Triton International Ltd. · NYSE:TRTN/PA

Triton International — Q2 2021 Earnings Presentation

22 slides from Triton International's earnings presentation, Jul 27, 2021

  1. Slide 1: Second Quarter 2021 Investor Conference Call

    SECOND QUARTER 2021 INVESTOR CONFERENCE CALL July 27, 2021 1

  2. 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

  3. Slide 3: Highlights

    HIGHLIGHTS  Triton achieved outstanding results in the second quarter of 2021 » Adjusted net income of $144.2 million, or $2.14 per share, up 12.0% from Q1 2021 and 148.8% from Q2 2020 » Q2 annualized return on equity 26.6%  Expect profitability to increase from Q2 to Q3 driven by increase in leas

  4. Slide 4: Strong Goods Consumption Driving Growth in Trade

    $B, Seasonally Adjusted % Change vs Dec. 2019 0 200 300 400 600 700 100 500 -25% -20% -15% -10% -5% 0% 5% 10% 15% 20% 25% May-92 May-93 May-94 Jan-20 May-95 Feb-20 May-96 May-97 Mar-20 May-98 Source: Bloomberg. May-99 Apr-20 US Retail Inventories May-00 May-01 May-20 May-02 Jun-20 May-03 US PCE: Goo

  5. Slide 5: Vessel and Container Shortages Driving Record Freight Rates and Container Prices

    VESSEL AND CONTAINER SHORTAGES DRIVING RECORD FREIGHT RATES AND CONTAINER PRICES Container Spot Freight Rates and Fuel Cost New Box Prices $14,000 $4,500 WCI Shanghai to Los Angeles 20DC Price $4,000 WCI Shanghai to Rotterdam $3,500 Bunker Fuel ($/mt) $3,000 $12,000 $2,500 $2,000 $1,500 $10,000 $1,0

  6. Slide 6: Container Production High but Long-Term Supply/Demand Appears Largely in Balance

    CONTAINER PRODUCTION HIGH BUT LONG-TERM SUPPLY / DEMAND APPEARS LARGELY IN BALANCE Dry Container Production Up Sharply But Containers Getting Absorbed Quickly 5.0 1,200 China Dry Van New Production Inventory 4.5 1,000 800 4.0 600 (TEU 000) 3.5 400 3.0 200 TEU (MM) 2.5 0 Jun-20 Jun-10 Jun-11 Jun-12 J

  7. Slide 7: Triton's Key Operating Metrics Very Strong

    TRITON’S KEY OPERATING METRICS VERY STRONG Ending Quarterly Utilization (CEU) Dry Container Pick-up / Drop-off Activity (TEU) (1) Ending Quarterly Utilization (CEU) 100% 500 95% 400 Jun. 30: 99.5% 90% 300 TEU (000) 200 85% 100 80% 0 75% (100) 70% (200) Pick-Ups Drop-Offs Net (1) Excludes Sale-leaseb

  8. Slide 8: Consolidated Statements of Adjusted Net Income

    CONSOLIDATED STATEMENTS OF ADJUSTED NET INCOME(*) (In thousands, except earnings per share) Q2 '21 Q1 '21 % Change Q2 '20 % Change Total leasing revenues $ 369,784 $ 346,743 6.6% $ 321,397 15.1% Trading margin 10,726 8,141 31.8% 2,020 431.0% Net gain on sale of leasing equipment 31,391 21,967 42.9%

  9. Slide 9: Profitability Drivers

    PROFITABILITY DRIVERS Sequential Change: Change from Prior Year Quarter: Q2 2021 vs Q1 2021 Q2 2021 vs Q2 2020 Fleet Size  Revenue earning assets up 10.3%  Revenue earning assets up 19.9%  Leasing revenue up 6.6%  Leasing revenue up 15.1%  UTE averaged 99.4% in Q2 and is 99.6% as  Average UTE

  10. Slide 10: Strong, Stable Cash Flow Drives Steady Value Creation

    STRONG, STABLE CASH FLOW DRIVES STEADY VALUE CREATION Cash Flow Before Capex (1)(2) Steady Value Creation (4) $1,500 $70 $1,250 $65 $1,000 $60 $750 ($MM) $55 $500 $50 $250 $45 $0 Adj. $40 Q2 Ann. 2008 2017 2005 2006 2007 2009 2010 2011 2012 2013 2014 2015 2016 2018 2019 2020 LTM Jun-21 TBV: $39.90 $

