Triton International Limited Reports First Quarter 2017 Results and Declares $0.45 Quarterly Dividend
First Quarter and Recent Highlights:
- Triton reported Net income attributable to shareholders of
$34.6 million and Income before income taxes of$43.4 million for the first quarter of 2017. - Triton reported Adjusted pre-tax income of
$42.7 million in the first quarter of 2017. - Utilization averaged 95.3% for the first quarter of 2017.
- Triton announced a quarterly dividend of
$0.45 per share payable onJune 22, 2017 to shareholders of record as of June 1, 2017.
Financial Results
The following table depicts Triton’s selected key financial information for the first quarter of 2017, the fourth quarter of 2016, and the first quarter of 2016 (dollars in millions, except per share data). Financial information for periods prior to
Three Months Ended, | ||||||||
March 31, 2017 | December 31, 2016 | March 31, 2016 | ||||||
Leasing revenues | $265.6 | $259.5 | $163.0 | |||||
Income before income taxes | $43.4 | $31.1 | $11.1 | |||||
Net income attributable to shareholders | $34.6 | $22.8 | $8.7 | |||||
Net income per share - diluted | $0.47 | $0.31 | $0.22 | |||||
Adjusted pre-tax income(1) | $42.7 | $19.0 | $17.7 | |||||
Adjusted net income(1) | $35.4 | $15.3 | $16.0 | |||||
(1) Adjusted pre-tax income and Adjusted net income 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.
Operating Performance
“We are very pleased with Triton’s solid start to 2017, in which we clearly benefited from our market-leading scale, cost structure and operational capabilities,” commented
“Throughout the first several months of 2017, market conditions have remained favorable, especially for our dry container product line. Global containerized trade growth remains moderately positive, and a number of our customers have indicated their volumes have been above expectations. The inventory of new containers and depot stocks of used containers are currently very low as we approach the traditional summer peak season for dry containers. While Triton has supported the requirements of our customers by ordering a high volume of new containers so far this year, overall new container production has been constrained by the financial challenges facing many shipping lines and leasing companies. Despite a recent dip in steel prices in
“Triton’s operating and financial performance rebounded quickly in the first quarter. Container pick-up volumes and new container lease transaction activity were high, despite the fact that the first quarter is typically the weakest period for dry containers. Our average container utilization increased 1.7% from the fourth quarter of 2016 to the first quarter of 2017, and our utilization currently stands at 96.4%. Triton generated
Outlook
Mr. Sondey concluded, “In general, we expect market conditions to remain favorable for at least the next several quarters. We expect the supply / demand balance for containers to remain tight, and that our key operating metrics will continue to improve. We also anticipate that we will achieve sequential growth in our Adjusted pre-tax income from the first quarter to the second quarter of 2017, reflecting further improvement in our operating performance and reduced impacts from purchase accounting. We also expect that our Adjusted pre-tax income will increase from its second quarter level through the end of the year, if market conditions remain strong.”
