UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For The Quarterly Period Ended ~~March 31,~~September 30, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from to

Commission file number - 001-37827

Triton International Limited

(Exact name of registrant as specified in the charter)


Bermuda						98-1276572
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

Victoria Place, 5th Floor, 31 Victoria Street, Hamilton HM 10, Bermuda

(Address of principal executive office)

(441) 294-8033

(Registrant's telephone number including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common shares, $0.01 par value per share	TRTN	New York Stock Exchange
8.50% Series A Cumulative Redeemable Perpetual Preference Shares	TRTN PRA	New York Stock Exchange
8.00% Series B Cumulative Redeemable Perpetual Preference Shares	TRTN PRB	New York Stock Exchange
7.375% Series C Cumulative Redeemable Perpetual Preference Shares	TRTN PRC	New York Stock Exchange
6.875% Series D Cumulative Redeemable Perpetual Preference Shares	TRTN PRD	New York Stock Exchange
5.75% Series E Cumulative Redeemable Perpetual Preference Shares	TRTN PRE	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated Filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~April 23,~~October 22, 2021, there were ~~67,372,008~~66,771,462 common shares at $0.01 par value per share of the registrant outstanding.

Triton International Limited

Index


		Page No.
Item 1.	Financial Statements (unaudited)	4
	Consolidated Balance Sheets as of ~~March~~September 3 1 ~~, 202~~1 30, 2021 and December 31, 20 202020	4
	Consolidated Statements of Operations for the three and nine months ended ~~March 31,~~September 30, 2021 and 2020	5
	Consolidated Statements of Comprehensive Income for the three and nine months ended ~~March 31,~~September 30, 2021 and 2020	6
	Consolidated Statements of Equity for the three and nine months ended ~~March 31,~~September 30, 2021 and 2020	7
	Consolidated Statements of Cash Flows for the ~~three~~ nine months ended ~~March 31,~~September 30, 2021 and 2020	89
	Notes to Consolidated Financial Statements	910
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2024
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3037
Item 4.	Controls and Procedures	3138
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	3239
Item 1A.	Risk Factors	3239
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3239
Item 6.	Exhibits	3340
Signature		3441

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, that involve substantial risks and uncertainties. In addition, we, or our executive officers on our behalf, may from time to time make forward-looking statements in reports and other documents we file with the Securities and Exchange Commission, or SEC, or in connection with oral statements made to the press, potential investors or others. All statements, 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. 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.

Forward-looking statements in this report are subject to a number of known and unknown risks and uncertainties that could cause our actual results, performance or achievements to differ materially from those described in the forward-looking statements, including, but not limited to: 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 businesses; decreases in demand for international trade; disruption to Triton's 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 Triton's operations from failure of, or attacks on, Triton's information technology systems; disruption to Triton's 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;~~the availability and cost of capital; restrictions imposed by the terms of Triton's debt agreements; changes in the tax laws in Bermuda, the United States and other countries; and other risks and uncertainties described in the section entitled "Risk Factors" in our Annual Report on Form 10-K, filed with the SEC on February 16, 2021 (the "Form 10-K"), in this Report on Form 10-Q and in any other Form 10-Q filed or to be filed by us, as well as in the other documents we file with the SEC from time to time, and such risks and uncertainties are specifically incorporated herein by reference.

Forward-looking statements speak only as of the date the statements are made. Except as required under the federal securities laws and rules and regulations of the SEC, we undertake no obligation to update or revise forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information. We caution you not to unduly rely on the forward-looking statements when evaluating the information presented in this report.

ITEM 1. FINANCIAL STATEMENTS

TRITON INTERNATIONAL LIMITED

Consolidated Balance Sheets

(In thousands, except share data)

(Unaudited)


		March 31, 2021		December 31, 2020			September 30, 2021		December 31, 2020
ASSETS:	ASSETS:					ASSETS:
Leasing equipment, net of accumulated depreciation of $3,497,805 and $3,370,652		$	9,198,780	$	8,630,696
Leasing equipment, net of accumulated depreciation of $3,782,025 and $3,370,652						Leasing equipment, net of accumulated depreciation of $3,782,025 and $3,370,652	$	10,297,985	$	8,630,696
Net investment in finance leases	Net investment in finance leases	271,347		282,131		Net investment in finance leases	1,016,298		282,131
Equipment held for sale	Equipment held for sale	57,568		67,311		Equipment held for sale	50,447		67,311
Revenue earning assets	Revenue earning assets	9,527,695		8,980,138		Revenue earning assets	11,364,730		8,980,138
Cash and cash equivalents	Cash and cash equivalents	233,064		61,512		Cash and cash equivalents	118,972		61,512
Restricted cash	Restricted cash	153,272		90,484		Restricted cash	90,397		90,484
Accounts receivable, net of allowances of $1,275 and $2,192		234,682		226,090
Accounts receivable, net of allowances of $1,250 and $2,192						Accounts receivable, net of allowances of $1,250 and $2,192	298,036		226,090
Goodwill	Goodwill	236,665		236,665		Goodwill	236,665		236,665
Lease intangibles, net of accumulated amortization of $269,355 and $264,791		29,102		33,666
Lease intangibles, net of accumulated amortization of $277,631 and $264,791						Lease intangibles, net of accumulated amortization of $277,631 and $264,791	20,826		33,666
Other assets	Other assets	68,919		83,969		Other assets	66,343		83,969
Fair value of derivative instruments	Fair value of derivative instruments	7,578		9		Fair value of derivative instruments	5,631		9
Total assets	Total assets	$	10,490,977	$	9,712,533	Total assets	$	12,201,600	$	9,712,533
LIABILITIES AND SHAREHOLDERS' EQUITY:	LIABILITIES AND SHAREHOLDERS' EQUITY:					LIABILITIES AND SHAREHOLDERS' EQUITY:
Equipment purchases payable	Equipment purchases payable	$	342,357	$	191,777	Equipment purchases payable	$	406,510	$	191,777
Fair value of derivative instruments	Fair value of derivative instruments	68,545		128,872		Fair value of derivative instruments	66,313		128,872
Accounts payable and other accrued expenses	Accounts payable and other accrued expenses	96,989		95,235		Accounts payable and other accrued expenses	141,677		95,235
Net deferred income tax liability	Net deferred income tax liability	342,071		327,431		Net deferred income tax liability	366,990		327,431
Debt, net of unamortized costs of $53,446 and $42,747		6,916,697		6,403,270
Debt, net of unamortized costs of $62,630 and $42,747						Debt, net of unamortized costs of $62,630 and $42,747	8,241,240		6,403,270
Total liabilities	Total liabilities	7,766,659		7,146,585		Total liabilities	9,222,730		7,146,585
Shareholders' equity:	Shareholders' equity:					Shareholders' equity:
Preferred shares, $0.01 par value, at liquidation preference	Preferred shares, $0.01 par value, at liquidation preference	555,000		555,000		Preferred shares, $0.01 par value, at liquidation preference	730,000		555,000
Common shares, $0.01 par value, 270,000,000 shares authorized, 81,273,334 and 81,151,723 shares issued, respectively		813		812
Undesignated shares, $0.01 par value, 7,800,000 shares authorized, 0 shares issued and outstanding		0		0
Treasury shares, at cost, 13,901,326 shares		(436,822)		(436,822)
Common shares, $0.01 par value, 270,000,000 shares authorized, 81,296,359 and 81,151,723 shares issued, respectively						Common shares, $0.01 par value, 270,000,000 shares authorized, 81,296,359 and 81,151,723 shares issued, respectively	813		812
Undesignated shares, $0.01 par value, 800,000 and 7,800,000 shares authorized, respectively, no shares issued and outstanding						Undesignated shares, $0.01 par value, 800,000 and 7,800,000 shares authorized, respectively, no shares issued and outstanding	—		—
Treasury shares, at cost, 14,280,091 and 13,901,326 shares, respectively						Treasury shares, at cost, 14,280,091 and 13,901,326 shares, respectively	(456,218)		(436,822)
Additional paid-in capital	Additional paid-in capital	902,891		905,323		Additional paid-in capital	902,265		905,323
Accumulated earnings	Accumulated earnings	1,765,498		1,674,670		Accumulated earnings	1,866,645		1,674,670
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(63,062)		(133,035)		Accumulated other comprehensive income (loss)	(64,635)		(133,035)

Total shareholders' equity	Total shareholders' equity	2,724,318		2,565,948		Total shareholders' equity	2,978,870		2,565,948
Total liabilities and shareholders' equity	Total liabilities and shareholders' equity	$	10,490,977	$	9,712,533	Total liabilities and shareholders' equity	$	12,201,600	$	9,712,533

The accompanying Notes to the Unaudited Consolidated Financial Statements are an integral part of these statements.

TRITON INTERNATIONAL LIMITED

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020			2021		2020		2021		2020
Leasing revenues:	Leasing revenues:					Leasing revenues:
Operating leases	Operating leases	$	339,794	$	312,804	Operating leases	$	385,221	$	320,352	$	1,085,874	$	946,579
Finance leases	Finance leases	6,949		8,664		Finance leases	14,970		7,405		30,844		24,043

Total leasing revenues	Total leasing revenues	346,743		321,468		Total leasing revenues	400,191		327,757		1,116,718		970,622

Equipment trading revenues	Equipment trading revenues	25,945		15,380		Equipment trading revenues	44,418		26,094		103,546		58,377
Equipment trading expenses	Equipment trading expenses	(17,804)		(13,447)		Equipment trading expenses	(35,255)		(22,225)		(75,516)		(50,555)
Trading margin	Trading margin	8,141		1,933		Trading margin	9,163		3,869		28,030		7,822

Net gain on sale of leasing equipment	Net gain on sale of leasing equipment	21,967		4,077		Net gain on sale of leasing equipment	25,606		10,737		78,964		19,351

Operating expenses:	Operating expenses:					Operating expenses:
Depreciation and amortization	Depreciation and amortization	143,307		132,695		Depreciation and amortization	163,493		136,248		460,856		402,235
Direct operating expenses	Direct operating expenses	9,370		23,248		Direct operating expenses	5,539		25,992		21,246		78,859
Administrative expenses	Administrative expenses	20,921		19,225		Administrative expenses	21,426		21,395		65,326		61,092

Provision (reversal) for doubtful accounts	Provision (reversal) for doubtful accounts	(2,464)		4,279		Provision (reversal) for doubtful accounts	23		(45)		(2,467)		4,608

Total operating expenses	Total operating expenses	171,134		179,447		Total operating expenses	190,481		183,590		544,961		546,794
Operating income (loss)	Operating income (loss)	205,717		148,031		Operating income (loss)	244,479		158,773		678,751		451,001
Other expenses:	Other expenses:					Other expenses:
Interest and debt expense	Interest and debt expense	54,623		69,002		Interest and debt expense	54,728		62,776		169,355		198,652

Debt termination expense	Debt termination expense	0		31		Debt termination expense	42,660		24,345		132,523		24,376
Other (income) expense, net	Other (income) expense, net	(481)		(3,584)		Other (income) expense, net	(453)		(631)		(1,195)		(4,179)
Total other expenses	Total other expenses	54,142		65,449		Total other expenses	96,935		86,490		300,683		218,849
Income (loss) before income taxes	Income (loss) before income taxes	151,575		82,582		Income (loss) before income taxes	147,544		72,283		378,068		232,152
Income tax expense (benefit)	Income tax expense (benefit)	11,737		5,546		Income tax expense (benefit)	12,812		15,825		38,281		28,070
Net income (loss)	Net income (loss)	$	139,838	$	77,036	Net income (loss)	$	134,732	$	56,458	$	339,787	$	204,082

Less: dividend on preferred shares	Less: dividend on preferred shares	10,513		9,825		Less: dividend on preferred shares	11,687		10,512		32,713		30,850
Net income (loss) attributable to common shareholders	Net income (loss) attributable to common shareholders	$	129,325	$	67,211	Net income (loss) attributable to common shareholders	$	123,045	$	45,946	$	307,074	$	173,232
Net income per common share—Basic	Net income per common share—Basic	$	1.93	$	0.94	Net income per common share—Basic	$	1.84	$	0.67	$	4.59	$	2.49
Net income per common share—Diluted	Net income per common share—Diluted	$	1.92	$	0.94	Net income per common share—Diluted	$	1.83	$	0.67	$	4.57	$	2.48
Cash dividends paid per common share	Cash dividends paid per common share	$	0.57	$	0.52	Cash dividends paid per common share	$	0.57	$	0.52	$	1.71	$	1.56
Weighted average number of common shares outstanding—Basic	Weighted average number of common shares outstanding—Basic	66,935		71,596		Weighted average number of common shares outstanding—Basic	66,919		68,223		66,935		69,693
Dilutive restricted shares	Dilutive restricted shares	282		202		Dilutive restricted shares	372		359		308		289
Weighted average number of common shares outstanding—Diluted	Weighted average number of common shares outstanding—Diluted	67,217		71,798		Weighted average number of common shares outstanding—Diluted	67,291		68,582		67,243		69,982

The accompanying Notes to the Unaudited Consolidated Financial Statements are an integral part of these statements.

TRITON INTERNATIONAL LIMITED

Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020			2021		2020		2021		2020
Net income (loss)	Net income (loss)	$	139,838	$	77,036	Net income (loss)	$	134,732	$	56,458	$	339,787	$	204,082
Other comprehensive income (loss), net of tax:	Other comprehensive income (loss), net of tax:					Other comprehensive income (loss), net of tax:
Change in derivative instruments designated as cash flow hedges	Change in derivative instruments designated as cash flow hedges	62,850		(120,140)		Change in derivative instruments designated as cash flow hedges	8,148		969		47,268		(135,283)
Reclassification of (gain) loss on derivative instruments designated as cash flow hedges	Reclassification of (gain) loss on derivative instruments designated as cash flow hedges	7,102		1,411		Reclassification of (gain) loss on derivative instruments designated as cash flow hedges	7,096		7,351		21,156		14,616

Foreign currency translation adjustment	Foreign currency translation adjustment	21		(262)		Foreign currency translation adjustment	(87)		176		(24)		(201)
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	69,973		(118,991)		Other comprehensive income (loss), net of tax	15,157		8,496		68,400		(120,868)
Comprehensive income	Comprehensive income	209,811		(41,955)		Comprehensive income	149,889		64,954		408,187		83,214
Less:	Less:					Less:

Dividend on preferred shares	Dividend on preferred shares	10,513		9,825		Dividend on preferred shares	11,687		10,512		32,713		30,850
Comprehensive income attributable to common shareholders	Comprehensive income attributable to common shareholders	$	199,298	$	(51,780)	Comprehensive income attributable to common shareholders	$	138,202	$	54,442	$	375,474	$	52,364

Tax (benefit) provision on change in derivative instruments designated as cash flow hedges	Tax (benefit) provision on change in derivative instruments designated as cash flow hedges	$	2,558	$	(9,474)	Tax (benefit) provision on change in derivative instruments designated as cash flow hedges	$	28	$	(117)	$	2,030	$	(11,103)
Tax (benefit) provision on reclassification of (gain) loss on derivative instruments designated as cash flow hedges	Tax (benefit) provision on reclassification of (gain) loss on derivative instruments designated as cash flow hedges	$	468	$	(152)	Tax (benefit) provision on reclassification of (gain) loss on derivative instruments designated as cash flow hedges	$	487	$	483	$	1,436	$	666

The accompanying Notes to the Unaudited Consolidated Financial Statements are an integral part of these statements.

