July 28, 2022 – Triton International Limited (NYSE: TRTN)
("Triton")
Highlights:
- Net income attributable to common shareholders for the three
months ended June 30, 2022 was $184.6 million or $2.90 per diluted
share.
- Adjusted net income was $186.0 million or $2.92 per diluted
share, an increase of 36.4% from the second quarter of 2021 and
5.8% from the first quarter of 2022.
- Container utilization remains exceptionally high. Utilization
averaged 99.4% in the second quarter of 2022 and ending utilization
was 99.3% as of July 26, 2022.
- Triton repurchased 1.8 million common shares during the second
quarter and has repurchased an additional 0.9 million common shares
through July 26, 2022. See the tables to this press release for
further information. Additionally, Triton again increased its share
repurchase authorization back to $200 million in July.
Financial Results
The following table summarizes Triton’s selected key financial
information for the three and six months ended June 30, 2022 and
2021 and the three months ended March 31, 2022.
(in millions, except per share
data)
Three Months Ended,
Six Months Ended,
June 30, 2022
March 31, 2022
June 30, 2021
June 30, 2022
June 30, 2021
Total leasing revenues
$421.6
$417.1
$369.8
$838.7
$716.5
GAAP
Net income attributable to common
shareholders
$184.6
$181.2
$54.7
$365.8
$184.0
Net income per share - Diluted
$2.90
$2.78
$0.81
$5.68
$2.74
Non-GAAP
(1)
Adjusted net income
$186.0
$179.6
$144.2
$365.7
$272.9
Adjusted net income per share -
Diluted
$2.92
$2.76
$2.14
$5.67
$4.06
Adjusted return on equity (2)
29.8
%
30.3
%
26.6
%
30.1
%
26.0
%
(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 achieved another record quarter of profitability in the
second quarter of 2022," commented Brian M. Sondey, Chief Executive
Officer of Triton. “Triton generated $2.92 of Adjusted net income
per share, an increase of 5.8% from the first quarter of 2022 and
an increase of 36.4% from the second quarter of 2021. In addition,
Triton achieved an annualized Adjusted return on equity of
29.8%."
"Triton’s outstanding profitability reflects durable
enhancements made to our business as well as generally constructive
market conditions. Our utilization remains well above 99%,
reflecting the large portion of our container fleet on long-term
lease and low drop off volumes. New container prices have decreased
from their peak level reached last year, but remain historically
high, with factories quoting in the $2,600 range for a 20' dry
container, providing strong support for lease rates and disposal
prices. We have also locked in low long-term interest rates through
our extensive refinancing activity in 2020 and 2021."
"Our gains on container disposals and trading margins remained
exceptionally high in the second quarter, reflecting a continued
tight market for containers and Triton’s market-leading resale
capabilities. We also benefited from several lease transactions for
older containers in the second quarter which were accounted for as
sales. These transactions generated substantial per container
margins, reflecting the value embedded in our container fleet, and
they boosted our disposal gains by $6.8 million in the second
quarter, or $0.11 per share."
"Triton's new container investment has been moderate so far this
year following our record investment and growth in 2021, as
customers have been more cautious about further expanding their
container fleets. As of July 26, 2022, we have ordered $546 million
of new containers for delivery in 2022. Triton has shifted its
investment focus and strong cash flow to share repurchases. Year to
date, Triton has repurchased 3.9 million or 6.0% of our shares
outstanding. Triton increased the pace of its repurchases during
the second quarter and our Board of Directors has again increased
our share repurchase authorization back to $200 million in
July."
Outlook
Mr. Sondey continued, "We expect our performance will remain
strong due to the durable enhancements we have made to our
business. While we anticipate that market conditions will continue
to moderate, we expect our cash flow, profitability and Adjusted
return on equity will remain very high throughout the year and into
the longer term. For the third quarter, we expect our Adjusted net
income per share will remain in line with our very strong second
quarter results, excluding the extra benefits to our disposal
gains."
Common and Preferred Share
Dividends
Triton’s Board of Directors has declared a quarterly cash
dividend of $0.65 per common share, payable on September 22, 2022
to shareholders of record at the close of business on September 8,
2022.
