(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Triton International Limited | |||
Date: July 25, 2019 | By: | /s/ John Burns | |
Name: | John Burns | ||
Title: | Chief Financial Officer |
• | Adjusted net income was $86.4 million or $1.15 per diluted share, an increase of 4.5% per diluted share from the second quarter of 2018. |
• | Net income attributable to common shareholders was $84.1 million or $1.12 per diluted share. |
• | Utilization averaged 97.2% in the second quarter of 2019. |
• | Triton raised gross proceeds of $143.8 million through a perpetual preferred equity offering in June 2019. |
• | Triton repurchased 2.3 million common shares during the second quarter. As of July 19, 2019, over 7.1 million shares have been repurchased since the inception of the program. |
• | Triton announced a quarterly dividend of $0.52 per common share payable on September 26, 2019 to shareholders of record as of September 5, 2019. |
(in millions, except per share data) | |||||||||||||||||||
Three Months Ended, | Six Months Ended, | ||||||||||||||||||
June 30, 2019 | June 30, 2018 | June 30, 2019 | June 30, 2018 | ||||||||||||||||
Total leasing revenues | $338.6 | $329.8 | $679.4 | $644.9 | |||||||||||||||
GAAP | |||||||||||||||||||
Net income attributable to common shareholders | $84.1 | (3) | $104.9 | (4) | $176.0 | (3) | $185.8 | (4) | |||||||||||
Net income per share - Diluted | $1.12 | $1.30 | $2.29 | $2.30 | |||||||||||||||
Non-GAAP (1) | |||||||||||||||||||
Adjusted net income | $86.4 | $88.9 | $179.2 | $168.7 | |||||||||||||||
Adjusted net income per share - Diluted | $1.15 | $1.10 | $2.34 | $2.09 | |||||||||||||||
Return on equity (2) | 16.2 | % | 16.4 | % | 16.7 | % | 15.9 | % |
(1) | Refer to the "Use of Non-GAAP Financial Measures" and "Non-GAAP Reconciliations of Adjusted Net Income" set forth below. |
(2) | Refer to the “Calculation of Return on Equity” set forth below. |
(3) | Net of dividends on preferred shares of $2.0 million and $2.3 million for the three and six months ended June 30, 2019. |
(4) | Net income attributable to common shareholders included a one-time gain of $21.0 million on the sale of a building. |
Quarter Ended | ||||||||||||||
June 30, 2019 | March 31, 2019 | December 31, 2018 | September 30, 2018 | June 30, 2018 | ||||||||||
Average Utilization (1) | 97.2 | % | 97.6 | % | 98.2 | % | 98.7 | % | 98.8 | % | ||||
Ending Utilization (1) | 97.0 | % | 97.4 | % | 97.8 | % | 98.6 | % | 98.7 | % |
(1) | 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. |
Equipment Fleet in Units | Equipment Fleet in TEU | ||||||||||||||||
June 30, 2019 | December 31, 2018 | June 30, 2018 | June 30, 2019 | December 31, 2018 | June 30, 2018 | ||||||||||||
Dry | 3,312,750 | 3,340,946 | 3,243,032 | 5,433,686 | 5,476,406 | 5,307,306 | |||||||||||
Refrigerated | 228,353 | 228,778 | 227,040 | 440,340 | 440,781 | 437,038 | |||||||||||
Special | 94,695 | 93,900 | 91,688 | 171,294 | 169,614 | 165,002 | |||||||||||
Tank | 12,572 | 12,509 | 12,201 | 12,572 | 12,509 | 12,201 | |||||||||||
Chassis | 24,856 | 24,832 | 23,405 | 45,765 | 45,787 | 42,884 | |||||||||||
Equipment leasing fleet | 3,673,226 | 3,700,965 | 3,597,366 | 6,103,657 | 6,145,097 | 5,964,431 | |||||||||||
Equipment trading fleet | 18,205 | 13,138 | 15,406 | 27,483 | 21,361 | 23,622 | |||||||||||
Total | 3,691,431 | 3,714,103 | 3,612,772 | 6,131,140 | 6,166,458 | 5,988,053 |
Equipment in CEU | ||||||||
June 30, 2019 | December 31, 2018 | June 30, 2018 | ||||||