TRITON INTERNATIONAL LIMITED

Consolidated Statements of Shareholders' Equity

(In thousands, except share amounts)

(Unaudited)


		Preferred Shares			Common Shares			Treasury Shares			Add'l Paid in Capital				Accumulated Earnings				Accumulated Other Comprehensive Income						Total Equity					Preferred Shares										Common Shares										Treasury Shares									Add'l Paid in Capital			Accumulated Earnings					Accumulated Other Comprehensive Income							Total Equity
		Shares	Amount		Shares	Amount		Shares	Amount														Total Equity	Shares				Amount					Shares					Amount					Shares					Amount					Add'l Paid in Capital			Accumulated Earnings	Accumulated Other Comprehensive Income								Total Equity
Balance as of December 31, 2020	Balance as of December 31, 2020	22,200,000	$	555,000	81,151,723	$	812	13,901,326	$	(436,822)			$	905,323			$	1,674,670			$	(133,035)						$	2,565,948		Balance as of December 31, 2020	22,200,000					$	555,000				81,151,723					$	812				13,901,326									$	(436,822)		$			905,323		$	1,674,670	$	(133,035)				$	2,565,948

Share-based compensation	Share-based compensation	—	—		207,077	2		—	—		1,713				—				—							1,715			Share-based compensation		—					—					207,077					2					—					—				1,713			—					—							1,715

Share repurchase to settle shareholder tax obligations	Share repurchase to settle shareholder tax obligations	—	—		(85,466)	(1)		—	—		(4,145)				—				—						(4,146)			Share repurchase to settle shareholder tax obligations		—					—					(85,466)					(1)					—					—				(4,145)			—					—							(4,146)
Net income (loss)	Net income (loss)	—	—		—	—		—	—		—				139,838				—						139,838			Net income (loss)		—					—					—					—					—					—				—			139,838					—							139,838
Other comprehensive income (loss)	Other comprehensive income (loss)	—	—		—	—		—	—		—				—				69,973						69,973			Other comprehensive income (loss)		—					—					—					—					—					—				—			—					69,973							69,973

Common shares dividend declared	Common shares dividend declared	—	—		—	—		—	—		—				(38,497)				—						(38,497)			Common shares dividend declared		—					—					—					—					—					—				—			(38,497)					—							(38,497)
Preferred shares dividend declared	Preferred shares dividend declared	—	—		—	—		—	—		—				(10,513)				—						(10,513)			Preferred shares dividend declared		—					—					—					—					—					—				—			(10,513)					—							(10,513)
Balance as of March 31, 2021	Balance as of March 31, 2021	22,200,000	$	555,000	81,273,334	$	813	13,901,326	$	(436,822)	$	902,891			$	1,765,498			$	(63,062)					$	2,724,318		Balance as of March 31, 2021		22,200,000					$	555,000				81,273,334					$	813				13,901,326					$	(436,822)			$	902,891		$	1,765,498				$	(63,062)						$	2,724,318

Share-based compensation																											Share-based compensation		—					—					21,568					—					—					—				3,295			—					—							3,295

Net income (loss)																											Net income (loss)		—					—					—					—					—					—				—			65,217					—							65,217
Other comprehensive income (loss)																											Other comprehensive income (loss)		—					—					—					—					—					—				—			—					(16,730)							(16,730)

Common shares dividend declared																											Common shares dividend declared		—					—					—					—					—					—				—			(38,510)					—							(38,510)
Preferred shares dividend declared																											Preferred shares dividend declared		—					—					—					—					—					—				—			(10,513)					—							(10,513)
Balance as of June 30, 2021																											Balance as of June 30, 2021		22,200,000					$	555,000				81,294,902					$	813				13,901,326					$	(436,822)			$	906,186		$	1,781,692				$	(79,792)						$	2,727,077
Issuance of preferred shares, net of offering expenses																											Issuance of preferred shares, net of offering expenses		7,000,000					175,000					—					—					—					—				(6,170)			—					—							168,830
Share-based compensation																											Share-based compensation		—					—					1,457					—					—					—				2,249			—					—							2,249
Treasury shares acquired																											Treasury shares acquired		—					—					—					—					378,765					(19,396)				—			—					—							(19,396)

Net income (loss)																											Net income (loss)		—					—					—					—					—					—				—			134,732					—							134,732
Other comprehensive income (loss)																											Other comprehensive income (loss)		—					—					—					—					—					—				—			—					15,157							15,157

Common shares dividend declared																											Common shares dividend declared		—					—					—					—					—					—				—			(38,512)					—							(38,512)
Preferred shares dividend declared																											Preferred shares dividend declared		—					—					—					—					—					—				—			(11,267)					—							(11,267)
Balance as of September 30, 2021																											Balance as of September 30, 2021		29,200,000					$	730,000				81,296,359					$	813				14,280,091					$	(456,218)			$	902,265		$	1,866,645				$	(64,635)						$	2,978,870

` Preferred Shares Common Shares Treasury Shares Add'l Paid in Capital Accumulated Earnings Accumulated Other Comprehensive Income Total Equity
Shares Amount Shares Amount Shares Amount
Balance as of December 31, 2019 16,200,000 $ 405,000 80,979,833 $ 810 8,771,345 $ (278,510) $ 902,725 $ 1,533,845 $ (31,633) $ 2,532,237
Issuance of preferred shares, net of offering expenses 6,000,000 150,000 — — — — (5,171) — — 144,829
Share-based compensation — — 184,644 2 — — 1,603 — — 1,605
Treasury shares acquired — — — — 1,365,620 (37,488) — — — (37,488)
Share repurchase to settle shareholder tax obligations — — (53,609) (1) — — (2,155) — — (2,156)
Net income (loss) — — — — — — — 77,036 — 77,036
Other comprehensive income (loss) — — — — — — — 0 (118,991) (118,991)
Common shares dividend declared — — — — — — — (37,427) — (37,427)
Preferred shares dividend declared — — — — — — — (9,395) — (9,395)
Balance as of March 31, 2020 22,200,000 $ 555,000 81,110,868 $ 811 10,136,965 $ (315,998) $ 897,002 $ 1,564,059 $ (150,624) $ 2,550,250

The accompanying Notes to the Unaudited Consolidated Financial Statements are an integral part of these statements.

TRITON INTERNATIONAL LIMITED

Consolidated Statements of Shareholders' Equity

(In thousands, except share amounts)

(Unaudited)


`	Preferred Shares			Common Shares			Treasury Shares			Add'l Paid in Capital		Accumulated Earnings		Accumulated Other Comprehensive Income		Total Equity
	Shares	Amount		Shares	Amount		Shares	Amount
Balance as of December 31, 2019	16,200,000	$	405,000	80,979,833	$	810	8,771,345	$	(278,510)	$	902,725	$	1,533,845	$	(31,633)	$	2,532,237
Issuance of preferred shares, net of offering expenses	6,000,000	150,000		—	—		—	—		(5,171)		—		—		144,829
Share-based compensation	—	—		184,644	2		—	—		1,603		—		—		1,605
Treasury shares acquired	—	—		—	—		1,365,620	(37,488)		—		—		—		(37,488)
Share repurchase to settle shareholder tax obligations	—	—		(53,609)	(1)		—	—		(2,155)		—		—		(2,156)
Net income (loss)	—	—		—	—		—	—		—		77,036		—		77,036
Other comprehensive income (loss)	—	—		—	—		—	—		—		—		(118,991)		(118,991)


Common shares dividend declared	—	—		—	—		—	—		—		(37,427)		—		(37,427)
Preferred shares dividend declared	—	—		—	—		—	—		—		(9,395)		—		(9,395)
Balance as of March 31, 2020	22,200,000	$	555,000	81,110,868	$	811	10,136,965	$	(315,998)	$	897,002	$	1,564,059	$	(150,624)	$	2,550,250
Issuance of preferred shares, net of offering expenses	—	—		—	—		—	—		31		—		—		31
Share-based compensation	—	—		38,592	—		—	—		4,256		—		—		4,256
Treasury shares acquired	—	—		—	—		2,050,924	(58,906)		—		—		—		(58,906)

Net income (loss)	—	—		—	—		—	—		—		70,588		—		70,588
Other comprehensive income (loss)	—	—		—	—		—	—		—		—		(10,373)		(10,373)


Common shares dividend declared	—	—		—	—		—	—		—		(36,383)		—		(36,383)
Preferred shares dividend declared	—	—		—	—		—	—		—		(10,513)		—		(10,513)
Balance as of June 30, 2020	22,200,000	$	555,000	81,149,460	$	811	12,187,889	$	(374,904)	$	901,289	$	1,587,751	$	(160,997)	$	2,508,950

Share-based compensation	—	—		2,263	1		—	—		2,057		—		—		2,058
Treasury shares acquired	—	—		—	—		356,708	(10,792)		—		—		—		(10,792)

Net income (loss)	—	—		—	—		—	—		—		56,458		—		56,458
Other comprehensive income (loss)	—	—		—	—		—	—		—		—		8,496		8,496

Common shares dividend declared	—	—		—	—		—	—		—		(35,769)		—		(35,769)
Preferred shares dividend declared	—	—		—	—		—	—		—		(10,512)		—		(10,512)
Balance as of September 30, 2020	22,200,000	$	555,000	81,151,723	$	812	12,544,597	$	(385,696)	$	903,346	$	1,597,928	$	(152,501)	$	2,518,889

The accompanying Notes to the Unaudited Consolidated Financial Statements are an integral part of these statements.

TRITON INTERNATIONAL LIMITED

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


		Three Months Ended March 31,					Nine Months Ended September 30,
		2021		2020			2021		2020
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income (loss)	Net income (loss)	$	139,838	$	77,036	Net income (loss)	$	339,787	$	204,082
Adjustments to reconcile net income (loss) to net cash provided by operating activities:	Adjustments to reconcile net income (loss) to net cash provided by operating activities:					Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	143,307		132,695		Depreciation and amortization	460,856		402,235
Amortization of deferred debt cost and other debt related amortization	Amortization of deferred debt cost and other debt related amortization	1,142		3,595		Amortization of deferred debt cost and other debt related amortization	7,872		10,789

Lease related amortization	Lease related amortization	4,857		7,054		Lease related amortization	13,703		18,358

Share-based compensation expense	Share-based compensation expense	1,715		1,605		Share-based compensation expense	7,259		7,919
Net (gain) loss on sale of leasing equipment	Net (gain) loss on sale of leasing equipment	(21,967)		(4,077)		Net (gain) loss on sale of leasing equipment	(78,964)		(19,351)

Unrealized (gain) loss on derivative instruments	Unrealized (gain) loss on derivative instruments	0		297		Unrealized (gain) loss on derivative instruments	—		286
Debt termination expense	Debt termination expense	0		31		Debt termination expense	132,523		24,376
Deferred income taxes	Deferred income taxes	11,615		5,505		Deferred income taxes	36,073		28,441
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	(10,828)		(3,775)		Accounts receivable	(63,919)		(7,325)
Deferred revenue						Deferred revenue	63,944		640
Accounts payable and other accrued expenses	Accounts payable and other accrued expenses	1,886		(15,111)		Accounts payable and other accrued expenses	(9,098)		(8,832)
Net equipment sold (purchased) for resale activity	Net equipment sold (purchased) for resale activity	1,579		1,435		Net equipment sold (purchased) for resale activity	4,938		5,185
Cash received (paid) for settlement of interest rate swaps	Cash received (paid) for settlement of interest rate swaps	5,558		0		Cash received (paid) for settlement of interest rate swaps	5,481		—
Cash collections on finance lease receivables, net of income earned	Cash collections on finance lease receivables, net of income earned	12,866		15,466		Cash collections on finance lease receivables, net of income earned	49,170		60,273
Other assets	Other assets	9,420		(23,796)		Other assets	17,294		(44,735)
Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities	300,988		197,960		Net cash provided by (used in) operating activities	986,919		682,341
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Purchases of leasing equipment and investments in finance leases	Purchases of leasing equipment and investments in finance leases	(579,211)		(62,406)		Purchases of leasing equipment and investments in finance leases	(2,791,943)		(354,425)
Proceeds from sale of equipment, net of selling costs	Proceeds from sale of equipment, net of selling costs	53,512		49,498		Proceeds from sale of equipment, net of selling costs	165,066		182,819

Other	Other	15		(216)		Other	—		(183)
Net cash provided by (used in) investing activities	Net cash provided by (used in) investing activities	(525,684)		(13,124)		Net cash provided by (used in) investing activities	(2,626,877)		(171,789)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Issuance of preferred shares, net of underwriting discount	Issuance of preferred shares, net of underwriting discount	0		145,275		Issuance of preferred shares, net of underwriting discount	169,488		145,275
Purchases of treasury shares	Purchases of treasury shares	0		(34,357)		Purchases of treasury shares	(16,757)		(107,186)
Redemption of common shares for withholding taxes	Redemption of common shares for withholding taxes	(4,146)		(2,156)		Redemption of common shares for withholding taxes	(4,146)		(2,156)

Debt issuance costs	Debt issuance costs	(13,803)		0		Debt issuance costs	(35,996)		(22,588)
Borrowings under debt facilities	Borrowings under debt facilities	1,504,850		530,000		Borrowings under debt facilities	7,713,006		3,297,445
Payments under debt facilities and finance lease obligations	Payments under debt facilities and finance lease obligations	(979,199)		(425,073)		Payments under debt facilities and finance lease obligations	(5,981,155)		(3,514,140)
Dividends paid on preferred shares	Dividends paid on preferred shares	(10,513)		(9,395)		Dividends paid on preferred shares	(32,293)		(30,420)
Dividends paid on common shares	Dividends paid on common shares	(38,153)		(37,110)		Dividends paid on common shares	(114,484)		(108,421)

Other	Other	0		(410)		Other	(332)		(590)
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	459,036		166,774		Net cash provided by (used in) financing activities	1,697,331		(342,781)
Net increase (decrease) in cash, cash equivalents and restricted cash	Net increase (decrease) in cash, cash equivalents and restricted cash	$	234,340	$	351,610	Net increase (decrease) in cash, cash equivalents and restricted cash	$	57,373	$	167,771
Cash, cash equivalents and restricted cash, beginning of period	Cash, cash equivalents and restricted cash, beginning of period	151,996		168,972		Cash, cash equivalents and restricted cash, beginning of period	151,996		168,972
Cash, cash equivalents and restricted cash, end of period	Cash, cash equivalents and restricted cash, end of period	$	386,336	$	520,582	Cash, cash equivalents and restricted cash, end of period	$	209,369	$	336,743
Supplemental disclosures:	Supplemental disclosures:					Supplemental disclosures:
Interest paid	Interest paid	$	42,133	$	53,795	Interest paid	$	153,812	$	181,576
Income taxes paid (refunded)	Income taxes paid (refunded)	$	155	$	139	Income taxes paid (refunded)	$	4,639	$	440
Right-of-use asset for leased property	Right-of-use asset for leased property	$	0	$	0	Right-of-use asset for leased property	$	1,598	$	196
Supplemental non-cash investing activities:	Supplemental non-cash investing activities:					Supplemental non-cash investing activities:
Equipment purchases payable	Equipment purchases payable	$	342,357	$	29,109	Equipment purchases payable	$	406,510	$	96,798

The accompanying Notes to the Unaudited Consolidated Financial Statements are an integral part of these statements.

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1—Description of the Business, Basis of Presentation and Accounting Policy Updates

Description of the Business

Triton International Limited ("Triton" or the "Company"), through its subsidiaries, leases intermodal transportation equipment, primarily maritime containers, and provides maritime container management services through a worldwide network of service subsidiaries, third-party depots and other facilities. The majority of the Company's business is derived from leasing its containers to shipping line customers through a variety of long-term and short-term contractual lease arrangements. The Company also sells containers from its equipment leasing fleet as well as containers specifically acquired for resale from third parties. The Company's registered office is located in Bermuda.

Basis of Presentation

The unaudited consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these financial statements do not include all information and footnotes required by GAAP for complete financial statements.

The interim consolidated balance sheet as of ~~March 31,~~September 30, 2021; the consolidated statements of operations, the consolidated statements of comprehensive income, and the consolidated statements of shareholders' equity for the three and nine months ended September 30, 2021 and 2020, and the consolidated statements of cash flows for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and 2020 are unaudited. The consolidated balance sheet as of December 31, 2020, included herein, was derived from the audited financial statements as of that date, but does not include all disclosures required by GAAP. The unaudited interim financial statements have been prepared on a basis consistent with the Company's annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary to state fairly the Company's financial position, results of operations, comprehensive income, shareholders' equity, and cash flows for the periods presented. The financial data and the other financial information disclosed in the notes to the financial statements related to these periods are also unaudited. The consolidated results of operations for the three and nine months ended ~~March 31,~~September 30, 2021 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2021 or for any other future annual or interim period.

These financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2020 included in the Company's Annual Report on Form 10-K which was filed with the SEC on February 16, 2021. The unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Certain changes in presentation have been made to conform the prior period presentation to current period reporting.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities in the financial statements. Such estimates include, but are not limited to, the Company's estimates in connection with leasing equipment, including residual values and depreciable lives, values of assets held for sale and other long lived assets, provision for income tax, allowance for doubtful accounts, share-based compensation, goodwill and intangible assets. Actual results could differ from those estimates.

Concentration of Credit Risk

The Company's equipment leases and trade receivables subject it to potential credit risk. The Company extends credit to its customers based upon an evaluation of each customer's financial condition and credit history. Evaluations of the financial condition and associated credit risk of customers are performed on an ongoing basis. The Company's three largest customers accounted for ~~21%~~20%, ~~14%~~15%, and 10%, respectively, of the Company's lease billings during the ~~three~~nine months ended ~~March 31,~~September 30, 2021.

910

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fair Value Measurements

For information on the fair value of equipment held for sale, debt, and the fair value of derivative instruments, please refer to Note 2 - "Equipment Held for Sale", Note 7 - "Debt" and Note 8 - "Derivative Instruments", respectively.

New Accounting Pronouncements

Recently Issued Accounting Standards Update

Lessors - Certain Leases with Variable Lease Payments

In July 2021, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") 2021-05, Lease (Topic 842): Lessors - Certain Leases with Variable Lease Payments. This guidance amends the lease classification accounting for lessors for certain leases with variable lease payments that do not depend on a reference index or a rate and would have resulted in the recognition of a loss at lease commencement if classified as a sales-type or direct financing lease. Under the new guidance, these leases will be classified as an operating lease. The amendments are effective for fiscal years beginning after December 15, 2021, with early adoption permitted. The Company will adopt this standard on January 1, 2022. Based on the nature of our finance leases, the Company does not expect the adoption of this ASU to have a significant impact on the consolidated financial statements.

