Triton International Ltd

Previous wording

On September 28, 2023, we completed the transactions contemplated by the Agreement and Plan of Merger, dated as of April 11, 2023 (the “Merger Agreement”), by and among the Company, Brookfield Infrastructure Corporation (“BIPC”), Thanos Holdings Limited (“Parent”) and Thanos Merger Sub Limited, a subsidiary of Parent (“Merger Sub”). Pursuant to the Merger Agreement, Merger Sub merged with and into Triton (the “Merger”), with Triton surviving the Merger as a subsidiary of Parent. Following the closing of the Merger, all of our common shares are privately held, and are no longer traded on the New York Stock Exchange.

Current wording

On September 28, 2023, we completed the transactions contemplated by the Agreement and Plan of Merger, dated as of April 11, 2023 (the “Merger Agreement”), by and among the Company, Brookfield Infrastructure Corporation (“BIPC”), Thanos Holdings Limited (“Parent”) and Thanos Merger Sub Limited, a subsidiary of Parent (“Merger Sub”). Pursuant to the Merger Agreement, Merger Sub merged with and into Triton (the “Merger”), with Triton surviving the Merger as a subsidiary of Parent. Following the closing of the Merger, all of our common shares are privately held, and are no longer traded on the New York Stock Exchange. Total consideration of $4,512.1 million was paid by Brookfield Infrastructure in connection with the Merger.

Previous wording

Our consolidated operations include the acquisition, leasing, re-leasing and subsequent sale of multiple types of intermodal containers and chassis. As of March 31, 2024, our total fleet consisted of 4.0 million containers and chassis, representing 6.8 million twenty-foot equivalent units ("TEU") or 7.5 million cost equivalent units ("CEU"). We have an extensive global presence, offering leasing services through a worldwide network of local offices, and we utilize third-party container depots spread across over 46 countries to provide customers global access to our container fleet. Our primary customers include the world's largest container shipping lines.

Current wording

Our consolidated operations include the acquisition, leasing, re-leasing and subsequent sale of multiple types of intermodal containers and chassis. As of June 30, 2024, our total fleet consisted of 4.0 million containers and chassis, representing 6.9 million twenty-foot equivalent units ("TEU") or 7.5 million cost equivalent units ("CEU"). We have an extensive global presence, offering leasing services through a worldwide network of local offices, and we utilize third-party container depots spread across over 46 countries to provide customers global access to our container fleet. Our primary customers include the world's largest container shipping lines.

Previous wording

We categorize our operating leases as either long-term leases or service leases. Some leases have contractual terms that have features reflective of both long-term and service leases. We classify such leases as either long-term or service leases, depending upon which features we believe are predominant. For example, some leases that provide redelivery flexibility during the lease term are classified as long-term leases in cases where lessees have made large upfront payments to reduce their lease payment during the lease term or in cases where lessees will incur significant redelivery fees if containers are returned during the lease term. Such leases are generally considered to be long-term leases based on the expected on-hire time and the economic protection achieved by the lease economics. Our long-term leases generally require our customers to maintain specific units on-hire for the duration of the lease term, and they provide us with predictable recurring cash flow. Long-term leases typically have initial contractual terms ranging from five to eight or more years.

Current wording

We categorize our operating leases as either long-term leases or service leases. Some leases have contractual terms that have features reflective of both long-term and service leases. We classify such leases as either long-term or service leases, depending upon which features we believe are predominant. For example, some leases that provide redelivery flexibility during the lease term are classified as long-term leases in cases where lessees have made large up-front payments to reduce their lease payment during the lease term or in cases where lessees will incur significant redelivery fees if containers are returned during the lease term. Such leases are generally considered to be long-term leases based on the expected on-hire time and the economic protection achieved by the lease economics. Our long-term leases generally require our customers to maintain specific units on-hire for the duration of the lease term, and they provide us with predictable recurring cash flow. Long-term leases typically have initial contractual terms ranging from five to eight or more years.

Previous wording

As of March 31, 2024, our long-term and finance leases combined had a weighted average remaining contractual term by CEU of approximately 55 months assuming no leases are renewed.

