UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For The Fiscal Year Ended December 31, 2023
Or
☐ 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
(State or other jurisdiction of incorporation or organization)
98-1276572
(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
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
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
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
(§ 232.405 of this chapter) 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
Non-accelerated filer
☒
☐
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. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the
correction of an error to previously issued financial statements.☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).☐
Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of the common shares held by non-affiliates as of June 30, 2023 was approximately $3,202.6 million.
As of February 8, 2024, there were 101,158,891 common shares at $0.01 par value per share of the Registrant outstanding, all of which were held by an affiliate of
Brookfield Infrastructure.
None.
DOCUMENTS INCORPORATED BY REFERENCE
Table of Contents
Page No.
PART I
Business ..........................................................................................................................................................
Item 1.
Item 1A. Risk Factors .....................................................................................................................................................
Item 1B. Unresolved Staff Comments ...........................................................................................................................
Item 1C. Cybersecurity ...................................................................................................................................................
Item 2.
Item 3.
Properties .........................................................................................................................................................
Legal Proceedings ...........................................................................................................................................
Item 4. Mine Safety Disclosures ..................................................................................................................................
PART II
Item 5. Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity
Securities .........................................................................................................................................................
[Reserved] .......................................................................................................................................................
Item 6.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations ..........................
Item 7A. Quantitative and Qualitative Disclosures About Market Risk ........................................................................
Item 8.
Item 9.
Financial Statements and Supplementary Data ...............................................................................................
Changes In and Disagreements With Accountants on Accounting and Financial Disclosure ........................
Item 9A. Controls and Procedures ..................................................................................................................................
Item 9B. Other Information ............................................................................................................................................
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections ............................................................
PART III
Item 10. Directors, Executive Officers and Corporate Governance ..............................................................................
Item 11. Executive Compensation .................................................................................................................................
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters .......
Item 13. Certain Relationships and Related Transactions, and Director Independence ................................................
Item 14. . Principal Accountant Fees and Services ..........................................................................................................
PART IV
Item 15. . Exhibits and Financial Statement Schedules ...................................................................................................
Item 16. . Form 10-K Summary .......................................................................................................................................
Signatures .........................................................................................................................................................................
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K of Triton International Limited contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities
Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (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 (the “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.
All forward-looking statements address matters that involve risks and uncertainties, many of which are beyond Triton's
control. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated
in such statements and, therefore, you should not place undue reliance on any such statements. These factors include, without
limitation, economic, business, competitive, market and regulatory conditions and the following:
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risks related to the acquisition of Triton by Brookfield Infrastructure, which was consummated on September 28, 2023,
including risks related to potentially divergent interests of our sole common shareholder, the holders of our outstanding
indebtedness and the holders of our outstanding preference shares; risks related to our reliance on certain corporate
governance exemptions; and shareholder litigation in connection with the acquisition;
decreases in the demand for leased containers;
decreases in market leasing rates for containers;
difficulties in re-leasing containers after their initial fixed-term leases;
our customers' decisions to buy rather than lease containers;
increases in the cost of repairing and storing our off-hire containers;
our dependence on a limited number of customers and suppliers;
customer defaults;
decreases in the selling prices of used containers;
extensive competition in the container leasing industry;
risks stemming from the international nature of our businesses, including global and regional economic conditions and
geopolitical risks, including international conflicts;
decreases in demand for international trade;
risks resulting from the political and economic policies of the United States and other countries, particularly China,
including but not limited to, the impact of trade wars, duties and tariffs;
disruption to our operations from failures of, or attacks on, our information technology systems;
disruption to our operations as a result of natural disasters or public health crises;
compliance with laws and regulations globally;
the availability and cost of capital;
restrictions imposed by the terms of our debt agreements;
changes in tax laws in Bermuda, the United States and other countries; and
other risks and uncertainties, including those listed under the caption "Risk Factors" in this Annual Report on Form 10-K
and in the other documents we file with the SEC from time to time.
The foregoing list of important factors should not be construed as exhaustive and should be read in conjunction with the other
cautionary statements that are included herein and elsewhere. Any forward-looking statements made in this Annual Report on
Form 10-K are qualified in their entirety by these cautionary statements, and there can be no assurance that the actual results or
developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences
to, or effects on, Triton or its businesses or operations. Except to the extent required by applicable law, we undertake no
obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future
developments or otherwise.
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WEBSITE ACCESS TO COMPANY'S REPORTS
Our Internet website address is www.trtn.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act
are available free of charge through our website as soon as reasonably practicable after they are electronically filed with, or
furnished to, the SEC.
SERVICE MARKS MATTERS
The following items referred to in this annual report are registered or unregistered service marks in the United States and/or
foreign jurisdictions pursuant to applicable intellectual property laws and are the property of Triton and its subsidiaries: Triton®,
TAL®, and
®.
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ITEM 1. BUSINESS
PART I
References in this Annual Report on Form 10-K to the “Company,” “Triton,” “we,” “us” and “our” refer to Triton
International Limited and, where appropriate, its consolidated subsidiaries.
