The following excerpt is from the company's SEC filing.
Hamilton, Bermuda -
November 10, 2016
– Triton International Limited (NYSE: TRTN)
, ("Triton") today reported results for the
September 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 its results based on U.S. GAAP as well as Non-GAAP selected information for the three and
and Recent Highlights:
Triton reported a Net loss attributable to shareholders of
and Loss before income taxes of
Triton reported an Adjusted pre-tax loss of
The Adjusted pre-tax loss in the
in Transaction and other costs (which includes a $4.0 million reclassification of accrued incentive compensation expenses relating to employees transitioning out of the Company from Administrative expenses to Transaction and other costs).
quarter includes a
negative impact related to the default by Hanjin Shipping, and a
net negative impact from the preliminary purchase accounting adjustments.
Excluding the items mentioned above (except the reclassification), Triton’s Adjusted pre-tax income would have been
as of November 10, 2016.
Triton announced a quarterly dividend of
per share payable on
December 22, 2016
to shareholders of record as of
December 2, 2016
Triton's reported results reflect TCIL's historical financial information as the accounting acquirer, and TAL's financial information from the close 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.
Three Months Ended September 30,
Nine Months Ended September 30,
(Loss) income before income taxes
Net (loss) income attributable to shareholders
Net (loss) income per share
Adjusted pre-tax (loss) income(1)
Adjusted net (loss) income(1)
(1) Adjusted pre-tax (loss) income and Adjusted net (loss) income are non-GAAP financial measures that we believe are useful in evaluating our operating performance. Triton's definition and calculation of Adjusted pre-tax (loss) income and Adjusted net (loss) income, including
reconciliation of such non-GAAP financial measures to the most directly comparable GAAP financial measures, are outlined in the attached schedules.
was an eventful quarter for Triton," commented Brian M. Sondey, Chairman and Chief Executive Officer of Triton International. "The merger between TCIL and TAL closed on July 12, creating the largest, and we believe, the most efficient and most capable container leasing company in the world. In addition, Hanjin Shipping filed for court supervised rehabilitation proceedings in South Korea on August 31, ceased active operations and defaulted on our lease agreements. Finally, leasing demand jumped in the third quarter, and over the last few months lease transaction activity and container pick-up volumes have accelerated. All of these events have stretched the new Triton organization, but we are already benefiting from the powerful combination of TCIL’s and TAL’s capabilities."
"Triton reported a Loss before income taxes of
quarter and an Adjusted pre-tax loss of
. Triton’s results in the third quarter of 2016 were impacted by a number of items related to our merger and the Hanjin default. Excluding these items, our Adjusted pre-tax income would have been
in the third quarter of 2016, a significant increase from the combined Adjusted pre-tax income for TCIL and TAL International of $18.4 million in the second quarter. The improvement in the third quarter was mainly driven by improved disposal results and strong leasing demand."
"Despite the ongoing situation with Hanjin, our market environment has continued to improve significantly from the first half of the year. The combination of modest trade growth and limited purchasing of new containers has caused the supply and demand balance for containers to tighten. Lease transaction activity and container lease-out volumes have been strong for the last several months. Our utilization currently stands at
, which is down slightly from the end of the second quarter, but mainly because almost three percent of our containers are in the process of being recovered from Hanjin. The inventory of new and used containers in Asia is much reduced from earlier in the year, and new container prices have increased recently. While market lease rates remain well below our portfolio average, they have rebounded nicely from the low levels reached earlier in the year and continue to have positive momentum."
Hanjin Shipping Recovery Effort
Mr. Sondey continued, "The recovery process related to the Hanjin default remains a major operational effort, but we are making good progress. We have gained control or have issued delivery clearances for almost fifty percent of our containers previously on-hire to Hanjin, and we expect the share of recovered containers will increase to be in the range of seventy percent by the end of the year. We expect we will eventually recover the vast majority of our containers, but it will take time to recover the "tail" of containers that are scattered across many locations."
"We believe we are adequately covered under our credit insurance policies for lost containers and container recovery and positioning costs that are in excess of our insurance deductibles. Our credit insurance policies also provide up to six months of protection against lost leasing revenue, which was roughly $3 million per month for all of the containers on-lease to Hanjin. The
of Hanjin impacts in the
quarter included a
provision for bad debt and
in lost revenue, much of which was applied toward our insurance deductibles. We expect the financial impact of the Hanjin default to be lower in future periods. Over the next few
quarters, we expect that insurance recoveries will offset most of the costs of the recovery effort, though we will not recognize expected insurance payments related to lost revenue until the payments are received."
Mr. Sondey concluded, "Leasing demand remains strong as we start the fourth quarter, and we have not seen the usual seasonal slowdown in dry container lease-out activity. We expect our utilization to increase during the fourth quarter, and expect that increasing new container prices and the tighter supply and demand balance for containers will lead to higher used container selling prices. We also expect our merger cost savings to increase steadily for the next several quarters. However, it will take time for us to fully recover and redeploy the containers previously on-hire to Hanjin, and we will face a timing gap between the lost revenue on these containers and the expected insurance payments that protect against this lost revenue. We also continue to face ongoing pressure from lease re-pricing. Overall, we expect our normalized level of profitability to increase from the third to the fourth quarter of 2016."
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
Triton will hold a Webcast at 9 a.m. (New York time) on
Friday, November 11, 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, December 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.
