UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of report (Date of earliest event reported):  February 22, 2018
 
TRITON INTERNATIONAL LIMITED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

	
					
Bermuda	 	001-37827	 	98-1276572	
(State or other jurisdiction of incorporation)	 	(Commission File Number)	 	(IRS Employer Identification No.)	
 
22 Victoria Street Hamilton HM 12, Bermuda
(Address of Principal Executive Offices, including Zip Code)
 
Telephone: (441) 295-2287
(Registrant's Telephone Number, Including Area Code)
 
Not applicable
(Former Name or Former Address, if Changed Since Last Report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant any of the following provisions:
 
o             Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o             Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o             Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o             Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 2.02. Results of Operations and Financial Condition.
 
On February 22, 2018 , Triton International Limited issued a press release announcing its results of operations for the quarter ended and year ended December 31, 2017 .  A copy of the press release is furnished with this report as Exhibit 99.1.
 
The information in this Current Report on Form 8-K, including the attached exhibit, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be set forth by specific reference in such filing.
 
Item 9.01. Financial Statements and Exhibits.
 
(d)   Exhibits
 
99.1        Press release issued by Triton International Limited dated February 22, 2018 .

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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	
				
 	Triton International Limited	
 	 	
Dated: February 22, 2018	By:	/s/ John Burns	
 	 	Name:	John Burns	
 	 	Title:	Chief Financial Officer	

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INDEX TO EXHIBITS

	
			
EXHIBIT	 	DESCRIPTION	
99.1	 	Press Release issued by Triton International Limited on February 22, 2018 announcing earnings for the quarter and full year ended December 31, 2017.	

TRITON INTERNATIONAL LIMITED REPORTS FOURTH QUARTER AND FULL YEAR 2017 RESULTS AND DECLARES $0.45 QUARTERLY DIVIDEND

Hamilton, Bermuda – February 22, 2018 – Triton International Limited (NYSE: TRTN) ("Triton") today reported results for the fourth quarter and full year ended December 31, 2017 . Triton was formed on July 12, 2016 through the merger of Triton Container International Limited ("TCIL") and TAL International Group, Inc. ("TAL").

Highlights:
		
•	Triton reported Net income attributable to shareholders of $207.2 million and Income before income taxes of $86.7 million for the fourth quarter of 2017 . Included in Net income attributable to shareholders is a one-time tax benefit of $139.4 million recognized as a result of the reduction in the U.S. statutory corporate tax rate as part of the Tax Cuts and Jobs Act.	
		
•	Triton reported Adjusted pre-tax income of $84.9 million in the fourth quarter of 2017 .	
		
•	Utilization averaged 98.3% for the fourth quarter of 2017 and averaged 96.9% for the full year 2017.	
		
•	Triton declared a quarterly dividend of $0.45 per share payable on March 28, 2018 to shareholders of record as of March 12, 2018 .	

Financial Results

The following table depicts Triton’s selected key financial information for the fourth quarter and full years ended December 31, 2017 and 2016 and for the three months ended September 30, 2017 . Financial information for the twelve months ended December 31, 2016 includes the results of operations of TCIL only for periods prior to July 12, 2016.

										
 	(in millions, except per share data)	
 	Three Months Ended,	 	Twelve Months Ended 	
 	December 31, 2017	 	September 30, 2017	 	December 31, 2016	 	December 31, 2017	 	December 31, 2016	
Total leasing revenues	$313.9	 	$302.1	 	$259.5	 	$1,163.5	 	$828.7	
Income (loss) before income taxes	$86.7	 	$70.6	 	$31.1	 	$260.3	 	$(5.8)	
Net income (loss) attributable to shareholders	$207.2	 	$57.2	 	$22.8	 	$344.6	 	$(13.5)	
Adjusted pre-tax income (1)	$84.9	 	$73.0	 	$19.0	 	$259.4	 	$49.1	
Adjusted net income (1)	$68.3	 	$61.1	 	$15.3	 	$211.9	 	$48.9	
Net income (loss) per share - Diluted	$2.57	 	$0.75	 	$0.31	 	$4.52	 	$(0.24)	
Adjusted pre-tax income per share - Diluted (1)	$1.05	 	$0.96	 	$0.26	 	$3.40	 	$0.88	
Adjusted net-tax income per share - Diluted (1)	$0.85	 	$0.81	 	$0.21	 	$2.78	 	$0.87	
(1) Adjusted pre-tax income, Adjusted pre-tax income per share - Diluted, Adjusted net income, Adjusted net income per share - Diluted are non-GAAP financial measures that we believe are useful in evaluating our operating performance. Triton's definition and calculation of Adjusted pre-tax income and Adjusted net income, including reconciliation of such non-GAAP financial measures to the most directly comparable GAAP financial measures, are outlined in the attached schedules.

