FOURTH QUARTER 2018 INVESTOR CONFERENCE CALL February 14, 2019 1
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
HIGHLIGHTS Triton reported fourth quarter Adjusted net income of $99.4 million, or $1.25 per share» EPS increase of 7% from Q3 2018 and 47% from Q4 2017» Q4 annualized return on equity of 17.7% 2018 full year Adjusted net income was $363.0 and full year return on equity of 16.7%» EPS up 62.6% from 2017» Strong results driven by outstanding operational performance, our unique competitive advantages and a favorable market environment Leasing activity slowed in Q4 due to start of slow season for dry containers, but expect to achieve another strong year in 2019 Continue to use our cash flow to drive shareholder value» Grew revenue earnings assets 8.8% while holding leverage constant» Paid $2.01 per share in dividends in 2018, declared $0.52 per share for Q1 2019» As of February 8, repurchased 2.1 million shares for an average price of $31.44 per share under the share repurchase plan established in August 2018 3
OPERATING PERFORMANCE Triton s operating performance was strong in 2018» Container demand supported by solid trade growth and increased reliance on leasing» Utilization averaged 98.6%» Average used dry container sale prices increased 21% We achieved another successful year of value-added investment and growth» Purchased $1.5 billion of containers for delivery in 2018, leading to 8.8% growth in revenue earning assets» Average initial lease duration for new containers approximately 7 years Leasing activity slowed in Q4, though our utilization still very high» Experiencing net drop-offs as shipping lines seek to reduce container capacity during slow season» New container prices have dropped to $1,700 range reflecting a decrease in steel prices and aggressive manufacturer competition for limited number of slow-season orders» Lease portfolio provides strong protection against seasonal and cyclically slow periods, and utilization remains well over 97% Expecting market conditions to remain generally favorable in 2019» Most customers and market forecasters expecting trade growth to remain solid» We expect our customers to continue to rely heavily on leasing» Supply of used leasing containers remains very low even in middle of slow season 4
TRITON S KEY OPERATING METRICS 100% Ending Quarterly Utilization (CEU) Ending Quarterly Utilization (CEU) 120% Dry Lease Rate Index (CEU) Overall Lease Rate Index (CEU) 98% 100% 96% 80% 94% 92% 60% 90% 40% Dry Container Pick-up / Drop-off Activity (Units) (1) 250,000 200,000 150,000 100,000 50,000 0 (50,000) (100,000) Dry Container Pick-up / Drop-off Activity (Units) (excluding Sale Leaseback) 150% 140% 130% 120% 110% 100% 90% 80% 70% 60% 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-leaseback units. 5
Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Supply China Dry Van New Production Inventory (TEU) Triton s Asia Inventory (TEU) Demand Growth Rate TEU (MM) Leasing Company (%) MARKET CONDITIONS Global GDP and Container Trade Growth 8% 50 World Container Fleet and Leasing Share 60% 6% 40 50% 4% 2% 30 20 40% 30% 20% 0% 10 10% 1,200,000 1,000,000 800,000 600,000 400,000 200,000 Container Trade Growth New Dry Factory Inventory Global GDP Growth Sources: Container Trade Growth 2014-2016: Alphaliner Monthly Monitor January 2019. Container Trade Growth 2017-2019E: average of estimates from Alphaliner Monthly Monitor January 2019 and Clarksons Container Intelligence Monthly December 2018. GDP Growth: International Monetary Fund, January 2019 World Economic Outlook Update. 0 0% Leasing Company Owned Shipping Line Owned Leasing (%) Source: Drewry Container Census & Lease Industry Annual Report 2018/19. Triton s Dry Depot Lease Inventory in Asia 250,000 200,000 150,000 100,000 50,000 0 - Shipping Inventory Leasing Inventory Unbooked Asia Dry Inventory Booked Asia Dry Inventory Sources: Shipping and Leasing Factory Inventory estimates provided by commonly used informal surveys by factory inspectors. Source: Internal container management reports. 6