The Company's Board of Directors also declared a cash dividend
payable on September 15, 2022 to holders of record at the close of
business on September 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
Second Quarter 2022 Investor
Webcast
Triton will hold a Webcast at 8:30 a.m. (New York time) on
Thursday, July 28, 2022 to discuss its second 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
June 30, 2022
March 31, 2022
December 31, 2021
September 30, 2021
June 30, 2021
Average Utilization (1)
99.4
%
99.6
%
99.6
%
99.6
%
99.4
%
Ending Utilization (1)
99.3
%
99.5
%
99.6
%
99.6
%
99.5
%
(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 June
30, 2022, December 31, 2021 and June 30, 2021 (in units, TEUs and
CEUs):
Equipment Fleet in
Units
Equipment Fleet in TEU
June 30, 2022
December 31, 2021
June 30, 2021
June 30, 2022
December 31, 2021
June 30, 2021
Dry
3,867,875
3,843,719
3,604,794
6,585,556
6,531,816
6,084,381
Refrigerated
231,470
235,338
236,978
449,850
457,172
459,389
Special
92,068
92,411
93,238
168,578
169,004
170,259
Tank
11,908
11,692
11,513
11,908
11,692
11,513
Chassis
23,985
24,139
24,275
44,902
44,554
44,391
Equipment leasing fleet
4,227,306
4,207,299
3,970,798
7,260,794
7,214,238
6,769,933
Equipment trading fleet
52,177
53,204
53,802
83,147
83,692
84,455
Total
4,279,483
4,260,503
4,024,600
7,343,941
7,297,930
6,854,388
Equipment in CEU(1)
June 30, 2022
December 31, 2021
June 30, 2021
Operating leases
7,248,096
7,291,769
7,171,845
Finance leases
683,175
623,136
369,130
Equipment trading fleet
78,936
81,136
82,980
Total
8,010,207
7,996,041
7,623,955
(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
June 30, 2022:
Lease
Portfolio
By CEU
By Net Book Value
Long-term leases
71.2
%
71.8
%
Finance leases
8.8
15.5
Subtotal
80.0
87.3
Service leases
6.9
4.3
Expired long-term leases, non-sale age
(units on hire)
7.8
5.8
Expired long-term leases, sale-age
(units on hire)
5.3
2.6
Total
100.0
%
100.0
%
The following table summarizes our leasing revenue for the
periods indicated (in thousands):
Three Months Ended,
June 30, 2022
March 31, 2022
June 30, 2021
Operating leases
Per diem revenues
$
378,414
$
377,514
$
353,277
Fee and ancillary revenues
13,677
11,431
7,582
Total operating lease revenues
392,091
388,945
360,859
Finance leases
29,517
28,143
8,925
Total leasing revenues
$
421,608
$
417,088
$
369,784
Share Repurchase Information
The following table provides information with respect to our
purchases of the Company's common shares for the periods
indicated:
Total Number of Shares
Purchased
Average Price Paid per
Share
July 1, 2021 through September 30,
2021
378,765
$
51.19
October 1, 2021 through December 31,
2021
1,149,408
$
57.52
2021 Total
1,528,173
$
55.95
January 1, 2022 through March 31,
2022
1,257,374
$
63.74
April 1, 2022 through June 30,
2022
1,832,240
$
60.04
July 1, 2022 through July 26,
2022
850,000
$
54.98
2022 Total
3,939,614
$
60.13
Total
5,467,787
$
58.96
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. These forward-looking
statements include, among others, statements relating to Triton's
future financial and operating performance and key drivers thereof;
anticipated trends in the market and industry; future capital
expenditures, including anticipated payments of dividends and
amount, manner and timing of share repurchases under the share
repurchase authorization; and other statements regarding prospects
and business strategies. 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 and regional economic
conditions, including inflation and attempts to control inflation,
and geopolitical risks such as the ongoing war in Ukraine;
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 subsequent 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)
June 30, 2022
December 31, 2021
ASSETS:
Leasing equipment, net of accumulated
