Triton International Limited Reports Second Quarter RESULTS AND DECLARES QUARTERLY DIVIDEND

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

Hamilton, Bermuda –

August 8, 2017

– Triton International Limited (NYSE: TRTN)

("Triton") today reported results for the

second

quarter ended

June 30, 2017

. 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

months ended

June 30, 2016

and fo r the three months ended

March 31, 2017

Second Quarter

and Recent Highlights:

Triton reported Net income attributable to shareholders of

$45.7 million

and Income before income taxes of

$59.5 million

quarter of

Triton reported Adjusted pre-tax income of

$58.8 million

in the

Average utilization was

Triton announced a quarterly dividend of

per share payable on

September 22, 2017

to shareholders of record as of

September 1, 2017

Financial Results

The following table summarizes Triton’s selected key financial information for the three and

Financial information for periods prior to July 12, 2016 is for TCIL (the accounting acquirer in the strategic combination of TCIL and TAL) only.

(in millions, except per share data)

Three Months Ended,

Six Months Ended,

June 30, 2017

June 30, 2016

Total leasing revenues

$281.9

$265.6

$158.3

$547.5

$321.4

$102.9

Net income per share - Diluted

Adjusted pre-tax income(1)

$101.5

Adjusted net income(1)

(1) Adjusted pre-tax income and Adjusted net 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 income 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 pleased with Triton’s strong operating and financial performance in the second quarter of 2017,” commented Brian Sondey, Chairman and Chief Executive Officer of Triton. “We generated

in Adjusted pre-tax income during the quarter, achieved improvements across all of our key operating metrics, and continued to take advantage of large and attractive investment opportunities that Triton is uniquely suited to pursue.”

“Market conditions remained strong in the second quarter and we continued to benefit from our industry-leading scale, cost structure, and operational capabilities. Our customers are indicating that global containerized trade growth has been stronger than expected this year, and industry forecasters have generally increased their growth projections for 2017 into the range of five percent. In addition, the inventory of new and used containers remains extremely tight, especially for dry containers. New dry container prices have been fairly stable since March in the range of $2,100 to $2,200 for a 20’ dry container, and market leasing rates for dry containers remain above our portfolio average rates. Used dry container sale prices continued to increase in the second quarter and are now above our accounting residual values.”

“Container pick-up volumes and new container lease transaction activity were near record levels in the second quarter, while container drop-off volumes were at very low levels. Our container utilization increased by

% during the quarter to reach

as of

, and our utilization currently stands at 97.5%.

“These strong market conditions have also allowed us to further differentiate Triton from our peers. Many shipping lines and leasing companies have been constrained from purchasing large volumes of new containers due to lingering financial challenges, and we have leveraged Triton’s financial and operational strength to fill the resulting supply gap and provide critically needed container capacity for our customers. This has also allowed us to generate a large volume of new container investments with highly attractive expected returns. Since the merger on July 12, 2016, Triton has purchased over

1.1 million

TEU of new and sale-leaseback containers. Our ability to quickly and aggressively invest to meet the industry’s container needs plainly demonstrates to customers that Triton is uniquely capable of managing their most critical container requirements.”

“Triton generated a

$9.6 million

gain on the sale of used containers in the second quarter. This gain was driven by significant increases in both disposal prices and volumes during the quarter.  In addition our sale results benefited from the recapture of prior period mark-downs made against our assets held for sale when container disposal prices were lower.  We expect that the benefits from recapturing prior period mark-downs will be lower in future periods.”

Outlook

Mr. Sondey concluded, “In general, we expect market conditions to remain favorable through at least the end of the year. We expect that the supply / demand balance for containers will remain tight, and that our key operating metrics will continue to improve. We also expect fleet growth and container on-hire activity to remain strong in the third quarter due to the large number of containers that have been ordered and committed to leases, but that have not yet been produced or are waiting for pick-up. As a result of these factors, we expect our Adjusted pre-tax income to increase from the second quarter of 2017 to the third quarter if market conditions remain strong.”