Current wording

As of June 30, 2024, our long-term and finance leases combined had a weighted average remaining contractual term by CEU of approximately 57 months assuming no leases are renewed.

Previous wording

Our utilization increased in the first quarter of 2024 compared to prior periods primarily due to the increase in pick-up activity, as well as a decrease in drop-off volumes. Average utilization for the first quarter of 2024, fourth quarter of 2023 and first quarter of 2023 was 97.7%, 96.4%, and 97.6% respectively; and ending utilization for the same periods was 98.2%, 96.5%, and 97.2%. 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.

Current wording

Our utilization increased in the second quarter of 2024 due to an increase in pick-up activity, as well as a decrease in drop-off volumes. Average utilization for the second quarter of 2024 and 2023 was 98.8% and 97.0% respectively, and ending utilization for the same periods was 99.1% and 96.7%. 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.

Previous wording

For the trailing twelve months ended March 31, 2024, cash provided by operating activities, together with the proceeds from the sale of our leasing equipment, was $1,459.4 million. In addition, as of March 31, 2024, we had $51.7 million of unrestricted cash and cash equivalents and $1,945.0 million of borrowing capacity remaining under our existing credit facilities.

Current wording

For the trailing twelve months ended June 30, 2024, cash provided by operating activities, together with the proceeds from the sale of our leasing equipment, was $1,440.8 million. In addition, as of June 30, 2024, we had $42.1 million of unrestricted cash and cash equivalents and $1,850.0 million of borrowing capacity remaining under our existing credit facilities.

Previous wording

As of March 31, 2024, our cash commitments in the next twelve months include $953.6 million of scheduled principal payments on our existing debt facilities and $243.2 million of committed but unpaid capital expenditures, primarily for the purchase of new equipment.

Current wording

As of June 30, 2024, our cash commitments in the next twelve months include $487.6 million of scheduled principal payments on our existing debt facilities and $579.6 million of committed but unpaid capital expenditures, primarily for the purchase of new equipment.

Previous wording

During the three months ended March 31, 2024, the Company paid dividends on preference shares of $13.0 million and paid a cash dividend of $200.0 million on the common shares of the Company to Parent. The Company also paid $0.9 million for transaction costs related to the Merger on behalf of Parent.

Current wording

During the three and six months ended June 30, 2024, the Company paid dividends on preference shares of $13.0 million and $26.1 million, respectively. During the first quarter of 2024, the Company paid a cash dividend of $200.0 million on the common shares of the Company to Parent, and paid $0.9 million for transaction costs related to the Merger on behalf of Parent. During the second quarter of 2024, the Company paid a $4.0 million cash distribution to Parent for the reimbursement of transaction costs related to the Merger.

Previous wording

On April 3, 2024, the Company issued a series of securitization ("ABS") fixed-rate notes in the amount of $450.0 million at a weighted average interest rate of 5.55% and an expected maturity date of May 2034. The proceeds from this issuance were used to partially pay down the Company's existing revolver debt. See Note 14 -"Subsequent Events"in the Notes to the Unaudited Consolidated Financial Statements for additional information.

Current wording

In April 2024, the Company issued a series of securitization ("ABS") fixed-rate notes in the amount of $450.0 million at a weighted average interest rate of 5.55% and an expected maturity date of May 2034. The proceeds from this issuance were primarily used to pay down borrowings under the Company's revolving credit facility.

Previous wording

In the first quarter of 2024, the Company obtained irrevocable standby Letters of Credit on its existing ABS facilities at March 31, 2024 to satisfy the restricted cash balance requirements in designated bank accounts equal to nine months of interest expense. Subsequent to the closing of the Letters of Credit, the restricted cash balance held at the Trustee was released in the amount of $38.3 million and the proceeds were used for general corporate purposes. The Company also amended its $1,125.0 million ABS warehouse facility to extend the conversion date to January 22, 2027, after which borrowings will convert to term notes with a final maturity date of January 22, 2031 and pay interest at daily compounded SOFR plus 2.60%.