Operating leases | 6,977,613 | 7,009,605 | 7,047,168 | |||||
Finance leases | 536,011 | 538,867 | 320,763 | |||||
Equipment trading fleet | 48,979 | 47,476 | 56,048 | |||||
Total | 7,562,603 | 7,595,948 | 7,423,979 |
June 30, 2019 | December 31, 2018 | ||||||
ASSETS: | |||||||
Leasing equipment, net of accumulated depreciation of $2,737,072 and $2,533,446 | $ | 8,684,103 | $ | 8,923,451 | |||
Net investment in finance leases | 449,385 | 478,065 | |||||
Equipment held for sale | 91,768 | 66,453 | |||||
Revenue earning assets | 9,225,256 | 9,467,969 | |||||
Cash and cash equivalents | 45,622 | 48,950 | |||||
Restricted cash | 114,763 | 110,589 | |||||
Accounts receivable, net of allowances of $1,279 and $1,240 | 250,673 | 264,382 | |||||
Goodwill | 236,665 | 236,665 | |||||
Lease intangibles, net of accumulated amortization of $226,243 and $205,532 | 72,214 | 92,925 | |||||
Other assets | 48,958 | 34,610 | |||||
Fair value of derivative instruments | 1,682 | 13,923 | |||||
Total assets | $ | 9,995,833 | $ | 10,270,013 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY: | |||||||
Equipment purchases payable | $ | 11,015 | $ | 22,392 | |||
Fair value of derivative instruments | 53,550 | 10,966 | |||||
Accounts payable and other accrued expenses | 100,221 | 99,885 | |||||
Net deferred income tax liability | 289,023 | 282,129 | |||||
Debt, net of unamortized debt costs of $43,465 and $44,889 | 7,205,416 | 7,529,432 | |||||
Total liabilities | 7,659,225 | 7,944,804 | |||||
Shareholders' equity: | |||||||
Series A Preferred shares, $0.01 par value, 3,450,000 authorized, 3,450,000 and 0 shares issued and outstanding, respectively; at liquidation preference | 86,250 | — | |||||
Series B Preferred shares, $0.01 par value, 5,750,000 authorized, 5,750,000 and 0 shares issued and outstanding, respectively; at liquidation preference | 143,750 | — | |||||
Common shares, $0.01 par value, 270,000,000 shares authorized, 81,023,732 and 80,843,472 shares issued, respectively | 811 | 809 | |||||
Undesignated shares, $0.01 par value, 20,800,000 and 30,000,000 shares authorized, respectively, no shares issued and outstanding | — | — | |||||
Treasury shares, at cost, 6,837,508 and 1,853,148 shares, respectively | (215,349 | ) | (58,114 | ) | |||
Additional paid-in capital | 909,942 | 896,811 | |||||
Accumulated earnings | 1,445,646 | 1,349,627 | |||||
Accumulated other comprehensive income (loss) | (34,442 | ) | 14,563 | ||||
Total shareholders' equity | 2,336,608 | 2,203,696 | |||||
Noncontrolling interests | — | 121,513 | |||||
Total equity | 2,336,608 | 2,325,209 | |||||
Total liabilities and equity | $ | 9,995,833 | $ | 10,270,013 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Leasing revenues: | |||||||||||||||
Operating leases | $ | 328,370 | $ | 324,954 | $ | 658,792 | $ | 635,185 | |||||||
Finance leases | 10,196 | 4,817 | 20,633 | 9,683 | |||||||||||
Total leasing revenues | 338,566 | 329,771 | 679,425 | 644,868 | |||||||||||
Equipment trading revenues | 23,209 | 18,099 | 41,037 | 31,474 | |||||||||||
Equipment trading expenses | (18,713 | ) | (14,105 | ) | (32,954 | ) | (24,489 | ) | |||||||
Trading margin | 4,496 | 3,994 | 8,083 | 6,985 | |||||||||||
Net gain on sale of leasing equipment | 7,519 | 11,105 | 15,988 | 20,323 | |||||||||||
Net gain on sale of building | — | 20,953 | — | 20,953 | |||||||||||
Operating expenses: | |||||||||||||||
Depreciation and amortization | 135,348 | 133,894 | 269,957 | 264,327 | |||||||||||