Dividend

Triton’s Board of Directors has approved and declared a

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

Wednesday, August 9, 2017

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

Wednesday, September 20, 2017

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

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

Andrew Greenberg

Senior Vice President

Finance & Investor Relations

(914) 697-2900

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

Quarter Ended

March 31,

December 31,

September 30,

Average Utilization (a)

Ending Utilization (a)

(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 summarizes the combined equipment fleet as of

December 31, 2016

Equipment Fleet in Units

Equipment Fleet in TEU

2,903,880

2,747,497

2,586,100

4,721,780

4,443,935

4,154,335

Refrigerated

218,238

217,564

200,943

419,170

417,634

384,600

Special

81,884

84,077

143,954

147,217

150,603

11,956

11,961

11,715

Chassis

21,468

21,172

21,784

38,933

38,321

39,355

Equipment leasing fleet

3,237,426

3,082,271

2,906,642

5,335,793

5,059,068

4,740,608

Equipment trading fleet

14,991

15,927

18,344

23,580

26,276

30,402

3,252,417

3,098,198

2,924,986

5,359,373

5,085,344

4,771,010

Equipment in CEU

Operating leases

6,384,590

6,126,320

5,848,136

Finance leases

354,727

368,468

235,806

62,969

72,646

84,832

6,802,286

6,567,434

6,168,774

Important Cautionary Information Regarding Forward-Looking Statements

Certain statements in this release, other than purely historical information, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements that include the words "expect," "intend," "plan," "believe," "project," "anticipate," "will," "may," "would" and similar statements of a future or forward-looking nature may be used to identify forward-looking statements. All forward-looking statements address matters that involve risks and uncertainties, many of which are beyond Triton's control. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in such statements and, therefore, you should not place undue reliance on any such statements.

These factors include, without limitation, economic, business, competitive, market and regulatory conditions and the following: failure to realize the anticipated benefits of the combination of TCIL and TAL, 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" contained in our Annual Report on Form 10-K filed with the SEC, on

March 17, 2017

The foregoing list of important factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included herein and elsewhere. Any forward-looking statements made herein are qualified in their entirety by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on Triton or its business or operations. Except to the extent required by applicable law, we undertake no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

-Financial Tables Follow-

TRITON INTERNATIONAL LIMITED

Consolidated Balance Sheets

(In thousands, except share data)

(Unaudited)

ASSETS:

Leasing equipment, net of accumulated depreciation of $1,994,936 and $1,787,505

7,813,214

7,370,519

Net investment in finance leases

325,125

346,810

Equipment held for sale

72,824

99,863

Revenue earning assets

8,211,163

7,817,192

Cash and cash equivalents

169,659

113,198

Restricted cash

112,118

50,294

Accounts receivable, net of allowances of $27,791 and $28,609

187,364

173,585

Goodwill

236,665

Lease intangibles, net of accumulated amortization of $103,406 and $56,159

199,350

246,598

Insurance receivables

17,170

Other assets

51,038

53,126

Fair value of derivative instruments

Total assets

9,173,961

8,713,571

LIABILITIES AND SHAREHOLDERS' EQUITY:

Equipment purchases payable

153,594

83,567

Accounts payable and other accrued expenses

116,604

143,098

Net deferred income tax liability

325,836

317,316

Debt, net of unamortized deferred financing costs of $36,089 and $19,999

6,747,002

6,353,449

Total liabilities

7,352,661

6,906,834

Shareholders' equity:

Common shares, $0.01 par value, 294,000,000 shares authorized 74,536,402 and 74,376,025 shares issued and outstanding, respectively

Undesignated shares $0.01 par value, 6,000,000 shares authorized, no shares issued and outstanding

Additional paid-in capital

693,715

690,418

Accumulated earnings

965,057

945,313

Accumulated other comprehensive income

23,953

26,758

Total shareholders' equity

1,683,470

1,663,233

Non-controlling interests

137,830

143,504

Total equity

1,821,300

1,806,737

Total liabilities and shareholders' equity

Consolidated Statements of Operations

(In thousands, except per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

Leasing revenues:

276,160

156,367

535,745

317,362

11,796

281,939

158,333

547,541

321,358

Equipment trading revenues

12,755

18,239

Equipment trading expenses

(11,427

(16,519

Trading margin

Net gain (loss) on sale of leasing equipment

(1,930

14,800

(3,767

Operating expenses:

Depreciation and amortization

124,091

81,132

241,971

160,276

Direct operating expenses

15,609

12,015

37,563

26,482

Administrative expenses

22,068

13,166

45,035

27,679

Transaction and other costs

(Benefit) provision for doubtful accounts

Total operating expenses

162,491

109,798

328,338

221,214

Operating income

130,415

46,605

235,723

96,377

Other expenses:

Interest and debt expense

70,777

33,491

134,281

67,189

Realized loss on derivative instruments, net

Unrealized loss (gain) on derivative instruments, net

Write-off of deferred financing costs

Other (income), net

(1,716

Total other expenses

70,918

37,758

132,781

76,473

59,497

102,942

19,904

Income tax expense

11,483

18,625

48,014

84,317

17,720

Less: income attributable to noncontrolling interest

45,671

80,282

14,916

Net income per common share—Basic

Net income per common share—Diluted

Cash dividends paid per common share

Weighted average number of common shares outstanding—Basic

73,763

40,362

73,752

40,361

Dilutive restricted shares

Weighted average number of common shares outstanding—Diluted

74,177

74,108

See definitions

Consolidated Statements of Cash Flows

(Dollars in thousands)

(Unaudited)

Cash flows from operating activities:

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

Amortization of deferred financing costs and other debt related amortization

Amortization of lease premiums

46,532

Share compensation expense

Net (gain) loss on sale of leasing equipment

(14,800

Unrealized (gain) loss on derivative instruments

Deferred income taxes

17,106

Changes in operating assets and liabilities:

(2,010

(25,396

(5,493

Net equipment sold for resale activity

(2,316

Net cash provided by operating activities

357,453

189,285

Cash flows from investing activities:

Purchases of leasing equipment and investments in finance leases

(665,473

(64,098

Proceeds from sale of equipment, net of selling costs

90,139

60,820

Cash collections on finance lease receivables, net of income earned

29,953

Net cash (used in) provided by investing activities

(545,326

Cash flows from financing activities:

Redemption of common shares

Debt issuance costs

(19,844

(5,068

Borrowings under debt facilities

1,582,882

44,700

Payments under debt facilities and capital lease obligations

(1,180,787

(188,304

(Increase) decrease in restricted cash

(61,824

Dividends paid

(66,384

Distributions to noncontrolling interest

(9,709

(12,853

Net cash provided by (used in) financing activities

244,334

(160,245

Net increase in cash and cash equivalents

56,461

33,099

Cash and cash equivalents, beginning of period

56,689

Cash and cash equivalents, end of period

89,788

Supplemental non-cash investing activities:

Transaction costs associated with the merger of TCIL and TAL and other costs for the three and

were as follows:

Employee compensation costs

Professional fees

Legal expenses

     Total

Employee compensation costs include costs to maintain and retain key employees, severance expenses, and certain stock compensation expenses, including retention and stock compensation expense pursuant to plans established as in 2011. Professional fees and legal expenses include costs paid for services directly related to the closing of the merger and include legal fees, accounting fees and transaction and advisory fees.

Non-GAAP Financial Measures

We use the terms "

" and "

" throughout this press release.

Adjusted pre-tax income and Adjusted net income is adjusted for certain items management believes are not representative of our operating performance. Adjusted pre-tax income is defined as Income before income taxes excluding the write-off of deferred financing costs, gains and losses on derivative instruments, transaction and other costs, and noncontrolling interest. Adjusted net income is defined as net income attributable to shareholders excluding the write-off of deferred financing costs net of tax, gains and losses on derivative instruments net of tax, transaction and other costs net of tax, and any foreign income and withholding tax adjustments.

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 income before income taxes

, the most directly comparable U.S. GAAP measures, to

in the tables below for the three and

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

(In Thousands)

43,445

(1,498

Income attributable to noncontrolling interest

58,822

42,727

15,177

101,549

32,918

34,611

(1,252

Foreign income and withholding tax adjustment

47,020

35,425

14,504

82,445

31,473

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

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