Our Company
Triton 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.
Our consolidated operations include the acquisition, leasing, re-leasing and subsequent sale of multiple types of intermodal
containers and chassis. As of December 31, 2023, our total fleet consisted of 4.0 million containers and chassis, representing
6.9 million twenty-foot equivalent units ("TEU") or 7.6 million cost equivalent units ("CEU"). We have an extensive global
presence offering leasing services through a worldwide network of local offices and utilize third-party container depots spread
across 46 countries to provide customers global access to our container fleet. Our primary customers include the world's largest
container shipping lines. Our global field operations include sales, operations, equipment resale, and logistics services. Our
registered office is located in Bermuda.
Brookfield Infrastructure Transaction
On September 28, 2023, we completed the transactions contemplated by the Agreement and Plan of Merger, dated as of
April 11, 2023 (the “Merger Agreement”), by and among the Company, Brookfield Infrastructure Corporation (“BIPC”),
Thanos Holdings Limited (“Parent”) and Thanos MergerSub Limited, a subsidiary of Parent (“Merger Sub”). Pursuant to the
Merger Agreement and the Statutory Merger Agreement, dated as of September 28, 2023, by and among the Company, BIPC,
Parent and Merger Sub (the "Statutory Merger Agreement"), Merger Sub merged with and into Triton (the “Merger”), with
Triton surviving the Merger as a subsidiary of Parent.
Pursuant to the Merger Agreement, at the effective time of the Merger, each common share of the Company issued and
outstanding immediately prior to the effective time (other than certain excluded common shares), was cancelled and
automatically converted into the right to receive, at the election of each shareholder, (x) mixed consideration of $68.50 in cash
and 0.3895 Class A exchangeable subordinate voting shares (“BIPC Shares”) of BIPC, (y) all-cash consideration in an amount
equivalent in value to the mixed consideration, which was equal to approximately $83.16, or (z) all-BIPC Share consideration
in an amount equivalent in value to the mixed consideration, which was equal to approximately 2.21 BIPC Shares (the “Merger
Consideration”). The number of BIPC Shares issued in exchange for each common share was subject to a collar mechanism set
forth in the Merger Agreement, which was based on the weighted average price of BIPC Shares on the New York Stock
Exchange (the “NYSE”) over the 10 consecutive trading days ending on the second trading day prior to the effective time of the
Merger (the “BIPC Final Share Price”). The BIPC Final Share Price was approximately $37.64.
In connection with the closing of the Merger, our common shares were delisted from the NYSE on September 28, 2023.
The last trading day for the common shares on the NYSE was September 27, 2023. On October 10, 2023, we filed a
certification on Form 15 with the SEC requesting the deregistration of our common shares under the Exchange Act. Our Series
A-E cumulative redeemable perpetual preference shares remained outstanding as an obligation of the Company and continued
to be listed on the NYSE following the closing of the Merger.
Industry Overview
Intermodal containers provide a secure and cost-effective method of transporting raw materials, component parts and
finished goods because they can be used in multiple modes of transport. By making it possible to move cargo from a point of
origin to a final destination without repeated unpacking and repacking, containers reduce freight and labor costs. In addition,
automated handling of containers permits faster loading and unloading of vessels, more efficient utilization of transportation
equipment and reduced transit time. The protection provided by sealed containers also reduces cargo damage and the loss and
theft of goods during shipment.
Container leasing companies maintain inventories of new and used containers in a wide range of worldwide locations and
supply these containers primarily to shipping line customers under a variety of short and long-term lease structures. We
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estimate that container lessors owned approximately 24.2 million TEU, or approximately 50% of the total worldwide container
fleet as of the end of 2023.
Leasing containers helps shipping lines improve their container fleet efficiency and provides shipping lines with an
alternative source of equipment financing. Given the uncertainty and variability of export volumes, and the fact that shipping
lines have difficulty in accurately forecasting their container requirements on a day-by-day, port-by-port basis, the availability
of containers for lease on short notice reduces shipping lines' need to purchase and maintain larger container inventory buffers.
In addition, the drop-off flexibility provided by operating leases also allows the shipping lines to adjust their container fleet
sizes and the mix of container types in their fleets both seasonally and over time and helps balance their trade flows.
Spot leasing rates are typically a function of, among other things, new equipment prices (which are heavily influenced by
steel prices), interest rates and the equipment supply and demand balance at a particular time and location. Average leasing
rates on an entire portfolio of leases respond more gradually to changes in new equipment prices or changes in the balance of
container supply and demand because lease agreements are generally only re-priced upon the expiration of the lease. The value
that lessors receive upon resale of equipment is closely related to the cost of new equipment.
Our Equipment
Intermodal containers are designed to meet a number of criteria outlined by the International Standards Organization (ISO).
The standard criteria include the size of the container and the gross weight rating of the container. This standardization ensures
that containers can be used by the widest possible number of transporters and it facilitates container and vessel sharing by the
shipping lines. The standardization of the container is also an important element of the container leasing business since we can
operate one fleet of containers that can be used by all of our major customers.