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Operating Performance

“Triton’s strong operating and financial performance in the fourth quarter of 2017 capped an outstanding year for the company,” commented Brian Sondey, Chairman and Chief Executive Officer of Triton International. “We generated $84.9 million in Adjusted pre-tax income during the fourth quarter, an increase of 16.3% from the third quarter of 2017, and we achieved improvements across all of our key operating metrics.”
“Triton’s performance in the fourth quarter continued to benefit from favorable market conditions and Triton’s unique position in our market. Container demand remains strong, driven by solid growth in global containerized trade, and leasing demand has been further supported by the increasing reliance of many of our shipping line customers on leased containers. Our container utilization increased by 0.6% during the fourth quarter to reach 98.6% as of December 31, 2017, and our utilization currently stands at 98.7% . New dry container prices held firm in the fourth quarter despite the beginning of the traditional slow season for dry containers, and used container sale prices increased during the quarter in response to high leasing company utilization and very low inventories of containers held for sale.”
“2017 was an outstanding year for container investments at Triton, and our leasing revenue and margins continued to grow in the fourth quarter as large numbers of new containers went on-hire. In 2017, Triton took advantage of the favorable supply / demand balance for containers and our leading supply capability to capture an out-sized share of new investments with attractive expected returns. These investments will lock-in a long tail of enhanced profitability and cash flow that will benefit us for many years. Our ability to step in to the supply gap created by the combination of stronger than expected trade growth and constrained buying by many of our customers and several other leasing companies reinforced our position with the world’s largest shipping lines and enhanced our strong reputation for reliability.”
“Our reported GAAP net income in the fourth quarter included several unusual items which we have excluded from our Adjusted profitability. These items include $6.8 million in insurance receipts related to lost leasing revenue due to the default of Hanjin Shipping in 2016, and an income tax benefit of $139.4 million related to the revaluation of our deferred tax liability as a result of the reduction in the U.S. statutory corporate tax rate. We do not expect further meaningful financial impacts from recovery expenses or insurance collections related to the Hanjin bankruptcy. We expect the primary future impact from the reduction in the U.S. statutory corporate tax rate will be a reduction in our GAAP tax accrual rate beginning in the first quarter of 2018.”
Outlook

Mr. Sondey continued, “We expect market conditions will remain favorable in 2018. Our customers are indicating they expect trade growth will remain solidly positive, and the supply of containers remains well controlled, with a moderate amount of new container inventory and very limited inventories of available used containers. Container prices remain in the range of $2,150 - $2,200, and we expect many of our shipping line customers will continue to rely heavily on leased containers for new additions to their fleets. Some of our competitors who did not invest in large numbers of containers in 2017 have started to invest more actively, and market lease rates for new dry container leasing transactions have moderated from where they were during the peak season of 2017. While competition has normalized, we have many advantages in our market and we continue to win a substantial portion of new container leasing opportunities with attractive expected returns. Dry container market leasing rates remain above our portfolio average, mitigating the risk from lease expirations. We are also well protected from the risk of rising interest rates since over 86% of our debt is either fixed rate or hedged to fixed rates with

