Triton International Ltd. · NYSE:TRTN/PA
Triton International — Q4 2022 Earnings Presentation
20 slides from Triton International's earnings presentation, Feb 14, 2023
Slide 1: Fourth Quarter and Full Year 2022 Investor Conference Call
Fourth Quarter and Full Year 2022 Investor Conference Call February 14, 2023 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’s fourth quarter results provide a strong finish to an outstanding year • Q4 Adjusted net income per share $2.76, down 4.2% from Q3; Q4 annualized Adjusted return on equity 25.4% • Includes $0.13 benefit from non-recurring items • FY 2022 Adjusted net income per share $11.32, up
Slide 4: Key Operating Metrics
Key Operating Metrics MONTHLY UTILIZATION (CEU) LIFECYCLE LEASES(1)(2) 100% 70% Sale Age at Expiration (CEU) 95% 60% 50% 90% 40% 85% 30% 80% 20% 75% 10% 70% 0% (1) Includes all equipment and lease types. (2 )Lifecycle leases structured so that containers will be sale age at lease expiration. DRY CON
Slide 5: Freight Rates and Container Prices Have Returned to Prepandemic Levels
Freight Rates and Container Prices Have Returned to Prepandemic Levels 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 $2,000 $500 $0 $0 Sour
Slide 6: New Container Production Decreasing In Response to Slower Demand
New Container Production Decreasing In Response to Slower Demand TOTAL NEW CONTAINER INVENTORY BACK ANNUAL NEW CONTAINER PRODUCTION TOWARDS NORMAL RANGE 5.0% 6 4.0% 5 4 TEU (MM) 3.0% 3 2.0% 2 1.0% 1 0.0% - % of Total Dry Standard Container Fleet Est. Replacement Range Production Source: Drewry Annua
Slide 7: Consolidated Statement of Adjusted Net income
Consolidated Statement of Adjusted Net income(*) (In thousands, except earnings per share) Q4 '22 Q3 '22 % Change 2022 2021 % Change Total leasing revenues $ 416,307 $ 424,683 (2.0%) $ 1,679,686 $ 1,533,880 9.5% Depreciation and amortization 154,661 158,538 (2.4%) 634,837 626,240 1.4% Interest and d
Slide 8: Profitability Drivers
Profitability Drivers Sequential Change: Year-over-Year Change: Outlook for Q1’23 Q4 2022 vs Q3 2022 FY 2022 vs FY 2021 • Average revenue earning • Average revenue earning • Expect fleet size will decrease Fleet Size assets down 1.7% assets up 11.5% slightly • Average utilization expected to • Avera
Slide 9: Sustainable Profitability
Sustainable Profitability STRONG LEASING MARGIN EXPANSION SUSTAINED BY EXTENDED LEASE DURATIONS(1)(2) 100 $800 45% 90 80 40% 70 $700 60 Months 50 35% 40 $600 30 Average Remaining Lease Duration (based on NBV) 20 30% Including Expected Build-Down Period 10 $500 - Dec-17 Dec-18 Dec-19 Dec-20 Dec-21 De
Slide 10: Translating Strong Profitability Into Rapid Value Creation
Translating Strong Profitability Into Rapid Value Creation TYPICAL PRIORITIZATION OF CASH FLOW ($MM, except per share amounts) FY2022 Cash flow before capex(1) $1,607 1. Maintain ability to service customers/replacement capex(2) ~$900 Cash flow after replacement capex ~$705 Steady-state cash flow yi
Slide 11: Long Track Record of Value Creation
Long Track Record of Value Creation FLEET GROWTH CASH FLOW BEFORE CAPEX(1)(2)(3) 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 2021 2022 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Slide 12: Outlook
Outlook • Expect Adjusted EPS will decrease from Q4 2022 to Q1 2023 • Negative seasonality adds to market pressure on utilization and disposal prices • First quarter has fewest number of days • Gain on a sizable lease prepayment and loss reversals added $0.13 in Q4. Not expecting benefits to re-occu
Slide 13: Conclusions
Conclusions Q4 2022 financial results provide a strong finish to an outstanding year Market conditions challenging, but Triton will continue to build shareholder value quickly • Have significant market advantages and have made durable enhancements to our business • Expect financial performance will
Slide 14: Appendix
Tt TRITON Appendix
Slide 15: Long Term Lease Expirations (CEU)
Long Term Lease Expirations (CEU)(1)(2) DRY REFRIGERATED Percent of Fleet 1.9% 3.8% 1.9% 4.7% 3.5% 0.7% Percent of Fleet 0.4% 1.6% 2.1% 1.0% 1.3% 0.3% (1) Excludes sale age units and lifecycle leases. (2) Used spot rate is the estimated market rate for leases on used equipment. 15
Slide 16: Consolidated Statement of Income
Consolidated Statement of Income (In thousands, except earnings per share) Q4 '22 Q3 '22 % Change 2022 2021 % Change Total leasing revenues $ 416,307 $ 424,683 (2.0%) $ 1,679,686 $ 1,533,880 9.5% Trading margin 1,781 3,680 (51.6%) 16,004 34,099 (53.1%) Net gain on sale of leasing equipment 25,156 26
Slide 17: Non-GAAP Financial Information
Non-GAAP Financial Information We use the terms "Adjusted net income," “Adjusted EPS,” “Adjusted return on equity,” “cash flow before capex”, "Adjusted tangible book value per share" and other non-GAAP financial measures throughout this presentation. These items are not presented in accordance with
Slide 18: Reconciliation of Non-GAAP Financial Measures: Adjusted Net Income and Adjusted Return on Equity
Reconciliation of Non-GAAP Financial Measures: Adjusted Net Income and Adjusted Return on Equity (In thousands, except earnings per share) Q1 '21 Q2 '21 Q3 '21 Q4 '21 2021 Total Q1 '22 Q2 '22 Q3 '22 Q4 '22 2022 Total Net income attributable to common shareholders $ 129,325 $ 54,704 $ 123,045 $ 177,4
Slide 19: Reconciliation of Non-GAAP Financial Measures: Cash Flow Before Capex (Excluding Certain Items)
Reconciliation of Non-GAAP Financial Measures: Cash Flow Before Capex (Excluding Certain Items) (In thousands) FY2022 Income (loss) before income taxes $ 817,729 Add: Unrealized loss (gain) on derivative instruments, net (343) Debt termination expense 1,933 Adjusted income before income taxes 819,31
Slide 20: Reconciliation of Non-GAAP Financial Measures: Adjusted Tangible Book Value per Share
Reconciliation of Non-GAAP Financial Measures: Adjusted Tangible Book Value per Share(*) Purchase (In thousands, except per share amounts) Combined Accounting Consolidated Total assets $ 12,092,405 $ 16,853 $ 12,109,258 Total liabilities 8,940,573 (35,678) 8,904,895 Preferred shareholders' equity 73