INVESTOR PRESENTATION. March 14, 2018

Transcription

1 INVESTOR PRESENTATION March 14,

2 DISCLAIMER Forward-Looking Statements Certain statements in this presentation, 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 International Limited s ( Triton ) 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: 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; customers' decisions to buy rather than lease containers; dependence on a limited number of customers for a substantial portion of our 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 our businesses; decreases in the demand for international trade; disruption to our operations resulting from the political and economic policies of the United States and other countries, particularly China, including increased tariffs; disruption to our operations from failures of or attacks on our information technology systems; compliance with laws and regulations related to economic and trade sanctions, security, anti-terrorism, environmental protection and corruption; ability to obtain sufficient capital to support our growth; restrictions on our businesses imposed by the terms of our debt agreements; changes in the tax laws in the United States and other countries; and other risks and uncertainties, including those risk factors set forth in the section entitled Item 1A "Risk Factors" beginning on page 14 of Triton International Limited s Annual Report on Form 10-K for the year ended December 31, 2017, as updated from time to time by Triton International Limited s Quarterly Reports on Form 10-Q or other comments of Triton International Limited on file with the United States Securities and Exchange Commission. 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. 2

3 OVERVIEW Triton International Limited is the largest container leasing company in the world» Created in July 2016 through the merger of two long-term industry leaders, Triton Container International Limited and TAL International Group Inc.» Own over 5.6 million twenty-foot equivalent units ( TEU ) of containers» Have significant financial and operating advantages in our market Triton s leadership position and favorable conditions in 2017 drove excellent performance Triton (and its predecessor companies) has a long track record of strong performance» Market leading returns» Stable cash flow generation We believe Triton is well-positioned for continued success» Attractive long-term market fundamentals» Favorable current conditions» Well-structured, long-term lease portfolio» Significant scale, cost and capability advantages to drive continued outperformance 3

4 TRITON CONTAINER FLEET AND LEASE PORTFOLIO Container Fleet % of Revenue 2017 Triton Position (1) Drys 63% #1 Refrigerated 29% #1 Specials 5% #1 Chassis 2% #4 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% The Large Majority of Triton s Containers Are On-hire Under Multi-year Long-term Leases 0% Lease Portfolio As of December 31, % 13.0% 8.8% 8.3% 72.2% 75.3% 4.9% 3.4% CEU Service Leases NBV Long-Term Expired Lease (Units on Hire) Long-Term Lease Finance lease Tanks 1% #5 Average remaining duration of long-term & finance leases was approximately 43 months as of December 31, 2017 (1) Source: Drewry Container Census & Lease Industry Annual Report 2017, IICL and ITCO. 4

5 MERGER SET A NEW STANDARD ACROSS CONSOLIDATING LANDSCAPE Pre-Merger Leasing Share (1) Current Leasing Share (1) Gold 3% Beacon 4% Other 10% Textainer 18% Beacon 5% Other 11% Triton 26% Dong Fang 4% CAI 6% Cronos 5% CAI 6% Triton 13% Seacube 6% Seacube 7% Seaco 7% Florens 11% TAL 12% Seaco 12% Textainer 16% Florens 18% (1) Source: Drewry Container Census & Lease Industry Annual Report 2016 and 2017, based on fleet size in TEU at end-2016; figures exclude containers owned by shipping lines and other. 5

6 Triton Target Leve l Textainer CAI ($ in MM) SCALE ADVANTAGES Cost Comparison to Peers Upon Full Realization of Synergies Capital Expenditures since June 30, 2016 (3) S&A as % of Leasing Revenue (1) 12% $2,500 Triton 10% CAI $2,000 Textainer 8% 6% Triton Target Level (2) $1,500 $1,000 Textainer CAI 4% $500 2% $0 Triton Textainer CAI (1) Triton Target Level calculated based on target level of S&A after integration savings are fully realized. Textainer based on financials for full year 2017 and includes short-term and long-term incentive compensation expense. CAI container leasing segment data shown for full year (2) Based on the quarter ending December 31, 2017, Triton s S&A to Leasing Revenue was 6.9%. (3) Calculated as the sum of cash paid for containers as reported in the cash flow statements of quarterly earnings filings plus the equipment purchases payables at December 31, For CAI, data includes both container and rail segments. Excludes capex commitments. 6