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interest rate swaps, and the weighted average life of our fixed interest rate debt and swaps was 48 months as of December 31, 2017.”
“The first quarter is usually our weakest quarter of the year since it represents the slow season for dry containers and since it has the fewest number of days. We usually experience a sequential decrease in profitability from the fourth to the first quarter. However, our level of container drop-offs has remained very low so far this year, and new container deal and pick-up activity have been solid. Used container sale prices have continued to trend upwards, and we will benefit from reduced administrative expense in the first quarter as incentive compensation accruals return to their normal level after being elevated in 2017 due to performance well above our financial plan. As a result, we expect our Adjusted pre-tax income will increase slightly from the fourth quarter of 2017 to the first quarter of 2018 despite the impacts of seasonality and two fewer revenue days. Starting in the first quarter of 2018, we will also benefit from a lower GAAP tax accrual rate, and we expect a larger sequential increase in our Adjusted net income. Looking forward in 2018, we expect our Adjusted pre-tax income and Adjusted net income will increase sequentially throughout the year if market conditions remain favorable.”

Dividend

Triton's Board of Directors has approved and declared a $0.45 per share quarterly cash dividend on its issued and outstanding common shares, payable on March 28, 2018 to shareholders of record at the close of business on March 12, 2018 .

Investors’ Webcast

Triton will hold a Webcast at 9 a.m. (New York time) on Friday, February 23, 2018 to discuss its fourth quarter and full year results. To listen by phone, please dial 1-877-418-5277 (domestic) or 1-412-717-9592 (international) approximately 15 minutes prior to the start time and reference the Triton International Limited conference call. An archive of the Webcast will be available one hour after the live call through Friday, April 6, 2018 . To access the live Webcast or archive, please visit Triton’s website at http://www.trtn.com.

About Triton International Limited

Triton International Limited is the parent of Triton Container International Limited and TAL International Group, Inc., each of which merged under Triton on July 12, 2016 to create the world’s largest lessor of intermodal freight containers and chassis. Triton operates a container fleet over five million twenty-foot equivalent units ("TEU"), and our global operations include acquisition, leasing, re-leasing and subsequent sale of multiple types of intermodal containers and chassis.

Contact

Andrew Greenberg
Senior Vice President,
Finance & Investor Relations
(914) 697-2900

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The following table sets forth the combined equipment fleet utilization(a) as of and for the periods indicated:

								
 	Quarter Ended	
 	December 31, 2017	 	September 30, 2017	 	June 30, 2017	 	March 31, 2017	
Average Utilization	98.3%	 	97.6%	 	96.5%	 	95.3%	
Ending Utilization	98.6%	 	98.0%	 	97.1%	 	95.8%	

(a) Utilization is computed by dividing total units on lease (in cost equivalent units, or "CEUs") by the total units in fleet (in CEUs), excluding new units not yet leased and off-hire units designated for sale. For the utilization calculation, units on lease to Hanjin were treated as off-lease effective August 1, 2016.

The following table provides the composition of our equipment fleet as of December 31, 2017 (in units, TEUs and cost equivalent units, or “CEUs”):

				
 	December 31, 2017	
 	Equipment Fleet in Units	 	Equipment Fleet in TEUs	
Dry    	3,077,144	 	5,000,043	
Refrigerated    	218,429	 	419,673	
Special    	89,066	 	159,172	
Tank    	12,124	 	12,124	
Chassis    	22,523	 	41,068	
Equipment leasing fleet    	3,419,286	 	5,632,080	
Equipment trading fleet	10,510	 	16,907	
Total    	3,429,796	 	5,648,987	
 	 	 	 	
 	December 31, 2017	 	 	
 	Equipment Fleet in CEUs	 	 	
Operating leases	6,678,282	 	 	
Finance leases	328,024	 	 	
Equipment trading fleet	51,762	 	 	
Total    	7,058,068	 	 	

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Important Cautionary Information Regarding Forward-Looking Statements

