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TI

Triton International Ltd (TRTN-PA)·Q2 2023 Earnings Summary

Executive Summary

  • Q2 2023 results were resilient amid slow market conditions: total leasing revenues were $386.5M, diluted EPS $2.34, and adjusted diluted EPS $2.38; adjusted ROE was 21.2% . Net income attributable to common shareholders declined 19.3% YoY and 4.1% QoQ, reflecting lower per diem revenues and reduced gains on asset sales .
  • Utilization remained high but continued to normalize, averaging 97.0% (ending 96.7%), with “pockets of demand” and stable profitability supported by long-term leases .
  • Triton advanced its take‑private: special meeting set for Aug 24, 2023 and expected close in Q3 2023; common dividend of $0.70 was declared, conditional on the transaction not closing before the record date; preference shares will remain outstanding and continue normal dividends post-close .
  • No earnings call and no formal 2023 outlook due to the pending Brookfield Infrastructure transaction; this removes the usual guidance anchor and Q&A tone signals for near-term trading .

What Went Well and What Went Wrong

What Went Well

  • Strong profitability and ROE despite softer conditions: adjusted EPS of $2.38 and adjusted ROE of 21.2% in Q2; “revenues and profitability are well protected by our strong long-term lease portfolio” .
  • High utilization maintained with demand pockets: average utilization of 97.0% and ending utilization of 96.7%, with drop‑off volumes decreasing from Q1 .
  • Transaction milestones and dividend continuity: special meeting set, expected Q3 close; preference shares to remain listed and continue paying normal quarterly dividends post-close; common dividend declared at $0.70, conditional on timing .

What Went Wrong

  • Topline and EPS compressed: total leasing revenues down to $386.5M from $397.7M in Q1 and $421.6M in Q2 2022; diluted EPS fell to $2.34 from $2.44 in Q1 and $2.90 YoY .
  • Lower per diem and gains on sales: operating lease per diem revenues fell to $343.0M (Q1: $352.2M; Q4: $369.8M), and net gains on sale of leasing equipment declined to $21.6M (Q1: $15.5M; Q4: $25.2M) .
  • Reduced visibility: management did not provide a financial outlook and did not hold an earnings call, limiting clarity on trajectory and specific drivers near term .

Financial Results

MetricQ4 2022Q1 2023Q2 2023
Total leasing revenues ($USD Millions)$416.3 $397.7 $386.5
Net income attributable to common shareholders ($USD Millions)$152.2 $136.8 $128.7
Diluted EPS ($USD)$2.61 $2.44 $2.34
Adjusted net income ($USD Millions)$160.7 $136.1 $131.3
Adjusted diluted EPS ($USD)$2.76 $2.42 $2.38
Adjusted ROE (%)25.4% 22.5% 21.2%
Operating income ($USD Millions)$249.3 $221.5 $213.1

Segment and revenue composition

ComponentQ4 2022Q1 2023Q2 2023
Per diem revenues ($USD Millions)$369.8 $352.2 $343.0
Fee & ancillary revenues ($USD Millions)$18.2 $18.2 $17.0
Total operating lease revenues ($USD Millions)$388.1 $370.3 $360.0
Finance lease revenues ($USD Millions)$28.3 $27.4 $26.5
Equipment trading revenues ($USD Millions)$20.9 $19.1 $26.4
Equipment trading margin ($USD Millions)$1.8 $1.1 $1.9
Net gain on sale of leasing equipment ($USD Millions)$25.2 $15.5 $21.6

KPIs and balance sheet

KPIQ4 2022Q1 2023Q2 2023
Average utilization (%)98.4% 97.6% 97.0%
Ending utilization (%)98.1% 97.2% 96.7%
Total equipment in CEU (units)7,885,851 7,794,240 7,711,840
Cash dividends paid per common share ($USD)$0.70 $0.70 $0.70
Total debt ($USD Millions)$8,074.8 $7,907.4 $7,624.8
Total shareholders’ equity ($USD Millions)$3,204.4 $3,157.8 $3,269.9

