Triton International Limited Reports Second Quarter RESULTS AND DECLARES QUARTERLY DIVIDEND

The following excerpt is from the company's SEC filing.

Hamilton, Bermuda - August 11, 2016 – Triton International Limited (NYSE: TRTN)

, ("Triton") today reported results for the

second

quarter ended

June 30, 2016

. On July 12, 2016 Triton Container International Limited ("TCIL") and TAL International Group, Inc. ("TAL") completed their previously announced strategic combination and became wholly owned subsidiaries of Triton. In this press release, Triton has presented selected combined information for the second quarter ended June 30, 2016 together with individual financial statements for Triton, TCIL and TAL for the three and six months ended

, and 2015.

Second Quarter and Recent Highlights:

On July 12, 2016, TCIL and TAL completed their combination to form Triton International, the world’s largest, most capable and most efficient lessor of intermodal freight containers.

On August 11, 2016, Triton announced a quarterly dividend of

per share payable on

September 22, 2016

to shareholders of record as of

September 8, 2016

The following reflects selected combined information of TCIL and TAL:

Combined Adjusted pre-tax income for TCIL and TAL was

$18.4 million

quarter of

, a decrease of

Combined leasing revenues for TCIL and TAL were

$299.6 million

Combined equipment utilization averaged

Through August 11, 2016, the combined companies have invested approximately

million in new and sale-leaseback containers for delivery in

The combined results shown in this press release represent the aggregate of TCIL's and TAL's individual results for the three and six months ended June 30, 2016 and 2015 and do not reflect Triton’s pro-forma results on a GAAP basis. These combined results do not reflect all transaction-related expenses since the transaction was completed on July 12, 2016, subsequent to quarter end, nor do they include the effect of any purchase accounting adjustments made in relation to the completion of the transaction. There will be additional transaction-related expenses and other charges that will be expensed in future periods.

As of June 30, 2016, Triton had not yet acquired TCIL and TAL, and, as such, had not commenced operations, had no significant assets or liabilities and had not conducted any material activities through

. For the three and six months ended

, Triton reported a net loss of

$0.02 million

$0.03 million

, respectively, mainly related to incidental costs incurred in Triton's formation and other costs in connection with the completion of the transaction. Therefore, no revenues or operating expenses existed for Triton as of June 30, 2016. Following completion of the transaction on July 12, 2016, Triton's results will reflect TCIL's historical financial information as the accounting acquirer, combined with TAL's financial information from the date of completion of the transaction, inclusive of the effect of purchase accounting adjustments. Such treatment is consistent with the accounting treatment prescribed under the acquisition method of accounting.

Selected Combined Information

The following selected key financial information illustrates the combined performance of TCIL and TAL for the

(dollars in millions):

Three Months Ended 

 June 30,

Six Months Ended 

% Change

Adjusted pre-tax income(1)

(77.4%)

$174.2

(70.9%)

Leasing revenues

$329.8

(9.2%)

$611.9

$658.9

(7.1%)

Adjusted EBITDA(1)

$240.7

$294.0

(18.1%)

$493.2

$592.9

(16.8%)

Adjusted net income(1)

(74.8%)

$142.2

(70.0%)

Net income

(93.3%)

$129.5

(85.0%)

(1) Adjusted pre-tax income, Adjusted EBITDA, and Adjusted net income are non-GAAP financial measures that we believe are useful in evaluating our operating performance. Triton's, TCIL's and TAL's definition and calculation of Adjusted pre-tax income, Adjusted EBITDA, 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 excited to have completed this transformative combination and formed Triton International, the world’s largest, most capable and most efficient container leasing company,” commented Brian M. Sondey, Chairman and Chief Executive Officer of Triton International. "With the closing now behind us, operations at the new Triton are off to a running start. We continue to expect our new company to have significant scale, cost, container supply and operating capability advantages compared to our peers, and we are on track to achieve our goal of $40 million of annual cost savings after our systems are fully integrated. The new company has also been well received by our customers, vendors and lenders. I would like to thank our employees and all of our business partners for helping us successfully launch Triton International."

