QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
☒ | Accelerated Filer | ☐ | |||||
Non-accelerated filer | ☐ | Smaller reporting company | |||||
Emerging growth company |
Page No. | ||
June 30, 2020 | December 31, 2019 | ||||||
ASSETS: | |||||||
Leasing equipment, net of accumulated depreciation of $3,135,646 and $2,933,886 | $ | $ | |||||
Net investment in finance leases | |||||||
Equipment held for sale | |||||||
Revenue earning assets | |||||||
Cash and cash equivalents | |||||||
Restricted cash | |||||||
Accounts receivable, net of allowances of $2,483 and $1,276 | |||||||
Goodwill | |||||||
Lease intangibles, net of accumulated amortization of $254,207 and $242,301 | |||||||
Other assets | |||||||
Fair value of derivative instruments | |||||||
Total assets | $ | $ | |||||
LIABILITIES AND SHAREHOLDERS' EQUITY: | |||||||
Equipment purchases payable | $ | $ | |||||
Fair value of derivative instruments | |||||||
Accounts payable and other accrued expenses | |||||||
Net deferred income tax liability | |||||||
Debt, net of unamortized costs of $34,088 and $39,781 | |||||||
Total liabilities | |||||||
Shareholders' equity: | |||||||
Preferred shares, $0.01 par value, at liquidation preference | |||||||
Common shares, $0.01 par value, 270,000,000 shares authorized, 81,149,460 and 80,979,833 shares issued, respectively | |||||||
Undesignated shares, $0.01 par value, 7,800,000 and 13,800,000 shares authorized, respectively, no shares issued and outstanding | |||||||
Treasury shares, at cost, 12,187,889 and 8,771,345 shares, respectively | ( | ) | ( | ) | |||
Additional paid-in capital | |||||||
Accumulated earnings | |||||||
Accumulated other comprehensive income (loss) | ( | ) | ( | ) | |||
Total shareholders' equity | |||||||
Total liabilities and shareholders' equity | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Leasing revenues: | |||||||||||||||
Operating leases | $ | $ | $ | $ | |||||||||||
Finance leases | |||||||||||||||
Total leasing revenues | |||||||||||||||
Equipment trading revenues | |||||||||||||||
Equipment trading expenses | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Trading margin | |||||||||||||||
Net gain on sale of leasing equipment | |||||||||||||||
Operating expenses: | |||||||||||||||
Depreciation and amortization | |||||||||||||||
Direct operating expenses | |||||||||||||||
Administrative expenses | |||||||||||||||
Provision (reversal) for doubtful accounts | |||||||||||||||
Total operating expenses | |||||||||||||||
Operating income (loss) | |||||||||||||||
Other expenses: | |||||||||||||||
Interest and debt expense | |||||||||||||||
Realized (gain) loss on derivative instruments, net | ( | ) | ( | ) | ( | ) | |||||||||
Unrealized (gain) loss on derivative instruments, net | ( | ) | |||||||||||||
Debt termination expense | |||||||||||||||
Other (income) expense, net | ( | ) | ( | ) | ( | ) | |||||||||
Total other expenses | |||||||||||||||
Income (loss) before income taxes | |||||||||||||||
Income tax expense (benefit) | |||||||||||||||
Net income (loss) | $ | $ | $ | $ | |||||||||||
Less: income (loss) attributable to noncontrolling interest | |||||||||||||||
Less: dividend on preferred shares | |||||||||||||||
Net income (loss) attributable to common shareholders | $ | $ | $ | $ | |||||||||||
Net income per common share—Basic | $ | $ | $ | $ | |||||||||||
Net income per common share—Diluted | $ | $ | $ | $ | |||||||||||
Cash dividends paid per common share | $ | $ | $ | $ | |||||||||||
Weighted average number of common shares outstanding—Basic | |||||||||||||||
Dilutive restricted shares | |||||||||||||||
Weighted average number of common shares outstanding—Diluted |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Net income (loss) | $ | $ | $ | $ | |||||||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Change in derivative instruments designated as cash flow hedges | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Reclassification of (gain) loss on derivative instruments designated as cash flow hedges | ( | ) | ( | ) | |||||||||||
Cumulative effect for the adoption of ASU 2017-12, net of income tax effect | |||||||||||||||
Foreign currency translation adjustment | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Other comprehensive income (loss), net of tax | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Comprehensive income | |||||||||||||||
Less: | |||||||||||||||
Other comprehensive income attributable to noncontrolling interest | $ | $ | $ | $ | |||||||||||
Dividend on preferred shares | |||||||||||||||
Comprehensive income attributable to common shareholders | $ | $ | $ | ( | ) | $ | |||||||||
Tax (benefit) provision on change in derivative instruments designated as cash flow hedges | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Tax (benefit) provision on reclassification of (gain) loss on derivative instruments designated as cash flow hedges | $ | $ | ( | ) | $ | $ | ( | ) | |||||||
Tax (benefit) provision on cumulative effect for the adoption of ASU 2017-12 | $ | $ | $ | $ |
Preferred Shares | Common Shares | Treasury Shares | Add'l Paid in Capital | Accumulated Earnings | Accumulated Other Comprehensive Income | Non controlling Interest | Total Equity | |||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||
Balance as of December 31, 2019 | $ | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||||||||
Issuance of preferred shares, net of offering expenses | — | — | — | — | ( | ) | — | — | — | |||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Treasury shares acquired | — | — | — | — | ( | ) | — | — | — | — | ( | ) | ||||||||||||||||||||||||||||
Share repurchase to settle shareholder tax obligations | — | — | ( | ) | ( | ) | — | — | ( | ) | — | — | — | ( | ) | |||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | — | — | — | — | ( | ) | — | ( | ) | |||||||||||||||||||||||||||
Common shares dividend declared | — | — | — | — | — | — | — | ( | ) | — | — | ( | ) | |||||||||||||||||||||||||||
Preferred shares dividend declared | — | — | — | — | — | — | — | ( | ) | — | — | ( | ) | |||||||||||||||||||||||||||
Balance as of March 31, 2020 | $ | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||||||||
Issuance of preferred shares, net of offering expenses | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Treasury shares acquired | — | — | — | — | ( | ) | — | — | — | — | ( | ) | ||||||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | — | — | — | — | ( | ) | — | ( | ) | |||||||||||||||||||||||||||
Common shares dividend declared | — | — | — | — | — | — | — | ( | ) | — | — | ( | ) | |||||||||||||||||||||||||||
Preferred shares dividend declared | — | — | — | — | — | — | — | ( | ) | — | — | ( | ) | |||||||||||||||||||||||||||
Balance as of June 30, 2020 | $ | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | $ |
` | Preferred Shares | Common Shares | Treasury Shares | Add'l Paid in Capital | Accumulated Earnings | Accumulated Other Comprehensive Income | Non controlling Interest | Total Equity | ||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||
Balance as of December 31, 2018 | $ | $ | $ | ( | ) | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
Issuance of preferred shares, net of offering expenses | — | — | — | — | ( | ) | — | — | — | |||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Treasury shares acquired | — | — | — | — | ( | ) | — | — | — | — | ( | ) | ||||||||||||||||||||||||||||
Share repurchase to settle shareholder tax obligations | — | — | ( | ) | — | — | — | ( | ) | — | — | — | ( | ) | ||||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | — | — | — | ( | ) | ( | ) | — | ( | ) | ||||||||||||||||||||||||||
Purchase of noncontrolling interests | — | — | — | — | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||
Common shares dividend declared | — | — | — | — | — | — | — | ( | ) | — | — | ( | ) | |||||||||||||||||||||||||||
Balance as of March 31, 2019 | $ | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||||||||
Issuance of preferred shares, net of offering expenses | — | — | — | — | ( | ) | — | — | — | |||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Treasury shares acquired | — | — | — | — | ( | ) | — | — | — | — | ( | ) | ||||||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | — | — | — | — | ( | ) | — | ( | ) | |||||||||||||||||||||||||||
Purchase of noncontrolling interests | — | — | — | — | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||
Common shares dividend declared | — | — | — | — | — | — | — | ( | ) | — | — | ( | ) | |||||||||||||||||||||||||||
Preferred shares dividend declared | — | — | — | — | — | — | — | ( | ) | — | — | ( | ) | |||||||||||||||||||||||||||
Balance as of June 30, 2019 | $ | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | $ |
Six Months Ended June 30, | |||||||
2020 | 2019 | ||||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | $ | |||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depreciation and amortization | |||||||
Amortization of deferred debt cost and other debt related amortization | |||||||
Lease related amortization | |||||||
Share-based compensation expense | |||||||
Net (gain) loss on sale of leasing equipment | ( | ) | ( | ) | |||
Unrealized (gain) loss on derivative instruments | |||||||
Debt termination expense | |||||||
Deferred income taxes | |||||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | ( | ) | |||||
Accounts payable and other accrued expenses | ( | ) | ( | ) | |||
Net equipment sold (purchased) for resale activity | ( | ) | ( | ) | |||
Cash collections on finance lease receivables, net of income earned | |||||||
Other assets | ( | ) | ( | ) | |||
Net cash provided by (used in) operating activities | |||||||
Cash flows from investing activities: | |||||||
Purchases of leasing equipment and investments in finance leases | ( | ) | ( | ) | |||
Proceeds from sale of equipment, net of selling costs | |||||||
Other | ( | ) | ( | ) | |||
Net cash provided by (used in) investing activities | ( | ) | ( | ) | |||
Cash flows from financing activities: | |||||||
Issuance of preferred shares, net of underwriting discount | |||||||
Purchases of treasury shares | ( | ) | ( | ) | |||
Redemption of common shares for withholding taxes | ( | ) | ( | ) | |||
Debt issuance costs | ( | ) | |||||
Borrowings under debt facilities | |||||||
Payments under debt facilities and finance lease obligations | ( | ) | ( | ) | |||
Dividends paid on preferred shares | ( | ) | ( | ) | |||
Dividends paid on common shares | ( | ) | ( | ) | |||
Distributions to noncontrolling interests | ( | ) | |||||
Purchase of noncontrolling interests | ( | ) | |||||
Other | ( | ) | |||||
Net cash provided by (used in) financing activities | ( | ) | ( | ) | |||
Net increase (decrease) in cash, cash equivalents and restricted cash | $ | $ | |||||
Cash, cash equivalents and restricted cash, beginning of period | |||||||
Cash, cash equivalents and restricted cash, end of period | $ | $ | |||||
Supplemental disclosures: | |||||||
Interest paid | $ | $ | |||||
Income taxes paid (refunded) | $ | $ | |||||
Right-of-use asset for leased property | $ | $ | |||||
Supplemental non-cash investing activities: | |||||||
Equipment purchases payable | $ | $ |
June 30, 2020 | December 31, 2019 | ||||||
