April 29, 2021 – Triton International Limited (NYSE: TRTN)
("Triton")
Highlights:
- Net income attributable to common shareholders for the three
months ended March 31, 2021 was $129.3 million or $1.92 per diluted
share.
- Adjusted net income was $128.7 million or $1.91 per diluted
share, an increase of 105.4% from the first quarter of 2020 and
12.4% from the fourth quarter of 2020.
- Trade volumes and container demand were exceptionally strong in
the first quarter. Utilization increased 0.4% during the quarter to
reach 99.3% as of March 31, 2021. Utilization was 99.4% as of April
23, 2021.
- As of April 23, 2021, Triton has purchased $2.6 billion of new
containers for delivery in 2021, most of which have already been
committed to high value, long duration leases.
- Triton’s corporate credit rating was upgraded to BBB- by
S&P Global Ratings on March 30, 2021.
- Triton completed an inaugural $600 million 2.05% senior secured
investment grade bond offering on April 15, 2021.
- Triton’s Board of Directors announced a quarterly dividend of
$0.57 per common share payable on June 24, 2021 to shareholders of
record as of June 10, 2021.
Financial Results
The following table summarizes Triton’s selected key financial
information for the three months ended March 31, 2021, December 31,
2020, and March 31, 2020.
(in millions, except per share
data)
Three Months Ended,
March 31, 2021
December 31, 2020
March 31, 2020
Total leasing revenues
$346.7
$337.3
$321.5
GAAP
Net income attributable to common
shareholders
$129.3
$115.2
$67.2
Net income per share - Diluted
$1.92
$1.70
$0.94
Non-GAAP
(1)
Adjusted net income
$128.7
$114.7
$67.1
Adjusted net income per share -
Diluted
$1.91
$1.70
$0.93
Return on equity (2)
25.0
%
22.9
%
13.1
%
(1)
Refer to the "Use of Non-GAAP
Financial Items" and "Non-GAAP Reconciliations of Adjusted Net
Income" set forth below.
(2)
Refer to the “Calculation of
Return on Equity” set forth below.
Operating Performance
"Triton achieved outstanding results in the first quarter of
2021," commented Brian M. Sondey, Chief Executive Officer of
Triton. "We generated $1.91 of Adjusted earnings per share in the
first quarter, an increase of more than 100% from the first quarter
of 2020 and an increase of 12.4% from the fourth quarter of 2020.
We also achieved an annualized Return on equity of 25.0%."
"Triton continues to benefit from very favorable market
conditions. Trade volumes remain strong due to a shift in consumer
spending from services and experiences to goods, and demand for
containers has been boosted further by a variety of logistical
challenges that have slowed the global movement of containers. Our
utilization increased to 99.3% as of March 31, 2021 and currently
stands at 99.4%. The strong demand for containers has also led to
high new container prices and market lease rates. Container
factories are currently quoting over $3,500 for a new 20’ dry
container, and market lease rates for new containers are
significantly higher than the average lease rates in our lease
portfolio. Our average selling price for used dry containers jumped
further in the first quarter, leading to an increase in our
disposal gains from the fourth quarter of 2020 despite a
significant decrease in disposal volumes."
"Triton is investing heavily in new containers to help our
customers manage the strong increase in trade volumes. Our
customers generally did not anticipate the rapid growth in trade
that began in the second half of 2020, and all major shipping lines
have needed to add significant numbers of containers. Shipping
lines have been primarily relying on the leasing market to fulfill
their container requirements, and Triton has secured a meaningful
share of leasing transactions due to our industry-leading supply
capability and our strong reputation for reliability. Triton has
purchased approximately $2.6 billion of containers for delivery in
2021, with $0.7 billion accepted in the first quarter, and we have
already pre-committed most of our purchased containers to
high-value, long-duration leases. We estimate that our existing
orders would translate to asset growth of close to 20% for Triton
in 2021."
