Triton International Ltd. · NYSE:TRTN/PA
Triton International — Investor Presentation (November 2022)
36 slides from Triton International's investor presentation, November 2022
Slide 1: Investor Presentation
Investor Presentation November 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 supp
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 50%+ Growth in • Triton purchased $4.7 billion of containers since Q3’20 REA per share in • Locked-in multi-year benefit with long duration, high IRR leases • Further secures scale advantages and position as “go-to” supplier last 2 years • Reduced share count by 13% sin
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% 2.7% 4.0% 4.3% Container Fleet 9M 2022 Position 90% 5.9% 5.7% 2.7% 80% 70% Drys 73.8% #1 60% 50% 71.7% 78.1% 87.4% 87.3% 40% Refrigerated 19.1% #1 30% 20% 10% 15.6% 9.3% 0% Core Se
Slide 8: Leading Position in Consolidating Market
Leading Position in Consolidating Market • Triton over 60% 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) 10 15% 8 CEU (MM) 10% 6
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 (Q2'22) Triton estimates that it is the #1 third-party supplier to: 4.5 17.3% Private • 4 of the top 5 carriers 4.3 16.4% $80B • 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 over 50% of total 40 40% Leasing attractive to customers due to: • Just-in-time access 30 30% • Increa
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 35% 30% 25% 20% 15% 10% 5% 0% 9M'22 5Yr 10Yr TRTN Container Leasing Railcar Leasing Commercial Finance Aircraft Leasing Notes: Container Leasing: TGH; Railcar Leasing: GATX; Commercial Finance:
Slide 14: 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 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q3'22 2021 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 20
Slide 15: Triton's ESG Strategic Framework
Triton’s ESG Strategic Framework 15
Slide 16: Current Market Update
Current Market Update
Slide 17: Q3 Highlights
Q3 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
Slide 18: 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 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 ACTIVITY (TEU)(3) Q3'12 Q4'12 Q1'13 On-Hires Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q1'15 Q4'14 Q3
Slide 19: 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 20: 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 21: 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 22: 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 23: 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 0 25% Dec-16 Dec-17 Dec-18 Dec-19 Dec-2
Slide 24: Lease Portfolio More Resilient
Lease Portfolio More Resilient HIGHER TROUGH UTILIZATION… AS FLEET MIX IMPROVES 100% 100% 95% 90% 90% 80% Hanjin 85% bankruptcy 70% 80% 60% 75% 50% 88.5% 70% 40% 65% 30% 60% 20% 55% 10% 50% 0% Currently Offhire Ending Quarterly Utilization (CEU) Expired Non-Sale Age Leases Trailing 5Y Average Not Ex
Slide 25: Robust Capital Structure
Robust Capital Structure DIVERSIFIED CAPITAL STACK(1) CASH FLOW COVERAGE(2) $2,000 12,000 $1,800 $1,600 $1,400 11,000 $1,200 $1,000 $MM 10,000 $800 Unsecured $600 Debt $400 9,000 $200 $0 8,000 2022 2023 2024 2025 2026 Senior Unsecured Notes Principal Debt Obligations 7,000 Term Loan and Revolver Cas
Slide 26: Translating Strong Profitability Into Rapid Value Creation
Translating Strong Profitability Into Rapid Value Creation TYPICAL PRIORITIZATION OF CASH FLOW ($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 27: 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 28: 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 29: Appendix
Tt TRITON Appendix
Slide 30: 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 31: 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 32: 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 33: 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 34: 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 35: 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 36: 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
Triton International — Investor Presentation (November 2022) on 6ix