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Triton International Reports First Quarter 2022 Results and Declares Quarterly Dividends

May 3, 2022 – Triton International Limited (NYSE: TRTN) ("Triton")

Highlights:

  • Net income attributable to common shareholders for the three months ended March 31, 2022 was $181.2 million or $2.78 per diluted share.
  • Adjusted net income was $179.6 million or $2.76 per diluted share, an increase of 44.5% from the first quarter of 2021 and 3.4% from the fourth quarter of 2021.
  • Container utilization remains exceptionally high. Utilization averaged 99.6% in the first quarter of 2022 and ending utilization was 99.5% as of April 29, 2022.
  • Triton repurchased 1.7 million common shares year-to-date through April 29, 2022 for a total of $110.5 million. Triton increased its share repurchase authorization to $200 million.

Financial Results

The following table summarizes Triton’s selected key financial information for the three months ended March 31, 2022, December 31, 2021 and March 31, 2021.

 

(in millions, except per share data)

 

Three Months Ended,

 

March 31, 2022

 

December 31, 2021

 

March 31, 2021

Total leasing revenues

$417.1

 

 

$417.2

 

 

$346.7

 

 

 

 

 

 

 

GAAP

 

 

 

 

 

Net income attributable to common shareholders

$181.2

 

 

$177.4

 

 

$129.3

 

Net income per share - Diluted

$2.78

 

 

$2.67

 

 

$1.92

 

 

 

 

 

 

 

Non-GAAP (1)

 

 

 

 

 

Adjusted net income

$179.6

 

 

$177.5

 

 

$128.7

 

Adjusted net income per share - Diluted

$2.76

 

 

$2.67

 

 

$1.91

 

 

 

 

 

 

 

Adjusted return on equity (2)

30.3

%

 

30.7

%

 

25.0

%

  1. Refer to the "Use of Non-GAAP Financial Items" and "Non-GAAP Reconciliations of Adjusted Net Income" set forth below.
  2. Refer to the “Calculation of Adjusted Return on Equity” set forth below.

Operating Performance

"Triton’s record performance in the first quarter of 2022 provides a great start to what we expect will be another outstanding year,” commented Brian M. Sondey, Chief Executive Officer of Triton. “Triton generated $2.76 of Adjusted net income per share, an increase of 3.4% from the fourth quarter of 2021 and an increase of 44.5% from the first quarter of 2021. In addition, Triton achieved an annualized Adjusted return on equity of 30.3%."

"Our first quarter performance reflects the significant operational and financial strength Triton is carrying in 2022. Our leasing margin continues to be supported by very high fleet utilization, the strong growth in our container fleet last year, our well protected portfolio of long-term, high value leases and our low average effective interest rate. Our gain on container disposals and trading margins also remained exceptionally high in the first quarter, reflecting a continued tight market for containers and Triton’s market-leading resale capabilities."

"We moderated our investment pace in the first quarter after record levels of investment and growth last year. Our shipping line customers aggressively added to their container fleets throughout 2021 to accommodate strong trade volumes and mitigate the impacts of logistical bottlenecks. They have so far been more cautious about adding further container capacity in 2022, though container drop-off volumes have remained very low. As of April 29, 2022, Triton has ordered $428 million of new containers for delivery in 2022."

"Overall market conditions remain constructive. Trade volumes continue to be supported by strong goods consumption, especially in the United States, and demand for containers is further supported by lingering logistical bottlenecks that are slowing container turn times. Container prices have decreased from their peak level reached last year, but remain historically very high, with factories quoting just below $3,000 for a 20' dry container, providing strong support for lease rates and disposal prices."

"Triton continues to actively repurchase shares. Since resuming buybacks at the end of the 2021 peak season, Triton has repurchased 3.3 million shares, or 4.9% of shares outstanding, including 1.7 million shares year-to-date through April 29, 2022. Triton’s strong and stable cash flow allows us to pursue multiple capital allocation priorities and we will continue to evaluate the relative attractiveness of fleet growth, share repurchases, increased dividends and other investments."