Equipment held for sale | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Impairment (loss) reversal on equipment held for sale | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Gain (loss) on sale of equipment, net of selling costs | |||||||||||||||
Net gain on sale of leasing equipment | $ | $ | $ | $ |
Years ending December 31, | Total intangible assets | ||
2020 | $ | ||
2021 | |||
2022 | |||
2023 | |||
2024 | |||
2025 and thereafter | |||
Total | $ |
Preferred Share Offering | Issuance | Liquidation Preference (in thousands) | # of Shares(1) | ||||||
Series A 8.50% Cumulative Redeemable Perpetual Preference Shares ("Series A") | March 2019 | $ | |||||||
Series B 8.00% Cumulative Redeemable Perpetual Preference Shares ("Series B") | June 2019 | ||||||||
Series C 7.375% Cumulative Redeemable Perpetual Preference Shares ("Series C") | November 2019 | ||||||||
Series D 6.875% Cumulative Redeemable Perpetual Preference Shares ("Series D") | January 2020 | ||||||||
$ |
(1) | Represents number of shares authorized, issued, and outstanding. |
Series A | Series B | Series C | Series D | ||||||||||||||
Record Date | Payment Date | Aggregate Payment | Per Share Payment | Aggregate Payment | Per Share Payment | Aggregate Payment | Per Share Payment | Aggregate Payment | Per Share Payment | ||||||||
June 8, 2020 | June 15, 2020 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||
March 9, 2020 | March 16, 2020 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||
June 10, 2019 | June 17, 2019 | $ | $ | n/a | n/a | n/a | n/a | n/a | n/a |
Record Date | Payment Date | Aggregate Payment | Per Share Payment | ||
June 11, 2020 | June 25, 2020 | $ | $ | ||
March 13, 2020 | March 27, 2020 | $ | $ | ||
June 6, 2019 | June 27, 2019 | $ | $ | ||
March 12, 2019 | March 28, 2019 | $ | $ |
Cash Flow Hedges | Foreign Currency Translation | Accumulated Other Comprehensive (Loss) Income | |||||||||
Balance as of December 31, 2019 | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||
Change in derivative instruments designated as cash flow hedges(1) | ( | ) | ( | ) | |||||||
Reclassification of (gain) loss on derivative instruments designated as cash flow hedges(1) | |||||||||||
Foreign currency translation adjustment | ( | ) | ( | ) | |||||||
Balance as of March 31, 2020 | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||
Change in derivative instruments designated as cash flow hedges(1) | ( | ) | ( | ) | |||||||
Reclassification of (gain) loss on derivative instruments designated as cash flow hedges(1) | |||||||||||
Foreign currency translation adjustment | ( | ) | ( | ) | |||||||
Balance as of June 30, 2020 | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Cash Flow Hedges | Foreign Currency Translation | Accumulated Other Comprehensive (Loss) Income | |||||||||
Balance as of December 31, 2018 | $ | $ | ( | ) | $ | ||||||
Change in derivative instruments designated as cash flow hedges(1) | ( | ) | ( | ) | |||||||
Reclassification of (gain) loss on derivative instruments designated as cash flow hedges(1) | ( | ) | ( | ) | |||||||
Cumulative effect for the adoption of ASU 2017-12, net of income tax effect | |||||||||||
Foreign currency translation adjustment | |||||||||||
Balance as of March 31, 2019 | $ | $ | ( | ) | $ | ( | ) | ||||
Change in derivative instruments designated as cash flow hedges(1) | ( | ) | ( | ) | |||||||
Reclassification of (gain) loss on derivative instruments designated as cash flow hedges(1) | ( | ) | ( | ) | |||||||
Foreign currency translation adjustment | ( | ) | ( | ) | |||||||
Balance as of June 30, 2019 | $ | ( | ) | $ | ( | ) | $ | ( | ) |
(1) | Refer to Note 8 - "Derivative Instruments" for reclassification impact on the Consolidated Statement of Operations |
Balance Sheet | Financial statement caption | June 30, 2020 | December 31, 2019 | ||||||
Right-of-use asset - operating | Other assets | $ | $ | ||||||
Lease liability - operating | Accounts payable and other accrued expenses | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
Income Statement | Financial statement caption | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Operating lease cost(1) | Administrative expenses | $ | $ | $ | $ |
(1) | Includes short-term leases that are immaterial. |
Years ending December 31, | |||
2020 | $ | ||
2021 | |||
2022 | |||
2023 | |||
2024 | |||
2025 and thereafter | |||
Total undiscounted future cash flows related to lease payments | $ | ||
Less: imputed interest | ( | ) | |
Total present value of lease liability | $ |
June 30, 2020 | December 31, 2019 | ||||||
Future minimum lease payment receivable(1) | $ | $ | |||||
Estimated residual receivable(2) | |||||||
Gross finance lease receivables(3) | |||||||
Unearned income(4) | ( | ) | ( | ) | |||
Net investment in finance leases(5) | $ | $ |
(1) | There were no executory costs included in gross finance lease receivables as of June 30, 2020 and December 31, 2019. |
(2) | The Company's finance leases generally include a bargain purchase option and therefore, the Company has immaterial residual value risk for assets. |
(3) | The gross finance lease receivable is reduced as billed to customers and reclassified to accounts receivable until paid. |
(4) | There were no unamortized initial direct costs as of June 30, 2020 and December 31, 2019. |
(5) | As of June 30, 2020, two major customers represented |
Years ending December 31, | |||
2020 | $ | ||
2021 | |||
2022 | |||
2023 | |||
2024 | |||
2025 and thereafter | |||
Total | $ |
Contractual Weighted Avg Interest Rate(1) | Maturity Range(1) | June 30, 2020 | December 31, 2019 | ||||||||||
From | To | ||||||||||||
Institutional notes | Sep 2020 | Jun 2029 | $ | $ | |||||||||
Asset-backed securitization term notes | May 2022 | Jun 2028 | |||||||||||
Term loan facilities | Apr 2022 | Nov 2023 | |||||||||||
Asset-backed securitization warehouse | Dec 2025 | Dec 2025 | |||||||||||
Revolving credit facilities | Sep 2023 | Jul 2024 | |||||||||||
Finance lease obligations | Feb 2024 | Feb 2024 | |||||||||||
Total debt outstanding | |||||||||||||
Unamortized debt costs | ( | ) | ( | ) | |||||||||
Unamortized debt premiums & discounts | ( | ) | ( | ) | |||||||||
Unamortized fair value debt adjustment | ( | ) | ( | ) | |||||||||
Debt, net of unamortized costs | $ | $ |
(1) | Data as of June 30, 2020. |
Balance Outstanding | Contractual Weighted Avg Interest Rate | Maturity Range | Weighted Avg Remaining Term | ||||||
From | To | ||||||||
Excluding impact of derivative instruments: | |||||||||
Fixed-rate debt | $ | Sep 2020 | Jun 2029 | ||||||
Floating-rate debt | $ | Apr 2022 | Dec 2025 | ||||||
Including impact of derivative instruments: | |||||||||
Fixed-rate debt | $ | ||||||||
Hedged floating-rate debt | |||||||||
Total fixed and hedged debt | |||||||||
Unhedged floating-rate debt | |||||||||
Total | $ |
Derivatives | Notional Amount | Weighted Average Fixed Leg (Pay) Interest Rate | Cap Rate | Weighted Average Remaining Term | ||||
Interest Rate Swap(1) | $ | n/a | ||||||
Interest Rate Cap | $ | n/a |
(1) | The impact of forward starting swaps with total notional amount of $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
Derivative Instrument | Financial statement caption | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Non-designated derivative instruments | Realized (gain) loss on derivative instruments, net | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
Non-designated derivative instruments | Unrealized (gain) loss on derivative instruments, net | $ | ( | ) | $ | $ | $ | ||||||||||
Designated derivative instruments | Interest and debt (income) expense | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
Designated derivative instruments | Comprehensive loss | $ | $ | $ | $ |
• | Equipment leasing - the Company owns, leases and ultimately disposes of containers and chassis from its lease fleet. |
• | Equipment trading - the Company purchases containers from shipping line customers, and other sellers of containers, and resells these containers to container retailers and users of containers for storage or one-way shipment. Included in the equipment trading segment revenues are leasing revenues from equipment purchased for resale that is currently on lease until the containers are dropped off. |
Three Months Ended June 30, | |||||||||||||||||||||||
2020 | 2019 | ||||||||||||||||||||||
Equipment Leasing | Equipment Trading | Totals | Equipment Leasing | Equipment Trading | Totals | ||||||||||||||||||
Total leasing revenues | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Trading margin | |||||||||||||||||||||||
Net gain on sale of leasing equipment | |||||||||||||||||||||||
Depreciation and amortization expense | |||||||||||||||||||||||
Interest and debt expense | |||||||||||||||||||||||
Realized (gain) loss on derivative instruments, net | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Income (loss) before income taxes(1) | |||||||||||||||||||||||
Purchases of leasing equipment and investments in finance leases(2) | $ | $ | $ | $ | $ | $ |
Six Months Ended June 30, | |||||||||||||||||||||||
2020 | 2019 | ||||||||||||||||||||||
Equipment Leasing | Equipment Trading | Totals | Equipment Leasing | Equipment Trading | Totals | ||||||||||||||||||
Total leasing revenues | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Trading margin | |||||||||||||||||||||||
Net gain on sale of leasing equipment | |||||||||||||||||||||||
Depreciation and amortization expense | |||||||||||||||||||||||
Interest and debt expense | |||||||||||||||||||||||
Realized (gain) loss on derivative instruments, net | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
Income (loss) before income taxes(1) | |||||||||||||||||||||||
Purchases of leasing equipment and investments in finance leases(2) | $ | $ | $ | $ | $ | $ |
(1) | Segment income before income taxes excludes unrealized gains or losses on derivative instruments and debt termination expense. The Company recorded an immaterial unrealized gain on derivative instruments and an unrealized loss on derivative instruments of $ |
(2) | Represents cash disbursements for purchases of leasing equipment and investments in finance lease as reflected in the consolidated statements of cash flows for the periods indicated, but excludes cash flows associated with the purchase of equipment held for resale. |
June 30, 2020 | December 31, 2019 | ||||||||||||||||||||||
Equipment Leasing | Equipment Trading | Totals | Equipment Leasing | Equipment Trading | Totals | ||||||||||||||||||
Equipment held for sale | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Goodwill | |||||||||||||||||||||||
Total assets | $ | $ | $ | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Total equipment leasing revenues: | |||||||||||||||
Asia | $ | $ | $ | $ | |||||||||||
Europe | |||||||||||||||
Americas | |||||||||||||||
Bermuda | |||||||||||||||
Other International | |||||||||||||||
Total | $ | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Total equipment trading revenues: | |||||||||||||||
Asia | $ | $ | $ | $ | |||||||||||
Europe | |||||||||||||||
Americas | |||||||||||||||
Bermuda | |||||||||||||||
Other International | |||||||||||||||
Total | $ | $ | $ | $ |
Preferred Share Offering | Dividend Rate | Dividend Per Share | ||
Series A | $ | |||
Series B | $ | |||
Series C | $ | |||
Series D | $ |
• | Equipment leasing - we own, lease and ultimately dispose of containers and chassis from our lease fleet. |
