Triton International Limited (NYSE: TRTN) ("Triton")
Second Quarter
Highlights:
- Triton reported net income attributable
to shareholders of $104.9 million or $1.30 per diluted share, an
increase of 30.0% per diluted share from the first quarter of 2018.
Net income attributable to shareholders included a one-time gain of
$21.0 million on the sale of a building. The gain on the building
sale also led to an increase in our effective tax rate to 13% in
the second quarter.
- Triton reported Adjusted net income of
$88.9 million or $1.10 per diluted share, an increase of 11.1% per
diluted share from the first quarter of 2018.
- Container pick-up activity increased
strongly in the second quarter, reflecting the start of the
traditional peak season for dry containers. Our utilization
averaged 98.8% during the second quarter of 2018.
- Triton announced a quarterly dividend
of $0.52 per share payable on September 25, 2018 to shareholders of
record as of September 4, 2018.
- Triton announced the Board of Directors
has authorized the repurchase of up to $200 million of its common
shares.
Financial Results
The following table summarizes Triton’s selected key financial
information for the three and six months ended June 30, 2018
and June 30, 2017 and for the three months ended
March 31, 2018.
(in millions, except per share data)
Three Months Ended, Six Months Ended,
June 30, 2018 March 31, 2018
June 30, 2017 June 30, 2018
June 30, 2017 Total leasing revenues $329.8
$315.1 $281.9 $644.9 $547.5
Net income attributable to shareholders $104.9 $80.9
$45.7 $185.8 $80.3
Net income per share - Diluted $1.30
$1.00 $0.62 $2.30 $1.08
Adjusted net income
(1) $88.9 $79.8 $47.0 $168.7 $82.4
Adjusted net income
per share - Diluted (1) $1.10 $0.99 $0.63 $2.09 $1.11
Return on equity (2) 16.4% 15.4%
11.2% 15.9% 9.9% (1)
Refer to the "Use of Non-GAAP Financial Measures" and
"Non-GAAP Reconciliations of Adjusted Net Income" set forth below.
(2) Triton's definition and calculation of Return on equity is
annualized Adjusted net income divided by average shareholders'
equity for the period.
Operating Performance
“Triton achieved outstanding performance in the second quarter
of 2018", commented Brian M. Sondey, Chief Executive Officer of
Triton. "We generated $88.9 million of Adjusted net income, or
$1.10 of Adjusted net income per share, which represents an
increase of 11.1% per diluted share from the first quarter of 2018.
We also generated an annualized return on equity of 16.4%.”
“Triton’s strong financial results continue to be driven by
outstanding operational performance, our unique competitive
advantages and a favorable market environment. Container pick-up
activity was near record levels in May and June, reflecting ongoing
trade growth and the start of the peak season for dry containers.
We also continued to benefit from an increase in the share for
leasing relative to direct container purchases by our customers,
and a continued high leasing deal share for Triton. Our utilization
averaged 98.8% in the second quarter, and currently stands at
98.8%. Our average used container sale prices increased in the
second quarter, driving an increase in gains on disposal."
"Trade growth and container demand have not been materially
impacted by the threat of trade actions or the initial round of new
tariffs implemented between the United States and China. However,
the United States has disclosed an expanded list of products that
will likely become subject to increased tariffs later in the third
quarter. The potential for expanded tariffs is adding uncertainty
to our market, though our customers and market forecasters are
still expecting global container volumes to increase in 2018."
"Triton continues to grow its fleet through value-added
investment. We have so far ordered $1.4 billion of containers for
delivery in 2018, and expect our revenue earning assets will grow
in the range of 10% this year. We estimate the lease transactions
we are concluding for our new container investments will generate
equity IRRs in the mid-teens over the lifetime of the containers,
and the average initial lease duration for our new container leases
is approximately seven years.”
Outlook
Mr. Sondey continued, “We are starting the second half of 2018
with strong operating and financial momentum. Container pick-up
activity and lease deal activity remain strong, and our key
operating metrics remain at high levels. Based on the continued
growth in our container fleet, continued high utilization and the
currently limited impacts from the tariffs, we expect our Adjusted
net income to increase sequentially throughout the balance of the
year.”