"Triton is highly focused on locking-in durable improvements to
our business, profitability and cash flow. The average lease
duration for our 2021 new dry container lease commitments is over
12 years, and we estimate that approximately 75% of the used
containers we have supplied since last July have been leased on
life-cycle leases, which keep the containers on-hire until our
typical disposal age. The large block of attractively priced new
leases and improved off-hire protections for our used containers
will provide a strong foundation to our profitability and cash flow
for years to come."
"Our balance sheet remains in great shape. Our leverage remains
well below our typical historical range, and our profitability
supports our high current growth rate with little impact on our
leverage. In March 2021, our corporate credit rating was upgraded
to BBB- by S&P, reflecting our strong market and financial
position. In the first quarter, we issued $1.2 billion of ABS notes
and in April 2021, we successfully completed an inaugural issuance
of $600 million investment grade senior secured notes. These
successful transactions, which further reduce our overall average
borrowing costs, provide an attractive source of financing to
support our customers and will contribute to the strong return on
our 2021 container investment."
Outlook
Mr. Sondey continued, "Looking ahead, we have significant
operational and financial momentum, and we expect to achieve
outstanding profitability throughout 2021. Trade volumes remain
strong, our container fleet is close to maximum utilization, and we
have approximately 500,000 TEU of new containers pre-booked for
pick-up in the second and third quarters. We anticipate some
normalization of consumer spending patterns as COVID vaccination
rates grow, but economists are generally projecting a strong bounce
to global GDP in the second half of 2021, and we typically
experience peak dry container demand in the third quarter as
retailers stock up for the holiday season. We expect our Adjusted
net income per share to hold fairly steady from the first to the
second quarter of 2021. We expect our leasing margin will increase
substantially due to a high volume of new container pick-ups,
though we expect this to be mostly offset by lower disposal gains
due to a very low volume of container off-hires and disposals.
Overall, we expect our profitability, Return on equity and cash
flow to remain at very high levels."
Dividends
Triton’s Board of Directors has approved and declared a $0.57
per share quarterly cash dividend on its issued and outstanding
common shares, payable on June 24, 2021 to shareholders of record
at the close of business on June 10, 2021.
The Company’s Board of Directors also approved and declared a
cash dividend payable on June 15, 2021 to holders of record at the
close of business on June 8, 2021 on its issued and outstanding
preferred shares as follows:
Preferred Share Series
Dividend Rate
Dividend Per Share
Series A Preferred Shares
(NYSE:TRTNPRA)
8.500%
$0.5312500
Series B Preferred Shares
(NYSE:TRTNPRB)
8.000%
$0.5000000
Series C Preferred Shares
(NYSE:TRTNPRC)
7.375%
$0.4609375
Series D Preferred Shares
(NYSE:TRTNPRD)
6.875%
$0.4296875
Share Repurchase Program
Update
Triton has repurchased over 13.9 million common shares since the
inception of the program in August 2018. There were no share
repurchases during the first quarter of 2021 and as of March 31,
2021, the Company had a total of $102.1 million remaining under the
current authorization.
Investors’ Webcast
Triton will hold a Webcast at 8:30 a.m. (New York time) on
Thursday, April 29, 2021 to discuss its first 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 6.5
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.
Utilization, Fleet, and Leasing Revenue
Information
The following table summarizes the equipment fleet utilization
for the periods indicated:
Quarter Ended
March 31, 2021
December 31, 2020
September 30, 2020
June 30, 2020
March 31, 2020
Average Utilization (1)
99.1
%
98.1
%
96.1
%
95.0
%
95.4
%
Ending Utilization (1)
99.3
%
98.9
%
97.4
%
94.8
%
95.3
%
(1)
Utilization is computed by
dividing total units on lease (in CEU) by the total units in our
fleet (in CEU), excluding new units not yet leased and off-hire
units designated for sale.