Certain statements in this release, other than purely historical information, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements that include the words "expect," "intend," "plan," "believe," "project," "anticipate," "will," "may," "would" and similar statements of a future or forward-looking nature may be used to identify forward-looking statements. All forward-looking statements address matters that involve risks and uncertainties, many of which are beyond Triton's control. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in such statements and, therefore, you should not place undue reliance on any such statements.
These factors include, without limitation, economic, business, competitive, market and regulatory conditions and the following: uncertainty as to the long-term value of Triton's common shares; decreases in the demand for leased containers; decreases in market leasing rates for containers; difficulties in re-leasing containers after their initial fixed-term leases; our customers' decisions to buy rather than lease containers; our dependence on a limited number of customers for a substantial portion of our revenues; customer defaults; decreases in the selling prices of used containers; extensive competition in the container leasing industry; difficulties stemming from the international nature of our business; decreases in the demand for international trade; disruption to our operations resulting from the political and economic policies of the United States and other countries, particularly China, including increased tariffs; disruption to our operations from failures of or attacks on our information technology systems; our compliance or failure to comply with laws and regulations related to economic and trade sanctions, security, anti-terrorism, environmental protection and corruption; our ability to obtain sufficient capital to support our growth; restrictions on our businesses imposed by the terms of our debt agreements; changes in the tax laws in the United States and other countries and other risks and uncertainties, including those risk factors set forth in the section entitled "Risk Factors" to our Form 10-K, with the SEC, on March 17, 2017 .
The foregoing list of important factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included herein and elsewhere. Any forward-looking statements made herein are qualified in their entirety by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on Triton or its business or operations. Except to the extent required by applicable law, we undertake no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

-Financial Tables Follow-

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TRITON INTERNATIONAL LIMITED
Consolidated Balance Sheets
(In thousands, except share data)

								
 	December 31, 2017	 	December 31, 2016	
ASSETS:	 	 	 	
Leasing equipment, net of accumulated depreciation of $2,218,897 and $1,787,505	$	8,364,484		 	$	7,370,519		
Net investment in finance leases, net of allowances of $0 and $527	295,891		 	346,810		
Equipment held for sale	43,195		 	99,863		
Revenue earning assets	8,703,570		 	7,817,192		
Cash and cash equivalents	132,031		 	113,198		
Restricted cash	94,140		 	50,294		
Accounts receivable, net of allowances of $3,002 and $28,082	199,876		 	173,585		
Goodwill	236,665		 	236,665		
Lease intangibles, net of accumulated amortization of $144,081 and $55,484	154,376		 	242,973		
Insurance receivable	—		 	17,170		
Other assets	49,591		 	56,751		
Fair value of derivative instruments	7,376		 	5,743		
Total assets	$	9,577,625		 	$	8,713,571		
LIABILITIES AND SHAREHOLDERS' EQUITY:	 	 	 	
Equipment purchases payable	$	128,133		 	$	83,567		
Fair value of derivative instruments	2,503		 	9,404		
Accounts payable and other accrued expenses	109,999		 	143,098		
Net deferred income tax liability	215,439		 	317,316		
Debt, net of unamortized debt costs of $40,636 and $19,999	6,911,725		 	6,353,449		
Total liabilities	7,367,799		 	6,906,834		
Shareholders' equity:	 	 	 	
Common shares, $0.01 par value, 294,000,000 shares authorized, 80,687,757 and 74,376,025 shares issued and outstanding respectively	807		 	744		
Undesignated shares $0.01 par value, 6,000,000 shares authorized, no shares issued and outstanding	—		 	—		
Additional paid-in capital	889,168		 	690,418		
Accumulated earnings	1,159,367		 	945,313		
Accumulated other comprehensive income	26,942		 	26,758		
Total shareholders' equity	2,076,284		 	1,663,233		
Non-controlling interests
	133,542		 	143,504		
Total equity
	$	2,209,826		 	$	1,806,737		
Total liabilities and shareholders' equity	$	9,577,625		 	$	8,713,571		