Note 2—Equipment Held for Sale

The Company's equipment held for sale is recorded at the lower of fair value less cost to sell, or carrying value at the time identified for sale. Fair value is measured using Level 2 inputs and is based predominantly on recent sales prices. The following table summarizes the portion of equipment held for sale in the consolidated balance sheet that have been impaired and written down to fair value less cost to sell (in thousands):

March 31, 2021 December 31, 2020
Equipment held for sale $ 1,868 $ 4,001


	September 30, 2021		December 31, 2020
Equipment held for sale	$	601	$	4,001

An impairment charge is recorded when the carrying value of the asset exceeds its fair value less cost to sell. The following table summarizes the Company's net impairment charges recorded in Net gain on sale of leasing equipment on the consolidated statements of operations (in thousands):


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020			2021		2020		2021		2020
Impairment (loss) reversal on equipment held for sale	Impairment (loss) reversal on equipment held for sale	$	5	$	(1,490)	Impairment (loss) reversal on equipment held for sale	$	76	$	(766)	$	39	$	(3,309)
Gain (loss) on sale of equipment, net of selling costs	Gain (loss) on sale of equipment, net of selling costs	21,962		5,567		Gain (loss) on sale of equipment, net of selling costs	25,530		11,503		78,925		22,660
Net gain on sale of leasing equipment	Net gain on sale of leasing equipment	$	21,967	$	4,077	Net gain on sale of leasing equipment	$	25,606	$	10,737	$	78,964	$	19,351

Note 3—Intangible Assets

Intangible assets consist of lease intangibles for leases acquired with lease rates above market in a business combination. The following table summarizes the amortization of intangible assets as of ~~March 31,~~September 30, 2021 (in thousands):


Years ending December 31,	Years ending December 31,	Total Intangible Assets		Years ending December 31,	Total Intangible Assets
2021	2021	$	11,985	2021	$	3,709
2022	2022	$	10,497	2022	$	10,497
2023	2023	$	4,657	2023	$	4,657
2024	2024	$	1,963	2024	$	1,963

Total	Total	$	29,102	Total	$	20,826

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Amortization expense related to intangible assets was ~~$4.6~~$3.9 million and ~~$6.2~~$12.8 million for the three and nine months ended ~~March 31,~~September 30, 2021, respectively, and $5.4 million and $17.3 million for the three and nine months ended September 30, 2020, respectively.

Note 4—Share-Based Compensation

The Company recognizes share-based compensation expense for share-based payment transactions based on the grant date fair value. The expense is recognized over the employee's requisite service period, which is generally the vesting period of the equity award. The Company recognized share-based compensation expense in administrative expenses of ~~$1.7~~$2.2 million and ~~$1.6~~$7.3 million for the three and nine months ended ~~March 31,~~September 30, 2021, respectively, and $2.1 million and $7.9 million for the three and nine months ended September 30, 2020, respectively. Share-based compensation expense includes charges for performance-based shares and units that are deemed probable to vest.

As of ~~March 31,~~September 30, 2021, the total unrecognized compensation expense related to non-vested restricted share awards and units was approximately ~~$15.6~~$11.3 million, which is expected to be recognized on a straight-line basis through 2024.

~~TRITON INTERNATIONAL LIMITED~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

During the ~~three~~nine months ended ~~March 31,~~September 30, 2021, the Company issued 207,077 restricted shares, and canceled 85,466 vested shares to settle payroll taxes on behalf of employees. Additional shares may be issued based upon the satisfaction of certain performance criteria. The Company also issued 23,025 shares to non-employee directors at fair value that vested immediately.

Note 5—Other Equity Matters

Share Repurchase Program

The Company's Board of Directors authorized repurchases of shares up to a specified dollar amount as part of its repurchase program. Purchases under the repurchase program may be made in the open market or privately negotiated transactions, and may include transactions pursuant to a repurchase plan administered in accordance with Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended. Purchases may be made from time to time at the Company's discretion and the timing and amount of any share repurchases will be determined based on share price, market conditions, legal requirements, and other factors. The repurchase program does not obligate the Company to acquire any particular amount of common shares, and the Company may suspend or discontinue the repurchase program at any time.

~~The Company did not repurchase any shares during~~During the ~~three~~nine months ended ~~March 31,~~September 30, 2021, ~~and currently has $102.1 million available under~~ the ~~share repurchase program.~~ Company repurchased a total of 378,765 common shares at an average price per-share of $51.19 for a total of $19.4 million.

Preferred Shares

The following table summarizes the Company's preferred share issuances (the "Series"):


Preferred Share Offering	Preferred Share Offering	Issuance	Liquidation Preference (in thousands)		# of Shares(1)	Preferred Share Offering	Issuance	Liquidation Preference (in thousands)		# of Shares(1)
Series A 8.50% Cumulative Redeemable Perpetual Preference Shares ("Series A")	Series A 8.50% Cumulative Redeemable Perpetual Preference Shares ("Series A")	March 2019	$	86,250	3,450,000	Series A 8.50% Cumulative Redeemable Perpetual Preference Shares ("Series A")	March 2019	$	86,250	3,450,000
Series B 8.00% Cumulative Redeemable Perpetual Preference Shares ("Series B")	Series B 8.00% Cumulative Redeemable Perpetual Preference Shares ("Series B")	June 2019	143,750		5,750,000	Series B 8.00% Cumulative Redeemable Perpetual Preference Shares ("Series B")	June 2019	143,750		5,750,000
Series C 7.375% Cumulative Redeemable Perpetual Preference Shares ("Series C")	Series C 7.375% Cumulative Redeemable Perpetual Preference Shares ("Series C")	November 2019	175,000		7,000,000	Series C 7.375% Cumulative Redeemable Perpetual Preference Shares ("Series C")	November 2019	175,000		7,000,000
Series D 6.875% Cumulative Redeemable Perpetual Preference Shares ("Series D")	Series D 6.875% Cumulative Redeemable Perpetual Preference Shares ("Series D")	January 2020	150,000		6,000,000	Series D 6.875% Cumulative Redeemable Perpetual Preference Shares ("Series D")	January 2020	150,000		6,000,000
Series E 5.75% Cumulative Redeemable Perpetual Preference Shares ("Series E")						Series E 5.75% Cumulative Redeemable Perpetual Preference Shares ("Series E")	August 2021	175,000		7,000,000
								$	730,000	29,200,000
			$	555,000	22,200,000

(1) Represents number of shares authorized, issued, and outstanding.

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In August 2021, the Company completed a public offering of the Series E shares and received $169.5 million in aggregate

net proceeds after deducting underwriting discounts of $5.5 million. The net proceeds will be used for general corporate purposes, including the purchase of containers, the repurchase of outstanding common shares, the payment of dividends, and the repayment or repurchase of outstanding indebtedness.

Each Series of preferred shares may be redeemed at the Company's option, at any time after approximately five years from original issuance, in whole or in part at a redemption price, ~~which is equal to the issue price, of $25.00 per share~~ plus an amount equal to all accumulated and unpaid dividends, whether or not declared. The Company may also redeem each Series of preferred shares prior to the lapse of the five year period upon the occurrence of certain events as described in each agreement, such as transactions that either transfer ownership of substantially all assets to a single entity or establish a majority voting interest by a single entity, and cause a downgrade or withdrawal of rating by the rating agency within 60 days of the event. If the Company does not elect to redeem each Series upon the occurrence of the preceding events, holders of preferred shares may have the right to convert their preferred shares into common shares. Separately, for Series E, the Company may also redeem preferred shares upon a change to the methodology used by a rating agency which causes a shortened period of the assigned rating or reduces the amount of equity credit assigned.

Holders of preferred shares generally have no voting rights. If the Company fails to pay dividends for six or more quarterly periods (whether or not consecutive), holders will be entitled to elect two additional directors to the Board of Directors and the size of the Board of Directors will be increased to accommodate such election. Such right to elect two directors will continue until such time as there are no accumulated and unpaid dividends in arrears.

~~TRITON INTERNATIONAL LIMITED~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

Dividends

Dividends on shares of each Series are cumulative from the date of original issue and will be payable quarterly in arrears on the 15th day of March, June, September and December of each year, when, as and if declared by the Company's Board of Directors. Dividends will be payable equal to the stated rate per annum of the $25.00 liquidation preference per share. The Series rank senior to the Company's common shares with respect to dividend rights and rights upon the Company's liquidation, dissolution or winding up, whether voluntary or involuntary.

The Company paid the following quarterly dividends during the three and nine months ended ~~March 31,~~September 30, 2021 and 2020 on its issued and outstanding Series (in millions except for the per-share amounts):

Series A Series B Series C Series D
Record Date Payment Date Aggregate Payment
Per Share
Payment(1)
Aggregate Payment Per Share
Payment Aggregate Payment
Per Share
Payment(1)
Aggregate Payment
Per Share
Payment(1)
March 8, 2021 March 15, 2021 $1.8 $0.53 $2.9 $0.50 $3.2 $0.46 $2.6 $0.43
March 9, 2020 March 16, 2020 $1.8 $0.53 $2.9 $0.50 $3.2 $0.46 $1.5 $0.24


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Series	Per Share Payment	Aggregate Payment	Per Share Payment	Aggregate Payment	Per Share Payment	Aggregate Payment	Per Share Payment	Aggregate Payment
A(1)	$0.53	$1.8	$0.53	$1.8	$1.59	$5.4	$1.59	$5.4
B	$0.50	$2.9	$0.50	$2.9	$1.50	$8.7	$1.50	$8.7
C(1)	$0.46	$3.2	$0.46	$3.2	$1.38	$9.6	$1.38	$9.6
D(1)	$0.43	$2.6	$0.43	$2.6	$1.29	$7.8	$1.10	$6.7
E(1)	$0.11	$0.8	$—	$—	$0.11	$0.8	$—	$—
Total		$11.3		$10.5		$32.3		$30.4

(1) ~~Rounded~~Per share payments rounded to the nearest whole cent.

As of ~~March 31,~~September 30, 2021, the Company had cumulative unpaid preferred dividends of ~~$1.8~~$2.2 million.

Common Share Dividends

The Company paid the following quarterly dividends during the three and nine months ended ~~March 31,~~September 30, 2021 and 2020 on its issued common ~~shares:~~shares (in millions except for the per-share amounts):

~~Record Date~~

~~Payment Date~~

~~Aggregate Payment~~

~~Per Share Payment~~

~~March 12, 2021~~

~~March 26, 2021~~

~~$38.2 Million~~

~~$0.57~~

~~March 13, 2020~~

~~March 27, 2020~~

~~$37.1 Million~~

~~$0.52~~


Three Months Ended September 30,				Nine Months Ended September 30,
2021		2020		2021		2020
Per Share Payment	Aggregate Payment	Per Share Payment	Aggregate Payment	Per Share Payment	Aggregate Payment	Per Share Payment	Aggregate Payment
$0.57	$38.2	$0.52	$35.5	$1.71	$114.5	$1.56	$108.4

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Accumulated Other Comprehensive Income

The following table summarizes the components of accumulated other comprehensive income (loss), net of tax, for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and 2020 (in thousands):


		Cash Flow Hedges		Foreign Currency Translation		Accumulated Other Comprehensive (Loss) Income			Cash Flow Hedges		Foreign Currency Translation		Accumulated Other Comprehensive (Loss) Income
Balance as of December 31, 2020	Balance as of December 31, 2020	$	(128,526)	$	(4,509)	$	(133,035)	Balance as of December 31, 2020	$	(128,526)	$	(4,509)	$	(133,035)
Change in derivative instruments designated as cash flow hedges(1)	Change in derivative instruments designated as cash flow hedges(1)	62,850		0		62,850		Change in derivative instruments designated as cash flow hedges(1)	62,850		—		62,850
Reclassification of (gain) loss on derivative instruments designated as cash flow hedges(1)	Reclassification of (gain) loss on derivative instruments designated as cash flow hedges(1)	7,102		0		7,102		Reclassification of (gain) loss on derivative instruments designated as cash flow hedges(1)	7,102		—		7,102
Foreign currency translation adjustment	Foreign currency translation adjustment	0		21		21		Foreign currency translation adjustment	—		21		21
Balance as of March 31, 2021	Balance as of March 31, 2021	$	(58,574)	$	(4,488)	$	(63,062)	Balance as of March 31, 2021	$	(58,574)	$	(4,488)	$	(63,062)
Change in derivative instruments designated as cash flow hedges(1)								Change in derivative instruments designated as cash flow hedges(1)	(23,730)		—		(23,730)
Reclassification of (gain) loss on derivative instruments designated as cash flow hedges(1)								Reclassification of (gain) loss on derivative instruments designated as cash flow hedges(1)	6,958		—		6,958
Foreign currency translation adjustment								Foreign currency translation adjustment	—		42		42
Balance as of June 30, 2021								Balance as of June 30, 2021	$	(75,346)	$	(4,446)	$	(79,792)
Change in derivative instruments designated as cash flow hedges(1)								Change in derivative instruments designated as cash flow hedges(1)	8,148		—		8,148
Reclassification of (gain) loss on derivative instruments designated as cash flow hedges(1)								Reclassification of (gain) loss on derivative instruments designated as cash flow hedges(1)	7,096		—		7,096
Foreign currency translation adjustment								Foreign currency translation adjustment	—		(87)		(87)
Balance as of September 30, 2021								Balance as of September 30, 2021	$	(60,102)	$	(4,533)	$	(64,635)

Cash Flow
Hedges Foreign
Currency
Translation Accumulated Other Comprehensive (Loss) Income
Balance as of December 31, 2019 $ (27,096) $ (4,537) $ (31,633)
Change in derivative instruments designated as cash flow hedges(1)
(120,140) 0 (120,140)
Reclassification of (gain) loss on derivative instruments designated as cash flow hedges(1)
1,411 0 1,411
Foreign currency translation adjustment 0 (262) (262)
Balance as of March 31, 2020 $ (145,825) $ (4,799) $ (150,624)


	Cash Flow Hedges		Foreign Currency Translation		Accumulated Other Comprehensive (Loss) Income
Balance as of December 31, 2019	$	(27,096)	$	(4,537)	$	(31,633)
Change in derivative instruments designated as cash flow hedges(1)	(120,140)		—		(120,140)
Reclassification of (gain) loss on derivative instruments designated as cash flow hedges(1)	1,411		—		1,411

Foreign currency translation adjustment	—		(262)		(262)
Balance as of March 31, 2020	$	(145,825)	$	(4,799)	$	(150,624)
Change in derivative instruments designated as cash flow hedges(1)	(16,112)		—		(16,112)
Reclassification of (gain) loss on derivative instruments designated as cash flow hedges(1)	5,854		—		5,854
Foreign currency translation adjustment	—		(115)		(115)
Balance as of June 30, 2020	$	(156,083)	$	(4,914)	$	(160,997)
Change in derivative instruments designated as cash flow hedges(1)	969		—		969
Reclassification of (gain) loss on derivative instruments designated as cash flow hedges(1)	7,351		—		7,351
Foreign currency translation adjustment	—		176		176
Balance as of September 30, 2020	$	(147,763)	$	(4,738)	$	(152,501)

(1) Refer to Note 8 - "Derivative Instruments" for reclassification impact on the Consolidated Statements of Operations

~~TRITON INTERNATIONAL LIMITED~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

Note 6—Leases

Lessee

The ~~Company~~Company's leases are primarily for multiple office facilities which are contracted under various cancelable and non-cancelable operating leases, most of which provide extension or early termination options. The Company's lease agreements do not contain any residual value guarantees or material restrictive covenants.

As of ~~March 31,~~September 30, 2021, the weighted average implicit rate was ~~3.84%~~3.39% and the weighted average remaining lease term was ~~2.6~~2.1 years.

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes the impact of the Company's leases in its financial statements (in thousands):


Balance Sheet	Balance Sheet	Financial statement caption	March 31, 2021		December 31, 2020		Balance Sheet	Financial statement caption	September 30, 2021		December 31, 2020
Right-of-use asset - operating	Right-of-use asset - operating	Other assets	$	4,750	$	5,062	Right-of-use asset - operating	Other assets	$	4,960	$	5,062
Lease liability - operating	Lease liability - operating	Accounts payable and other accrued expenses	$	5,697	$	6,088	Lease liability - operating	Accounts payable and other accrued expenses	$	5,739	$	6,088


			Three Months Ended March 31,						Three Months Ended September 30,				Nine Months Ended September 30,
Income Statement	Income Statement	Financial statement caption	2021		2020		Income Statement	Financial statement caption	2021		2020		2021		2020
Operating lease cost(1)	Operating lease cost(1)	Administrative expenses	$	722	$	759	Operating lease cost(1)	Administrative expenses	$	829	$	754	$	2,408	$	2,260

(1) Includes short-term leases that are immaterial.

