TRTN Triton International Ltd

November 1, 2022 – Triton International Limited (NYSE: TRTN) ("Triton")

Highlights:

• Net income attributable to common shareholders for the three months ended September 30, 2022 was $176.8 million or $2.88 per diluted share.
• Adjusted net income was $176.5 million or $2.88 per diluted share, an increase of 18.5% from the third quarter of 2021 and a decrease of 1.4% from the second quarter of 2022.
• Utilization averaged 99.1% in the third quarter of 2022 and was 98.6% as of October 26, 2022.
• Triton repurchased 3.2 million common shares during the third quarter and has repurchased an additional 0.9 million common shares through October 26, 2022. See the tables to this press release for further information. Additionally, Triton increased its share repurchase authorization back to $200 million in October.
• Triton increased its quarterly common share dividend by $0.05 to $0.70 per share, payable on December 22, 2022 to shareholders of record as of December 8, 2022.

Financial Results

The following table summarizes Triton’s selected key financial information for the three and nine months ended September 30, 2022 and 2021 and the three months ended June 30, 2022.

 

(in millions, except per share data)

 

Three Months Ended,

 

Nine Months Ended,

 

September 30, 2022

 

June 30, 2022

 

September 30, 2021

 

September 30, 2022

 

September 30, 2021

Total leasing revenues

$

424.7

 

 

$

421.6

 

 

$

400.2

 

 

$

1,263.4

 

 

$

1,116.7

 

 

 

 

 

 

 

 

 

 

 

GAAP

 

 

 

 

 

 

 

 

 

Net income attributable to common shareholders

$

176.8

 

 

$

184.6

 

 

$

123.0

 

 

$

542.6

 

 

$

307.1

 

Net income per share - Diluted

$

2.88

 

 

$

2.90

 

 

$

1.83

 

 

$

8.56

 

 

$

4.57

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP (1)

 

 

 

 

 

 

 

 

 

Adjusted net income

$

176.5

 

 

$

186.0

 

 

$

163.8

 

 

$

542.2

 

 

$

436.6

 

Adjusted net income per share - Diluted

$

2.88

 

 

$

2.92

 

 

$

2.43

 

 

$

8.55

 

 

$

6.49

 

 

 

 

 

 

 

 

 

 

 

Adjusted return on equity (2)

 

27.5

%

 

 

29.8

%

 

 

29.4

%

 

 

29.3

%

 

 

27.1

%

(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 Adjusted Return on Equity” set forth below.

Operating Performance

"Triton continued to achieve outstanding financial performance in the third quarter of 2022," commented Brian M. Sondey, Chief Executive Officer of Triton. "Triton generated $2.88 of Adjusted net income per share, an increase of 18.5% from the third quarter of 2021 and just slightly below our record results from the second quarter of 2022. In addition, Triton achieved an annualized Adjusted return on equity of 27.5%."

"Triton's outstanding financial results reflect the durable enhancements we have made to our business. Container drop-off volumes increased in the third quarter, but our utilization remains exceptionally high and is well protected by our strong lease portfolio. Weighted by net book value, over 87% of our container fleet is covered by long-term and finance leases, and these leases have an average remaining duration of 76 months. In addition, used container sale prices remain high and we continue to generate sizable gains on disposals."

"The increase in container drop-offs in the third quarter reflects a muted summer peak season. Customers had expected trade growth would slow this year following exceptionally strong volumes in 2021, but we experienced fairly balanced activity in the first half of the year as customers continued to struggle with logistical disruptions and as they anticipated container needs for the traditional summer peak. However, normalizing consumer spending and macroeconomic challenges have impacted trade volumes, and many of our customers have shifted their focus to fleet efficiency and increased the pace of container off-hires. In addition, new container investment activity has slowed significantly across the market, and new container prices have decreased into the range of $2,200 for a 20’ dry container."