Current wording

In the first quarter of 2024, the Company obtained $57.0 million in irrevocable standby letters of credit to satisfy the restricted cash balance requirements equal to nine months of interest expense on the ABS facilities, inclusive of a $18.7 million irrevocable standby letter of credit related to the ABS fixed-rate notes issued in the second quarter of 2024. The restricted cash balance held by the Trustee in designated bank accounts of $38.3 million was released to the Company subsequent to the issuance of the letters of credit, proceeds of which were used for general corporate purposes. The Company also amended its $1,125.0 million ABS warehouse facility to extend the conversion date to January 22, 2027, after which borrowings will convert to term notes with a final maturity date of January 22, 2031 and pay interest at daily compounded SOFR plus 2.60%.

Previous wording

Our investment-grade corporate and long-term debt credit ratings enable us to lower our cost of funds and broaden our access to attractively priced capital. While a ratings downgrade, on its own, would not result in a default under any of our debt agreements, it could adversely affect our ability to issue debt and obtain new financings, or renew existing financings, and it would increase the cost of our financings. Additionally, under the terms of our senior notes and preference shares, certain ratings downgrades following the occurrence of a change of control, as more fully described in the relevant agreements governing those instruments, could give holders of those instruments certain redemption or conversion rights. The Company's long-term debt and corporate rating of BBB- from Fitch Ratings and BBB from S&P Global Ratings remained unchanged in the first quarter of 2024.

Current wording

Our investment-grade corporate and long-term debt credit ratings enable us to lower our cost of funds and broaden our access to attractively priced capital. While a ratings downgrade, on its own, would not result in a default under any of our debt agreements, it could adversely affect our ability to issue debt and obtain new financings, or renew existing financings, and it would increase the cost of our financings. Additionally, under the terms of our senior notes and preference shares, certain ratings downgrades following the occurrence of a change of control, as more fully described in the relevant agreements governing those instruments, could give holders of those instruments certain redemption or conversion rights. The Company's long-term debt and corporate rating of BBB- from Fitch Ratings and BBB from S&P Global Ratings remained unchanged in the second quarter of 2024.

Previous wording

The maximum borrowing levels depicted in the table above may not reflect the actual availability under all of the credit facilities. Certain of these facilities are governed by either borrowing bases or an unencumbered asset test that limits borrowing capacity. Based on those limitations, the availability under these credit facilities at March 31, 2024 was approximately $1,071.7 million.

Current wording

The maximum borrowing levels depicted in the table above may not reflect the actual availability under all of the credit facilities. Certain of these facilities are governed by either borrowing bases or an unencumbered asset test that limits borrowing capacity. Based on those limitations, the availability under these credit facilities at June 30, 2024 was approximately $1,115.3 million.

Previous wording

As of March 31, 2024, we had a combined $6,649.1 million of total debt on facilities with fixed interest rates or floating interest rates that have been synthetically fixed through interest rate swap contracts. This accounts for 90% of our total debt.

Current wording

As of June 30, 2024, we had a combined $6,499.2 million of total debt on facilities with fixed interest rates or floating interest rates that have been synthetically fixed through interest rate swap contracts. This accounts for 88.6% of our total debt.

Previous wording

Net cash provided by investing activities decreased by $37.0 million to $15.2 million for the three months ended March 31, 2024, compared to $52.3 million in the same period in 2023. The change in net cash provided by investing activities was primarily due to a $39.0 million increase in the purchases of leasing equipment.

Current wording

Net cash used in investing activities was $167.5 million for the six months ended June 30, 2024 compared to net cash provided by investing activities of $60.8 million in the same period in 2023, a change of $228.3 million. The change was primarily due to a $248.6 million increase in the purchases of leasing equipment partially offset by a $20.4 million increase in proceeds from the sale of equipment.

Previous wording

Total leasing revenues were $371.3 million for the three months ended March 31, 2024 compared to $397.7 million in the same period in 2023, a decrease of $26.4 million.

Current wording

Total leasing revenues were $379.0 million for the three months ended June 30, 2024 compared to $386.5 million in the same period in 2023, a decrease of $7.5 million.