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Financial outlook (EPS trajectory)2023Q4 2022: expected adjusted EPS to decrease from Q4 to Q1 given seasonality and disposal gains normalization No financial outlook due to pending transaction Withdrawn
Common dividendQ2 2023Maintain current quarterly dividend prior to transaction close $0.70 declared; payable only if transaction has not closed before record date Maintained, conditional
Preference share dividendsQ2 2023 and post-closeNormal quarterly dividends Continue normal quarterly preference dividends; remain obligation of Triton; listing to continue post-close Maintained
Transaction closing timeline2023Expected Q4 2023 close (announced Apr 12) Expected Q3 2023 close per Q2 release Pulled forward

Earnings Call Themes & Trends

TopicQ4 2022 (Previous Mentions)Q1 2023 (Previous Mentions)Q2 2023 (Current Period)Trend
Utilization & demandUtilization averaged 98.4%; strong finish to 2022 Utilization averaged 97.6%; conditions slow Utilization averaged 97.0%; drop‑offs decreased; pockets of demand Gradual normalization down from peak
Pricing & disposal gains$25.2M gains on sale; note Q4 special items added $0.13 to adj EPS Gains fell to $15.5M; continued normalization $21.6M gains; still lower YoY Lower than 2022 peak
Long-term lease protectionExtended lease durations and low-cost financing underpin stability Strong long-term lease portfolio protects revenues/profitability Long-term leases continue to protect profitability Stable protection
Macro/geopolitical risksBroad macro, trade, and geopolitical risk disclosures Similar risk disclosures; transaction pending Continued emphasis on transaction and regulatory approvals (CFIUS, etc.) Persistent
Capital allocationAggressive 2022 buybacks; 2023 continued until suspension Repurchased 1.9M YTD; suspended due to deal No buybacks; common dividend declared conditional Shift to deal-close

Note: Triton did not hold earnings calls for Q1 or Q2 2023 due to the pending transaction .

Management Commentary

  • “Triton delivered solid results in the second quarter of 2023. We generated $2.38 of Adjusted net income per share and an annualized return on equity of 21.2%... our revenues and profitability are well protected by our strong long-term lease portfolio. Our utilization averaged 97.0% during the second quarter and currently stands at 96.6%.” — Brian M. Sondey, CEO .
  • “We are excited about our recent agreement to be acquired by Brookfield Infrastructure. We believe the acquisition provides a compelling value for our shareholders, and expect Brookfield will be an ideal partner for Triton.” — Brian M. Sondey, CEO (Q1 release) .
  • “We believe this transaction provides an excellent outcome for all of Triton’s stakeholders… represents a 35% premium… and crystalizes a total shareholder return of approximately 700% since the 2016 merger.” — Brian M. Sondey, CEO (Apr 12 release) .
  • “Triton is an attractive business with highly contracted and stable cash flows, strong margins and a track record of value creation.” — Sam Pollock, CEO of Brookfield Infrastructure (Apr 12 release) .

Q&A Highlights

  • No Q&A: Triton did not hold an earnings conference call for Q2 2023 (nor Q1 2023) due to the pending transaction; therefore there were no analyst questions, clarifications, or tone read-through this quarter .

Estimates Context

  • Wall Street consensus (S&P Global) for Q2 2023 EPS and revenue was unavailable for this analysis window; Triton did not provide formal guidance or hold an earnings call, further limiting triangulation versus consensus .

Key Takeaways for Investors

  • High-quality lease book continues to buffer earnings: adjusted EPS $2.38 and adjusted ROE 21.2% despite slower conditions and lower per diem revenues, signaling durable cash generation .
  • Utilization is normalizing but remains strong at 97.0%; drop-off volumes improved vs Q1, indicating stabilizing operational metrics that limit downside .
  • Revenue mix shows steady operating lease base with finance lease revenues trending modestly down; gains on asset sales are lower than 2022 peaks, reducing ancillary profit tailwinds .
  • Transaction is the near-term catalyst: special meeting Aug 24 and expected Q3 close; common dividend declared but conditional; preference dividends to continue post-close with NYSE listing retained—important for preferred holders .
  • Lack of guidance and no call remove typical visibility; trading may be driven by merger progress, regulatory milestones, and macro data on global trade rather than company-specific updates .
  • Balance sheet deleveraging continued QoQ (debt $7.62B vs $7.91B in Q1), and equity increased QoQ to $3.27B, reflecting earnings retention and stability ahead of the transaction .
  • Medium-term thesis under private ownership: Brookfield highlights contracted cash flows and platform for transport/logistics growth, suggesting continued investment pace and capital access post-close .