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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Large Accelerated Filer
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Accelerated Filer
o
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Non-accelerated filer
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(Do not check if a smaller reporting company)
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Smaller reporting company
o
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Emerging growth company
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Page No.
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June 30,
2017 |
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December 31,
2016 |
||||
ASSETS:
|
|
|
|
||||
Leasing equipment, net of accumulated depreciation of $1,994,936 and $1,787,505
|
$
|
7,813,214
|
|
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$
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7,370,519
|
|
Net investment in finance leases
|
325,125
|
|
|
346,810
|
|
||
Equipment held for sale
|
72,824
|
|
|
99,863
|
|
||
Revenue earning assets
|
8,211,163
|
|
|
7,817,192
|
|
||
Cash and cash equivalents
|
169,659
|
|
|
113,198
|
|
||
Restricted cash
|
112,118
|
|
|
50,294
|
|
||
Accounts receivable, net of allowances of $27,791 and $28,609
|
187,364
|
|
|
173,585
|
|
||
Goodwill
|
236,665
|
|
|
236,665
|
|
||
Lease intangibles, net of accumulated amortization of $103,406 and $56,159
|
199,350
|
|
|
246,598
|
|
||
Insurance receivables
|
—
|
|
|
17,170
|
|
||
Other assets
|
51,038
|
|
|
53,126
|
|
||
Fair value of derivative instruments
|
6,604
|
|
|
5,743
|
|
||
Total assets
|
$
|
9,173,961
|
|
|
$
|
8,713,571
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY:
|
|
|
|
||||
Equipment purchases payable
|
$
|
153,594
|
|
|
$
|
83,567
|
|
Fair value of derivative instruments
|
9,625
|
|
|
9,404
|
|
||
Accounts payable and other accrued expenses
|
116,604
|
|
|
143,098
|
|
||
Net deferred income tax liability
|
325,836
|
|
|
317,316
|
|
||
Debt, net of unamortized deferred financing costs of $36,089 and $19,999
|
6,747,002
|
|
|
6,353,449
|
|
||
Total liabilities
|
7,352,661
|
|
|
6,906,834
|
|
||
Shareholders' equity:
|
|
|
|
||||
Common shares, $0.01 par value, 294,000,000 shares authorized 74,536,402 and 74,376,025 shares issued and outstanding, respectively
|
745
|
|
|
744
|
|
||
Undesignated shares $0.01 par value, 6,000,000 shares authorized, no shares issued and outstanding
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
693,715
|
|
|
690,418
|
|
||
Accumulated earnings
|
965,057
|
|
|
945,313
|
|
||
Accumulated other comprehensive income
|
23,953
|
|
|
26,758
|
|
||
Total shareholders' equity
|
1,683,470
|
|
|
1,663,233
|
|
||
Non-controlling interests
|
137,830
|
|
|
143,504
|
|
||
Total equity
|
1,821,300
|
|
|
1,806,737
|
|
||
Total liabilities and shareholders' equity
|
$
|
9,173,961
|
|
|
$
|
8,713,571
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Leasing revenues:
|
|
|
|
|
|
|
|
||||||||
Operating leases
|
$
|
276,160
|
|
|
$
|
156,367
|
|
|
$
|
535,745
|
|
|
$
|
317,362
|
|
Finance leases
|
5,779
|
|
|
1,966
|
|
|
11,796
|
|
|
3,996
|
|
||||
Total leasing revenues
|
281,939
|
|
|
158,333
|
|
|
547,541
|
|
|
321,358
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Equipment trading revenues
|
12,755
|
|
|
—
|
|
|
18,239
|
|
|
—
|
|
||||
Equipment trading expenses
|
(11,427
|
)
|
|
—
|
|
|
(16,519
|
)
|
|
—
|
|
||||
Trading margin
|
1,328
|
|
|
—
|
|
|
1,720
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net gain (loss) on sale of leasing equipment
|
9,639
|
|
|
(1,930
|
)
|
|
14,800
|
|
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(3,767
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
124,091
|
|
|
81,132
|
|
|
241,971
|
|
|
160,276
|
|
||||
Direct operating expenses
|
15,609
|
|
|
12,015
|
|
|
37,563
|
|
|
26,482
|
|
||||
Administrative expenses
|
22,068
|
|
|
13,166
|
|
|
45,035
|
|
|
27,679
|
|
||||
Transaction and other costs
|
836
|
|
|
3,537
|
|
|
3,308
|
|
|
6,948
|
|
||||
(Benefit) provision for doubtful accounts
|
(113
|
)
|
|
(52
|
)
|
|
461
|
|
|
(171
|
)
|
||||
Total operating expenses
|
162,491
|
|
|
109,798
|
|
|
328,338
|
|
|
221,214
|
|
||||
Operating income
|
130,415
|
|
|
46,605
|
|
|
235,723
|
|
|
96,377
|
|
||||
Other expenses:
|
|
|
|
|
|
|
|
||||||||
Interest and debt expense
|
70,777
|
|
|
33,491
|
|
|
134,281
|
|
|
67,189
|
|
||||
Realized loss on derivative instruments, net
|
283
|
|
|
749
|
|
|
882
|
|
|
1,403
|
|
||||
Unrealized loss (gain) on derivative instruments, net
|
789
|
|
|
4,133
|
|
|
(709
|
)
|
|
8,729
|
|
||||
Write-off of deferred financing costs
|
43
|
|
|
141
|
|
|
43
|
|
|
141
|
|
||||
Other (income), net
|
(974
|
)
|
|
(756
|
)
|
|
(1,716
|
)
|
|
(989
|
)
|
||||
Total other expenses
|
70,918
|
|
|
37,758
|
|
|
132,781
|
|
|
76,473
|
|
||||
Income before income taxes
|
59,497
|
|
|
8,847
|
|
|
102,942
|
|
|
19,904
|
|
||||
Income tax expense
|
11,483
|
|
|
1,192
|
|
|
18,625
|
|
|
2,184
|
|
||||
Net income
|
$
|
48,014
|
|
|
$
|
7,655
|
|
|
$
|
84,317
|
|
|
$
|
17,720
|
|
Less: income attributable to noncontrolling interest
|
2,343