• | Equipment trading - we purchase containers from shipping line customers, and other sellers of containers, and resell these containers to container retailers and users of containers for storage or one-way shipment. |
Equipment Fleet in Units | Equipment Fleet in TEU | ||||||||||||||||
June 30, 2020 | December 31, 2019 | June 30, 2019 | June 30, 2020 | December 31, 2019 | June 30, 2019 | ||||||||||||
Dry | 3,215,482 | 3,267,624 | 3,312,750 | 5,287,639 | 5,369,377 | 5,433,686 | |||||||||||
Refrigerated | 227,018 | 225,520 | 228,353 | 438,380 | 435,148 | 440,340 | |||||||||||
Special | 93,996 | 94,453 | 94,695 | 170,977 | 171,437 | 171,294 | |||||||||||
Tank | 12,439 | 12,485 | 12,572 | 12,439 | 12,485 | 12,572 | |||||||||||
Chassis | 24,133 | 24,515 | 24,856 | 44,524 | 45,154 | 45,765 | |||||||||||
Equipment leasing fleet | 3,573,068 | 3,624,597 | 3,673,226 | 5,953,959 | 6,033,601 | 6,103,657 | |||||||||||
Equipment trading fleet | 79,778 | 17,906 | 18,205 | 123,377 | 27,121 | 27,483 | |||||||||||
Total | 3,652,846 | 3,642,503 | 3,691,431 | 6,077,336 | 6,060,722 | 6,131,140 |
Equipment Fleet in CEU (1) | ||||||||
June 30, 2020 | December 31, 2019 | June 30, 2019 | ||||||
Operating leases | 6,478,561 | 6,434,434 | 6,499,909 | |||||
Finance leases | 317,159 | 423,638 | 438,986 | |||||
Equipment trading fleet | 120,654 | 37,232 | 41,966 | |||||
Total | 6,916,374 | 6,895,304 | 6,980,861 |
(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. |
Equipment Type | Percentage of total fleet in units | Percentage of total fleet in CEU | |||
Dry | 88.0 | % | 67.3 | % | |
Refrigerated | 6.2 | 24.3 | |||
Special | 2.6 | 3.5 | |||
Tank | 0.3 | 1.4 | |||
Chassis | 0.7 | 1.8 | |||
Equipment leasing fleet | 97.8 | 98.3 | |||
Equipment trading fleet | 2.2 | 1.7 | |||
Total | 100.0 | % | 100.0 | % |
• | Long-term leases typically have initial contractual terms ranging from three to eight years and provide us with stable cash flow and low transaction costs by requiring customers to maintain specific units on-hire for the duration of the lease term. |
• | Finance leases are typically structured as full payout leases and provide for a predictable recurring revenue stream with the lowest cost to the customer as customers are generally required to retain the equipment for the duration of its useful life. |
• | Service leases command a premium per diem rate in exchange for providing customers with greater operational flexibility by allowing non-scheduled pick-up and drop-off of units during the lease term. |
Lease Portfolio | June 30, 2020 | December 31, 2019 | June 30, 2019 | |||||
Long-term leases | 71.5 | % | 69.5 | % | 67.2 | % | ||
Finance leases | 5.2 | 6.8 | 6.8 | |||||
Service leases | 7.7 | 7.8 | 8.8 | |||||
Expired long-term leases (units on-hire) | 15.6 | 15.9 | 17.2 | |||||
Total | 100.0 | % | 100.0 | % | 100.0 | % |
Quarter Ended | ||||||||||||||
June 30, 2020 | March 31, 2020 | December 31, 2019 | September 30, 2019 | June 30, 2019 | ||||||||||
Average Utilization(1) | 95.0 | % | 95.4 | % | 95.8 | % | 96.7 | % | 97.2 | % | ||||
Ending Utilization(1) | 94.8 | % | 95.3 | % | 95.4 | % | 96.4 | % | 97.1 | % |
(1) | Utilization is computed by dividing our 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. |
June 30, 2020 | Maximum Borrowing Level | ||||||
Institutional notes | $ | 1,733.7 | $ | 1,733.7 | |||
Asset-backed securitization term notes | 2,527.6 | 2,527.6 | |||||
Term loan facilities | 1,144.9 | 1,144.9 | |||||
Asset-backed securitization warehouse | 470.0 | 800.0 | |||||
Revolving credit facilities | 718.5 | 1,560.0 | |||||
Finance lease obligations | 18.4 | 18.4 | |||||
Total debt outstanding | 6,613.1 | 7,784.6 | |||||
Unamortized debt costs | (34.1 | ) | — | ||||
Unamortized debt premiums & discounts | (3.5 | ) | — | ||||
Unamortized fair value debt adjustment | (6.4 | ) | — | ||||
Debt, net of unamortized costs | $ | 6,569.1 | $ | 7,784.6 |
TCIL | TAL | |||||||
Financial Covenant | Covenant | Actual | Covenant | Actual | ||||
Fixed charge coverage ratio | Shall not be less than 1.25:1 | 2.62:1 | Shall not be less than 1.10:1 | 1.97:1 | ||||
Minimum net worth | Shall not be less than $855 million | $2,165.3 million | Shall not be less than $500 million | $906.0 million | ||||
Leverage ratio | Shall not exceed 4.0:1 | 1.91:1 | Shall not exceed 4.75:1 | 2.13:1 |
Six Months Ended June 30, | |||||||
2020 | 2019 | ||||||
Net cash provided by (used in) operating activities | $ | 416,569 | $ | 501,814 | |||
Net cash provided by (used in) investing activities | $ | (118,028 | ) | $ | (43,513 | ) | |
Net cash provided by (used in) financing activities | $ | (116,630 | ) | $ | (457,455 | ) |
Three Months Ended June 30, | |||||||||||
2020 | 2019 | Variance | |||||||||
Leasing revenues: | |||||||||||
Operating leases | $ | 313,423 | $ | 328,370 | $ | (14,947 | ) | ||||
Finance leases | 7,974 | 10,196 | (2,222 | ) | |||||||
Total leasing revenues | 321,397 | 338,566 | (17,169 | ) | |||||||
Equipment trading revenues | 16,903 | 23,209 | (6,306 | ) | |||||||
Equipment trading expenses | (14,883 | ) | (18,713 | ) | 3,830 | ||||||
Trading margin | 2,020 | 4,496 | (2,476 | ) | |||||||
Net gain on sale of leasing equipment | 4,537 | 7,519 | (2,982 | ) | |||||||
Operating expenses: | |||||||||||
Depreciation and amortization | 133,292 | 135,348 | (2,056 | ) | |||||||
Direct operating expenses | 29,619 | 18,097 | 11,522 | ||||||||
Administrative expenses | 20,472 | 19,988 | 484 | ||||||||
Provision (reversal) for doubtful accounts | 374 | 521 | (147 | ) | |||||||
Total operating expenses | 183,757 | 173,954 | 9,803 | ||||||||
Operating income (loss) | 144,197 | 176,627 | (32,430 | ) | |||||||
Other expenses: | |||||||||||
Interest and debt expense | 66,874 | 82,260 | (15,386 | ) | |||||||
Realized (gain) loss on derivative instruments, net | 11 | (669 | ) | 680 | |||||||
Unrealized (gain) loss on derivative instruments, net | (11 | ) | 1,267 | (1,278 | ) | ||||||
Debt termination expense | — | 558 | (558 | ) | |||||||
Other (income) expense, net | 36 | (927 | ) | 963 | |||||||
Total other expenses | 66,910 | 82,489 | (15,579 | ) | |||||||
Income (loss) before income taxes | 77,287 | 94,138 | (16,851 | ) | |||||||
Income tax expense (benefit) | 6,699 | 8,042 | (1,343 | ) | |||||||
Net income (loss) | $ | 70,588 | $ | 86,096 | $ | (15,508 | ) | ||||
Less: dividend on preferred shares | 10,513 | 2,025 | 8,488 | ||||||||
Net income (loss) attributable to common shareholders | $ | 60,075 | $ | 84,071 | $ | (23,996 | ) |
Three Months Ended June 30, | |||||||||||
2020 | 2019 | Variance | |||||||||
Leasing revenues: | |||||||||||
Operating leases | |||||||||||
Per diem revenues | $ | 294,748 | $ | 312,042 | $ | (17,294 | ) | ||||
Fee and ancillary revenues | 18,675 | 16,328 | 2,347 | ||||||||
Total operating lease revenues | 313,423 | 328,370 | (14,947 | ) | |||||||
Finance leases | 7,974 | 10,196 | (2,222 | ) | |||||||
Total leasing revenues | $ | 321,397 | $ | 338,566 | $ | (17,169 | ) |
• | $16.0 million decrease due to a decrease in average units on-hire; and |
• | $9.0 million decrease due to a decrease in average per diem rates reflecting the impact of several large lease extension transactions at rates below our portfolio average; partially offset by |
• | $4.3 million increase due to a decrease in lease intangible amortization; and |
• | $3.4 million increase due to the reclassification of certain contracts from finance leases to operating leases in the first quarter of 2020 as a result of the renegotiation of the contracts and the elimination of purchase options. |
• | $3.5 million decrease due to a net decrease in the size of the depreciable fleet; partially offset by |
• | $1.9 million increase due to the reclassification of certain contracts from finance leases to operating leases in the first quarter of 2020 as a result of the renegotiation of the contracts and the elimination of purchase options. |
• | $6.3 million increase in storage expense due to an increase in idle units; |
• | $2.3 million increase in repair expense due to an increase in the volume of redeliveries; and |
• | $2.3 million increase in positioning expense due to customer pick-up requirements from specific locations. |
• | $1.1 million increase in professional fees; and |
• | $0.6 million increase in stock compensation expense; offset by |
• | $0.8 million decrease in travel expense due to travel restrictions caused by the COVID-19 pandemic. |
• | $8.0 million decrease due to a decrease in the average effective interest rate to 3.92% from 4.39%; and |
• | $7.4 million decrease due to a decrease in the average debt balance of $665.3 million |
Six Months Ended June 30, | |||||||||||
2020 | 2019 | Variance | |||||||||
Leasing revenues: | |||||||||||
Operating leases | $ | 626,227 | $ | 658,792 | $ | (32,565 | ) | ||||
Finance leases | 16,638 | 20,633 | (3,995 | ) | |||||||
Total leasing revenues | 642,865 | 679,425 | (36,560 | ) | |||||||
Equipment trading revenues | 32,283 | 41,037 | (8,754 | ) | |||||||
Equipment trading expenses | (28,330 | ) | (32,954 | ) | 4,624 | ||||||
Trading margin | 3,953 | 8,083 | (4,130 | ) | |||||||
Net gain on sale of leasing equipment | 8,614 | 15,988 | (7,374 | ) | |||||||
Operating expenses: | |||||||||||
Depreciation and amortization | 265,987 | 269,957 | (3,970 | ) | |||||||
Direct operating expenses | 52,867 | 34,899 | 17,968 | ||||||||
Administrative expenses | 39,697 | 38,175 | 1,522 | ||||||||
Provision (reversal) for doubtful accounts | 4,653 | 379 | 4,274 | ||||||||
Total operating expenses | 363,204 | 343,410 | 19,794 | ||||||||
Operating income (loss) | 292,228 | 360,086 | (67,858 | ) | |||||||
Other expenses: | |||||||||||
Interest and debt expense | 135,876 | 165,780 | (29,904 | ) | |||||||
Realized (gain) loss on derivative instruments, net | (224 | ) | (1,373 | ) | 1,149 | ||||||
Unrealized (gain) loss on derivative instruments, net | 286 | 2,253 | (1,967 | ) | |||||||
Debt termination expense | 31 | 558 | (527 | ) | |||||||
Other (income) expense, net | (3,610 | ) | (1,931 | ) | (1,679 | ) | |||||
Total other expenses | 132,359 | 165,287 | (32,928 | ) | |||||||
Income (loss) before income taxes | 159,869 | 194,799 | (34,930 | ) | |||||||
Income tax expense (benefit) | 12,245 | 15,892 | (3,647 | ) | |||||||
Net income (loss) | $ | 147,624 | $ | 178,907 | $ | (31,283 | ) | ||||
Less: income (loss) attributable to noncontrolling interest | — | 592 | (592 | ) | |||||||
Less: dividend on preferred shares | 20,338 | 2,330 | 18,008 | ||||||||
Net income (loss) attributable to common shareholders | $ | 127,286 | $ | 175,985 | $ | (48,699 | ) |
Six Months Ended June 30, | |||||||||||
2020 | 2019 | Variance | |||||||||
Leasing revenues: | |||||||||||
Operating leases | |||||||||||
Per diem revenues | $ | 593,234 | $ | 627,394 | $ | (34,160 | ) | ||||
Fee and ancillary revenues | 32,993 | 31,398 | 1,595 | ||||||||
Total operating lease revenues | 626,227 | 658,792 | (32,565 | ) | |||||||
Finance leases | 16,638 | 20,633 | (3,995 | ) | |||||||
Total leasing revenues | $ | 642,865 | $ | 679,425 | $ | (36,560 | ) |
• | $30.4 million decrease due to a decrease in average units on-hire; and |
• | $18.2 million decrease due to a decrease in average per diem rates reflecting the impact of several large lease extension transactions at rates below our portfolio average; partially offset by |
• | $8.8 million increase due to a decrease in lease intangible amortization; and |