Cash paid for amounts of lease liabilities included in operating cash flows was ~~$0.7 million and $0.8~~$2.4 million for both the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and ~~March 31, 2020, respectively.~~September 30, 2020.

Lessor

The following table summarizes the components of the net investment in finance leases (in thousands):


		March 31, 2021		December 31, 2020			September 30, 2021		December 31, 2020
Future minimum lease payment receivable(1)	Future minimum lease payment receivable(1)	$	338,471	$	355,755	Future minimum lease payment receivable(1)	$	1,380,331	$	355,755
Estimated residual receivable(2)	Estimated residual receivable(2)	53,789		53,892		Estimated residual receivable(2)	146,428		53,892

Gross finance lease receivables(3)	Gross finance lease receivables(3)	392,260		409,647		Gross finance lease receivables(3)	1,526,759		409,647
Unearned income(4)	Unearned income(4)	(120,913)		(127,516)		Unearned income(4)	(510,461)		(127,516)
Net investment in finance leases(5)	Net investment in finance leases(5)	$	271,347	$	282,131	Net investment in finance leases(5)	$	1,016,298	$	282,131

(1) There were no executory costs included in gross finance lease receivables as of ~~March 31,~~September 30, 2021 and December 31, 2020.

(2) The Company's finance leases generally include a purchase option at nominal amounts that is reasonably certain to be exercised, and therefore, the Company has immaterial residual value risk for assets.

(3) The gross finance lease receivable is reduced as billed to customers and reclassified to accounts receivable until paid by customers.

(4) There were no unamortized initial direct costs as of ~~March 31,~~September 30, 2021 and December 31, 2020.

(5) One major customer represented ~~77%~~89% and 75% of the Company's finance lease portfolio as of ~~March 31,~~September 30, 2021 and December 31, 2020, respectively. No other customer represented more than 10% of the Company's finance lease portfolio in each of those periods.

The Company’s finance lease portfolio lessees are primarily comprised of the largest international shipping lines. In its estimate of expected credit losses, the Company evaluates the overall credit quality of its finance lease portfolio. The Company considers an account past due when a payment has not been received in accordance with the terms of the related lease agreement and maintains allowances, if necessary, for doubtful accounts. These allowances are based on, but not limited to, historical experience which includes stronger and weaker economic cycles, each lessee's payment history, management's current assessment of each lessee's financial condition, consideration of current economic conditions and reasonable market forecasts. As of ~~March 31,~~September 30, 2021, the Company does not have an allowance on its gross finance lease receivables and does not have any material past due balances.

1315

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 7—Debt

The table below summarizes the Company's key terms and carrying value of debt (in thousands):


		Contractual Weighted Avg Interest Rate(1)		Maturity Range(1)				March 31, 2021				December 31, 2020			Contractual Weighted Avg Interest Rate(1)				Maturity Range(1)		September 30, 2021		December 31, 2020
			From		To									From					To
Institutional notes	Institutional notes		4.59%		Jun 2021		Jun 2029			$	1,611,371					$	1,642,314	Institutional notes	—%	—	—		$	—	$	1,642,314
Asset-backed securitization term notes	Asset-backed securitization term notes	1.98%		Aug 2023		Feb 2031		4,076,059				2,920,807		Asset-backed securitization term notes	1.98%				August 2023	February 2031	3,893,421		2,920,807
Term loan facility		1.61%		Nov 2023		Nov 2023		820,000				840,000
Corporate notes														Corporate notes	1.82%				August 2023	June 2031	2,300,000		—
Term loan facilities														Term loan facilities	1.58%				July 2024	May 2026	1,023,600		840,000
Asset-backed securitization warehouse	Asset-backed securitization warehouse	1.96%		Nov 2027		Nov 2027		20,000				264,000		Asset-backed securitization warehouse	1.94%				November 2027	November 2027	320,000		264,000
Revolving credit facilities	Revolving credit facilities	1.76%		Sep 2023		Jul 2024		426,400				760,500		Revolving credit facilities	1.62%				May 2024	July 2026	755,000		760,500
Finance lease obligations	Finance lease obligations	4.93%		Feb 2024		Feb 2024		16,746				17,304		Finance lease obligations	4.93%				February 2022	February 2022	15,619		17,304
Total debt outstanding	Total debt outstanding							6,970,576				6,444,925		Total debt outstanding							8,307,640		6,444,925
Unamortized debt costs	Unamortized debt costs							(53,446)				(42,747)		Unamortized debt costs							(62,630)		(42,747)
Unamortized debt premiums & discounts	Unamortized debt premiums & discounts							(1,941)				(599)		Unamortized debt premiums & discounts							(3,738)		(599)
Unamortized fair value debt adjustment	Unamortized fair value debt adjustment							1,508				1,691		Unamortized fair value debt adjustment							(32)		1,691
Debt, net of unamortized costs	Debt, net of unamortized costs							$	6,916,697			$	6,403,270	Debt, net of unamortized costs							$	8,241,240	$	6,403,270

(1) Data as of ~~March 31,~~September 30, 2021.

The fair value of total debt outstanding was ~~$7,034.8~~$8,311.1 million and $6,536.5 million as of ~~March 31,~~September 30, 2021 and December 31, 2020, respectively, and was measured using Level 2 inputs.

As of ~~March 31,~~September 30, 2021, the maximum borrowing levels for the Asset-backed Securitization ("ABS") warehouse and the revolving credit facilities are $1,125.0 million and ~~$1,560.0~~$1,275.0 million, respectively. These facilities are governed by borrowing bases that limit borrowing capacity to an established percentage of relevant assets. As of ~~March 31,~~September 30, 2021, the availability under these credit facilities without adding additional container assets to the borrowing base was approximately ~~$828.8~~$876.8 million.

The Company is subject to certain financial covenants under its debt agreements. The agreements remain the obligations of the respective subsidiaries, and all related debt covenants are calculated at the subsidiary level. As of ~~March 31,~~September 30, 2021 and December 31, 2020, the Company was in compliance with all financial covenants in accordance with the terms of its debt agreements.

The Company hedges the risks associated with fluctuations in interest rates on a portion of its floating-rate debt by entering into interest rate swap agreements that convert a portion of its floating-rate debt to a fixed rate basis, thus reducing the impact of interest rate changes on future interest expense. The following table summarizes the Company's outstanding fixed-rate and floating-rate debt as of ~~March 31,~~September 30, 2021 (in thousands):

Balance Outstanding Contractual Weighted Avg Interest Rate Maturity Range Weighted Avg Remaining Term
From To
Excluding impact of derivative instruments:
Fixed-rate debt $5,057,512 2.86% Jun 2021 Feb 2031 4.4 years
Floating-rate debt $1,913,064 1.67% Aug 2023 Nov 2027 2.6 years
Including impact of derivative instruments:
Fixed-rate debt $5,057,512 2.86%
Hedged floating-rate debt $1,697,600 3.57%
Total fixed and hedged debt 6,755,112 3.04%
Unhedged floating-rate debt 215,464 1.67%
Total $6,970,576 3.00%


	Balance Outstanding	Contractual Weighted Avg Interest Rate	Maturity Range		Weighted Avg Remaining Term
			From	To
Excluding impact of derivative instruments:
Fixed-rate debt	$5,591,500	1.96%	Feb 2022	Jun 2031	5.0 years
Floating-rate debt	$2,716,141	1.65%	Aug 2023	Nov 2027	3.2 years

Including impact of derivative instruments:
Fixed-rate debt	$5,591,500	1.96%
Hedged floating-rate debt	$1,654,103	3.58%
Total fixed and hedged debt	$7,245,603	2.33%
Unhedged floating-rate debt	$1,062,037	1.65%
Total	$8,307,640	2.24%

1416

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company issued the following corporate notes during the nine months ended September 30, 2021:

Date

Total Offering

Contractual Weighted Avg Interest Rate

Maturity

April 15, 2021

$600.0 Million

2.05%

Apr 2026

June 7, 2021

$500.0 Million

1.15%

Jun 2024

June 7, 2021

$600.0 Million

3.15%

Jun 2031

August 6, 2021

$600.0 Million

0.80%

Aug 2023

The Company issued the following ABS fixed rate series during the ~~three~~nine months ended ~~March 31,~~September 30, 2021:

Date

Total Offering

Contractual Weighted Avg Interest Rate

Expected Maturity

February 3, 2021

$502.9 Million

1.69%

Feb 2031

March 17, 2021

$725.0 Million

1.89%

Dec 2030

On May 27, 2021, the Company extinguished a term loan and paid the outstanding balance of $820.0 million. As a result, the Company wrote off $1.8 million of debt related costs. Concurrently, the Company entered into a delayed draw term loan facility with a maximum capacity of $1,200.0 million at an interest rate of 1-month LIBOR plus 1.375% and a maturity date of May 27, 2026.

On June 28, 2021, the Company redeemed approximately $821.0 million of its outstanding institutional notes. As a result, the Company paid a make-whole premium of $84.8 million and wrote off $2.5 million of debt related costs. The cash paid for the make-whole premium is classified under financing cash flows as payments under debt facilities and finance lease obligations.

On August 30, 2021, the Company redeemed the remaining $648.9 million of its outstanding institutional notes. As a result, the Company paid a make-whole premium of $43.1 million and recognized a gain of $0.6 million from the write-off of unamortized debt costs and fair value adjustments. The cash paid for the make-whole premium is classified under financing cash flows as payments under debt facilities and finance lease obligations.

Institutional Notes

~~In accordance with the~~The Company's institutional note agreements, interest payments are due semi-annually. Institutional note maturities typically range from 7 - 12 years, with level principal payments due annually following an interest-only period. The institutional notes ~~are pre-payable (in whole or in part) at~~were fully redeemed during the Company's option at any time, subject to certain provisions in the note agreements, including the payment of a make-whole premium in respect to such prepayment. These facilities provide for an advance rate against the net book values of designated eligible equipment.nine months ended September 30, 2021.

Asset-Backed Securitization Term Notes

Under the Company's ABS facilities, indirect wholly-owned subsidiaries of the Company issue ABS notes. These subsidiaries are intended to be bankruptcy remote so that such assets are not available to creditors of the Company or its affiliates until and unless the related secured borrowings have been fully discharged. These transactions do not meet accounting requirements for sales treatment and are recorded as secured borrowings.

The Company’s borrowings under the ABS facilities amortize in monthly installments, typically in level payments over five or more years. These facilities provide for an advance rate against the net book values of designated eligible equipment. The net book values for purposes of calculating eligible equipment is determined according to the related debt agreement and may be different than those calculated per U.S. GAAP. The Company is required to maintain restricted cash balances on deposit in designated bank accounts equal to three to nine months of interest expense depending on the terms of each facility.

~~Term Loan Facility~~Corporate Notes

The Company’s corporate notes have maturities ranging from 2 - 10 years and interest payments due semi-annually. These corporate notes are initially secured by assets of the subsidiary. If the Company satisfies certain credit rating conditions outlined in the indenture, the corporate notes may become unsecured. The corporate notes are pre-payable (in whole or in part) at the Company's option at any time prior to the maturity date, subject to certain provisions in the corporate note agreements, including the payment of a make-whole premium in respect to such prepayment.

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Term Loan Facilities

The Company's term loan ~~facility~~facilities have a maximum borrowing capacity of $1,518.6 million which amortizes in monthly or quarterly installments. ~~This facility provides~~These facilities provide for an advance rate against the net book values of designated eligible equipment. One facility has a borrowing capacity of $1,200.0 million and provides a delayed draw feature which is available to the Company until November 24, 2021.

Asset-Backed Securitization Warehouse

Under the Company’s ~~asset-backed~~ABS warehouse facility, an indirect wholly-owned subsidiary of the Company issues ABS notes. This subsidiary is intended to be bankruptcy remote so that such assets are not available to creditors of the Company or its affiliates until and unless the related secured borrowings have been fully discharged. These transactions do not meet accounting requirements for sales treatment and are recorded as secured borrowings.

The Company's ~~asset-backed~~ABS warehouse facility has a borrowing capacity of $1,125.0 million that is available on a revolving basis until November 13, 2023, paying interest at LIBOR plus 1.85%, after which any borrowings will convert to term notes with a maturity date of November 15, 2027, paying interest at LIBOR plus 2.85%.

During the revolving period, the borrowing capacity under this facility is determined by applying an advance rate against the net book values of designated eligible equipment. The net book values for purposes of calculating eligible equipment are determined according to the related debt agreement and may be different than those calculated per U.S. GAAP. The Company is required to maintain restricted cash balances on deposit in designated bank accounts equal to three months of interest expense.

Revolving Credit Facilities

The revolving credit facilities have a maximum borrowing capacity of ~~$1,560.0~~$1,275.0 million. These facilities provide for an advance rate against the net book values of designated eligible equipment.

~~TRITON INTERNATIONAL LIMITED~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

Finance Lease Obligations

Certain containers are leased with a financial institution. The lease is accounted for as a finance lease, with interest expense recognized on a level yield basis over the period preceding early purchase options, which is five to seven years from the transaction date. The Company has provided notice to early terminate these finance lease obligations in the first quarter of 2022.

Note 8—Derivative Instruments

Interest Rate Swaps / Caps

The Company enters into derivative agreements to manage interest rate risk exposure. Interest rate swap agreements are utilized to limit the Company's exposure to interest rate risk by converting a portion of its floating-rate debt to a fixed rate basis, thus reducing the impact of interest rate changes on future interest expense. Interest rate swaps involve the receipt of floating-rate amounts in exchange for fixed-rate interest payments over the lives of the agreements without an exchange of the underlying principal amounts. The Company also utilizes interest rate cap agreements to manage the Company's exposure to rising interest rates by placing a ceiling on the rate that will be paid under certain floating-rate debt agreements.

The counterparties to these agreements are highly rated financial institutions. In the unlikely event that the counterparties fail to meet the terms of these agreements, the Company's exposure is limited to the interest rate differential on the notional amount at each monthly settlement period over the life of the agreements. The Company does not anticipate any non-performance by the counterparties.

Certain assets of the Company's subsidiaries are pledged as collateral for various credit facilities and the amounts payable under certain derivative agreements. Additionally, the Company may be required to post cash collateral on these agreements. Any amounts of cash collateral posted are included in Other assets on the consolidated balance sheet and are presented in operating activities of the consolidated statements of cash flows. As of September 30, 2021, the Company has cash collateral of $23.5 million related to interest rate swap contracts.

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In conjunction with the issuance of ABS notes, the Company canceled the following interest rate swaps that were in place to hedge the impact of interest rate changes on fixed-rate debt issuances:

Derivative Instrument

Date Canceled

Notional Amount

Funds Received

Interest rate swap

January 25, 2021

$150.0 million

$0.3 million

Interest rate swap

January 27, 2021

$150.0 million

$0.3 million

Interest rate swap

February 19, 2021

$150.0 million

$2.4 million

Interest rate swap

February 19, 2021

$150.0 million

$2.4 million

On April 15, 2021, the Company cancelled and simultaneously entered into an interest rate swap with a notional amount of $93.8 million. The Company paid $0.1 million for the cancellation of the existing contract. The new contract has a scheduled maturity date of April 20, 2024 and is indexed to 1 month LIBOR with a fixed leg interest rate of 0.25%.

In conjunction with the redemption of the institutional notes, the Company entered into and subsequently canceled the following interest rate swaps that were in place to hedge the impact of interest rate changes related to the make-whole premium payment during the notification period. The settlement of these swaps is presented in debt termination expense on the consolidated statement of operations and in payments under debt facilities and finance lease obligations within the financing section of the consolidated statement of cash flows.

Derivative Instrument

Date Canceled

Notional Amount

Funds Received (Paid)

Interest rate swap

June 25, 2021

$72.5 million

$— million

Interest rate swap

June 25, 2021

$195.9 million

$(0.9) million

During the nine months ended September 30, 2021, the Company entered into the following hedging instruments:

Derivative Instrument

Date Effective

Notional Amount

Fixed Leg (Pay) Interest Rate

Indexed To

Scheduled Maturity

Interest rate cap

May 24, 2021

$200.0 million

n/a

1 month LIBOR

November 13, 2023

Forward starting interest rate swap

October 29, 2021

$150.0 million

1.21%

1 month LIBOR

October 29, 2031(1)

Forward starting interest rate swap

October 29, 2021

$150.0 million

1.21%

1 month LIBOR

October 29, 2031(1)

(1) Mandatory termination date of July 29, 2022.

As of ~~March 31,~~September 30, 2021, the Company had interest rate swap and cap agreements in place to fix or limit the floating interest rates on a portion of the borrowings under its debt facilities summarized below:

Derivatives

Notional Amount

Weighted Average
Fixed Leg (Pay) Interest Rate

Cap Rate

Weighted Average
Remaining Term

Interest Rate Swap(1)

$~~1,697.6~~1,654.1 Million

2.02%

n/a

~~4.8~~4.4 years

Interest Rate Cap

$~~200.0~~400.0 Million

n/a

5.5%

~~2.7~~2.2 years

(1) The impact of forward starting swaps will increase total notional amount by ~~$350.0~~$650.0 million and increase the weighted average remaining term to ~~5.8~~7.2 years.

