Triton International Reports Fourth Quarter and Full Year 2018 Results and Declares Quarterly Dividend of $0.52
Highlights
- Adjusted net income was
$99.4 million in the fourth quarter of 2018, or$1.25 per diluted share, an increase of 47.1% per diluted share from the fourth quarter of 2017 and an increase of 6.8% per diluted share from the third quarter of 2018. - Net income attributable to shareholders was
$69.6 million in the fourth quarter of 2018, or$0.87 per diluted share. Net income attributable to shareholders was reduced by$24.7 million non-cash income tax expense for intra-entity transfers of containers. - Adjusted net income was
$363.0 million for the full year of 2018, or$4.52 per diluted share, an increase of 62.6% per diluted share from 2017. - Net income attributable to shareholders was
$349.6 million for the full year of 2018, or$4.35 per diluted share. - Utilization averaged 98.2% for the fourth quarter of 2018 and averaged 98.6% for the full year 2018.
- Triton has purchased 2.1 million shares under the share repurchase program authorized in
August 2018 . - Triton's Board of Directors announced a quarterly dividend of
$0.52 per share payable onMarch 28, 2019 to shareholders of record as ofMarch 12, 2019 .
Financial Results
The following table summarizes Triton’s selected key financial information for the three and twelve months ended
(in millions, except per share data) | |||||||||||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||
December 31, |
September 30, |
December 31, |
December 31, |
December 31, |
|||||||||||||||||||||
Total leasing revenues | $ | 355.4 | $ | 350.1 | $ | 313.9 | $ | 1,350.3 | $ | 1,163.5 | |||||||||||||||
GAAP |
|||||||||||||||||||||||||
Net income attributable to |
$ | 69.6 | (4) | $ | 94.2 | $ | 207.2 | (5) | $ | 349.6 | (3)(4) | $ | 344.6 | (5) | |||||||||||
Net income per share - Diluted | $ | 0.87 | $ | 1.17 | $ | 2.57 | $ | 4.35 | $ | 4.52 | |||||||||||||||
Non-GAAP(1) |
|||||||||||||||||||||||||
Adjusted net income | $ | 99.4 | $ | 94.8 | $ | 68.3 | $ | 363.0 | $ | 211.5 | |||||||||||||||
Adjusted net income per share - |
$ | 1.25 | $ | 1.17 | $ | 0.85 | $ | 4.52 | $ | 2.78 | |||||||||||||||
Return on equity (2) | 17.7 | % | 16.9 | % | 13.6 | % | 16.7 | % | 11.8 | % | |||||||||||||||
(1) | Refer to the "Use of Non-GAAP Financial Measures" and "Non-GAAP Reconciliations of Adjusted Net Income" set forth below. | |
(2) | Refer to the "Calculation of Return on Equity" set forth below. | |
(3) | Net income attributable to shareholders was increased by a one-time gain of $21.0 million on the sale of a building. | |
(4) | Net income attributable to shareholders was reduced by $24.7 million tax expense related to the intra-entity transfer of assets. | |
(5) | Net income attributable to shareholders was increased by 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. | |
Operating Performance
"Triton’s strong performance in the fourth quarter of 2018 provided an excellent finish to an outstanding year", commented
"Triton’s strong financial results in 2018 were driven by outstanding operational performance, our unique competitive advantages and a favorable market environment. Container pick-up activity remained strong for most of the year, reflecting ongoing trade growth and a tight supply / demand balance for containers. We also continued to benefit from an increase in the share for leasing relative to direct container purchases by our customers, and a continued high leasing deal share for Triton."
"The start of the fourth quarter typically marks the end of the peak season for dry containers, and net container pick-up and drop-off activity has turned negative. New container prices have also decreased to the
"Triton continues to use our strong and stable cash flow to create shareholder value. We ordered
Outlook
Mr. Sondey continued, "We are carrying significant financial momentum into 2019 and expect that we will have another year of strong performance, continued value-added growth and a further extension of our market leadership. While the ongoing trade dispute between
"The first quarter is typically our weakest quarter of the year since it represents the depth of the slow season for dry containers and has the fewest number of billing days. As a result, we expect our Adjusted net income will decrease from the fourth quarter of 2018 to the first quarter of 2019. After the first quarter, we expect our adjusted income to increase moderately throughout the year as leasing demand improves seasonally."