• | $5.6 million increase due to the reclassification of certain contracts from finance leases to operating leases in the first quarter of 2020 as a result of the renegotiation of the contracts and the elimination of purchase options. |
• | $6.0 million decrease due to an 8.6% decrease in average used dry container selling prices, partially offset by a 9.8% increase in selling volumes; and |
• | $1.5 million decrease due to a gain recognized in the first quarter of 2019 related to units declared lost by a customer which did not reoccur in 2020. |
• | $6.3 million decrease due to a net decrease in the size of the depreciable fleet; and |
• | $1.0 million decrease due to fully depreciated administrative assets; partially offset by |
• | $3.2 million increase due to the reclassification of certain contracts from finance leases to operating leases in the first quarter of 2020 as a result of the renegotiation of the contracts and the elimination of purchase options. |
• | $12.3 million increase in storage expense due to an increase in idle units; |
• | $2.5 million increase in positioning expense due to customer pick-up requirements from specific locations; and |
• | $2.2 million increase in repair expense due to an increase in the volume of redeliveries. |
• | $1.5 million increase due to an increase in professional fees; and |
• | $1.5 million increase due to an increase in payroll and benefit expenses; offset by |
• | $1.1 million decrease due to a decrease in travel expenses due to travel restrictions caused by the COVID-19 pandemic. |
• | $18.5 million decrease due to a decrease in the average debt balance of $828.0 million; and |
• | $12.3 million decrease due to a decrease in the average effective interest rate to 4.05% from 4.42%. |
Contractual Obligations by Period | |||||||||||||||||||||||||||
Contractual Obligations: | Total | Remaining 2020 | 2021 | 2022 | 2023 | 2024 | 2025 and thereafter | ||||||||||||||||||||
(dollars in millions) | |||||||||||||||||||||||||||
Principal debt obligations | $ | 6,594.7 | $ | 349.0 | $ | 827.1 | $ | 1,061.6 | $ | 1,648.1 | $ | 1,370.6 | $ | 1,338.3 | |||||||||||||
Interest on debt obligations(1) | 890.6 | 118.2 | 213.0 | 181.7 | 144.8 | 92.9 | 140.0 | ||||||||||||||||||||
Finance lease obligations(2) | 20.6 | 1.5 | 3.1 | 3.1 | 3.1 | 9.8 | — | ||||||||||||||||||||
Operating leases (mainly facilities) | 8.5 | 1.6 | 3.0 | 2.4 | 1.4 | 0.1 | — | ||||||||||||||||||||
Purchase obligations: | |||||||||||||||||||||||||||
Equipment purchases payable | 46.6 | 46.6 | — | — | — | — | — | ||||||||||||||||||||
Equipment purchase commitments | 45.9 | 45.9 | — | — | — | — | — | ||||||||||||||||||||
Total contractual obligations | $ | 7,606.9 | $ | 562.8 | $ | 1,046.2 | $ | 1,248.8 | $ | 1,797.4 | $ | 1,473.4 | $ | 1,478.3 |
(1) | Amounts include actual interest for fixed debt, estimated interest for floating-rate debt and interest rate swaps which are in a payable position based on June 30, 2020 rates. |
(2) | Amounts include interest. |
Derivatives | Notional Amount | Weighted Average Fixed Leg (Pay) Interest Rate | Cap Rate | Weighted Average Remaining Term | ||||
Interest Rate Swap(1) | $1,823.0 Million | 2.00% | n/a | 5.3 years | ||||
Interest Rate Cap | $200.0 Million | n/a | 5.5% | 1.5 years |
(1) | The impact of forward starting swaps with total notional amount of $350.0 million will increase the weighted average remaining term to 6.3 years. |
• | increased credit concerns relating to our shipping line customers as they face reduced demand, operational disruptions and increased costs relating to the pandemic, including the risk of bankruptcy or significant payment defaults or delays; |
• | further reduced demand for containers and increased pressure on lease rates; |
• | reduced demand for sale of containers; |
• | operational issues that could prevent our containers from being discharged or picked up in affected areas or in other locations after having visited affected areas for a prolonged period of time; |
• | business continuity risks associated with the transition to remote working arrangements, including increased cybersecurity risks, internet capacity constraints or other systems problems, and unanticipated difficulties or delays in our financial reporting processes; |
• | liquidity risks, including that disruptions in financial markets as a result of the pandemic may increase the cost and availability of capital, and the risk of non-compliance with financial covenants in debt agreements; |
• | potential impacts on key management, including health impacts and distraction caused by the pandemic response; and |
• | potential impacts on business relationships due to restrictions on travel. |
Issuer Purchases of Common Shares(1) | ||||||||||
Period | Total number of shares purchased(2) | Average price paid per share | Approximate dollar value of shares that may yet be purchased under the plan (in thousands) | |||||||
April 1, 2020 through April 30, 2020 | 1,057,956 | $ | 28.16 | $ | 193,095 | |||||
May 1, 2020 through May 31, 2020 | 568,373 | $ | 29.06 | $ | 176,569 | |||||
June 1, 2020 through June 30, 2020 | 424,595 | $ | 29.57 | $ | 164,007 | |||||
Total | 2,050,924 | $ | 28.70 | $ | 164,007 |
(1) | On April 21, 2020, the Company's Board of Directors increased the share repurchase authorization to $200.0 million. The revised authorization may be used by the Company to repurchase common or preferred shares. |
(2) | This column represents the total number of shares purchased and the total number of shares purchased as part of publicly announced plans. |
Exhibit Number | Exhibit Description | |
Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended | ||
Certification of the Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended | ||
Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350 | ||
Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350 | ||
101.INS | XBRL Instance Document - the instance document does not appear on the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |
101.SCH | XBRL Instance Extension Schema | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase | |
101.LAB | XBRL Taxonomy Extension Label Linkbase | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase | |
104 | Cover Page Inline XBRL Data (formatted as Inline XBRL and contained in Exhibit 101) |
* | Filed herewith. |
** | Furnished herewith. |
TRITON INTERNATIONAL LIMITED | ||
July 24, 2020 | By: | /s/ JOHN BURNS |
John Burns | ||
Chief Financial Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Triton International Limited; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15(d)-15(f) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ BRIAN M. SONDEY Brian M. Sondey Chairman and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Triton International Limited; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15(d)-15(f) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ JOHN BURNS John Burns Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: July 24, 2020 | /s/ BRIAN M. SONDEY Brian M. Sondey Chairman and Chief Executive Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: July 24, 2020 | /s/ JOHN BURNS John Burns Chief Financial Officer |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Leasing equipment, accumulated depreciation and allowances | $ 3,135,646 | $ 2,933,886 |
Accounts receivable, allowances | 2,483 | 1,276 |
Finite-Lived Intangible Assets, Accumulated Amortization | 254,207 | 242,301 |
Deferred financing costs | $ 34,088 | $ 39,781 |
Class of Stock [Line Items] | ||
Common Shares, Par Value (in dollars per share) | $ 0.01 | $ 0.01 |
Common Shares, Shares Authorized (in shares) | 270,000,000 | 270,000,000 |
Treasury Stock, Shares (in shares) | 12,187,889 | 1,853,148 |
Preferred Stock [Member] | ||
Class of Stock [Line Items] | ||
Preferred Stock, Par or Stated Value Per Share (in dollars per share) | $ 0.01 | $ 0.01 |
Designated Common Stock | ||
Class of Stock [Line Items] | ||
Common Shares, Shares Issued (in shares) | 81,149,460 | 80,979,833 |
Undesignated Common Stock | ||
Class of Stock [Line Items] | ||
Common Shares, Shares Authorized (in shares) | 7,800,000 | 13,800,000 |
Description of the Business |
6 Months Ended |
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Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of the Business, Basis of Presentation and Recently Adopted Accounting Pronouncements [Text Block] | Description of the Business, Basis of Presentation and Accounting Policy Updates Description of the Business Triton International Limited ("Triton" or the "Company"), through its subsidiaries, leases intermodal transportation equipment, primarily maritime containers, and provides maritime container management services through a worldwide network of service subsidiaries, third-party depots and other facilities. The majority of the Company's business is derived from leasing its containers to shipping line customers through a variety of long-term and short-term contractual lease arrangements. The Company also sells containers from its equipment leasing fleet as well as containers specifically acquired for resale from third parties. The Company's registered office is located in Bermuda. Basis of Presentation The unaudited consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these financial statements do not include all information and footnotes required by GAAP for complete financial statements. The interim consolidated balance sheet as of June 30, 2020; the consolidated statements of operations, the consolidated statements of comprehensive income, and the consolidated statements of shareholders' equity for the three and six months ended June 30, 2020 and 2019, and the consolidated statements of cash flows for the six months ended June 30, 2020 and 2019 are unaudited. The consolidated balance sheet as of December 31, 2019, included herein, was derived from the audited financial statements as of that date, but does not include all disclosures required by GAAP. The unaudited interim financial statements have been prepared on a basis consistent with the Company's annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary to state fairly the Company's financial position, results of operations, comprehensive income, shareholders' equity, and cash flows for the periods presented. The financial data and the other financial information disclosed in the notes to the financial statements related to these periods are also unaudited. The consolidated results of operations for the three and six months ended June 30, 2020 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2020 or for any other future annual or interim period. These financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2019 included in the Company's Annual Report on Form 10-K which was filed with the SEC on February 14, 2020. The unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Certain changes in presentation have been made to conform the prior period presentation to current period reporting. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities in the financial statements. Such estimates include, but are not limited to, the Company's estimates in connection with leasing equipment, including residual values and depreciable lives, values of assets held for sale and other long lived assets, provision for income tax, allowance for doubtful accounts, share-based compensation, goodwill and intangible assets. Actual results could differ from those estimates. Concentration of Credit Risk The Company's equipment leases and trade receivables subject it to potential credit risk. The Company extends credit to its customers based upon an evaluation of each customer's financial condition and credit history. Evaluations of the financial condition and associated credit risk of customers are performed on an ongoing basis. The Company's two largest customers, CMA CGM S.A. and Mediterranean Shipping Company S.A., accounted for 21% and 15%, respectively, of the Company's lease billings during the six months ended June 30, 2020. Fair Value Measurements For information on the fair value of equipment held for sale, debt, and the fair value of derivative instruments, please refer to Note 2 - "Equipment Held for Sale", Note 7 - "Debt" and Note 8 - "Derivative Instruments", respectively. New Accounting Pronouncements Recently Adopted Accounting Standards Updates Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326) and subsequently issued amendments. The guidance affects the Company's net investment in finance leases and accounts receivable for sales of equipment. The standard requires the measurement of expected credit losses to be based on relevant information from past events, including historical experiences, current conditions and reasonable and supportable forecasts that affect collectability. The Company adopted the standard and its related amendments as of January 1, 2020. The Company has evaluated the impact of this ASU and concluded that the adoption of this standard did not have a significant impact on its consolidated financial statements. Reference Rate Reform In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The guidance provides optional practical expedients for applying U.S. GAAP to hedging relationships affected by reference rate reform. The guidance is applicable to the Company's debt agreements, hedging relationships, and other transactions that reference LIBOR. The Company adopted the standard and certain of its related amendments as of March 12, 2020. By adopting this standard, it will help ease the burden that the Company may face due to the transition away from certain reference rates, specifically LIBOR, which is the predominant reference rate in many of the Company’s debt agreements and hedging relationships. The practical expedients applicable to the Company are as follows: (1) contract modifications due to reference rate reform can be treated as continuations of the existing contract and potential changes to interest rate risk can be disregarded when asserting the probability of the forecasted hedged transactions; (2) hedge accounting can continue to be used for hedging relationships where critical terms change due to reference rate reform; and (3) effectiveness assessments can be performed in ways that disregard certain mismatches due to reference rate reform. The Company concluded that the adoption of this standard will not have a significant impact on our consolidated financial statements. Accounting Policy Update Allowance for Doubtful Accounts-Net investment in finance leases and accounts receivable for sales of equipment Upon adoption of Topic 326, the Company measures expected credit loss on net investment in finance leases and accounts receivable for sales of equipment by evaluating the overall credit quality of its customers. Expected credit losses for these financial assets are estimated using historical experience which includes economic cycles, customer payment history, management's assessment of the customer's financial condition, and consideration of current conditions and reasonable forecasts.
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Equipment Held for Sale |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equipment Held for Sale | Equipment Held for Sale The Company's equipment held for sale is recorded at the lower of fair value less cost to sell, or carrying value at the time identified for sale. Fair value is measured using Level 2 inputs and is based on recent sales prices and other factors. The following table summarizes the portion of equipment held for sale in the consolidated balance sheet that have been impaired and written down to fair value less cost to sell (in thousands):
An impairment charge is recorded when the carrying value of the asset exceeds its fair value less cost to sell. The following table summarizes the Company's net impairment charges recorded in net gains or losses on sale of leasing equipment held for sale on the consolidated statements of operations (in thousands):
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Intangible Assets |
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Intangible Assets | Intangible Assets Intangible assets consist of lease intangibles for leases acquired with lease rates above market at the time of acquisition. The following table summarizes the amortization of intangible assets as of June 30, 2020 (in thousands):
Amortization expense related to intangible assets was $5.7 million and $11.9 million for the three and six months ended June 30, 2020, respectively, and $10.3 million and $21.4 million for the three and six months ended June 30, 2019, respectively.
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Other Equity Matters |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Equity Matters | Other Equity Matters Share Repurchase Program On April 21, 2020, the Company's Board of Directors increased the share repurchase authorization to $200.0 million. Purchases under the repurchase program may be made in the open market or privately negotiated transactions, and may include transactions pursuant to a repurchase plan administered in accordance with Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended. Purchases may be made from time to time at the Company's discretion and the timing and amount of any share repurchases will be determined based on share price, market conditions, legal requirements, and other factors. The repurchase program does not obligate the Company to acquire any particular amount of common shares, and the Company may suspend or discontinue the repurchase program at any time. During the six months ended June 30, 2020, the Company repurchased a total of 3,416,544 common shares at an average price per-share of $28.19 for a total of $96.3 million. As of June 30, 2020, $164.0 million remains available under the common share repurchase program. Preferred Shares The following table summarizes the Company's preferred share issuances (the "Series"):
In January 2020, the Company completed a public offering of the Series D shares and received $145.3 million in aggregate net proceeds after deducting underwriting discounts of $4.7 million. The net proceeds were used for general corporate purposes, including the purchase of containers, the repurchase of outstanding common shares, the payment of dividends, and the repayment or repurchase of outstanding indebtedness. Each Series of preferred shares may be redeemed at the Company's option, at any time after approximately five years from original issuance, in whole or in part at a redemption price, which is equal to the issue price, of $25.00 per share plus an amount equal to all accumulated and unpaid dividends, whether or not declared. The Company may also redeem each Series of preferred shares prior to the lapse of the five year period upon the occurrence of certain events as described in each agreement, such as transactions that either transfer ownership of substantially all assets to a single entity or establish a majority voting interest by a single entity, and cause a downgrade or withdrawal of rating by the rating agency within 60 days of the event. If the Company does not elect to redeem each Series, holders of preferred shares may have the right to convert their preferred shares into common shares. Holders of preferred shares generally have no voting rights. If the Company fails to pay dividends for six or more quarterly periods (whether or not consecutive), holders will be entitled to elect two additional directors to the Board of Directors and the size of the Board of Directors will be increased to accommodate such election. Such right to elect two directors will continue until such time as there are no accumulated and unpaid dividends in arrears. Dividends Dividends on shares of each Series are cumulative from the date of original issue and will be payable quarterly in arrears on the 15th day of March, June, September and December of each year, when, as and if declared by the Company's Board of Directors. Dividends on shares of each Series will be payable equal to the applicable stated rate per annum of the $25.00 liquidation preference per share. The Series rank senior to the Company's common shares with respect to dividend rights and rights upon the Company's liquidation, dissolution or winding up, whether voluntary or involuntary. The Company paid the following quarterly dividends during the six months ended June 30, 2020 and 2019 on its issued and outstanding Series (in millions except for per-share amounts):
As of June 30, 2020, the Company had cumulative unpaid preferred dividends of $1.8 million. Common Share Dividends The Company paid the following quarterly dividends during the six months ended June 30, 2020 and 2019 on its issued and outstanding common shares:
Accumulated Other Comprehensive Income The following table summarizes the components of accumulated other comprehensive income (loss), net of tax, for the six months ended June 30, 2020 and 2019 (in thousands):
(1) Refer to Note 8 - "Derivative Instruments" for reclassification impact on the Consolidated Statement of Operations
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Share Based Compensation |
6 Months Ended |
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Jun. 30, 2020 | |
Equity [Abstract] | |
Share Based Compensation | Share-Based Compensation The Company recognizes share-based compensation expense for share-based payment transactions based on the grant date fair value. The expense is recognized over the employee's requisite service period, which is generally the vesting period of the equity award. The Company recognized share-based compensation expense in administrative expenses of $4.3 million and $5.9 million for the three and six months ended June 30, 2020, respectively, and $3.7 million and $5.5 million for the three and six months ended June 30, 2019, respectively. Share-based compensation expense includes charges for performance-based shares that are deemed probable to vest. As of June 30, 2020, the total unrecognized compensation expense related to non-vested restricted shares was approximately $11.9 million, which is expected to be recognized on a monthly basis through 2023. During the six months ended June 30, 2020, the Company issued 185,820 time-based and performance-based restricted shares, and canceled 53,609 vested shares to settle payroll taxes on behalf of employees. Additional shares may be accrued and issued based upon the Company's performance measured against selected peers. The Company also issued 37,416 shares to non-employee directors at fair value that vested immediately.