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Unrealized losses of ~~$28.6~~$31.3 million related to interest rate swap and cap agreements included in accumulated other comprehensive income (loss) are expected to be recognized in Interest and debt expense over the next twelve months.

The following table summarizes the impact of derivative instruments on the consolidated statements of operations and the consolidated statements of comprehensive income on a pretax basis (in thousands):

Three Months Ended
March 31,
Financial statement caption 2021 2020
Non-Designated Derivative Instruments
Realized (gains) losses Other (income) expense, net $ 0 $ (235)
Unrealized (gains) losses Other (income) expense, net $ 0 $ 297
Designated Derivative Instruments
Realized (gains) losses Interest and debt (income) expense $ 7,570 $ 1,259
Unrealized (gains) losses Comprehensive (income) loss $ (65,408) $ 129,614

~~TRITON INTERNATIONAL LIMITED~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~


		Three Months Ended September 30,				Nine Months Ended September 30,
	Financial statement caption	2021		2020		2021		2020
Non-Designated Derivative Instruments
Realized (gains) losses	Other (income) expense, net	$	—	$	—	$	—	$	(224)

Realized (gains) losses	Debt termination expense	$	—	$	—	$	883	$	—
Unrealized (gains) losses	Other (income) expense, net	$	—	$	—	$	—	$	286

Designated Derivative Instruments
Realized (gains) losses	Interest and debt (income) expense	$	7,583	$	7,834	$	22,592	$	15,282
Unrealized (gains) losses	Comprehensive (income) loss	$	(8,176)	$	(852)	$	(49,298)	$	146,386

Fair Value of Derivative Instruments

The Company has elected to use the income approach to value its interest rate swap and cap agreements, using Level 2 market expectations at the measurement date and standard valuation techniques to convert future values to a single discounted present value. The Level 2 inputs for the interest rate swap and cap valuations are inputs other than quoted prices that are observable for the asset or liability (specifically LIBOR and swap rates and credit risk at commonly quoted intervals). In response to the expected phase out of LIBOR, the Company continues to work with its counterparties to identify an alternative reference rate. Substantially all of the Company's debt agreements already include transition language, and the Company also adopted various practical expedients which will facilitate the transition.

The Company presents the fair value of derivative financial instruments on a gross basis as a separate line item on the consolidated balance sheet. As of ~~March 31,~~September 30, 2021 and December 31, 2020, the Company has no material non-designated instruments.

Any amounts of cash collateral posted related to derivative instruments are included in Other assets on the consolidated balance sheet and are presented in operating activities of the consolidated statements of cash flows. As of March 31, 2021, the Company has cash collateral of $28.4 million related to interest rate swap contracts.

Note 9—Segment and Geographic Information

Segment Information

The Company operates its business in one industry, intermodal transportation equipment, and has 2 operating segments which also represent its reporting segments:

•Equipment leasing - the Company owns, leases and ultimately disposes of containers and chassis from its lease fleet.

•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.

These operating segments were determined based on the chief operating decision maker's review and resource allocation of the products and services offered.

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following tables summarizes our segment information and the consolidated totals reported (in thousands):


		Three Months Ended March 31,													Three Months Ended September 30,
		2021						2020							2021						2020
		Equipment Leasing		Equipment Trading		Totals		Equipment Leasing		Equipment Trading		Totals			Equipment Leasing		Equipment Trading		Totals		Equipment Leasing		Equipment Trading		Totals
Total leasing revenues	Total leasing revenues	$	343,805	$	2,938	$	346,743	$	321,037	$	431	$	321,468	Total leasing revenues	$	396,100	$	4,091	$	400,191	$	325,279	$	2,478	$	327,757
Trading margin	Trading margin	0		8,141		8,141		0		1,933		1,933		Trading margin	—		9,163		9,163		—		3,869		3,869
Net gain on sale of leasing equipment	Net gain on sale of leasing equipment	21,967		0		21,967		4,077		0		4,077		Net gain on sale of leasing equipment	25,606		—		25,606		10,737		—		10,737
Depreciation and amortization expense	Depreciation and amortization expense	143,137		170		143,307		132,518		177		132,695		Depreciation and amortization expense	163,308		185		163,493		136,058		190		136,248
Interest and debt expense	Interest and debt expense	54,221		402		54,623		68,699		303		69,002		Interest and debt expense	54,238		490		54,728		62,138		638		62,776

Segment income (loss) before income taxes(1)	Segment income (loss) before income taxes(1)	142,189		9,386		151,575		81,517		1,393		82,910		Segment income (loss) before income taxes(1)	178,660		11,544		190,204		91,986		4,642		96,628
Purchases of leasing equipment and investments in finance leases(2)	Purchases of leasing equipment and investments in finance leases(2)	$	579,211	$	0	$	579,211	$	62,406	$	0	$	62,406	Purchases of leasing equipment and investments in finance leases(2)	$	1,074,100	$	—	$	1,074,100	$	134,637	$	—	$	134,637

															Nine Months Ended September 30,
															2021						2020
															Equipment Leasing		Equipment Trading		Totals		Equipment Leasing		Equipment Trading		Totals
Total leasing revenues														Total leasing revenues	$	1,106,894	$	9,824	$	1,116,718	$	965,936	$	4,686	$	970,622
Trading margin														Trading margin	—		28,030		28,030		—		7,822		7,822
Net gain on sale of leasing equipment														Net gain on sale of leasing equipment	78,964		—		78,964		19,351		—		19,351
Depreciation and amortization expense														Depreciation and amortization expense	460,326		530		460,856		401,692		543		402,235
Interest and debt expense														Interest and debt expense	168,053		1,302		169,355		197,320		1,332		198,652

Segment income (loss) before income taxes(1)														Segment income (loss) before income taxes(1)	478,173		32,418		510,591		248,346		8,468		256,814
Purchases of leasing equipment and investments in finance leases(2)														Purchases of leasing equipment and investments in finance leases(2)	$	2,791,943	$	—	$	2,791,943	$	354,425	$	—	$	354,425

(1) Segment income before income taxes excludes unrealized gains or losses on derivative instruments and debt termination expense. The Company recorded ~~an unrealized loss on derivative instruments~~$42.7 million and $132.5 million of ~~$0.3 million for the three months ended March 31, 2020, included in other (income)/expense, net, and an immaterial amount for~~ debt termination expense for the three and nine months ended ~~March 31, 2020.~~September 30, 2021, respectively, and $24.3 million and $24.4 million of debt termination expense for the three and nine months ended September 30, 2020, respectively.

(2) Represents cash disbursements for purchases of leasing equipment and investments in finance lease as reflected in the consolidated statements of cash flows for the periods indicated, but excludes cash flows associated with the purchase of equipment held for resale.

~~TRITON INTERNATIONAL LIMITED~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~


		March 31, 2021						December 31, 2020							September 30, 2021						December 31, 2020
		Equipment Leasing		Equipment Trading		Totals		Equipment Leasing		Equipment Trading		Totals			Equipment Leasing		Equipment Trading		Totals		Equipment Leasing		Equipment Trading		Totals
Equipment held for sale	Equipment held for sale	$	30,415	$	27,153	$	57,568	$	43,275	$	24,036	$	67,311	Equipment held for sale	$	10,202	$	40,245	$	50,447	$	43,275	$	24,036	$	67,311
Goodwill	Goodwill	220,864		15,801		236,665		220,864		15,801		236,665		Goodwill	220,864		15,801		236,665		220,864		15,801		236,665
Total assets	Total assets	$	10,390,561	$	100,416	$	10,490,977	$	9,612,251	$	100,282	$	9,712,533	Total assets	$	12,092,222	$	109,378	$	12,201,600	$	9,612,251	$	100,282	$	9,712,533

There are no intercompany revenues or expenses between segments. Certain administrative expenses have been allocated between segments based on an estimate of services provided to each segment. A portion of the Company's equipment purchased for resale in the equipment trading segment may be leased for a period of time and is reflected as leasing equipment as opposed to equipment held for sale and the cash flows associated with these transactions are reflected as purchases of leasing equipment and proceeds from the sale of equipment in investing activities in the Company's consolidated statements of cash flows.

Geographic Segment Information

The Company generates the majority of its leasing revenues from international containers which are deployed by its customers in a wide variety of global trade routes. The majority of the Company's leasing related revenue is denominated in U.S. dollars.

The following table summarizes the geographic allocation of equipment leasing revenues for the three and nine months ended ~~March 31,~~September 30, 2021 and 2020 based on customers' primary domicile (in thousands):

Three Months Ended March 31,
2021 2020
Total equipment leasing revenues:
Asia $ 123,894 $ 120,806
Europe 186,373 164,263
Americas 24,713 26,261
Bermuda 575 443
Other International 11,188 9,695
Total $ 346,743 $ 321,468

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Total equipment leasing revenues:
Asia	$	146,661	$	115,084	$	406,407	$	353,464
Europe	208,231		175,629		588,674		503,106
Americas	32,017		25,055		84,066		81,668
Bermuda	625		450		1,798		1,331
Other International	12,657		11,539		35,773		31,053
Total	$	400,191	$	327,757	$	1,116,718	$	970,622

Since the majority of the Company's containers are used internationally, where no one container is domiciled in one particular place for a prolonged period of time, all of the Company's long-lived assets are considered to be international.

The following table summarizes the geographic allocation of equipment trading revenues for the three and nine months ended ~~March 31,~~September 30, 2021 and 2020 based on the location of the sale (in thousands):


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020			2021		2020		2021		2020
Total equipment trading revenues:	Total equipment trading revenues:					Total equipment trading revenues:
Asia	Asia	$	7,459	$	1,532	Asia	$	22,918	$	7,546	$	44,687	$	12,232
Europe	Europe	7,122		4,952		Europe	6,247		6,329		18,409		16,542
Americas	Americas	8,541		6,595		Americas	13,588		8,316		32,963		21,755
Bermuda	Bermuda	0		0		Bermuda	—		—		—		—
Other International	Other International	2,823		2,301		Other International	1,665		3,903		7,487		7,848
Total	Total	$	25,945	$	15,380	Total	$	44,418	$	26,094	$	103,546	$	58,377

~~TRITON INTERNATIONAL LIMITED~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

Note 10—Commitments and Contingencies

Container Equipment Purchase Commitments

At ~~March 31,~~September 30, 2021, the Company had commitments to purchase equipment in the amount of ~~$1,398.6~~$463.9 million payable in 2021.

Contingencies

The Company is party to various pending or threatened legal or regulatory proceedings arising in the ordinary course of its business. Based upon information presently available, the Company does not expect any liabilities arising from these matters to have a material effect on the consolidated financial position, results of operations or cash flows of the Company.

Note 11—Income Taxes

The Company's effective tax rates were ~~7.7%~~8.7% and ~~6.7%~~21.9% for the three months ended ~~March 31,~~September 30, 2021 and 2020, respectively, and 10.1% and 12.1% for the nine months ended September 30, 2021 and 2020, respectively. The Company has computed the provision for income taxes based on the estimated annual effective tax rate and the application of discrete items, if any, in the applicable period. The ~~increase~~decrease in the effective tax ~~rate~~rates in 2021 compared to the same period ofin 2020 was primarily due to an $8.6 million tax expense related to a U.S. entity to foreign entity intra-company asset sale recorded in the ~~result~~third quarter of 2020 that did not reoccur in 2021. This decrease was partially offset by an increased proportion of the Company's income generated in higher tax ~~jurisdictions.~~jurisdictions as a result of the payment of make-whole premiums related to the termination of certain institutional notes in the second and third quarters of 2021.

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 12—Related Party Transactions

The Company holds a 50% interest in TriStar Container Services (Asia) Private Limited ("TriStar"), which is primarily engaged in the selling and leasing of container equipment in the domestic and short sea markets in India. The Company's equity investment in TriStar is included in Other assets on the consolidated balance sheet. The Company received payments on finance leases with TriStar of $0.5 million and $1.5 million for ~~both of~~ the three and nine months ended ~~March 31,~~September 30, 2021, respectively, and ~~March 31, 2020.~~$0.5 million and $1.4 million for the three and nine months ended September 30, 2020, respectively. The Company has a direct finance lease balance with TriStar of ~~$10.0~~$9.3 million and $10.3 million as of ~~March 31,~~September 30, 2021 and December 31, 2020, respectively.

Note 13—Subsequent Events

On ~~April 15,~~October 14, 2021, the Company ~~completed a $600.0 million senior secured~~announced the completion of its debt capital structure transition to primarily investment grade ~~bond offering.~~unsecured borrowings. In conjunction with this planned transition, the Company amended and restated its revolving credit facility and its $1.2 billion term loan facility to represent unsecured financings. In addition, the Company's $2.3 billion outstanding senior notes became unsecured under the terms of the relevant governing indentures. The ~~bond offering has a contractual interest rate of 2.05%~~Company also increased the borrowing limit on its revolving facility to $2.0 billion and ~~expected~~extended the maturity ~~date of April 15,~~to 2026.

On ~~April 27,~~October 20, 2021, the Company's Board of Directors approved and declared a quarterly cash dividend of ~~$0.57~~$0.65 per share on its issued and outstanding common shares, payable on ~~June 24,~~December 23, 2021 to holders of record at the close of business on ~~June 10,~~December 9, 2021.

On ~~April 27,~~October 20, 2021, the Company's Board of Directors also approved and declared a cash dividend on its issued and outstanding preferred shares, payable on ~~June~~December 15, 2021 to holders of record at the close of business on ~~June~~December 8, 2021 as follows:


Preferred Share Offering	Preferred Share Offering	Dividend Rate	Dividend Per Share	Preferred Share Offering	Dividend Rate	Dividend Per Share
Series A	Series A	8.500%	$0.5312500	Series A	8.500%	$0.5312500
Series B	Series B	8.000%	$0.5000000	Series B	8.000%	$0.5000000
Series C	Series C	7.375%	$0.4609375	Series C	7.375%	$0.4609375
Series D	Series D	6.875%	$0.4296875	Series D	6.875%	$0.4296875
Series E				Series E	5.750%	$0.3593750

On October 20, 2021, the Company's Board of Directors increased the share repurchase authorization to $200.0 million. The revised authorization may be used by the Company to repurchase common or preferred shares.

1923

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The statements in this discussion regarding industry outlook, our expectations regarding our future performance, liquidity and capital resources and other non-historical statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described under "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" as discussed in our Annual Report on Form 10-K filed for the fiscal year ended December 31, 2020 with the SEC on February 16, 2021 (the "Form 10-K"), in this Report on Form 10-Q and in any other Form 10-Q filed or to be filed by us, and in other documents we file with the SEC from time to time. Our actual results may differ materially from those contained in or implied by any forward-looking statements.

Our Company

Triton International Limited ("Triton", "we", "our" or the "Company") is the world's largest lessor of intermodal containers. Intermodal containers are large, standardized steel boxes used to transport freight by ship, rail or truck. Because of the handling efficiencies they provide, intermodal containers are the primary means by which many goods and materials are shipped internationally. We also lease chassis, which are used for the transportation of containers.

We operate our business in one industry, intermodal transportation equipment, and have two business segments, which also represent our reporting segments:

•Equipment leasing - we own, lease and ultimately dispose of containers and chassis from our lease fleet.

•Equipment trading - we purchase containers from shipping line customers, and other sellers of containers, and resell these containers to container retailers and users of containers for storage or one-way shipment.

Operations

Our consolidated operations include the acquisition, leasing, re-leasing and subsequent sale of multiple types of intermodal containers and chassis. As of ~~March 31,~~September 30, 2021, our total fleet consisted of ~~3.8~~4.2 million containers and chassis, representing ~~6.5~~7.1 million twenty-foot equivalent units ("TEU") or ~~7.3~~7.9 million cost equivalent units ("CEU"). We have an extensive global presence, offering leasing services through 1920 offices and 3 independent agencies located in 16 countries and ~~411~~407 third-party owned and operated depot facilities in 46 countries as of ~~March 31,~~September 30, 2021. Our primary customers include the world's largest container shipping lines. For the ~~three~~nine months ended ~~March 31,~~September 30, 2021, our twenty largest customers accounted for 86% of our lease billings, our five largest customers accounted for ~~60%~~59% of our lease billings, and our three largest customers accounted for ~~21%~~20%, ~~14%~~15%, and 10% of our lease billings.

The most important driver of profitability in our business is the extent to which leasing revenues, which are driven by our owned equipment fleet size, utilization and average lease rates, exceed our ownership and operating costs. Our profitability is also driven by the gains or losses we realize on the sale of used containers in the ordinary course of our business.