|
|
|
1,481
|
|
|
4,035
|
|
|
2,804
|
|
||||
Net income attributable to shareholders
|
$
|
45,671
|
|
|
$
|
6,174
|
|
|
$
|
80,282
|
|
|
$
|
14,916
|
|
Net income per common share—Basic
|
$
|
0.62
|
|
|
$
|
0.15
|
|
|
$
|
1.09
|
|
|
$
|
0.37
|
|
Net income per common share—Diluted
|
$
|
0.62
|
|
|
$
|
0.15
|
|
|
$
|
1.08
|
|
|
$
|
0.37
|
|
Cash dividends paid per common share
|
$
|
0.45
|
|
|
$
|
—
|
|
|
$
|
0.90
|
|
|
$
|
—
|
|
Weighted average number of common shares outstanding—Basic
|
73,763
|
|
|
40,362
|
|
|
73,752
|
|
|
40,361
|
|
||||
Dilutive restricted shares
|
414
|
|
|
—
|
|
|
356
|
|
|
—
|
|
||||
Weighted average number of common shares outstanding—Diluted
|
74,177
|
|
|
40,362
|
|
|
74,108
|
|
|
40,361
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income
|
$
|
48,014
|
|
|
$
|
7,655
|
|
|
$
|
84,317
|
|
|
$
|
17,720
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Change in fair value of derivative instruments designated as cash flow hedges (net of income tax effect of $(2,367), $0, $(2,109) and $0, respectively)
|
(4,349
|
)
|
|
—
|
|
|
(3,917
|
)
|
|
—
|
|
||||
Reclassification of loss on interest rate swap agreements designated as cash flow hedges (net of income tax effect of $204, $0, $461 and $0, respectively)
|
490
|
|
|
—
|
|
|
1,000
|
|
|
—
|
|
||||
Foreign currency translation adjustment
|
115
|
|
|
(245
|
)
|
|
112
|
|
|
(144
|
)
|
||||
Other comprehensive (loss), net of tax
|
(3,744
|
)
|
|
(245
|
)
|
|
(2,805
|
)
|
|
(144
|
)
|
||||
Comprehensive income
|
44,270
|
|
|
7,410
|
|
|
81,512
|
|
|
17,576
|
|
||||
Less:
|
|
|
|
|
|
|
|
||||||||
Comprehensive income attributable to noncontrolling interest
|
2,343
|
|
|
1,481
|
|
|
4,035
|
|
|
2,804
|
|
||||
Comprehensive income, attributable to shareholders
|
$
|
41,927
|
|
|
$
|
5,929
|
|
|
$
|
77,477
|
|
|
$
|
14,772
|
|
|
Six Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
84,317
|
|
|
$
|
17,720
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
241,971
|
|
|
160,276
|
|
||
Amortization of deferred financing costs and other debt related amortization
|
6,761
|
|
|
2,672
|
|
||
Amortization of lease premiums
|
46,532
|
|
|
—
|
|
||
Share compensation expense
|
3,298
|
|
|
2,288
|
|
||
Net (gain) loss on sale of leasing equipment
|
(14,800
|
)
|
|
3,767
|
|
||
Unrealized (gain) loss on derivative instruments
|
(709
|
)
|
|
8,729
|
|
||
Write-off of deferred financing costs
|
43
|
|
|
141
|
|
||
Deferred income taxes
|
17,106
|
|
|
449
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
398
|
|
|
(2,010
|
)
|
||
Accounts payable and other accrued expenses
|
(25,396
|
)
|
|
(5,493
|
)
|
||
Net equipment sold for resale activity
|
248
|
|
|
—
|
|
||
Other assets
|
(2,316
|
)
|
|
746
|
|
||
Net cash provided by operating activities
|
357,453
|
|
|
189,285
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of leasing equipment and investments in finance leases
|
(665,473
|
)
|
|
(64,098
|
)
|
||
Proceeds from sale of equipment, net of selling costs
|
90,139
|
|
|
60,820
|
|
||
Cash collections on finance lease receivables, net of income earned
|
29,953
|
|
|
7,911
|
|
||
Other
|
55
|
|
|
(574
|
)
|
||
Net cash (used in) provided by investing activities
|
(545,326
|
)
|
|
4,059
|
|
||
Cash flows from financing activities:
|
|
|
|
||||
Redemption of common shares
|
—
|
|
|
(376
|
)
|
||
Debt issuance costs
|
(19,844
|
)
|
|
(5,068
|
)
|
||
Borrowings under debt facilities
|
1,582,882
|
|
|
44,700
|
|
||
Payments under debt facilities and capital lease obligations
|
(1,180,787
|
)
|
|
(188,304
|
)
|
||
(Increase) decrease in restricted cash
|
(61,824
|
)
|
|
1,656
|
|
||
Dividends paid
|
(66,384
|
)
|
|
—
|
|
||
Distributions to noncontrolling interest
|
(9,709
|
)
|
|
(12,853
|
)
|
||
Net cash provided by (used in) financing activities
|
244,334
|
|
|
(160,245
|
)
|
||
Net increase in cash and cash equivalents
|
$
|
56,461
|
|
|
$
|
33,099
|
|
Cash and cash equivalents, beginning of period
|
113,198
|
|
|
56,689
|
|
||
Cash and cash equivalents, end of period
|
$
|
169,659
|
|
|
$
|
89,788
|
|
Supplemental non-cash investing activities:
|
|
|
|
||||
Equipment purchases payable
|
$
|
153,594
|
|
|
$
|
1,232
|
|
|
Three months ended
June 30, 2016
|
|
Six months ended
June 30, 2016
|
||||
Total leasing revenues
|
$
|
271,653
|
|
|
$
|
553,279
|
|
Net income attributable to shareholders
|
$
|
4,925
|
|
|
$
|
12,373
|
|
•
|
A lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis; and
|
•
|
A right-of-use asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term.
|
•
|
Level 1—Financial assets and liabilities whose values are based on observable inputs such as quoted prices for identical instruments in active markets.
|
•
|
Level 2—Financial assets and liabilities whose values are based on observable inputs such as (i) quoted prices for similar instruments in active markets, (ii) quoted prices for identical or similar instruments in markets that are not active, or (iii) model-derived valuations in which all significant inputs are observable in active markets.
|
•
|
Level 3—Financial assets and liabilities whose values are derived from valuation techniques based on one or more significant unobservable inputs.