"Triton's new container investment has been limited this year following our record investment and growth in 2021. As of October 26, 2022, we have ordered $557 million of new containers for delivery in 2022. Triton has shifted its investment focus and strong cash flow to share repurchases, and we accelerated the pace of our repurchases in the third quarter. Year to date, Triton has repurchased 7.1 million shares, or 10.8% of our outstanding shares, while decreasing our leverage. Our Board of Directors increased our share repurchase authorization back to $200 million in October."

Outlook

Mr. Sondey continued, "We anticipate our Adjusted net income per share will decrease sequentially as our utilization and used container sale prices decrease from their recent extraordinarily high levels. However, we have made durable enhancements to our business, are very well protected by our lease portfolio and expect our utilization will remain high. We also expect our share repurchases will continue to be highly accretive. Overall, we expect our performance will remain very strong through the end of the year and into the longer term."

Common and Preferred Share Dividends

Triton’s Board of Directors has increased the quarterly cash dividend from $0.65 to $0.70 per common share, reflecting an approximate 8% increase. The dividend will be payable on December 22, 2022 to shareholders of record at the close of business on December 8, 2022.

Mr. Sondey concluded, "The increase in Triton's quarterly dividend reflects Triton's strong balance sheet, outstanding financial performance and our confidence that Triton's profitability and cash flows will remain strong."

The Company's Board of Directors also declared a cash dividend payable on December 15, 2022 to holders of record at the close of business on December 8, 2022 on Triton's 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

Series E Preferred Shares (NYSE:TRTNPRE)

 

5.750%

 

$0.3593750

Third Quarter 2022 Investor Webcast

Triton will hold a Webcast at 8:30 a.m. (New York time) on Tuesday, November 1, 2022 to discuss its third 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 over 7 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

 

September 30, 2022

 

June 30, 2022

 

March 31, 2022

 

December 31, 2021

 

September 30, 2021

Average Utilization (1)

99.1

%

 

99.4

%

 

99.6

%

 

99.6

%

 

99.6

%

Ending Utilization (1)

98.8

%

 

99.3

%

 

99.5

%

 

99.6

%

 

99.6

%

(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 September 30, 2022, December 31, 2021 and September 30, 2021 (in units, TEUs and CEUs):

 

Equipment Fleet in Units

 

Equipment Fleet in TEU

 

September 30, 2022

 

December 31, 2021

 

September 30, 2021

 

September 30, 2022

 

December 31, 2021

 

September 30, 2021

Dry

3,833,065

 

3,843,719

 

3,748,654

 

6,540,720

 

6,531,816

 

6,351,083

Refrigerated

229,839

 

235,338

 

239,328

 

446,678

 

457,172

 

464,465

Special

91,949

 

92,411

 

92,458

 

168,441

 

169,004

 

168,951

Tank

11,911

 

11,692

 

11,591

 

11,911

 

11,692

 

11,591

Chassis

25,823

 

24,139

 

24,381

 

48,615

 

44,554

 

44,726

Equipment leasing fleet

4,192,587

 

4,207,299

 

4,116,412

 

7,216,365

 

7,214,238

 

7,040,816

Equipment trading fleet

47,696

 

53,204

 

55,299

 

77,755

 

83,692

 

86,598

Total

4,240,283

 

4,260,503

 

4,171,711

 

7,294,120

 

7,297,930

 

7,127,414

 

Equipment in CEU(1)

 

September 30, 2022

 

December 31, 2021

 

September 30, 2021

Operating leases

7,210,150

 

7,291,769

 

7,294,503

Finance leases

676,310

 

623,136

 

494,839

Equipment trading fleet

73,529

 

81,136

 

83,976

Total

7,959,989

 

7,996,041

 

7,873,318

(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 provides a summary of our equipment lease portfolio by lease type, based on CEU and net book value, as of September 30, 2022:

Lease Portfolio

 

By CEU

 

By Net Book Value

Long-term leases

 

71.1

%

 

71.7

%

Finance leases

 

