SECOND QUARTER 2021 INVESTOR CONFERENCE CALL - July 27, 2021
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SECOND QUARTER 2021
INVESTOR CONFERENCE CALL
July 27, 2021
1
DISCLAIMERS
Forward-Looking Statements
Certain statements in this presentation, other than statements of historical facts, including statements regarding our strategy, future operations,
future financial position, future revenues, future costs, prospects, plans and objectives of management 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,” “estimate,” “anticipate,” “predict,” "believe," “think,”
“plan,” “will,” “should,” “intend,” “seek,” “potential” and similar expressions and variations are intended to identify forward-looking statements,
although not all forward-looking statements contain these identifying words. All forward-looking statements address matters that involve risks and
uncertainties, many of which are beyond our 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: the impact of COVID-19 on our
business and financial results; 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 and suppliers; customer defaults; decreases in the selling prices of used containers; extensive competition in the container leasing
industry; difficulties stemming from the international nature of Triton’s business; decreases in the demand for international trade; disruption to
our operations resulting from political and economic policies of the United States and other countries, particularly China, including but not limited
to the impact of trade wars, duties and tariffs; disruption to our operations from failure of or attacks on our information technology systems;
disruption to our operations as a result of natural disasters, 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 growth; restrictions imposed by the
terms of our debt agreements; the achievement of our capital structure plans and related timing; changes in the tax laws in Bermuda, the United
States and other countries; and other risks and uncertainties, including those listed under the caption “Risk Factors” in our Annual Report on Form
10-K for the year ended December 31, 2020 (the “Form 10-K”) or other reports we 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, including the risk factors in our Form 10-K. 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, us or our businesses 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. Certain financial measures presented in this presentation
are identified as not being prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Please refer to the Appendix
hereto for a reconciliation of such non-GAAP measures to their most comparable GAAP measures.
Industry and Market Data
Certain data included in this presentation has been derived from a variety of sources, including independent industry publications, third-party
financial reports and other published independent sources. Although we believe that such third-party sources are reliable, we have not
independently verified, and take no responsibility for, the accuracy or completeness of such data
2HIGHLIGHTS
Triton achieved outstanding results in the second quarter of 2021
» Adjusted net income of $144.2 million, or $2.14 per share, up 12.0% from Q1 2021 and 148.8% from Q2 2020
» Q2 annualized return on equity 26.6%
Expect profitability to increase from Q2 to Q3 driven by increase in leasing margin
Market conditions exceptionally strong
» Container demand driven by combination of strong trade volumes and significant logistical disruptions
» Sustained surge in demand leading to very high container prices and lease rates
» Shipping lines relying heavily on leasing to fulfill supply requirements
Triton maximizing opportunities presented by the current market
» Achieving outstanding operational and financial results
» Strong capex program providing critical support to customers and locking-in 25%+ growth for 2021
» Focusing on extending lease durations for new and used equipment
Triton’s long-term outlook meaningfully boosted by durable business and market improvements
» Very large block of 2020 and 2021 high-IRR containers provides strong long-term foundation for profitability
» Comprehensive debt refinancing and transition to investment grade bonds expanding leasing margin
» Significantly improved credit profile for major shipping lines
» Expect high ROE for Triton will lead to accelerated growth in book value per share
3$B, Seasonally Adjusted % Change vs Dec. 2019
0
200
300
400
600
700
100
500
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
May-92
May-93
May-94 Jan-20
May-95 Feb-20
May-96
May-97 Mar-20
May-98
Source: Bloomberg.
May-99 Apr-20
US Retail Inventories
May-00
May-01 May-20
May-02 Jun-20
May-03
US PCE: Goods
May-04 Jul-20
May-05
May-06 Aug-20
May-07 Sep-20
May-08
May-09 Oct-20
US Retail Sales
May-10
May-11 Nov-20
May-12 Dec-20
May-13
May-14 US PCE: Services Jan-21
May-15
Goods Consumption Still High
Retail Inventories Remain Low
May-16 Feb-21
May-17 Mar-21
May-18
May-19 Apr-21
May-20
May-21
US Inventory/Sales
May-21
0.0x
0.2x
0.4x
0.6x
0.8x
1.0x
1.2x
1.4x
1.6x
1.8x
2.0x
Throughput (TEU Millions)
10.0
15.0
20.0
25.0
5.0
0.0
May '19
Jun '19
Jul '19
Aug '19
Sep '19
Oct '19
STRONG GOODS CONSUMPTION DRIVING GROWTH IN TRADE
Nov '19
Dec '19
Jan '20
CNY
Feb '20
Jan 25th
Mar '20
Source: Alphaliner Monthly Monitor.