Dividend
Triton’s Board of Directors has approved and declared a $0.52
per share quarterly cash dividend on its issued and outstanding
common shares, payable on September 25, 2018 to shareholders of
record at the close of business on September 4, 2018.
Share Repurchase
Authorization
Triton’s Board of Directors has authorized the repurchase of up
to $200 million of its common shares. Under the plan, shares may be
purchased on the open market or in privately negotiated
transactions. The extent to which the company repurchases its
shares and the timing of such repurchases will depend upon market
conditions and other corporate considerations.
Mr. Sondey concluded, “Given the strong market environment and
sizable attractive investment opportunities, we will continue to
prioritize organic investment and growth as the primary use for our
capital. However, we believe that an opportunistic share repurchase
program could complement our dividend as another avenue for
providing returns to shareholders.”
Investors’ Webcast
Triton will hold a Webcast at 8:30 a.m. (New York time) on
Friday, August 3, 2018 to discuss its second quarter results.
To listen by phone, please dial 1-877-418-5277 (domestic) or
1-412-717-9592 (international) approximately 15 minutes prior to
the start time and reference the Triton International Limited
conference call. To access the live Webcast please visit Triton's
website at http://www.trtn.com. An archive of the Webcast will be
available one hour after the live call.
About Triton International
Limited
Triton International Limited is the world’s largest lessor of
intermodal freight containers. With a container fleet of 6.0
million twenty-foot equivalent units ("TEU"), Triton’s global
operations include acquisition, leasing, re-leasing and subsequent
sale of multiple types of intermodal containers and chassis.
The following table sets forth the equipment fleet utilization
for the periods indicated:
Quarter Ended June 30, 2018
March 31, 2018 December 31,
2017 September 30, 2017
June 30, 2017 Average Utilization (a) 98.8 %
98.6 % 98.3 % 97.6 % 96.5 %
Ending Utilization (a)
98.7 % 98.7 % 98.6 % 98.0 % 97.1 % (a) Utilization is
computed by dividing total units on lease (in cost equivalent
units, or "CEUs") by the total units in fleet (in CEUs), excluding
new units not yet leased and off-hire units designated for sale.
The following table summarizes the equipment fleet as of
June 30, 2018, December 31, 2017 and June 30,
2017:
Equipment Fleet in Units
Equipment Fleet in TEU June 30, 2018
December 31, 2017 June 30, 2017 June
30, 2018 December 31, 2017
June 30, 2017 Dry 3,243,032 3,077,144 2,903,880
5,307,306 5,000,043 4,721,780
Refrigerated 227,040 218,429
218,238 437,038 419,673 419,170
Special 91,688 89,066 81,884
165,002 159,172 143,954
Tank 12,201 12,124 11,956 12,201
12,124 11,956
Chassis 23,405 22,523 21,468
42,884 41,068 38,933
Equipment leasing
fleet 3,597,366 3,419,286 3,237,426 5,964,431 5,632,080
5,335,793
Equipment trading fleet 15,406 10,510
14,991 23,622 16,907 23,580
Total 3,612,772 3,429,796 3,252,417
5,988,053 5,648,987 5,359,373
Equipment in CEU June 30, 2018
December 31, 2017 June 30, 2017
Operating leases 7,047,168 6,678,282 6,384,590
Finance
leases 320,763 328,024 354,727
Equipment trading fleet
56,048 51,762 62,969
Total 7,423,979
7,058,068 6,802,286
Important Cautionary Information Regarding Forward-Looking
Statements
Certain statements in this release, 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 of the
Securities Exchange Act of 1934, as amended. Statements that
include the words "expect," "intend," "plan," "believe," "project,"
"anticipate," "will," "may," "would" and similar statements of a
future or forward-looking nature may be used to identify
forward-looking statements. All forward-looking statements address
matters that involve risks and uncertainties, many of which are
beyond Triton's control. Accordingly, there are or will be
important factors that could cause actual results to differ
materially from those indicated in such statements and, therefore,
you should not place undue reliance on any such statements.