We lease five types of equipment: (1) dry containers, which are used for general cargo such as manufactured component parts, consumer staples, electronics and apparel, (2) refrigerated containers, which are used for perishable items such as fresh and frozen foods, (3) special containers, which are used for heavy and over-sized cargo such as marble slabs, building products and machinery, (4) tank containers, which are used to transport bulk liquid products such as chemicals, and (5) chassis, which are used for the transportation of containers on land. Our in-house equipment sales group manages the sale process for our used containers and chassis from our equipment leasing fleet and buys and sells used and new containers and chassis acquired from third parties.

2024

The following tables summarize our equipment fleet as of ~~March 31,~~September 30, 2021, December 31, 2020 and ~~March 31,~~September 30, 2020 indicated in units, TEU and CEU. CEU and TEU are standard industry measures of fleet size and are used to measure the quantity of containers that make up our revenue earning assets:


		Equipment Fleet in Units			Equipment Fleet in TEU				Equipment Fleet in Units			Equipment Fleet in TEU
		March 31, 2021	December 31, 2020	March 31, 2020	March 31, 2021	December 31, 2020	March 31, 2020		September 30, 2021	December 31, 2020	September 30, 2020	September 30, 2021	December 31, 2020	September 30, 2020
Dry	Dry	3,417,293	3,295,908	3,239,306	5,711,032	5,466,421	5,324,756	Dry	3,748,654	3,295,908	3,220,631	6,351,083	5,466,421	5,306,071
Refrigerated	Refrigerated	232,550	227,519	225,026	450,087	439,956	434,263	Refrigerated	239,328	227,519	226,627	464,465	439,956	437,886
Special	Special	94,266	93,885	93,743	171,781	170,792	170,225	Special	92,458	93,885	93,639	168,951	170,792	170,471
Tank	Tank	11,339	11,312	12,469	11,339	11,312	12,469	Tank	11,591	11,312	11,153	11,591	11,312	11,153
Chassis	Chassis	24,078	24,781	24,319	43,858	45,188	44,828	Chassis	24,381	24,781	24,916	44,726	45,188	45,380
Equipment leasing fleet	Equipment leasing fleet	3,779,526	3,653,405	3,594,863	6,388,097	6,133,669	5,986,541	Equipment leasing fleet	4,116,412	3,653,405	3,576,966	7,040,816	6,133,669	5,970,961
Equipment trading fleet	Equipment trading fleet	60,242	64,243	17,549	93,514	98,991	26,185	Equipment trading fleet	55,299	64,243	72,444	86,598	98,991	111,369
Total	Total	3,839,768	3,717,648	3,612,412	6,481,611	6,232,660	6,012,726	Total	4,171,711	3,717,648	3,649,410	7,127,414	6,232,660	6,082,330


		Equipment Fleet in CEU (1)				Equipment Fleet in CEU (1)
		March 31, 2021	December 31, 2020	March 31, 2020		September 30, 2021	December 31, 2020	September 30, 2020
Operating leases	Operating leases	6,892,129	6,649,350	6,474,701	Operating leases	7,294,503	6,649,350	6,492,628
Finance leases	Finance leases	297,168	295,784	338,242	Finance leases	494,839	295,784	308,513
Equipment trading fleet	Equipment trading fleet	92,570	98,420	35,632	Equipment trading fleet	83,976	98,420	109,469
Total	Total	7,281,867	7,043,554	6,848,575	Total	7,873,318	7,043,554	6,910,610

(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 an estimate for the historical average 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 1.70, and a 40-foot high cube refrigerated container is 7.50. These factors may differ slightly from CEU ratios used by others in the industry.

The following table summarizes the percentage of our equipment fleet in terms of units and CEU as of ~~March 31,~~September 30, 2021:


Equipment Type	Equipment Type	Percentage of total fleet in units		Percentage of total fleet in CEU		Equipment Type	Percentage of total fleet in units		Percentage of total fleet in CEU
Dry	Dry	88.9	%	68.8	%	Dry	89.9	%	70.6	%
Refrigerated	Refrigerated	6.1		23.7		Refrigerated	5.7		22.5
Special	Special	2.5		3.3		Special	2.2		3.0
Tank	Tank	0.3		1.2		Tank	0.3		1.2
Chassis	Chassis	0.6		1.7		Chassis	0.6		1.6
Equipment leasing fleet	Equipment leasing fleet	98.4		98.7		Equipment leasing fleet	98.7		98.9
Equipment trading fleet	Equipment trading fleet	1.6		1.3		Equipment trading fleet	1.3		1.1
Total	Total	100.0	%	100.0	%	Total	100.0	%	100.0	%

We generally lease our equipment on a per diem basis to our customers under three types of leases:

•Long-term leases typically have initial contractual terms ranging from three to eight or more years and provide us with stable cash flow and low transaction costs by requiring customers to maintain specific units on-hire for the duration of the lease term. Some of our containers, primarily used containers, are placed on lifecycle leases which keep the containers on-hire until the end of their useful life.

•Finance leases are typically structured as full payout leases and provide for a predictable recurring revenue stream with the lowest cost to the customer as customers are generally required to retain the equipment for the duration of its useful life.

•Service leases command a premium per diem rate in exchange for providing customers with greater operational flexibility by allowing non-scheduled pick-up and drop-off of units during the lease term.

We also have expired long-term leases whose fixed terms have ended but for which the related units remain on-hire and for which we continue to receive rental payments pursuant to the terms of the initial contract. Some leases have contractual terms

that have features reflective of both long-term and service leases and we classify such leases as either long-term or service leases, depending upon which features we believe are predominant.

The following table summarizes our lease portfolio by lease type, based on CEU on-hire as of ~~March 31,~~September 30, 2021, December 31, 2020 and ~~March 31,~~September 30, 2020:


Lease Portfolio	Lease Portfolio	March 31, 2021		December 31, 2020		March 31, 2020		Lease Portfolio	September 30, 2021		December 31, 2020		September 30, 2020
Long-term leases	Long-term leases	74.7	%	73.8	%	71.1	%	Long-term leases	74.5	%	73.8	%	73.6	%
Finance leases	Finance leases	4.2		4.4		5.5		Finance leases	6.5		4.4		4.8
Service leases	Service leases	6.4		7.2		7.7		Service leases	5.4		7.2		7.2
Expired long-term leases (units on-hire)	Expired long-term leases (units on-hire)	14.7		14.6		15.7		Expired long-term leases (units on-hire)	13.6		14.6		14.4
Total	Total	100.0	%	100.0	%	100.0	%	Total	100.0	%	100.0	%	100.0	%

As of ~~March 31,~~September 30, 2021, December 31, 2020 and ~~March 31,~~September 30, 2020, our long-term and finance leases combined had an average remaining contractual term of approximately 5159 months, 49 months, and 48 months, respectively, assuming no leases are renewed.

Market Overview and COVID-19

The COVID-19 pandemic continues to have a meaningful impact on global trade and our business. The initial outbreak of COVID-19 and ~~the initial global~~resulting social and economic ~~and social~~ lockdowns ~~caused~~led to a sharp decrease in global trade ~~volume and pressured our operating and financial performance~~ in the first half of 2020.During this time, we faced weak demand for containers and pressure on our utilization and profitability.However, our lease portfolio provided strong protections and our utilization and profitability decreased gradually.

Trade volumes rebounded rapidly in the ~~easing of the lockdowns during the second~~third quarter of 2020 as lockdowns eased and ~~a shift in consumer~~consumers shifted spending from services and experiences to goods, ~~drove a sharp rebound in global containerized~~and trade volumes have remained strong throughout 2021.Demand for containers has been further boosted by extensive logistical disruptions such as reduced port productivity and ~~container~~a shortage of trucking capacity that have slowed turn times for containers.The strong and sustained demand ~~beginning~~for containers has led to a shortage of containers, high prices for new and used containers, and high market leasing rates.In addition, we have been able to drive our utilization close to maximum levels and have invested aggressively in new containers to support our customers.Our profitability has increased rapidly from the second half of ~~2020. The increase~~2020 through the third quarter of 2021.

We have recently seen some moderation in ~~trade volumes coupled with logistical challenges that have slowed~~ the ~~global movement~~pace of ~~containers~~new leasing transactions as we reach the end of the typical summer peak shipping season. In addition, new container production has ~~resulted~~been at record levels in ~~a worldwide~~2021, which has helped ease the shortage of ~~containers that has continued into~~containers. As a result, we may see more balance between container supply and demand in the ~~first quarter of this year. This shortage has driven our fleet~~coming months. However, the timing for a return to ~~near full utilization, and led to significant increases in new container prices,~~more normal market leasing rates and used container disposal prices. We have also significantly increased our procurement of new containers. All of these factors have contributed to a sharp increase in our profitability over the prior year period.conditions is uncertain.

Operating Performance

Our operating and financial performance in the ~~first~~third quarter of 2021 ~~benefited~~was strong as we continued to benefit from ~~the~~ very favorable market conditions ~~that are being~~ driven by strong global trade ~~activity coupled with a~~volumes, logistical disruptions that have slowed container turn times, and limited availability of containers.

Fleet size. As of ~~March 31,~~September 30, 2021, our revenue earning assets had a net book value of ~~$9.5~~$11.4 billion, an increase of ~~8.4%~~30.2% from ~~March 31,~~September 30, 2020 and ~~6.1%~~26.6% from December 31, 2020. This increase was primarily due to increased purchases of new containers ~~that began in the second half of 2020 and accelerated into 2021~~ in response to athe surge in global containerized trade volumes and ~~lease demand. Through April 23,~~strong leasing demand, as well as higher new container prices. As of October 22, 2021, we have ~~purchased approximately $2.6~~placed orders for over $3.4 billion of ~~new~~ containers for delivery in ~~2021, of which $702.6 million were accepted in the first quarter. The vast majority~~2021. Approximately $3.0 billion of these containers ~~have already been committed to leases. We expect our existing orders will translate to asset growth~~were delivered through the end of ~~close to 20% in 2021.~~the third quarter.

Utilization. Our average utilization was ~~99.1%~~99.6% for the quarter ended ~~March 31,~~September 30, 2021, an increase of ~~3.7%~~3.5% compared to the ~~first~~third quarter of 2020 and an increase of ~~1.0%~~0.2% from the ~~fourth~~second quarter of ~~2020.~~2021. Our utilization ~~has~~ increased ~~steadily since~~rapidly in the ~~third quarter~~second half of 2020 due to a very high volume of container pick-ups and limited drop-off activity. AsIn 2021, utilization has continued to increase, although at a slower pace given the limited amount of ~~April 23, 2021, our~~available inventory. Our utilization ~~was 99.4%.~~ended the third quarter at 99.6% and currently remains at this level.

The following table summarizes our equipment fleet utilization for the periods indicated below. Utilization is computed by dividing our total units on lease (in CEU) by the total units in our fleet (in CEU) excluding new units not yet leased and off-hire units designated for sale:


		Quarter Ended											Quarter Ended
		March 31, 2021		December 31, 2020		September 30, 2020		June 30, 2020		March 31, 2020			September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020
Average Utilization	Average Utilization	99.1	%	98.1	%	96.1	%	95.0	%	95.4	%	Average Utilization	99.6	%	99.4	%	99.1	%	98.1	%	96.1	%
Ending Utilization	Ending Utilization	99.3	%	98.9	%	97.4	%	94.8	%	95.3	%	Ending Utilization	99.6	%	99.5	%	99.3	%	98.9	%	97.4	%

Average lease rates. Average lease rates for our dry container product line increased by ~~1.0%~~8.6% in the ~~first~~third quarter of 2021 compared to the ~~first~~third quarter of 2020, and increased by ~~1.9%~~2.9% from the ~~fourth~~second quarter of ~~2020.~~2021. The increase in our average dry container lease rates was primarily driven by the ~~sharp increase~~addition of new containers with lease rates well above the average rates in ~~new~~our lease portfolio. New container prices and market lease rates have increased sharply due to the surge in the fourth quarter of 2020 and the first quarter of 2021. Container manufacturers are currently quoting over $3,500 for 20' dry containers and market lease rates for new dry containers are currently significantly above the average dry container ~~lease rates in our portfolio.~~demand. We expect our average dry container lease rates will continue to increase if container prices and market lease rates remain at their current levels.

Average lease rates for our refrigerated container product line decreased by ~~4.8%~~4.3% in the ~~first~~third quarter of 2021 compared to the ~~first~~third quarter of 2020. During the second quarter of 2021, we completed a large lease extension transaction for refrigerated containers that lowered the lease rates on expired leases in return for a lease extension covering the remaining useful life of the equipment. We have also been experiencing larger differences in lease rates for older refrigerated containers compared to rates on new equipment, and we expect our average lease rates for refrigerated containers will continue to gradually trend down.

The average lease rates for special containers ~~remained flat~~decreased by 1.1% in the ~~first~~third quarter of 2021 compared to the ~~first~~third quarter of ~~2020.~~2020 primarily due to a lease extension transaction for a large number of special containers.

Equipment disposals. Disposal gains ~~were very high in~~continued to be strong through the ~~first~~third quarter of 2021, reflecting ~~exceptionally~~very high used container selling prices. Our average used dry container sale price in the ~~first~~third quarter of 2021 increased ~~90.2%~~163.2% from the ~~first~~third quarter of 2020, and increased ~~52.1%~~19.1% from the ~~fourth~~second quarter of ~~2020. This increase in sale prices reflects the~~2021. The current worldwide shortage of containers and the large increase in new container ~~prices.~~prices has resulted in strong demand for used containers and sale prices have continued to push upwards. The benefit of the large increase in used dry container sale prices was partially offset in the third quarter of 2021 by a substantial decrease in disposal volumes. Container drop-off volumes have been very low due to the strong demand and ~~limited global availability~~our inventory of used containers ~~and our~~for sale has been limited. Our used dry container sales volumes decreased by ~~47.2%~~78.7% compared to the ~~first~~third quarter of 2020 and by ~~54.6%~~43.5% compared to the ~~fourth~~second quarter of ~~2020. We expect our disposal volumes and related gains will decrease due to limited container drop-offs.~~2021.

Liquidity and Capital Resources

Our principal sources of liquidity are cash flows provided by operating activities, proceeds from the sale of our leasing equipment, and borrowings under our credit facilities. Our principal uses of cash include capital expenditures, debt service, dividends, and share repurchases.

For the trailing twelve months ended ~~March 31,~~September 30, 2021, cash provided by operating activities, together with the proceeds from the sale of our leasing equipment, was ~~$1,305.9~~$1,485.7 million. In addition, as of ~~March 31,~~September 30, 2021, we had ~~$233.1~~$119.0 million of cash and cash equivalents and ~~$2,238.6~~$1,820.0 million of maximum borrowing capacity under our current credit facilities.

As of ~~March 31,~~September 30, 2021, our cash commitments in the next twelve months include ~~$771.4~~$474.6 million of scheduled principal payments on our existing debt facilities and ~~$1,741.0~~$870.4 million of committed but unpaid capital expenditures, primarily for the purchase of equipment.

We believe that cash provided by operating activities, existing cash, proceeds from the sale of our leasing equipment, and availability under our credit facilities will be sufficient to meet our obligations over the next twelve months.

~~Asset-backed Securitization ("ABS") Note Issuances~~

Debt Activity

During the ~~three months ended March 31,~~third quarter of 2021, the Company issued $600 million of senior secured corporate notes with a two year maturity at an interest rate of 0.80%. Additionally, the Company prepaid $648.9 million in aggregate principal of its remaining outstanding institutional notes with a weighted average interest rate of 4.9% and paid a related make-whole premium of $43.1 million.

During the second quarter of 2021, the Company issued $1.7 billion of senior secured corporate notes with a range of maturities of 3 - 10 years at a weighted average interest rate of 2.2%. The Company also prepaid $821.0 million in aggregate principal of its outstanding institutional notes with a weighted average interest rate of 4.1% and paid a related make-whole premium of $84.8 million.

During the first quarter of 2021, the Company issued $1.2 billion in ABS notes at a weighted average interest rate of 1.8%. ~~The proceeds~~Proceeds from these issuances were primarily used to facilitate additional capital expenditures and ~~investment in our fleet.~~prepay existing debt.

~~Share Repurchase Program~~

The Company did not repurchase any shares in the first quarter of 2021. Since the inception of the Company's share repurchase program in August 2018, we have purchased over 13.9 million shares, or 17.2% of our common shares.

~~Dividends~~Capital Activity

During the three and nine months ended ~~March 31,~~September 30, 2021 ~~and 2020,~~ the Company paid dividends on preferred shares of ~~$10.5~~$11.3 million and ~~$9.4~~$32.3 million, respectively, and paid dividends on common shares of $38.2 million and ~~$37.1~~$114.5 million, respectively.

23During the three and nine months ended September 30, 2021, the Company repurchased a total of 0.4 million common shares at an average price per share of $51.19 for a total cost of $19.4 million under its share repurchase program. On October 20, 2021, the Company announced an increase in its share repurchase program to $200.0 million. Since October 2018, the Company has purchased over 14.5 million shares, or 17.9% of our common shares.