7 EXTENSIVE GLOBAL OPERATING INFRASTRUCTURE Extensive global footprint provides market-leading operating and marketing capabilities» 24 offices worldwide located in 15 countries; 456 third-party depots located in 47 countries (1)» Leased containers to 259 customers from 53 countries; sold containers to 1,451 customers from 77 countries (2)» Worked with over 130 third-party logistics providers to move over 40,000 containers to better locations (2) Combined scale allows Triton to provide best-in-class global service at low unit cost Seattle London Hamburg Rotterdam Antwerp San Francisco Houston Lexington Miami New York New Jersey Bermuda Mumbai Bangkok Hong Kong Seoul Tokyo Shanghai Taipei Singapore Rio de Janeiro Triton Office Depot Sydney (1) As of December 31, (2) For the full year

8 SUPPLIER OF CHOICE TO WORLD S LARGEST SHIPPING LINES Triton Is the World s Leading Supplier Triton estimates that it has a #1 position with (1) :» Each of the top 5 carriers» 8 of the top 10 carriers Top Global Shipping Lines (2) (2) (2) Top 10 customers have leased containers from the Company for over 30 years on (2) average (2) (1) Carriers with announced but uncompleted acquisitions counted separately. (2) Acquisition or merger completed or in process. Dashed lines indicate acquisition or merger is currently in process; solid lines indicate completion. 8

9 China Dry Van New Production Inventory (TEU) Triton s Asia Inventory (TEU) Growth Rate TEU (MM) Leasing Company (%) MARKET CONDITIONS REMAIN FAVORABLE Global GDP and Container Trade Growth 20% 15% 10% 5% 0% (5%) (10%) World Container Fleet and Leasing Share 60% 50% 40% 30% 20% 10% Container Trade Growth Global GDP Growth Sources: Container Trade Growth : Alphaliner Monthly Monitor December Container Trade Growth 2017E-2018E: average of estimates from Alphaliner Monthly Monitor December 2017 and Clarksons Container Intelligence Monthly December GDP Growth: International Monetary Fund, October 2017 World Economic Outlook Update and earlier editions of the same report. 1,200,000 1,000, , , , ,000 0 New Dry Factory Inventory 0 0% Leasing Company Owned Shipping Line Owned Leasing (%) Source: Drewry Container Census & Lease Industry Annual Report Triton s Dry Depot Lease Inventory in Asia 250, , , ,000 50,000 - Shipping Inventory Leasing Inventory Sources: Shipping and Leasing Factory Inventory estimates provided by commonly used informal surveys by factory inspectors. 9 Unbooked Asia Dry Inventory Source: Internal container management reports. Booked Asia Dry Inventory

10 TRITON S KEY OPERATING METRICS STRONG Ending Quarterly Utilization (CEU) Dry Lease Rate Index (CEU) 100% 99% 98% 97% 96% 95% 94% 93% 92% 91% Ending Quarterly Utilization (CEU) 125% 120% 115% 110% 105% 100% 95% 90% 85% 80% 75% 70% 65% Overall Lease Rate Index (CEU) Dry Container Pick-up / Drop-off Activity (Units) (1) 225, , , , , ,000 75,000 50,000 25,000 0 (25,000) (50,000) (75,000) (100,000) Dry Container Pick-up / Drop-off Activity (Units) (excluding Sale Leaseback) 250% 225% 200% 175% 150% 125% 100% 75% 50% Used Dry Container Sales Price Index Used Dry Container Sales Price Index (1) Pick-ups Drop-offs Net 20' Price Index 40'HC Price Index (1) Excludes sale of new equipment (1) Excludes Sale-leaseback units. 10