8.9

 

 

15.6

 

Subtotal

 

80.0

 

 

87.3

 

Service leases

 

6.8

 

 

4.3

 

Expired long-term leases, non-sale age (units on hire)

 

7.6

 

 

5.7

 

Expired long-term leases, sale-age (units on hire)

 

5.6

 

 

2.7

 

Total

 

100.0

%

 

100.0

%

The following table summarizes our leasing revenue for the periods indicated (in thousands):

 

Three Months Ended,

 

September 30, 2022

 

June 30, 2022

 

September 30, 2021

Operating leases

 

 

 

 

 

Per diem revenues

$

379,623

 

$

378,414

 

$

377,234

Fee and ancillary revenues

 

15,777

 

 

13,677

 

 

7,987

Total operating lease revenues

 

395,400

 

 

392,091

 

 

385,221

Finance leases

 

29,283

 

 

29,517

 

 

14,970

Total leasing revenues

$

424,683

 

$

421,608

 

$

400,191

Share Repurchase Information

The following table provides information with respect to our purchases of the Company's common shares for the periods indicated:

 

 

Total Number of Shares Purchased

 

Average Price Paid per Share

July 1, 2021 through September 30, 2021

 

378,765

 

$

51.19

October 1, 2021 through December 31, 2021

 

1,149,408

 

$

57.52

2021 Total

 

1,528,173

 

$

55.95

 

 

 

 

 

January 1, 2022 through March 31, 2022

 

1,257,374

 

$

63.74

April 1, 2022 through June 30, 2022

 

1,832,240

 

$

60.04

July 1, 2022 through September 30, 2022

 

3,200,340

 

$

59.21

October 1, 2022 through October 26, 2022

 

851,603

 

$

56.64

2022 Total

 

7,141,557

 

$

59.91

 

 

 

 

 

Total

 

8,669,730

 

$

59.21

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. These forward-looking statements include, among others, statements relating to Triton's future financial and operating performance and key drivers thereof; anticipated trends in the market and industry; future capital expenditures, including anticipated payments of dividends and amount, manner and timing of share repurchases under the share repurchase authorization; and other statements regarding prospects and business strategies. Statements that include the words "expect," "intend," "plan," "seek," "believe," "project," "predict," "anticipate," "potential," "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; increases in the cost of repairing and storing our off-hire 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; risks stemming from the international nature of our business, including global and regional economic conditions, including inflation and attempts to control inflation, and geopolitical risks such as the ongoing war in Ukraine; decreases in demand for international trade; risks 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 anti-corruption; the availability and cost of capital; 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 15, 2022, in any subsequent 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. 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)

 

September 30, 2022

 

December 31, 2021

ASSETS:

 

 

 

Leasing equipment, net of accumulated depreciation of $4,223,166 and $3,919,181

$

9,742,929

 

 

$

10,201,113

 

Net investment in finance leases

 

1,704,642

 

 

 

1,558,290

 

Equipment held for sale

 

88,221

 

 

 

48,746

 

Revenue earning assets

 

11,535,792

 

 

 

11,808,149

 

Cash and cash equivalents

 

63,992

 

 

 

106,168

 

Restricted cash

 

103,026

 

 

 

124,370

 

Accounts receivable, net of allowances of $3,144 and $1,178

 

283,819

 

 

 

294,792

 

Goodwill

 

236,665

 

 

 

236,665

 

Lease intangibles, net of accumulated amortization of $289,334 and $281,340

 

9,123

 

 

 

17,117

 

Other assets

 

28,569

 

 

 

50,346

 

Fair value of derivative instruments

 

123,357

 

 

 

6,231

 

Total assets

$

12,384,343

 

 

$

12,643,838

 

LIABILITIES AND SHAREHOLDERS' EQUITY:

 

 

 

Equipment purchases payable

$

19,450

 

 

$

429,568

 

Fair value of derivative instruments

 

3,450

 

 

 

48,277

 