The following table summarizes the equipment fleet as of March
31, 2021, December 31, 2020 and March 31, 2020 (in units, TEUs and
CEUs):
Equipment Fleet in
Units
Equipment Fleet in TEU
March 31, 2021
December 31, 2020
March 31, 2020
March 31, 2021
December 31, 2020
March 31, 2020
Dry
3,417,293
3,295,908
3,239,306
5,711,032
5,466,421
5,324,756
Refrigerated
232,550
227,519
225,026
450,087
439,956
434,263
Special
94,266
93,885
93,743
171,781
170,792
170,225
Tank
11,339
11,312
12,469
11,339
11,312
12,469
Chassis
24,078
24,781
24,319
43,858
45,188
44,828
Equipment leasing fleet
3,779,526
3,653,405
3,594,863
6,388,097
6,133,669
5,986,541
Equipment trading fleet
60,242
64,243
17,549
93,514
98,991
26,185
Total
3,839,768
3,717,648
3,612,412
6,481,611
6,232,660
6,012,726
Equipment in CEU(1)
March 31, 2021
December 31, 2020
March 31, 2020
Operating leases
6,892,129
6,649,350
6,474,701
Finance leases
297,168
295,784
338,242
Equipment trading fleet
92,570
98,420
35,632
Total
7,281,867
7,043,554
6,848,575
(1)
In the equipment fleet tables above, we
have included total fleet count information based on CEU. CEU is a
ratio used to convert the actual number of containers in our fleet
to a figure based on the relative purchase prices of our various
equipment types to that of a 20-foot dry container. For example,
the CEU ratio for a 40-foot high cube dry container is 1.70, and a
40-foot high cube refrigerated container is 7.50. These factors may
differ slightly from CEU ratios used by others in the industry.
The following table summarizes our leasing revenue for the
periods indicated (in thousands):
Three Months Ended,
March 31, 2021
December 31, 2020
March 31, 2020
Operating leases
Per diem revenues
$
331,252
$
319,679
$
298,486
Fee and ancillary revenues
8,542
10,439
14,318
Total operating lease revenues
339,794
330,118
312,804
Finance leases
6,949
7,167
8,664
Total leasing revenues
$
346,743
$
337,285
$
321,468
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:
the impact of COVID-19 on our business and financial results;
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 and suppliers; 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 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 but not limited to, the
impact of trade wars, duties and tariffs; disruption to our
operations from failures of, or attacks on, our information
technology systems; disruption to our operations as a result of
natural disasters; compliance 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 imposed by
the terms of our debt agreements; changes in tax laws in, Bermuda,
the United States and other countries and other risks and
uncertainties, including those risk factors set forth in the
section entitled "Risk Factors" in our Form 10-K filed with the
Securities and Exchange Commission ("SEC"), on February 16, 2021,
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)
March 31, 2021
December 31, 2020
ASSETS:
Leasing equipment, net of accumulated
depreciation of $3,497,805 and $3,370,652
$
9,198,780
$
8,630,696
Net investment in finance leases
271,347
282,131
Equipment held for sale
57,568
67,311
Revenue earning assets
9,527,695
8,980,138
Cash and cash equivalents
233,064
61,512
Restricted cash
153,272
90,484
Accounts receivable, net of allowances of
$1,275 and $2,192
234,682
226,090
Goodwill
236,665
236,665
Lease intangibles, net of accumulated
amortization of $269,355 and $264,791
29,102
33,666
Other assets
68,919
83,969
Fair value of derivative instruments
7,578
9
Total assets
$
10,490,977
$
9,712,533
LIABILITIES AND SHAREHOLDERS’
EQUITY:
Equipment purchases payable
$
342,357
$
191,777
Fair value of derivative instruments
68,545
128,872
Accounts payable and other accrued
expenses
96,989
95,235
Net deferred income tax liability
342,071
327,431
Debt, net of unamortized costs of $53,446