Direct operating expenses | 18,097 | 10,195 | 34,899 | 21,243 | |||||||||||
Administrative expenses | 19,988 | 20,774 | 38,175 | 40,327 | |||||||||||
Provision (reversal) for doubtful accounts | 521 | (25 | ) | 379 | (126 | ) | |||||||||
Total operating expenses | 173,954 | 164,838 | 343,410 | 325,771 | |||||||||||
Operating income (loss) | 176,627 | 200,985 | 360,086 | 367,358 | |||||||||||
Other expenses: | |||||||||||||||
Interest and debt expense | 82,260 | 79,027 | 165,780 | 154,125 | |||||||||||
Realized (gain) loss on derivative instruments, net | (669 | ) | (492 | ) | (1,373 | ) | (740 | ) | |||||||
Unrealized (gain) loss on derivative instruments, net | 1,267 | (111 | ) | 2,253 | (1,297 | ) | |||||||||
Debt termination expense | 558 | 503 | 558 | 503 | |||||||||||
Other (income) expense, net | (927 | ) | (585 | ) | (1,931 | ) | (1,244 | ) | |||||||
Total other expenses | 82,489 | 78,342 | 165,287 | 151,347 | |||||||||||
Income (loss) before income taxes | 94,138 | 122,643 | 194,799 | 216,011 | |||||||||||
Income tax expense (benefit) | 8,042 | 15,890 | 15,892 | 26,393 | |||||||||||
Net income | $ | 86,096 | $ | 106,753 | $ | 178,907 | $ | 189,618 | |||||||
Less: income (loss) attributable to noncontrolling interest | — | 1,883 | 592 | 3,856 | |||||||||||
Less: dividend on preferred shares | 2,025 | — | 2,330 | — | |||||||||||
Net income (loss) attributable to common shareholders | $ | 84,071 | $ | 104,870 | $ | 175,985 | $ | 185,762 | |||||||
Net income per common share—Basic | $ | 1.13 | $ | 1.31 | $ | 2.31 | $ | 2.32 | |||||||
Net income per common share—Diluted | $ | 1.12 | $ | 1.30 | $ | 2.29 | $ | 2.30 | |||||||
Cash dividends paid per common share | $ | 0.52 | $ | 0.52 | $ | 1.04 | $ | 0.97 | |||||||
Weighted average number of common shares outstanding—Basic | 74,598 | 80,044 | 76,151 | 80,007 | |||||||||||
Dilutive restricted shares | 617 | 611 | 583 | 589 | |||||||||||
Weighted average number of common shares outstanding—Diluted | 75,215 | 80,655 | 76,734 | 80,596 |
Six Months Ended June 30, | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | 178,907 | $ | 189,618 | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depreciation and amortization | 269,957 | 264,327 | |||||
Amortization of deferred debt cost and other debt related amortization | 6,849 | 6,627 | |||||
Lease related amortization | 23,835 | 37,722 | |||||
Share-based compensation expense | 5,471 | 5,661 | |||||
Net (gain) loss on sale of leasing equipment | (15,988 | ) | (20,323 | ) | |||
Net (gain) loss on sale of building | — | (20,953 | ) | ||||
Unrealized (gain) loss on derivative instruments | 2,253 | (1,297 | ) | ||||
Debt termination expense | 558 | 503 | |||||
Deferred income taxes | 13,910 | 23,946 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 12,545 | (30,551 | ) | ||||
Accounts payable and other accrued expenses | (8,860 | ) | (16,788 | ) | |||
Net equipment sold for resale activity | (8,517 | ) | (11,686 | ) | |||
Cash collections on finance lease receivables, net of income earned | 33,680 | 29,598 | |||||
Other assets | (12,786 | ) | (1,218 | ) | |||
Net cash provided by (used in) operating activities | 501,814 | 455,186 | |||||
Cash flows from investing activities: | |||||||
Purchases of leasing equipment and investments in finance leases | (149,986 | ) | (884,007 | ) | |||
Proceeds from sale of equipment, net of selling costs | 106,603 | 83,443 | |||||