Deferred revenue

 

320,945

 

 

 

92,198

 

Accounts payable and other accrued expenses

 

70,710

 

 

 

70,557

 

Net deferred income tax liability

 

405,574

 

 

 

376,009

 

Debt, net of unamortized costs of $58,192 and $63,794

 

8,290,293

 

 

 

8,562,517

 

Total liabilities

 

9,110,422

 

 

 

9,579,126

 

 

 

 

 

Shareholders' equity:

 

 

 

Preferred shares, $0.01 par value, at liquidation preference

 

730,000

 

 

 

730,000

 

Common shares, $0.01 par value, 270,000,000 shares authorized, 81,389,809 and 81,295,366 shares issued, respectively

 

814

 

 

 

813

 

Undesignated shares, $0.01 par value, 800,000 shares authorized, no shares issued and outstanding

 

—

 

 

 

—

 

Treasury shares, at cost, 21,719,453 and 15,429,499 shares, respectively

 

(902,118

)

 

 

(522,360

)

Additional paid-in capital

 

908,008

 

 

 

904,224

 

Accumulated earnings

 

2,420,166

 

 

 

2,000,854

 

Accumulated other comprehensive income (loss)

 

117,051

 

 

 

(48,819

)

Total shareholders' equity

 

3,273,921

 

 

 

3,064,712

 

Total liabilities and shareholders' equity

$

12,384,343

 

 

$

12,643,838

 

TRITON INTERNATIONAL LIMITED Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited)

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2022

 

2021

 

2022

 

2021

Leasing revenues:

 

 

 

 

 

 

 

Operating leases

$

395,400

 

 

$

385,221

 

 

$

1,176,436

 

 

$

1,085,874

 

Finance leases

 

29,283

 

 

 

14,970

 

 

 

86,943

 

 

 

30,844

 

Total leasing revenues

 

424,683

 

 

 

400,191

 

 

 

1,263,379

 

 

 

1,116,718

 

 

 

 

 

 

 

 

 

Equipment trading revenues

 

44,786

 

 

 

44,418

 

 

 

127,014

 

 

 

103,546

 

Equipment trading expenses

 

(41,106

)

 

 

(35,255

)

 

 

(112,791

)

 

 

(75,516

)

Trading margin

 

3,680

 

 

 

9,163

 

 

 

14,223

 

 

 

28,030

 

 

 

 

 

 

 

 

 

Net gain on sale of leasing equipment

 

26,468

 

 

 

25,606

 

 

 

90,509

 

 

 

78,964

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Depreciation and amortization

 

158,538

 

 

 

163,493

 

 

 

480,176

 

 

 

460,856

 

Direct operating expenses

 

10,525

 

 

 

5,539

 

 

 

24,143

 

 

 

21,246

 

Administrative expenses

 

22,747

 

 

 

21,426

 

 

 

69,015

 

 

 

65,326

 

Provision (reversal) for doubtful accounts

 

(123

)

 

 

23

 

 

 

(104

)

 

 

(2,467

)

Total operating expenses

 

191,687

 

 

 

190,481

 

 

 

573,230

 

 

 

544,961

 

Operating income (loss)

 

263,144

 

 

 

244,479

 

 

 

794,881

 

 

 

678,751

 

Other expenses:

 

 

 

 

 

 

 

Interest and debt expense

 

57,124

 

 

 

54,728

 

 

 

166,293

 

 

 

169,355

 

Unrealized (gain) loss on derivative instruments, net

 

19

 

 

 

—

 

 

 

(320

)

 

 

—

 

Debt termination expense

 

190

 

 

 

42,660

 

 

 

1,853

 

 

 

132,523

 

Other (income) expense, net

 

(644

)

 

 

(453

)

 

 

(1,141

)

 

 

(1,195

)

Total other expenses

 

56,689

 

 

 

96,935

 

 

 

166,685

 

 

 

300,683

 

Income (loss) before income taxes

 