"While overall business conditions remained challenging, we did see some improvement during the second quarter, with leasing demand returning after a long period of slow activity. Modest trade growth, combined with limited production of new containers, has resulted in many of our customers experiencing spot container shortages and has led to increased demand for our containers. Net pick-up activity for the combined operations of TCIL and TAL was meaningfully positive during the second quarter of 2016 for the first time since the third quarter of 2014, and our combined utilization has started to recover, increasing by 0.2% during the second quarter to reach

as of June 30, 2016. Utilization of the Triton container fleet currently stands at

"While leasing demand and net pick-up activity improved during the second quarter, market leasing rates and used container sale prices remained very low due to aggressive competition. Low market leasing rates continued to compress our leasing margins, as containers were returned from high-rate leases and subsequently leased out at lower market rates, and as existing leases were renegotiated and extended at lower rate levels. Used container sale prices also continued to decrease in the second quarter, leading to significant losses on the sale of containers. The loss on sale was particularly large for the TAL fleet during the second quarter due to mark-to-market adjustments related to TAL’s much larger inventory of containers for sale."

"Business conditions are also challenging for our shipping line customers, and several of our customers are in active financial restructuring negotiations. While our collections performance generally has been strong, credit risks will remain elevated until freight rates and the financial performance of the container shipping lines improve."

"The combined Adjusted pre-tax income for TCIL and TAL was

during the second quarter of 2016, down

from the second quarter of 2015 and down

from the first quarter of 2016. This decrease primarily reflects ongoing lease rate pressure and the further decrease of used container selling prices in the second quarter. The improved leasing demand that we began to experience in the second quarter will mainly benefit future periods."

Outlook

Mr. Sondey continued, "Leasing demand remains solid as we start the third quarter, and we have recently seen some limited improvements in pricing trends. We expect dry container net pick-up activity to be strong for the third quarter, and our utilization should continue to increase. Prevailing lease rates remain far below historical levels and well below our portfolio average, but we have seen some improvement in market leasing rates as depot and factory container inventories shrink. Used container sale prices have so far stabilized during the third quarter, benefiting from a reduced volume of off-hires and improved lease-out opportunities for our older depot containers. If current demand levels and pricing trends continue through the third quarter, we expect our Adjusted pre-tax income to increase sequentially in the third quarter, excluding the impacts of purchase accounting."

Dividend

Triton’s Board of Directors has approved and declared a

per share quarterly cash dividend on its issued and outstanding common stock, payable on

to shareholders of record at the close of business on

Investors’ Webcast

Triton will hold a Webcast at 9 a.m. (New York time) on Friday, August 12, 2016 to discuss its

quarter results. To participate by phone, please dial 1-877-418-5277 (domestic) or 1-412-717-9592 (international) approximately 15 minutes prior to the start time and reference the Triton International Limited conference call. To access the live Webcast or archive, please visit Triton's website at http://www.trtn.com. An archive of the Webcast will be available one hour after the live call through Friday, September 23, 2016.

About Triton International Limited

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

Contact

John Burns

Senior Vice President and Chief Financial Officer

Investor Relations

(914) 697-2900

The following table sets forth the combined equipment fleet utilization(2) for TCIL and TAL as of and for the periods indicated:

Quarter Ended

March 31,

December 31,

September 30,

Average Utilization

Ending Utilization

(2) 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 provides the composition of the combined equipment fleet as of

, December 31, 2015, and June 30, 2015 (in units, TEUs and CEUs):