Outlook

Mr. Sondey continued, "We expect our performance will remain very strong in 2022 due to the durable enhancements we have made to our business, and we have many levers to drive shareholder value across a wide range of market conditions. Our Adjusted net income per share in the second quarter will likely decrease slightly from our record results in the first quarter, especially if used container sale prices and gains continue to normalize. But overall, we expect our profitability and Return on equity will remain very high throughout the year and into the longer term."

Share Repurchase Update

Triton's Board of Directors has increased the company's share repurchase authorization to $200 million.

Common and Preferred Share Dividends

Triton’s Board of Directors has declared a quarterly cash dividend of $0.65 per common share, payable on June 23, 2022 to shareholders of record at the close of business on June 9, 2022.

The Company's Board of Directors also declared a cash dividend payable on June 15, 2022 to holders of record at the close of business on June 8, 2022 on Triton's issued and outstanding preferred shares as follows:

Preferred Share Series

 

Dividend Rate

 

Dividend Per Share

Series A Preferred Shares (NYSE:TRTNPRA)

 

8.500%

 

$0.5312500

Series B Preferred Shares (NYSE:TRTNPRB)

 

8.000%

 

$0.5000000

Series C Preferred Shares (NYSE:TRTNPRC)

 

7.375%

 

$0.4609375

Series D Preferred Shares (NYSE:TRTNPRD)

 

6.875%

 

$0.4296875

Series E Preferred Shares (NYSE:TRTNPRE)

 

5.750%

 

$0.3593750

First Quarter 2022 Investor Webcast

Triton will hold a Webcast at 8:30 a.m. (New York time) on Tuesday, May 3, 2022 to discuss its first quarter results. To listen by phone, please dial 1-877-418-5277 (domestic) or 1-412-717-9592 (international) approximately 15 minutes prior to the start time and reference the Triton International Limited conference call. To access the live Webcast please visit Triton's website at http://www.trtn.com. An archive of the Webcast will be available one hour after the live call.

About Triton International Limited

Triton International Limited is the world’s largest lessor of intermodal freight containers. With a container fleet of over 7 million twenty-foot equivalent units ("TEU"), Triton’s global operations include acquisition, leasing, re-leasing and subsequent sale of multiple types of intermodal containers and chassis.

Utilization, Fleet, and Leasing Revenue Information

The following table summarizes the equipment fleet utilization for the periods indicated:

 

Quarter Ended

 

March 31, 2022

 

December 31, 2021

 

September 30, 2021

 

June 30, 2021

 

March 31, 2021

Average Utilization (1)

99.6 %

 

99.6 %

 

99.6 %

 

99.4 %

 

99.1 %

Ending Utilization (1)

99.5 %

 

99.6 %

 

99.6 %

 

99.5 %

 

99.3 %

  1. Utilization is computed by dividing total units on lease (in CEU) by the total units in our fleet (in CEU), excluding new units not yet leased and off-hire units designated for sale.

The following table summarizes the equipment fleet as of March 31, 2022, December 31, 2021 and March 31, 2021 (in units, TEUs and CEUs):

 

Equipment Fleet in Units

 

Equipment Fleet in TEU

 

March 31, 2022

 

December 31, 2021

 

March 31, 2021

 

March 31, 2022

 

December 31, 2021

 

March 31, 2021

Dry

3,850,167

 

3,843,719

 

3,417,293

 

6,546,249

 

6,531,816

 

5,711,032

Refrigerated

234,274

 

235,338

 

232,550

 

455,261

 

457,172

 

450,087

Special

92,184

 

92,411

 

94,266

 

168,687

 

169,004

 

171,781

Tank

11,734

 

11,692

 

11,339

 

11,734

 

11,692

 

11,339

Chassis

23,711

 

24,139

 

24,078

 

44,272

 

44,554

 

43,858

Equipment leasing fleet

4,212,070

 

4,207,299

 

3,779,526

 

7,226,203

 

7,214,238

 

6,388,097

Equipment trading fleet

56,161

 

53,204

 