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Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases Lessee The Company leases multiple office facilities which are contracted under various cancelable and non-cancelable operating leases, most of which provide extension or early termination options. The Company's lease agreements do not contain any residual value guarantees or material restrictive covenants. As of June 30, 2020, the weighted average implicit rate was 4.04% and the weighted average remaining lease term was 2.9 years. The following table summarizes the components of the Company's leases (in thousands):
Cash paid for amounts included in the measurement of lease liabilities under operating cash flows was $0.8 million and $1.6 million for both the three and six months ended June 30, 2020 and June 30, 2019, respectively. The following represents our future undiscounted cash flows for each of the next five years and thereafter and reconciliation to the lease liabilities as of June 30, 2020 (in thousands):
Lessor The following table summarizes the components of the net investment in finance leases (in thousands):
Maturities of the Company's gross finance lease receivables subsequent to June 30, 2020 are as follows (in thousands):
The Company’s finance lease portfolio lessees are primarily comprised of the largest international shipping lines. In its estimate of expected credit losses, the Company evaluates the overall credit quality of its finance lease portfolio. The Company considers an account past due when a payment has not been received in accordance with the terms of the related lease agreement and maintains allowances, if necessary, for doubtful accounts. These allowances are based on, but not limited to, historical experience which includes stronger and weaker economic cycles, each lessee's payment history, management's current assessment of each lessee's financial condition, consideration of current conditions and reasonable forecasts. As of June 30, 2020, the Company does not have an allowance on its gross finance lease receivables and does not have any past due balances. |
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Leases | Leases Lessee The Company leases multiple office facilities which are contracted under various cancelable and non-cancelable operating leases, most of which provide extension or early termination options. The Company's lease agreements do not contain any residual value guarantees or material restrictive covenants. As of June 30, 2020, the weighted average implicit rate was 4.04% and the weighted average remaining lease term was 2.9 years. The following table summarizes the components of the Company's leases (in thousands):
Cash paid for amounts included in the measurement of lease liabilities under operating cash flows was $0.8 million and $1.6 million for both the three and six months ended June 30, 2020 and June 30, 2019, respectively. The following represents our future undiscounted cash flows for each of the next five years and thereafter and reconciliation to the lease liabilities as of June 30, 2020 (in thousands):
Lessor The following table summarizes the components of the net investment in finance leases (in thousands):
Maturities of the Company's gross finance lease receivables subsequent to June 30, 2020 are as follows (in thousands):
The Company’s finance lease portfolio lessees are primarily comprised of the largest international shipping lines. In its estimate of expected credit losses, the Company evaluates the overall credit quality of its finance lease portfolio. The Company considers an account past due when a payment has not been received in accordance with the terms of the related lease agreement and maintains allowances, if necessary, for doubtful accounts. These allowances are based on, but not limited to, historical experience which includes stronger and weaker economic cycles, each lessee's payment history, management's current assessment of each lessee's financial condition, consideration of current conditions and reasonable forecasts. As of June 30, 2020, the Company does not have an allowance on its gross finance lease receivables and does not have any past due balances.
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Leases | Leases Lessee The Company leases multiple office facilities which are contracted under various cancelable and non-cancelable operating leases, most of which provide extension or early termination options. The Company's lease agreements do not contain any residual value guarantees or material restrictive covenants. As of June 30, 2020, the weighted average implicit rate was 4.04% and the weighted average remaining lease term was 2.9 years. The following table summarizes the components of the Company's leases (in thousands):
Cash paid for amounts included in the measurement of lease liabilities under operating cash flows was $0.8 million and $1.6 million for both the three and six months ended June 30, 2020 and June 30, 2019, respectively. The following represents our future undiscounted cash flows for each of the next five years and thereafter and reconciliation to the lease liabilities as of June 30, 2020 (in thousands):
Lessor The following table summarizes the components of the net investment in finance leases (in thousands):
Maturities of the Company's gross finance lease receivables subsequent to June 30, 2020 are as follows (in thousands):
The Company’s finance lease portfolio lessees are primarily comprised of the largest international shipping lines. In its estimate of expected credit losses, the Company evaluates the overall credit quality of its finance lease portfolio. The Company considers an account past due when a payment has not been received in accordance with the terms of the related lease agreement and maintains allowances, if necessary, for doubtful accounts. These allowances are based on, but not limited to, historical experience which includes stronger and weaker economic cycles, each lessee's payment history, management's current assessment of each lessee's financial condition, consideration of current conditions and reasonable forecasts. As of June 30, 2020, the Company does not have an allowance on its gross finance lease receivables and does not have any past due balances. |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt The table below summarizes the Company's key terms and carrying value of debt (in thousands):
The fair value of total debt outstanding was $6,683.5 million and $6,747.8 million as of June 30, 2020 and December 31, 2019, respectively, and was measured using Level 2 inputs. As of June 30, 2020, the maximum borrowing levels for the ABS warehouse and the revolving credit facility are $800.0 million and $1,560.0 million, respectively. These facilities are governed by borrowing bases that limit borrowing capacity to an established percentage of relevant assets. As of June 30, 2020, the availability under these credit facilities without adding additional container assets to the borrowing base was approximately $576.6 million. The Company is subject to certain financial covenants under its debt agreements. The agreements remain the obligations of the respective subsidiaries, and all related debt covenants are calculated at the subsidiary level. As of June 30, 2020 and December 31, 2019, the Company was in compliance with all financial covenants in accordance with the terms of its debt agreements. The Company hedges the risks associated with fluctuations in interest rates on a portion of its floating-rate debt by entering into interest rate swap agreements that convert a portion of its floating-rate debt to a fixed rate basis, thus reducing the impact of interest rate changes on future interest expense. The following table summarizes the Company's outstanding fixed-rate and floating-rate debt as of June 30, 2020 (in thousands):
On January 31, 2020, the Company paid $7.5 million to exercise the early purchase option on a finance lease obligation. Institutional Notes In accordance with the institutional note agreements, interest payments on the Company's institutional notes are due semi-annually. Institutional note maturities typically range from 7 - 12 years, with level principal payments due annually following an interest-only period. The Company's institutional notes are pre-payable (in whole or in part) at the Company's option at any time, subject to certain provisions in the note agreements, including the payment of a make-whole premium in respect to such prepayment. These facilities provide for an advance rate against the net book values of designated eligible equipment. Asset-Backed Securitization Term Notes Under the Company's Asset-backed Securitization ("ABS") facilities, indirect wholly-owned subsidiaries of the Company issue asset-backed notes. These subsidiaries are intended to be bankruptcy remote so that such assets are not available to creditors of the Company or its affiliates until and unless the related secured borrowings have been fully discharged. These transactions do not meet accounting requirements for sales treatment and are recorded as secured borrowings. The Company’s borrowings under the ABS facilities amortize in monthly installments, typically in level payments over five or more years. These facilities provide for an advance rate against the net book values of designated eligible equipment. The net book values for purposes of calculating eligible equipment is determined according to the related debt agreement and may be different than those calculated per U.S. GAAP. The Company is required to maintain restricted cash balances on deposit in designated bank accounts equal to three to nine months of interest expense depending on the terms of each facility. Term Loan Facilities The term loan facilities amortize in monthly or quarterly installments. These facilities provide for an advance rate against the net book values of designated eligible equipment. Asset-Backed Securitization Warehouse Under the Company’s asset-backed warehouse facility, indirect wholly-owned subsidiaries of the Company issue asset-backed notes. These subsidiaries are intended to be bankruptcy remote so that such assets are not available to creditors of the Company or its affiliates until and unless the related secured borrowings have been fully discharged. These transactions do not meet accounting requirements for sales treatment and are recorded as secured borrowings. The Company's asset-backed warehouse facility has a borrowing capacity of $800.0 million that is available on a revolving basis until December 13, 2021, paying interest at LIBOR plus 1.75%, after which any borrowings will convert to term notes with a maturity date of December 15, 2025, paying interest at LIBOR plus 2.85%. During the revolving period, the borrowing capacity under this facility is determined by applying an advance rate against the net book values of designated eligible equipment. The net book values for purposes of calculating eligible equipment are determined according to the related debt agreement and may be different than those calculated per U.S. GAAP. The Company is required to maintain restricted cash balances on deposit in designated bank accounts equal to three months of interest expense. Revolving Credit Facilities The revolving credit facilities have a maximum borrowing capacity of $1,560.0 million. These facilities provide for an advance rate against the net book values of designated eligible equipment. Finance Lease Obligations |
Derivative Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments | Derivative Instruments Interest Rate Swaps / Caps The Company enters into derivative agreements to manage interest rate risk exposure. Interest rate swap agreements are utilized to limit the Company's exposure to interest rate risk by converting a portion of its floating-rate debt to a fixed rate basis, thus reducing the impact of interest rate changes on future interest expense. Interest rate swaps involve the receipt of floating-rate amounts in exchange for fixed rate interest payments over the lives of the agreements without an exchange of the underlying principal amounts. The Company also utilizes interest rate cap agreements to manage interest rate risk exposure. Interest rate cap agreements place a ceiling on the Company's exposure to rising interest rates. The counterparties to these agreements are highly rated financial institutions. In the unlikely event that the counterparties fail to meet the terms of these agreements, the Company's exposure is limited to the interest rate differential on the notional amount at each monthly settlement period over the life of the agreements. The Company does not anticipate any non-performance by the counterparties. Substantially all of the assets of certain indirect, wholly-owned subsidiaries of the Company have been pledged as collateral for the underlying indebtedness and the amounts payable under the agreements for each of these entities. In addition, certain assets of the Company's subsidiaries are pledged as collateral for various credit facilities and the amounts payable under certain agreements. During the three months ended June 30, 2020, the Company entered into an interest rate swap contract with an effective date of April 20, 2020 and a scheduled maturity date of April 20, 2024. This contract is indexed to 1 month LIBOR, has a fixed leg interest rate of 0.35%, and has a notional amount of $125.0 million. As of June 30, 2020, the Company had interest rate swap and cap agreements in place to fix or limit the floating interest rates on a portion of the borrowings under its debt facilities summarized below:
Over the next twelve months, we expect to reclassify unrealized losses of $30.6 million to income of pre-tax amounts from accumulated other comprehensive income (loss) related to interest rate swap and cap agreements. The following table summarizes the impact of derivative instruments on the consolidated statements of operations and the consolidated statements of comprehensive income on a pretax basis (in thousands):
Fair Value of Derivative Instruments The Company has elected to use the income approach to value its interest rate swap and cap agreements, using Level 2 market expectations at the measurement date and standard valuation techniques to convert future values to a single discounted present value. The Level 2 inputs for the interest rate swap and cap valuations are inputs other than quoted prices that are observable for the asset or liability (specifically LIBOR and swap rates and credit risk at commonly quoted intervals). In response to the expected phase out of LIBOR, the Company continues to work with its counterparties to identify an alternative reference rate. Substantially all of the Company's debt agreements already include transition language, and the Company also adopted various practical expedients which will facilitate the transition. |
Segment and Geographic Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment and Geographic Information | Segment and Geographic Information Segment Information The Company operates its business in one industry, intermodal transportation equipment, and has two operating segments which also represent its reporting segments:
These operating segments were determined based on the chief operating decision maker's review and resource allocation of the products and services offered. The following tables summarizes our segment information and the consolidated totals reported (in thousands):
There are no intercompany revenues or expenses between segments. Certain administrative expenses have been allocated between segments based on an estimate of services provided to each segment. A portion of the Company's equipment purchased for resale may be leased for a period of time and is reflected as leasing equipment as opposed to equipment held for sale and the cash flows associated with these transactions are reflected as purchases of leasing equipment and proceeds from the sale of equipment in investing activities in the Company's consolidated statements of cash flows. Geographic Segment Information The Company generates the majority of its leasing revenues from international containers which are deployed by its customers in a wide variety of global trade routes. The majority of the Company's leasing related revenue is denominated in U.S. dollars. The following table summarizes the geographic allocation of equipment leasing revenues for the three and six months ended June 30, 2020 and 2019 based on customers' primary domicile (in thousands):
Since the majority of the Company's containers are used internationally, where no one container is domiciled in one particular place for a prolonged period of time, all of the Company's long-lived assets are considered to be international. The following table summarizes the geographic allocation of equipment trading revenues for the three and six months ended June 30, 2020 and 2019 based on the location of the sale (in thousands):
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Commitments and Contingencies |
6 Months Ended |
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Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Container Equipment Purchase Commitments At June 30, 2020, the Company had commitments to purchase equipment in the amount of $45.9 million payable in 2020. Contingencies The Company is party to various pending or threatened legal or regulatory proceedings arising in the ordinary course of its business. Based upon information presently available, the Company does not expect any liabilities arising from these matters to have a material effect on the consolidated financial position, results of operations or cash flows of the Company.
