Triton International Ltd. · NYSE:TRTN/PA
Triton International — Investor Presentation (February 2023)
36 slides from Triton International's investor presentation, February 2023
Slide 1: Investor Presentation February 2023
Investor Presentation February 2023 1
Slide 2: Disclaimers
Disclaimers Forward-Looking Statements Certain statements in this presentation, other than statements of historical facts, including statements regarding our strategy, future operations, future financial position, future revenues, future costs, prospects, plans and objectives of management are "forw
Slide 3: Triton Overview
Triton Overview
Slide 4: Company Overview
Company Overview Triton International is the largest intermodal container leasing company in the world • Number one in all major product lines • Number one supplier to most global shipping lines Triton derives multiple benefits from leadership position • Cost and capability advantages; customer supp
Slide 5: Strong Fundamentals
Strong Fundamentals • Long-term asset growth well above U.S. GDP growth • High ROE supported by operational value-add and leadership advantages Attractive Market • Short order cycle for containers; limited risk of sustained excess capacity • Ideal leasing asset • Leading position drives cost, capabi
Slide 6: Durable Business Enhancements
Durable Business Enhancements ~50% Growth in • Triton purchased $4.9 billion of containers since Q3’20 REA per share in • Locked-in multi-year benefit with long duration, high IRR leases • Further secures scale advantages and position as “go-to” supplier last 2 years • Reduced share count by ~14% in
Slide 7: #1 Position in Key Product Lines & Strong Lease Portfolio
#1 Position in Key Product Lines & Strong Lease Portfolio REVENUE BY PRODUCT LEASE PORTFOLIO (NBV) % of Rev Triton 100% 2.9% 3.5% 4.2% 2.6% Container Fleet 2022 Position 90% 6.2% 5.0% 80% 70% Drys 73.8% #1 60% 50% 73.6% 72.8% 87.4% 88.2% 40% Refrigerated 19.1% #1 30% 20% 10% 15.4% 13.8% 0% Core Dec-
Slide 8: Leading Position in Consolidating Market
Leading Position in Consolidating Market • Triton over 60% larger than closest competitor and increasing share organically • Industry consolidating due to multiple benefits from scale • Competitive stability reflects high barriers to successful entry and advantages for market leaders LESSOR % OF LEA
Slide 9: Triton's Scale Provides Cost & Service Advantages
Triton’s Scale Provides Cost & Service Advantages Triton leased containers from 205 locations in 55 different countries and sold containers from 357 locations in 91 different countries (1) Leasing + Sales Leasing Sales Triton Office (2) S&A AS A PERCENT OF LEASING REVENUE (3) 10 15% 8 CEU (MM) 10% 6
Slide 10: Leading Position with Top Shipping Lines
Leading Position with Top Shipping Lines GLOBAL SHIPPING LINES TRITON IS THE PREFERRED SUPPLIER Vessel TEU Vessel Total Assets (Millions) Share (Q3'22) Triton estimates that it is the #1 third-party 4.6 17.4% Private supplier to: • 4 of the top 5 carriers 4.2 16.0% $89B • 7 of the top 10 carriers 3.
