November 1, 2022 – Triton International Limited (NYSE: TRTN)
("Triton")
Highlights:
- Net income attributable to common shareholders for the three
months ended September 30, 2022 was $176.8 million or $2.88 per
diluted share.
- Adjusted net income was $176.5 million or $2.88 per diluted
share, an increase of 18.5% from the third quarter of 2021 and a
decrease of 1.4% from the second quarter of 2022.
- Utilization averaged 99.1% in the third quarter of 2022 and was
98.6% as of October 26, 2022.
- Triton repurchased 3.2 million common shares during the third
quarter and has repurchased an additional 0.9 million common shares
through October 26, 2022. See the tables to this press release for
further information. Additionally, Triton increased its share
repurchase authorization back to $200 million in October.
- Triton increased its quarterly common share dividend by $0.05
to $0.70 per share, payable on December 22, 2022 to shareholders of
record as of December 8, 2022.
Financial Results
The following table summarizes Triton’s selected key financial
information for the three and nine months ended September 30, 2022
and 2021 and the three months ended June 30, 2022.
(in millions, except per share
data)
Three Months Ended,
Nine Months Ended,
September 30, 2022
June 30, 2022
September 30, 2021
September 30, 2022
September 30, 2021
Total leasing revenues
$
424.7
$
421.6
$
400.2
$
1,263.4
$
1,116.7
GAAP
Net income attributable to common
shareholders
$
176.8
$
184.6
$
123.0
$
542.6
$
307.1
Net income per share - Diluted
$
2.88
$
2.90
$
1.83
$
8.56
$
4.57
Non-GAAP
(1)
Adjusted net income
$
176.5
$
186.0
$
163.8
$
542.2
$
436.6
Adjusted net income per share -
Diluted
$
2.88
$
2.92
$
2.43
$
8.55
$
6.49
Adjusted return on equity (2)
27.5
%
29.8
%
29.4
%
29.3
%
27.1
%
(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 continued to achieve outstanding financial performance
in the third quarter of 2022," commented Brian M. Sondey, Chief
Executive Officer of Triton. "Triton generated $2.88 of Adjusted
net income per share, an increase of 18.5% from the third quarter
of 2021 and just slightly below our record results from the second
quarter of 2022. In addition, Triton achieved an annualized
Adjusted return on equity of 27.5%."
"Triton's outstanding financial results reflect the durable
enhancements we have made to our business. Container drop-off
volumes increased in the third quarter, but our utilization remains
exceptionally high and is well protected by our strong lease
portfolio. Weighted by net book value, over 87% of our container
fleet is covered by long-term and finance leases, and these leases
have an average remaining duration of 76 months. In addition, used
container sale prices remain high and we continue to generate
sizable gains on disposals."
"The increase in container drop-offs in the third quarter
reflects a muted summer peak season. Customers had expected trade
growth would slow this year following exceptionally strong volumes
in 2021, but we experienced fairly balanced activity in the first
half of the year as customers continued to struggle with logistical
disruptions and as they anticipated container needs for the
traditional summer peak. However, normalizing consumer spending and
macroeconomic challenges have impacted trade volumes, and many of
our customers have shifted their focus to fleet efficiency and
increased the pace of container off-hires. In addition, new
container investment activity has slowed significantly across the
market, and new container prices have decreased into the range of
$2,200 for a 20’ dry container."
"Triton's new container investment has been limited this year
following our record investment and growth in 2021. As of October
26, 2022, we have ordered $557 million of new containers for
delivery in 2022. Triton has shifted its investment focus and
strong cash flow to share repurchases, and we accelerated the pace
of our repurchases in the third quarter. Year to date, Triton has
repurchased 7.1 million shares, or 10.8% of our outstanding shares,
while decreasing our leverage. Our Board of Directors increased our
share repurchase authorization back to $200 million in
October."
Outlook
Mr. Sondey continued, "We anticipate our Adjusted net income per
share will decrease sequentially as our utilization and used
container sale prices decrease from their recent extraordinarily
high levels. However, we have made durable enhancements to our
business, are very well protected by our lease portfolio and expect
our utilization will remain high. We also expect our share
repurchases will continue to be highly accretive. Overall, we
expect our performance will remain very strong through the end of
the year and into the longer term."