During the three months ended September 30, 2021, the Company completed a public offering of 7,000,000 shares of 5.75% Series E preference shares, which generated $175.0 million of gross proceeds. The estimated costs associated with the offering, inclusive of underwriting discount and other offering expenses, were $6.2 million.

For additional information, ~~on the Share Repurchase Program and Dividends,~~ please refer to Note 5 - “Other Equity Matters” in the Notes to the Unaudited Consolidated Financial Statements.

Debt Agreements

At ~~March 31,~~September 30, 2021 our outstanding indebtedness was comprised of the following (amounts in millions):


		March 31, 2021		Maximum Borrowing Level			September 30, 2021		Maximum Borrowing Level
Institutional notes		$	1,611.4	$	1,611.4

Asset-backed securitization term notes	Asset-backed securitization term notes	4,076.1		4,076.1		Asset-backed securitization term notes	$	3,893.3	$	3,893.3
Term loan facility		820.0		820.0
Corporate notes						Corporate notes	2,300.0		2,300.0
Term loan facilities						Term loan facilities	1,023.6		1,518.6
Asset-backed securitization warehouse	Asset-backed securitization warehouse	20.0		1,125.0		Asset-backed securitization warehouse	320.0		1,125.0
Revolving credit facilities	Revolving credit facilities	426.4		1,560.0		Revolving credit facilities	755.0		1,275.0
Finance lease obligations	Finance lease obligations	16.7		16.7		Finance lease obligations	15.6		15.6
Total debt outstanding	Total debt outstanding	$	6,970.6	$	9,209.2	Total debt outstanding	$	8,307.5	$	10,127.5
Unamortized debt costs	Unamortized debt costs	(53.5)		—		Unamortized debt costs	(62.6)		—
Unamortized debt premiums & discounts	Unamortized debt premiums & discounts	(1.9)		—		Unamortized debt premiums & discounts	(3.7)		—
Unamortized fair value debt adjustment	Unamortized fair value debt adjustment	1.5		—		Unamortized fair value debt adjustment	—		—
Debt, net of unamortized costs	Debt, net of unamortized costs	$	6,916.7	$	9,209.2	Debt, net of unamortized costs	$	8,241.2	$	10,127.5

The maximum borrowing levels depicted in the table above may not reflect the actual availability under all of the credit facilities. Certain of these facilities are governed by borrowing bases that limit borrowing capacity to an established percentage of relevant assets. As of ~~March 31,~~September 30, 2021, the availability under these credit facilities without adding additional container assets to the borrowing base was approximately ~~$828.8~~$876.8 million.

As of ~~March 31,~~September 30, 2021, we had a combined ~~$6,755.1~~$7,245.6 million of total debt with fixed interest rates or floating interest rates that have been synthetically fixed through interest rate swap contracts, which accounts for ~~97%~~87% of total debt.

Pursuant to the terms of certain debt agreements, we are required to maintain certain amounts in restricted cash accounts. As of ~~March 31,~~September 30, 2021, we had restricted cash of ~~$153.3~~$90.4 million.

For additional information on our debt, please refer to Note 7 - "Debt" in the Notes to the Unaudited Consolidated Financial Statements.

Debt Covenants

We are subject to certain financial covenants related to leverage, interest coverage and net worth as defined in our debt agreements. The debt agreements are the obligations of our subsidiaries and all related debt covenants are calculated at the subsidiary level. Failure to comply with these covenants could result in a default under the related credit agreements and the acceleration of our outstanding debt if we were unable to obtain a waiver from the creditors. As of ~~March 31,~~September 30, 2021, we were in compliance with all such covenants. ~~The table below reflects the key debt covenants for~~

On October 14, 2021, the Company ~~that cover the majority of~~completed its debt capital structure transition to primarily investment grade unsecured borrowings and as a result, our ~~debt agreements:~~

~~TCIL~~

~~TAL~~

~~Financial Covenant~~

~~Covenant~~

~~Actual~~

~~Covenant~~

~~Actual~~

~~Fixed charge coverage ratio~~

~~Shall not be less than 1.25:1~~

~~2.99:1~~

~~Shall not be less than 1.10:1~~

~~2.41:1~~

~~Minimum net worth~~

~~Shall not be less than $855 million~~

~~$2,144.6 million~~

~~Shall not be less than $500 million~~

~~$987.8 million~~

~~Leverage ratio~~

~~Shall not exceed 4.0:1~~

~~2.19:1~~

~~Shall not exceed 4.75:1~~

~~1.68:1~~

financial covenants were modified.

Cash Flow

The following table sets forth certain cash flow information for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and 2020 (in thousands):


		Three Months Ended March 31,					Nine Months Ended September 30,
		2021		2020			2021		2020
Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities	$	300,988	$	197,960	Net cash provided by (used in) operating activities	$	986,919	$	682,341
Net cash provided by (used in) investing activities	Net cash provided by (used in) investing activities	$	(525,684)	$	(13,124)	Net cash provided by (used in) investing activities	$	(2,626,877)	$	(171,789)
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	$	459,036	$	166,774	Net cash provided by (used in) financing activities	$	1,697,331	$	(342,781)

Operating Activities

Net cash provided by operating activities increased by ~~$103.0~~$304.6 million to ~~$301.0~~$986.9 million in the ~~three~~nine months ended ~~March 31,~~September 30, 2021 compared to ~~$198.0~~$682.3 million in the same period in 2020. The significant increase was primarily due to an increase in profitability due to strong market conditions. ~~Additionally, changes~~This was further increased due to deferred revenue collections related to leases with uneven payment terms in ~~working capital accounts were positive compared to~~2021 and the ~~same period last~~reduction of cash collateral that was required for certain interest rate swaps in liability positions in the prior year.

Investing Activities

Net cash used in investing activities increased by ~~$512.6~~$2,455.1 million to ~~$525.7~~$2,626.9 million in the ~~three~~nine months ended ~~March 31,~~September 30, 2021 compared to ~~$13.1~~$171.8 million in the same period in 2020. The change was primarily due to a ~~$516.8~~$2,437.5 million increase in leasing equipment purchases to support the strong container demand.

Financing Activities

Net cash provided by financing activities increased by ~~$292.2~~$2,040.1 million to ~~$459.0~~$1,697.3 million in the ~~three~~nine months ended ~~March 31,~~September 30, 2021, compared to ~~$166.8~~net cash used in financing activities of $342.8 million in the same period in 2020. The increase was primarily due to a ~~$420.7~~$1,948.5 million increase in net borrowings to finance the substantial ~~purchases~~purchase of leasing ~~equipment in 2021.~~equipment.

2529

Results of Operations

The following table summarizes our comparative results of operations for the three months ended ~~March 31,~~September 30, 2021 and ~~March 31,~~ 2020 (in thousands).


		Three Months Ended March 31,				Variance			Three Months Ended September 30,
		2021		2020					2021		2020		Variance
Leasing revenues:	Leasing revenues:							Leasing revenues:
Operating leases	Operating leases	$	339,794	$	312,804	$	26,990	Operating leases	$	385,221	$	320,352	$	64,869
Finance leases	Finance leases	6,949		8,664		(1,715)		Finance leases	14,970		7,405		7,565

Total leasing revenues	Total leasing revenues	346,743		321,468		25,275		Total leasing revenues	400,191		327,757		72,434

Equipment trading revenues	Equipment trading revenues	25,945		15,380		10,565		Equipment trading revenues	44,418		26,094		18,324
Equipment trading expenses	Equipment trading expenses	(17,804)		(13,447)		(4,357)		Equipment trading expenses	(35,255)		(22,225)		(13,030)
Trading margin	Trading margin	8,141		1,933		6,208		Trading margin	9,163		3,869		5,294

Net gain on sale of leasing equipment	Net gain on sale of leasing equipment	21,967		4,077		17,890		Net gain on sale of leasing equipment	25,606		10,737		14,869

Operating expenses:	Operating expenses:							Operating expenses:
Depreciation and amortization	Depreciation and amortization	143,307		132,695		10,612		Depreciation and amortization	163,493		136,248		27,245
Direct operating expenses	Direct operating expenses	9,370		23,248		(13,878)		Direct operating expenses	5,539		25,992		(20,453)
Administrative expenses	Administrative expenses	20,921		19,225		1,696		Administrative expenses	21,426		21,395		31

Provision (reversal) for doubtful accounts	Provision (reversal) for doubtful accounts	(2,464)		4,279		(6,743)		Provision (reversal) for doubtful accounts	23		(45)		68

Total operating expenses	Total operating expenses	171,134		179,447		(8,313)		Total operating expenses	190,481		183,590		6,891
Operating income (loss)	Operating income (loss)	205,717		148,031		57,686		Operating income (loss)	244,479		158,773		85,706
Other expenses:	Other expenses:							Other expenses:
Interest and debt expense	Interest and debt expense	54,623		69,002		(14,379)		Interest and debt expense	54,728		62,776		(8,048)

Debt termination expense	Debt termination expense	—		31		(31)		Debt termination expense	42,660		24,345		18,315
Other (income) expense, net	Other (income) expense, net	(481)		(3,584)		3,103		Other (income) expense, net	(453)		(631)		178
Total other expenses	Total other expenses	54,142		65,449		(11,307)		Total other expenses	96,935		86,490		10,445
Income (loss) before income taxes	Income (loss) before income taxes	151,575		82,582		68,993		Income (loss) before income taxes	147,544		72,283		75,261
Income tax expense (benefit)	Income tax expense (benefit)	11,737		5,546		6,191		Income tax expense (benefit)	12,812		15,825		(3,013)
Net income (loss)	Net income (loss)	$	139,838	$	77,036	$	62,802	Net income (loss)	$	134,732	$	56,458	$	78,274

Less: dividend on preferred shares	Less: dividend on preferred shares	10,513		9,825		688		Less: dividend on preferred shares	11,687		10,512		1,175
Net income (loss) attributable to common shareholders	Net income (loss) attributable to common shareholders	$	129,325	$	67,211	$	62,114	Net income (loss) attributable to common shareholders	$	123,045	$	45,946	$	77,099

2630

Comparison of the three months ended ~~March 31,~~September 30, 2021 and 2020

Leasing revenues. Per diem revenue represents revenue earned under operating lease contracts. Fee and ancillary lease revenue represents fees billed for the pick-up and drop-off of containers in certain geographic locations and billings of certain reimbursable operating costs such as repair and handling expenses. Finance lease revenue represents interest income earned under finance lease contracts. The following table summarizes our leasing revenue for the periods indicated below (in thousands):


		Three Months Ended March 31,				Variance			Three Months Ended September 30,
		2021		2020					2021		2020		Variance
Leasing revenues:	Leasing revenues:							Leasing revenues:
Operating leases	Operating leases							Operating leases
Per diem revenues	Per diem revenues	$	331,252	$	298,486	$	32,766	Per diem revenues	$	377,234	$	304,510	$	72,724
Fee and ancillary revenues	Fee and ancillary revenues	8,542		14,318		(5,776)		Fee and ancillary revenues	7,987		15,842		(7,855)
Total operating lease revenues	Total operating lease revenues	339,794		312,804		26,990		Total operating lease revenues	385,221		320,352		64,869
Finance leases	Finance leases	6,949		8,664		(1,715)		Finance leases	14,970		7,405		7,565

Total leasing revenues	Total leasing revenues	$	346,743	$	321,468	$	25,275	Total leasing revenues	$	400,191	$	327,757	$	72,434

Total leasing revenues were ~~$346.7~~$400.2 million for the three months ended ~~March 31,~~September 30, 2021, compared to ~~$321.5~~$327.8 million in the same period in 2020, an increase of ~~$25.2~~$72.4 million.

Per diem revenues were ~~$331.3~~$377.2 million for the three months ended ~~March 31,~~September 30, 2021 compared to ~~$298.5~~$304.5 million in the same period in 2020, an increase of ~~$32.8~~$72.7 million. The primary reasons for this increase are as follows:

•$~~32.9~~56.1 million increase due to an increase of approximately 1.1 million CEU in the average ~~units~~number of containers on-hire; and

•$~~1.6~~15.1 million increase primarily due to ~~a decrease~~an increase in ~~lease intangible amortization;~~average per diem rates for our dry containers partially offset by

•~~$1.7 million decrease primarily due to~~ a decrease in average per diem rates for our refrigerated and special containers.

Fee and ancillary lease revenues were ~~$8.5~~$8.0 million for the three months ended ~~March 31,~~September 30, 2021 compared to ~~$14.3~~$15.8 million in the same period in 2020, a decrease of ~~$5.8~~$7.8 million, primarily due to lower drop-off activity.

Finance lease revenues were ~~$6.9~~$15.0 million for the three months ended ~~March 31,~~September 30, 2021 compared to ~~$8.7~~$7.4 million in the same period in 2020, ~~a decrease~~an increase of ~~$1.8 million,~~$7.6 million. The increase was primarily due to the addition of $786.5 million of net finance lease receivables since October 2020 partially offset by the runoff of the existing portfolio.

Trading margin. Trading margin was ~~$8.1~~$9.2 million for the three months ended ~~March 31,~~September 30, 2021 compared to ~~$1.9~~$3.9 million in the same period in 2020, an increase of ~~$6.2~~$5.3 million. The increase was due to ~~increased~~an increase in per container selling margins due to a significant increase ~~in used~~ container selling ~~prices.~~prices, partially offset by a decrease in container sales volume.

Net gain on sale of leasing equipment. Gain on sale of equipment was ~~$22.0~~$25.6 million for the three months ended ~~March 31,~~September 30, 2021 compared to ~~$4.1~~$10.7 million in the same period in 2020, an increase of ~~$17.9~~$14.9 million. The increase was primarily due to a ~~90.2%~~163.2% increase in the average sale price of our used dry containers. This increase was partially offset by a ~~47.2%~~78.7% decrease in sales volume due to ~~the~~very low container drop-off volumes and our limited ~~global availability~~inventory of ~~containers.~~containers available for sale.

Depreciation and amortization. Depreciation and amortization was ~~$143.3~~$163.5 million for the three months ended ~~March 31,~~September 30, 2021 compared to ~~$132.7~~$136.2 million in the same period in 2020, an increase of ~~$10.6~~$27.3 million. The primary reasons for the increase are as follows:

•$~~19.1~~32.9 million increase due to the increased size of our container fleet; partially offset by

•$~~7.5~~6.6 million decrease due to an increase in the number of containers that have become fully depreciated.

Direct operating expenses. Direct operating expenses primarily consist of our costs to repair equipment returned off lease, store equipment when it is not on lease and reposition equipment from locations with weak leasing demand. Direct operating expenses were ~~$9.4~~$5.5 million for the three months ended ~~March 31,~~September 30, 2021 compared to ~~$23.2~~$26.0 million in the same period in 2020, a decrease of ~~$13.8~~$20.5 million. The primary reasons for the decrease are as follows:

•$~~10.1~~10.4 million decrease in storage expense resulting from a decrease in the number of idle units; and

•$~~4.0~~9.5 million decrease in repair and handling expense primarily due to lower drop-off activity.

2731

Administrative expenses. Administrative expenses were ~~$20.9~~$21.4 million for both the three months ended September 30, 2021 and 2020.

Interest and debt expense. Interest and debt expense was $54.7 million for the three months ended ~~March 31,~~September 30, 2021, compared to ~~$19.2~~$62.8 million in the same period in 2020, a decrease of $8.1 million. The primary reasons for the decrease are as follows:

•$17.5 million decrease due to a decrease in the average effective interest rate to 2.77% from 3.79%; partially offset by

•$9.7 million increase due to an increase in the average debt balance of $1,382.0 million.

Debt termination expense. Debt termination expense was $42.7 million for the three months ended September 30, 2021 compared to $24.3 million in the same period in 2020, an increase of ~~$1.7~~$18.4 million. During the three months ended September 30, 2021, the Company incurred make-whole and other debt termination costs primarily related to the prepayment of senior secured institutional notes. During the three months ended September 30, 2020, the Company incurred write-offs for unamortized debt and other costs related to the prepayment of ABS notes in September 2020.

Income taxes. Income tax expense was $12.8 million for the three months ended September 30, 2021 compared to $15.8 million in the same period in 2020, a decrease in income tax expense of $3.0 million. The decrease in income tax expense was primarily due to a tax expense related to a U.S. entity to foreign entity intra-company asset sale and provision to return adjustments that were both recorded in the third quarter of 2020 and did not reoccur in 2021. These decreases were partially offset by an increase in income tax expense as a result of an increase in pre-tax income.

Results of Operations

The following table summarizes our comparative results of operations for the nine months ended September 30, 2021 and 2020 (in thousands).