Slide 11: Long-Term Market Growth
Long-Term Market Growth GLOBAL CONTAINER FLEET CUSTOMERS INCREASING USE OF LEASING 60 60% Leasing companies have purchased >55% of 50 50% new containers over the last five years(1) • Leased containers ~50% of total 40 40% Leasing attractive to customers due to: • Just-in-time access 30 30% • Increas
Slide 12: Additional Growth Drivers for Triton
Additional Growth Drivers for Triton TRITON’S STEADY FLEET GROWTH MULTIPLE DRIVERS OF GROWTH 10% 9 M&A Market Share 8 Gains Product Industry Drivers Line 7 Extensions Triton Container Fleet (CEU MM) Sale- 6 Shift from Leasebacks Ownership To Leasing 5 Global Trade Growth 4 Triton Upside Opportunitie
Slide 13: Unique Market Position Drives Superior Returns
Unique Market Position Drives Superior Returns SOURCES OF ADVANTAGE SUPERIOR ROE OVER MULTIPLE TIME FRAMES 30% 25% 20% 15% 10% 5% 0% LTM 5Yr 10Yr TRTN Container Leasing Railcar Leasing Commercial Finance Aircraft Leasing Notes: Container Leasing: TGH; Railcar Leasing: GATX; Commercial Finance: ARCC
Slide 14: Long Track Record of Value Creation
Long Track Record of Value Creation FLEET GROWTH CASH FLOW BEFORE CAPEX(1)(2)(3) 9 $1,750 8 $1,500 7 $1,250 CEU (MM) 6 5 $1,000 $MM 4 $750 3 $500 2 1 $250 - $0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Slide 15: Triton's ESG Strategic Framework
Triton’s ESG Strategic Framework 15
Slide 16: Current Market Update
Current Market Update
Slide 17: Highlights
Highlights • Triton’s fourth quarter results provide a strong finish to an outstanding year • Q4 Adjusted net income per share $2.76, down 4.2% from Q3; Q4 annualized Adjusted return on equity 25.4% • Includes $0.13 benefit from non-recurring items • FY 2022 Adjusted net income per share $11.32, up
Slide 18: Key Operating Metrics
Key Operating Metrics MONTHLY UTILIZATION (CEU) LIFECYCLE LEASES(1)(2) 100% 70% Sale Age at Expiration (CEU) 95% 60% 50% 90% 40% 85% 30% 80% 20% 75% 10% 70% 0% (1) Includes all equipment and lease types. (2 )Lifecycle leases structured so that containers will be sale age at lease expiration. DRY CON
Slide 19: Freight Rates and Container Prices Have Returned to Prepandemic Levels
Freight Rates and Container Prices Have Returned to Prepandemic Levels CONTAINER SPOT FREIGHT RATES NEW BOX PRICES $16,000 WCI Shanghai to Los Angeles $4,500 $14,000 $4,000 WCI Shanghai to Rotterdam $12,000 $3,500 $10,000 $3,000 $2,500 $8,000 $2,000 $6,000 $1,500 $4,000 $1,000 $2,000 $500 $0 $0 Sour
Slide 20: New Container Production Decreasing In Response to Slower Demand
New Container Production Decreasing In Response to Slower Demand TOTAL NEW CONTAINER INVENTORY BACK ANNUAL NEW CONTAINER PRODUCTION TOWARDS NORMAL RANGE 5.0% 6 4.0% 5 4 TEU (MM) 3.0% 3 2.0% 2 1.0% 1 0.0% - % of Total Dry Standard Container Fleet Est. Replacement Range Production Source: Drewry Annua
Slide 21: Consolidated Statement of Adjusted Net Income
Consolidated Statement of Adjusted Net income(*) (In thousands, except earnings per share) Q4 '22 Q3 '22 % Change 2022 2021 % Change Total leasing revenues $ 416,307 $ 424,683 (2.0%) $ 1,679,686 $ 1,533,880 9.5% Depreciation and amortization 154,661 158,538 (2.4%) 634,837 626,240 1.4% Interest and d
Slide 22: Profitability Drivers
Profitability Drivers Sequential Change: Year-over-Year Change: Outlook for Q1’23 Q4 2022 vs Q3 2022 FY 2022 vs FY 2021 • Average revenue earning • Average revenue earning • Expect fleet size will decrease Fleet Size assets down 1.7% assets up 11.5% slightly • Average utilization expected to • Avera
Slide 23: Sustainable Profitability
Sustainable Profitability STRONG LEASING MARGIN EXPANSION SUSTAINED BY EXTENDED LEASE DURATIONS(1)(2) 100 $800 45% 90 80 40% 70 $700 60 Months 50 35% 40 $600 30 Average Remaining Lease Duration (based on NBV) 20 30% Including Expected Build-Down Period 10 $500 - Dec-17 Dec-18 Dec-19 Dec-20 Dec-21 De
Slide 24: Lease Portfolio More Resilient
Lease Portfolio More Resilient HIGHER TROUGH UTILIZATION… AS FLEET MIX IMPROVES 100% 100% 95% 90% 90% 80% Hanjin 85% bankruptcy 70% 80% 60% % of CEU 75% 50% 88.2% 70% 40% 65% 30% 60% 20% 55% 10% 50% 0% Currently Offhire Ending Quarterly Utilization (CEU) Expired Non-Sale Age Leases Trailing 5Y Avera