Apr '20
May '20
Jun '20
Jul '20
Top 10 Global Ports Throughput
Aug '20
Sep '20
Oct '20
Nov '20
Dec '20
Global Trade Volumes Strong
Jan '21
Feb '21
CNY
Feb 12th
Mar '21
Apr '21
YoY Change
May '21
0%
5%
-5%
10%
15%
20%
25%
30%
-15%
-10%
YoY Change
4VESSEL AND CONTAINER SHORTAGES DRIVING RECORD FREIGHT
RATES AND CONTAINER PRICES
Container Spot Freight Rates and Fuel Cost New Box Prices
$14,000 $4,500
WCI Shanghai to Los Angeles 20DC Price
$4,000
WCI Shanghai to Rotterdam $3,500
Bunker Fuel ($/mt) $3,000
$12,000
$2,500
$2,000
$1,500
$10,000
$1,000
$500
$0
$8,000
$6,000 Disposal Prices
300
20' Avg Price (Indexed)
250
$4,000 40' HC Avg Price (Indexed)
200
150
$2,000 100
50
$0 -
Source: Bloomberg. Freight rates are for a 40’ dry container. Bunker fuel is 380 cst prior to
Jan. 1, 2020 and VLSFO thereafter. VLSFO is very-low sulfur fuel oil that complies with the
new IMO 2020 regulations and trades at a premium to regular 380 cst bunker fuel.
5CONTAINER PRODUCTION HIGH BUT LONG-TERM SUPPLY / DEMAND
APPEARS LARGELY IN BALANCE
Dry Container Production Up Sharply But Containers Getting Absorbed Quickly
5.0 1,200
China Dry Van New Production Inventory
4.5 1,000
800
4.0
600
(TEU 000)
3.5
400
3.0
200
TEU (MM)
2.5 0
Jun-20
Jun-10
Jun-11
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Jun-17
Jun-18
Jun-19
Jun-21
2.0
Shipping Inventory Leasing Inventory
1.5
And Growth in Container Fleet Consistent with
1.0 Long-Term Trade Growth
3.0 World Maritime Dry Standard Container Fleet
0.5 2.5
Global Port Throughput (Trade Growth Proxy)
2.0
Indexed
Leasing Share 67% 49% 66% 58% 56% 45% 74% 62% 60% 58% 74% 66%
- 1.5
1.0
0.5
Estimated Replacement Range Leasing 0.0
Shipping Q3-Q4 Production Est.
Source: Drewry Annual Report and data from internal sources. Excludes non-
leasing and non-shipping purchasers. Source: Alphaliner, Clarksons, Drewry, and internal sources.
6TRITON’S KEY OPERATING METRICS VERY STRONG
Ending Quarterly Utilization (CEU) Dry Container Pick-up / Drop-off Activity (TEU) (1)
Ending Quarterly Utilization (CEU)
100%
500
95%
400
Jun. 30: 99.5%
90% 300
TEU (000)
200
85%
100
80%
0
75%
(100)
70% (200)
Pick-Ups Drop-Offs Net
(1) Excludes Sale-leaseback equipment.
Trend of Leasing Transactions – New Dry Containers Dry Depot Lease Inventory
1.8 300
Q2 avg. term = 14 years
1.6
Q1 avg. term = 10 years 250
1.4
1.2 200
Rate (Indexed)
1.0 TEU (000) 150
0.8
0.6 100
0.4 50
0.2
-
-
Note: Bubble size represents new dry container leasing transactions in CEUs by Asia Americas Europe
quarter.