and $42,747
6,916,697
6,403,270
Total liabilities
7,766,659
7,146,585
Shareholders’ equity:
Preferred shares, $0.01 par value, at
liquidation preference
555,000
555,000
Common shares, $0.01 par value,
270,000,000 shares authorized, 81,273,334 and 81,151,723 shares
issued, respectively
813
812
Undesignated shares, $0.01 par value,
7,800,000 and 7,800,000 shares authorized, respectively, no shares
issued and outstanding
—
—
Treasury shares, at cost, 13,901,326 and
13,901,326 shares, respectively
(436,822
)
(436,822
)
Additional paid-in capital
902,891
905,323
Accumulated earnings
1,765,498
1,674,670
Accumulated other comprehensive income
(loss)
(63,062
)
(133,035
)
Total shareholders’ equity
2,724,318
2,565,948
Total liabilities and shareholders’
equity
$
10,490,977
$
9,712,533
TRITON INTERNATIONAL
LIMITED
Consolidated Statements of
Operations
(In thousands, except per
share amounts)
(Unaudited)
Three Months Ended March
31,
March 31, 2021
March 31, 2020
Leasing revenues:
Operating leases
$
339,794
$
312,804
Finance leases
6,949
8,664
Total leasing revenues
346,743
321,468
Equipment trading revenues
25,945
15,380
Equipment trading expenses
(17,804
)
(13,447
)
Trading margin
8,141
1,933
Net gain on sale of leasing equipment
21,967
4,077
Operating expenses:
Depreciation and amortization
143,307
132,695
Direct operating expenses
9,370
23,248
Administrative expenses
20,921
19,225
Provision (reversal) for doubtful
accounts
(2,464
)
4,279
Total operating expenses
171,134
179,447
Operating income (loss)
205,717
148,031
Other expenses:
Interest and debt expense
54,623
69,002
Debt termination expense
—
31
Other (income) expense, net
(481
)
(3,584
)
Total other expenses
54,142
65,449
Income (loss) before income taxes
151,575
82,582
Income tax expense (benefit)
11,737
5,546
Net income (loss)
$
139,838
$
77,036
Less: dividend on preferred shares
10,513
9,825
Net income (loss) attributable to
common shareholders
$
129,325
$
67,211
Net income per common share—Basic
$
1.93
$
0.94
Net income per common share—Diluted
$
1.92
$
0.94
Cash dividends paid per common share
$
0.57
$
0.52
Weighted average number of common shares
outstanding—Basic
66,935
71,596
Dilutive restricted shares
282
202
Weighted average number of common shares
outstanding—Diluted
67,217
71,798
TRITON INTERNATIONAL
LIMITED
Consolidated Statements of
Cash Flows
(In thousands)
(Unaudited)
Three Months Ended March
31,
March 31, 2021
March 31, 2020
Cash flows from operating
activities:
Net income (loss)
$
139,838
$
77,036
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
143,307
132,695
Amortization of deferred debt cost and
other debt related amortization
1,142
3,595
Lease related amortization
4,857
7,054
Share-based compensation expense
1,715
1,605
Net (gain) loss on sale of leasing
equipment
(21,967
)
(4,077
)
Unrealized (gain) loss on derivative
instruments
—
297
Debt termination expense
—
31
Deferred income taxes
11,615
5,505
Changes in operating assets and
liabilities:
Accounts receivable
(10,828
)
(3,775
)
Accounts payable and other accrued
expenses
1,886
(15,111
)
Net equipment sold (purchased) for resale
activity
1,579
1,435
Cash received (paid) for settlement of
interest rate swaps
5,558
—
Cash collections on finance lease
receivables, net of income earned
12,866
15,466
Other assets
9,420
(23,796
)
Net cash provided by (used in)
operating activities
300,988
197,960
Cash flows from investing
activities:
Purchases of leasing equipment and
investments in finance leases
(579,211
)
(62,406
)
Proceeds from sale of equipment, net of
selling costs
53,512
49,498
Other
15
(216
)
Net cash provided by (used in)
investing activities
(525,684
)
(13,124
)
Cash flows from financing
activities:
Issuance of preferred shares, net of
underwriting discount
—
145,275
Purchases of treasury shares