Equipment Fleet in Units

Equipment Fleet in TEU

2,586,100

2,632,257

2,593,791

4,154,335

4,217,703

4,163,511

Refrigerated

200,943

198,292

194,857

384,600

379,134

372,271

Special

88,148

88,227

150,603

154,137

155,008

11,715

11,243

Chassis

21,784

21,216

20,293

39,355

38,210

36,325

Equipment leasing fleet

2,906,642

2,951,156

2,907,020

4,740,608

4,800,427

4,736,967

Equipment trading fleet

18,344

21,135

28,256

30,402

35,989

46,614

2,924,986

2,972,291

2,935,276

4,771,010

4,836,416

4,783,581

Equipment Fleet in CEU

Operating leases

5,848,136

5,855,833

5,750,341

Finance leases

235,806

252,229

246,907

84,832

107,080

119,226

6,168,774

6,215,142

6,116,474

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, TCIL's and TAL'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 transaction, 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 China; disruption to their operations from failures of or attacks on their information technology systems; their compliance with laws and regulations related to security, anti-terrorism, environmental protection and corruption; their ability to obtain sufficient capital to support their growth; restrictions on their businesses imposed by the terms of their debt agreements; and other risks and uncertainties, including those risk factors set forth in the section entitled "Risk Factors" beginning on page 34 of the proxy statement/prospectus included in Triton’s Registration Statement on Form S-4, as amended.

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 AND ITS SUBSIDIARIES

Consolidated Balance Sheets

(Dollars in thousands)

(Unaudited)

ASSETS:

Prepaid assets

Total current assets

Total assets

LIABILITIES AND SHAREHOLDER'S EQUITY:

Accounts payable

Total current liabilities

Total liabilities

Shareholder's equity:

Common shares, $0.01 par value, 100 shares authorized, and 100 shares issued respectively

Receivable from TCIL common shares

Additional paid-in capital

Accumulated (deficit)

Total shareholder's equity

Total liabilities and shareholder's equity

Consolidated Statements of Operations

(Dollars in thousands, except share data)

Three Months Ended June 30, 2016

Six Months Ended June 30, 2016

Revenues:

 Revenues

Total revenues

Operating expenses:

Administrative expenses

Transaction and other non-recurring costs

Total operating expenses

Operating (loss)

Other expenses:

Total other expenses

(Loss) before income taxes

(Loss) tax expense

Net (loss)

Net (loss) per common share—Basic

Net (loss) per common share—Diluted

Cash dividends paid per common share

Weighted average number of common shares outstanding—Basic

Dilutive share options and restricted shares

Weighted average number of common shares outstanding—Diluted

Consolidated Statements of Cash Flows

Cash flows from operating activities:

Net loss

Adjustments to reconcile net loss:

Expenses paid by TCIL on behalf of Triton

Changes in assets and liabilities:

Increase in prepaid assets

Decrease in accounts payable

Net cash provided by operating activities

Cash flows from investing activities:

Net cash provided by investing activities

Cash flows from financing activities:

Net cash provided by financing activities

Net increase in unrestricted cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Supplemental non-cash activities:

Capital contribution from TCIL in the form of expenses paid on behalf of Triton

TRITON CONTAINER INTERNATIONAL LIMITED

December 31,

Leasing equipment, net of accumulated depreciation and allowances of $1,651,513 and $1,566,963

4,189,723

4,362,043

Net investment in finance leases

64,664

68,107

Revenue earning assets

4,254,387

4,430,150

Unrestricted cash and cash equivalents

89,788

56,689

Restricted cash

20,918

22,575

Accounts receivable, net of allowances of $7,143 and $8,297

127,346

127,676

Other assets

36,126

37,911

Fair value of derivative instruments

4,528,565

4,677,154

LIABILITIES AND EQUITY:

Equipment purchases payable

12,128

Accounts payable and other accrued expenses

115,934

120,033

Debt, net of unamortized deferred financing costs of $21,279 and $19,024

3,021,044

3,166,903

3,145,043

3,299,321

Equity:

Class A common shares, $0.01 par value; 294,000,000 authorized, 44,537,630 and 44,535,732 issued and outstanding

Class B common shares, $0.01 par value; 6,000,000 authorized, issued and outstanding

177,054

176,088

Accumulated earnings

1,059,318

1,044,402

Accumulated other comprehensive (loss)