11 TRITON S INVESTMENT SUCCESS IS BUILDING LONG-TERM VALUE Triton has leveraged it s financial and operating strengths to achieve very strong investment performance» Estimate share of new container leasing transactions close to 50% since our merger» Have invested over $2.6 billion in 1.4 million TEU of containers since July 2016 Strong investment performance building long-term value» High expected returns on recent investment will support enhanced profitability and cash flow for many years» Triton s unique ability provide critically needed container capacity in 2017 has reinforced our position as the supplier of choice for the world s largest shipping lines Competition for new leasing transactions normalizing, but investment returns remain attractive and we expect to achieve another successful investment year in

12 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4'17 ($ in MM) Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Leasing Revenue ($ in MM) Revenue Earning Assets ($ in MM) ($ in MM) TRITON S FINANCIAL PERFORMANCE BACK ON TRACK (1) Leasing Revenue and Revenue Earning Assets (2)(3) Adjusted Pre-Tax Income (4) $400 $300 $200 $100 $11,000 $8,500 $6,000 $3,500 $1,000 $100 $75 $50 $25 $- $(25) Leasing Revenue Revenue Earning Assets (Avg.) Adjusted EBITDA Interest Expense (2) Gain (Loss) on Sale Adjusted Pre-Tax Income Excluding Gain (Loss) on Sale Adjusted Pre-Tax Income $250 $200 $150 $100 $50 $- (1) The combined financial information from Q and prior periods does not reflect results on a GAAP basis. GAAP financial statements reflect only the TCIL operations prior to the merger on July 12, 2016, and can be found in the Company s 10-Q and 10-K filings. (2) Excludes purchase accounting adjustments. (3) Revenue Earning Assets includes the NBV of leasing equipment, equipment held for sale, and the net investment in finance leases. The amount represents the average balance at the beginning and end of the period presented. (4) Reflects purchase accounting adjustments. Adjusted EBITDA Interest Expense 12

13 Q4 17 Annualized ($MM) STABLE CASH FLOW GENERATION UNDERPINS LONG-TERM VALUE Adjusted EBITDA less Interest Expense (1) $1,000 $800 $600 $400 $200 $- Adjusted EBITDA Interest Expense Total Shareholder Return since IPO % Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Oct-11 Oct-12 Oct-13 Oct-14 Oct-15 Oct-16 Oct-17 (1) Reflects purchase accounting for 2017 only. 13

14 ATTRACTIVE BUSINESS FUNDAMENTALS Valuable Service» Pick-up and drop-off flexibility helps shipping lines manage uncertain and variable trade flows» Pooled leasing inventory brings industry-wide efficiency Favorable Long-Term Pricing Dynamics» Need for extensive global infrastructure creates meaningful barrier to entry» Reliable access to container supply main selection factor; critical to customers revenue but low cost Attractive Leasing Asset» Little risk of technological obsolescence; limited age discrimination» Strong residual value protection Naturally Resilient from Supply Cycles» Supply corrects quickly: ordering lead time only 2-3 months; annual replacements 4-5%» High percentage of containers on multi-year leases provides revenue and cash flow stability Meaningful Advantages for Leading Players» Strong cost economies of scale» Extensive supply capability and reputation for reliability critical 14