Slide 25: Robust Capital Structure
Robust Capital Structure DIVERSIFIED CAPITAL STACK(1) CASH FLOW COVERAGE $2,000 12,000 $1,800 $1,600 $1,400 11,000 $1,200 $1,000 $MM 10,000 $800 $600 9,000 Unsecured $400 Debt $200 $0 8,000 2023 2024 2025 2026 2027 Senior Unsecured Notes Principal Debt Obligations 7,000 Term Loan and Revolver 2022 C
Slide 26: Translating Strong Profitability Into Rapid Value Creation
Translating Strong Profitability Into Rapid Value Creation TYPICAL PRIORITIZATION OF CASH FLOW ($MM, except per share amounts) FY2022 Cash flow before capex(1) $1,607 1. Maintain ability to service customers/replacement capex(2) ~$900 Cash flow after replacement capex ~$705 Steady-state cash flow yi
Slide 27: Outlook
Outlook • Expect Adjusted EPS will decrease from Q4 2022 to Q1 2023 • Negative seasonality adds to market pressure on utilization and disposal prices • First quarter has fewest number of days • Gain on a sizable lease prepayment and loss reversals added $0.13 in Q4. Not expecting benefits to re-occu
Slide 28: Conclusions
Conclusions Q4 2022 financial results provide a strong finish to an outstanding year Market conditions challenging, but Triton will continue to build shareholder value quickly • Have significant market advantages and have made durable enhancements to our business • Expect financial performance will
Slide 29: Appendix
Tt TRITON Appendix
Slide 30: Attractive Fundamentals Reinforced by Triton Advantages
Attractive Fundamentals Reinforced by Triton Advantages ATTRACTIVE MARKET FUNDAMENTALS TRITON ADVANTAGES • Strong organic growth across the cycle • Strong balance sheet • Natural exposure to high-growth emerging • Investment grade balance sheet with leverage in economies line with historical average
Slide 31: Long Term Lease Expirations (CEU)
Long Term Lease Expirations (CEU)(1)(2) DRY REFRIGERATED Percent of Fleet 1.9% 3.8% 1.9% 4.7% 3.5% 0.7% Percent of Fleet 0.4% 1.6% 2.1% 1.0% 1.3% 0.3% (1) Excludes sale age units and lifecycle leases. (2) Used spot rate is the estimated market rate for leases on used equipment. 31
Slide 32: Consolidated Statement of Income
Consolidated Statement of Income (In thousands, except earnings per share) Q4 '22 Q3 '22 % Change 2022 2021 % Change Total leasing revenues $ 416,307 $ 424,683 (2.0%) $ 1,679,686 $ 1,533,880 9.5% Trading margin 1,781 3,680 (51.6%) 16,004 34,099 (53.1%) Net gain on sale of leasing equipment 25,156 26
Slide 33: Non-GAAP Financial Information
Non-GAAP Financial Information We use the terms "Adjusted net income," “Adjusted EPS,” “Adjusted return on equity,” “cash flow before capex”, "Adjusted tangible book value per share" and other non-GAAP financial measures throughout this presentation. These items are not presented in accordance with
Slide 34: Reconciliation: Adjusted Net Income and Adjusted Return on Equity
Reconciliation of Non-GAAP Financial Measures: Adjusted Net Income and Adjusted Return on Equity (In thousands, except earnings per share) Q1 '21 Q2 '21 Q3 '21 Q4 '21 2021 Total Q1 '22 Q2 '22 Q3 '22 Q4 '22 2022 Total Net income attributable to common shareholders $ 129,325 $ 54,704 $ 123,045 $ 177,4
Slide 35: Reconciliation: Cash Flow Before Capex (Excluding Certain Items)
Reconciliation of Non-GAAP Financial Measures: Cash Flow Before Capex (Excluding Certain Items) (In thousands) FY2022 Income (loss) before income taxes $ 817,729 Add: Unrealized loss (gain) on derivative instruments, net (343) Debt termination expense 1,933 Adjusted income before income taxes 819,31
Slide 36: Reconciliation: Adjusted Tangible Book Value per Share
Reconciliation of Non-GAAP Financial Measures: Adjusted Tangible Book Value per Share(*) Purchase (In thousands, except per share amounts) Combined Accounting Consolidated Total assets $ 12,092,405 $ 16,853 $ 12,109,258 Total liabilities 8,940,573 (35,678) 8,904,895 Preferred shareholders' equity 73
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