60,242

 

90,090

 

83,692

 

93,514

Total

4,268,231

 

4,260,503

 

3,839,768

 

7,316,293

 

7,297,930

 

6,481,611

 

Equipment in CEU(1)

 

March 31, 2022

 

December 31, 2021

 

March 31, 2021

Operating leases

7,250,246

 

7,291,769

 

6,892,129

Finance leases

666,690

 

623,136

 

297,168

Equipment trading fleet

85,686

 

81,136

 

92,570

Total

8,002,622

 

7,996,041

 

7,281,867

  1. In the equipment fleet tables above, we have included total fleet count information based on CEU. CEU is a ratio used to convert the actual number of containers in our fleet to a figure based on the relative purchase prices of our various equipment types to that of a 20-foot dry container. For example, the CEU ratio for a 40-foot high cube dry container is 1.70, and a 40-foot high cube refrigerated container is 7.50. These factors may differ slightly from CEU ratios used by others in the industry.

The following table provides a summary of our equipment lease portfolio by lease type, based on CEU and net book value, as of March 31, 2022:

Lease Portfolio

 

By CEU

 

By Net Book Value

Long-term leases

 

72.4

%

 

73.0

%

Finance leases

 

8.6

 

 

15.0

 

Subtotal

 

81.0

 

 

88.0

 

Service leases

 

5.0

 

 

3.7

 

Expired long-term leases, non-sale age (units on hire)

 

6.9

 

 

4.9

 

Expired long-term leases, sale-age (units on hire)

 

7.1

 

 

3.4

 

Total

 

100.0

%

 

100.0

%

The following table summarizes our leasing revenue for the periods indicated (in thousands):

 

Three Months Ended,

 

March 31, 2022

 

December 31, 2021

 

March 31, 2021

Operating leases

 

 

 

 

 

Per diem revenues

$ 377,514

 

$ 383,529

 

$ 331,252

Fee and ancillary revenues

11,431

 

11,092

 

8,542

Total operating lease revenues

388,945

 

394,621

 

339,794

Finance leases

28,143

 

22,541

 

6,949

Total leasing revenues

$ 417,088

 

$ 417,162

 

$ 346,743

Important Cautionary Information Regarding Forward-Looking Statements

Certain statements in this release, other than purely historical information, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements that include the words "expect," "intend," "plan," "seek," "believe," "project," "predict," "anticipate," "potential," "will," "may," "would" and similar statements of a future or forward-looking nature may be used to identify forward-looking statements. All forward-looking statements address matters that involve risks and uncertainties, many of which are beyond Triton's control. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in such statements and, therefore, you should not place undue reliance on any such statements.

These factors include, without limitation, economic, business, competitive, market and regulatory conditions and the following: the impact of COVID-19 on our business and financial results; decreases in the demand for leased containers; decreases in market leasing rates for containers; difficulties in re-leasing containers after their initial fixed-term leases; our customers' decisions to buy rather than lease containers; our dependence on a limited number of customers and suppliers; customer defaults; decreases in the selling prices of used containers; extensive competition in the container leasing industry; risks stemming from the international nature of our business, including global economic trends and geopolitical risks; decreases in demand for international trade; risks resulting from the political and economic policies of the United States and other countries, particularly China, including but not limited to, the impact of trade wars, duties and tariffs; disruption to our operations from failures of, or attacks on, our information technology systems; disruption to our operations as a result of natural disasters; compliance with laws and regulations related to economic and trade sanctions, security, anti-terrorism, environmental protection and anti-corruption; the availability and cost of capital; restrictions imposed by the terms of our debt agreements; changes in tax laws in Bermuda, the United States and other countries; and other risks and uncertainties, including those risk factors set forth in the section entitled "Risk Factors" in our Form 10-K filed with the Securities and Exchange Commission ("SEC"), on February 15, 2022, in any Form 10-Q filed or to be filed by Triton, and in other documents we file with the SEC from time to time.

The foregoing list of important factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included herein and elsewhere. Any forward-looking statements made herein are qualified in their entirety by these cautionary statements. Except to the extent required by applicable law, we undertake no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

-Financial Tables Follow-

TRITON INTERNATIONAL LIMITED

Consolidated Balance Sheets

(In thousands, except share data)

(Unaudited)

 

March 31, 2022

 

December 31, 2021

ASSETS:

 

 

 

Leasing equipment, net of accumulated depreciation of $4,048,194 and $3,919,181

$

9,945,967

 

 

$

10,201,113

 

Net investment in finance leases

 

1,696,543

 

 

 

1,558,290

 

Equipment held for sale

 

79,061

 

 

 

48,746

 

Revenue earning assets

 

11,721,571

 

 

 

11,808,149

 

Cash and cash equivalents

 

71,969

 

 

 

106,168

 

Restricted cash

 

121,431

 

 

 

124,370

 

Accounts receivable, net of allowances of $1,144 and $1,178

 

293,442

 

 

 

294,792

 

Goodwill

 

236,665

 

 

 

236,665

 

Lease intangibles, net of accumulated amortization of $284,111 and $281,340

 

14,346

 

 

 

17,117

 

Other assets

 

38,989

 

 

 

50,346

 

Fair value of derivative instruments

 

36,401

 

 

 

6,231

 

Total assets

$

12,534,814

 

 

$

12,643,838

 

LIABILITIES AND SHAREHOLDERS' EQUITY:

 

 

 

Equipment purchases payable

$

56,804

 

 

$

429,568

 

Fair value of derivative instruments

 

2,906

 

 

 

48,277

 

Deferred revenue

 

90,417

 

 

 

92,198

 

Accounts payable and other accrued expenses

 

69,490

 

 

 

70,557

 

Net deferred income tax liability

 

387,211

 

 

 

376,009

 

Debt, net of unamortized costs of $65,069 and $63,794

 

8,727,432

 

 

 

8,562,517

 

Total liabilities

 

9,334,260

 

 

 

9,579,126

 

 

 

 

 

Shareholders' equity:

 

 

 

Preferred shares, $0.01 par value, at liquidation preference

 

730,000

 

 

 

730,000

 

Common shares, $0.01 par value, 270,000,000 shares authorized, 81,367,045 and 81,295,366 shares issued, respectively

 

814

 

 

 

813

 

Undesignated shares, $0.01 par value, 800,000 shares authorized, no shares issued and outstanding

 

 

 

 

 

Treasury shares, at cost, 16,686,873 and 15,429,499 shares, respectively

 

(602,526

)

 

 

(522,360

)

Additional paid-in capital

 

901,150

 

 

 

904,224

 

Accumulated earnings

 

2,139,777

 

 

 

2,000,854

 

Accumulated other comprehensive income (loss)

 

31,339

 

 

 

(48,819

)

Total shareholders' equity

 

3,200,554

 

 

 

3,064,712

 

Total liabilities and shareholders' equity

$

12,534,814

 

 

$

12,643,838

 

TRITON INTERNATIONAL LIMITED

Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

 

Three Months Ended March 31,

 

 

2022

 

 

 

2021

 

Leasing revenues:

 

 

 

Operating leases

$

388,945

 

 

$

339,794

 

Finance leases

 

28,143

 

 

 

6,949

 

Total leasing revenues

 

417,088

 

 

 

346,743

 

 

 

 

 

Equipment trading revenues

 

34,120

 

 

 

25,945

 

Equipment trading expenses

 

(29,979

)

 

 

(17,804

)

Trading margin

 

4,141

 

 

 

8,141

 

 

 

 

 

Net gain on sale of leasing equipment

 

28,969

 

 

 

21,967

 

 

 

 

 

Operating expenses:

 

 

 

Depreciation and amortization

 

160,716

 

 

 

143,307

 

Direct operating expenses

 

6,220

 

 

 

9,370

 

Administrative expenses

 

21,300

 

 

 

20,921

 

Provision (reversal) for doubtful accounts

 

(27

)

 

 

(2,464

)

Total operating expenses

 

188,209

 

 

 

171,134

 

Operating income (loss)

 

261,989

 

 

 

205,717

 

Other expenses:

 

 

 

Interest and debt expense

 

54,510

 

 

 

54,623

 

Unrealized (gain) loss on derivative instruments, net

 

(439

)

 

 

 

Debt termination expense

 

36

 

 

 

 

Other (income) expense, net

 

(308

)

 

 

(481

)

Total other expenses

 

53,799

 

 

 

54,142

 

Income (loss) before income taxes

 

208,190

 

 

 

151,575

 

Income tax expense (benefit)

 

13,932

 

 

 

11,737

 

Net income (loss)

$

194,258

 

 

$

139,838

 

Less: dividend on preferred shares

 

13,028

 

 

 

10,513

 

Net income (loss) attributable to common shareholders

$

181,230

 

 

$

129,325

 

Net income per common share—Basic

$

2.79

 

 

$

1.93

 

Net income per common share—Diluted

$

2.78

 

 

$

1.92

 

Cash dividends paid per common share

$

0.65

 

 

$

0.57

 

Weighted average number of common shares outstanding—Basic

 

64,887

 

 

 

66,935

 

Dilutive restricted shares

 

267

 

 

 

282

 

Weighted average number of common shares outstanding—Diluted

 

65,154

 

 

 

67,217

 

TRITON INTERNATIONAL LIMITED

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

Three Months Ended March 31,

 

 

2022

 

 

 

2021

 

Cash flows from operating activities:

 

 

 

Net income (loss)

$

194,258

 

 

$

139,838

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

160,716

 

 

 

143,307

 

Amortization of deferred debt cost and other debt related amortization

 

3,526

 

 

 

1,142

 

Lease related amortization

 

3,013

 

 

 

4,857

 

Share-based compensation expense

 

2,556

 

 

 

1,715

 

Net (gain) loss on sale of leasing equipment

 

(28,969

)

 

 

(21,967

)

Unrealized (gain) loss on derivative instruments

 

(439

)

 

 

 

Debt termination expense

 

36

 

 

 

 

Deferred income taxes

 

5,193

 

 

 

11,615

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

(23,835

)

 

 

(20,300

)

Deferred revenue

 

35,237

 

 

 

9,472

 

Accounts payable and other accrued expenses

 

4,143

 

 

 

1,886

 

Net equipment sold (purchased) for resale activity

 

(7,749

)

 

 

1,579

 

Cash received (paid) for settlement of interest rate swaps

 

12,178

 

 

 

5,558

 

Cash collections on finance lease receivables, net of income earned

 

28,745

 

 

 

12,866

 

Other assets

 

10,061

 

 

 

9,420

 

Net cash provided by (used in) operating activities

 

398,670

 

 

 

300,988

 

Cash flows from investing activities:

 

 

 

Purchases of leasing equipment and investments in finance leases

 

(511,027

)

 

 

(579,211

)

Proceeds from sale of equipment, net of selling costs

 

57,274

 

 

 

53,512

 

Other

 

(135

)

 

 

15

 

Net cash provided by (used in) investing activities

 

(453,888

)

 

 

(525,684

)

Cash flows from financing activities:

 

 

 

Purchases of treasury shares

 

(81,720

)

 

 

 

Debt issuance costs

 

(5,507

)

 

 

(13,803

)

Borrowings under debt facilities

 

932,600

 

 

 

1,504,850

 

Payments under debt facilities and finance lease obligations

 

(766,686

)

 

 

(979,199

)

Dividends paid on preferred shares

 

(13,028

)

 

 

(10,513

)

Dividends paid on common shares

 

(41,950

)

 

 

(38,153

)

Other

 

(5,629

)

 

 

(4,146

)

Net cash provided by (used in) financing activities

 

18,080

 

 

 

459,036

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

(37,138

)

 

 

234,340

 

Cash, cash equivalents and restricted cash, beginning of period

 

230,538

 

 

 

151,996

 

Cash, cash equivalents and restricted cash, end of period

 

193,400

 

 

 

386,336

 

Supplemental disclosures:

 

 

 

Interest paid

$

39,127

 

 

$

42,133

 

Income taxes paid (refunded)

$

137

 

 

$

155

 

Supplemental non-cash investing activities:

 

 

 

Equipment purchases payable

$

56,804

 

 

$

342,357

 

Use of Non-GAAP Financial Items

We use the terms "Adjusted net income" and "Adjusted return on equity" throughout this press release.

