Triton International Ltd. · NYSE:TRTN/PA
Triton International — Investor Presentation (February 2022)
34 slides from Triton International's investor presentation, February 2022
Slide 1: Investor Presentation February 2022
Investor Presentation February 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: 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 pre
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 • Triton invested $3.6 billion in 2021; >30% revenue earning asset growth 30%+ Asset • Locked-in multi-year benefit with long duration, high IRR leases Growth in 2021 • Further secures scale advantages and position as “go-to” supplier • 13 year average lease duration fo
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% 3.5% 5.9% 2.6% 2.9% Container Fleet Q4 2021 Position 90% 9.0% 6.2% 80% 70% Drys 73% #1 60% 50% 73.6% 79.2% 40% 30% Refrigerated 20% #1 20% 10% 13.8% 0% 3.3% Core Dec-20 Dec-21 4% #
Slide 8: Leading Position in Consolidating Market
Leading Position in Consolidating Market • Triton over 50% 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 222 locations in 57 different countries and sold containers from 356 locations in 89 different countries (1) Leasing + Sales Leasing Sales Triton Office (2) S&A AS A PERCENT OF LEASING REVENUE (3) 12% CAI 10% 8% Tex 6% 4
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 (Q3'21) Triton estimates that it is the #1 third-party supplier to: 4.3 16.9% $65B • 4 of the top 5 carriers 4.3 16.9% Private • 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 >60% of 50 50% new containers over the last five years • Leased containers now over 50% of total 40 40% Leasing attractive to customers due to: • Just-in-time access 30 30% • In
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% 2021 5Yr 10Yr TRTN Container Leasing Railcar Leasing Commercial Finance Aircraft Leasing Notes: Container Leasing: CAI and TGH; Railcar Leasing: GATX; Commercial Finan
Slide 14: Powerful Long-Term Value Creation
Powerful Long-Term Value Creation STEADY FLEET GROWTH STRONG, STABLE CASH FLOW BEFORE CAPEX 9 $1,750 8 $1,500 Triton Fleet (CEU MM) 7 $1,250 6 5 $1,000 $MM 4 $750 3 $500 2 $250 1 $0 0 Q4 Ann. 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2006 2007 2008 2009 201
Slide 15: Current Market Update
Current Market Update
Slide 16: Driving Strong Container Demand
0.0x 0.5x 1.0x 1.5x 2.0x % Change vs Dec. 2019 Dec-92 0% 5% 10% 20% 25% 30% -25% -20% -15% -10% -5% 15% Dec-93 Dec-94 Dec-95 Dec-19 Source: Bloomberg. Source: Bloomberg. Dec-96 Jan-20 Dec-97 Feb-20 Dec-98 Mar-20 Dec-99 Apr-20 Dec-00 May-20 Dec-01 Jun-20 Dec-02 Jul-20 Dec-03 Aug-20 Dec-04 US PCE: Goo
Slide 17: Vessel and Container Shortages Leading to Record Freight Rates and Container Prices
Vessel and Container Shortages Leading to Record Freight Rates and Container Prices CONTAINER SPOT FREIGHT RATES AND NEW BOX PRICES FUEL COST $16,000 $4,500 WCI Shanghai to Los Angeles $4,000 WCI Shanghai to Rotterdam $3,500 Bunker Fuel ($/mt) $3,000 $14,000 $2,500 $2,000 $1,500 $12,000 $1,000 $500
Slide 18: High Container Production Has Alleviated Some Supply Constraints
High Container Production Has Alleviated Some Supply Constraints DRY CONTAINER PRODUCTION UP SHARPLY CONTAINER FACTORY INVENTORY LEVELS BACK TO A MORE TYPICAL RANGE 1,200 4.0% 6 China Dry Van New Production 3.5% 1,000 Inventory (TEU 000) 3.0% 800 2.5% 5 600 2.0% 1.5% 400 1.0% 200 0.5% 4 - 0.0% TEU (
Slide 19: Triton's Key Operating Metrics Remain Very Strong
Triton’s Key Operating Metrics Remain Very Strong DRY CONTAINER PICK-UP / DROP-OFF ENDING QUARTERLY UTILIZATION (CEU) ACTIVITY (TEU)(2) 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) (2)Excludes Sale-leaseback equipment. Includes fin
Slide 20: High IRR Investments and Extended Lease Durations Building Long-Term Value
High IRR Investments and Extended Lease Durations Building Long-Term Value Large block of 2021 investments will underpin long-term profitability • $3.6 billion of capex, growing REA by 31% • Average lease duration for 2021 investments 13 years; high lifetime equity IRRs driven by strong demand and “