	Nine Months Ended September 30,
	2021		2020		Variance
Leasing revenues:
Operating leases	$	1,085,874	$	946,579	$	139,295
Finance leases	30,844		24,043		6,801

Total leasing revenues	1,116,718		970,622		146,096

Equipment trading revenues	103,546		58,377		45,169
Equipment trading expenses	(75,516)		(50,555)		(24,961)
Trading margin	28,030		7,822		20,208

Net gain on sale of leasing equipment	78,964		19,351		59,613


Operating expenses:
Depreciation and amortization	460,856		402,235		58,621
Direct operating expenses	21,246		78,859		(57,613)
Administrative expenses	65,326		61,092		4,234

Provision (reversal) for doubtful accounts	(2,467)		4,608		(7,075)

Total operating expenses	544,961		546,794		(1,833)
Operating income (loss)	678,751		451,001		227,750
Other expenses:
Interest and debt expense	169,355		198,652		(29,297)


Debt termination expense	132,523		24,376		108,147
Other (income) expense, net	(1,195)		(4,179)		2,984
Total other expenses	300,683		218,849		81,834
Income (loss) before income taxes	378,068		232,152		145,916
Income tax expense (benefit)	38,281		28,070		10,211
Net income (loss)	$	339,787	$	204,082	$	135,705

Less: dividend on preferred shares	32,713		30,850		1,863
Net income (loss) attributable to common shareholders	$	307,074	$	173,232	$	133,842

Comparison of the nine months ended September 30, 2021 and 2020


	Nine Months Ended September 30,
	2021		2020		Variance
Leasing revenues:
Operating leases
Per diem revenues	$	1,061,763	$	897,744	$	164,019
Fee and ancillary revenues	24,111		48,835		(24,724)
Total operating lease revenues	1,085,874		946,579		139,295
Finance leases	30,844		24,043		6,801

Total leasing revenues	$	1,116,718	$	970,622	$	146,096

Total leasing revenues were $1,116.7 million for the nine months ended September 30, 2021, compared to $970.6 million, in the same period in 2020, an increase of $146.1 million.

Per diem revenues were $1,061.8 million for the nine months ended September 30, 2021 compared to $897.7 million in the same period in 2020, an increase of $164.1 million. The primary ~~reason~~reasons for this increase are as follows:

•$138.7 million increase due to an increase of approximately 1.0 million CEU in the average number of containers on-hire; and

•$20.9 million increase ~~is higher employee compensation costs,~~primarily due to an increase in average per diem rates for our dry containers partially offset by a decrease in ~~travel expense~~average per diem rates for our refrigerated and special containers.

Fee and ancillary lease revenues were $24.1 million for the nine months ended September 30, 2021 compared to $48.8 million in the same period in 2020, a decrease of $24.7 million, primarily due to ~~travel restrictions caused~~lower drop-off activity.

Finance lease revenues were $30.8 million for the nine months ended September 30, 2021 compared to $24.0 million in the same period in 2020, an increase of $6.8 million. This increase is primarily due to the addition of $786.5 million of net finance lease receivable since October 2020 offset by the ~~COVID-19 pandemic.~~runoff of the existing portfolio.

Trading margin. Trading margin was $28.0 million for the nine months ended September 30, 2021 compared to $7.8 million in the same period in 2020, an increase of $20.2 million. The increase was due to an increase in per container selling margins due to a significant increase in container selling prices, partially offset by a decrease in container sales volume.

Net gain (loss) on sale of leasing equipment. Gain on sale of equipment was $79.0 million for the nine months ended September 30, 2021 compared to $19.4 million in the same period in 2020, an increase of $59.6 million. The increase was primarily due to a 121.6% increase in the average sale price of our used dry containers, partially offset by a 59.4% decrease in sales volume due to very low container drop-off volumes and our limited inventory of containers available for sale.

Depreciation and amortization. Depreciation and amortization was $460.9 million for the nine months ended September 30, 2021 compared to $402.2 million in the same period in 2020, an increase of $58.7 million. The primary reasons for the increase are as follows:

•$79.7 million increase due to the increased size of our container fleet; partially offset by

•$21.6 million decrease due to an increase in the number of containers that have become fully depreciated.

Direct operating expenses. Direct operating expenses primarily consist of our costs to repair equipment returned off lease, store equipment when it is not on lease and reposition equipment from locations with weak leasing demand. Direct operating expenses were $21.2 million for the nine months ended September 30, 2021 compared to $78.9 million in the same period in 2020, a decrease of $57.7 million. The primary reasons for the decrease are as follows:

•$32.8 million decrease in storage expense resulting from a decrease in the number of idle units; and

•$24.8 million decrease in repair, handling and repositioning expense primarily due to lower drop-off activity.

Administrative expenses. Administrative expenses were $65.3 million for the nine months ended September 30, 2021 compared to $61.1 million in the same period in 2020, an increase of $4.2 million. The primary reasons for this increase are as follows:

•$2.5 million increase due to higher compensation costs; and

•$1.5 million increase due to an increase in annual incentive expense.

Provision (reversal) for doubtful accounts. There was a reversal for doubtful accounts of $2.5 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 compared to a provision of ~~$4.3~~$4.6 million in the same period in ~~2020.~~2020, a change of $7.1 million. We reversed reserves in the first quarter of 2021 which were recorded in the first quarter of last year against a mid-sized ~~customer~~customer's receivable.

Interest and debt expense. Interest and debt expense was ~~$54.6~~$169.4 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021, compared to ~~$69.0~~$198.7 million in the same period in 2020, a decrease of ~~$14.4~~$29.3 million. The primary reasons for the decrease are as follows:

•$~~14.7~~45.9 million decrease due to a decrease in the average effective interest rate to ~~3.30%~~3.08% from ~~4.19%~~3.97%; partially offset by

•$~~1.1~~17.2 million increase due to an increase in the average debt balance of ~~$105.8~~$739.7 million.

Debt termination expense. Debt termination expense was $132.5 million for the nine months ended September 30, 2021 compared to $24.4 million in the same period in 2020, an increase of $108.1 million. During the nine months ended September 30, 2020, the Company incurred make-whole and other debt termination costs primarily related to the prepayment of senior secured institutional notes. During the nine months ended September 30, 2020, the Company incurred write-offs for unamortized debt and other costs related to the prepayment of ABS notes.

Income taxes. Income tax expense was ~~$11.7~~$38.3 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 compared to ~~$5.5~~$28.1 million in the same period in 2020, an increase in income tax expense of ~~$6.2~~$10.2 million. The increase in income tax expense was primarily the result of an increase in pre-tax income, ~~and~~partially offset by an ~~increase~~$8.6 million tax expense related to a U.S. entity to foreign entity intra-company asset sale recorded in ~~the portion~~third quarter of ~~income generated~~2020 that did not reoccur in ~~higher tax jurisdictions.~~2021.

2835

Contractual Obligations

We are party to various operating and finance leases and are obligated to make payments related to our borrowings. We are also obligated under various commercial commitments, including obligations to our equipment manufacturers. Our equipment manufacturer obligations are in the form of conventional accounts payable, and are satisfied by cash flows from operations and financing activities.

The following table summarizes our contractual obligations and commercial commitments as of ~~March 31,~~September 30, 2021 and the effect such obligations are expected to have on our liquidity and cash flows in future periods:


		Contractual Obligations by Period															Contractual Obligations by Period
Contractual Obligations:	Contractual Obligations:	Total		Remaining 2021		2022		2023		2024		2025		2026 and thereafter		Contractual Obligations:	Total		Remaining 2021		2022		2023		2024		2025		2026 and thereafter
		(dollars in millions)															(dollars in millions)
Principal debt obligations	Principal debt obligations	$	6,953.9	$	617.5	$	816.7	$	1,634.4	$	1,129.0	$	474.9	$	2,281.4	Principal debt obligations	$	8,291.9	$	114.7	$	459.0	$	1,228.4	$	2,136.5	$	400.4	$	3,952.9
Interest on debt obligations(1)	Interest on debt obligations(1)	834.6		153.5		182.0		152.2		104.3		78.2		164.4		Interest on debt obligations(1)	966.5		56.4		187.6		174.9		139.7		113.7		294.2
Finance lease obligations(2)	Finance lease obligations(2)	18.3		2.3		3.1		3.1		9.8		—		—		Finance lease obligations(2)	16.0		0.8		15.2		—		—		—		—
Operating leases (mainly facilities)	Operating leases (mainly facilities)	6.7		2.4		2.6		1.6		0.1		—		—		Operating leases (mainly facilities)	6.9		0.9		3.5		2.1		0.4		—		—
Purchase obligations:	Purchase obligations:															Purchase obligations:
Equipment purchases payable	Equipment purchases payable	342.4		342.4		—		—		—		—		—		Equipment purchases payable	406.5		406.5		—		—		—		—		—
Equipment purchase commitments	Equipment purchase commitments	1,398.6		1,398.6		—		—		—		—		—		Equipment purchase commitments	463.9		463.9		—		—		—		—		—

Total contractual obligations	Total contractual obligations	$	9,554.5	$	2,516.7	$	1,004.4	$	1,791.3	$	1,243.2	$	553.1	$	2,445.8	Total contractual obligations	$	10,151.7	$	1,043.2	$	665.3	$	1,405.4	$	2,276.6	$	514.1	$	4,247.1

(1)Amounts include actual interest for fixed debt, estimated interest for floating-rate debt and interest rate swaps which are in a payable position based on ~~March 31,~~September 30, 2021 rates.

(2)Amounts include interest.

Off-Balance Sheet Arrangements

As of ~~March 31,~~September 30, 2021, we did not have any relationships with unconsolidated entities or financial partnerships, which are often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We are, therefore, not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

Critical Accounting Policies

Our consolidated financial statements have been prepared in conformity with GAAP, which requires us to make estimates and assumptions that affect the amounts and disclosures reported in the consolidated financial statements and accompanying notes. We base our estimates and judgments on historical experience and on various other assumptions that we believe are reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions. Our critical accounting policies are discussed in our Form 10-K.

2936

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss to future earnings, values or cash flows that may result from changes in the price of a financial instrument. The fair value of a financial instrument, derivative or non-derivative, might change as a result of changes in interest rates, exchange rates, commodity prices, equity prices and other market changes. We have operations internationally and we are exposed to market risks in the ordinary course of our business. These risks include interest rate and foreign currency exchange rate risks.

Interest Rate Risk

We enter into derivative agreements to fix the interest rates on a portion of our floating-rate debt. We assess and manage the external and internal risk associated with these derivative instruments in accordance with our overall operating goals. External risk is defined as those risks outside of our direct control, including counterparty credit risk, liquidity risk, systemic risk and legal risk. Internal risk relates to those operational risks within the management oversight structure and includes actions taken in contravention of our policies.

The primary external risk of our derivative agreements is counterparty credit exposure, which is defined as the ability of a counterparty to perform its financial obligations under the agreement. All of our derivative agreements are with highly-rated financial institutions. Credit exposures are measured based on the market value of outstanding derivative instruments. ~~Both~~In order to monitor counterparty credit exposure, both current and potential exposures are ~~calculated for each derivative agreement to monitor counterparty credit exposure.~~calculated.

As of ~~March 31,~~September 30, 2021, we had derivative agreements in place to fix interest rates on a portion of our borrowings under debt facilities with floating interest rates as summarized below:

Derivatives

Notional Amount

Weighted Average
Fixed Leg (Pay) Interest Rate

Cap Rate

Weighted Average
Remaining Term

Interest Rate Swap(1)

$~~1,697.6~~1,654.1 Million

2.02%

n/a

~~4.8~~4.4 years

Interest Rate Cap

$~~200.0~~400.0 Million

n/a

5.5%

~~2.7~~2.2 years

(1) The impact of forward starting swaps with total notional amount of ~~$350.0~~$650.0 million will increase the weighted average remaining term to ~~5.8~~7.2 years.

Our derivative agreements are designated as cash flow hedges for accounting purposes. Any unrealized gains or losses related to the changes in fair value are recognized in accumulated other comprehensive income and reclassified to interest and debt expense as they are realized. As of ~~March 31,~~September 30, 2021, we do not have any material non-designated derivatives. ~~Previously,~~Prior to the third quarter of 2020, a portion of our swap portfolio was not designated and unrealized and realized gains or losses related to changes in the fair value of these agreements were ~~recognized~~reported in the consolidated statements of operations as other (income) expense, net.

Approximately ~~97%~~87% of our debt is either fixed or hedged using derivative instruments which helps mitigate the impact of changes in short-term interest rates. ~~However, a~~A 100 basis point increase in the interest rates on our unhedged debt (primarily LIBOR) would result in an increase of approximately ~~$1.5~~$7.7 million in interest expense over the next 12 months.

Foreign currency exchange rate risk

Although we have significant foreign-based operations, the majority of our revenues and our operating expenses are denominated in U.S. dollars. However, we pay our non-U.S. employees in local currencies and certain operating expenses are denominated in foreign currencies. Net foreign currency exchange gains and losses were immaterial for the three and nine months ended ~~March 31,~~September 30, 2021 and 2020.

3037

ITEM 4. CONTROLS AND PROCEDURES.

Our senior management has evaluated the effectiveness and design of our disclosure controls and procedures (as defined under Rules 13a-15(e) and 15d-15(e)), as of ~~March 31,~~September 30, 2021. Based upon their evaluation of these disclosure controls and procedures, our Chief Executive Officer and our Senior Vice President and Chief Financial Officer concluded, as of ~~March 31,~~September 30, 2021, that our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the three months ended ~~March 31,~~September 30, 2021, which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

3138

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

From time to time, we are a party to litigation matters arising in connection with the normal course of our business. While we cannot predict the outcome of these matters, in the opinion of our management, based on information presently available to us, we believe that we have adequate legal defenses, reserves or insurance coverage and any liability arising from these matters will not have a material adverse effect on our business. Nevertheless, unexpected adverse future events, such as an unforeseen development in our existing proceedings, a significant increase in the number of new cases or changes in our current insurance arrangements could result in liabilities that have a material adverse impact on our business.

ITEM 1A. RISK FACTORS.

For detailed discussion of our risk factors, refer to our Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Share Repurchase Program

The following table provides certain information with respect to the Company's purchases of its common shares during the three months ended ~~March 31,~~September 30, 2021:

~~Issuer Purchases of Common Shares~~

~~Period~~

~~Total number of shares purchased(1)~~

~~Average price paid per share~~

~~Approximate dollar value of shares that may yet be purchased under the plan (in thousands)~~

~~January 1, 2021 through January 31, 2021~~

—

~~102,089~~

~~February 1, 2021 through February 28, 2021~~

—

~~102,089~~

~~March 1, 2021 through March 31, 2021~~

—

~~102,089~~

~~Total~~

—

~~102,089~~


	Issuer Purchases of Common Shares(1)
Period	Total number of shares purchased(2)	Average price paid per share		Approximate dollar value of shares that may yet be purchased under the plan (in thousands)
July 1, 2021 through July 31, 2021	—	$	—	$	102,089
August 1, 2021 through August 31, 2021	—	$	—	$	102,089
September 1, 2021 through September 30, 2021	378,765	$	51.19	$	82,693
Total	378,765	$	51.19	$	82,693

(1)On October 20, 2021, the Company's Board of Directors increased the share repurchase authorization to $200.0 million. The revised authorization may be used by the Company to repurchase common or preferred shares.

(2)This column represents the total number of shares purchased and the total number of shares purchased as part of publicly announced plans.

ITEM 6. EXHIBITS.


Exhibit Number						Exhibit Description



10.1*						Eleventh Restated and Amended Credit Agreement, dated as of October 14, 2021, by and among Triton Container International Limited and TAL International Container Corporation, as Borrowers, Triton International Limited, ~~Amended~~as Guarantor, various lenders, and ~~Restated 2016 Equity Incentive Plan~~Bank of America, N.A., as Administrative Agent and an Issuer, and other parties thereto.
10.2*						~~Form~~Amended and Restated Term Loan Agreement, dated as of ~~Restricted Share Award Agreement under the~~October 14, 2021, by and among Triton Container International Limited and TAL International Container Corporation, as Borrowers, Triton International Limited, ~~Amended~~as Guarantor, various lenders, and ~~Restated 2016 Equity Incentive Plan~~
10.3*						~~Form of Restricted Share Unit Award Agreement under the Triton International Limited Amended~~PNC Bank, National Association, as a lender and ~~Restated 2016 Equity Incentive Plan~~Administrative Agent
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 - the instance document does not appear on the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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
104						Cover Page Inline XBRL Data (formatted as Inline XBRL and contained in Exhibit 101)


*			Filed herewith.
**			Furnished herewith.

3340

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	TRITON INTERNATIONAL LIMITED

~~April 29,~~October 26, 2021	By:	/s/ JOHN BURNS
		John Burns
		Chief Financial Officer

3441


		Three Months Ended March 31,
	Financial statement caption	2021		2020
Non-Designated Derivative Instruments
Realized (gains) losses	Other (income) expense, net	$	0	$	(235)

Unrealized (gains) losses	Other (income) expense, net	$	0	$	297
Designated Derivative Instruments
Realized (gains) losses	Interest and debt (income) expense	$	7,570	$	1,259
Unrealized (gains) losses	Comprehensive (income) loss	$	(65,408)	$	129,614