CONSOLIDATED STATEMENTS OF ADJUSTED NET INCOME % Change (Dollars in 000's, except earnings per share) Q4 '18 Q4 '17 2018 2017 QoQ YoY Total leasing revenues $ 355,357 $ 313,856 $ 1,350,303 $ 1,163,517 13.2% 16.1% Trading margin 6,126 1,095 18,921 4,184 459.5% 352.2% Net gain on sale of leasing equipment 7,999 10,749 35,377 35,812 (25.6%) (1.2%) Depreciation and amortization 139,474 130,168 545,138 500,720 7.1% 8.9% Interest and debt expenses 85,380 74,269 320,659 283,247 15.0% 13.2% Total ownership costs 224,854 204,437 865,797 783,967 10.0% 10.4% Direct operating expenses 15,594 11,495 48,326 62,891 35.7% (23.2%) Administrative expenses 19,712 21,341 80,033 87,609 (7.6%) (8.6%) Provision / (benefit) for doubtful accounts (782) 2,103 (231) 3,347 (137.2%) (106.9%) Other (income) / expense, net (1,540) (1,085) (2,292) (2,637) 41.9% (13.1%) Income attributable to noncontrolling interests 1,868 2,503 7,117 8,928 (25.4%) (20.3%) Adjusted Pretax Income (1) $ 109,776 $ 84,906 $ 405,851 $ 259,408 29.3% 56.5% Estimated Taxes 10,337 16,567 42,858 47,516 (37.6%) (9.8%) Adjusted Net Income (1) $ 99,439 $ 68,339 $ 362,993 $ 211,892 45.5% 71.3% Adjusted net income per common share $ 1.25 $ 0.85 $ 4.52 $ 2.78 47.1% 62.6% Weighted average numbers of common shares outstanding - diluted 79,741 80,556 80,364 76,188 (1.0%) 5.5% Return on equity 17.7% 13.6% 16.7% 11.8% (1) Excludes transaction costs, debt termination expense, gain on sale of building and net unrealized loss or gains on interest rate swaps. 7
2018 PROFITABILITY DRIVERS Fleet growth Revenue earning assets up 8.8% in 2018 Leasing revenue up 16.1% Sustained high utilization Utilization averaged 98.6% in 2018, supporting revenue growth Direct operating expenses down $14.6 million, or 23.2% from 2017 Strong disposal prices Gains on disposal and trading margin increased by $14.3 million from 2017, reflecting a 21% increase in sale prices and several block purchases of trading containers Benefit from purchase accounting and decrease in GAAP tax rate Purchase accounting provided a $21.0 million net benefit in 2018. Expect net benefit to grow over the next several years Adjusted GAAP tax rate down to 10.6% in 2018 from 18.3% in 2017 8
IMPROVEMENT IN TAX RATE Reduction in tax rates from 2017 to 2018» Q4 2018 effective tax rate 9.4%, down from 10.6% for all of 2018 and 18.3% in 2017» Forecast 2019 effective tax rate in the 8%-9% range Key drivers of the changes» 2017 Tax Cuts and Jobs Act reduced US rate from 35% to 21%» Allocation of new investment between US and Bermuda» Intercompany sale of over $700 million of container assets from US to Bermuda subsidiaries Intercompany sale of containers created one time increase in GAAP taxes of $24.7 million» Sale is eliminated for pre-tax results but requires tax provision to adjust deferred taxes» Due to the intercompany nature of the transaction we have excluded the $24.7 million tax provision from Adjusted net income 9
Q4 '07 Q4 '08 Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14 Q4 '15 Q4 '16 Q4 '17 Q4 '18 Net Debt as % of REA $ Per Share 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 ($MM) CASH FLOW AND SHAREHOLDER VALUE CREATION $1,500 $1,250 $1,000 $750 $500 $250 $0 Cash Flow Before CapEx (1)(2)(3) $70 $60 $50 Steady Value Creation (5) Cash Flow Before CapEx (1) See Footnote 1 in the Appendix. (2) See Footnote 2 in the Appendix (3) Reflects purchase accounting adjustments for 2017 and 2018 only. Net Debt as % of REA (Q4 07 Q4 18) (4) $40 $30 100% 90% Financial Crisis Surplus Period $20 80% 70% 60% 50% $10 $- Q4 Q4 Q4 Q4 Q4 '06 '07 '08 '09 '10 Book Value Per Share Cumulative Dividends Per Share Q4 '11 Q4 '12 Q4 '13 Q4 '14 Q4 '15 Q4 '16 Q4 '17 Q4 '18 Adjusted Tangible Book Value Per Share (4) All periods exclude purchase accounting adjustments. Net Debt defined as Total Debt plus Equipment Purchases Payable less Cash and Restricted Cash. (5) Adjusted tangible book value defined as Shareholders Equity, less Goodwill plus Net Deferred Tax Liability plus Net Swap Liability, before purchase accounting adjustments. 10