Previous wording

Per diem revenues were $330.8 million for the three months ended March 31, 2024 compared to $352.2 million in the same period in 2023, a decrease of $21.4 million. The primary reasons for the decrease were as follows:

Current wording

Per diem revenues were $336.6 million for the three months ended June 30, 2024 compared to $343.0 million in the same period in 2023, a decrease of $6.4 million. The primary reasons for the decrease were as follows:

Previous wording

•$14.2 million decrease due to a decrease of approximately 0.3 million CEU in the average number of containers on-hire; and

Current wording

•$4.7 million decrease due to a decrease of approximately 0.1 million CEU in the average number of containers on-hire; and

Previous wording

•$7.5 million decrease due to a decrease in the average lease rates for our dry and refrigerated container product lines as a result of the impact of sizable lease extension transactions completed in 2023 at lower rates.

Current wording

•$1.5 million decrease due to a decrease in the average lease rates for our dry and refrigerated container product lines as a result of the impact of sizable lease extension transactions completed in the second half of 2023 at lower rates.

Previous wording

Fee and ancillary lease revenues were $15.4 million for the three months ended March 31, 2024 compared to $18.2 million in the same period in 2023, a decrease of $2.8 million, primarily due to a decrease in repair revenue as a result of a lower volume of redeliveries partially offset by an increase in handling revenue due to an increase in pickup activity.

Current wording

Fee and ancillary lease revenues were $14.3 million for the three months ended June 30, 2024 compared to $17.0 million in the same period in 2023, a decrease of $2.7 million, primarily due to a decrease in repair revenue as a result of a lower volume of redeliveries.

Previous wording

Depreciation and amortization. Depreciation and amortization was $136.1 million for the three months ended March 31, 2024 compared to $148.4 million in the same period in 2023, a decrease of $12.3 million. The primary reasons for the decrease were as follows:

Current wording

Depreciation and amortization. Depreciation and amortization was $135.5 million for the three months ended June 30, 2024 compared to $146.9 million in the same period in 2023, a decrease of $11.4 million. The primary reasons for the decrease were as follows:

Previous wording

•$16.3 million decrease due to an increase in the number of containers that have become fully depreciated or reclassified to assets held for sale; partially offset by a

Current wording

•$15.6 million decrease due to an increase in the number of containers that have become fully depreciated or reclassified to assets held for sale; partially offset by a

Previous wording

•$2.3 million increase due to new production units placed on-hire during 2023 that have a full quarter of depreciation in 2024, as well as new production units placed on-hire in the current year.

Current wording

•$3.9 million increase due to new production units placed on-hire in the current year.

Previous wording

Direct operating expenses. Direct operating expenses primarily consist of our costs to repair equipment returned off lease, store equipment when it is not on lease and reposition equipment from locations with weak leasing demand. Direct operating expenses were $22.7 million for the three months ended March 31, 2024 compared to $23.2 million in the same period in 2023, a decrease of $0.5 million. The primary reasons for the decrease were as follows:

Current wording

Direct operating expenses. Direct operating expenses primarily consist of our costs to repair equipment returned off lease, store equipment when it is not on lease and reposition equipment from locations with weak leasing demand. Direct operating expenses were $17.0 million for the three months ended June 30, 2024 compared to $24.8 million in the same period in 2023, a decrease of $7.8 million. The primary reasons for the decrease were as follows:

Previous wording

•$2.3 million decrease in repair costs resulting from lower volume of re-deliveries; partially offset by a

Current wording

•$1.3 million decrease in repair costs resulting from a lower volume of redeliveries.

Previous wording

Administrative expenses. Administrative expenses were $21.8 million for the three months ended March 31, 2024 compared to $22.9 million in the same period in 2023, a decrease of $1.1 million primarily due to a decrease in costs associated with being a public company.

Current wording

Administrative expenses. Administrative expenses were $24.0 million for the three months ended June 30, 2024 compared to $23.4 million in the same period in 2023, an increase of $0.6 million primarily due to an increase in incentive compensation costs partially offset by a decrease in costs associated with being a public company.