These factors include, without limitation, economic, business,
competitive, market and regulatory conditions and the following:
uncertainty as to the long-term value of Triton's common shares;
decreases in the demand for leased containers; decreases in market
leasing rates for containers; difficulties in re-leasing containers
after their initial fixed-term leases; our customers' decisions to
buy rather than lease containers; our dependence on a limited
number of customers for a substantial portion of our revenues;
customer defaults; decreases in the selling prices of used
containers; extensive competition in the container leasing
industry; difficulties stemming from the international nature of
our business; decreases in the demand for international trade;
disruption to our operations resulting from the political and
economic policies of the United States and other countries,
particularly China, including increased tariffs and other trade
actions; disruption to our operations from failures of, or attacks
on, our information technology systems; our compliance or failure
to comply with laws and regulations related to economic and trade
sanctions, security, anti-terrorism, environmental protection and
corruption; our ability to obtain sufficient capital to support our
growth; restrictions on our businesses imposed by the terms of our
debt agreements; changes in tax laws in the United States and other
countries and other risks and uncertainties, including those risk
factors set forth in the section entitled "Risk Factors" to in our
Form 10-K filed with the Securities and Exchange Commission
("SEC"), on February 27, 2018, in any Form 10-Q filed or to be
filed by Triton, and in other documents we file with the SEC from
time to time.
The foregoing list of important factors should not be construed
as exhaustive and should be read in conjunction with the other
cautionary statements that are included herein and elsewhere. Any
forward-looking statements made herein are qualified in their
entirety by these cautionary statements, and there can be no
assurance that the actual results or developments anticipated by us
will be realized or, even if substantially realized, that they will
have the expected consequences to, or effects on Triton or its
business or operations. Except to the extent required by applicable
law, we undertake no obligation to update publicly or revise any
forward-looking statement, whether as a result of new information,
future developments or otherwise.
-Financial Tables Follow-
TRITON INTERNATIONAL LIMITED
Consolidated Balance Sheets
(In thousands, except share
data)
(Unaudited)
June 30, 2018 December 31, 2017
ASSETS: Leasing equipment, net of accumulated depreciation
of $2,441,745 and $2,218,897 $ 8,956,091 $ 8,364,484 Net investment
in finance leases 270,746 295,891 Equipment held for sale 50,068
43,195
Revenue earning assets 9,276,905 8,703,570 Cash and
cash equivalents 48,145 132,031 Restricted cash 132,433 94,140
Accounts receivable, net of allowances of $2,861 and $3,002 229,697
199,876 Goodwill 236,665 236,665 Lease intangibles, net of
accumulated amortization of $177,187 and $144,081 121,270 154,376
Other assets 35,534 49,591 Fair value of derivative instruments
29,467 7,376
Total assets $ 10,110,116 $ 9,577,625
LIABILITIES AND SHAREHOLDERS' EQUITY: Equipment purchases
payable $ 159,454 $ 128,133 Fair value of derivative instruments —
2,503 Accounts payable and other accrued expenses 93,008 109,999
Net deferred income tax liability 243,342 215,439 Debt, net of
unamortized debt costs of $44,603 and $40,636 7,282,056 6,911,725
Total liabilities 7,777,860 7,367,799
Shareholders'
equity: Common shares, $0.01 par value, 294,000,000 shares
authorized, 80,855,072 and 80,687,757 shares issued and
outstanding, respectively 809 807 Undesignated shares, $0.01 par
value, 6,000,000 shares authorized, no shares issued and
outstanding — — Additional paid-in capital 894,005 889,168
Accumulated earnings 1,269,429 1,159,367 Accumulated other
comprehensive income 38,358 26,942
Total shareholders'
equity 2,202,601 2,076,284 Non-controlling interests 129,655
133,542
Total equity 2,332,256 2,209,826
Total
liabilities and equity $ 10,110,116 $ 9,577,625
TRITON INTERNATIONAL LIMITED
Consolidated Statements of
Operations
(In thousands, except per share
amounts)
(Unaudited)
