Triton International Ltd

Previous 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.

Current wording

Our consolidated operations include the acquisition, leasing, re-leasing and subsequent sale of multiple types of intermodal containers and chassis. As of September 30, 2024, our total fleet consisted of 4.1 million containers and chassis, representing 7.0 million twenty-foot equivalent units ("TEU") or 7.6 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

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.

Current wording

Our utilization increased in the third quarter of 2024 as compared to the third quarter of 2023 due to an increase in container pick-up activity, as well as a decrease in drop-off volumes. Average utilization for the third quarter of 2024 and 2023 was 99.0% and 96.6% respectively, and ending utilization for the same periods was 98.9% and 96.4%. 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 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.

Current wording

For the trailing twelve months ended September 30, 2024, cash provided by operating activities, together with the proceeds from the sale of our leasing equipment, was $1,521.4 million. In addition, as of September 30, 2024, we had $85.8 million of unrestricted cash and cash equivalents and $2,260.0 million of maximum borrowing capacity remaining under our existing credit facilities.

Previous 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.

Current wording

As of September 30, 2024, our cash commitments in the next twelve months include $511.6 million of scheduled principal payments on our existing debt facilities and $307.1 million of committed but unpaid capital expenditures, primarily for the purchase of new equipment.

Previous 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.

Current wording

During the three and nine months ended September 30, 2024, the Company paid dividends on preference shares of $13.0 million and $39.1 million, respectively, and paid cash dividends of $200.0 million and $400.0 million, respectively, on the common shares of the Company to Parent. During the nine months ended September 30, 2024, the Company paid $5.0 million in distributions to Parent for the reimbursement of or payment of transaction costs related to the Merger.

Previous wording

On July 9, 2024, the Company amended and restated its existing $2,000.0 million revolving credit facility. The amendment extended the maturity date to July 9, 2029. The amendment also transitioned the reference rate from term to daily SOFR and increased the accordion feature available under the facility from $500.0 million to $1,000.0 million (or more in certain instances). The amendment also added a new $1,750.0 million term loan facility tranche with a maturity date of July 9, 2029, and a reference rate of daily SOFR. Proceeds from the new term loan were used in part to prepay the existing term loan agreement, which was then terminated.

Current wording

During the third quarter of 2024, the Company amended and restated its existing $2,000.0 million revolving credit facility to, among other things, add a new $1,750.0 million term loan tranche under the credit facility. The amendment and restatement also transitioned the reference rate from term to daily SOFR, increased the accordion feature available under the credit facility from $500.0 million to $1,000.0 million (or more in certain instances) and extended the maturity date of the credit facility to July 9, 2029. Proceeds from the credit facility were used in part to prepay the Company's former term loan facility, which was then terminated.

Previous 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.

Current wording

During the second and third quarters of 2024, the Company issued securitization ("ABS") fixed-rate notes in the amount of $450.0 million and $351.9 million at weighted average interest rates of 5.55% and 5.63% and expected maturity dates of May 2034 and February 2035, respectively. The proceeds from these issuances were primarily used to pay down borrowings under the Company's revolving credit facilities.

Previous wording

In June 2024, the Company’s $500.0 million 1.15% senior notes matured. Payment at maturity was primarily funded by borrowings under Triton’s revolving credit facility.

Current wording

In the second quarter of 2024, the Company’s $500.0 million 1.15% senior notes matured. Payment at maturity was primarily funded by borrowings under Triton’s revolving credit facility.

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 second 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 third 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 June 30, 2024 was approximately $1,115.3 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 the ABS warehouse and the revolving credit tranche under the credit facility at September 30, 2024 was approximately $995.0 million.

Previous 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.

Current wording

As of September 30, 2024, we had a combined $6,803.7 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 90.7% of our total debt.

Previous wording

Net cash provided by operating activities decreased by $82.4 million to $525.3 million for the six months ended June 30, 2024 compared to $607.6 million in the same period in 2023. The decrease was primarily due to lower profitability in the current period and a decrease in cash collections on finance leases. In 2023 we had a large buyout of equipment under finance lease that did not re-occur in 2024. These decreases were partially offset by positive adjustments to accounts receivable and accounts payable due to timing of cash collections and payments.

Current wording

Net cash provided by operating activities increased by $5.2 million to $868.1 million for the nine months ended September 30, 2024 compared to $863.0 million in the same period in 2023. The increase was primarily due to higher profitability and an increase in accounts receivable due to the timing of cash collections. These increases were partially offset by a decrease in cash collections on finance lease receivables due to a large buyout of equipment under a finance lease in 2023, that did not re-occur in 2024.