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
Liabilities
|
|
|
|
||||
Total debt(1) - carrying value
|
$
|
6,818,125
|
|
|
$
|
6,415,664
|
|
Total debt(1) - fair value
|
$
|
6,851,329
|
|
|
$
|
6,316,229
|
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
Assets
|
|
|
|
||||
Equipment held for sale - assets at fair value(1)
|
$
|
16,889
|
|
|
$
|
41,067
|
|
Cumulative impairment charges(2)
|
$
|
(4,514
|
)
|
|
$
|
(12,063
|
)
|
|
Cash Flow
Hedges |
|
Foreign
Currency Translation |
|
Accumulated Other Comprehensive (Loss) Income
|
||||||
Balance as of December 31, 2016
|
$
|
31,182
|
|
|
$
|
(4,424
|
)
|
|
$
|
26,758
|
|
Change in fair value of derivative instruments designated as cash flow hedges
|
(3,917
|
)
|
|
—
|
|
|
(3,917
|
)
|
|||
Reclassification of loss on interest rate swap agreements designated as cash flow hedges
|
1,000
|
|
|
—
|
|
|
1,000
|
|
|||
Foreign currency translation adjustment
|
—
|
|
|
112
|
|
|
112
|
|
|||
Other comprehensive (loss) income
|
(2,917
|
)
|
|
112
|
|
|
(2,805
|
)
|
|||
Balance as of June 30, 2017
|
$
|
28,265
|
|
|
$
|
(4,312
|
)
|
|
$
|
23,953
|
|
|
Cash Flow
Hedges |
|
Foreign
Currency Translation |
|
Accumulated Other Comprehensive (Loss) Income
|
||||||
Balance as of December 31, 2015
|
$
|
—
|
|
|
$
|
(3,666
|
)
|
|
$
|
(3,666
|
)
|
Foreign currency translation adjustment
|
—
|
|
|
(144
|
)
|
|
(144
|
)
|
|||
Other comprehensive (loss)
|
—
|
|
|
(144
|
)
|
|
(144
|
)
|
|||
Balance as of June 30, 2016
|
$
|
—
|
|
|
$
|
(3,810
|
)
|
|
$
|
(3,810
|
)
|
|
Amounts Reclassified From Accumulated Other Comprehensive Income
|
Affected Line Item
in the Consolidated
Statements of Income
|
||||||||||||||
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|||||||||
Reclassification of loss on interest rate swap agreements
|
$
|
694
|
|
|
$
|
—
|
|
|
$
|
1,461
|
|
|
$
|
—
|
|
Interest and debt expense
|
Income tax (benefit)
|
(204
|
)
|
|
—
|
|
|
(461
|
)
|
|
—
|
|
Income tax expense
|
||||
Amounts reclassified from accumulated other comprehensive income, net of tax
|
$
|
490
|
|
|
$
|
—
|
|
|
$
|
1,000
|
|
|
$
|
—
|
|
Net income
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
Future minimum lease payment receivable
|
$
|
324,047
|
|
|
$
|
353,811
|
|
Estimated residual values
|
64,419
|
|
|
65,793
|
|
||
Gross finance lease receivables
|
388,466
|
|
|
419,604
|
|
||
Unearned income
|
(63,341
|
)
|
|
(72,794
|
)
|
||
Net investment in finance leases, net of allowances
|
$
|
325,125
|
|
|
$
|
346,810
|
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
Institutional notes
|
$
|
2,171,857
|
|
|
$
|
2,233,874
|
|
Asset backed securitization (ABS) notes
|
1,858,603
|
|
|
1,384,235
|
|
||
Term loan facilities
|
1,801,691
|
|
|
1,332,030
|
|
||
Asset backed warehouse facility
|
596,000
|
|
|
660,000
|
|
||
Revolving credit facilities
|
267,250
|
|
|
708,750
|
|
||
Capital lease obligations
|
122,724
|
|
|
96,775
|
|
||
Total debt outstanding
|
6,818,125
|
|
|
6,415,664
|
|
||
Deferred financing costs
|
(36,089
|
)
|
|
(19,999
|
)
|
||
Purchase price debt adjustment
|
(35,034
|
)
|
|
(42,216
|
)
|
||
Debt, net
|
$
|
6,747,002
|
|
|
$
|
6,353,449
|
|
Derivatives
|
|
Net Notional Amount
|
|
Weighted Average
Fixed Leg (Pay) Interest Rate |
|
Cap Rate
|
|
Weighted Average
Remaining Term |
Interest rate swaps
|
|
$1,964.2 Million
|
|
1.64%
|
|
—%
|
|
3.7 years
|
Interest rate caps
|
|
$69.2 Million
|
|
—%
|
|
4.0%
|
|
0.5 years
|
|
Asset Derivatives
|
Liability Derivatives
|
|||||||||||||
Derivative Instrument
|
June 30, 2017
|
|
December 31, 2016
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||
Interest rate swap contracts, designated as cash flow hedges
|
$
|
1,057
|
|
|
$
|
526
|
|
|
$
|
9,328
|
|
|
$
|
8,728
|
|
Interest rate swap contracts, not designated
|
5,547
|
|
|
5,217
|
|
|
297
|
|
|
676
|
|
||||
Fair value of derivative instruments
|
$
|
6,604
|
|
|
$
|
5,743
|
|
|
$
|
9,625
|
|
|
$
|
9,404
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
Derivative instrument
|
Financial statement caption
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Non-designated interest rate swaps
|
Realized loss on derivative instruments, net
|
|
$
|
283
|
|
|
$
|
749
|
|
|
$
|
882
|
|
|
$
|
1,403
|
|
Non-designated interest rate swaps
|
Unrealized loss (gain) on derivative instruments, net
|
|
$
|
789
|
|
|
$
|
4,133
|
|
|
$
|
(709
|
)
|
|
$
|
8,729
|
|
Designated interest rate swaps
|
Other comprehensive income
|
|
$
|
6,716
|
|
|
$
|
—
|
|
|
$
|
6,026
|
|
|
$
|
—
|
|
Designated interest rate swaps
|
Interest and debt expense
|
|
$
|
694
|
|
|
$
|
—
|
|
|
$
|
1,461
|
|
|
$
|
—
|
|
•
|
Equipment leasing—the Company owns, leases and ultimately dispose of containers and chassis from its lease fleet, as well as manage containers owned by third parties.
|
•
|
Equipment trading—the Company purchases containers from shipping line customers, and other sellers of containers, and resells these containers to container retailers and users of containers for storage or one-way shipment. Included in the equipment trading segment revenues are leasing revenues from equipment purchased for resale that is currently on lease until the containers are dropped off.
|
|
Three Months Ended June 30,
|
||||||||||||||||||||||
|
2017
|
|
2016
|
||||||||||||||||||||
|
Equipment
Leasing |
|
Equipment
Trading |
|
Totals
|
|
Equipment
Leasing |
|
Equipment
Trading |
|
Totals
|
||||||||||||
Total leasing revenues
|
$
|
280,995
|
|
|
$
|
944
|
|
|
$
|
281,939
|
|
|
$
|
158,333
|
|
|
$
|
—
|
|
|
$
|
158,333
|
|
Trading margin
|
—
|
|
|
1,328
|
|
|
1,328
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net gain (loss) on sale of leasing equipment
|
9,639
|
|
|
—
|
|
|
9,639
|
|
|
(1,930
|
)
|
|
—
|
|
|
(1,930
|
)
|
||||||
Depreciation and amortization expense
|
123,932
|
|
|
159
|
|
|
124,091
|
|
|
81,132
|
|
|
—
|
|
|
81,132
|
|
||||||
Interest and debt expense
|
70,365
|
|
|
412
|
|
|
70,777
|
|
|
33,491
|
|
|
—
|
|
|
33,491
|
|
||||||
Realized loss on derivative instruments, net
|
283
|
|
|
—
|
|
|
283
|
|
|
749
|
|
|
—
|
|
|
749
|
|
||||||
Income before income taxes(1)
|
58,466
|
|
|
1,863
|
|
|
60,329
|
|
|
13,121
|
|
|
—
|
|
|
13,121
|
|
(1)
|
Segment income before income taxes excludes unrealized gains or losses on interest rate swaps and the write-off of deferred financing costs. Unrealized losses on interest rate swaps were
$0.8 million
and
$4.1 million
for the three months ended
June 30, 2017
and
2016
, respectively. There were
minimal
write-offs of deferred financing costs for the three months ended
June 30, 2017
and
2016
.
