Triton International Ltd. · NYSE:TRTN/PA
Triton International — Q2 2022 Earnings Presentation
19 slides from Triton International's earnings presentation, Jul 28, 2022
Slide 1: Second Quarter 2022 Investor Conference Call
Second Quarter 2022 Investor Conference Call July 28, 2022 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: Highlights
Highlights • Triton achieved record results in the second quarter of 2022 • Adjusted net income of $186.0 million, or $2.92 per diluted share, up 5.8% from Q1 2022 • Q2 annualized return on equity 29.8% • Gain on sale boosted by $6.8 million ($0.11 per share) as several finance lease transactions fo
Slide 4: Triton's Key Operating Metrics Remain Strong
Triton’s Key Operating Metrics Remain Strong ENDING QUARTERLY UTILIZATION (CEU) DRY CONTAINER PICK-UP / DROP-OFF ACTIVITY (TEU)(1) 100% 500,000 On-Hires Off-Hires Net 95% 400,000 300,000 90% 200,000 85% 100,000 80% 0 75% (100,000) 70% (200,000) (1) Excludes Sale-leaseback equipment. Includes finance
Slide 5: Freight Rates and Container Prices Still Well Above Normal As Bottlenecks Absorb Capacity
Freight Rates and Container Prices Still Well Above Normal As Bottlenecks Absorb Capacity 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,
Slide 6: Container Availability Remains Tight
Container Availability Remains Tight DRY CONTAINER PRODUCTION DOWN NEW CONTAINER INVENTORY MODERATE FOLLOWING RECORD 2021 1,200 4.0% 6 Production Inventory (TEU 000) 3.5% China Dry Container New 1,000 3.0% 800 2.5% 5 600 2.0% 1.5% 400 1.0% 200 0.5% 4 - 0.0% TEU (MM) 3 Shipping Leasing % of Dry Fleet
Slide 7: Consolidated Statement of Adjusted Net income
Consolidated Statement of Adjusted Net income* (In thousands, except earnings per share) Q2 '22 Q1 '22 % Change Q2 '21 % Change Total leasing revenues $ 421,608 $ 417,088 1.1% $ 369,784 14.0% Depreciation and amortization 160,922 160,716 0.1% 154,056 4.5% Interest and debt expense 54,659 54,510 0.3%
Slide 8: Profitability Drivers
Profitability Drivers Sequential Change: Year-over-Year Change: Outlook for Q3 Q2 2022 vs Q1 2022 Q2 2022 vs Q2 2021 • Average revenue earning • Average revenue earning • Expect fleet size will decrease Fleet Size assets down 0.3% assets up 17.4% slightly • Average utilization may • Slightly down bu
Slide 9: Sustainable Profitability
Sustainable Profitability STRONG LEASING MARGIN EXPANSION SUSTAINED BY EXTENDED LEASE DURATIONS(1)(2) 100 $800 45% 90 80 $700 40% 70 60 Months 50 35% $600 40 30 Average Remaining Lease Duration (based on NBV) 30% 20 Including Expected Build-Down Period $500 10 - 25% Jun-17 Jun-18 Jun-19 Jun-20 Jun-2
Slide 10: Translating Strong Profitability Into Rapid Value Creation
Translating Strong Profitability Into Rapid Value Creation TYPICAL PRIORITIZATION OF CASH FLOW Q2 Annualized ($MM, except per share amounts) Cash flow before capex $1,610 1. Maintain ability to service customers/replacement capex1 ~$900 Cash flow after replacement capex ~$710 Steady-state cash flow
Slide 11: Long Track Record of Value Creation
Long Track Record of Value Creation FLEET GROWTH CASH FLOW BEFORE CAPEX(1)(2) 9 $1,750 8 $1,500 7 $1,250 CEU (MM) 6 5 $1,000 $MM 4 $750 3 $500 2 1 $250 - $0 Q2'22 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 20
Slide 12: Conclusions
Conclusions Achieved another quarter of record profitability in Q2 2022 • Exceptional profitability driven by durable business enhancements • Market conditions moderating, but remain constructive Expect outstanding financial performance will continue throughout 2022 and into the longer term • Elevat
Slide 13: Appendix
Tt TRITON Appendix
Slide 14: Long Term Lease Expirations (CEU)
Long Term Lease Expirations (CEU)(1)(2) DRY REFRIGERATED Percent of Fleet 3.1% 1.4% 4.1% 2.1% 4.9% 3.7% Percent of Fleet 0.5% 0.5% 1.6% 2.1% 0.9% 1.3% (1) Excludes sale age units and lifecycle leases. (2) Used spot rate is the estimated market rate for leases on used equipment. 14
Slide 15: Adjusted Tangible Book Value per Share as of 06/30/22
Adjusted Tangible Book Value per Share as of 06/30/22 Purchase (In thousands, except per share amounts) Combined Accounting Consolidated Total assets $ 12,551,920 $ (22,332) $ 12,529,588 Total liabilities 9,296,820 (41,532) 9,255,288 Preferred shareholders' equity 730,000 - 730,000 Common shareholde
Slide 16: Consolidated Statement of Income
Consolidated Statement of Income (In thousands, except earnings per share) Q2 '22 Q1 '22 % Change Q2 '21 % Change Total leasing revenues $ 421,608 $ 417,088 1.1% $ 369,784 14.0% Trading margin 6,402 4,141 54.6% 10,726 (40.3%) Net gain on sale of leasing equipment 35,072 28,969 21.1% 31,391 11.7% Dep
Slide 17: Reconciliation of Non-GAAP Financial Information
Reconciliation of Non-GAAP Financial Information (In thousands) Q2 Annualized Income before income taxes 833,912 Interest and debt expense 218,636 Depreciation and amortization 643,688 Adjusted EBITDA 1,696,236 Principal payments on finance leases 140,236 NBV of container disposals 79,488 (1) Major
Slide 18: Reconciliation of Non-GAAP Financial Information
Reconciliation of Non-GAAP Financial Information (In thousands, except earnings per share) Q1 '21 Q2 '21 Q3 '21 Q4 '21 2021 Total Q1 '22 Q2 '22 Net income attributable to common shareholders $ 129,325 $ 54,704 $ 123,045 $ 177,426 $ 484,500 $ 181,230 $ 184,591 Add (subtract): Debt termination expense
Slide 19: Non-GAAP Financial Information
Non-GAAP Financial Information We use the terms "Adjusted net income," “Adjusted EPS,” “Return on equity,” “cash flow before capex” and other non-GAAP financial measures throughout this presentation. These items are not presented in accordance with U.S. GAAP and should not be considered as alternati