THIRD QUARTER 2021 INVESTOR CONFERENCE CALL - October 26, 2021
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THIRD QUARTER 2021
INVESTOR CONFERENCE CALL
October 26, 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; our customers' decisions to buy rather than lease containers; our 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 our business; decreases in 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 but not limited to, the impact of trade wars,
duties and tariffs; disruption to our operations from failures 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; the availability and cost of capital; restrictions imposed by the terms of our debt agreements; changes in tax laws in Bermuda, the United
States and other countries; and other risks and uncertainties, including those risk factors set forth in the section entitled "Risk Factors" in our Form 10-K
filed with the Securities and Exchange Commission ("SEC"), on February 16, 2021, in any Form 10-Q filed or to be filed by Triton, and in other documents
we file with the SEC from time to time.
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.
2
HIGHLIGHTS
Triton achieved exceptional results in the third quarter of 2021
» Adjusted net income of $163.8 million, or $2.43 per diluted share, up 13.6% from Q2 2021
» Q3 annualized return on equity 29.4%
» Expect Q4 EPS will be up slightly from record Q3 results
Market conditions remain very strong
» New lease transaction activity has slowed post peak season, but trade volumes remain elevated and
logistical disruptions continue to soak up available container capacity
» Sustained market tightness continues to drive very high container prices and lease rates
» Expect strong market conditions and exceptional profitability to continue into 2022
Triton’s long-term outlook meaningfully boosted by durable business enhancements
» Very large block of high-IRR containers provides strong long-term foundation for profitability
» Comprehensive debt refinancing and transition to investment grade bonds expanding leasing margin
» Record profitability and rapid deleveraging for shipping lines driving significantly improved customer
credit profile
» Expect high ROE for Triton will lead to accelerated growth in book value per share
Using exceptional profitability to aggressively drive shareholder value without pushing leverage
» Have ordered $3.4 billion of containers in 2021, locking in nearly 30% asset growth
» Raising common dividend by 14% to $0.65 per quarter
» Repurchased $32 million of shares in September and October; increased authorization to $200 million
3INCREASED GOODS CONSUMPTION AND LOGISTICAL BOTTLENECKS
DRIVING STRONG CONTAINER DEMAND
Goods Consumption Still High Global Trade Volumes Strong
CNY CNY
25% 25.0 Jan. 25th Feb 12th 30%
20% 25%
% Change vs Dec. 2019
15% 20.0 20%
10% 15%
5% 15.0
10%
Throughput (TEU Millions)
0%
5%
YoY Change
-5% 10.0
-10% 0%
-15% 5.0 -5%
-20% -10%
-25% 0.0 -15%
Jul-20
Jun-21
Jul-21
Apr-20
Apr-21
Jun-20
Dec-19
May-20
Sep-20
Nov-20
May-21
Jan-20
Aug-20
Dec-20
Aug-21
Feb-20
Mar-20
Jan-21
Feb-21
Mar-21
Oct-20
Apr-20
May-20
Jul-20
Apr-21
May-21
Jul-21
Jun-20
Jun-21
Jan-21
Aug-19
Nov-19
Dec-19
Aug-21
Sep-19
Oct-19
Jan-20
Feb-20
Mar-20
Aug-20
Nov-20
Dec-20
Sep-20
Feb-21
Mar-21
Oct-20
US PCE: Goods US PCE: Services Top 10 Global Ports Throughput YoY Change
Source: Bloomberg. Source: Alphaliner Monthly Monitor and Bloomberg.
Retail Inventory/Sales Remain Low Logistical Bottlenecks Absorbing Capacity
2.0x 80
1.8x 70
1.6x
60
1.4x
1.2x 50
1.0x 40
0.8x 30
0.6x
20
0.4x
0.2x 10
0.0x -
Aug-98
Aug-14
Aug-92
Aug-93
Aug-94
Aug-95
Aug-96
Aug-97
Aug-99
Aug-00
Aug-01
Aug-02
Aug-03
Aug-04
Aug-05
Aug-06
Aug-07
Aug-08
Aug-09
Aug-10
Aug-11
Aug-12
Aug-13
Aug-15
Aug-16
Aug-17
Aug-18
Aug-19
Aug-20
Aug-21
Jul-21
Apr-21
May-21
Jun-21
Dec-20
Jan-21
Feb-21
Mar-21
Aug-21
Sep-21
Oct-21
US Retail Inventory/Sales Port of LA/LB Containerships at Anchor (5D Moving Avg.)
Source: Bloomberg. Source: Marine Exchange of Southern California.
4VESSEL AND CONTAINER SHORTAGES LEADING T0
RECORD FREIGHT RATES AND CONTAINER PRICES
Container Spot Freight Rates and Fuel Cost New Box Prices
$16,000 $4,500
WCI Shanghai to Los Angeles 20DC Price
$4,000
WCI Shanghai to Rotterdam
$3,500
Bunker Fuel ($/mt)
$14,000 $3,000
$2,500
$2,000
$12,000
$1,500
$1,000
$500
$10,000
$0
$8,000
Disposal Prices
$6,000 300
20' Avg Price (Indexed)
250
40' HC Avg Price (Indexed)
$4,000 200
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 FLEET REMAINS TIGHT
Dry Container Production Up Sharply But Containers Getting Absorbed Quickly
5.5
1,200
5.0
China Dry Van New Production Inventory (TEU 000)
4.5 1,000
4.0
800
3.5
3.0
TEU (MM)
600
2.5
2.0
400
1.5
1.0 200
0.5
Leasing Share 67% 49% 66% 58% 56% 45% 74% 62% 60% 58% 74% 63%
- 0
Shipping Inventory Leasing Inventory
Source: Drewry Annual Report and data from internal sources. Excludes non-
leasing and non-shipping purchasers.
6TRITON’S KEY OPERATING METRICS VERY STRONG
Ending Quarterly Utilization (CEU) Dry Container Pick-up / Drop-off Activity (TEU) (1)
100% 500
Sep. 30: 400
95%
99.6%
300
90%
TEU (000)
200
85%
100
80% 0
75% (100)
70% (200)
Total Picks TINs Net
(1) Excludes Sale-leaseback equipment. Includes finance leases.
Trend of Leasing Transactions – New Dry Containers Dry Depot Lease Inventory
1.8 300 7%
Average Term
1.6 Q1: 10 years
6%
Q3 250
Q2: 14 years
1.4 Q3: 10 years
5%
1.2 200
Rate (Indexed)
TEU (000)
1.0 4%
150
0.8 3%
0.6 100
2%
0.4 50 1%
0.2
- 0%
-
Note: Bubble size represents new dry container leasing transactions in CEUs by Asia Americas Europe % of Dry TEU
quarter.
7HIGH IRR INVESTMENTS AND EXTENDED LEASE DURATIONS BUILDING
LONG-TERM VALUE
Large block of 2021 investments will Months of Average Remaining Lease Duration
underpin long-term profitability 80
» $3.4 billion of committed
investments have already locked-in 70
nearly 30% asset growth
» Average lease duration for 2021 60
investments 13 years; high lifetime
equity IRRs driven by strong demand 50
and “inventory profits” due to
Months
40
steady increase in container prices
30
Triton also focused on increasing lease
durations for existing containers 20
Expectations for future profitability 10
meaningfully higher and range of likely
0
performance tighter
Jun-17
Dec-16
Mar-17
Dec-17
Mar-18
Dec-18
Mar-19
Dec-19
Mar-20
Dec-20
Mar-21
Jun-18
Sep-18
Jun-19
Jun-20
Jun-21
Sep-17
Sep-19
Sep-20
Sep-21
1
Average Remaining Lease Duration
2
Including Expected Build-Down Period
1 Includes long term and finance leases only.
2 Build down refers to average time to return containers after lease expiration.
8CONSOLIDATED STATEMENTS OF ADJUSTED NET INCOME(*)
(In thousands, except earnings per share) Q3 '21 Q2 '21 % Change Q3 '20 % Change
Total leasing revenues $ 400,191 $ 369,784 8.2% $ 327,757 22.1%
Depreciation and amortization 163,493 154,056 6.1% 136,248 20.0%
Interest and debt expense 54,728 60,004 (8.8%) 62,776 (12.8%)
Total ownership costs 218,221 214,060 1.9% 199,024 9.6%
Gross margin 181,970 155,724 16.9% 128,733 41.4%
Direct operating expenses 5,539 6,337 (12.6%) 25,992 (78.7%)
Administrative expenses 21,426 22,979 (6.8%) 21,395 0.1%
Provision (reversal) for doubtful accounts and other (income) expense (430) (287) 49.8% (676) (36.4%)
Leasing margin 155,435 126,695 22.7% 82,022 89.5%
Trading margin 9,163 10,726 (14.6%) 3,869 136.8%
Net gain on sale of leasing equipment 25,606 31,391 (18.4%) 10,737 138.5%
Adjusted pretax income (1) 190,204 168,812 12.7% 96,628 96.8%
Income tax expense 14,754 14,110 4.6% 8,060 83.1%
Adjusted net income (1)(2) $ 175,450 $ 154,702 13.4% $ 88,568 98.1%
Less: dividend on preferred shares 11,687 10,513 11.2% 10,512 11.2%
(1)(2)
Adjusted net income attributable to common shareholders $ 163,763 $ 144,189 13.6% $ 78,056 109.8%
Adjusted net income per common share $ 2.43 $ 2.14 13.6% $ 1.14 113.2%
Weighted average number of common shares outstanding - diluted 67,291 67,282 0.0% 68,582 (1.9%)
Return on equity 29.4% 26.6% 15.8%
(*) Adjusted net income is a non-GAAP financial measure. See Appendix.
(1) Excludes debt termination expense.
(2) Excludes state and other income tax adjustment, tax adjustments related to intra-entity asset transfer.
9PROFITABILITY DRIVERS
Sequential Change: Change from Prior Year Quarter:
Q3 2021 vs Q2 2021 Q3 2021 vs Q3 2020
Leasing revenue up 8.2% Leasing revenue up 22.1%
Avg revenue earning assets up 9.2% Avg revenue earning assets up 25.0%
Fleet Size Revenues up less than REA due to growth in finance Revenues up less than REA due to growth in
leases finance leases and lower ancillary fees from
lower drop activity
UTE averaged 99.6% in Q3 and currently Average UTE up 3.5% from Q3 2020 to
remains the same 99.6%
Utilization
Direct opex decreased by $0.8 million due to Direct opex decreased by $20.5 million due
lower storage and repairs to lower storage and repairs
Effective interest rate down 43 basis points to Effective interest rate down 102 basis points
Interest Expense 2.77% due to prepayment of private due to refinancing of ABS and prepayment of
placements private placements
Gain on sale and trading margin totaled $34.8 Gain on sale and trading margin up by $20.2
million, down $7.3 million due to limited million due to strong increase in dry
Disposal Activity inventory container sale prices
Weighted average diluted shares essentially Weighted average diluted shares
flat outstanding decreased by 1.3 million, or
Share Count 67.0 million diluted shares outstanding as of
1.9% due to share repurchases
09/30/2021
10STRONG, STABLE CASH FLOW DRIVES STEADY VALUE CREATION
Cash Flow Before Capex (1)(2) Steady Value Creation (4)
$1,600
$1,400 $75
$1,200 $70
$1,000 $65
$800
($MM)
$60
$600
$55
$400
$200 $50
$0 $45 Adj.
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Q3 Ann.
LTM Sep-21
TBV:
$40 $40.92
$ Per Share
(1) See Non-GAAP Financial Information in the Appendix.
(2) Reflects purchase accounting adjustments for 2017-2021.
$35 GAAP
BVPS:
$33.56
$30
Net Debt as % of REA (3) $25
100% $20
Financial Industrial & Trade $15
Crisis Commodity War /
90% Recession COVID-19 $10
Net Debt as % of REA
/
Pref. $5
80% Issuance
$-
Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3
70%
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21
Cumulative Dividends Per Share
60%
Adjusted Tangible Book Value Per Share
Q3 '19
Q3 '08
Q3 '09
Q3 '10
Q3 '11
Q3 '12
Q3 '13
Q3 '14
Q3 '15
Q3 '16
Q3 '17
Q3 '18
Q3 '20
Q3 '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.
11TRANSITION TO UNSECURED INVESTMENT GRADE FINANCING
PROVIDES A MORE EFFICIENT CAPITAL STRUCTURE
On October 14, completed strategic transition of debt capital structure to primarily unsecured
» Upgrade of issue rating by Fitch to BBB- and re-affirmation by S&P of BBB-
» Released security on $2.3 billion of notes issued this year
» Amended existing bank revolver and term loan facility to be unsecured
Access to unsecured Investment Grade financing should provide multiple benefits and further
extend our market advantages:
» Deeper pool of capital
» Cost advantages relative to other forms of financing
» Faster execution
» Access to longer durations
» Less complexity compared to managing secured financings
12CAPITAL ALLOCATION
Our strong profitability provides an array of options to drive shareholder value
» Current profitability supports nearly 20% asset growth with current dividend while
maintaining constant leverage
» While our market environment remains strong, we expect some normalization of
investment levels in 2022
» Excess equity cash flow likely to be substantial going forward
Raising quarterly common dividend by 14% to $0.65 per quarter
» Follows roughly 10% increase in October 2020
» Payout ratio remains conservative
Restarted share repurchases
» Purchased 0.6 million shares in September and October
» Brings total repurchases to 14.5 million shares, or 17.9% of shares outstanding, since
September 2018
» Increased stock buyback authorization to $200 million
13EQUITY CASH FLOW
Typical Prioritization of Cash Flow
($MM, except per share amounts) Q3 Annualized
Cash flow before capex $1,538
1. Maintain ability to service customers/replacement capex 1 $825-850
Cash flow after replacement capex ~$700
Steady-state cash flow yield2 18.7%
3
2. Pay common dividend of $2.60 per share $175
Dividend yield2 4.6%
Cash flow after replacement capex and regular dividend ~$525
Capital Allocation Options
3A. Growth capex at constant leverage
4
- Levered growth in revenue earning assets ~$2,100
- Potential REA growth 18.5%
3B. Share repurchase ~$525
- Percent of outstanding shares at current price 14.0%
3C. Additional dividends ~$525
- Potential additional per share distribution $7.83
(1) Approximates depreciation, NBV of disposals, and principal payments on finance leases.
(2) Based on closing stock price of $55.93 on 10/22/21.
(3) Reflects annualized fourth quarter dividend.
(4) Based on 75% debt to revenue earning assets.
14OUTLOOK AND CONCLUSIONS
Triton achieved another quarter of record performance in Q3 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
Using exceptional profitability to aggressively drive shareholder value without pushing leverage
» Value-added container investment
» Increased dividend
» Repurchasing shares
Expect strong financial performance will continue
» Expect Q4 Adjusted EPS will slightly increase from record level achieved in Q3
» 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
15Appendix
16LONG TERM LEASE EXPIRATIONS (*)
Dry Refrigerated
Percent of Fleet 3.9% 0.7% 4.5% 5.7% 2.6% 5.1% 4.0% 0.8% 2.0% Percent of Fleet 2.9% 0.1% 1.5% 2.2% 1.8% 1.0% 1.6% 0.5% 1.0%
* Excludes Sale Age Equipment
17ADJUSTED TANGIBLE BOOK VALUE PER SHARE AS OF 09/30/21
Purchase
(In thousands, except per share amounts)
Combined Accounting Consolidated
Total assets $ 12,280,806 $ (79,206) $ 12,201,600
Total liabilities 9,272,971 (50,241) 9,222,730
Preferred shareholders' equity 730,000 - 730,000
Common shareholders' equity 2,277,835 (28,965) 2,248,870
Total equity 3,007,835 (28,965) 2,978,870
Total liabilities and equity $ 12,280,806 $ (79,206) $ 12,201,600
Common shares outstanding 67,016
Book value per share $33.56
Reconciliation to adjusted tangible book value
Common shareholders' equity $ 2,277,835
Less: Goodwill (13,307)
Plus: Net deferred tax liability 417,244
Plus: Net swap liability 60,682
Adjusted tangible book value $ 2,742,454
Adjusted tangible book value per share $40.92
18RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION
(In thousands) Q3
annualized
Income before income taxes 760,816
Interest and debt expense 218,912
Depreciation and amortization 653,972
Adjusted EBITDA 1,633,700
Principal payments on finance leases 88,184
NBV of container disposals 87,088
Major cash in flows 1,808,972
Interest and debt expense 218,912
Preferred stock dividends (*) 52,116
Cash flow before capex $ 1,537,944
(*) Reflects annualized dividend payments on preferred
equity series A, B, C, D and E.
19CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except earnings per share) Q3 '21 Q2 '21 % Change Q3 '20 % Change
Total leasing revenues $ 400,191 $ 369,784 8.2% $ 327,757 22.1%
Trading margin 9,163 10,726 (14.6%) 3,869 136.8%
Net gain on sale of leasing equipment 25,606 31,391 (18.4%) 10,737 138.5%
Depreciation and amortization 163,493 154,056 6.1% 136,248 20.0%
Interest and debt expense 54,728 60,004 (8.8%) 62,776 (12.8%)
Total ownership costs 218,221 214,060 1.9% 199,024 9.6%
Direct operating expenses 5,539 6,337 (12.6%) 25,992 (78.7%)
Administrative expenses 21,426 22,979 (6.8%) 21,395 0.1%
Provision (reversal) for doubtful accounts 23 (26) (188.5%) (45) (151.1%)
Other (income) expense, net (453) (261) 73.6% (631) (28.2%)
Debt termination expense 42,660 89,863 (52.5%) 24,345 75.2%
Total operating and other costs 69,195 118,892 (41.8%) 71,056 (2.6%)
Income before income taxes 147,544 78,949 86.9% 72,283 104.1%
Income tax expense 12,812 13,732 (6.7%) 15,825 (19.0%)
Net income $ 134,732 $ 65,217 106.6% $ 56,458 138.6%
Less: dividend on preferred shares 11,687 10,513 11.2% 10,512 11.2%
Net Income attributable to common shareholders $ 123,045 $ 54,704 124.9% $ 45,946 167.8%
Net income per common share - Diluted $ 1.83 $ 0.81 125.9% $ 0.67 173.1%
20RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION
(In thousands, except earnings per share)
Q3 '20 Q4 '20 2020 Total Q1 '21 Q2 '21 Q3 '21
Net income attributable to common shareholders $ 45,946 $ 115,185 $ 288,417 $ 129,325 $ 54,704 $ 123,045
Add (subtract):
Debt termination expense & unrealized (gain) loss on derivative 21,140 358 21,804 - 89,485 41,214
instruments, net
State and other income tax adjustments 2,341 (866) 1,390 - - (496)
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 $ 78,056 $ 114,677 $ 319,850 $ 128,682 $ 144,189 $ 163,763
Adjusted net income per common share - diluted $ 1.14 $ 1.70 $ 4.61 $ 1.91 $ 2.14 $ 2.43
Q3 '20 Q4 '20 2020 Total Q1 '21 Q2 '21 Q3 '21
Adjusted net income $ 78,056 $ 114,677 $ 319,850 $ 128,682 $ 144,189 $ 163,763
(1)
Annualized adjusted net income 309,679 454,969 319,850 521,877 578,340 649,712
Beginning shareholders' equity 1,953,950 1,963,889 2,127,237 2,010,948 2,169,318 2,172,077
Ending shareholders' equity 1,963,889 2,010,948 2,010,948 2,169,318 2,172,077 2,248,870
Average common shareholders' equity (2) $ 1,958,920 $ 1,987,419 $ 2,010,255 $ 2,090,133 $ 2,170,698 $ 2,210,474
Return on equity 15.8% 22.9% 15.9% 25.0% 26.6% 29.4%
(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.
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