Triton International Ltd. · NYSE:TRTN/PA
Triton International — Q3 2022 Earnings Presentation
20 slides from Triton International's earnings presentation, Nov 1, 2022
Slide 1: Third Quarter 2022 Investor Conference Call
Third Quarter 2022 Investor Conference Call November 1, 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 continued to achieve outstanding financial performance in the third quarter of 2022 • Adjusted net income of $176.5 million, or $2.88 per share, down 1.4% from Q2 2022 and up 18.5% from Q3 2021 • Q3 annualized adjusted return on equity 27.5% • Market conditions softened during th
Slide 4: Key Operating Metrics
70% 75% 80% 85% 90% 100% 95% (200,000) (100,000) 100,000 200,000 300,000 400,000 500,000 0 Q1'08 Q1'08 Q3'08 Q3'08 Q1'09 Q1'09 Q3'09 Q3'09 Q1'10 Q1'10 Q3'10 Q3'10 Q1'11 Q1'11 Q3'11 Q3'11 Q1'12 Q1'12 Q3'12 ACTIVITY (TEU)(3) Q3'12 Q1'13 Q1'13 On-Hires Q3'13 Q3'13 Q1'14 Q1'14 Q3'14 Q3'14 Q1'15 Q1'15 Q3
Slide 5: Freight Rates and Container Prices Quickly Normalizing; Some Logistical Challenges Remain
Freight Rates and Container Prices Quickly Normalizing; Some Logistical Challenges Remain 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: New Container Production Decreasing In Response to Slower Demand
New Container Production Decreasing In Response to Slower Demand NEW CONTAINER INVENTORY BACK DRY CONTAINER PRODUCTION DOWN TOWARDS NORMAL RANGE 5.0% 4.0% 6 3.0% 2.0% 5 1.0% 0.0% 4 TEU (MM) % of Total Dry Standard Container Fleet Sources: Drewry Annual report and commonly used informal surveys by fa
Slide 7: Consolidated Statement of Adjusted Net income
Consolidated Statement of Adjusted Net income* (In thousands, except earnings per share) Q3 '22 Q2 '22 % Change Q3 '21 % Change Total leasing revenues $ 424,683 $ 421,608 0.7% $ 400,191 6.1% Depreciation and amortization 158,538 160,922 (1.5%) 163,493 (3.0%) Interest and debt expense 57,124 54,659 4
Slide 8: Profitability Drivers
Profitability Drivers Sequential Change: Year-over-Year Change: Outlook for Q4 Q3 2022 vs Q2 2022 Q3 2022 vs Q3 2021 • Average revenue earning • Average revenue earning • Expect fleet size will decrease Fleet Size assets down 0.9% assets up 5.9% slightly • Average utilization expected to • Average u
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 $500 10 - 25% Sep-17 Sep-18 Sep-19 Sep-20 Sep-2
Slide 10: Translating Strong Profitability Into Rapid Value Creation
Translating Strong Profitability Into Rapid Value Creation TYPICAL PRIORITIZATION OF CASH FLOW ($MM, except per share amounts) Q3 Annualized Cash flow before capex $1,652 1. Maintain ability to service customers/replacement capex1 ~$925 Cash flow after replacement capex ~$725 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 Q3'22 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: Outlook
Outlook • Expect Adjusted EPS will decrease from the third to the fourth quarter as utilization and disposal prices continue to decrease from peak levels • However, our fleet is well protected by our long-term lease portfolio and we expect our utilization will remain very high. We also expect our on
Slide 13: Conclusions
Conclusions Achieved another quarter of outstanding financial performance in Q3 2022 Market conditions becoming more challenging, but expect outstanding financial performance will continue in Q4 and into the longer term • Elevated EPS • High return on equity • Powerful cash flow Strong cash flow all
Slide 14: Appendix
Tt TRITON Appendix
Slide 15: Long Term Lease Expirations (CEU)
Long Term Lease Expirations (CEU)(1)(2) DRY REFRIGERATED Percent of Percent of Fleet Fleet 3.1% 2.8% 1.4% 0.9% 4.1% 4.0% 2.1% 2.0% 4.9% 4.8% 3.7% 3.6% Percent of Fleet 0.5% 0.5% 0.2% 1.6% 1.6% 2.1% 2.1% 0.9% 1.0% 1.3% 1.3% (1) Excludes sale age units and lifecycle leases. (2) Used spot rate is the e
Slide 16: Adjusted Tangible Book Value per Share as of 09/30/22
Adjusted Tangible Book Value per Share as of 09/30/22 (In thousands, except per share amounts) Purchase Combined Accounting Consolidated Total assets $ 12,386,147 $ (1,804) $ 12,384,343 Total liabilities 9,148,669 (38,247) 9,110,422 Preferred shareholders' equity 730,000 - 730,000 Common shareholder
Slide 17: Consolidated Statement of Income
Consolidated Statement of Income (In thousands, except earnings per share) Q3 '22 Q2 '22 % Change Q3 '21 % Change Total leasing revenues $ 424,683 $ 421,608 0.7% $ 400,191 6.1% Trading margin 3,680 6,402 (42.5%) 9,163 (59.8%) Net gain on sale of leasing equipment 26,468 35,072 (24.5%) 25,606 3.4% De
Slide 18: Reconciliation of Non-GAAP Financial Information
Reconciliation of Non-GAAP Financial Information (In thousands) Q3 Annualized Income before income taxes 826,656 Interest and debt expense 228,496 Depreciation and amortization 634,152 Adjusted EBITDA 1,689,304 Principal payments on finance leases 142,516 NBV of container disposals(1) 141,728 Major
Slide 19: 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 Q3 '22 Net income attributable to common shareholders $ 129,325 $ 54,704 $ 123,045 $ 177,426 $ 484,500 $ 181,230 $ 184,591 $ 176,809 Add (subtract): Debt te
Slide 20: 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