Senior Vice President and Chief Financial Officer
The following table sets forth the combined equipment fleet utilization(a) for TCIL and TAL as of and for the periods indicated:
(a) Utilization is computed by dividing total units on lease (in cost equivalent units, or "CEUs") by the total units in fleet (in CEUs), excluding new units not yet leased and off-hire units designated for sale. For the utilization calculation, units on lease to Hanjin were treated as off-lease effective August 1, 2016.
The following table provides the composition of the combined equipment fleet as of
December 31, 2015
September 30, 2015
(in units, TEUs and CEUs):
Equipment Fleet in Units
Equipment Fleet in TEU
Equipment leasing fleet
Equipment trading fleet
Equipment in CEU
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
Consolidated Balance Sheets
(Dollars in thousands, except share data)
Leasing equipment, net of accumulated depreciation of $1,683,693 and $1,566,963
Net investment in finance leases, net of allowances of $527 and $526
Equipment held for sale
Revenue earning assets
Unrestricted cash and cash equivalents
Accounts receivable, net of allowances of $26,701 and $8,297
Lease intangibles, net of accumulated amortization of $26,488 and $0
LIABILITIES AND SHAREHOLDERS' EQUITY:
Equipment purchases payable
Fair value of derivative instruments
Accounts payable and other accrued expenses
Net deferred income tax liability
Debt, net of unamortized deferred financing costs of $20,548 and $19,024
Class A common shares, $0.01 par value; 294,000,000 shares authorized, 44,535,732 issued and outstanding at December 31, 2015
Class B common shares, $0.01 par value; 6,000,000 shares authorized, 6,000,000 issued and outstanding at December 31, 2015
Common shares, $0.01 par value, 294,000,000 shares authorized, undesignated shares $0.01 par value, 6,000,000 shares authorized, 74,376,025 and 0 shares issued, respectively
Additional paid-in capital
Accumulated other comprehensive loss
Total shareholders' equity
Total liabilities and shareholders' equity
Consolidated Statements of Operations
(Dollars and shares in thousands, except per share amounts)
Three Months Ended
Nine Months Ended
Total leasing revenues
Equipment trading revenues
Equipment trading expenses
Net (loss) gain on sale of leasing equipment
Depreciation and amortization
Direct operating expenses
Provision (reversal) for doubtful accounts
Total operating expenses
Operating (loss) income
Interest and debt expense
Realized loss on derivative instruments, net
Unrealized (gain) loss on derivative instruments, net
Write-off of deferred financing costs
Other expense (income), net
Total other expenses
Income tax (benefit) expense
Less: income attributable to noncontrolling interest
Net (loss) income per common share—Basic
Net (loss) income 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
(Dollars in thousands)
Cash flows from operating activities:
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Amortization of deferred financing costs and other debt related amortization
Amortization of lease premiums
Share compensation expense
Net loss (gain) on sale of leasing equipment
Deferred income taxes
Changes in operating assets and liabilities, net of acquired assets and liabilities:
Decrease in accounts receivable
Increase in accounts payable and other accrued expenses
Net equipment sold for resale activity
Other changes in operating assets and liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Purchases of leasing equipment and investments in finance leases
Proceeds from sale of equipment, net of selling costs
Cash collections on finance lease receivables, net of income earned
Cash and cash equivalents acquired
Net cash used in investing activities
Cash flows from financing activities:
Redemption of common shares
Financing fees paid under debt facilities
Borrowings under debt facilities
Payments under debt facilities and capital lease obligations
Decrease in restricted cash
Common share dividends paid
Distributions to noncontrolling interest
Net cash used in financing activities
Net increase (decrease) in unrestricted cash and cash equivalents
Unrestricted cash and cash equivalents, beginning of period
Unrestricted cash and cash equivalents, end of period
Supplemental non-cash investing activities:
Transaction and other costs associated with the mergers for the three and
were as follows:
Employee compensation costs
Employee compensation costs include costs to maintain and retain key employees, severance expenses, and certain stock compensation expense, including retention and stock compensation expense pursuant to plans established as part of TCIL's 2011 re-capitalization.
Professional fees and legal expenses include costs paid for services directly related to the closing of the mergers and include legal fees, accounting fees and transaction and advisory fees.
Non-GAAP Financial Measures
We use the terms "
" throughout this press release.
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.
excludes gains and losses on interest rate swaps, the write-off of deferred financing costs, transaction and other costs, and noncontrolling interest.
is defined as net income further adjusted for the items discussed above, net of income tax.
are not presentations made in accordance with U.S. GAAP.
should not be considered as alternatives to, or more meaningful than, amounts determined in accordance with U.S. GAAP, including net income.
We believe that
are useful to an investor in evaluating our operating performance because these measures:
are widely used by securities analysts and investors to measure a company’s operating performance;
help investors to more meaningfully evaluate and compare the results of our operations from period to period by removing the impact of our capital structure, our asset base and certain non-routine events which we do not expect to occur in the future; and
are used by our management for various purposes, including as measures of operating performance and liquidity, to assist in comparing performance from period to period on a consistent basis, in presentations to our board of directors concerning our financial performance and as a basis for strategic planning and forecasting.
We have provided reconciliations of
Net (loss) income before income taxes
, the most directly comparable U.S. GAAP measures, to
in the tables below for the
three and nine
Non-GAAP Reconciliations of Adjusted Pre-tax (Loss) Income and Adjusted Net (Loss) Income
(Dollars in Thousands)
(Loss) Income before income taxes
Transaction and other costs
Income attributable to noncontrolling interest
Tax adjustment related to non-deductibility of transaction costs and other non-recurring costs
The above information was disclosed in a filing to the SEC. To see the filing, click here.
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