206,455

 

 

 

147,544

 

 

 

628,196

 

 

 

378,068

 

Income tax expense (benefit)

 

16,618

 

 

 

12,812

 

 

 

46,482

 

 

 

38,281

 

Net income (loss)

$

189,837

 

 

$

134,732

 

 

$

581,714

 

 

$

339,787

 

Less: dividend on preferred shares

 

13,028

 

 

 

11,687

 

 

 

39,084

 

 

 

32,713

 

Net income (loss) attributable to common shareholders

$

176,809

 

 

$

123,045

 

 

$

542,630

 

 

$

307,074

 

Net income per common share—Basic

$

2.90

 

 

$

1.84

 

 

$

8.60

 

 

$

4.59

 

Net income per common share—Diluted

$

2.88

 

 

$

1.83

 

 

$

8.56

 

 

$

4.57

 

Cash dividends paid per common share

$

0.65

 

 

$

0.57

 

 

$

1.95

 

 

$

1.71

 

Weighted average number of common shares outstanding—Basic

 

61,035

 

 

 

66,919

 

 

 

63,112

 

 

 

66,935

 

Dilutive restricted shares

 

329

 

 

 

372

 

 

 

295

 

 

 

308

 

Weighted average number of common shares outstanding—Diluted

 

61,364

 

 

 

67,291

 

 

 

63,407

 

 

 

67,243

 

TRITON INTERNATIONAL LIMITED Consolidated Statements of Cash Flows (In thousands) (Unaudited)

 

Nine Months Ended September 30,

 

2022

 

2021

Cash flows from operating activities:

 

 

 

Net income (loss)

$

581,714

 

 

$

339,787

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

480,176

 

 

 

460,856

 

Amortization of deferred debt cost and other debt related amortization

 

9,181

 

 

 

7,872

 

Lease related amortization

 

8,674

 

 

 

13,703

 

Share-based compensation expense

 

9,414

 

 

 

7,259

 

Net (gain) loss on sale of leasing equipment

 

(90,509

)

 

 

(78,964

)

Unrealized (gain) loss on derivative instruments

 

(320

)

 

 

—

 

Debt termination expense

 

1,853

 

 

 

132,523

 

Deferred income taxes

 

19,633

 

 

 

36,073

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

(11,542

)

 

 

(63,919

)

Deferred revenue

 

274,981

 

 

 

63,944

 

Accounts payable and other accrued expenses

 

812

 

 

 

(9,098

)

Net equipment sold (purchased) for resale activity

 

7,297

 

 

 

4,938

 

Cash received (paid) for settlement of interest rate swaps

 

19,026

 

 

 

5,481

 

Cash collections on finance lease receivables, net of income earned

 

107,633

 

 

 

49,170

 

Other assets

 

20,239

 

 

 

17,294

 

Net cash provided by (used in) operating activities

 

1,438,262

 

 

 

986,919

 

Cash flows from investing activities:

 

 

 

Purchases of leasing equipment and investments in finance leases

 

(889,811

)

 

 

(2,791,943

)

Proceeds from sale of equipment, net of selling costs

 

217,832

 

 

 

165,066

 

Other

 

(716

)

 

 

—

 

Net cash provided by (used in) investing activities

 

(672,695

)

 

 

(2,626,877

)

Cash flows from financing activities:

 

 

 

Issuance of preferred shares, net of underwriting discount

 

—

 

 

 

169,488

 

Purchases of treasury shares

 

(375,026

)

 

 

(16,757

)

Debt issuance costs

 

(8,523

)

 

 

(35,996

)

Borrowings under debt facilities

 

1,802,600

 

 

 

7,713,006

 

Payments under debt facilities and finance lease obligations

 

(2,081,274

)

 

 

(5,981,155

)

Dividends paid on preferred shares

 

(39,084

)

 

 

(32,293

)

Dividends paid on common shares

 

(122,151

)

 

 

(114,484

)