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||
|
2017
|
|
2016
|
||||||||||||||||||||
|
Equipment
Leasing |
|
Equipment
Trading |
|
Totals
|
|
Equipment
Leasing |
|
Equipment
Trading |
|
Totals
|
||||||||||||
Total leasing revenues
|
$
|
545,854
|
|
|
$
|
1,687
|
|
|
$
|
547,541
|
|
|
$
|
321,358
|
|
|
$
|
—
|
|
|
$
|
321,358
|
|
Trading margin
|
—
|
|
|
1,720
|
|
|
1,720
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net gain (loss) on sale of leasing equipment
|
14,800
|
|
|
—
|
|
|
14,800
|
|
|
(3,767
|
)
|
|
—
|
|
|
(3,767
|
)
|
||||||
Depreciation and amortization expense
|
241,653
|
|
|
318
|
|
|
241,971
|
|
|
160,276
|
|
|
—
|
|
|
160,276
|
|
||||||
Interest and debt expense
|
133,493
|
|
|
788
|
|
|
134,281
|
|
|
67,189
|
|
|
—
|
|
|
67,189
|
|
||||||
Realized loss on derivative instruments, net
|
882
|
|
|
—
|
|
|
882
|
|
|
1,403
|
|
|
—
|
|
|
1,403
|
|
||||||
Income before income taxes(1)
|
100,098
|
|
|
2,178
|
|
|
102,276
|
|
|
28,774
|
|
|
—
|
|
|
28,774
|
|
(1)
|
Segment income before income taxes excludes unrealized gains or losses on interest rate swaps and the write-off of deferred financing costs. Unrealized gains on interest rate swaps were
$0.7 million
and unrealized losses on interest rate swaps were
$8.7 million
for the
six
months ended
June 30, 2017
and
2016
, respectively. There were
minimal
write-offs of deferred financing costs for the
six
months ended
June 30, 2017
and
2016
.
|
|
Balance as of June 30, 2017
|
|
Balance as of December 31, 2016
|
||||||||||||||
|
Equipment
Leasing |
|
Equipment
Trading |
|
Totals
|
|
Equipment
Leasing |
|
Equipment
Trading |
|
Totals
|
||||||
Equipment held for sale
|
55,628
|
|
|
17,196
|
|
|
72,824
|
|
|
81,804
|
|
|
18,059
|
|
|
99,863
|
|
Goodwill
|
220,864
|
|
|
15,801
|
|
|
236,665
|
|
|
220,864
|
|
|
15,801
|
|
|
236,665
|
|
Total assets
|
9,124,039
|
|
|
49,922
|
|
|
9,173,961
|
|
|
8,660,786
|
|
|
52,785
|
|
|
8,713,571
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Total leasing revenues:
|
|
|
|
|
|
|
|
||||||||
Asia
|
$
|
120,393
|
|
|
$
|
86,602
|
|
|
$
|
234,770
|
|
|
$
|
173,156
|
|
Europe
|
123,294
|
|
|
52,852
|
|
|
242,663
|
|
|
107,431
|
|
||||
Americas
|
27,560
|
|
|
10,171
|
|
|
49,449
|
|
|
23,369
|
|
||||
Other
|
10,417
|
|
|
8,577
|
|
|
20,268
|
|
|
17,168
|
|
||||
Bermuda
|
275
|
|
|
131
|
|
|
391
|
|
|
234
|
|
||||
Total
|
$
|
281,939
|
|
|
$
|
158,333
|
|
|
$
|
547,541
|
|
|
$
|
321,358
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||
|
2017
|
|
2017
|
||||
Total equipment trading revenues:
|
|
|
|
||||
Asia
|
$
|
6,523
|
|
|
$
|
8,480
|
|
Europe
|
2,632
|
|
|
4,218
|
|
||
Americas
|
2,580
|
|
|
3,699
|
|
||
Other
|
998
|
|
|
1,820
|
|
||
Bermuda
|
22
|
|
|
22
|
|
||
Total
|
$
|
12,755
|
|
|
$
|
18,239
|
|
|
Total
|
||
Balance at December 31, 2016
|
$
|
25,175
|
|
Accrual
|
2,853
|
|
|
Payments
|
(17,467
|
)
|
|
Balance at June 30, 2017
|
$
|
10,561
|
|
|
Total
|
||
Balance at December 31, 2016
|
$
|
20,718
|
|
Accrual
|
88
|
|
|
Payments
|
(11,399
|
)
|
|
Balance at June 30, 2017
|
$
|
9,407
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Payments received from TriStar on direct finance leases
|
$
|
472
|
|
|
$
|
413
|
|
|
$
|
896
|
|
|
$
|
827
|
|
Payments received from TriStar on loan payable
|
$
|
43
|
|
|
$
|
—
|
|
|
$
|
85
|
|
|
$
|
42
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
June 30,
2017 |
|
December 31,
2016 |
||||||||
Direct finance lease balance
|
|
|
|
|
|
|
$
|
11,272
|
|
|
$
|
10,636
|
|
||
Loan payable balance
|
|
|
|
|
|
|
$
|
42
|
|
|
$
|
126
|
|
|
Equipment Fleet in Units
|
|
Equipment Fleet in TEU
|
||||||||||||||
|
June 30, 2017
|
|
December 31, 2016
|
|
June 30, 2016
|
|
June 30, 2017
|
|
December 31, 2016
|
|
June 30, 2016
|
||||||
Dry
|
2,903,880
|
|
|
2,747,497
|
|
|
2,586,100
|
|
|
4,721,780
|
|
|
4,443,935
|
|
|
4,154,335
|
|
Refrigerated
|
218,238
|
|
|
217,564
|
|
|
200,943
|
|
|
419,170
|
|
|
417,634
|
|
|
384,600
|
|
Special
|
81,884
|
|
|
84,077
|
|
|
86,100
|
|
|
143,954
|
|
|
147,217
|
|
|
150,603
|
|
Tank
|
11,956
|
|
|
11,961
|
|
|
11,715
|
|
|
11,956
|
|
|
11,961
|
|
|
11,715
|
|
Chassis
|
21,468
|
|
|
21,172
|
|
|
21,784
|
|
|
38,933
|
|
|
38,321
|
|
|
39,355
|
|
Equipment leasing fleet
|
3,237,426
|
|
|
3,082,271
|
|
|
2,906,642
|
|
|
5,335,793
|
|
|
5,059,068
|
|
|
4,740,608
|
|
Equipment trading fleet
|
14,991
|
|
|
15,927
|
|
|
18,344
|
|
|
23,580
|
|
|
26,276
|
|
|
30,402
|
|
Total
|
3,252,417
|
|
|
3,098,198
|
|
|
2,924,986
|
|
|
5,359,373
|
|
|
5,085,344
|
|
|
4,771,010
|
|
|
Equipment Fleet in CEU(1)
|
|||||||
|
June 30, 2017
|
|
December 31, 2016
|
|
June 30, 2016
|
|||
Operating leases
|
6,384,590
|
|
|
6,126,320
|
|
|
5,848,136
|
|
Finance leases
|
354,727
|
|
|
368,468
|
|
|
235,806
|
|
Equipment trading fleet
|
62,969
|
|
|
72,646
|
|
|
84,832
|
|
Total
|
6,802,286
|
|
|
6,567,434
|
|
|
6,168,774
|
|
(1)
|
In the equipment fleet tables above, we have included total fleet count information based on CEU. CEU is a ratio used to convert the actual number of containers in our fleet to a figure based on the relative purchase prices of our various equipment types to that of a 20 foot dry container. For example, the CEU ratio for a 40 foot high cube dry container is 1.68, and a 40 foot high cube refrigerated container is 10.0. The CEU ratios used in this calculation may differ slightly from current actual cost ratios and CEU ratios used by others in the industry.