Dividend
Triton’s Board of Directors has approved and declared a
Investors’ Webcast
Triton will hold a Webcast at
About
The following table sets forth the combined equipment fleet utilization(a) for TCIL and TAL as of and for the periods indicated:
Quarter Ended | ||||||||||||
March 31, 2017 |
December 31, 2016 |
September 30, 2016 |
June 30, 2016 |
March 31, 2016 |
||||||||
Average Utilization | 95.3% | 93.6% | 92.4% | 93.3% | 94.0% | |||||||
March 31, 2017 |
December 31, 2016 |
September 30, 2016 |
June 30, 2016 |
March 31, 2016 |
||||||||
Ending Utilization | 95.8% | 94.8% | 92.6% | 93.7% | 93.5% | |||||||
(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
The following table provides the composition of the combined equipment fleet as of March 31, 2017, December 31, 2016, and March 31, 2016 (in units, TEUs and CEUs):
Equipment Fleet in Units | Equipment Fleet in TEU | |||||||||||||
March 31, 2017 |
December 31, |
March 31, 2016 | March 31, 2017 |
December 31, |
March 31, 2016 | |||||||||
Dry | 2,835,075 | 2,747,497 | 2,636,095 | 4,604,595 | 4,443,935 | 4,232,676 | ||||||||
Refrigerated | 220,158 | 217,564 | 202,337 | 422,922 | 417,634 | 387,267 | ||||||||
Special | 82,867 | 84,077 | 87,305 | 145,410 | 147,217 | 152,477 | ||||||||
Tank | 11,958 | 11,961 | 11,422 | 11,958 | 11,961 | 11,422 | ||||||||
Chassis | 21,116 | 21,172 | 21,806 | 38,220 | 38,321 | 39,395 | ||||||||
Equipment leasing fleet | 3,171,174 | 3,082,271 | 2,958,965 | 5,223,105 | 5,059,068 | 4,823,237 | ||||||||
Equipment trading fleet | 20,280 | 15,927 | 19,874 | 31,290 | 26,276 | 33,423 | ||||||||
Total | 3,191,454 | 3,098,198 | 2,978,839 | 5,254,395 | 5,085,344 | 4,856,660 | ||||||||
|
|
Equipment in CEU |
||||||||||||
March 31, 2017 |
December 31, 2016 |
March 31, 2016 |
||||||||||||
Operating leases |
6,295,201 |
6,126,320 |
5,912,651 |
|||||||||||
Finance leases |
360,869 |
368,468 |
250,874 |
|||||||||||
Equipment trading fleet |
74,638 |
72,646 |
98,041 |
|||||||||||
Total |
6,730,708 |
6,567,434 |
6,261,566 |
|||||||||||
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: failure to realize the anticipated benefits of the combination of TCIL and TAL, including as a result of a delay or difficulty in integrating the businesses of TCIL and TAL; uncertainty as to the long-term value of Triton's common shares; the expected amount and timing of cost savings and operating synergies resulting from the transaction; 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; their customers' decisions to buy rather than lease containers; their dependence on a limited number of customers for a substantial portion of their 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 their businesses; decreases in the demand for international trade; disruption to their operations resulting from the political and economic policies of foreign countries, particularly
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.
TRITON INTERNATIONAL LIMITED | |||||||
Consolidated Balance Sheets | |||||||
(Dollars in thousands, except share data) | |||||||
(Unaudited) | |||||||
March 31, 2017 |
December 31, 2016 |
||||||
ASSETS: | |||||||
Leasing equipment, net of accumulated depreciation of $1,887,657 and $1,787,505 | $ | 7,605,903 | $ | 7,370,519 | |||
Net investment in finance leases, net of allowances of $527 and $527 | 335,253 | 346,810 | |||||
Equipment held for sale | 104,954 | 99,863 | |||||
Revenue earning assets | 8,046,110 | 7,817,192 | |||||
Cash and cash equivalents | 135,442 | 113,198 | |||||
Restricted cash | 57,628 | 50,294 | |||||
Accounts receivable, net of allowances of $27,884 and $28,082 | 167,720 | 173,585 | |||||
Goodwill | 236,665 | 236,665 | |||||
Lease intangibles, net of accumulated amortization of $80,225 and $56,159 | 222,532 | 246,598 | |||||
Insurance receivables | 32,310 | 17,170 | |||||
Other assets | 53,750 | 53,126 | |||||
Fair value of derivative instruments | 7,902 | 5,743 | |||||