Other

 

(5,629

)

 

 

(4,478

)

Net cash provided by (used in) financing activities

 

(829,087

)

 

 

1,697,331

 

Net increase (decrease) in cash, cash equivalents and restricted cash

$

(63,520

)

 

$

57,373

 

Cash, cash equivalents and restricted cash, beginning of period

 

230,538

 

 

 

151,996

 

Cash, cash equivalents and restricted cash, end of period

$

167,018

 

 

$

209,369

 

Supplemental disclosures:

 

 

 

Interest paid

$

148,568

 

 

$

153,812

 

Income taxes paid (refunded)

$

27,579

 

 

$

4,639

 

Right-of-use asset for leased property

$

210

 

 

$

1,598

 

Supplemental non-cash investing activities:

 

 

 

Equipment purchases payable

$

19,450

 

 

$

406,510

 

Use of Non-GAAP Financial Items

We use the terms "Adjusted net income" and "Adjusted return on equity" throughout this press release.

Adjusted net income and Adjusted 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 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 September 30, 2022, June 30, 2022, and September 30, 2021 and for the nine months ended September 30, 2022 and September 30, 2021.

Additionally, the calculation for Adjusted return on equity is adjusted annualized earnings divided by average shareholders' equity. Management utilizes Adjusted 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,

 

Nine Months Ended

 

September 30, 2022

 

June 30, 2022

 

September 30, 2021

 

September 30, 2022

 

September 30, 2021

Net income attributable to common shareholders

$

176,809

 

 

$

184,591

 

$

123,045

 

 

$

542,630

 

 

$

307,074

 

Add (subtract):

 

 

 

 

 

 

 

 

 

Unrealized loss (gain) on derivative instruments, net

 

17

 

 

 

139

 

 

—

 

 

 

(283

)

 

 

—

 

Debt termination expense

 

180

 

 

 

1,304

 

 

41,214

 

 

 

1,520

 

 

 

130,699

 

State and other income tax adjustments

 

(510

)

 

 

—

 

 

(496

)

 

 

(510

)

 

 

(496

)

Tax benefit from vesting of restricted shares

 

—

 

 

 

—

 

 

—

 

 

 

(1,184

)

 

 

(643

)

Adjusted net income

$

176,496

 

 

$

186,034

 

$

163,763

 

 

$

542,173

 

 

$

436,634

 

Adjusted net income per common share—Diluted

$

2.88

 

 

$

2.92

 

$

2.43

 

 

$

8.55

 

 

$

6.49

 

Weighted average number of common shares outstanding—Diluted

 

61,364

 

 

 

63,745

 

 

67,291

 

 

 

63,407

 

 

 

67,243

 

TRITON INTERNATIONAL LIMITED Calculation of Adjusted Return on Equity (In thousands)

 

Three Months Ended,

 

Nine Months Ended,

 

September 30, 2022

 

June 30, 2022

 

September 30, 2021

 

September 30, 2022

 

September 30, 2021

Adjusted net income

$

176,496

 

 

$

186,034

 

 

$

163,763

 

 

$

542,173

 

 

$

436,634

 

Annualized Adjusted net income (1)

 

700,229

 

 

 

746,180

 

 

 

649,712

 

 

 

724,883

 

 

 

583,778

 

 

 

 

 

 

 

 

 

 

 

Average Shareholders' equity (2)(3)

$

2,544,111

 

 

$

2,507,427

 

 

$

2,210,474

 

 

$

2,473,372

 

 

$

2,150,303

 

 

 

 

 

 

 

 

 

 

 

Adjusted return on equity

 

27.5

%

 

 

29.8

%

 

 

29.4

%

 

 

29.3

%

 

 

27.1

%

(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, and the ending Shareholder's equity from each quarter in the current year and December 31 of the previous year for the nine-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/20221031005419/en/

Andrew Greenberg Senior Vice President Business Development & Investor Relations (914) 697-2900