|
Equipment Fleet
|
Percentage of
total fleet in units |
|
Percentage of total
fleet in CEU
|
||
Dry
|
89.3
|
%
|
|
60.6
|
%
|
Refrigerated
|
6.7
|
|
|
31.5
|
|
Special
|
2.5
|
|
|
2.9
|
|
Tank
|
0.4
|
|
|
2.8
|
|
Chassis
|
0.6
|
|
|
1.3
|
|
Equipment leasing fleet
|
99.5
|
|
|
99.1
|
|
Equipment trading fleet
|
0.5
|
|
|
0.9
|
|
Total
|
100.0
|
%
|
|
100.0
|
%
|
Lease Portfolio
|
June 30,
2017 |
|
December 31,
2016 |
|
June 30,
2016 |
|||
Long-term leases
|
71.2
|
%
|
|
69.7
|
%
|
|
72.8
|
%
|
Finance leases
|
5.6
|
|
|
6.3
|
|
|
4.4
|
|
Service leases
|
15.3
|
|
|
18.5
|
|
|
13.2
|
|
Expired long-term leases (units on-hire)
|
7.9
|
|
|
5.5
|
|
|
9.6
|
|
Total
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
Quarter Ended
|
|||||||||||||
|
June 30,
2017 |
|
March 31,
2017 |
|
December 31,
2016 |
|
September 30,
2016 |
|
June 30,
2016 |
|||||
Average Utilization
|
96.5
|
%
|
|
95.3
|
%
|
|
93.6
|
%
|
|
92.4
|
%
|
|
93.3
|
%
|
|
June 30,
2017 |
|
March 31,
2017 |
|
December 31,
2016 |
|
September 30,
2016 |
|
June 30,
2016 |
|||||
Ending Utilization
|
97.1
|
%
|
|
95.8
|
%
|
|
94.8
|
%
|
|
92.6
|
%
|
|
93.7
|
%
|
Record Date
|
|
Payment
Date |
|
Aggregate
Payment |
|
Per Share
Payment |
March 20, 2017
|
|
March 30, 2017
|
|
$33.2 Million
|
|
$0.45
|
June 1, 2017
|
|
June 22, 2017
|
|
$33.2 Million
|
|
$0.45
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Leasing revenues:
|
|
|
|
|
|
|
|
||||||||
Operating leases
|
$
|
276,160
|
|
|
$
|
156,367
|
|
|
$
|
535,745
|
|
|
$
|
317,362
|
|
Finance leases
|
5,779
|
|
|
1,966
|
|
|
11,796
|
|
|
3,996
|
|
||||
Total leasing revenues
|
281,939
|
|
|
158,333
|
|
|
547,541
|
|
|
321,358
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Equipment trading revenues
|
12,755
|
|
|
—
|
|
|
18,239
|
|
|
—
|
|
||||
Equipment trading expenses
|
(11,427
|
)
|
|
—
|
|
|
(16,519
|
)
|
|
—
|
|
||||
Trading margin
|
1,328
|
|
|
—
|
|
|
1,720
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net gain (loss) on sale of leasing equipment
|
9,639
|
|
|
(1,930
|
)
|
|
14,800
|
|
|
(3,767
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
124,091
|
|
|
81,132
|
|
|
241,971
|
|
|
160,276
|
|
||||
Direct operating expenses
|
15,609
|
|
|
12,015
|
|
|
37,563
|
|
|
26,482
|
|
||||
Administrative expenses
|
22,068
|
|
|
13,166
|
|
|
45,035
|
|
|
27,679
|
|
||||
Transaction and other costs
|
836
|
|
|
3,537
|
|
|
3,308
|
|
|
6,948
|
|
||||
(Benefit) provision for doubtful accounts
|
(113
|
)
|
|
(52
|
)
|
|
461
|
|
|
(171
|
)
|
||||
Total operating expenses
|
162,491
|
|
|
109,798
|
|
|
328,338
|
|
|
221,214
|
|
||||
Operating income
|
130,415
|
|
|
46,605
|
|
|
235,723
|
|
|
96,377
|
|
||||
Other expenses:
|
|
|
|
|
|
|
|
||||||||
Interest and debt expense
|
70,777
|
|
|
33,491
|
|
|
134,281
|
|
|
67,189
|
|
||||
Realized loss on derivative instruments, net
|
283
|
|
|
749
|
|
|
882
|
|
|
1,403
|
|
||||
Unrealized loss (gain) on derivative instruments, net
|
789
|
|
|
4,133
|
|
|
(709
|
)
|
|
8,729
|
|
||||
Write-off of deferred financing costs
|
43
|
|
|
141
|
|
|
43
|
|
|
141
|
|
||||
Other (income), net
|
(974
|
)
|
|
(756
|
)
|
|
(1,716
|
)
|
|
(989
|
)
|
||||
Total other expenses
|
70,918
|
|
|
37,758
|
|
|
132,781
|
|
|
76,473
|
|
||||
Income before income taxes
|
59,497
|
|
|
8,847
|
|
|
102,942
|
|
|
19,904
|
|
||||
Income tax expense
|
11,483
|
|
|
1,192
|
|
|
18,625
|
|
|
2,184
|
|
||||
Net income
|
$
|
48,014
|
|
|
$
|
7,655
|
|
|
$
|
84,317
|
|
|
$
|
17,720
|
|
Less: income attributable to noncontrolling interest
|
2,343
|
|
|
1,481
|
|
|
4,035
|
|
|
2,804
|
|
||||
Net income attributable to shareholders
|
$
|
45,671
|
|
|
$
|
6,174
|
|
|
$
|
80,282
|
|
|
$
|
14,916
|
|
|
Three Months Ended June 30,
|
||||||||||
|
2017
|
|
2016
|
|
Variance
|
||||||
Leasing revenues:
|
|
|
|
|
|
||||||
Operating leases
|
$
|
276,160
|
|
|
$
|
156,367
|
|
|
$
|
119,793
|
|
Finance leases
|
5,779
|
|
|
1,966
|
|
|
3,813
|
|
|||
Total leasing revenues
|
281,939
|
|
|
158,333
|
|
|
123,606
|
|
|||
|
|
|
|
|
|
||||||
Equipment trading revenues
|
12,755
|
|
|
—
|
|
|
12,755
|
|
|||
Equipment trading expenses
|
(11,427
|
)
|
|
—
|
|
|
(11,427
|
)
|
|||
Trading margin
|
1,328
|
|
|
—
|
|
|
1,328
|
|
|||
|
|
|
|
|
|
||||||
Net gain (loss) on sale of leasing equipment
|
9,639
|
|
|
(1,930
|
)
|
|
11,569
|
|
|||
|
|
|
|
|
|
||||||
Operating expenses:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
124,091
|
|
|
81,132
|
|
|
