Triton International Ltd. · NYSE:TRTN/PA
Triton International — Q2 2016 Earnings Presentation
22 slides from Triton International's earnings presentation, Aug 12, 2016
Slide 1: Investor Conference Call
INVESTOR CONFERENCE CALL August 12, 2016 (rev. 8/17/16) 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 The merger of Triton Container International Limited (“TCIL”) and TAL International Group, Inc. (“TAL”) closed on July 12, 2016 forming Triton International Limited (“Triton”) » The world’s largest, most efficient and most capable container leasing company, with nearly five million twen
Slide 4: The New Triton Is Well Underway
THE NEW TRITON IS WELL UNDERWAY Triton is the clear market leader in container leasing » 25% market share of leasing fleet » Leading position in all major container types » Cost, capability and relationship advantages vs peers » Merger well received by customers, lenders and other key business par
Slide 5: Leasing Demand Is Improving, But Pricing Remains Under Pressure
LEASING DEMAND IS IMPROVING, BUT PRICING REMAINS UNDER PRESSURE Trended Overall Average Utilization (CEU) Overall Lease Rate Index (CEU) 100% 130% 98% 120% Per Diem Rate Index 96% 110% 94% 100% 92% 90% 90% 80% Dry Container Pick-up / Drop-off Activity Used Dry Container Sales Price Index (1) (exclud
Slide 6: Container Production Is Low
CONTAINER PRODUCTION IS LOW 20DC New Container Price vs. Steel Input Cost $3,500 $3,000 $2,500 $2,000 New Dry Container Production $1,500 1.0 $1,000 2014: 3.14M TEU 2015: 2.26M TEU $500 0.8 YTD 2016: 575K 20DC Price Steel Cost $- 0.6 TEU (in Millions) Source: Platts SteelBB 0.4 20DC New Container Pr
Slide 7: Cash Flow Is Well Protected by Our Strong Lease Portfolio
CASH FLOW IS WELL PROTECTED BY OUR STRONG LEASE PORTFOLIO The large majority of Triton’s containers are on- …And containers returned are well positioned to hire under multi-year long-term leases… go back on hire when demand improves Lease Portfolio – June 2016 Location of Dry Container Leasing Inven
Slide 8: Combined Operating Performance
COMBINED OPERATING PERFORMANCE (Dollars in thousands, except earnings per share) Three Months Ended Six Months Ended June 30, June 30, 2016 2015 % change 2016 2015 % change Leasing Revenues $299,606 $329,827 (9.2%) $611,854 $658,933 (7.1%) Depreciation and amortization (B) 136,674 131,061 4.3% 273,6
Slide 9: Summary of Major Earnings Drivers
SUMMARY OF MAJOR EARNINGS DRIVERS Q2 2016 Q2 2015 Change Adjusted Pre-tax Income ($ millions) $18.4 $81.5 ($63.1) Q2 2015 to Q2 2016 Impact on Pre-tax Income Major Drivers of Triton’s Earnings ($ millions) Comments Decrease in average lease rates(1) ($26.0) Lease rate pressure will continue Opportun
Slide 10: Combined Summary Balance Sheet Information
COMBINED SUMMARY BALANCE SHEET INFORMATION (Dollars in thousands) June 30, December 31, 2016 2015 % change Revenue earning assets $8,307,980 $8,591,078 (3.3%) Cash and cash equivalents 193,395 168,473 14.8% Accounts receivable, net of allowances 218,704 223,385 (2.1%) Other assets 125,740 128,294 (2
Slide 11: Combined Summary Cash Flow Information
COMBINED SUMMARY CASH FLOW INFORMATION (Dollars in thousands) Six months ended June 30, 2016 2015 Net Income $ 22,172 $ 136,244 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 273,605 258,525 Net loss (gain) on sale of equipment 46,259
Slide 12: Debt Summary
DEBT SUMMARY Debt maturities well staggered over time Triton Debt Summary as of 6/30/2016 ($ in 000) Principal Payments 2020 & Principal 2016 2017 2018 2019 Beyond Term Notes 5,050,550 264,700 583,533 553,893 913,107 2,735,317 Total Revolving Credit Facilities 1,162,250 - 16,125 449,500 64,500 632
Slide 13: Combination Expected to Generate $40 Million in Annual SG&A Savings
COMBINATION EXPECTED TO GENERATE $40 MILLION IN ANNUAL SG&A SAVINGS Detailed staffing plan completed and communicated Initial round of staffing transitions completed Sales and Operations teams in the field already integrated Back office synergies tied to completion of systems integration, targ
Slide 14: Second Half Expectations
SECOND HALF EXPECTATIONS We expect broad based leasing demand to continue in the third quarter Triton’s operating trends will be mixed » Expect utilization will improve due to strong net pick-up activity for dry containers » Expect average portfolio lease rates will continue to decrease since ma
Slide 15: Historical and Projected Combined Financial Performance
HISTORICAL AND PROJECTED COMBINED FINANCIAL PERFORMANCE The range of Q3 and Q4 forecasted adjusted pre-tax income is based on various factors including utilization levels, lease rates and disposal prices » The forecasted results assume a continued moderate improvement in utilization, lease rates a
Slide 16: Conclusions
CONCLUSIONS Triton International Limited is off to a running start » Clear market leader with scale, cost and capability advantages compared to everyone else in industry – $8.3 billion of revenue earning assets » Integration is well underway and on-track to achieve $40 million of annual cost savin
Slide 17: Appendix
“Mm TRITON INTERNATIONAL Appendix
Slide 18: Lease Expiration Profile
LEASE EXPIRATION PROFILE 700,000 600,000 500,000 Total MCEUs 400,000 300,000 200,000 100,000 - Expired LTL Remain 2016 2017 2018 2019 2020 Expired LTL Finance Lease Term Lease Notes: - MCEU "Market Cost Equivalent Unit" reflects an adjustment to CEU levels to reflect current reefer and tank prices -
Slide 19: Purchase Accounting – Expected Impact
PURCHASE ACCOUNTING – EXPECTED IMPACT Balance Sheet Impacts: » Reduction to the carrying value of certain revenue earning assets » Lease intangible asset capitalizes above market lease rates on existing leases Income Statement Impacts: Projected Purchase Accounting Impacts 2016 (1) 2017 2018 201
Slide 20: Pro Forma Income Statement, Including Estimated Synergies
PRO FORMA INCOME STATEMENT, INCLUDING ESTIMATED SYNERGIES FOR THE SIX MONTHS ENDED JUNE 30, 2016 Six Months Six Months Pro Forma Pro Forma Ended Ended Before Estimated After 6/30/16 6/30/16 Adjustments Merger Purchase Purchase Purchase $ in 000; except per share TCIL TAL (1) Impacts (2) Accounting A
Slide 21: Pro Forma Balance Sheet (6/30/2016)
PRO FORMA BALANCE SHEET (6/30/2016) Purchase Accounting $ in 000's Triton TAL Adjustments Pro Forma Assets Cash and cash equivalents $ 110,706 $ 82,689 $ (8,026) $ 185,369 Accounts receivable, net 127,346 91,358 - 218,704 Container rental equipment & equipment held for sale 4,189,723 3,893,900 (729,
Slide 22: Reconciliations of Combined Financial Information
RECONCILIATIONS OF COMBINED FINANCIAL INFORMATION Three Months Ended Six Months Ended Six Months Ended (Dollars and shares in thousands, except share data) June 30, June 30, (Dollars in thousands) June 30, 2016 2015 2016 2015 2016 2015 Income before income taxes $ 9,461 $ 82,554 $ 31,683 $167,804 To