  11. Slide 11: Attractive Refinancing and Transition to Investment Grade Bonds Provide a More Efficient Capital Structure

    ATTRACTIVE REFINANCING AND TRANSITION TO INVESTMENT GRADE BONDS PROVIDE A MORE EFFICIENT CAPITAL STRUCTURE  Comprehensive debt refinancing has significantly reduced Triton’s long-term borrowing cost » Issued $6.4 billion of long-term debt over last twelve months; prepaid $3.4 billion of ABS, instit

  12. Slide 12: Credit Profile of Major Shipping Lines Fundamentally Improved

    CREDIT PROFILE OF MAJOR SHIPPING LINES FUNDAMENTALLY IMPROVED  Exceptional financial performance by major shipping lines positively changing long term outlook » All major liners reporting record profitability » Expect major lines to significantly delever in 2021 Financial Performance of a Sample of

  13. Slide 13: 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 » $3.4 billion of committed investments have already locked-in over 25% asset growth » Average lease duration for 2021 investments 13 years; high lifetim

  14. Slide 14: Outlook and Conclusions

    OUTLOOK AND CONCLUSIONS  Triton achieved another quarter of record performance in Q2 2021  Triton’s outstanding performance supported by very favorable market conditions and Triton’s many advantages  Triton is making durable improvements to our business » Very large investment in new containers l

  15. Slide 15: Appendix

    Appendix 15

  16. Slide 16: Equity Cash Flow

    EQUITY CASH FLOW Typical Prioritization of Cash Flow ($000, except per share amounts) Q2 Annualized Cash flow before capex 1,437,592 1. Maintain ability to service customers/replacement capex 1 804,396 Cash flow after replacement capex 633,196 Steady-state cash flow yield2 18.9% 3 2. Pay common divi

  17. Slide 17: Long Term Lease Expirations

    LONG TERM LEASE EXPIRATIONS (*) Dry Refrigerated Percent of Fleet 4.0% 1.0% 4.6% 5.9% 2.7% 5.3% 4.1% 0.8% 2.1% Percent of Fleet 2.2% 0.6% 1.5% 2.2% 1.8% 1.1% 1.6% 0.5% 0.8% * Excludes Sale Age Equipment 17

  18. Slide 18: Adjusted Tangible Book Value Per Share as of 06/30/21

    ADJUSTED TANGIBLE BOOK VALUE PER SHARE AS OF 06/30/21 Purchase (In thousands, except per share amounts) Combined Accounting Consolidated Total assets $ 11,434,068 $ (98,710) $ 11,335,358 Total liabilities 8,660,205 (51,924) 8,608,281 Preferred shareholders' equity 555,000 555,000 Common shareholders

  19. Slide 19: Reconciliation of Non-GAAP Financial Information

    RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION (In thousands) Q2 annualized Income before income taxes 675,248 Interest and debt expense 240,016 Depreciation and amortization 616,224 Adjusted EBITDA 1,531,488 Principal payments on finance leases 57,032 NBV of container disposals 131,140 Major cash

  20. Slide 20: Consolidated Statements of Income

    CONSOLIDATED STATEMENTS OF INCOME (In thousands, except earnings per share) Q2 '21 Q1 '21 % Change Q2 '20 % Change Total leasing revenues $ 369,784 $ 346,743 6.6% $ 321,397 15.1% Trading margin 10,726 8,141 31.8% 2,020 431.0% Net gain on sale of leasing equipment 31,391 21,967 42.9% 4,537 591.9% Dep

  21. Slide 21: Reconciliation of Non-GAAP Financial Information

    RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION (In thousands, except earnings per share) Q2 '20 Q3 '20 Q4 '20 2020 Total Q1 '21 Q2 '21 Net income attributable to common shareholders $ 60,075 $ 45,946 $ 115,185 $ 288,417 $ 129,325 $ 54,704 Add (subtract): Debt termination expense & unrealized (gain

  22. Slide 22: 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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