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

																
 	Three Months Ended   December 31,	 	Twelve Months Ended   December 31,	
 	2017	 	2016	 	2017	 	2016	
Leasing revenues:	 	 	 	 	 	 	 	
Operating leases	$	308,751		 	$	253,095		 	$	1,141,165		 	$	813,357		
Finance leases	5,105		 	6,452		 	22,352		 	15,337		
Total leasing revenues	313,856		 	259,547		 	1,163,517		 	828,694		
 	 	 	 	 	 	 	 	
Equipment trading revenues	7,206		 	6,597		 	37,419		 	16,418		
Equipment trading expenses	(6,111	)	 	(6,211	)	 	(33,235	)	 	(15,800	)	
Trading margin	1,095		 	386		 	4,184		 	618		
 	 	 	 	 	 	 	 	
Net gain (loss) on sale of leasing equipment	10,749		 	(4,261	)	 	35,812		 	(20,347	)	
 	 	 	 	 	 	 	 	
Operating expenses:	 	 	 	 	 	 	 	
Depreciation and amortization	130,168		 	120,006		 	500,720		 	392,592		
Direct operating expenses	11,495		 	29,959		 	62,891		 	84,256		
Administrative expenses	21,341		 	20,481		 	87,609		 	65,618		
Transaction and other costs A 	5,932		 	399		 	9,272		 	66,916		
Provision for doubtful accounts	2,103		 	1,103		 	3,347		 	23,304		
Insurance recovery income	(6,764	)	 	—		 	(6,764	)	 	—		
Total operating expenses	164,275		 	171,948		 	657,075		 	632,686		
Operating income	161,425		 	83,724		 	546,438		 	176,279		
Other expenses:	 	 	 	 	 	 	 	
Interest and debt expense	74,271		 	61,389		 	282,347		 	184,014		
Realized (gain) loss on derivative instruments, net	(2	)	 	1,171		 	900		 	3,438		
Unrealized (gain) on derivative instruments, net	(1,317	)	 	(9,648	)	 	(1,397	)	 	(4,405	)	
Write-off of debt costs	2,857		 	—		 	6,973		 	141		
Other (income), net	(1,085	)	 	(301	)	 	(2,637	)	 	(1,076	)	
Total other expenses	74,724		 	52,611		 	286,186		 	182,112		
Income (loss) before income taxes	86,701		 	31,113		 	260,252		 	(5,833	)	
Income tax (benefit) expense	(122,962	)	 	5,489		 	(93,274	)	 	(48	)	
Net income (loss)	$	209,663		 	$	25,624		 	$	353,526		 	$	(5,785	)	
Less: income attributable to non-controlling interest	2,503		 	2,846		 	8,928		 	7,732		
Net income (loss) attributable to shareholders	$	207,160		 	$	22,778		 	$	344,598		 	$	(13,517	)	
Net income (loss) per common share—Basic	$	2.59		 	$	0.31		 	$	4.55		 	$	(0.24	)	
Net income (loss) per common share—Diluted	$	2.57		 	$	0.31		 	$	4.52		 	$	(0.24	)	
Cash dividends paid per common share	$	0.45		 	$	0.45		 	$	1.80		 	$	1.35		
Weighted average number of common shares and non-voting common shares outstanding—Basic	79,936		 	73,735		 	75,679		 	56,032		
Dilutive stock options and restricted stock	620		 	112		 	509		 	—		
Weighted average number of common shares and non-voting common shares outstanding—Diluted	80,556		 	73,847		 	76,188		 	56,032		