42,959
|
|
|||
Direct operating expenses
|
15,609
|
|
|
12,015
|
|
|
3,594
|
|
|||
Administrative expenses
|
22,068
|
|
|
13,166
|
|
|
8,902
|
|
|||
Transaction and other costs
|
836
|
|
|
3,537
|
|
|
(2,701
|
)
|
|||
(Benefit) provision for doubtful accounts
|
(113
|
)
|
|
(52
|
)
|
|
(61
|
)
|
|||
Total operating expenses
|
162,491
|
|
|
109,798
|
|
|
52,693
|
|
|||
Operating income
|
130,415
|
|
|
46,605
|
|
|
83,810
|
|
|||
Other expenses:
|
|
|
|
|
|
||||||
Interest and debt expense
|
70,777
|
|
|
33,491
|
|
|
37,286
|
|
|||
Realized loss on derivative instruments, net
|
283
|
|
|
749
|
|
|
(466
|
)
|
|||
Unrealized loss on derivative instruments, net
|
789
|
|
|
4,133
|
|
|
(3,344
|
)
|
|||
Write-off of deferred financing costs
|
43
|
|
|
141
|
|
|
(98
|
)
|
|||
Other (income), net
|
(974
|
)
|
|
(756
|
)
|
|
(218
|
)
|
|||
Total other expenses
|
70,918
|
|
|
37,758
|
|
|
33,160
|
|
|||
Income before income taxes
|
59,497
|
|
|
8,847
|
|
|
50,650
|
|
|||
Income tax expense
|
11,483
|
|
|
1,192
|
|
|
10,291
|
|
|||
Net income
|
$
|
48,014
|
|
|
$
|
7,655
|
|
|
$
|
40,359
|
|
Less: income attributable to noncontrolling interest
|
2,343
|
|
|
1,481
|
|
|
862
|
|
|||
Net income attributable to shareholders
|
$
|
45,671
|
|
|
$
|
6,174
|
|
|
$
|
39,497
|
|
|
Three Months Ended June 30,
|
||||||||||
|
2017
|
|
2016
|
|
Variance
|
||||||
|
(in thousands)
|
||||||||||
Leasing revenues:
|
|
|
|
|
|
||||||
Operating lease revenues:
|
|
|
|
|
|
||||||
Per diem revenues
|
$
|
265,570
|
|
|
$
|
146,891
|
|
|
$
|
118,679
|
|
Fee and ancillary lease revenues
|
10,590
|
|
|
9,476
|
|
|
1,114
|
|
|||
Total operating lease revenues
|
276,160
|
|
|
156,367
|
|
|
119,793
|
|
|||
Finance lease revenues
|
5,779
|
|
|
1,966
|
|
|
3,813
|
|
|||
Total leasing revenues
|
$
|
281,939
|
|
|
$
|
158,333
|
|
|
$
|
123,606
|
|
•
|
$108.0 million
increase due to the inclusion of TAL's per diem revenues, net of lease intangible amortization;
|
•
|
$20.7 million
increase due to an additional
437,455
CEU in the average number of containers on-hire under operating leases, partially offset by a
|
•
|
$10.0 million decrease due to a decrease in average CEU per diem rates.
|
•
|
$4.8 million
increase due to the inclusion of TAL's fees and ancillary revenues; partially offset by a
|
•
|
$3.7 million decrease in re-delivery fees due to a decrease in the volume of customer re-deliveries.
|
•
|
$6.1 million
increase due to the inclusion of TAL's gains on sale of leasing equipment;
|
•
|
$4.8 million increase due to a
41%
increase in our average used container selling prices; and a
|
•
|
$0.7 million increase in sales volume.
|
•
|
$45.8 million
increase due to the inclusion of TAL's depreciation and amortization;
|
•
|
$4.7 million increase due to a net increase in the size of our depreciable fleet, partially offset by a;
|
•
|
$7.5 million decrease primarily due to an impairment charge related to certain off-lease container equipment for the three months ended June 30, 2016. There was no impairment charge recorded as depreciation for the three months ended June 30, 2017.
|
•
|
$8.8 million
increase due to the inclusion of TAL's direct operating expenses; partially offset by a
|
•
|
$5.2 million decrease in equipment repairs and storage expenses resulting from decreases in off hire volumes and the number of idle units.
|
•
|
$8.5 million
increase due to the inclusion of TAL's administrative expenses for the three months ended
June 30, 2017
. TAL's reported administrative expense for the three months ended June 30, 2016 was $10.9 million. The three months ended June 30, 2017 are reflective of $2.4 million of synergies gained from the Merger;
|
•
|
$1.5 million increase due to increases in director's share-based compensation expense and an increase in our professional fees; partially offset by
|
•
|
$1.4 million decrease primarily due to lower employee compensation expense as a result of synergies gained from the Merger.
|
•
|
$32.6 million
increase due to the inclusion of TAL's interest and debt expense;
|
•
|
$4.3 million increase due to a higher average debt balance of $3.4 billion in the three months ended
June 30, 2017
compared to $3.0 billion in the same period in
2016
exclusive of TAL debt acquired; and
|
•
|
$0.4 million increase due to an increase in the average effective interest rate to 4.43% in the three months ended
June 30, 2017
compared to 4.38% in the same period in
2016
.