15 Average Annual Return on Assets (EBIT / Total Assets) Average Annual Return on Assets (EBIT / Total Assets) LEADING TO STRONG ABSOLUTE AND RELATIVE FINANCIAL PERFORMANCE OVER MANY YEARS 7% 10 Year 5 Year Average Annual Growth in Revenue Earning Assets % -5% 0% 5% 10% 15% 8% Triton 7% Average Annual Growth in Revenue Earning Assets % -5% 0% 5% 10% 15% 8% Rental Companies 6% Railcar Leasing Rental Companies Aircraft Leasing (1) 6% Triton Railcar Leasing Aircraft Leasing (1) 5% 5% 4% 4% Containership Chartering 3% Containership Chartering 3% 2% 2% 1% 0% Commercial Finance Container Shipping 1% 0% Commercial Finance Container Shipping -1% -1% Triton: Reflects combined financials for TAL and TCIL; Aircraft Leasing: Aercap, Aircastle, FLY, Airlease; Containership Chartering: SSW, DAC, CMRE; Container Shipping: NYK, Kline, MOL, OOCL; Rental Companies: H&E Equipment, McGrath, Mobile Mini, Ryder, URI; Commercial Finance: CIT Group, Marlin; Railcar Leasing: GATX. Data from FactSet, except for Triton. (1) REA growth excludes AerCap acquisition of ILFC from AIG in

16 WELL STRUCTURED BALANCE SHEET Match-fund long-term lease portfolio with long-term fixed rate debt» 86% of total debt either fixed rate or swapped to fixed, minimizing interest rate risk» Average remaining duration of fixed rate debt of 4.0 years (includes swaps), which exceeds average lease duration» 100bps increase in LIBOR would increase annual interest expense by $12.8 million Manage refinancings Financing Strategy» Staggered debt maturities avoids any significant maturity cliffs Financing Sources We have raised total new financing of over $3.5 billion in 2017 to support our aggressive investment» Have accessed multiple financing sources, including the bank, asset-backed and private placement markets ($ in MM) Outstanding (at 12/31/17) ABS notes $2,385 Institutional notes 2,381 Term loan facilities 1,702 Revolving credit / ABS Warehouse facilities 415 Capital lease obligations 103 Total principal outstanding $6,986 Fixed/Floating Mix (1) Staggered Maturity Profile (1) Fixed /Hedged Balance (2) Average Life (yrs) (3) Average Rate (4) Fixed Rate $4, % Hedged Floating Rate $1, % Total Fixed / Hedged $6, % Unhedged Floating Rate $ % Total Debt $6, % % of Debt Fixed / Hedged 86.2% (1) As of 12/31/17, $ in millions. (2) Balances gross of debt discounts at issuance. (3) Weighted by expected swap notional and principal balances at the end of each month. (4) Rate excludes the impact of debt discount amortization, deferred financing cost amortization and purchase accounting adjustments. 16

17 CONCLUSIONS Triton is the clear leader in an attractive market niche» Long track record of strong performance and attractive shareholder returns» Position significantly strengthened with 2016 merger Triton is taking full advantage of current favorable market conditions» Financial performance and key operating metrics up sharply» Building a long tail of enhanced earnings and cash flow through our high investment share Triton is wellpositioned for long-term success» Industry fundamentals support above-gdp growth and strong investment returns» Strong, stable cash flow underpins value and protects financials during down cycles» Current market conditions favorable» Triton has significant scale, cost and capability advantages 17

18 Appendix

19 RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION (1) The combined financial information from Q and prior periods does not reflect results on a GAAP basis. GAAP financial statements reflect only the TCIL operations prior to the merger on July 12, 2016, and can be found in the Company s 10-Q and 10-K filings. 19

20 RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION 20

21 EQUITY CASH FLOW ANALYSIS ($ in 000s, except per share data) Q4 17 Annualized Adjusted EBITDA $1,157,372 Principal Payments on Finance Leases 62,108 NBV of Container Disposals 177,396 Major Cash In Flows $1,396,876 Interest Expense $297,076 Cash Flow Before Capex 1,099,800 Replacement Capex * 760,176 Steady-state Cash flow $339,624 Per share $4.22 Dividends Per Share $1.80 Dividends $145,001 Cash Flow for Growth Capex $194,623 Leverage on Growth Capex 75.0% Asset Growth Potential at Constant Leverage ($) $778,493 Asset Growth Potential at Constant Leverage (%) 8.9% Internal cash flows, at constant leverage, support high level of growth * Represents depreciation, NBV of disposals and principal payments on finance leases. 21