(3,810

(3,666

Noncontrolling interests

150,455

160,504

Total equity

1,383,522

1,377,833

Total liabilities and equity

(Dollars and shares in thousands, except earnings per share)

Leasing revenues:

156,367

176,986

317,362

355,137

Total leasing revenues

158,333

178,989

321,358

359,120

(Loss) gain on sale of leasing equipment, net

(1,930

(3,767

Depreciation and amortization

81,132

71,040

160,276

140,120

Direct operating expenses

12,015

13,506

26,482

26,122

13,166

14,367

27,679

29,730

(Reversal of) provision for doubtful accounts

(2,132

109,798

103,170

221,214

203,796

Operating income

46,605

76,896

96,377

161,649

Interest and debt expense

33,491

35,929

67,189

70,466

Realized loss on derivative instruments

Write-off of deferred financing costs

Loss (gain) on interest rate swaps, net

(2,059

Other (income) expense, net

37,758

35,569

76,473

74,888

Income before income taxes

41,327

19,904

86,761

Income tax expense

39,981

17,720

83,817

Less: income attributable to noncontrolling interest

Net income attributable to shareholders

36,241

14,916

77,111

Adjustments to reconcile net income to net cash provided by operating activities:

Amortization of deferred financing costs

Loss (gain) on sale of leasing equipment, net

(6,325

Loss on interest rate swaps, net

Stock compensation charge

Changes in operating assets and liabilities:

Other changes in operating assets and liabilities

(6,308

(1,325

189,285

228,914

Purchases of leasing equipment and investments in finance leases

(64,098

(302,853

Proceeds from sale of equipment, net of selling costs

60,820

89,824

Cash collections on finance lease receivables, net of income earned

(1,562

Net cash provided by (used in) investing activities

(208,013

Redemption of common shares

Financing fees paid under debt facilities

(5,068

(2,972

Borrowings under debt facilities

44,700

535,000

Payments under debt facilities and capital lease obligations

(188,304

(535,061

Decrease in restricted cash

Distributions to noncontrolling interests

(12,853

(26,772

Net cash (used in) provided by financing activities

(160,245

(25,932

Net increase (decrease) in unrestricted cash and cash equivalents

33,099

(5,031

Unrestricted cash and cash equivalents, beginning of period

65,607

Unrestricted cash and cash equivalents, end of period

60,576

Supplemental non-cash investing activities:

 Amounts incurred, but not yet paid, for container rental equipment purchased

16,889

TAL INTERNATIONAL GROUP, INC.

Leasing equipment, net of accumulated depreciation and allowances of $1,289,204 and $1,218,826

3,813,218

3,908,292

Net investment in finance leases, net of allowances of $671 and $805

159,693

177,737

Equipment held for sale

80,682

74,899

4,053,593

4,160,928

54,331

58,907

28,358

30,302

Accounts receivable, net of allowances of $1,209 and $1,314

91,358

95,709

Goodwill

74,523

15,091

13,620

4,317,254

4,434,076

LIABILITIES AND STOCKHOLDERS' EQUITY:

20,009

67,191

20,348

53,480

56,096

Net deferred income tax liability

447,992

456,123

Debt, net of unamortized deferred financing costs of $23,720 and $25,245

3,146,494

3,216,488

3,723,461

3,769,064

Stockholders' equity:

Preferred stock, $0.001 par value, 500,000 shares authorized, none issued

Common stock, $0.001 par value, 100,000,000 shares authorized, 37,307,134 and 37,167,134 shares issued respectively

