Triton International Ltd. · NYSE:TRTN/PA
Triton International — Q1 2021 Earnings Presentation
23 slides from Triton International's earnings presentation, Apr 29, 2021
Slide 1: First Quarter 2021 Investor Conference Call
FIRST QUARTER 2021 INVESTOR CONFERENCE CALL April 29, 2021 1
Slide 2: Disclaimer
DISCLAIMER 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 "forwa
Slide 3: Highlights
HIGHLIGHTS Triton achieved outstanding results in the first quarter of 2021 » Adjusted net income of $128.7 million, or $1.91 per share, up 12.4% from Q4 2020 » Q1 annualized return on equity of 25.0% Market conditions remain exceptionally strong » Achieving outstanding operational performance »
Slide 4: Current Market Overview
CURRENT MARKET OVERVIEW The supply / demand environment remains highly favorable » Demand driven by combination of strong trade volumes and significant logistical disruptions » Shipping lines relying heavily on leasing to fulfill supply requirements » Drop-offs exceptionally low and new container
Slide 5: Trade Volumes Well Above Pre-Pandemic Levels
TRADE VOLUMES WELL ABOVE PRE-PANDEMIC LEVELS Consumer Spend Shifts From Services To Goods Global Trade Well Above Pre-Pandemic Levels 10% CNY CNY % Change vs Dec. 2019 Jan 25th Feb 12th 0% 25.0 30% -10% 25% -20% 20.0 -30% 20% -40% Mar-20 Aug-20 Jul-20 Oct-20 Jun-20 Nov-20 Apr-20 Dec-20 Jan-20 Feb-20
Slide 6: 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 $10,000 $4,000 WCI Shanghai to Los Angeles 20DC Price $3,500 WCI Shanghai to Rotterdam $9,000 $3,000 Bunker Fuel ($/mt) $2,500 $8,000 $2,000 $1,500 $7,000 $1,000
Slide 7: Triton's Key Operating Metrics Very Strong
TRITON’S KEY OPERATING METRICS VERY STRONG Ending Quarterly Utilization (CEU) Ending Quarterly Utilization (CEU) Dry Container Pick-up / Drop-off Activity (TEU) (1) 100% 350 300 95% 250 Mar. 31: 99.3% 200 90% 150 TEU (000) 100 85% 50 80% 0 (50) 75% (100) (150) 70% (200) Pick-Ups Drop-Offs Net (1) Ex
Slide 8: Container Supply Still Tight Despite Increased Production; Leasing Share Remains High
CONTAINER SUPPLY STILL TIGHT DESPITE INCREASED PRODUCTION; LEASING SHARE REMAINS HIGH New Dry Container Production New Dry Factory Inventory 5.0 March 31, 2021 Inventory: 1,200 Lessors 176k Lines 115k 4.5 Total 291k 1,000 4.0 China Dry Van New Production Inventory (TEU 000) 3.5 800 3.0 TEU (MM) 2.5
Slide 9: Consolidated Statements of Adjusted Net Income
CONSOLIDATED STATEMENTS OF ADJUSTED NET INCOME(*) (In thousands, except earnings per share) Q1 '21 Q4 '20 % Change Q1 '20 % Change Total leasing revenues $ 346,743 $ 337,285 2.8% $ 321,468 7.9% Trading margin 8,141 6,977 16.7% 1,933 321.2% Net gain on sale of leasing equipment 21,967 18,422 19.2% 4,
Slide 10: Profitability Drivers
PROFITABILITY DRIVERS Sequential Change: Change from Prior Year Quarter: Q1 2021 vs Q4 2020 Q1 2021 vs Q1 2020 Revenue earning assets up 6.1%; leasing Revenue earning assets up 8.4% Fleet Size revenue up 2.8% (2 less days in quarter) Leasing revenue up 7.9% Expect leasing revenue growth to c
Slide 11: Strong Balance Sheet and Liquidity
STRONG BALANCE SHEET AND LIQUIDITY Highlights Liquidity as of 3/31/21 ($ in mm) Leverage well below historical average; ability to fund 15%+ LTM operating cash flow plus proceeds from the sale of leasing equipment $ 1,306 annual asset growth at constant leverage based on current Cash on hand $ 233
Slide 12: Investment Grade Rating an Opportunity for Further Differentiation
INVESTMENT GRADE RATING AN OPPORTUNITY FOR FURTHER DIFFERENTIATION Triton’s corporate rating upgraded to BBB- by S&P Global Ratings Completed inaugural issuance of senior secured investment grade notes in April » Raised $600 million in proceeds at a spread of T+120 and a yield of 2.07% » Introdu
Slide 13: Stable Cash Flows and Steady Shareholder Value Creation
STABLE CASH FLOWS AND STEADY SHAREHOLDER 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 Q1 Ann. 2008 2017 2005 2006 2007 2009 2010 2011 2012 2013 2014 2015 2016 2018 2019 2020 LTM Mar-21 TBV: $39.66
Slide 14: Strong Fleet Growth and Enhanced Lease Protections
STRONG FLEET GROWTH AND ENHANCED LEASE PROTECTIONS YTD Capex Expected to Generate Nearly New Containers Placed on Hire: 20% Growth in Revenue Earning Assets in 2021 Total Cost and Lease Duration $1,500 15 $12,000 New Dry Containers Leased Out Q1’17- Q2’21E Forecasted New Dry Committed to Lease CAGR
Slide 15: Outlook and Conclusions
OUTLOOK AND CONCLUSIONS Triton achieved outstanding results in the first quarter of 2021 » Adjusted EPS $1.91 per share, up 12.4% from Q4 2020; annualized ROE 25.0% » Critical operating metrics at very high levels Market conditions remain highly favorable » Container demand remains exceptionally
Slide 16: Appendix
Appendix 16
Slide 17: Equity Cash Flow
EQUITY CASH FLOW Typical Prioritization of Cash Flow ($000, except per share amounts) Q1 Annualized Cash flow before capex 1,315,120 1. Maintain ability to service customers/replacement capex 1 750,872 Cash flow after replacement capex 564,248 Steady-state cash flow yield2 15.2% 3 2. Pay common divi
Slide 18: Long Term Lease Expirations
LONG TERM LEASE EXPIRATIONS (*) Dry Refrigerated Percent of Fleet 4.6% 1.8% 5.0% 6.1% 2.8% 5.5% 4.0% 0.9% 2.2% Percent of Fleet 4.0% 0.7% 1.6% 2.2% 1.9% 1.1% 1.6% 0.5% 0.6% * Excludes Sale Age Equipment 18
Slide 19: Adjusted Tangible Book Value Per Share as of 03/31/21
ADJUSTED TANGIBLE BOOK VALUE PER SHARE AS OF 03/31/21 Purchase (In thousands, except per share amounts) Combined Accounting Consolidated Total assets $ 10,607,296 $ (116,319) $ 10,490,977 Total liabilities 7,821,067 (54,408) 7,766,659 Preferred shareholders' equity 555,000 - 555,000 Common sharehold
Slide 20: Reconciliation of Non-GAAP Financial Information
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION (In thousands) Q1 annualized Income before income taxes 606,300 Interest and debt expense 218,492 Depreciation and amortization 573,228 Adjusted EBITDA 1,398,020 Principal payments on finance leases 51,464 NBV of container disposals 126,180 Major cash
Slide 21: Consolidated Statements of Income
CONSOLIDATED STATEMENTS OF INCOME (In thousands, except earnings per share) Q1 '21 Q4 '20 % Change Q1 '20 % Change Total leasing revenues $ 346,743 $ 337,285 2.8% $ 321,468 7.9% Trading margin 8,141 6,977 16.7% 1,933 321.2% Net gain on sale of leasing equipment 21,967 18,422 19.2% 4,077 438.8% Depre
Slide 22: Reconciliation of Non-GAAP Financial Information
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION (In thousands, except earnings per share) Q1 '20 Q2 '20 Q3 '20 Q4 '20 2020 Total Q1 '21 Net income attributable to common shareholders $ 67,211 $ 60,075 $ 45,946 $ 115,185 $ 288,417 $ 129,325 Add (subtract): Debt termination expense & unrealized (gain
Slide 23: 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