CAPITAL STRUCTURE Conservative Financing Strategy Minimal interest rate risk» 81% of total debt either fixed rate or swapped to fixed» Average remaining duration of fixed rate debt of ~4.1 years (includes swaps), which exceeds average lease duration Low refinancing risk» Focus on long duration debt» Well-staggered debt maturities» Cash flows before capex sufficient to meet near-term debt repayments, even with no roll-over Access to multiple funding sources» Utilize ABS, bank and private placement markets to diversify debt sources» Raised over $3.1 billion in 2018 Intend to focus efforts to position for upgrade to investment grade» S&P revised outlook to Positive from Stable» Would provide access to additional deep funding sources, further differentiating ourselves from other container lessors High Percentage of Fixed-rate Debt (1) Staggered Maturity Profile (1,5) Fixed / Hedged Balance (2) Average Life (yrs) (3) Average Rate (4) Fixed Rate $4,598 3.9 4.24% Hedged Floating Rate 1,566 4.4 3.96% Total Fixed / Hedged 6,164 4.1 4.17% Unhedged Floating Rate 1,432 4.23% Total Debt 7,596 4.18% % of Debt Fixed / Hedged 81.2% (1) As of 12/31/18, $ 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. (5) See Footnote 2 in the Appendix. $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $- 2019 2020 2021 2022 2023 Principal Payments '18 Cash Flow Before CapEx 11
2018 EQUITY CASH FLOW Generated substantial equity cash flow in 2018 over $5 / share Flexibility to allocate capital to the area of best use Use of Cash $ in mm Impact on Investor Returns Support Business Growth (25% of $764mm Increase in Revenue Earning Assets) $191 +8.8% Growth in REA in 2018, at constant leverage Pay Substantial Dividends $160 +6.0% Average dividend yield in 2018 Repurchase Shares $56 +2.4% Reduction in shares outstanding (1) Total $407 +17.2% (1) Reflects shares repurchased during 2018. 12
OUTLOOK AND CONCLUSIONS Fourth quarter and full year 2018 operating and financial performance was very strong Expect Q1 2019 Adjusted net income to decrease from Q4 2018» Q1 is typically our weakest quarter of the year Represents the depth of the slow season for dry containers Contains the fewest number of billing days Expect to achieve another outstanding year in 2019» Expect market conditions to be generally favorable, despite increased level of uncertainty» Expect our Adjusted net income to increase moderately from Q1 through the year as demand improves seasonally» Will also be focused on further extending our market leadership Will continue to use our strong cash flow to drive shareholder value 13
Appendix 14
CONSOLIDATED STATEMENTS OF INCOME (Dollars in 000's, except earnings per share) Q4 '18 Q4 '17 2018 2017 Total Leasing Revenues $ 355,357 $ 313,856 $ 1,350,303 $ 1,163,517 Trading Margin 6,126 1,095 18,921 4,184 Net gain on sale of leasing equipment 7,999 10,749 35,377 35,812 Net gain on sale of building - - 20,953 - Depreciation and amortization 139,474 130,168 545,138 500,720 Interest and debt expenses 85,380 74,269 320,659 283,247 Total ownership costs 224,854 204,437 865,797 783,967 Direct Operating Expenses 15,594 11,495 48,326 62,891 Administrative expenses 19,712 21,341 80,033 87,609 Transaction Cost and other costs 116 5,932 88 9,272 Provision / (benefit) for doubtful accounts (782) 2,103 (231) 3,347 Insurance recovery income - (6,764) - (6,764) Other (income) / expense, net (1,540) (1,085) (2,292) (2,637) Debt termination expense and unrealized (gain) loss on swaps, net 5,644 1,540 6,520 5,576 Total operating and other costs 38,744 34,562 132,444 159,294 Income before income taxes $ 105,884 $ 86,701 $ 427,313 $ 260,252 Income tax expense (benefit) 34,459 (122,962) 70,641 (93,274) Net income $ 71,425 $ 209,663 $ 356,672 $ 353,526 Less: income attributable to noncontrolling interests 1,868 2,503 7,117 8,928 Net Income attributable to shareholders $ 69,557 $ 207,160 $ 349,555 $ 344,598 Net income per common share - diluted $ 0.87 $ 2.57 $ 4.35 $ 4.52 15