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Income Taxes |
6 Months Ended |
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Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes |
Related Party Transactions |
6 Months Ended |
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Jun. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions |
Non-Controlling Interest |
6 Months Ended |
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Jun. 30, 2020 | |
Noncontrolling Interest [Abstract] | |
Non-Controlling Interest | Noncontrolling Interest During 2019, the Company acquired all of the remaining third-party partnership interests in Triton Container Investments LLC for an aggregate of $103.0 million in cash.
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Subsequent Events |
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Subsequent Events [Abstract] | ||||||||||||||||||||||||||||||||||||
Subsequent Events | Subsequent Events On July 21, 2020, the Company's Board of Directors approved and declared a quarterly cash dividend of $0.52 per share on its issued and outstanding common shares, payable on September 24, 2020 to holders of record at the close of business on September 10, 2020. On July 21, 2020, the Company's Board of Directors also approved and declared a cash dividend on its issued and outstanding preferred shares, payable on September 15, 2020 to holders of record at the close of business on September 8, 2020 as follows:
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Description of the Business (Policies) |
6 Months Ended |
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Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The unaudited consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these financial statements do not include all information and footnotes required by GAAP for complete financial statements. The interim consolidated balance sheet as of June 30, 2020; the consolidated statements of operations, the consolidated statements of comprehensive income, and the consolidated statements of shareholders' equity for the three and six months ended June 30, 2020 and 2019, and the consolidated statements of cash flows for the six months ended June 30, 2020 and 2019 are unaudited. The consolidated balance sheet as of December 31, 2019, included herein, was derived from the audited financial statements as of that date, but does not include all disclosures required by GAAP. The unaudited interim financial statements have been prepared on a basis consistent with the Company's annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary to state fairly the Company's financial position, results of operations, comprehensive income, shareholders' equity, and cash flows for the periods presented. The financial data and the other financial information disclosed in the notes to the financial statements related to these periods are also unaudited. The consolidated results of operations for the three and six months ended June 30, 2020 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2020 or for any other future annual or interim period. These financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2019 included in the Company's Annual Report on Form 10-K which was filed with the SEC on February 14, 2020. The unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Certain changes in presentation have been made to conform the prior period presentation to current period reporting.
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Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities in the financial statements. Such estimates include, but are not limited to, the Company's estimates in connection with leasing equipment, including residual values and depreciable lives, values of assets held for sale and other long lived assets, provision for income tax, allowance for doubtful accounts, share-based compensation, goodwill and intangible assets. Actual results could differ from those estimates.
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Concentration of Credit Risk | Concentration of Credit Risk The Company's equipment leases and trade receivables subject it to potential credit risk. The Company extends credit to its customers based upon an evaluation of each customer's financial condition and credit history. Evaluations of the financial condition and associated credit risk of customers are performed on an ongoing basis. The Company's two largest customers, CMA CGM S.A. and Mediterranean Shipping Company S.A., accounted for 21% and 15%, respectively, of the Company's lease billings during the six months ended June 30, 2020. |
Accounting Policy Updates & Recently Adopted Accounting Pronouncements | New Accounting Pronouncements Recently Adopted Accounting Standards Updates Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326) and subsequently issued amendments. The guidance affects the Company's net investment in finance leases and accounts receivable for sales of equipment. The standard requires the measurement of expected credit losses to be based on relevant information from past events, including historical experiences, current conditions and reasonable and supportable forecasts that affect collectability. The Company adopted the standard and its related amendments as of January 1, 2020. The Company has evaluated the impact of this ASU and concluded that the adoption of this standard did not have a significant impact on its consolidated financial statements. Reference Rate Reform In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The guidance provides optional practical expedients for applying U.S. GAAP to hedging relationships affected by reference rate reform. The guidance is applicable to the Company's debt agreements, hedging relationships, and other transactions that reference LIBOR. The Company adopted the standard and certain of its related amendments as of March 12, 2020. By adopting this standard, it will help ease the burden that the Company may face due to the transition away from certain reference rates, specifically LIBOR, which is the predominant reference rate in many of the Company’s debt agreements and hedging relationships. The practical expedients applicable to the Company are as follows: (1) contract modifications due to reference rate reform can be treated as continuations of the existing contract and potential changes to interest rate risk can be disregarded when asserting the probability of the forecasted hedged transactions; (2) hedge accounting can continue to be used for hedging relationships where critical terms change due to reference rate reform; and (3) effectiveness assessments can be performed in ways that disregard certain mismatches due to reference rate reform. The Company concluded that the adoption of this standard will not have a significant impact on our consolidated financial statements. Accounting Policy Update Allowance for Doubtful Accounts-Net investment in finance leases and accounts receivable for sales of equipment Upon adoption of Topic 326, the Company measures expected credit loss on net investment in finance leases and accounts receivable for sales of equipment by evaluating the overall credit quality of its customers. Expected credit losses for these financial assets are estimated using historical experience which includes economic cycles, customer payment history, management's assessment of the customer's financial condition, and consideration of current conditions and reasonable forecasts.
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Equipment Held for Sale (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Long Lived Assets Held-for-sale | The Company's equipment held for sale is recorded at the lower of fair value less cost to sell, or carrying value at the time identified for sale. Fair value is measured using Level 2 inputs and is based on recent sales prices and other factors. The following table summarizes the portion of equipment held for sale in the consolidated balance sheet that have been impaired and written down to fair value less cost to sell (in thousands):
An impairment charge is recorded when the carrying value of the asset exceeds its fair value less cost to sell. The following table summarizes the Company's net impairment charges recorded in net gains or losses on sale of leasing equipment held for sale on the consolidated statements of operations (in thousands):
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Intangible Assets (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination | Intangible assets consist of lease intangibles for leases acquired with lease rates above market at the time of acquisition. The following table summarizes the amortization of intangible assets as of June 30, 2020 (in thousands):
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Other Equity Matters (Table) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred Stock | The following table summarizes the Company's preferred share issuances (the "Series"):
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Dividends | The Company paid the following quarterly dividends during the six months ended June 30, 2020 and 2019 on its issued and outstanding common shares:
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Schedule of accumulated other comprehensive (loss) | The following table summarizes the components of accumulated other comprehensive income (loss), net of tax, for the six months ended June 30, 2020 and 2019 (in thousands):
(1) Refer to Note 8 - "Derivative Instruments" for reclassification impact on the Consolidated Statement of Operations
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Leases (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lessee, Balance Sheet and Income Statement Effect | The following table summarizes the components of the Company's leases (in thousands):
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Lessee, Operating Lease, Liability, Maturity | The following represents our future undiscounted cash flows for each of the next five years and thereafter and reconciliation to the lease liabilities as of June 30, 2020 (in thousands):
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Schedule of Components of Leveraged Lease Investments | The following table summarizes the components of the net investment in finance leases (in thousands):
(5) As of June 30, 2020, two major customers represented 71% and 11% of the Company's finance lease portfolio. As of December 31, 2019, three major customers represented 55%, 24% and 11% of the Company's finance lease portfolio. No other customer represented more than 10% of the Company's finance lease portfolio in each of those periods.