Total assets | $ | 8,960,059 | $ | 8,713,571 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY: | |||||||
Equipment purchases payable | $ | 200,728 | $ | 83,567 | |||
Fair value of derivative instruments | 6,206 | 9,404 | |||||
Accounts payable and other accrued expenses | 143,459 | 143,098 | |||||
Net deferred income tax liability | 317,841 | 317,316 | |||||
Debt, net of unamortized deferred financing costs of $26,005 and $19,999 | 6,478,602 | 6,353,449 | |||||
Total liabilities | 7,146,836 | 6,906,834 | |||||
Shareholders' equity: | |||||||
Common shares, $0.01 par value, 294,000,000 shares authorized 74,497,727 and 74,376,025 |
745 | 744 | |||||
Undesignated shares $0.01 par value, 6,000,000 shares authorized, no shares issued and outstanding | — | — | |||||
Additional paid-in capital | 691,536 | 690,418 | |||||
Accumulated earnings | 952,947 | 945,313 | |||||
Accumulated other comprehensive income | 27,697 | 26,758 | |||||
Total shareholders' equity | 1,672,925 | 1,663,233 | |||||
Non-controlling interests | 140,298 | 143,504 | |||||
Total equity | 1,813,223 | 1,806,737 | |||||
Total liabilities and shareholders' equity | $ | 8,960,059 | $ | 8,713,571 | |||
TRITON INTERNATIONAL LIMITED | ||||||||
Consolidated Statements of Operations | ||||||||
(Dollars and shares in thousands, except per share amounts) | ||||||||
(Unaudited) | ||||||||
Three Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
Leasing revenues: | ||||||||
Operating leases | $ | 259,585 | $ | 160,995 | ||||
Finance leases | 6,017 | 2,030 | ||||||
Total leasing revenues | 265,602 | 163,025 | ||||||
Equipment trading revenues | 5,484 | — | ||||||
Equipment trading expenses | (5,092 | ) | — | |||||
Trading margin | 392 | — | ||||||
Net gain (loss) on sale of leasing equipment | 5,161 | (1,837 | ) | |||||
Operating expenses: | ||||||||
Depreciation and amortization | 117,880 | 79,144 | ||||||
Direct operating expenses | 21,954 | 14,467 | ||||||
Administrative expenses | 22,967 | 14,513 | ||||||
Transaction and other costsA | 2,472 | 3,411 | ||||||
Provision (reversal) for doubtful accounts | 574 | (119 | ) | |||||
Total operating expenses | 165,847 | 111,416 | ||||||
Operating income | 105,308 | 49,772 | ||||||
Other expenses: | ||||||||
Interest and debt expense | 63,504 | 33,698 | ||||||
Realized loss on derivative instruments, net | 599 | 654 | ||||||
Unrealized (gain) loss on derivative instruments, net | (1,498 | ) | 4,596 | |||||
Other (income), net | (742 | ) | (233 | ) | ||||
Total other expenses | 61,863 | 38,715 | ||||||
Income before income taxes | 43,445 | 11,057 | ||||||
Income tax expense | 7,142 | 992 | ||||||
Net income | $ | 36,303 | $ | 10,065 | ||||
Less: income attributable to noncontrolling interest | 1,692 | 1,323 | ||||||
Net income attributable to shareholders | $ | 34,611 | $ | 8,742 | ||||
Net income per common share—Basic | $ | 0.47 | $ | 0.22 | ||||
Net income per common share—Diluted | $ | 0.47 | $ | 0.22 | ||||
Cash dividends paid per common share | $ | 0.45 | $ | — | ||||
Weighted average number of common shares outstanding—Basic | 73,741 | 40,429 | ||||||
Dilutive share options and restricted shares | 292 | — | ||||||
Weighted average number of common shares outstanding—Diluted | 74,033 | 40,429 | ||||||
(A) See definitions
TRITON INTERNATIONAL LIMITED | ||||||||
Consolidated Statements of Cash Flows | ||||||||
(Dollars in thousands) | ||||||||
(Unaudited) | ||||||||
Three Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 36,303 | $ | 10,065 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 117,880 | 79,144 | ||||||
Amortization of deferred financing costs and other debt related amortization | 2,490 | 1,265 | ||||||
Amortization of lease premiums | 24,138 | — | ||||||
Share compensation expense | 1,057 | 1,358 | ||||||
Net (gain) loss on sale of leasing equipment | (5,161 | ) | 1,837 | |||||
Unrealized (gain) loss on derivative instruments | (1,498 | ) | 4,596 | |||||
Deferred income taxes | 6,593 | 265 | ||||||
Changes in operating assets and liabilities, net of acquired assets and liabilities: | ||||||||
Decrease in accounts receivable | 3,353 | 1,661 | ||||||
(Decrease) increase in accounts payable and other accrued expenses | (3,978 | ) | 3,522 | |||||
Net equipment (purchased) for resale activity | (8,893 | ) | — | |||||
Other changes in operating assets and liabilities | (9,343 | ) | 3,055 | |||||
Net cash provided by operating activities | 162,941 | 106,768 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of leasing equipment and investments in finance leases | (265,706 | ) | (43,092 | ) | ||||
Proceeds from sale of equipment, net of selling costs | 34,988 | 32,468 | ||||||
Cash collections on finance lease receivables, net of income earned | 15,580 | 3,869 | ||||||
Other | (405 | ) | (356 | ) | ||||
Net cash used in investing activities | (215,543 | ) | (7,111 | ) | ||||
Cash flows from financing activities: | ||||||||
Financing fees paid under debt facilities | (7,517 | ) | (188 | ) | ||||
Borrowings under debt facilities | 388,253 | 7,500 | ||||||
Payments under debt facilities and capital lease obligations | (260,475 | ) | (106,962 | ) | ||||
(Increase) decrease in restricted cash | (7,334 | ) | 734 | |||||
Common share dividends paid | (33,183 | ) | — | |||||
Distributions to noncontrolling interest | (4,898 | ) | (6,960 | ) | ||||
Net cash provided by (used in) financing activities | 74,846 | (105,876 | ) | |||||
Net increase (decrease) in unrestricted cash and cash equivalents | $ | 22,244 | $ | (6,219 | ) | |||
Unrestricted cash and cash equivalents, beginning of period | 113,198 | 56,689 | ||||||
Unrestricted cash and cash equivalents, end of period | $ | 135,442 | $ | 50,470 | ||||
Supplemental non-cash investing activities: | ||||||||
Equipment purchases payable | $ | 200,728 | $ | 17,483 | ||||
A Transaction costs associated with the merger of TCIL and TAL and other costs for the three months ended March 31, 2017 and 2016 were as follows:
Three Months Ended March 31, | |||||||||
2017 | 2016 | ||||||||
Employee compensation costs | $ | 2,463 | $ | 2,346 | |||||
Professional fees | — | 434 | |||||||
Legal expenses | 9 | 631 | |||||||
Total | $ | 2,472 | $ | 3,411 | |||||
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.
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 deferred financing costs, transaction and other costs, and noncontrolling 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 before income taxes and Net income 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 months ended March 31, 2017, the three months ended
TRITON INTERNATIONAL LIMITED | |||||||||||||
Non-GAAP Reconciliations of Adjusted Pre-tax Income and Adjusted Net Income | |||||||||||||
(Dollars in Thousands) | |||||||||||||
Three Months Ended, | |||||||||||||
March 31, |
December 31, |
March 31, |
|||||||||||
Income before income taxes | $ | 43,445 | $ | 31,113 | $ | 11,057 | |||||||
Add: | |||||||||||||
Unrealized (gain) loss on derivative instruments, net | (1,498 | ) | (9,648 | ) | 4,596 | ||||||||
Transaction and other costs | 2,472 | 399 | 3,411 | ||||||||||
Less: | |||||||||||||
Income attributable to noncontrolling interest | 1,692 | 2,846 | 1,323 | ||||||||||
Adjusted pre-tax income | $ | 42,727 | $ | 19,018 | $ | 17,741 | |||||||
Three Months Ended, | |||||||||||||
March 31, |
December 31, |
March 31, |
|||||||||||
Net income attributable to shareholders | $ | 34,611 | $ | 22,778 | $ | 8,742 | |||||||
Add: | |||||||||||||
Unrealized (gain) loss on derivative instruments, net | (1,252 | ) | (7,775 | ) | 4,184 | ||||||||
Transaction and other costs | 2,066 | 322 | 3,105 | ||||||||||
Adjusted net income | $ | 35,425 | $ | 15,325 | $ | 16,031 | |||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20170511006454/en/
Source:
Triton International Limited
Andrew Greenberg, 914-697-2900
Senior Vice President
Finance & Investor Relations