Dividend
Triton’s Board of Directors has approved and declared a
Share Repurchase Update
As of
Investors’ Webcast
Triton will hold a Webcast at
About
The following table summarizes the equipment fleet utilization for the periods indicated:
Quarter Ended | ||||||||||||
December 31, |
September 30, |
June 30, |
March 31, |
|||||||||
Average Utilization (1) | 98.2% | 98.7% | 98.8% | 98.6% | ||||||||
Ending Utilization (1) | 97.8% | 98.6% | 98.7% | 98.7% | ||||||||
(1) | Utilization is computed by dividing total units on lease (in cost equivalent units, or "CEUs") by the total units in fleet (in CEUs), excluding new units not yet leased and off-hire units designated for sale. | |
The following table summarizes the equipment fleet as of
Equipment Fleet in Units | Equipment Fleet in TEU | ||||||||||
December 31, |
December 31, |
December 31, |
December 31, |
||||||||
Dry | 3,340,946 | 3,077,144 | 5,476,406 | 5,000,043 | |||||||
Refrigerated | 228,778 | 218,429 | 440,781 | 419,673 | |||||||
Special | 93,900 | 89,066 | 169,614 | 159,172 | |||||||
Tank | 12,509 | 12,124 | 12,509 | 12,124 | |||||||
Chassis | 24,832 | 22,523 | 45,787 | 41,068 | |||||||
Equipment leasing fleet | 3,700,965 | 3,419,286 | 6,145,097 | 5,632,080 | |||||||
Equipment trading fleet | 13,138 | 10,510 | 21,361 | 16,907 | |||||||
Total | 3,714,103 | 3,429,796 | 6,166,458 | 5,648,987 | |||||||
|
Equipment Fleet in CEU |
||||||||||
|
December 31, |
December 31, |
|||||||||
Operating leases |
|
7,009,605 |
6,678,282 |
||||||||
Finance leases |
|
538,867 |
328,024 |
||||||||
Equipment trading fleet |
|
47,476 |
51,762 |
||||||||
Total |
|
7,595,948 |
7,058,068 |
||||||||
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: 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 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-
TRITON INTERNATIONAL LIMITED | |||||||
Consolidated Balance Sheets | |||||||
(In thousands, except share data) | |||||||
December 31, |
December 31, |
||||||
ASSETS: | |||||||
Leasing equipment, net of accumulated depreciation of $2,533,446 and $2,218,897 | $ | 8,923,451 | $ | 8,364,484 | |||
Net investment in finance leases | 478,065 | 295,891 | |||||
Equipment held for sale | 66,453 | 43,195 | |||||
Revenue earning assets | 9,467,969 | 8,703,570 | |||||
Cash and cash equivalents | 48,950 | 132,031 | |||||
Restricted cash | 110,589 | 94,140 | |||||
Accounts receivable, net of allowances of $1,240 and $3,002 | 264,382 | 199,876 | |||||
Goodwill | 236,665 | 236,665 | |||||
Lease intangibles, net of accumulated amortization of $205,532 and $144,081 | 92,925 | 154,376 | |||||
Other assets | 34,610 | 49,591 | |||||
Fair value of derivative instruments | 13,923 | 7,376 | |||||
Total assets | $ | 10,270,013 | $ | 9,577,625 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY: | |||||||
Equipment purchases payable | $ | 22,392 | $ | 128,133 | |||
Fair value of derivative instruments | 10,966 | 2,503 | |||||
Accounts payable and other accrued expenses | 99,885 | 109,999 | |||||
Net deferred income tax liability | 282,129 | 215,439 | |||||
Debt, net of unamortized debt costs of $44,889 and $40,636 | 7,529,432 | 6,911,725 | |||||
Total liabilities | 7,944,804 | 7,367,799 | |||||
Shareholders' equity: | |||||||
Common shares, $0.01 par value, 270,000,000 and 294,000,000 shares authorized, |
809 | 807 | |||||
Undesignated shares, $0.01 par value, 30,000,000 and 6,000,000 shares authorized, no |
— | — | |||||
Treasury shares, at cost, 1,853,148 shares and no shares, respectively | (58,114 | ) | — | ||||
Additional paid-in capital | 896,811 | 889,168 | |||||
Accumulated earnings | 1,349,627 | 1,159,367 | |||||