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

												
 	Year Ended December 31, 2017	 	Year Ended December 31, 2016	 	Year Ended December 31, 2015	
Cash flows from operating activities:	 	 	 	 	 	
Net income (loss)	$	353,526		 	$	(5,785	)	 	$	127,669		
Adjustments to reconcile net income (loss) to net cash provided by operating activities:	 	 	 	 	 	
Depreciation and amortization	500,720		 	392,592		 	300,470		
Debt related amortization	13,401		 	5,934		 	5,674		
Amortization of lease intangible	92,053		 	55,484		 	—		
Net (gain) loss on sale of leasing equipment	(35,812	)	 	20,347		 	(2,013	)	
Unrealized (gain) loss on derivative instruments, net	(1,397	)	 	(4,405	)	 	2,240		
Write-off of debt costs	6,973		 	141		 	1,170		
Deferred income taxes	(94,678	)	 	(809	)	 	3,353		
Share-based compensation	5,641		 	5,399		 	12,048		
Changes in operating assets and liabilities, net of acquired assets and liabilities:	 	 	 	 	 	
Net equipment sold for resale activity	8,821		 	4,031		 	—		
Accounts receivables	(5,967	)	 	(1,592	)	 	5,494		
Accounts payable and other accrued expenses	(42,402	)	 	10,694		 	(2,768	)	
Other assets	3,799		 	2,194		 	(2,814	)	
Cash received (payments) on termination of derivative instruments	2,117		 	(37	)	 	(1,219	)	
Net cash provided by operating activities	806,795		 	484,188		 	449,304		
Cash flows from investing activities:	 	 	 	 	 	
Purchases of leasing equipment and investments in finance leases	(1,562,863	)	 	(629,332	)	 	(398,799	)	
Proceeds from sale of equipment, net of selling costs	190,744		 	145,572		 	171,719		
Cash collections on finance lease receivables, net of income earned	60,673		 	38,650		 	14,178		
Cash and cash equivalents acquired	—		 	50,349		 	—		
Other	55		 	(685	)	 	(2,819	)	
Net cash (used in) investing activities	(1,311,391	)	 	(395,446	)	 	(215,721	)	
Cash flows from financing activities:	 	 	 	 	 	
Issuance (redemption) of common shares	192,861		 	(7,410	)	 	—		
Financing fees paid under debt facilities	(34,494	)	 	(6,554	)	 	(2,972	)	
Borrowings under debt facilities and proceeds under capital lease obligations	3,102,825		 	661,971		 	685,500		
Payments under debt facilities and capital lease obligations	(2,539,711	)	 	(602,152	)	 	(886,979	)	
(Increase) decrease in restricted cash	(43,846	)	 	31,396		 	8,877		
Distributions to non-controlling interest	(18,890	)	 	(24,732	)	 	(46,927	)	
Dividends paid	(135,557	)	 	(84,752	)	 	—		
Other	241		 	—		 	—		
Net cash provided by (used in) financing activities	523,429		 	(32,233	)	 	(242,501	)	
Net increase (decrease) in cash and cash equivalents	$	18,833			$	56,509		 	$	(8,918	)	
Cash and cash equivalents, beginning of period	113,198		 	56,689		 	65,607		
Cash and cash equivalents, end of period	$	132,031			$	113,198		 	$	56,689		
Supplemental disclosures:	 	 	 	 	 	
Interest paid	$	269,601		 	$	181,559		 	$	131,749		
Income taxes (refunded) paid	$	(288	)	 	$	309		 	$	1,477		
Supplemental non-cash investing activities:	 	 	 	 	 	
Equipment purchases payable	$	128,133		 	$	83,567		 	$	12,128		
Shares issued to acquire TAL	$	—		 	$	510,186		 	$	—		

8

A Transaction costs associated with the merger of TCIL and TAL and other costs for the fourth quarter and full year ended December 31, 2017 and 2016 were as follows (in thousands):

	
																
 	Three Months Ended   December 31,	 	Twelve Months Ended   December 31,	
 	2017	 	2016	 	2017	 	2016	
Employee compensation costs	$	5,931		 	$	209		 	$	9,271		 	$	46,838		
Professional fees	—		 	78		 	—		 	14,295		
Legal expenses	1		 	81		 	10		 	3,371		
Other	—		 	31		 	(9	)	 	2,412		
     Total	$	5,932		 	$	399		 	$	9,272		 	$	66,916		
Employee compensation costs include costs to maintain and retain key employees, severance expenses, and certain stock compensation expense, including retention and stock compensation expense pursuant to plans established as part of TCIL's 2011 re-capitalization. Professional fees and legal expenses include costs paid for services directly related to the closing of the merger and include legal fees, accounting fees and transaction and advisory fees.

