting into individual markets in specific, the story kind of varies by car type. At the same time, we've got large overhang of railcars and a number of those owned by third-party lessors who might be interested in buying at the depth of the market, I don't think they're going to be speculative purchasers until they see that overhang shrink considerably.
So right now, I don't anticipate any near-term volume purchases of the opportunistic nature by third-party lessors or even by railroads, for that matter, who return in cars they have on lease and who have significant [idle equipment part].
John Barnes - BB&T Capital Markets
That's a good answer. James, going back to your initial comments, and I appreciate the color you provided on the corporate debt and the leasing debt.
Could you just give us an idea in '09, 2010, what kind of maturities you're left looking at? And are there any of these facilities, anything out there that's left to be renewed or have some short maturity that's going to have to be handled in the next, say, 18 months?
James Perry
John, the warehouse, as you know, of course, is up for renewal in the third quarter and we talked about renewing that in the second quarter. The 10-Q lays out for you that will be published right after the conference call, the maturing debt we have.
Other than the normal monthly amortization of our long-term leasing pieces, there's no debt with any maturity of any significance prior to the revolver in 2012. Then you'll start getting later into the 2014, 2018 period for the other pieces of debt.
So in the near-term, other than the warehouse renewal, there is nothing of significance.
John Barnes - BB&T Capital Markets
And then, Tim, lastly, just from kind of a strategic standpoint, it's been a while since you guys pulled the trigger on any kind of major acquisition. Obviously, I'm sure you're thrilled to not be trying to integrate one in this kind of environment given the last downturn.
But I'm just kind of curious as to the pipeline of potential acquisition properties out there and what you think right now about purchase multiples and that type of thing.
Tim Wallace
Well, as I said, we're just evaluating business conditions on a daily basis and we'll make our decisions appropriately. Our primary objective has been to be sure our liquidity position is strong and to be sure that we have a good handle on the existing markets that we have and our position in those markets.
At the same time, though, we are always looking at the various opportunities that are out there in the marketplace where companies are up for sale for various reasons. We'll just deal with this with our Board on a one-off type basis and based on the balance sheet and the financial position and our outlook in the industry in general.
I think it's safe to say that most businesses right now are selling for multiples at a much lower rate than they were a year ago or two years ago, so we've got a drastically different market.
John Barnes - BB&T Capital Markets
Do you think they're fair multiples or you think they're still a little elevated?
Tim Wallace
I think that they're just across the board. Every business itself has specific issues that are pertaining to their market, their balance sheet, the terms that they're looking for.
So it's hard to make a general statement.
Operator
Next, we'll go to the site of Art Hatfield with Morgan Keegan. Your line is open.
Please go ahead.
Art Hatfield - Morgan Keegan
Thank you. Good morning, everybody.
Just a few questions. First, James, on the converts on the discount, the amortization of that, is that straight-line through 2018?
Tim Wallace
Bill, why don't you handle that?
Bill McWhirter
No, it's not a straight line. In effect, you bring it back as kind of a discounted note, so it will move as you go, but not a straight-line approach.
Art Hatfield - Morgan Keegan
Secondly, on the backlog -- and you may have said this, so if you did, forgive me for not catching it, but did you mention how much of the backlog had the cars were on fixed-price contract as opposed to having escalators in them?
Bill McWhirter
No, we didn't. And frankly, so little of the backlog is for outside sales that it's probably not relative at this point in time.
James Perry
You're talking railcar backlog?
Bill McWhirter
I'm talking railcar backlog.
Art Hatfield - Morgan Keegan
Yes, I was. Is the barge backlog, same situation or should we think about that?
Bill McWhirter
Yes, the barge backlog at $400 million has all sorts of cost-coverage features in it, whether its firm prices with our materials suppliers or up or down movements with our customers. Given the current market for raw materials, it's really not an issue in today's market.
Art Hatfield - Morgan Keegan
But you feel like you're comfortably hedged there if things were to move a little bit on you?
Bill McWhirter
Yes.
Art Hatfield - Morgan Keegan
Then finally, I hate to kind of bring up what everybody else has been asking about with regards to basically fixed-cost margins and where margins can go. I'm not going to ask that, but curious as to when you shut a plant down or close a plant for a period of time, do you have any cash that goes out the door during the period of time that it's closed or all cash outflow stopped at that point in time?
Bill McWhirter
No, Art. There's still a little cash.
I mean, obviously, we keep security in those, we have insurance, kind of miscellaneous items like that. But it's the cash drain on a plant moves down significantly.
Art Hatfield - Morgan Keegan
Would it be fair to say that it's not material?
Bill McWhirter
It's not material to Trinity as a whole but to the rail segment.
Art Hatfield - Morgan Keegan
Right. Then finally, as we go through this difficult period and you have cars come up for renewal in the lease fleet and/or come up for renewal at TRIP, it's probably going to be difficult to place some of those cars.
Are you indifferent where idle cars are, whether they're at Trinity Leasing or at TRIP? My assumption would be that you'd prefer to have better utilization at Trinity Leasing.
And if so, how do you handle the competitive aspects of those two different entities with regards to having cars on lease?
Steve Menzies
Yes. We treat any of those cars the same in our portfolio.
We don't discriminate for our portfolio or for TRIP's portfolio, we make the best decision from the economic standpoint of how to deploy that railcar to satisfy the customer's requirement. And our field salespeople have no insight as to what portfolio those cars are drawn from, nor do our customers.
We operate that way to satisfy the institutional investors who have invested in TRIP and also support the debt instruments for our own leasing company. So it's not discrimination for or against our own portfolio.
Art Hatfield - Morgan Keegan
Great. That's helpful.
And as to the issue of financial impact, is there a bigger financial drain on either one for having a car idle?
Steve Menzies
I would think the economics are the same for the ownership interests of that railcar.
Art Hatfield - Morgan Keegan
Difference meaning your ownership percentage at TRIP is smaller than at Trinity Leasing, correct?
Steve Menzies
Yes.
Operator
And next, we'll go to the site of Louis Sapir with Oppenheimer & Company. Your line is open.
Please go ahead.
Louis Sapir - Oppenheimer & Company
Thank you very, very much. I missed part of it, but I don't know whether this question has been asked.
Formerly, you have indicated the parameters of what your earnings for the year might be, have you in any way indicated what those earnings might be for '09?
Bill McWhirter
Yes. No, we have not.
We've only provided guidance for the second quarter of 2009. Just given the uncertainty of business conditions right now, it would be very challenging to provide guidance for the year.
The guidance for '09, if you missed it, was $0.20 to $0.30 per diluted share.
Louis Sapir - Oppenheimer & Company
For the second quarter?
Bill McWhirter
The second quarter, that's correct. Sorry about that.
Louis Sapir - Oppenheimer & Company
But you have no indication of what it might be for the year?
Bill McWhirter
We're not providing guidance for the year.
Operator
It appears that we have no further questions. I'd like to turn the call back to Mr.
Perry for closing remarks.
James Perry
Thank you, Sarah. This concludes today's conference call.
Remember, a replay of this call will be available starting one hour after this call ends today through midnight Thursday, May 7th. The access number is 402-220-0398.
Also, this replay will be available on our 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
This does conclude today's teleconference. Thank you for your participation.
You may disconnect at any time and have a wonderful day.