Slide 21: Consolidated Statement of Adjusted Net Income
Consolidated Statement of Adjusted Net income(*) (In thousands, except earnings per share) Q4 '21 Q3 '21 % Change 2021 2020 % Change Total leasing revenues $ 417,162 $ 400,191 4.2% $ 1,533,880 $ 1,307,907 17.3% Depreciation and amortization 165,384 163,493 1.2% 626,240 542,128 15.5% Interest and deb
Slide 22: Profitability Drivers
Profitability Drivers Sequential Change: Year-over-Year Change: Outlook for Q1 Q4 2021 vs Q3 2021 FY 2021 vs FY 2020 • Expect average on hires to be • Average revenue earning assets • Average revenue earning assets higher Fleet Size up 5.3% up 18.6% • Expect leasing revenue down • Leasing revenue up
Slide 23: Sustainable Profitability
Sustainable Profitability STRONG LEASING MARGIN EXPANSION SUSTAINED BY EXTENDED LEASE DURATIONS(1)(2) $700 40% 100 Duration of 78 90 months by net book value at 12/31/21 80 (90 with build down) 35% 70 $600 60 Months 50 30% 40 $500 30 Average Remaining Lease Duration (based on CEU) 20 Including Expec
Slide 24: Robust Capital Structure
Robust Capital Structure DIVERSIFIED CAPITAL STACK(1) CASH FLOW COVERAGE(3) 11,000 $3,000 Principal Debt Obligations 10,000 Unsecured Corporate Notes Cash Flow Before Capex (Q4'21 Ann.) 9,000 $2,500 Debt 8,000 $MM Term Loan and Revolver $2,000 7,000 6,000 $MM ABS Notes, Warehouse, and $1,500 5,000 S
Slide 25: Equity Cash Flow
Equity Cash Flow TYPICAL PRIORITIZATION OF CASH FLOW ($MM, except per share amounts) Q4 Annualized Cash flow before capex $1,620 1. Maintain ability to service customers/replacement capex1 ~$900 Cash flow after replacement capex ~$720 Steady-state cash flow yield2 17.1% 2. Pay common dividend of $2.
Slide 26: Expectations for 2022
Expectations for 2022 Market Outlook • Expect container demand will continue to be supported by elevated goods consumption and logistical bottlenecks • New container production should be able keep pace with demand, though overall container fleet will likely stay tight Triton Operating Performance •
Slide 27: Appendix
Tt TRITON Appendix
Slide 28: 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 29: Long Term Lease Expirations (CEU)
Long Term Lease Expirations (CEU)(1)(2) DRY REFRIGERATED Percent of Fleet 4.0% 3.2% 3.9% 2.0% 4.7% 3.5% Percent of Fleet 3.0% 0.9% 1.1% 1.5% 0.7% 1.3% (1) Excludes sale age units and lifecycle leases. (2) Used spot rate is the estimated market rate for leases on used equipment. 29
Slide 30: Adjusted Tangible Book Value per Share as of 12/31/21
Adjusted Tangible Book Value per Share as of 12/31/21 (In thousands, except per share amounts) Purchase Combined Accounting Consolidated Total assets $ 12,703,846 $ (60,008) $ 12,643,838 Total liabilities 9,626,289 (47,163) 9,579,126 Preferred shareholders' equity 730,000 - 730,000 Common shareholde
Slide 31: Consolidated Statement of Income
Consolidated Statement of Income (In thousands, except earnings per share) Q4 '21 Q3 '21 % Change Q4 '20 % Change Total leasing revenues $ 417,162 $ 400,191 4.2% $ 337,285 23.7% Trading margin 6,069 9,163 (33.8%) 6,977 (13.0%) Net gain on sale of leasing equipment 28,096 25,606 9.7% 18,422 52.5% Dep
Slide 32: Reconciliation of Non-GAAP Financial Information
Reconciliation of Non-GAAP Financial Information (In thousands) Q4 annualized Income before income taxes 815,436 Interest and debt expense 210,676 Depreciation and amortization 661,536 Adjusted EBITDA 1,687,648 Principal payments on finance leases 99,788 NBV of container disposals 95,664 Major cash
Slide 33: Reconciliation of Non-GAAP Financial Information
Reconciliation of Non-GAAP Financial Information (In thousands, except earnings per share) Q1 '20 Q2 '20 Q3 '20 Q4 '20 2020 Total Q1 '21 Q2 '21 Q3 '21 Q4 '21 2021 Total Net income attributable to common shareholders $ 67,211 $ 60,075 $ 45,946 $ 115,185 $ 288,417 $ 129,325 $ 54,704 $ 123,045 $ 177,42
Slide 34: 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
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