|
|
Six Months Ended June 30,
|
||||||||||
|
2017
|
|
2016
|
|
Variance
|
||||||
Leasing revenues:
|
|
|
|
|
|
||||||
Operating leases
|
$
|
535,745
|
|
|
$
|
317,362
|
|
|
$
|
218,383
|
|
Finance leases
|
11,796
|
|
|
3,996
|
|
|
7,800
|
|
|||
Total leasing revenues
|
547,541
|
|
|
321,358
|
|
|
226,183
|
|
|||
|
|
|
|
|
|
|
|||||
Equipment trading revenues
|
18,239
|
|
|
—
|
|
|
18,239
|
|
|||
Equipment trading expenses
|
(16,519
|
)
|
|
—
|
|
|
(16,519
|
)
|
|||
Trading margin
|
1,720
|
|
|
—
|
|
|
1,720
|
|
|||
|
|
|
|
|
|
|
|||||
Net gain (loss) on sale of leasing equipment
|
14,800
|
|
|
(3,767
|
)
|
|
18,567
|
|
|||
|
|
|
|
|
|
|
|||||
Operating expenses:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
241,971
|
|
|
160,276
|
|
|
81,695
|
|
|||
Direct operating expenses
|
37,563
|
|
|
26,482
|
|
|
11,081
|
|
|||
Administrative expenses
|
45,035
|
|
|
27,679
|
|
|
17,356
|
|
|||
Transaction and other costs
|
3,308
|
|
|
6,948
|
|
|
(3,640
|
)
|
|||
Provision (benefit) for doubtful accounts
|
461
|
|
|
(171
|
)
|
|
632
|
|
|||
Total operating expenses
|
328,338
|
|
|
221,214
|
|
|
107,124
|
|
|||
Operating income
|
235,723
|
|
|
96,377
|
|
|
139,346
|
|
|||
Other expenses:
|
|
|
|
|
|
||||||
Interest and debt expense
|
134,281
|
|
|
67,189
|
|
|
67,092
|
|
|||
Realized loss on derivative instruments, net
|
882
|
|
|
1,403
|
|
|
(521
|
)
|
|||
Unrealized (gain) loss on derivative instruments, net
|
(709
|
)
|
|
8,729
|
|
|
(9,438
|
)
|
|||
Write-off of deferred financing costs
|
43
|
|
|
141
|
|
|
(98
|
)
|
|||
Other (income), net
|
(1,716
|
)
|
|
(989
|
)
|
|
(727
|
)
|
|||
Total other expenses
|
132,781
|
|
|
76,473
|
|
|
56,308
|
|
|||
Income before income taxes
|
102,942
|
|
|
19,904
|
|
|
83,038
|
|
|||
Income tax expense
|
18,625
|
|
|
2,184
|
|
|
16,441
|
|
|||
Net income
|
$
|
84,317
|
|
|
$
|
17,720
|
|
|
$
|
66,597
|
|
Less: income attributable to noncontrolling interest
|
4,035
|
|
|
2,804
|
|
|
1,231
|
|
|||
Net income attributable to shareholders
|
$
|
80,282
|
|
|
$
|
14,916
|
|
|
$
|
65,366
|
|
|
Six Months Ended June 30,
|
||||||||||
|
2017
|
|
2016
|
|
Variance
|
||||||
|
(in thousands)
|
||||||||||
Leasing revenues:
|
|
|
|
|
|
||||||
Operating lease revenues:
|
|
|
|
|
|
||||||
Per diem revenues
|
$
|
513,575
|
|
|
$
|
298,569
|
|
|
$
|
215,006
|
|
Fee and ancillary lease revenues
|
22,170
|
|
|
18,793
|
|
|
3,377
|
|
|||
Total operating lease revenues
|
535,745
|
|
|
317,362
|
|
|
218,383
|
|
|||
Finance lease revenues
|
11,796
|
|
|
3,996
|
|
|
7,800
|
|
|||
Total leasing revenues
|
$
|
547,541
|
|
|
$
|
321,358
|
|
|
$
|
226,183
|
|
•
|
$208.8 million
increase due to the inclusion of TAL's per diem revenues, net of lease intangible amortization;
|
•
|
$29.3 million
increase due to an increase of
338,293
CEU in the average number of containers on-hire under operating leases; partially offset by a
|
•
|
$23.1 million
decrease due to a decrease in average CEU per diem rates.
|
•
|
$10.2 million
increase due to the inclusion of TAL's fees and ancillary revenues; partially offset by a
|
•
|
$6.8 million decrease in re-delivery fees due to a decrease in the volume of customer re-deliveries.
|
•
|
$8.9 million
increase due to the inclusion of TAL's gains on sale of leasing equipment;
|
•
|
$7.8 million increase due to a
32%
increase in our average used container selling prices; and a
|
•
|
$1.9 million increase in sales volume.
|
•
|
$89.9 million
increase due to the inclusion of TAL's depreciation and amortization expense;
|
•
|
$5.0 million increase due to a net increase in the size of our depreciable fleet, partially offset by a;
|
•
|
$13.1 million decrease mainly due to an impairment charge recorded as depreciation expense for the six months ended June 30, 2016. There was no impairment charge recorded as depreciation expense for the six months ended June 30, 2017.
|
•
|
$20.2 million
increase due to the inclusion of TAL's direct operating expenses; partially offset by a
|
•
|
$9.1 million decrease in equipment repairs and storage expenses resulting from decreases in off hire volumes and the number of idle units.
|
•
|
$20.8 million
increase due to the inclusion of TAL administrative expenses for the six months ended
June 30, 2017
. TAL's reported administrative expenses for the six months ended June 30, 2016 was $21.6 million. The six months ended June 30, 2017 are reflective of $0.8 million synergies gained from the Merger;
|
•
|
$3.0 million increase due to increases in director's share-based compensation expense and an increase in our professional fees, partially offset by a
|
•
|
$5.9 million decrease primarily due to a lower employee compensation expense as a result of synergies gained from the Merger.
|
•
|
$60.9 million
increase due to the inclusion of TAL's interest and debt expense;
|
•
|
$5.2 million increase due to a higher average debt balance of $3.3 billion for the
six
months ended
June 30, 2017
compared to $3.1 billion in the same period in
2016
; exclusive of TAL debt acquired; and
|
•
|
$1.0 million increase due to an increase in the average effective interest rate to 4.37% for the
six
months ended
June 30, 2017
compared to 4.31% in the same period in
2016
.
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Income before income taxes(1)
|
|
|
|
|
|
|
|
||||||||
Equipment leasing segment
|
$
|
58,466
|
|
|
$
|
13,121
|
|
|
$
|
100,098
|
|
|
$
|
28,774
|
|
Equipment trading segment
|
$
|
1,863
|
|
|
$
|
—
|
|
|
$
|
2,178
|
|
|
$
|
—
|
|
(1)
|
Segment income before income taxes excludes unrealized gains or losses on interest rate swaps and the write-off of deferred financing costs. Unrealized losses on interest rate swaps were
$0.8 million
and
$4.1 million
for the three months ended
June 30, 2017
and
2016
, respectively. There were
minimal
deferred financing costs for the three months ended
June 30, 2017
and
2016
, respectively. Unrealized gains on interest rate swaps were
$0.7 million
and unrealized losses on interest rate swaps were
$8.7 million
for the
six
months ended
June 30, 2017
and
2016
, respectively. There were
minimal
deferred financing costs for the
six
months ended
June 30, 2017
and
2016
, respectively.
|
|
Current
Amount
Outstanding
|
|
Current Maximum
Borrowing
Level
|
||||
Institutional notes
|
$
|
2,171.9
|
|
|
$
|
2,171.9
|
|
Asset backed securitization (ABS) notes
|
1,858.6
|
|
|
1,858.6
|
|
||
Term loan facilities
|
1,801.7
|
|
|
1,801.7
|
|
||
Asset backed warehouse facility
|
596.0
|
|
|
1,150.0
|
|
||
Revolving credit facilities
|
267.3
|
|
|
1,075.0
|
|
||
Capital lease obligations
|
122.7
|
|
|
122.7
|
|
||
Total debt outstanding
|
6,818.2
|
|
|
8,179.9
|
|
||
Deferred financing costs
|
(36.1
|
)
|
|
—
|
|
||
Unamortized fair value debt adjustment
|
(35.0
|
)
|
|
—
|
|
||
Total debt outstanding
|
$
|
6,747.1
|
|
|
$
|
8,179.9
|
|
•
|
Ratio of Consolidated Net Income Available for Fixed Charges to Fixed Charges ("Fixed Charge Coverage Ratio");
|
•
|
Consolidated Tangible Net Worth ("Minimum CTNW"); and
|
•
|
Funded Debt Ratio.