Adjusted net income and Adjusted return on equity are not items presented in accordance with U.S. GAAP and should not be considered as alternatives to, or more meaningful than, amounts determined in accordance with U.S. GAAP, including net income.

Adjusted net income is adjusted for certain items management believes are not representative of our operating performance. Adjusted net income is defined as net income attributable to common shareholders excluding debt termination expenses net of tax, unrealized gains and losses on derivative instruments net of tax, and foreign and other income tax adjustments.

We believe that Adjusted net income is useful to an investor in evaluating our operating performance because this item:

  • is widely used by securities analysts and investors to measure a company's operating performance;
  • helps investors to more meaningfully evaluate and compare the results of our operations from period to period by removing certain non-routine events which we do not expect to occur in the future; and
  • is used by our management for various purposes, including as measures of operating performance and liquidity, to assist in comparing performance from period to period on a consistent basis, in presentations to our board of directors concerning our financial performance and as a basis for strategic planning and forecasting.

We have provided a reconciliation of net income attributable to common shareholders, the most directly comparable U.S. GAAP measure, to Adjusted net income in the table below for the three months ended March 31, 2022, December 31, 2021, and March 31, 2021.

Additionally, the calculation for Adjusted return on equity is adjusted annualized earnings divided by average shareholders' equity. Management utilizes Adjusted return on equity in evaluating how much profit the Company generates on the shareholders' equity in the Company and believes it is useful for comparing the profitability of companies in the same industry.

TRITON INTERNATIONAL LIMITED

Non-GAAP Reconciliations of Adjusted Net Income

(In thousands, except per share amounts)

 

 

 

Three Months Ended,

 

March 31, 2022

 

December 31, 2021

 

March 31, 2021

Net income attributable to common shareholders

$

181,230

 

 

$

177,426

 

 

$

129,325

 

Add (subtract):

 

 

 

 

 

Unrealized loss (gain) on derivative instruments, net

 

(439

)

 

 

 

 

 

 

Debt termination expense

 

36

 

 

 

1,119

 

 

 

 

State and other income tax adjustments

 

 

 

 

(957

)

 

 

 

Tax benefit from vesting of restricted shares

 

(1,184

)

 

 

(40

)

 

 

(643

)

Adjusted net income

$

179,643

 

 

$

177,548

 

 

$

128,682

 

Adjusted net income per common share—Diluted

$

2.76

 

 

$

2.67

 

 

$

1.91

 

Weighted average number of common shares outstanding—Diluted

 

65,154

 

 

 

66,541

 

 

 

67,217

 

TRITON INTERNATIONAL LIMITED

Calculation of Adjusted Return on Equity

(In thousands)

 

 

 

Three Months Ended,

 

March 31, 2022

 

December 31, 2021

 

March 31, 2021

Adjusted net income

$

179,643

 

 

$

177,548

 

 

$

128,682

 

Annualized Adjusted net income (1)

 

728,552

 

 

 

704,402

 

 

 

521,877

 

 

 

 

 

 

 

Average Shareholders' equity (2)(3)

$

2,402,633

 

 

$

2,291,791

 

 

$

2,090,133

 

 

 

 

 

 

 

Adjusted return on equity

 

30.3

%

 

 

30.7

%

 

 

25.0

%

  1. Annualized Adjusted net income was calculated based on calendar days per quarter.
  2. Average Shareholders' equity was calculated using the quarter’s beginning and ending Shareholder’s equity for the three-month ended periods.
  3. Average Shareholders' equity was adjusted to exclude preferred shares.

 

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(914) 697-2900

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