Accumulated other comprehensive income | 14,563 | 26,942 | |||||
Total shareholders' equity | 2,203,696 | 2,076,284 | |||||
Non-controlling interests | 121,513 | 133,542 | |||||
Total equity | $ | 2,325,209 | $ | 2,209,826 | |||
Total liabilities and equity | $ | 10,270,013 | $ | 9,577,625 | |||
TRITON INTERNATIONAL LIMITED | ||||||||||||||||
Consolidated Statements of Operations | ||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||
Three Months Ended |
Twelve Months ended |
|||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Leasing revenues: | ||||||||||||||||
Operating leases | $ | 347,110 | $ | 308,751 | $ | 1,328,756 | $ | 1,141,165 | ||||||||
Finance leases | 8,247 | 5,105 | 21,547 | 22,352 | ||||||||||||
Total leasing revenues | 355,357 | 313,856 | 1,350,303 | 1,163,517 | ||||||||||||
Equipment trading revenues | 26,273 | 7,206 | 83,039 | 37,419 | ||||||||||||
Equipment trading expenses | (20,147 | ) | (6,111 | ) | (64,118 | ) | (33,235 | ) | ||||||||
Trading margin | 6,126 | 1,095 | 18,921 | 4,184 | ||||||||||||
Net gain (loss) on sale of leasing equipment | 7,999 | 10,749 | 35,377 | 35,812 | ||||||||||||
Net gain (loss) on sale of building | — | — | 20,953 | — | ||||||||||||
Operating expenses: | ||||||||||||||||
Depreciation and amortization | 139,474 | 130,168 | 545,138 | 500,720 | ||||||||||||
Direct operating expenses | 15,594 | 11,495 | 48,326 | 62,891 | ||||||||||||
Administrative expenses | 19,712 | 21,341 | 80,033 | 87,609 | ||||||||||||
Transaction and other costs (income) | 116 | 5,932 | 88 | 9,272 | ||||||||||||
Provision (reversal) for doubtful accounts | (782 | ) | 2,103 | (231 | ) | 3,347 | ||||||||||
Insurance recovery income | — | (6,764 | ) | — |
|
(6,764 | ) | |||||||||
Total operating expenses | 174,114 | 164,275 | 673,354 | 657,075 | ||||||||||||
Operating income | 195,368 | 161,425 | 752,200 | 546,438 | ||||||||||||
Other expenses: | ||||||||||||||||
Interest and debt expense | 86,104 | 74,271 | 322,731 | 282,347 | ||||||||||||
Realized (gain) loss on derivative instruments, net | (724 | ) | (2 | ) | (2,072 | ) | 900 | |||||||||
Unrealized (gain) loss on derivative instruments, net | 1,405 | (1,317 | ) | 430 | (1,397 | ) | ||||||||||
Debt termination expense | 4,239 | 2,857 | 6,090 | 6,973 | ||||||||||||
Other (income) expense, net | (1,540 | ) | (1,085 | ) | (2,292 | ) | (2,637 | ) | ||||||||
Total other expenses | 89,484 | 74,724 | 324,887 | 286,186 | ||||||||||||
Income (loss) before income taxes | 105,884 | 86,701 | 427,313 | 260,252 | ||||||||||||
Income tax expense (benefit) | 34,459 | (122,962 | ) | 70,641 | (93,274 | ) | ||||||||||
Net income (loss) | $ | 71,425 | $ | 209,663 | $ | 356,672 | $ | 353,526 | ||||||||
Less: income (loss) attributable to non-controlling interest | 1,868 | 2,503 | 7,117 | 8,928 | ||||||||||||
Net income (loss) attributable to shareholders | $ | 69,557 | $ | 207,160 | $ | 349,555 | $ | 344,598 | ||||||||
Net income per common share—Basic | $ | 0.88 | $ | 2.59 | $ | 4.38 | $ | 4.55 | ||||||||
Net income per common share—Diluted | $ | 0.87 | $ | 2.57 | $ | 4.35 | $ | 4.52 | ||||||||
Cash dividends paid per common share | $ | 0.52 | $ | 0.45 | $ | 2.01 | $ | 1.80 | ||||||||
Weighted average number of common shares outstanding—Basic | 79,056 | 79,936 | 79,782 | 75,679 | ||||||||||||
Dilutive restricted shares | 685 | 620 | 582 | 509 | ||||||||||||
Weighted average number of common shares outstanding— |
79,741 | 80,556 | 80,364 | 76,188 | ||||||||||||
TRITON INTERNATIONAL LIMITED | ||||||||
Consolidated Statements of Cash Flows | ||||||||
(In thousands) | ||||||||
Year Ended |
Year Ended |