depreciation of $4,151,317 and $3,919,181
$
9,887,026
$
10,201,113
Net investment in finance leases
1,743,192
1,558,290
Equipment held for sale
79,402
48,746
Revenue earning assets
11,709,620
11,808,149
Cash and cash equivalents
66,713
106,168
Restricted cash
113,392
124,370
Accounts receivable, net of allowances of
$1,183 and $1,178
289,681
294,792
Goodwill
236,665
236,665
Lease intangibles, net of accumulated
amortization of $286,750 and $281,340
11,707
17,117
Other assets
30,609
50,346
Fair value of derivative instruments
71,201
6,231
Total assets
$
12,529,588
$
12,643,838
LIABILITIES AND SHAREHOLDERS'
EQUITY:
Equipment purchases payable
$
43,348
$
429,568
Fair value of derivative instruments
2,030
48,277
Deferred revenue
335,025
92,198
Accounts payable and other accrued
expenses
67,361
70,557
Net deferred income tax liability
396,253
376,009
Debt, net of unamortized costs of $62,204
and $63,794
8,411,271
8,562,517
Total liabilities
9,255,288
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, 81,389,809 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, 18,519,113 and
15,429,499 shares, respectively
(712,575
)
(522,360
)
Additional paid-in capital
904,841
904,224
Accumulated earnings
2,283,084
2,000,854
Accumulated other comprehensive income
(loss)
68,136
(48,819
)
Total shareholders' equity
3,274,300
3,064,712
Total liabilities and shareholders'
equity
$
12,529,588
$
12,643,838
TRITON INTERNATIONAL
LIMITED
Consolidated Statements of
Operations
(In thousands, except per
share amounts)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Leasing revenues:
Operating leases
$
392,091
$
360,859
$
781,036
$
700,653
Finance leases
29,517
8,925
57,660
15,874
Total leasing revenues
421,608
369,784
838,696
716,527
Equipment trading revenues
48,108
33,183
82,228
59,128
Equipment trading expenses
(41,706
)
(22,457
)
(71,685
)
(40,261
)
Trading margin
6,402
10,726
10,543
18,867
Net gain on sale of leasing equipment
35,072
31,391
64,041
53,358
Operating expenses:
Depreciation and amortization
160,922
154,056
321,638
297,363
Direct operating expenses
7,398
6,337
13,618
15,707
Administrative expenses
24,968
22,979
46,268
43,900
Provision (reversal) for doubtful
accounts
46
(26
)
19
(2,490
)
Total operating expenses
193,334
183,346
381,543
354,480
Operating income (loss)
269,748
228,555
531,737
434,272
Other expenses:
Interest and debt expense
54,659
60,004
109,169
114,627
Unrealized (gain) loss on derivative
instruments, net
100
—
(339
)
—
Debt termination expense
1,627
89,863
1,663
89,863
Other (income) expense, net
(189
)
(261
)
(497
)
(742
)
Total other expenses
56,197
149,606
109,996
203,748
Income (loss) before income taxes
213,551
78,949
421,741
230,524
Income tax expense (benefit)
15,932
13,732
29,864
25,469
Net income (loss)
$
197,619
$
65,217
$
391,877
$
205,055
Less: dividend on preferred shares
13,028
10,513
26,056
21,026
Net income (loss) attributable to
common shareholders
$
184,591
$
54,704
$
365,821
$
184,029
Net income per common share—Basic
$
2.91
$
0.82
$
5.70
$
2.75
Net income per common share—Diluted
$
2.90
$
0.81
$
5.68
$
2.74
Cash dividends paid per common share
$
0.65
$
0.57
$
1.30
$
1.14
Weighted average number of common shares
outstanding—Basic
63,457
66,951
64,168
66,943
Dilutive restricted shares
288
331
277
295
Weighted average number of common shares
outstanding—Diluted
63,745
67,282
64,445
67,238
TRITON INTERNATIONAL
LIMITED
Consolidated Statements of
Cash Flows
(In thousands)
(Unaudited)
Six Months Ended June
30,
2022
2021
Cash flows from operating
activities:
Net income (loss)
$
391,877
$
205,055
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
321,638
297,363
Amortization of deferred debt cost and
other debt related amortization
6,541
4,255
Lease related amortization
5,893
9,549
Share-based compensation expense