Treasury stock, at cost, 3,911,843 shares

(75,310

513,162

511,297

204,568

248,183

(48,664

(19,195

Total stockholders' equity

593,793

665,012

Total liabilities and stockholders' equity

138,137

146,569

283,035

291,137

Other revenues

141,273

150,838

290,496

299,813

Equipment trading revenues

11,463

16,478

22,755

33,323

Equipment trading expenses

(11,471

(14,957

(22,736

(30,388

Trading margin

(Loss) on sale of leasing equipment, net

(15,508

(29,438

(2,109

63,157

60,021

126,383

118,405

19,576

10,011

37,535

18,833

10,855

10,467

21,568

22,249

Provision (reversal) for doubtful accounts

95,961

81,234

189,789

160,399

29,796

70,465

71,288

140,240

28,874

29,602

58,025

58,845

29,182

29,238

59,509

59,197

41,227

11,779

81,043

14,557

28,616

Net (loss) income

(1,970

26,670

52,427

Amortization of net loss on terminated derivative instruments designated as cash flow hedges

Amortization of lease intangibles

Loss on sale of leasing equipment, net

Deferred income taxes

Net equipment sold (purchased) for resale activity

(4,809

(3,759

178,229

203,133

(145,667

(428,963

61,301

66,026

21,325

21,289

Net cash (used in) investing activities

(63,337

(341,574

Purchases of treasury stock

(4,446

Stock options exercised and stock related activity

(2,362

190,001

365,000

(261,555

(182,251

Common stock dividends paid

(47,496

(47,313

(119,468

131,470

Net (decrease) in unrestricted cash and cash equivalents

(4,576

(6,971

79,132

72,161

34,670

Non-GAAP Financial Measures

We use the terms "EBITDA", “Adjusted EBITDA”, "Adjusted pre-tax income", and "Adjusted net income", throughout this press release.

EBITDA is defined as net income before interest and debt expense, income tax expense, depreciation and amortization, and the write-off of deferred financing costs. Adjusted EBITDA is defined as EBITDA excluding gains and losses on interest rate swaps, plus principal payments on finance leases, plus transaction and other non-recurring costs.

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, and transaction and other non-recurring costs. Adjusted net income is defined as net income further adjusted for the items discussed above, net of income tax.

EBITDA, Adjusted EBITDA, Adjusted pre-tax income, Adjusted net income, and Adjusted pre-tax return on tangible equity are not presentations made in accordance with U.S. GAAP. EBITDA, Adjusted EBITDA, 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, or net cash from operating activities.

We believe that EBITDA, Adjusted EBITDA, Adjusted pre-tax income, Adjusted net income, and Adjusted pre-tax return on tangible equity 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 and available liquidity to service debt and fund investments without regard to debt or capital structure, income tax rates and depreciation policy estimates, which can vary substantially from company to company;

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 a reconciliation of net income, the most directly comparable U.S. GAAP measure, to EBITDA in the tables below for the

. We have also provided reconciliations of income before income taxes and net income, the most directly comparable U.S. GAAP measures, to Adjusted pre-tax income and Adjusted net income in the tables below for the

We have also provided reconciliations of operating cash flows to Adjusted EBITDA in the tables below for the current quarter.

Non-GAAP Reconciliations of Adjusted Pre-tax Income and Adjusted Net Income

(Dollars in Thousands)

Net loss (gain) on interest rate swaps

    Transaction and other non-recurring costs

Adjusted pre-tax income

15,177

39,701

32,918

91,685

Write-off of deferred financing costs, net of tax

Net loss (gain) on interest rate swaps, net of tax

(1,997

    Transaction and other non-recurring costs, net of tax

    Foreign income and withholding tax adjustments

Adjusted net income

14,504

38,460

31,473

88,839

Non-GAAP Reconciliations of Operating Cash Flows to Adjusted EBITDA

Non-cash expenses

(5,580

(14,715

(Loss) gain on sale of equipment, net

Changes in operating assets & liabilities

Interest expense

Principal payments on finance leases

269,697

311,862

TAL INTERNATIONAL GROUP, INC.

41,763

17,797

82,495

Stock compensation tax adjustment

Tax adjustment related to non-deductibility of certain transaction and other non-recurring costs

27,016

11,130

53,366

(10,252

(9,792

(Loss) on sale of equipment, net

223,530

281,034

The above information was disclosed in a filing to the SEC. To see the filing, click here.

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