Three Months Ended June
30, Six Months Ended June 30, 2018
2017 2018 2017 Leasing revenues:
Operating leases $ 324,954 $ 276,160 $ 635,185 $ 535,745 Finance
leases 4,817 5,779 9,683 11,796
Total leasing revenues 329,771 281,939 644,868
547,541 Equipment trading revenues 18,099
12,755 31,474 18,239 Equipment trading expenses (14,105 ) (11,427 )
(24,489 ) (16,519 )
Trading margin 3,994 1,328
6,985 1,720 Net gain on sale of leasing
equipment 11,105 9,639 20,323 14,800 Net gain on sale of building
20,953 — 20,953 —
Operating expenses: Depreciation
and amortization 133,894 124,091 264,327 241,971 Direct operating
expenses 10,195 15,609 21,243 37,563 Administrative expenses 20,775
22,068 40,357 45,035 Transaction and other (income) costs (1 ) 836
(30 ) 3,308 (Benefit) provision for doubtful accounts (25 ) (113 )
(126 ) 461 Total operating expenses 164,838 162,491
325,771 328,338 Operating income 200,985
130,415 367,358 235,723
Other expenses: Interest and debt
expense 79,027 70,777 154,125 134,281 Realized (gain) loss on
derivative instruments, net (492 ) 283 (740 ) 882 Unrealized loss
(gain) on derivative instruments, net (111 ) 789 (1,297 ) (709 )
Write-off of debt costs 503 43 503 43 Other (income), net (585 )
(974 ) (1,244 ) (1,716 )
Total other expenses 78,342
70,918 151,347 132,781 Income before income
taxes 122,643 59,497 216,011 102,942 Income tax expense 15,890
11,483 26,393 18,625 Net income $
106,753 $ 48,014 $ 189,618 $ 84,317 Less: income attributable to
noncontrolling interest 1,883 2,343 3,856
4,035
Net income attributable to shareholders $
104,870 $ 45,671 $ 185,762 $ 80,282 Net
income per common share—Basic $ 1.31 $ 0.62 $ 2.32 $ 1.09 Net
income per common share—Diluted $ 1.30 $ 0.62 $ 2.30 $ 1.08 Cash
dividends paid per common share $ 0.52 $ 0.45 $ 0.97 $ 0.90
Weighted average number of common shares outstanding—Basic 80,044
73,763 80,007 73,752 Dilutive restricted shares and share options
611 414 589 356 Weighted average number of common shares
outstanding—Diluted 80,655 74,177 80,596 74,108
TRITON INTERNATIONAL LIMITED
Consolidated Statements of Cash
Flows
(In thousands)
(Unaudited)
Six Months Ended June 30, 2018
2017 Cash flows from operating
activities: Net income $ 189,618 $ 84,317 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation and amortization 264,327 241,971 Amortization of
deferred financing cost and other debt related amortization 6,627
6,761 Lease related amortization 37,722 47,093 Share-based
compensation expense 5,661 3,298 Net (gain) loss on sale of leasing
equipment (20,323 ) (14,800 ) Net (gain) on sale of building
(20,953 ) — Unrealized (gain) loss on derivative instruments (1,297
) (709 ) Write-off of debt cost 503 43 Deferred income taxes 23,946
17,106 Changes in operating assets and liabilities: Accounts
receivable (30,551 ) (1,823 ) Accounts payable and other accrued
expenses (16,788 ) (25,396 ) Net equipment sold for resale activity
(11,686 ) 248 Other assets (1,218 ) (656 )
Net cash provided by
operating activities 425,588 357,453
Cash
flows from investing activities: Purchases of leasing equipment
and investments in finance leases (884,007 ) (665,473 ) Proceeds
from sale of equipment, net of selling costs 83,443 90,139 Proceeds
from the sale of building 27,630 — Cash collections on finance
lease receivables, net of income earned 29,598 29,953 Other (64 )
55
Net cash (used in) in investing activities
(743,400 ) (545,326 )
Cash flows from financing activities:
Redemption of common shares for withholding taxes (822 ) — Debt
issuance costs (9,567 ) (19,844 ) Borrowings under debt facilities
1,417,985 1,582,882 Payments under debt facilities and capital
lease obligations (1,049,996 ) (1,180,787 ) Dividends paid (77,638
) (66,384 ) Distributions to noncontrolling interests (7,743 )
(9,709 )
Net cash provided by financing activities 272,219
306,158
Net (decrease) increase in cash, cash
equivalents and restricted cash $ (45,593 ) $ 118,285 Cash,
cash equivalents and restricted cash, beginning of period 226,171
163,492
Cash, cash equivalents and restricted
cash, end of period $ 180,578 $ 281,777
Supplemental disclosures: Interest paid $ 148,007 $ 127,360
Supplemental non-cash investing activities: Equipment
purchases payable $ 159,454 $ 153,594
Use of Non-GAAP Financial Measures
We use the term "Adjusted net income" throughout this press
release.