6,247
5,010
Net (gain) loss on sale of leasing
equipment
(64,041
)
(53,358
)
Unrealized (gain) loss on derivative
instruments
(339
)
—
Debt termination expense
1,663
89,863
Deferred income taxes
12,542
25,228
Changes in operating assets and
liabilities:
Accounts receivable
(1,459
)
(40,419
)
Deferred revenue
266,802
25,801
Accounts payable and other accrued
expenses
(2,957
)
(5,842
)
Net equipment sold (purchased) for resale
activity
(14,015
)
8,787
Cash received (paid) for settlement of
interest rate swaps
16,588
5,481
Cash collections on finance lease
receivables, net of income earned
72,004
27,124
Other assets
18,471
9,422
Net cash provided by (used in)
operating activities
1,037,455
613,319
Cash flows from investing
activities:
Purchases of leasing equipment and
investments in finance leases
(750,021
)
(1,717,843
)
Proceeds from sale of equipment, net of
selling costs
126,818
117,688
Other
(405
)
63
Net cash provided by (used in)
investing activities
(623,608
)
(1,600,092
)
Cash flows from financing
activities:
Purchases of treasury shares
(187,967
)
—
Debt issuance costs
(8,348
)
(31,502
)
Borrowings under debt facilities
1,505,600
5,663,432
Payments under debt facilities and finance
lease obligations
(1,659,002
)
(4,490,788
)
Dividends paid on preferred shares
(26,056
)
(21,026
)
Dividends paid on common shares
(82,878
)
(76,317
)
Other
(5,629
)
(4,146
)
Net cash provided by (used in)
financing activities
(464,280
)
1,039,653
Net increase (decrease) in cash, cash
equivalents and restricted cash
$
(50,433
)
$
52,880
Cash, cash equivalents and restricted
cash, beginning of period
230,538
151,996
Cash, cash equivalents and restricted
cash, end of period
$
180,105
$
204,876
Supplemental disclosures:
Interest paid
$
94,321
$
106,182
Income taxes paid (refunded)
$
17,538
$
3,445
Right-of-use asset for leased property
$
210
$
1,453
Supplemental non-cash investing
activities:
Equipment purchases payable
$
43,348
$
411,454
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 June 30, 2022, March 31, 2022, and June 30, 2021 and
for the six months ended June 30, 2022 and June 30, 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,
Six Months Ended
June 30, 2022
March 31, 2022
June 30, 2021
June 30, 2022
June 30, 2021
Net income attributable to common
shareholders
$
184,591
$
181,230
$
54,704
$
365,821
$
184,029
Add (subtract):
Unrealized loss (gain) on derivative
instruments, net
139
(439
)
—
(300
)
—
Debt termination expense
1,304
36
89,485
1,340
89,485
Tax benefit from vesting of restricted
shares
—
(1,184
)
—
(1,184
)
(643
)
Adjusted net income
$
186,034
$
179,643
$
144,189
$
365,677
$
272,871
Adjusted net income per common
share—Diluted
$
2.92
$
2.76
$
2.14
$
5.67
$
4.06
Weighted average number of common shares
outstanding—Diluted
63,745
65,154
67,282
64,445
67,238
TRITON INTERNATIONAL
LIMITED
Calculation of Adjusted Return
on Equity
(In thousands)
Three Months Ended,
Six Months Ended,
June 30, 2022
March 31, 2022
June 30, 2021
June 30, 2022
June 30, 2021
Adjusted net income
$
186,034
$
179,643
$
144,189
$
365,677
$
272,871
Annualized Adjusted net income (1)
746,180
728,552
578,340
737,415
550,265
Average Shareholders' equity (2)(3)
$
2,507,427
$
2,402,633
$
2,170,698
$
2,449,855
$
2,117,448
Adjusted return on equity
29.8
%
30.3
%
26.6
%
30.1
%
26.0
%
(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, and the ending
Shareholder's equity from each quarter in the current year and
December 31 of the previous year for the six-month ended
periods.
(3)
Average Shareholders' equity was adjusted
to exclude preferred shares.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220727005544/en/
Andrew Greenberg Senior Vice President Business Development
& Investor Relations (914) 697-2900
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