—
(34,357
)
Redemption of common shares for
withholding taxes
(4,146
)
(2,156
)
Debt issuance costs
(13,803
)
—
Borrowings under debt facilities
1,504,850
530,000
Payments under debt facilities and finance
lease obligations
(979,199
)
(425,073
)
Dividends paid on preferred shares
(10,513
)
(9,395
)
Dividends paid on common shares
(38,153
)
(37,110
)
Other
—
(410
)
Net cash provided by (used in)
financing activities
459,036
166,774
Net increase (decrease) in cash, cash
equivalents and restricted cash
$
234,340
$
351,610
Cash, cash equivalents and restricted
cash, beginning of period
151,996
168,972
Cash, cash equivalents and restricted
cash, end of period
$
386,336
$
520,582
Supplemental disclosures:
Interest paid
$
42,133
$
53,795
Income taxes paid (refunded)
$
155
$
139
Right-of-use asset for leased property
$
—
$
—
Supplemental non-cash investing
activities:
Equipment purchases payable
$
342,357
$
29,109
Use of Non-GAAP Financial Items
We use the terms "Adjusted net income" and Return on equity
throughout this press release.
Adjusted net income and Return on equity are not items presented
in accordance with U.S. GAAP and should not be considered as
alternatives to, or more meaningful than, amounts determined in
accordance with U.S. GAAP, including net income.
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 common
shareholders excluding debt termination expenses net of tax,
unrealized gains and losses on derivative instruments net of tax,
and foreign and other income tax adjustments.
We believe that Adjusted net income is useful to an investor in
evaluating our operating performance because this item:
- 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
common shareholders, the most directly comparable U.S. GAAP
measure, to Adjusted net income in the table below for the three
months ended March 31, 2021, December 31, 2020, and March 31,
2020.
Additionally, the calculation for return on equity is adjusted
annualized earnings divided by average shareholders’ equity.
Management utilizes return on equity in evaluating how much profit
the Company generates on the shareholders’ equity in the Company
and believes it is useful for comparing the profitability of
companies in the same industry.
TRITON INTERNATIONAL
LIMITED
Non-GAAP Reconciliations of
Adjusted Net Income
(In thousands, except per
share amounts)
Three Months Ended,
March 31, 2021
December 31, 2020
March 31, 2020
Net income attributable to common
shareholders
$
129,325
$
115,185
$
67,211
Add (subtract):
Unrealized loss (gain) on derivative
instruments, net
—
—
270
Debt termination expense
—
358
24
State and other income tax adjustments
—
(866
)
—
Tax benefit from vesting of restricted
shares
(643
)
—
(390
)
Adjusted net income
$
128,682
$
114,677
$
67,115
Adjusted net income per common
share—Diluted
$
1.91
$
1.70
$
0.93
Weighted average number of common shares
outstanding—Diluted
67,217
67,571
71,798
TRITON INTERNATIONAL
LIMITED
Calculation of Return on
Equity
(In thousands)
Three Months Ended,
March 31, 2021
December 31, 2020
March 31, 2020
Adjusted net income
$
128,682
$
114,677
$
67,115
Annualized Adjusted net income (1)
521,877
454,969
269,198
Average Shareholders’ equity (2)(3)
$
2,090,133
$
1,987,419
$
2,061,244
Return on equity
25.0
%
22.9
%
13.1
%
(1)
Annualized Adjusted net income
was calculated based on calendar days per quarter.
(2)
Average Shareholders’ equity was
calculated using the quarter’s beginning and ending Shareholder’s
equity for the three-month ended periods.
(3)
Average Shareholders’ equity was
adjusted to exclude preferred shares.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210429005196/en/
Andrew Greenberg Senior Vice President Business Development
& Investor Relations (914) 697-2900
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