|
•
|
Minimum Earnings Before Interest and Taxes ("Covenant EBIT") to Cash Interest Expense;
|
•
|
Minimum Tangible Net Worth ("TNW"); and
|
•
|
Maximum Indebtedness to TNW.
|
Entity/Issuer
|
Minimum Fixed Charge Coverage Ratio to Fixed Charges
|
|
Actual Fixed Charge Coverage Ratio to Cash Interest Expense Ratio
|
TCIL Bank Facilities and Institutional Notes
|
1.25
|
|
1.55
|
Entity/Issuer
|
Maximum Funded Debt Ratio
|
|
Actual Funded Debt Ratio
|
TCIL
|
4.00
|
|
3.58
|
Entity/Issuer
|
Minimum
Covenant EBIT to Cash Interest Expense Ratio |
|
Actual
Covenant EBIT to Cash Interest Expense Ratio |
TAL - borrower level test
|
1.10
|
|
1.83
|
TAL asset backed warehouse
|
1.30
|
|
1.93
|
TAL asset backed securitization term notes
|
1.10
|
|
1.98*
|
Entity/Issuer
|
Maximum
Indebtedness to TNW Ratio |
|
Actual
Indebtedness to TNW Ratio |
TAL
|
4.75
|
|
3.69
|
|
Six Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
Net cash provided by operating activities
|
$
|
357,453
|
|
|
$
|
189,285
|
|
Net cash (used in) provided by investing activities
|
$
|
(545,326
|
)
|
|
$
|
4,059
|
|
Net cash provided by (used in) financing activities
|
$
|
244,334
|
|
|
$
|
(160,245
|
)
|
|
Contractual Obligations by Period
|
||||||||||||||||||||||
Contractual Obligations:
|
Total
|
|
Remaining 2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021 and thereafter
|
||||||||||||
|
(dollars in millions)
|
||||||||||||||||||||||
Principal debt obligations
|
$
|
6,702.5
|
|
|
$
|
363.8
|
|
|
$
|
740.0
|
|
|
$
|
1,165.7
|
|
|
$
|
1,005.1
|
|
|
$
|
3,427.9
|
|
Interest on debt obligations(1)
|
1,051.9
|
|
|
134.0
|
|
|
246.1
|
|
|
207.9
|
|
|
166.3
|
|
|
297.6
|
|
||||||
Capital lease obligations(2)
|
140.2
|
|
|
22.0
|
|
|
32.0
|
|
|
11.2
|
|
|
10.8
|
|
|
64.2
|
|
||||||
Operating leases (mainly facilities)
|
8.2
|
|
|
1.4
|
|
|
3.8
|
|
|
1.7
|
|
|
0.9
|
|
|
0.4
|
|
||||||
Purchase obligations:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equipment purchases payable
|
153.6
|
|
|
153.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Equipment purchase commitments
|
495.4
|
|
|
495.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Retention bonus and severance benefit commitment
|
20.0
|
|
|
20.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total contractual obligations
|
$
|
8,571.8
|
|
|
$
|
1,190.2
|
|
|
$
|
1,021.9
|
|
|
$
|
1,386.5
|
|
|
$
|
1,183.1
|
|
|
$
|
3,790.1
|
|
(1)
|
Amounts include actual for fixed interest debt and estimated interest for floating rate debt based on
June 30, 2017
rates and the net effect of our interest rate swaps.
|
(2)
|
Amounts include interest.
|
Derivatives
|
|
Net Notional Amount
|
|
Weighted Average
Fixed Leg (Pay) Interest Rate |
|
Cap Rate
|
|
Weighted Average
Remaining Term |
Interest rate swaps
|
|
$1,964.2 Million
|
|
1.64%
|
|
—%
|
|
3.7 years
|
Interest rate caps
|
|
$69.2 Million
|
|
—%
|
|
4.0%
|
|
0.5 years
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
Derivative instrument
|
Financial statement caption
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Non-designated interest rate swaps
|
Realized loss on derivative instruments, net
|
|
$
|
283
|
|
|
$
|
749
|
|
|
$
|
882
|
|
|
$
|
1,403
|
|
Non-designated interest rate swaps
|
Unrealized loss (gain) on derivative instruments, net
|
|
$
|
789
|
|
|
$
|
4,133
|
|
|
$
|
(709
|
)
|
|
$
|
8,729
|
|
Designated interest rate swaps
|
Other comprehensive income
|
|
$
|
6,716
|
|
|
$
|
—
|
|
|
$
|
6,026
|
|
|
$
|
—
|
|
Designated interest rate swaps
|
Interest and debt expense
|
|
$
|
694
|
|
|
$
|
—
|
|
|
$
|
1,461
|
|
|
$
|
—
|
|
Exhibit
Number
|
|
Exhibit Description
|
10.7
|
|
Ninth Restated and Amended Credit Agreement, dated as of April 15, 2016, by and among Triton Container International Limited, as Borrower, various lenders, and Bank of America, N.A., as Administrative Agent and an Issuer, and other parties thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on June 22, 2017)
|
10.8
|
|
First Amendment, dated as of February 6, 2017, to the Ninth Restated and Amended Credit Agreement, dated April 15, 2016 by and among Triton Container International Limited, as the Borrower, various lenders and Bank of America, N.A., as Administrative Agent and an Issuer, and other parties thereto (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on June 22, 2017)
|
10.9
|
|
Second Amendment, dated June 16, 2017, to the Ninth Restated and Amended Credit Agreement dated April 15, 2016 by and among Triton Container International Limited, as Borrower, various lenders, Bank of America, N.A., as Administrative Agent and an Issuer, and other parties thereto (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed on June 22, 2017)
|
31.1*
|
|
Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended
|
31.2*
|
|
Certification of the Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended
|
32.1*
|
|
Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350
|
32.2*
|
|
Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350
|
101.INS
|
|
XBRL Instance Document
|
101.SCH
|
|
XBRL Instance Extension Schema
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
*
|
Filed herewith.
|
|
TRITON INTERNATIONAL LIMITED
|
|
|
|
|
August 11, 2017
|
By:
|
/s/ JOHN BURNS
|
|
|
John Burns
|
|
|
Chief Financial Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Triton International Limited;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15(d)-15(f) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ BRIAN M. SONDEY
Brian M. Sondey
Chairman and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Triton International Limited;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15(d)-15(f) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ JOHN BURNS
John Burns
Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: August 11, 2017
|
/s/ BRIAN M. SONDEY
Brian M. Sondey
Chairman and Chief Executive Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: August 11, 2017
|
/s/ JOHN BURNS
John Burns
Chief Financial Officer
|