Previous 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.

Current wording

Net cash used in investing activities was $380.1 million for the nine months ended September 30, 2024 compared to net cash provided by investing activities of $121.1 million in the same period in 2023, a change of $501.2 million. The change was primarily due to a $515.0 million increase in the purchases of leasing equipment partially offset by a $13.5 million increase in proceeds from the sale of equipment.

Previous wording

Net cash used in financing activities decreased by $276.8 million to $420.0 million for the six months ended June 30, 2024 compared to $696.7 million in the same period in 2023. Last year, we had net debt repayments of $458.2 million compared to $180.3 million in 2024 for a decrease in cash used in financing activities of $277.9 million.

Current wording

Net cash used in financing activities decreased by $543.6 million to $476.0 million for the nine months ended September 30, 2024 compared to $1,019.7 million in the same period in 2023. We had a decrease in net debt repayments of $305.7 million and a decrease in capital distributions of $245.4 million in the first nine months of 2024 compared to the same period of 2023.

Previous wording

Total leasing revenues were $750.3 million for the six months ended June 30, 2024 compared to $784.3 million, in the same period in 2023, a decrease of $34.0 million.

Current wording

Total leasing revenues were $391.3 million for the three months ended September 30, 2024 compared to $384.9 million in the same period in 2023, an increase of $6.4 million.

Previous wording

Per diem revenues were $667.4 million for the six months ended June 30, 2024 compared to $695.2 million in the same period in 2023, a decrease of $27.8 million. The primary reasons for the decrease were as follows:

Current wording

Per diem revenues were $349.2 million for the three months ended September 30, 2024 compared to $341.2 million in the same period in 2023, an increase of $8.0 million. The primary reasons for the increase were as follows:

Previous wording

•$18.9 million decrease due to a decrease of approximately 0.2 million CEU in the average number of containers on-hire; and

Current wording

•$3.7 million increase due to an increase of approximately 0.1 million CEU in the average number of containers on-hire; and

Previous 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.

Current wording

•$4.4 million increase due to an increase in the average lease rates for our dry container product line as a result of pick up activity in the third quarter of 2024 at higher rates, partially offset by a decrease in average lease rates for our refrigerated container line.

Previous 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.

Current wording

Fee and ancillary lease revenues were $14.6 million for the three months ended September 30, 2024 compared to $17.8 million in the same period in 2023, a decrease of $3.2 million, primarily due to a decrease in repair and handling revenue as a result of a lower volume of redeliveries.

Previous wording

Finance lease revenues were $28.0 million for the three months ended June 30, 2024 compared to $26.5 million in the same period in 2023, an increase of $1.5 million. The increase was primarily due to the addition of a large finance lease transaction in the second quarter of 2024, partially offset by the runoff of the existing portfolio.

Current wording

Finance lease revenues were $27.5 million for the three months ended September 30, 2024 compared to $25.9 million in the same period in 2023, an increase of $1.6 million. The increase was primarily due to the addition of a large finance lease transaction in the second quarter of 2024, partially offset by the runoff of the existing portfolio.

Previous 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:

Current wording

Depreciation and amortization. Depreciation and amortization was $135.0 million for the three months ended September 30, 2024 compared to $141.4 million in the same period in 2023, a decrease of $6.4 million. The primary reasons for the decrease were as follows:

Previous 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

Current wording

•$13.4 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

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

Current wording

•$6.8 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 $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:

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 $13.5 million for the three months ended September 30, 2024 compared to $27.1 million in the same period in 2023, a decrease of $13.6 million. The primary reasons for the decrease were as follows:

Previous wording

•$6.4 million decrease in storage expense resulting from a decrease in the number of idle units; and a

Current wording

•$10.4 million decrease in storage expense resulting from a decrease in the number of idle units; and a

Previous wording

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

Current wording

•$1.5 million decrease in repair costs resulting from a lower volume of redeliveries.

Previous wording

Transaction and other costs. Transaction and other costs were $16.1 million for the three months ended June 30, 2024 compared to $2.6 million in the same period in 2023, an increase of $13.6 million primarily due to an increase in employee incentive and retention compensation costs, legal expenses and other costs associated with the Merger.

Current wording

Transaction and other costs. Transaction and other costs were $5.1 million for the three months ended September 30, 2024 compared to $68.7 million in the same period in 2023, a decrease of $63.6 million. Transaction costs in the prior period are primarily related to advisory and legal fees associated with the closing of the Merger.

