Triton International Ltd. · NYSE:TRTN/PA
Triton International — Q1 2017 Earnings Presentation
21 slides from Triton International's earnings presentation, May 12, 2017
Slide 1: Investor Conference Call
INVESTOR CONFERENCE CALL May 12, 2017 1
Slide 2: Disclaimer
DISCLAIMER Forward-Looking Statements Certain statements in this presentation, 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
Slide 3: Highlights
HIGHLIGHTS Triton International is off to a strong start in 2017 Market conditions remain favorable, especially for dry containers Triton International’s performance is rebounding nicely » Critical operating metrics continue to improve » Reported $42.7 million of Adjusted pretax income in Q1 (
Slide 4: We Are Close to Completing Merger Integration
WE ARE CLOSE TO COMPLETING MERGER INTEGRATION Have received approvals from all lender groups for balance sheet consolidation » Will allow us to operate with one fleet of containers » Facilitates optimization of corporate and tax structure Recently went live with systems integration » Will allow
Slide 5: Macro Conditions Remain Moderately Positive
MACRO CONDITIONS REMAIN MODERATELY POSITIVE Global GDP and Container Trade Growth Steel and New Container Prices 20% $3,000 $900 Avg. 20DC New Build 15% Price $800 $2,500 Average HRC Price in China 10% $700 $2,000 5% $600 0% $1,500 (5%) $500 $1,000 (10%) $400 (15%) $500 2000 2001 2002 2003 2004 2005
Slide 6: Supply Constraints Continue to Drive Strong Leasing Market
SUPPLY CONSTRAINTS CONTINUE TO DRIVE STRONG LEASING MARKET Supply constraints due to several factors, including: » Limited new container production from mid-2015 through the end of 2016 » Financial capacity at a number of shipping lines and other leasing companies tight » Conversion to waterborne
Slide 7: New Dry Container Production
NEW DRY CONTAINER PRODUCTION …Triton’s Investment Driven by High Customer New Dry Production Under Control… Demands 1.0 Triton has supplied a large share of total new container production since closing of the merger 0.9 2014: 3.14M TEU Highly focused on quality of new business 2015: 2.26M TEU »
Slide 8: Triton's Critical Operating Metrics Are Rebounding Nicely
TRITON’S CRITICAL OPERATING METRICS ARE REBOUNDING NICELY Ending Monthly Utilization (CEU) Overall Lease Rate Index (CEU) 100.0% 120% 99.0% 98.0% 110% 97.0% 96.0% 100% 95.0% 94.0% 90% 93.0% 92.0% 80% 91.0% 90.0% 70% Dry Container Pick-up / Drop-off Activity (Units) Used Dry Container Sales Price Ind
Slide 9: Leasing Transactions for Dry Containers Remain Strong
LEASING TRANSACTIONS FOR DRY CONTAINERS REMAIN STRONG The Trend of New Dry Container Leasing Transactions 160% 150% (December 2016 Dry Fleet Avg. Rate = 100%) 140% 130% Rate Per CEU Index 120% 110% 100% 90% 80% 70% 60% 50% Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17
Slide 10: Entering Final Phase of the Hanjin Recovery Process
ENTERING FINAL PHASE OF THE HANJIN RECOVERY PROCESS Containers originally on-hire to Hanjin represented approximately 3% of our fleet » 86,973 units; 152,044 CEU » Net book value $243 million as of August 31, 2016 86% of the containers on-hire to Hanjin have been recovered or cleared for deliver
Slide 11: Consolidated Statements of Adjusted Net Income
CONSOLIDATED STATEMENTS OF ADJUSTED NET INCOME 11
Slide 12: Disposal Gains Impacted by Prior Period Impairments
DISPOSAL GAINS IMPACTED BY PRIOR PERIOD IMPAIRMENTS Recorded disposal gains of $5.2 million in Q1 compared to a loss of $4.3 million in Q4 2016 » Average dry container disposal prices for Q1 increased by approximately 14% but remained below our accounting residuals » Gains are a result of reversin
Slide 13: Expected Drivers for Second Quarter
EXPECTED DRIVERS FOR SECOND QUARTER Near-term Drivers Positive » Leasing revenue – Expect average utilization to increase from Q1 to Q2, aided by recovery and re-lease of Hanjin containers – Expect high volume of new container pick-ups – Drag from lease re-pricing should be minimal » Expenses – Ex
Slide 14: Outlook
OUTLOOK Expect market conditions to remain generally favorable, especially for dry containers » Trade growth expected to remain moderately positive » New container production constrained during the second quarter » Shipping lines continue to rely heavily on leasing » Several leasing companies most
Slide 15: Q2 2017 Financial Expectations
Q2 2017 FINANCIAL EXPECTATIONS Adjusted Pre-tax Income ($ in mm) TCIL & TAL Combined Note: The combined financial information from Q3 2016 and prior periods does not reflect results on a GAAP basis. GAAP financial statements reflect only the TCIL operations prior to the merger on July 12, 2016, and
Slide 16: Conclusions
CONCLUSIONS Triton International is off to a strong start in 2017 We are close to finishing post-merger integration and continue to see many benefits from the merger We expect market conditions to remain generally favorable We expect our profitability will increase throughout 2017 if dry con
Slide 17: Appendix
Appendix *™ TRITON INTERNATIONAL
Slide 18: Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOME 18
Slide 19: Reconciliation of Non-GAAP Financial Information
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION Three Months Ended, (Dollars in thousands) March 31, December 31, March 31, 2017 2016 2016 Income before income taxes $ 43,445 $ 31,113 $ 11,057 Add: Unrealized (gain) loss on derivative instruments, net (1,498) (9,648) 4,596 Transaction and other non
Slide 20: Consolidated Balance Sheet (03/31/17)
CONSOLIDATED BALANCE SHEET (03/31/17) 20
Slide 21: Debt Summary
DEBT SUMMARY Debt maturities well staggered over time Triton International Debt Maturity Schedule as of 3/31/2017 ($ in 000) Principal Payments Remaining 2021 & Outstanding 2017 2018 2019 2020 Beyond Institutional notes 2,232,790 101,790 182,800 240,643 315,243 1,392,314 Asset-backed securitizatio