|||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | 356,672 | $ | 353,526 | ||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 545,138 | 500,720 | ||||||
Amortization of deferred financing costs | 15,005 | 13,401 | ||||||
Lease related amortization | 70,275 | 92,787 | ||||||
Share-based compensation expense | 9,030 | 5,641 | ||||||
Net (gain) loss on sale of leasing equipment | (35,377 | ) | (35,812 | ) | ||||
Net (gain) loss on sale of building | (20,953 | ) | — | |||||
Unrealized (gain) loss on derivative instruments | 430 | (1,397 | ) | |||||
Debt termination expense | 6,090 | 6,973 | ||||||
Deferred income taxes | 66,467 | (94,678 | ) | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (65,385 | ) | (5,967 | ) | ||||
Accounts payable and accrued expenses | (14,449 | ) | (42,402 | ) | ||||
Net equipment sold for resale activity | (2,341 | ) | 8,821 | |||||
Cash received for settlement of interest rate swaps | 187 | 2,117 | ||||||
Other assets | (939 | ) | 3,065 | |||||
Net cash provided by (used in) operating activities | 929,850 | 806,795 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of leasing equipment and investments in finance leases | (1,603,507 | ) | (1,562,863 | ) | ||||
Proceeds from sale of equipment, net of selling costs | 163,256 | 190,744 | ||||||
Proceeds from the sale of building | 27,630 | — | ||||||
Cash collections on finance lease receivables, net of income earned | 64,372 | 60,673 | ||||||
Other | (160 | ) | 55 | |||||
Net cash provided by (used in) investing activities | (1,348,409 | ) | (1,311,391 | ) | ||||
Cash flows from financing activities: | ||||||||
Issuance of common shares, net of underwriter expenses | — | 192,931 | ||||||
Purchases of treasury shares | (56,274 | ) | — | |||||
Redemption of common shares for withholding taxes | (1,385 | ) | (70 | ) | ||||
Debt issuance costs | (19,575 | ) | (34,494 | ) | ||||
Borrowings under debt facilities | 4,043,637 | 3,102,825 | ||||||
Payments under debt facilities and capital lease obligations | (3,435,041 | ) | (2,539,711 | ) | ||||
Dividends paid | (160,289 | ) | (135,557 | ) | ||||
Distributions to noncontrolling interests | (19,146 | ) | (18,890 | ) | ||||
Other | — | 241 | ||||||
Net cash provided by (used in) financing activities | 351,927 | 567,275 | ||||||
Net (decrease) increase in cash, cash equivalents and restricted cash | $ | (66,632 | ) | $ | 62,679 | |||
Cash, cash equivalents and restricted cash, beginning of period | 226,171 | 163,492 | ||||||
Cash, cash equivalents and restricted cash, end of period | $ | 159,539 | $ | 226,171 | ||||
Supplemental disclosures: | ||||||||
Interest paid | $ | 308,827 | $ | 269,601 | ||||
Income taxes paid (refunded) | $ | 4,484 | $ | (288 | ) | |||
Supplemental non-cash investing activities: | ||||||||
Equipment purchases payable | $ | 22,392 | $ | 128,133 | ||||
Use of Non-GAAP Financial Measures
We use the term "Adjusted net income" throughout this press release.
Adjusted net income is adjusted for certain items management believes are not representative of our operating performance. Adjusted net income is defined as net income attributable to shareholders excluding debt termination costs net of tax, gains and losses on interest rate swaps net of tax, transaction and other costs net of tax, certain non-recurring transactions net of tax, foreign income tax adjustments, and taxes adjustments related to the intra-entity transfer.
Adjusted net income is not a presentation made in accordance with U.S. GAAP. Adjusted net income should not be considered as an alternative to, or more meaningful than, amounts determined in accordance with U.S. GAAP, including net income.
We believe that Adjusted net income is useful to an investor in evaluating our operating performance because this measure:
- is widely used by securities analysts and investors to measure a company’s operating performance;
- helps investors to more meaningfully evaluate and compare the results of our operations from period to period by removing the impact of our capital structure, our asset base and certain non-routine events which we do not expect to occur in the future; and
- is used by our management for various purposes, including as measures of operating performance and liquidity, to assist in comparing performance from period to period on a consistent basis, in presentations to our board of directors concerning our financial performance and as a basis for strategic planning and forecasting.
We have provided a reconciliation of net income attributable to shareholders, the most directly comparable U.S. GAAP measure, to Adjusted net income in the table below for the three and twelve months ended
TRITON INTERNATIONAL LIMITED | ||||||||||||||||||||
Non-GAAP Reconciliations of Adjusted Net Income | ||||||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||||||
Three Months Ended, | Twelve Months Ended, | |||||||||||||||||||
December 31, |
September 30, |
December 31, |
December 31, |
December 31, |
||||||||||||||||
Net income (loss) attributable to |
$ | 69,557 | $ | 94,236 | $ | 207,160 | $ | 349,555 | $ | 344,598 | ||||||||||
Add (subtract): | ||||||||||||||||||||
Unrealized (gain) loss on derivative |
1,250 | 286 | (1,084 | ) | 384 | (1,150 | ) | |||||||||||||
Insurance recovery income | — | — | (5,567 | ) |
|
— | (5,567 | ) | ||||||||||||
Debt termination expense | 3,800 | 1,197 | 2,327 | 5,444 | 5,739 | |||||||||||||||
Transaction and other costs (income) | 104 | 2 | 4,862 | 79 | 7,631 | |||||||||||||||
One-time tax benefit related to U.S. |
— | — | (139,359 | ) | — | (139,359 | ) | |||||||||||||
Foreign income tax adjustments |
— | (881 | ) |
|
— | (881 | ) | (393 | ) | |||||||||||
Gain of Sale of Building | — | — | — | (16,316 | ) | — | ||||||||||||||
Tax adjustments related to intra-entity |
24,728 | — | — | 24,728 | — | |||||||||||||||
Adjusted net income | $ | 99,439 | $ | 94,840 | $ | 68,339 | $ | 362,993 | $ | 211,499 | ||||||||||
Adjusted net income per share - Diluted | $ | 1.25 | $ | 1.17 | $ | 0.85 | $ | 4.52 | $ | 2.78 | ||||||||||
Weighted average number of common |
79,741 | 80,728 | 80,556 | 80,364 | 76,188 | |||||||||||||||
Tax adjustments related to intra-entity asset transfer
The primary driver leading to the difference between net income (loss) attributable to shareholders and Adjusted net income in the fourth quarter of 2018 was a one-time increase in GAAP taxes resulting from internal transfers of approximately
TRITON INTERNATIONAL LIMITED | ||||||||||||||||||||
Calculation of Return on Equity | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
Three Months Ended, | Twelve Months Ended, | |||||||||||||||||||
December 31, |
September 30, |
December 31, |
December 31, |
December 31, |
||||||||||||||||
Adjusted net income | $ | 99,439 | $ | 94,840 | $ | 68,339 | $ | 362,993 | $ | 211,499 | ||||||||||
Annualized Adjusted net income (1) | 394,513 | 376,267 | 271,128 | 362,993 | 211,499 | |||||||||||||||
Average Shareholders' equity (2) | $ | 2,230,590 | $ | 2,230,042 | $ | 1,988,156 | $ | 2,174,714 | $ | 1,799,188 | ||||||||||
Return on equity | 17.7 | % | 16.9 | % | 13.6 | % | 16.7 | % | 11.8 | % | ||||||||||
(1) | Annualized Adjusted net income was calculated based on calendar days per quarter. | |
(2) | Average Shareholders' equity was calculated using the quarter’s beginning and ending Shareholder’s equity for the three-month ended periods, and the ending Shareholder’s equity from each quarter in the current year and December 31 of the previous year for the twelve-month ended periods. | |
View source version on businesswire.com: https://www.businesswire.com/news/home/20190214005273/en/
Source:
Andrew Greenberg
Senior Vice President
Finance & Investor Relations
(914) 697-2900