Previous 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:

Current wording

Interest and debt expense. Interest and debt expense was $67.4 million for the three months ended September 30, 2024 compared to $60.1 million in the same period in 2023, an increase of $7.3 million. The primary reasons for the increase were as follows:

Previous wording

•$7.3 million increase due to the average effective interest rate increase to 3.33% 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

Current wording

•$8.9 million increase due to the average effective interest rate increase to 3.62% from 3.14% 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

Previous wording

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

Current wording

•$1.6 million decrease in interest expense due to a reduction in the average debt balance of $203.1 million.

Previous wording

Income tax expense (benefit). Income tax expense was $26.0 million for the six months ended June 30, 2024 compared to $27.3 million in the same period in 2023, a decrease of $1.3 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 11.3% for the six months ended June 30, 2024 compared to 8.5% 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.

Current wording

Income tax expense (benefit). Income tax expense was $15.4 million for the three months ended September 30, 2024 compared to $11.4 million in the same period in 2023, an increase of $4.0 million. The increase in income tax expense was primarily the result of an increase in pre-tax income partially offset by a decrease in the effective tax rate. The Company's effective tax rate was 9.3% for the three months ended September 30, 2024 compared to 14.0% in the same period in 2023. The effective tax rate in the third quarter of 2023 was higher than the current year as there was a lower portion of the Company's income generated in lower tax rate jurisdictions due to transaction costs incurred in connection with the Merger.

Previous wording

Comparison of the six months ended June 30, 2024 and 2023

Current wording

Comparison of the nine months ended September 30, 2024 and 2023

Previous 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.

Current wording

Total leasing revenues were $1,141.6 million for the nine months ended September 30, 2024 compared to $1,169.2 million, in the same period in 2023, a decrease of $27.6 million.

Previous 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:

Current wording

Per diem revenues were $1,016.6 million for the nine months ended September 30, 2024 compared to $1,036.4 million in the same period in 2023, a decrease of $19.8 million. The primary reasons for the decrease were as follows:

Previous wording

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

Current wording

•$15.2 million decrease due to a decrease of approximately 0.1 million CEU in the average number of containers on-hire; and

Previous wording

•$8.3 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 throughout 2023 at lower levels.

Current wording

•$3.9 million decrease due to a decrease in the average lease rates for our dry and refrigerated container product lines as a result of sizable lease extension transactions throughout 2023 at lower levels.

Previous wording

Fee and ancillary lease revenues were $29.8 million for the six months ended June 30, 2024 compared to $35.1 million in the same period in 2023, a decrease of $5.3 million, primarily due to a lower volume of redeliveries.

Current wording

Fee and ancillary lease revenues were $44.3 million for the nine months ended September 30, 2024 compared to $52.9 million in the same period in 2023, a decrease of $8.6 million, primarily due to a lower volume of redeliveries.

Previous 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.

Current wording

Trading margin. Trading margin was $3.4 million for the nine months ended September 30, 2024 compared to $7.5 million in the same period in 2023, a decrease of $4.1 million primarily due to a decrease in sales volume.

Previous wording

Net gain (loss) on sale of leasing equipment. Loss on sale of leasing equipment was $38.1 million for the three months ended June 30, 2024 compared to a $21.6 million gain on sale in the same period in 2023, a decrease of $59.7 million. The decrease was primarily due to a $57.1 million up-front loss on a finance lease transaction in the second quarter of 2024 that included certain containers purchased during the COVID-19 pandemic with carrying values that were higher than current market values. Additionally, in the prior year we had a gain from the buyout of a finance lease of $4.3 million that did not re-occur. Excluding activity related to finance leases, gain on sale of equipment increased in the current period primarily due to an increase in sales volume.

Current wording

Net gain (loss) on sale of leasing equipment. Loss on sale of leasing equipment was $6.1 million for the nine months ended September 30, 2024 compared to a $49.4 million gain on sale in the same period in 2023, a decrease of $55.5 million. The decrease was primarily due to a $57.4 million up-front loss on a finance lease transaction in 2024 that included certain containers purchased during the COVID-19 pandemic with carrying values that were higher than current market values. Additionally, in the prior year we had a gain from the buyout of a finance lease of $4.3 million that did not re-occur. Excluding activity related to finance leases, gain on sale of equipment increased in the current period primarily due to an increase in sales volume.

Previous wording

Depreciation and amortization. Depreciation and amortization was $271.6 million for the six months ended June 30, 2024 compared to $295.3 million in the same period in 2023, a decrease of $23.7 million. The primary reasons for the decrease were as follows:

Current wording

Depreciation and amortization. Depreciation and amortization was $406.6 million for the nine months ended September 30, 2024 compared to $436.8 million in the same period in 2023, a decrease of $30.2 million. The primary reasons for the decrease were as follows: