Triton International Limited (TRTN) Tops Q2 EPS by 8c, Revenues Beat

Triton International Limited (NYSE: TRTN) reported Q2 EPS of $0.86, $0.08 better than the analyst estimate of $0.78. Revenue for the quarter came in at $321.4 million versus the consensus estimate of $309.5 million.

Highlights:

• Net income attributable to common shareholders was $60.1 million or $0.86 per diluted share.
• Adjusted net income was $60.0 million or $0.86 per diluted share, a decrease of 25.2% per diluted share from the second quarter of 2019.
• Utilization averaged 95.0% in the second quarter of 2020. Utilization was 94.8% as of June 30, 2020 and was 95.0% as of July 22, 2020.
• Triton repurchased 2.1 million common shares during the second quarter, and has repurchased an additional 0.3 million common shares through July 22, 2020. Triton has purchased over 12.4 million common shares since the inception of the program in August 2018.
• Triton's Board of Directors announced a quarterly dividend of $0.52 per common share payable on September 24, 2020 to shareholders of record as of September 10, 2020.

Operating Performance

"Triton achieved solid performance in the second quarter of 2020" commented Brian M. Sondey, Chief Executive Officer of Triton. "We generated $60.0 million of Adjusted net income, or $0.86 per share, and we realized an annualized Return on equity of 12.2%. While below our long-term targets, our solid performance demonstrates the underlying strength of our business given the numerous market challenges created by the global spread of COVID-19."

"The COVID-19 pandemic and the resulting widespread economic shutdowns have led to a significant decrease in global trade. Our customers estimate container transport volumes decreased 15% or more in the second quarter of 2020 compared to second quarter of last year, and our container pick-up and new deal activity were limited in the first half of the year. However, drop-off volumes have been moderate and our utilization decreased just 0.5% during the quarter to reach 94.8% as of June 30, 2020. The resiliency of our utilization reflects our high quality long-term lease portfolio, operational challenges for our customers that have slowed container turn-times and the generally balanced supply of containers. Used container sale prices and volumes have also held up well and we continue to generate sizable disposal gains."

"As of July 22, 2020, we have purchased $489.4 million of new and sale-leaseback containers for delivery in 2020, which is well below our typical level. However, Triton continues to use its strong cash flow to drive shareholder value in other ways. Our regular dividend currently provides an annual yield of approximately seven percent. We also repurchased 2.1 million common shares during the second quarter for an average price of $28.70, and repurchased an additional 0.3 million shares through July 22, 2020. We have purchased over 12.4 million shares since the inception of the program in August 2018, representing 15.4% of the shares originally outstanding. We also have continued to pay down debt and our leverage remains near an all-time low."

"We have been concerned that the sharp decrease in global container volumes this year would increase the financial challenges facing our customers. While we are not yet through the pandemic, container freight rates and the financial performance of our customers have generally held up better than anticipated. The major shipping lines have taken aggressive action to reduce their deployed vessel capacity, decreasing their network expenses and mitigating rate pressure from reduced freight volumes. The large decrease in bunker fuel prices has also been very helpful to their financial performance. We continue to monitor customer credit closely."

Outlook

Mr. Sondey continued, "There continues to be a high degree of uncertainty to our outlook due to the unprecedented nature of the broad economic shutdowns across the globe, and trade volumes and leasing demand were well below normal for the first half of the year. However, our customers have indicated volumes have improved as shutdowns in Europe and the United States have eased, and we have seen a significant increase in leasing deal activity in July. The extent to which these recent improvements continue will have a large impact on the trajectory of our performance through the rest of the year."

"While our visibility is more limited than usual, we expect our operating trends will improve in the third quarter as containers recently booked on lease are picked up, and we expect our Adjusted net income per share will increase from the second quarter to the third quarter of 2020."

For earnings history and earnings-related data on Triton International Limited (TRTN) click here.

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