Previous wording

Interest and debt expense. Interest and debt expense was $61.4 million for the three months ended March 31, 2024, compared to $58.8 million in the same period in 2023, an increase of $2.6 million. The primary reasons for the increase were as follows:

Current wording

Interest and debt expense. Interest and debt expense was $61.4 million for the three months ended June 30, 2024 compared to $57.3 million in the same period in 2023, an increase of $4.1 million. The primary reasons for the increase were as follows:

Previous wording

•$4.0 million decrease due to a reduction in the average debt balance of $537.9 million.

Current wording

•$3.3 million decrease in interest expense due to a reduction in the average debt balance of $446.6 million.

Previous wording

Income tax expense (benefit). Income tax expense was $12.8 million for the three months ended March 31, 2024, compared to $13.0 million in the same period in 2023, a decrease of $0.2 million. The decrease in income tax expense was primarily the result of a decrease in pre-tax income, partially offset by a higher effective tax rate. The Company's effective tax rate was 9.3% for the three months ended March 31, 2024 compared, to 8.0% in the same period in 2023. The increase in the effective tax rate was primarily due to nondeductible transaction costs incurred in the first quarter of 2024 in connection with the Merger.

Current wording

Income tax expense (benefit). Income tax expense was $13.2 million for the three months ended June 30, 2024 compared to $14.3 million in the same period in 2023, a decrease of $1.1 million. During the second quarter of 2023, there was a $1.4 million write-off of deferred tax benefits as a result of a one-time early buyout of containers under finance lease contracts, that did not re-occur in 2024. The Company's effective tax rate was 14.5% for the three months ended June 30, 2024 compared to 9.2% in the same period in 2023. The increase in the effective tax rate was primarily due to nondeductible transaction costs incurred in connection with the Merger and the up-front loss on a finance lease transaction recorded in low tax jurisdictions during the second quarter of 2024, which resulted in a disproportionate increase to pre-tax income in higher tax jurisdictions.

Previous wording

Finance lease revenues were $25.1 million for the three months ended March 31, 2024 compared to $27.4 million in the same period in 2023, a decrease of $2.3 million. This decrease was primarily due to the runoff of the existing portfolio.

Current wording

Finance lease revenues were $53.1 million for the six months ended June 30, 2024 compared to $53.9 million in the same period in 2023, a decrease of $0.8 million. The decrease is due to the runoff of the existing portfolio, partially offset by additions of new finance leases.

Previous wording

Trading margin. Trading margin was $0.4 million for the three months ended March 31, 2024 compared to $1.1 million in the same period in 2023, a decrease of $0.7 million. Container selling margins decreased in 2024 as a result of a decrease in both sales volume and selling prices.

Current wording

Trading margin. Trading margin was $2.3 million for the six months ended June 30, 2024 compared to $3.0 million in the same period in 2023, a decrease of $0.7 million primarily due to a decrease in sales volume.

Previous wording

Provision (reversal) for doubtful accounts. Provision for doubtful accounts was $0.5 million for the three months ended March 31, 2024 compared to a reversal for doubtful accounts of $1.8 million in the same period in 2023. In the first quarter of 2024, we established a reserve for $0.5 million for a customer outstanding balance not expected to be received. In the first quarter of 2023, we reversed $1.8 million of reserves established in 2022 due to better than expected recoveries.

Current wording

Provision (reversal) for doubtful accounts. Reversal for doubtful accounts was $1.5 million for the six months ended June 30, 2024 compared to a reversal for doubtful accounts of $2.6 million in the same period in 2023. During 2024 and 2023, reserves of $2.1 million and $2.5 million established in 2022 related to a customer default were reversed due to better than expected recoveries. The 2024 reversal for doubtful accounts was partially offset by a $0.5 million reserve established in the first quarter of 2024 for outstanding balance not expected to be received.

Previous wording

•$6.4 million increase due to an increase in the average effective interest rate to 3.27% from 2.93% due to an increase in variable interest rates on the unhedged portion of our debt and the repayment of lower yielding fixed rate debt in the third quarter of 2023, some of which was replaced with variable rate debt at a higher rate; partially offset by a

Current wording

•$13.7 million increase due to an increase in the average effective interest rate to 3.30% from 2.93% due to the maturity of lower interest fixed-rate debt in the third quarter of 2023 and the second quarter of 2024, which was repaid with higher rate variable debt borrowings; partially offset by a