Proceeds from the sale of building | — | 27,630 | |||||
Other | (130 | ) | (64 | ) | |||
Net cash provided by (used in) investing activities | (43,513 | ) | (772,998 | ) | |||
Cash flows from financing activities: | |||||||
Issuance of preferred shares, net of underwriting discount and expenses | 221,790 | — | |||||
Purchases of treasury shares | (157,075 | ) | — | ||||
Redemption of common shares for withholding taxes | (978 | ) | (822 | ) | |||
Debt issuance costs | (5,455 | ) | (9,567 | ) | |||
Borrowings under debt facilities | 1,143,000 | 1,417,985 | |||||
Payments under debt facilities and capital lease obligations | (1,472,827 | ) | (1,049,996 | ) | |||
Dividends paid on preferred and common shares | (80,793 | ) | (77,638 | ) | |||
Distributions to noncontrolling interests | (2,078 | ) | (7,743 | ) | |||
Purchase of noncontrolling interests | (103,039 | ) | — | ||||
Net cash provided by (used in) financing activities | (457,455 | ) | 272,219 | ||||
Net increase (decrease) in cash, cash equivalents and restricted cash | $ | 846 | $ | (45,593 | ) | ||
Cash, cash equivalents and restricted cash, beginning of period | 159,539 | 226,171 | |||||
Cash, cash equivalents and restricted cash, end of period | $ | 160,385 | $ | 180,578 | |||
Supplemental disclosures: | |||||||
Interest paid | $ | 160,211 | $ | 148,007 | |||
Income taxes paid (refunded) | $ | 2,216 | $ | 541 | |||
Right-of-use asset for leased property | $ | 7,862 | $ | — | |||
Supplemental non-cash investing activities: | |||||||
Equipment purchases payable | $ | 11,015 | $ | 159,454 |
• | 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. |
TRITON INTERNATIONAL LIMITED Non-GAAP Reconciliations of Adjusted Net Income (In thousands, except per share amounts) | |||||||||||||||
Three Months Ended, | Six Months Ended, | ||||||||||||||
June 30, 2019 | June 30, 2018 | June 30, 2019 | June 30, 2018 | ||||||||||||
Net income attributable to common shareholders | $ | 84,071 | $ | 104,870 | $ | 175,985 | $ | 185,762 | |||||||
Adjustments: | |||||||||||||||
Unrealized loss (gain) on derivative instruments, net | 1,321 | (100 | ) | 2,224 | (1,152 | ) | |||||||||
Transaction and other (income) costs | — | (1 | ) | — | (27 | ) | |||||||||
Debt termination expense | 551 | 447 | 551 | 447 | |||||||||||
Foreign income tax adjustment | 414 | — | 414 | — | |||||||||||
Gain on sale of building | — | (16,316 | ) | — | (16,316 | ) | |||||||||
Adjusted net income | $ | 86,357 | $ | 88,900 | $ | 179,174 | $ | 168,714 | |||||||
Adjusted net income per common share—Diluted | $ | 1.15 | $ | 1.10 | $ | 2.34 | $ | 2.09 | |||||||
Weighted average number of common shares outstanding—Diluted | 75,215 | 80,655 | 76,734 | 80,596 |
TRITON INTERNATIONAL LIMITED Calculation of Return on Equity (In thousands) | |||||||||||||||
Three Months Ended, | Six Months Ended, | ||||||||||||||
June 30, 2019 | June 30, 2018 | June 30, 2019 | June 30, 2018 | ||||||||||||
Adjusted net income | $ | 86,357 | $ | 88,900 | $ | 179,174 | $ | 168,714 | |||||||
Annualized Adjusted net income (1) | 346,377 | 356,577 | 361,318 | 340,224 | |||||||||||
Average Shareholders' equity (2)(3) | $ | 2,135,817 | $ | 2,168,053 | $ | 2,158,443 | $ | 2,137,463 | |||||||
Return on equity | 16.2 | % | 16.4 | % | 16.7 | % | 15.9 | % |
(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 six month ended periods. |
(3) | Shareholders' equity was adjusted to exclude preferred shares. |
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