7CONSOLIDATED STATEMENTS OF ADJUSTED NET INCOME(*)
(In thousands, except earnings per share) Q2 '21 Q1 '21 % Change Q2 '20 % Change
Total leasing revenues $ 369,784 $ 346,743 6.6% $ 321,397 15.1%
Trading margin 10,726 8,141 31.8% 2,020 431.0%
Net gain on sale of leasing equipment 31,391 21,967 42.9% 4,537 591.9%
Depreciation and amortization 154,056 143,307 7.5% 133,292 15.6%
Interest and debt expense 60,004 54,623 9.9% 66,874 (10.3%)
Total ownership costs 214,060 197,930 8.1% 200,166 6.9%
Direct operating expenses 6,337 9,370 (32.4%) 29,619 (78.6%)
Administrative expenses 22,979 20,921 9.8% 20,472 12.2%
Provision (reversal) for doubtful accounts (26) (2,464) (98.9%) 374 (107.0%)
Other (income) expense, net (261) (481) (45.7%) 36 (825.0%)
Adjusted pretax income (1) 168,812 151,575 11.4% 77,287 118.4%
Income tax expense 14,109 12,380 14.0% 6,772 108.3%
Adjusted net income (1)(2) $ 154,703 $ 139,195 11.1% $ 70,515 119.4%
Less: dividend on preferred shares 10,513 10,513 0.0% 10,513 0.0%
(1)(2)
Adjusted net income attributable to common shareholders $ 144,190 $ 128,682 12.1% $ 60,002 140.3%
Adjusted net income per common share $ 2.14 $ 1.91 12.0% $ 0.86 148.8%
Weighted average number of common shares outstanding - diluted 67,282 67,217 0.1% 69,536 (3.2%)
Return on equity 26.6% 25.0% 12.2%
(*) Adjusted net income is a non-GAAP financial measure. See Appendix.
(1) Excludes debt termination expense, and net unrealized loss or gains on derivative instruments.
(2) Excludes foreign income tax adjustment and tax benefit from vesting of restricted shares.
8PROFITABILITY DRIVERS
Sequential Change: Change from Prior Year Quarter:
Q2 2021 vs Q1 2021 Q2 2021 vs Q2 2020
Fleet Size Revenue earning assets up 10.3% Revenue earning assets up 19.9%
Leasing revenue up 6.6% Leasing revenue up 15.1%
UTE averaged 99.4% in Q2 and is 99.6% as Average UTE up 4.4% from Q2 2020 to
Utilization of July 23 94.4%
Direct opex decreased by $3.0 million due Direct opex decreased by $23.3 million
to lower storage and repairs due to lower storage and repairs
Effective interest rate down 10 basis points Effective interest rate down 75 basis
Interest Expense to 3.20% reflecting ongoing refinancing at points and vast majority of debt fixed
lower rates
Gain on sale and trading margin totaled Gain on sale and trading margin up by
$42.1 million up $12.0 million due to $35.6 million due to strong increases in
Disposal Activity further increases in dry container sale dry container sale prices
prices
Weighted average diluted shares Weighted average diluted shares
essentially flat outstanding decreased by 2.3 million, or
Share Count 3.2% due to share repurchases
67.4 million diluted shares outstanding as
of 06/30/2021
9STRONG, STABLE CASH FLOW DRIVES STEADY VALUE CREATION
Cash Flow Before Capex (1)(2) Steady Value Creation (4)
$1,500
$70
$1,250
$65
$1,000
$60
$750
($MM)
$55
$500
$50
$250
$45
$0 Adj.
$40
Q2 Ann.
2008
2017
2005
2006
2007
2009
2010
2011
2012
2013
2014
2015
2016
2018
2019
2020
LTM Jun-21
TBV:
$39.90
$ Per Share
(1) See Non-GAAP Financial Information in the Appendix.
$35
GAAP
(2) Reflects purchase accounting adjustments for 2017-2021. BVPS:
$30 $32.23
Net Debt as % of REA (3) $25
$20
100%
Financial Industrial & Trade
$15
90% Crisis Commodity War /
Recession COVID-19 $10
Net Debt as % of REA
/
Pref. $5
80% Issuance
$-
70% Q2 Q2 Q2 Q2 Q2 Q2 Q2 Q2 Q2 Q2 Q2 Q2 Q2 Q2 Q2 Q2
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21
60% Cumulative Dividends Per Share
Adjusted Tangible Book Value Per Share
Q2 '08
Q2 '09
Q2 '10
Q2 '11
Q2 '12
Q2 '13
Q2 '14
Q2 '15
Q2 '16
Q2 '17
Q2 '18
Q2 '19
Q2 '20
Q2 '21
Book Value Per Share
(4) Adjusted tangible book value defined as Shareholders Equity, less Goodwill plus Net Deferred
(3) All periods exclude purchase accounting adjustments. Net Debt defined as Total Debt plus Tax Liability plus Net Swap Liability, before purchase accounting adjustments. Reflects TAL
Equipment Purchases Payable less Cash and Restricted Cash. standalone for Q2 2016 and prior periods.
10ATTRACTIVE REFINANCING AND TRANSITION TO INVESTMENT GRADE
BONDS PROVIDE A MORE EFFICIENT CAPITAL STRUCTURE
Comprehensive debt refinancing has significantly reduced Triton’s long-term borrowing cost
» Issued $6.4 billion of long-term debt over last twelve months; prepaid $3.4 billion of ABS,
institutional notes, and term loans with higher rates
» Reduced avg. effective interest rate from 3.9% to 3.2%, significantly expanding leasing margin
» Over 90% of debt with fixed rates with average duration of 5 years
» Accessed secured investment grade bond market, tapping an attractive source of new funding
Transition to unsecured investment grade bonds would provide further cost and flexibility benefits
» Corporate rating upgraded in March to BBB- by S&P Global Ratings
» Working to refinance existing debt to facilitate a transition to unsecured debt
» Targeting completion in 2021
Capital structure improvements adding to Triton’s already substantial market advantages
11CREDIT PROFILE OF MAJOR SHIPPING LINES FUNDAMENTALLY
IMPROVED
Exceptional financial performance by major shipping lines positively changing long term outlook
» All major liners reporting record profitability
» Expect major lines to significantly delever in 2021
Financial Performance of a Sample of Shipping Lines
($MM)
Annualized EBITDA /
2019 2020 Q1 Annualized Total Debt &
Shipping Line Total Debt & Lease
EBITDA EBITDA EBITDA Lease Liabilities
Liabilities
Maersk 5,712 8,226 16,156 14,461 1.1x
CMA 3,759 6,109 12,740 17,216 0.7x
Hapag-Lloyd 2,223 3,083 7,432 6,254 1.2x
Zim 386 1,036 3,284 2,141 1.5x
Source: Company reported data. EBITDA is a non-GAAP financial measure and definitions may vary. See Non-GAAP Financial Information in the Appendix.
Liner consolidation and stronger alliances have improved long-term industry structure
» Industry demonstrated improved resiliency in reacting to temporary steep drop in trade
volumes during the initial COVID-19 lockdowns
12HIGH IRR INVESTMENTS AND EXTENDED LEASE DURATIONS BUILDING
LONG-TERM VALUE
Large block of 2021 investments will underpin long-term profitability
» $3.4 billion of committed investments have already locked-in over 25% asset growth
» Average lease duration for 2021 investments 13 years; high lifetime equity IRR’s driven by
strong demand and “inventory profits” due to steady increase in container prices
Triton also focused on increasing lease durations for existing containers
Expectations for future profitability meaningfully higher and range of likely performance tighter
Months of Average Remaining Lease Duration Dry Lifecycle Leases as a Percent of Long Term Leases
70 60%
60 50%
50
40%
40
30%
30
20%
20
10 10%
0 0%
Sep-18
Sep-19
Sep-20
Jun-19
Mar-21
Dec-17
Mar-18
Jun-18
Dec-18
Mar-19
Dec-19
Mar-20
Jun-20
Dec-20
Jun-21
Dec-17
Jun-18
Dec-18
Jun-19
Dec-19
Jun-20
Dec-20
Jun-21
Sep-18
Sep-19
Sep-20
Sep-21E
Mar-18
Mar-19
Mar-20
Mar-21
Note: Long term and finance leases only. Sep-21E based on forecasted lease outs in Q3. Note: Excludes sale-leaseback equipment.
13OUTLOOK AND CONCLUSIONS
Triton achieved another quarter of record performance in Q2 2021
Triton’s outstanding performance supported by very favorable market conditions and Triton’s
many advantages
Triton is making durable improvements to our business
» Very large investment in new containers locked into long duration leases with high returns
» Reinforcing scale advantages and further securing position as “Go To” supplier in the industry
» Extending lease durations for used containers and increasing share of lifecycle leases
» Transition of capital structure will reduce funding costs and extend market advantages
Expect strong financial performance will continue
» Expect Q3 Adjusted EPS will increase from record level achieved in the second quarter
» Expect cash flow and profitability will remain elevated into the longer tem
» Expect our book value per share will increase rapidly due to our high Return on equity
14Appendix
15EQUITY CASH FLOW
Typical Prioritization of Cash Flow
($000, except per share amounts) Q2 Annualized
Cash flow before capex 1,437,592
1. Maintain ability to service customers/replacement capex 1 804,396
Cash flow after replacement capex 633,196
Steady-state cash flow yield2 18.9%
3
2. Pay common dividend of $2.28 per share 153,658
Dividend yield2 4.6%
Cash flow after replacement capex and regular dividend 479,538
Capital Allocation Options
3A. Growth capex at constant leverage
4
- Levered growth in revenue earning assets 1,918,151
- Potential REA growth 18.3%
3B. Share repurchase 479,538
- Percent of outstanding shares at current price 14.3%
3C. Additional dividends 479,538
- Potential additional per share distribution $7.12
(1) Represents depreciation, NBV of disposals, and principal payments on finance leases.
(2) Based on closing stock price of $49.65 on 7/23/21.
(3) Reflects annualized second quarter dividend.
(4) Based on 75% debt to revenue earning assets.
16LONG TERM LEASE EXPIRATIONS (*)
Dry Refrigerated
Percent of Fleet 4.0% 1.0% 4.6% 5.9% 2.7% 5.3% 4.1% 0.8% 2.1% Percent of Fleet 2.2% 0.6% 1.5% 2.2% 1.8% 1.1% 1.6% 0.5% 0.8%
* Excludes Sale Age Equipment
17ADJUSTED TANGIBLE BOOK VALUE PER SHARE AS OF 06/30/21
Purchase
(In thousands, except per share amounts)
Combined Accounting Consolidated
Total assets $ 11,434,068 $ (98,710) $ 11,335,358
Total liabilities 8,660,205 (51,924) 8,608,281
Preferred shareholders' equity 555,000 555,000
Common shareholders' equity 2,218,863 (46,786) 2,172,077
Total equity 2,773,863 (46,786) 2,727,077
Total liabilities and equity $ 11,434,068 $ (98,710) $ 11,335,358
Common shares outstanding 67,394
Book value per share $32.23
Reconciliation to adjusted tangible book value
Common shareholders' equity $ 2,218,863
Less: Goodwill (15,969)
Plus: Net deferred tax liability 409,119
Plus: Net swap liability 77,048
Adjusted tangible book value $ 2,689,061
Adjusted tangible book value per share $39.90
18RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION
(In thousands) Q2
annualized
Income before income taxes 675,248
Interest and debt expense 240,016
Depreciation and amortization 616,224
Adjusted EBITDA 1,531,488
Principal payments on finance leases 57,032
NBV of container disposals 131,140
Major cash in flows 1,719,660
Interest and debt expense 240,016
Preferred stock dividends 42,052
Cash flow before capex $ 1,437,592
19CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except earnings per share) Q2 '21 Q1 '21 % Change Q2 '20 % Change
Total leasing revenues $ 369,784 $ 346,743 6.6% $ 321,397 15.1%
Trading margin 10,726 8,141 31.8% 2,020 431.0%
Net gain on sale of leasing equipment 31,391 21,967 42.9% 4,537 591.9%
Depreciation and amortization 154,056 143,307 7.5% 133,292 15.6%
Interest and debt expenses 60,004 54,623 9.9% 66,874 (10.3%)
Total ownership costs 214,060 197,930 8.1% 200,166 6.9%
Direct operating expenses 6,337 9,370 (32.4%) 29,619 (78.6%)
Administrative expenses 22,979 20,921 9.8% 20,472 12.2%
Provision for doubtful accounts (26) (2,464) (98.9%) 374 (107.0%)
Other (income) expense, net (261) (481) (45.7%) 36 (825.0%)
Debt termination expense 89,863 - N/A - N/A
Total operating and other costs 118,892 27,346 334.8% 50,501 135.4%
Income before income taxes 78,949 151,575 (47.9%) 77,287 2.2%
Income tax expense 13,732 11,737 17.0% 6,699 105.0%
Net income $ 65,217 $ 139,838 (53.4%) $ 70,588 (7.6%)
Less: dividend on preferred shares 10,512 10,513 0.0% 10,513 0.0%
Net Income attributable to common shareholders $ 54,705 $ 129,325 (57.7%) $ 60,075 (8.9%)
Net income per common share - Diluted $ 0.81 $ 1.92 (57.8%) $ 0.86 (5.8%)
20RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION
(In thousands, except earnings per share)