Common and Preferred Share
Dividends
Triton’s Board of Directors has increased the quarterly cash
dividend from $0.65 to $0.70 per common share, reflecting an
approximate 8% increase. The dividend will be payable on December
22, 2022 to shareholders of record at the close of business on
December 8, 2022.
Mr. Sondey concluded, "The increase in Triton's quarterly
dividend reflects Triton's strong balance sheet, outstanding
financial performance and our confidence that Triton's
profitability and cash flows will remain strong."
The Company's Board of Directors also declared a cash dividend
payable on December 15, 2022 to holders of record at the close of
business on December 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
Third Quarter 2022 Investor
Webcast
Triton will hold a Webcast at 8:30 a.m. (New York time) on
Tuesday, November 1, 2022 to discuss its third 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
September 30, 2022
June 30, 2022
March 31, 2022
December 31, 2021
September 30, 2021
Average Utilization (1)
99.1
%
99.4
%
99.6
%
99.6
%
99.6
%
Ending Utilization (1)
98.8
%
99.3
%
99.5
%
99.6
%
99.6
%
(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
September 30, 2022, December 31, 2021 and September 30, 2021 (in
units, TEUs and CEUs):
Equipment Fleet in
Units
Equipment Fleet in TEU
September 30, 2022
December 31, 2021
September 30, 2021
September 30, 2022
December 31, 2021
September 30, 2021
Dry
3,833,065
3,843,719
3,748,654
6,540,720
6,531,816
6,351,083
Refrigerated
229,839
235,338
239,328
446,678
457,172
464,465
Special
91,949
92,411
92,458
168,441
169,004
168,951
Tank
11,911
11,692
11,591
11,911
11,692
11,591
Chassis
25,823
24,139
24,381
48,615
44,554
44,726
Equipment leasing fleet
4,192,587
4,207,299
4,116,412
7,216,365
7,214,238
7,040,816
Equipment trading fleet
47,696
53,204
55,299
77,755
83,692
86,598
Total
4,240,283
4,260,503
4,171,711
7,294,120
7,297,930
7,127,414
Equipment in CEU(1)
September 30, 2022
December 31, 2021
September 30, 2021
Operating leases
7,210,150
7,291,769
7,294,503
Finance leases
676,310
623,136
494,839
Equipment trading fleet
73,529
81,136
83,976
Total
7,959,989
7,996,041
7,873,318
(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
September 30, 2022:
Lease
Portfolio
By CEU
By Net Book Value
Long-term leases
71.1
%
71.7
%
Finance leases
8.9
15.6
Subtotal
80.0
87.3
Service leases
6.8
4.3
Expired long-term leases, non-sale age
(units on hire)
7.6
5.7
Expired long-term leases, sale-age
(units on hire)
5.6
2.7
Total
100.0
%
100.0
%
The following table summarizes our leasing revenue for the
periods indicated (in thousands):
Three Months Ended,
September 30, 2022
June 30, 2022
September 30, 2021
Operating leases
Per diem revenues
$
379,623
$
378,414
$
377,234
Fee and ancillary revenues
15,777
13,677
7,987
Total operating lease revenues
395,400
392,091
385,221
Finance leases
29,283
29,517
14,970
Total leasing revenues
$
424,683
$
421,608
$
400,191
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 September 30,
2022
3,200,340
$
59.21
October 1, 2022 through October 26,
2022
851,603
$
56.64
2022 Total
7,141,557
$
59.91
Total
8,669,730
$
59.21
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; increases in the cost of
repairing and storing our off-hire 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)
September 30, 2022
December 31, 2021
ASSETS:
Leasing equipment, net of accumulated
depreciation of $4,223,166 and $3,919,181
$
9,742,929
$
10,201,113
Net investment in finance leases
1,704,642
1,558,290
Equipment held for sale
88,221
48,746
Revenue earning assets
11,535,792
11,808,149
Cash and cash equivalents
63,992
106,168
Restricted cash