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION (Dollars in 000's, except earnings per share) Q1 '17 Q2 '17 Q3 '17 Q4 '17 2017 Total Q1 '18 Q2 '18 Q3 '18 Q4 '18 2018 Total Net income attributable to shareholders $ 34,611 $ 45,671 $ 57,156 $ 207,160 $ 344,598 $ 80,892 $ 104,870 $ 94,236 $ 69,557 $ 349,555 Add (subtract): W/off of DFC & unrealized (gain) loss on derivative instruments, net (1,252) 706 3,892 1,243 4,589 (1,052) 347 1,483 5,050 5,828 Transaction and other costs (income) 2,066 643 60 4,862 7,631 (26) (1) 2 104 79 Insurance recovery income - - - (5,567) (5,567) - - - - - Foreign income tax adjustments - - (393) - (393) - - (881) - (881) Tax adjustments related to intra-entity asset transfer - - - - - - - - 24,728 24,728 One-time tax benefit related to U.S statutory rate reduction - - - (139,359) (139,359) - - - - - Gain on sale of building - - - - - - (16,316) - - (16,316) Adjusted net income $ 35,425 $ 47,020 $ 60,715 $ 68,339 $ 211,499 $ 79,814 $ 88,900 $ 94,840 $ 99,439 $ 362,993 Adjusted net income per share - Diluted $ 0.48 $ 0.63 $ 0.80 $ 0.85 $ 2.78 $ 0.99 $ 1.10 $ 1.17 $ 1.25 $ 4.52 Q1 '17 Q2 '17 Q3 '17 Q4 '17 2017 Total Q1 '18 Q2 '18 Q3 '18 Q4 '18 2018 Total Adjusted net income $ 35,425 $ 47,020 $ 60,715 $ 68,339 $ 211,499 $ 79,814 $ 88,900 $ 94,840 $ 99,439 $ 362,993 Annualized Adjusted net income (1) 143,668 188,597 240,880 271,128 211,499 323,690 356,577 376,267 394,513 362,993 Average Shareholders' equity (2) $ 1,668,079 $ 1,678,198 $ 1,791,749 $ 1,988,156 $ 1,799,188 $ 2,104,895 $ 2,168,053 $ 2,230,042 $ 2,230,590 $ 2,174,714 Return on equity 8.6% 11.2% 13.4% 13.6% 11.8% 15.4% 16.4% 16.9% 17.7% 16.7% (1) Annualized Adjusted net income was calculated based on calendar days per quarter. (2) Average Shareholders' equity was calculated using the quarter s beginning and ending Shareholder s equity for the three-month ended periods, and the ending Shareholder s equity from each quarter in the current year and December 31 of the previous year for the twelve-month ended periods. 16
EQUITY CASH FLOW SUPPORTS BOTH DIVIDENDS AND GROWTH CAPEX ($ in 000's, except per share data) 2018 Actual Adjusted EBITDA $1,271,648 Principal payments on finance leases 64,372 NBV of container disposals 127,879 Major cash in flows 1,463,899 Interest and debt expense 320,659 Cash flow before capex $1,143,240 Replacement capex (1) 737,389 Equity cash flow 405,851 Per share $5.05 Cash flow yield (2) 15.2% Annualized dividends per share $2.08 Dividends $167,157 Dividend yield (2) 6.2% Cash flow for growth capex $238,694 Leverage on growth capex 75.0% Asset growth potential at constant leverage ($) $954,776 Asset growth potential at constant leverage (%) 10.1% (1) Represents depreciation, NBV of disposals and principal payments on finance leases (2) Based on closing stock price of $33.30 on 2/12/2019 Internal cash flows, at constant leverage, support high levels of growth 17
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION (Dollars in thousands) 2018 Income before income taxes $427,313 Add (subtract): Unrealized loss on derivative instruments 430 Gain on sale of building (20,953) Debt termination expense 6,090 Transaction and other costs 88 Less: Income attributable to non-controlling interest 7,117 Adjusted pre-tax income 405,851 Interest and debt expense 320,659 Depreciation and amortization 545,138 Adjusted EBITDA 1,271,648 Principal payments on finance leases 64,372 NBV of container disposals 127,879 Major cash in flows 1,463,899 Interest and debt expense 320,659 Cash flow before capex $1,143,240 18
FOOTNOTES 1. The combined financial information from 2016 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. Cash Flow Before CapEx defined as Adjusted EBITDA (defined as net income before interest and debt expense, income tax expense and depreciation and amortization, and excludes transaction costs, net loss (gain) on interest rate swaps, insurance proceeds, gain on sale of building and the write-off of deferred financing costs) less interest and debt costs plus NBV of disposals and principal payments on finance leases. 19