Adjusted net income is adjusted for certain items management
believes are not representative of our operating performance.
Adjusted net income is defined as net income attributable to
shareholders excluding the write-off of debt costs net of tax,
gains and losses on interest rate swaps net of tax, transaction and
other costs net of tax, and certain non-recurring transactions net
of tax.
Adjusted net income is not a presentation made in accordance
with U.S. GAAP. Adjusted net income should not be considered as an
alternative to, or more meaningful than, amounts determined in
accordance with U.S. GAAP, including net income.
We believe that Adjusted net income is useful to an investor in
evaluating our operating performance because this measure:
- is widely used by securities analysts
and investors to measure a company’s operating performance;
- helps investors to more meaningfully
evaluate and compare the results of our operations from period to
period by removing the impact of our capital structure, our asset
base and certain non-routine events which we do not expect to occur
in the future; and
- is used by our management for various
purposes, including as measures of operating performance and
liquidity, to assist in comparing performance from period to period
on a consistent basis, in presentations to our board of directors
concerning our financial performance and as a basis for strategic
planning and forecasting.
We have provided a reconciliation of net income attributable to
shareholders, the most directly comparable U.S. GAAP measure, to
Adjusted net income in the table below for the three and six months
ended June 30, 2018 and June 30, 2017 and for the three
months ended March 31, 2018.
TRITON INTERNATIONAL LIMITEDNon-GAAP
Reconciliations of Adjusted Net Income (In thousands, except
per share amounts)
Three Months Ended, Six Months Ended, June
30, 2018 March 31, 2018
June 30, 2017 June 30, 2018 June 30,
2017 Net income attributable to shareholders $ 104,870 $ 80,892
$ 45,671 $ 185,762 $ 80,282 Adjustments: Unrealized loss (gain) on
derivative instruments, net (100 ) (1,052 ) 671 (1,152 ) (581 )
Transaction and other (income) costs (1 ) (26 ) 643 (27 ) 2,709
Write-off of debt costs 447 — 35 447 35 Gain on sale of building
(16,316 ) — — (16,316 ) — Adjusted net income
$ 88,900 $ 79,814 $ 47,020 $ 168,714 $
82,445 Adjusted income per common share—Basic $ 1.11 $ 1.00
$ 0.64 $ 2.11 $ 1.12 Adjusted income per common share—Diluted $
1.10 $ 0.99 $ 0.63 $ 2.09 $ 1.11 Weighted average number of common
shares outstanding—Basic 80,044 79,968 73,763 80,007 73,752
Weighted average number of common shares outstanding—Diluted 80,655
80,572 74,177 80,596 74,108
TRITON INTERNATIONAL
LIMITEDCalculation of Return on Equity (In
thousands)
Three Months Ended, Six Months Ended, June 30,
2018 March 31, 2018 June
30, 2017 June 30, 2018 June 30,
2017 Adjusted net income $ 88,900 $ 79,814 $ 47,020 $ 168,714
$ 82,445 Annualized Adjusted net income (1) 356,577
323,690 188,597 340,224 166,256 Beginning Shareholders'
equity 2,133,505 2,076,284 1,672,925 2,076,284 1,663,233 Ending
Shareholders' equity 2,202,601 2,133,505 1,683,470
2,202,601 1,683,470 Average
Shareholders' equity $ 2,168,053 $ 2,104,895 $
1,678,198 $ 2,139,443 $ 1,673,352
Return on equity 16.4 % 15.4 % 11.2 % 15.9 % 9.9 %
(1) Annualized Adjusted net income was calculated based on
calendar days per quarter.
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version on businesswire.com: https://www.businesswire.com/news/home/20180803005079/en/
Triton International LimitedAndrew Greenberg,
914-697-2900Senior Vice President, Finance & Investor
Relations
Triton (NYSE:TRTN)
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