9

Non-GAAP Financial Measures
We use the terms "Adjusted pre-tax income "and "Adjusted net income" throughout this press release.
Adjusted pre-tax income is defined as income before income taxes as further adjusted for certain items which are described in more detail below, which management believes are not representative of our operating performance. Adjusted pre-tax income excludes gains and losses on interest rate swaps, the write-off of debt costs, transaction and other costs, and non-controlling interest. Adjusted net income is defined as net income further adjusted for the items discussed above, net of income tax.
Adjusted pre-tax income and Adjusted net income are not presentations made in accordance with U.S. GAAP. Adjusted pre-tax income and Adjusted net income should not be considered as alternatives to, or more meaningful than, amounts determined in accordance with U.S. GAAP, including net income.
We believe that Adjusted pre-tax income and Adjusted net income are useful to an investor in evaluating our operating performance because these measures:

•	are widely used by securities analysts and investors to measure a company’s operating performance;	

•	help investors to more meaningfully evaluate and compare the results of our operations from period to period by removing the impact of our capital structure, our asset base and certain non-routine events which we do not expect to occur in the future; and	

•	are used by our management for various purposes, including as measures of operating performance and liquidity, to assist in comparing performance from period to period on a consistent basis, in presentations to our board of directors concerning our financial performance and as a basis for strategic planning and forecasting.	
We have provided reconciliations of Net income (loss) before income taxes and Net income (loss) attributable to shareholders, the most directly comparable U.S. GAAP measures, to Adjusted pre-tax income and Adjusted net income in the tables below for the three and twelve months ended December 31, 2017 and 2016 and for the three months ended September 30, 2017.

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TRITON INTERNATIONAL LIMITED
Non-GAAP Reconciliations of Adjusted Pre-tax Income and Adjusted Net Income (In Thousands, except per share amounts)	
 	Three Months Ended,	Twelve Months Ended,	
 	December 31, 2017	September 30, 2017	December 31, 2016	December 31, 2017	December 31, 2016	
Income (loss) before income taxes	$86,701	$70,609	$31,113	$260,252	$(5,833)	
Add (subtract):	 	 	 	 	 	
Unrealized (gain) loss on derivative instruments, net	(1,317)	629	(9,648)	(1,397)	(4,405)	
Insurance recovery income	(6,764)	—	—	(6,764)	—	
   Write-off of debt costs	2,857	4,073	—	6,973	141	
   Transaction and other costs	5,932	32	399	9,272	66,916	
Less:	 	 	 	 	 	
Income attributable to non-controlling interest	2,503	2,390	2,846	8,928	7,732	
Adjusted pre-tax income	$84,906	$72,953	$19,018	$259,408	$49,087	
Adjusted pre-tax income per share - Diluted	$1.05	$0.96	$0.26	$3.40	$0.88	
Weighted average number of common shares outstanding - Diluted	80,556	75,707	73,847	76,188	56,032	
 	 	 	 	 	 	
 	Three Months Ended,	Twelve Months Ended,	
 	December 31, 2017	September 30, 2017	December 31, 2016	December 31, 2017	December 31, 2016	
Net income (loss) attributable to shareholders	$207,160	$57,156	$22,778	$344,598	$(13,517)	
Add (subtract):	 	 	 	 	 	
Unrealized (gain) loss on derivative instruments, net	(1,084)	515	(7,775)	(1,150)	(4,389)	
Insurance recovery income	(5,567)	—	—	(5,567)	—	
   Write-off of debt costs	2,327	3,377	—	5,739	141	
Transaction and other costs	4,862	60	322	7,631	66,679	
One-time tax benefit related to U.S. statutory rate reduction	(139,359)	—	—	(139,359)	—	
Adjusted net income	$68,339	$61,108	$15,325	$211,892	$48,914	
Adjusted net income per share - Diluted	$0.85	$0.81	$0.21	$2.78	$0.87	
Weighted average number of common shares outstanding - Diluted	80,556	75,707	73,847	76,188	56,032	

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