Q2 '20 Q3 '20 Q4 '20 2020 Total Q1 '21 Q2 '21
Net income attributable to common shareholders $ 60,075 $ 45,946 $ 115,185 $ 288,417 $ 129,325 $ 54,705
Add (subtract):
Debt termination expense & unrealized (gain) loss on derivative 12 21,140 358 21,804 - 89,485
instruments, net
State and other income tax adjustments (85) 2,341 (866) 1,390 - -
Tax adjustments related to intra-entity asset transfer - 8,629 - 8,629 - -
Tax benefit from vesting of restricted shares - - (390) (643) -
Adjusted net income attributable to common shareholders $ 60,002 $ 78,056 $ 114,677 $ 319,850 $ 128,682 $ 144,190
Adjusted net income per common share - Diluted $ 0.86 $ 1.14 $ 1.70 $ 4.61 $ 1.91 $ 2.14
Q2 '20 Q3 '20 Q4 '20 2020 Total Q1 '21 Q2 '21
Adjusted net income $ 60,002 $ 78,056 $ 114,677 $ 319,850 $ 128,682 $ 144,190
(1)
Annualized adjusted net income 240,667 309,679 454,969 319,850 521,877 578,345
Beginning Shareholders' equity 1,995,250 1,953,950 1,963,889 2,127,237 2,010,948 2,169,318
Ending Shareholders' equity 1,953,950 1,963,889 2,010,948 2,010,948 2,169,318 2,172,077
Average common shareholders' equity (2) $ 1,974,600 $ 1,958,920 $ 1,987,419 $ 2,010,255 $ 2,090,133 $ 2,170,698
Return on equity 12.2% 15.8% 22.9% 15.9% 25.0% 26.6%
(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. Average
Shareholders’ equity for the full year was calculated using the ending Shareholder’s equity for each quarter and the previous year-end. Average shareholders’
equity excludes preferred shares.
21NON-GAAP FINANCIAL INFORMATION
We use the terms "Adjusted net income," “Adjusted EPS,” “Return on equity,” “cash flow before capex” and other non-GAAP financial measures throughout
this presentation. These items are not presented in accordance with U.S. GAAP and should not be considered as alternatives to, or more meaningful than,
amounts determined in accordance with U.S. GAAP, including net income or cash flow from operations.
Adjusted net income is adjusted for certain items management believes are not representative of our operating performance. Adjusted net income is
defined as net income attributable to common shareholders excluding debt termination expenses net of tax, unrealized gains and losses on derivative
instruments net of tax, and foreign and other income tax adjustments.
We believe that Adjusted net income is useful to an investor in evaluating our operating performance because this item:
• is widely used by securities analysts and investors to measure a company's operating performance;
• helps investors to more meaningfully evaluate and compare the results of our operations from period to period by removing the impact of
certain non-routine events which we do not expect to occur in the future; and
• is 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 attributable to common shareholders, the most directly comparable U.S. GAAP measure, to Adjusted net
income in the tables below for the periods presented.
Return on equity is adjusted annualized earnings divided by average shareholders' equity. Management utilizes return on equity in evaluating how much
profit the Company generates on the shareholders' equity in the Company and believes it is useful for comparing the profitability of companies in the same
industry.
Cash Flow Before CapEx is defined as Adjusted net income plus depreciation and amortization, taxes, principal payments on finance leases and NBV of
container disposals.
Certain forward-looking information included in this presentation is provided only on a non-GAAP basis without a reconciliation of these measures to the
mostly directly comparable GAAP measure due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such
reconciliation. These items depend on highly variable factors, many of which may not be in our control, and which could vary significantly from future GAAP
financial results.
Additionally, throughout this presentation, the combined financial information from 2016 and prior periods does not reflect results on a GAAP basis. GAAP
financial statements reflect only the TAL operations prior to the merger of TCIL and TAL on July 12, 2016, and can be found in the Company’s 10-Q and 10-K
filings.
This presentation also includes non-GAAP financial measures, including EBITDA, as reported by other companies. These non-GAAP measures have been
derived from those companies’ public reports and should not be considered as substitutes for other financial data prepared and reported in accordance
with their respective governing accounting standards. In addition, the calculation of EBITDA as reported by each company may differ.
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