103,026
124,370
Accounts receivable, net of allowances of
$3,144 and $1,178
283,819
294,792
Goodwill
236,665
236,665
Lease intangibles, net of accumulated
amortization of $289,334 and $281,340
9,123
17,117
Other assets
28,569
50,346
Fair value of derivative instruments
123,357
6,231
Total assets
$
12,384,343
$
12,643,838
LIABILITIES AND SHAREHOLDERS'
EQUITY:
Equipment purchases payable
$
19,450
$
429,568
Fair value of derivative instruments
3,450
48,277
Deferred revenue
320,945
92,198
Accounts payable and other accrued
expenses
70,710
70,557
Net deferred income tax liability
405,574
376,009
Debt, net of unamortized costs of $58,192
and $63,794
8,290,293
8,562,517
Total liabilities
9,110,422
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, 21,719,453 and
15,429,499 shares, respectively
(902,118
)
(522,360
)
Additional paid-in capital
908,008
904,224
Accumulated earnings
2,420,166
2,000,854
Accumulated other comprehensive income
(loss)
117,051
(48,819
)
Total shareholders' equity
3,273,921
3,064,712
Total liabilities and shareholders'
equity
$
12,384,343
$
12,643,838
TRITON INTERNATIONAL LIMITED
Consolidated Statements of Operations (In thousands,
except per share amounts) (Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2021
2022
2021
Leasing revenues:
Operating leases
$
395,400
$
385,221
$
1,176,436
$
1,085,874
Finance leases
29,283
14,970
86,943
30,844
Total leasing revenues
424,683
400,191
1,263,379
1,116,718
Equipment trading revenues
44,786
44,418
127,014
103,546
Equipment trading expenses
(41,106
)
(35,255
)
(112,791
)
(75,516
)
Trading margin
3,680
9,163
14,223
28,030
Net gain on sale of leasing equipment
26,468
25,606
90,509
78,964
Operating expenses:
Depreciation and amortization
158,538
163,493
480,176
460,856
Direct operating expenses
10,525
5,539
24,143
21,246
Administrative expenses
22,747
21,426
69,015
65,326
Provision (reversal) for doubtful
accounts
(123
)
23
(104
)
(2,467
)
Total operating expenses
191,687
190,481
573,230
544,961
Operating income (loss)
263,144
244,479
794,881
678,751
Other expenses:
Interest and debt expense
57,124
54,728
166,293
169,355
Unrealized (gain) loss on derivative
instruments, net
19
—
(320
)
—
Debt termination expense
190
42,660
1,853
132,523
Other (income) expense, net
(644
)
(453
)
(1,141
)
(1,195
)
Total other expenses
56,689
96,935
166,685
300,683
Income (loss) before income taxes
206,455
147,544
628,196
378,068
Income tax expense (benefit)
16,618
12,812
46,482
38,281
Net income (loss)
$
189,837
$
134,732
$
581,714
$
339,787
Less: dividend on preferred shares
13,028
11,687
39,084
32,713
Net income (loss) attributable to
common shareholders
$
176,809
$
123,045
$
542,630
$
307,074
Net income per common share—Basic
$
2.90
$
1.84
$
8.60
$
4.59
Net income per common share—Diluted
$
2.88
$
1.83
$
8.56
$
4.57
Cash dividends paid per common share
$
0.65
$
0.57
$
1.95
$
1.71
Weighted average number of common shares
outstanding—Basic
61,035
66,919
63,112
66,935
Dilutive restricted shares
329
372
295
308
Weighted average number of common shares
outstanding—Diluted
61,364
67,291
63,407
67,243
TRITON INTERNATIONAL LIMITED
Consolidated Statements of Cash Flows (In thousands)
(Unaudited)
Nine Months Ended September
30,
2022
2021
Cash flows from operating
activities:
Net income (loss)
$
581,714
$
339,787
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
480,176
460,856
Amortization of deferred debt cost and
other debt related amortization
9,181
7,872
Lease related amortization
8,674
13,703
Share-based compensation expense
9,414
7,259
Net (gain) loss on sale of leasing
equipment
(90,509
)
(78,964
)
Unrealized (gain) loss on derivative
instruments
