UPDATE 1-Trinity says pending regulations delay tank-car orders

Wed Apr 30, 2014 12:45pm EDT
 
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NEW YORK, April 30 (Reuters) - Trinity Industries Inc said on Wednesday that orders for its rail tank cars that carry flammable products have slowed in recent quarters because of uncertainties regarding new rules on their design.

A series of accidents on rail tank cars carrying crude oil has put the new workhorses of the oil industry under scrutiny, and U.S. and Canadian regulators are carving out new rules on how to build them.

Dallas-based Trinity expects the delays to be short-lived. Demand will rebound once final rules are in place, shortly after Sept. 30, Steve Menzies, who heads its rail and railcar-leasing business, said during the company's first-quarter earnings call.

"Our customers, like us, are assessing the potential impacts pending regulatory changes," Menzies said.

The U.S. Department of Transportation is expected to submit a proposal to the White House this week that will outline new specifications.

Last week, Canadian authorities ordered the phase-out of older rail cars, partly in response to the explosion and fire on a train carrying Bakken crude that killed 47 people in Lac-Megantic, Quebec last July.

Changes in regulations, which are expected to add new safety features like thermal protection and head-shields to older tank cars, will likely increase demand for retrofits and boost business for tank-car makers like Trinity.

On Tuesday, the company reported first-quarter net income of $226.4 million, 186 percent higher than a year earlier.

Trinity shares jumped 4.7 percent to $75.89 on Wednesday. (Reporting by Selam Gebrekidan; Editing by Franklin Paul and Jeffrey Benkoe)