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Lessor, Operating Lease, Payments to be Received, Maturity | aturities of the Company's gross finance lease receivables subsequent to June 30, 2020 are as follows (in thousands):
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Debt (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of debt | The table below summarizes the Company's key terms and carrying value of debt (in thousands):
(1) Data as of June 30, 2020. The following table summarizes the Company's outstanding fixed-rate and floating-rate debt as of June 30, 2020 (in thousands):
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Derivative Instruments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of interest rate derivatives | As of June 30, 2020, the Company had interest rate swap and cap agreements in place to fix or limit the floating interest rates on a portion of the borrowings under its debt facilities summarized below:
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Schedule of derivatives instruments and their effect on consolidated statements of operations and consolidated statements of comprehensive income | The following table summarizes the impact of derivative instruments on the consolidated statements of operations and the consolidated statements of comprehensive income on a pretax basis (in thousands):
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Segment and Geographic Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of segment information | The following tables summarizes our segment information and the consolidated totals reported (in thousands):
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Schedule of revenues by geographic location | The following table summarizes the geographic allocation of equipment leasing revenues for the three and six months ended June 30, 2020 and 2019 based on customers' primary domicile (in thousands):
The following table summarizes the geographic allocation of equipment trading revenues for the three and six months ended June 30, 2020 and 2019 based on the location of the sale (in thousands):
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Subsequent Events (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||
Subsequent Events [Abstract] | ||||||||||||||||||||||||||||||||||||
Dividends | On July 21, 2020, the Company's Board of Directors also approved and declared a cash dividend on its issued and outstanding preferred shares, payable on September 15, 2020 to holders of record at the close of business on September 8, 2020 as follows:
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Description of the Business Concentration of Credit Risk (Details) - Operating and Capital Leases Billing [Member] [Domain] - Credit Concentration Risk [Member] |
6 Months Ended |
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Jun. 30, 2020 | |
CMA CGM S.A [Member] | |
Concentration Risk [Line Items] | |
Concentration Risk, Percentage | 21.00% |
Mediterranean Shipping Company [Member] | |
Concentration Risk [Line Items] | |
Concentration Risk, Percentage | 15.00% |
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 31, 2019 |
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Fair Value | |||||
Net gain on sale of leasing equipment | $ 4,537 | $ 7,519 | $ 8,614 | $ 15,988 | |
Equipment, net of selling costs | |||||
Fair Value | |||||
Net gain on sale of leasing equipment | 5,590 | 8,843 | 11,157 | 18,719 | |
Equipment held for sale | |||||
Fair Value | |||||
Net gain on sale of leasing equipment | (1,053) | $ (1,324) | (2,543) | $ (2,731) | |
Carrying value containers impaired to fair value | Level 2 | |||||
Fair Value | |||||
Equipment held for sale | $ 14,765 | $ 14,765 | $ 11,797 |
Intangible Assets (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
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Finite-Lived Intangible Assets [Line Items] | ||||
Amortization expense of intangible assets | $ 5,700 | $ 10,300 | $ 11,900 | $ 21,400 |
Above Market Lease Intangibles [Domain] | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
2020 | 10,585 | 10,585 | ||
2021 | 16,549 | 16,549 | ||
2022 | 10,497 | 10,497 | ||
2023 | 4,657 | 4,657 | ||
2024 | 1,962 | 1,962 | ||
2025 and thereafter | 0 | 0 | ||
Total | $ 44,250 | $ 44,250 |
Share Based Compensation (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
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Stock based compensation plans | ||||
Share-based Payment Arrangement, Noncash Expense | $ 4.3 | $ 3.7 | $ 5.9 | $ 5.5 |
Employee Service Share-based Compensation Not yet Recognized | $ 11.9 | $ 11.9 | ||
Employees [Member] | Restricted Stock [Member] | ||||
Stock based compensation plans | ||||
Grants of restricted shares (in shares) | 185,820 | |||
Shares withheld for tax withholding obligation | 53,609 | |||
Employees, Non-Directors [Member] | Restricted Stock [Member] | ||||
Stock based compensation plans | ||||
Grants of restricted shares (in shares) | 37,416 |
Leases (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
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Leases [Abstract] | ||||
Operating lease, weighted average implicit rate, percent | 4.04% | 4.04% | ||
Lessee, operating lease, remaining term of contract | 2 years 10 months 24 days | 2 years 10 months 24 days | ||
Operating lease, payments | $ 0.8 | $ 0.8 | $ 1.6 | $ 1.6 |
Leases - Financial Statement Impact (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 31, 2019 |
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New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Lease liability - operating | $ 7,573 | $ 7,573 | |||
Administrative expenses | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Operating lease cost | 747 | $ 767 | 1,506 | $ 1,501 | |
Other assets | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Right-of-use asset - operating | 6,393 | 6,393 | $ 7,616 | ||
Accounts payable and other accrued expenses | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Lease liability - operating | $ 7,573 | $ 7,573 | $ 8,940 |
Leases - Operating Leases Lessee Maturities (Details) $ in Thousands |
Jun. 30, 2020
USD ($)
|
---|---|
Leases [Abstract] | |
2020 | $ 1,559 |
2021 | 2,755 |
2022 | 2,288 |
2023 | 1,379 |
2024 | 67 |
2025 and thereafter | 0 |
Total undiscounted future cash flows related to lease payments | 8,048 |
Less: imputed interest | (475) |
Lease liability - operating | $ 7,573 |
- Net Investment in Finance Leases (Details) - USD ($) $ in Thousands |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2020 |
Dec. 31, 2019 |
|
Concentration Risk [Line Items] | ||
Future minimum lease payment receivable | $ 388,950 | $ 476,443 |
Estimated residual receivable | 58,961 | 102,238 |
Gross finance lease receivables(3) | 447,911 | 578,681 |
Unearned income | (141,032) | (165,339) |
Net investment in finance leases | $ 306,879 | $ 413,342 |
Customer One | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 71.00% | 55.00% |
Customer Two | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 11.00% | 24.00% |
Customer Three | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 11.00% |
Leases - Finance Leases Lessor Maturities (Details) $ in Thousands |
Jun. 30, 2020
USD ($)
|
---|---|
Leases [Abstract] | |
2020 | $ 44,728 |
2021 | 75,116 |
2022 | 50,853 |
2023 | 45,010 |
2024 | 44,058 |
2025 and thereafter | 188,146 |
Total | $ 447,911 |
Derivative Instruments Fair Value (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Derivative [Line Items] | ||
Asset Derivatives | $ 24 | $ 10,848 |
Not Designated as Hedging Instrument [Member] | Interest Rate Swap [Member] | ||
Derivative [Line Items] | ||
Cash Collateral for Interest Rate Swap Contracts | $ 38,900 | |
Asset Derivatives | $ 300 |
Segment and Geographic Information (Details) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2020
USD ($)
|
Jun. 30, 2019
USD ($)
|
Jun. 30, 2020
USD ($)
segment
|
Jun. 30, 2019
USD ($)
|
Dec. 31, 2019
USD ($)
|
|
Industry Segment Information | |||||
Number of operating segments | segment | 2 | ||||
Number of reportable segments | segment | 2 | ||||
Total leasing revenues | $ 321,397,000 | $ 338,566,000 | $ 642,865,000 | $ 679,425,000 | |
Trading margin | 2,020,000 | 4,496,000 | 3,953,000 | 8,083,000 | |
Net gain on sale of leasing equipment | 4,537,000 | 7,519,000 | 8,614,000 | 15,988,000 | |
Depreciation and amortization expense | 133,292,000 | 135,348,000 | 265,987,000 | 269,957,000 | |
Interest and debt expense | 66,874,000 | 82,260,000 | 135,876,000 | 165,780,000 | |
Realized (gain) loss on derivative instruments, net | 11,000 | (669,000) | (224,000) | (1,373,000) | |
Income before income taxes | 77,276,000 | 95,963,000 | 160,186,000 | 197,610,000 | |
Payments to Acquire Productive Assets | 157,382,000 | 106,005,000 | 219,788,000 | 149,986,000 | |
Equipment held for sale | 144,956,000 | 144,956,000 | $ 114,504,000 | ||
Goodwill at the end of the period | 236,665,000 | 236,665,000 | 236,665,000 | ||
Total assets at the end of the period | 9,681,754,000 | 9,681,754,000 | 9,642,633,000 | ||
Equipment trading revenues | 16,903,000 | 23,209,000 | 32,283,000 | 41,037,000 | |
Expenses | 183,757,000 | 173,954,000 | 363,204,000 | 343,410,000 | |
Unrealized (gain) loss on derivative instruments, net | 300,000 | 1,300,000 | 286,000 | 2,253,000 | |
Debt termination expense | 0 | 558,000 | 31,000 | 558,000 | |
Equipment Leasing | |||||
Industry Segment Information | |||||
Total leasing revenues | 319,620,000 | 337,897,000 | 640,657,000 | 677,967,000 | |
Trading margin | 0 | 0 | 0 | 0 | |
Net gain on sale of leasing equipment | 4,537,000 | 8,614,000 | |||
Depreciation and amortization expense | 133,116,000 | 135,181,000 | 265,634,000 | 269,603,000 | |
Interest and debt expense | 66,483,000 | 81,883,000 | 135,182,000 | 165,057,000 | |
Realized (gain) loss on derivative instruments, net | 11,000 | (667,000) | (223,000) | (1,369,000) | |
Income before income taxes | 74,843,000 | 92,294,000 | 156,360,000 | 190,760,000 | |
Payments to Acquire Productive Assets | 157,382,000 | 106,005,000 | 219,788,000 | 149,986,000 | |
Equipment held for sale | 106,035,000 | 106,035,000 | 89,755,000 | ||
Goodwill at the end of the period | 220,864,000 | 220,864,000 | 220,864,000 | ||
Total assets at the end of the period | 9,563,689,000 | 9,563,689,000 | 9,596,263,000 | ||
Equipment Trading | |||||
Industry Segment Information | |||||
Total leasing revenues | 1,777,000 | 669,000 | 2,208,000 | 1,458,000 | |
Trading margin | 2,020,000 | 4,496,000 | 3,953,000 | 8,083,000 | |
Net gain on sale of leasing equipment | 0 | 0 | 0 | 0 | |
Depreciation and amortization expense | 176,000 | 167,000 | 353,000 | 354,000 | |
Interest and debt expense | 391,000 | 377,000 | 694,000 | 723,000 | |
Realized (gain) loss on derivative instruments, net | 0 | (2,000) | (1,000) | (4,000) | |
Income before income taxes | 2,433,000 | 3,669,000 | 3,826,000 | 6,850,000 | |
Payments to Acquire Productive Assets | 0 | $ 0 | 0 | 0 | |
Equipment held for sale | 38,921,000 | 38,921,000 | 24,749,000 | ||
Goodwill at the end of the period | 15,801,000 | 15,801,000 | 15,801,000 | ||
Total assets at the end of the period | $ 118,065,000 | 118,065,000 | $ 46,370,000 | ||
Intersegment Eliminations | |||||
Industry Segment Information | |||||
Equipment trading revenues | 0 | 0 | |||
Expenses | $ 0 | $ 0 |
Commitments and Contingencies (Details) $ in Millions |
Jun. 30, 2020
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
Purchase commitment payable | $ 45.9 |
Income Taxes Tax Detail (Details) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Income Tax Disclosure [Abstract] | ||||
Effective Income Tax Rate Reconciliation, Percent | 8.70% | 8.50% | 7.70% | 8.20% |
Related Party Transactions (Details) - TriStar [Member] - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 31, 2019 |
|
Related Party Transaction [Line Items] | |||||
Percentage Of Ownership | 50.00% | 50.00% | |||
Direct Financing Lease Receivable [Member] | |||||
Related Party Transaction [Line Items] | |||||
Proceeds from (Repayments of) Related Party Debt | $ 0.5 | $ 0.4 | $ 0.9 | $ 0.9 | |
Loans and Leases Receivable, Related Parties | $ 11.0 | $ 11.0 | $ 10.7 |
Non-Controlling Interest (Details) $ in Millions |
Dec. 31, 2019
USD ($)
|
---|---|
Noncontrolling Interest [Abstract] | |
Aggregate investment | $ 103.0 |
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