(320
)
—
Debt termination expense
1,853
132,523
Deferred income taxes
19,633
36,073
Changes in operating assets and
liabilities:
Accounts receivable
(11,542
)
(63,919
)
Deferred revenue
274,981
63,944
Accounts payable and other accrued
expenses
812
(9,098
)
Net equipment sold (purchased) for resale
activity
7,297
4,938
Cash received (paid) for settlement of
interest rate swaps
19,026
5,481
Cash collections on finance lease
receivables, net of income earned
107,633
49,170
Other assets
20,239
17,294
Net cash provided by (used in)
operating activities
1,438,262
986,919
Cash flows from investing
activities:
Purchases of leasing equipment and
investments in finance leases
(889,811
)
(2,791,943
)
Proceeds from sale of equipment, net of
selling costs
217,832
165,066
Other
(716
)
—
Net cash provided by (used in)
investing activities
(672,695
)
(2,626,877
)
Cash flows from financing
activities:
Issuance of preferred shares, net of
underwriting discount
—
169,488
Purchases of treasury shares
(375,026
)
(16,757
)
Debt issuance costs
(8,523
)
(35,996
)
Borrowings under debt facilities
1,802,600
7,713,006
Payments under debt facilities and finance
lease obligations
(2,081,274
)
(5,981,155
)
Dividends paid on preferred shares
(39,084
)
(32,293
)
Dividends paid on common shares
(122,151
)
(114,484
)
Other
(5,629
)
(4,478
)
Net cash provided by (used in)
financing activities
(829,087
)
1,697,331
Net increase (decrease) in cash, cash
equivalents and restricted cash
$
(63,520
)
$
57,373
Cash, cash equivalents and restricted
cash, beginning of period
230,538
151,996
Cash, cash equivalents and restricted
cash, end of period
$
167,018
$
209,369
Supplemental disclosures:
Interest paid
$
148,568
$
153,812
Income taxes paid (refunded)
$
27,579
$
4,639
Right-of-use asset for leased property
$
210
$
1,598
Supplemental non-cash investing
activities:
Equipment purchases payable
$
19,450
$
406,510
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 September 30, 2022, June 30, 2022, and September 30,
2021 and for the nine months ended September 30, 2022 and September
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,
Nine Months Ended
September 30, 2022
June 30, 2022
September 30, 2021
September 30, 2022
September 30, 2021
Net income attributable to common
shareholders
$
176,809
$
184,591
$
123,045
$
542,630
$
307,074
Add (subtract):
Unrealized loss (gain) on derivative
instruments, net
17
139
—
(283
)
—
Debt termination expense
180
1,304
41,214
1,520
130,699
State and other income tax adjustments
(510
)
—
(496
)
(510
)
(496
)
Tax benefit from vesting of restricted
shares
—
—
—
(1,184
)
(643
)
Adjusted net income
$
176,496
$
186,034
$
163,763
$
542,173
$
436,634
Adjusted net income per common
share—Diluted
$
2.88
$
2.92
$
2.43
$
8.55
$
6.49
Weighted average number of common shares
outstanding—Diluted
61,364
63,745
67,291
63,407
67,243
TRITON INTERNATIONAL LIMITED
Calculation of Adjusted Return on Equity (In
thousands)
Three Months Ended,
Nine Months Ended,
September 30, 2022
June 30, 2022
September 30, 2021
September 30, 2022
September 30, 2021
Adjusted net income
$
176,496
$
186,034
$
163,763
$
542,173
$
436,634
Annualized Adjusted net income (1)
700,229
746,180
649,712
724,883
583,778
Average Shareholders' equity (2)(3)
$
2,544,111
$
2,507,427
$
2,210,474
$
2,473,372
$
2,150,303
Adjusted return on equity
27.5
%
29.8
%
29.4
%
29.3
%
27.1
%
(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 nine-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/20221031005419/en/
Andrew Greenberg Senior Vice President Business Development
& Investor Relations (914) 697-2900
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