Our fleet primarily consists of five types of equipment:
•
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•
•
•
Dry Containers. A dry container is a steel constructed box with a set of doors on one end. Dry containers come in
lengths of 20, 40 or 45 feet. They are 8 feet wide, and either 8½ or 9½ feet tall. Dry containers are the least expensive
and most widely used type of intermodal container and are used to carry general cargo such as manufactured
component parts, consumer staples, electronics and apparel.
Refrigerated Containers. Refrigerated containers include a fully installed cooling machine and an insulated container.
Refrigerated containers come in lengths of 20 or 40 feet. They are 8 feet wide, and are either 8½ or 9½ feet tall. These
containers are used for perishable items such as fresh and frozen foods.
Special Containers. Most of our special containers are open top and flat rack containers. Open top containers come in
similar sizes as dry containers, but do not have a fixed roof. Flat rack containers come in varying sizes and are steel
platforms with folding ends and no fixed sides. Open top and flat rack containers are used to move heavy or over-
sized cargos, such as marble slabs, steel coils or factory components, that cannot be easily loaded on a fork lift through
the doors of a standard container.
Tank Containers. Tank containers are stainless steel cylindrical tanks enclosed in rectangular steel frames with the
same outside dimensions as 20 foot dry containers. These containers carry bulk liquids such as chemicals.
Chassis. An intermodal chassis is a rectangular, wheeled steel frame, generally 23½, 40 or 45 feet in length, built
specifically for the purpose of transporting intermodal containers on the road. Longer sized chassis, designed to solely
accommodate rail containers, can be up to 53 feet in length. When mounted on a chassis, the container may be trucked
either to its destination or to a railroad terminal for loading onto a rail car. Our chassis are primarily used in the United
States.
Segments
We operate our business in one industry, intermodal transportation equipment, and have two business segments, which also
represent our reporting segments:
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Equipment leasing—Our equipment leasing operations include the acquisition, leasing, re-leasing and ultimate sale of
multiple types of intermodal transportation equipment, primarily intermodal containers.
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.
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Our Leases
Most of our revenues are derived from leasing our equipment to our core shipping line customers. The majority of our
leases are structured as operating leases, though we also provide customers with finance leases. Regardless of the lease type,
we seek to exceed our targeted return on our investments over the life cycle of the equipment by managing utilization, lease
rates, and the used equipment sale process.
Our lease products provide numerous operational and financial benefits to our shipping line customers. These benefits
include:
•
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Operating Flexibility. The timing, location and daily volume of cargo movements for a shipping line are often
unpredictable. Leasing containers and chassis helps our customers manage this uncertainty and reduces the
requirement for inventory buffers by allowing them to pick-up leased equipment on short notice.
Fleet Size and Mix Flexibility. The drop-off flexibility included in container and chassis operating leases allows our
customers to more quickly adjust the size of their fleets and the mix of container types in their fleets as their trade
volumes and patterns change due to seasonality, market changes or changes in company strategies.
Alternative Source of Financing. Container and chassis leases provide an additional source of equipment financing to
help our customers manage the high level of investment required to keep pace with the growth of the asset intensive
container shipping industry.
Operating Leases. Operating leases are structured to allow customers flexibility to pick-up equipment on short notice and
to drop-off equipment prior to the end of its useful life. Because of this flexibility, most of our containers and chassis will go
through several pick-up and drop-off cycles. Our operating lease contracts specify a per diem rate for equipment on-hire, where
and when such equipment can be returned, how the customer will be charged for damage and the charge for lost or destroyed
equipment, among other things.
We categorize our operating leases as either long-term leases or service leases. Some leases have contractual terms that
have features reflective of both long-term and service leases. We classify such leases as either long-term or service leases,
depending upon which features we believe are predominant. For example, some leases that provide redelivery flexibility during
the lease term are classified as long-term leases in cases where lessees have made large upfront payments to reduce their lease
payment during the lease term or in cases where lessees will incur significant redelivery fees if containers are returned during
the lease term. Such leases are generally considered to be long-term leases based on the expected on-hire time and the
economic protection achieved by the lease economics. Our long-term leases generally require our customers to maintain
specific units on-hire for the duration of the lease term, and they provide us with predictable recurring cash flow. Long-term
leases typically have initial contractual terms ranging from five to eight or more years.
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.
Service leases allow our customers to pick-up and drop-off equipment during the term of the lease, subject to contractual
limitations. Service leases provide the customer with a higher level of flexibility than long-term leases and, as a result, typically
carry a higher per diem rate. The terms of our service leases can range from 12 months to five years, though because
equipment can be returned during the term of a service lease and since service leases are generally renewed or modified and
extended upon expiration, lease term does not dictate expected on-hire time for our equipment on service leases.
Finance Leases. Finance leases provide our customers with an alternative method to finance their equipment acquisitions.
Finance leases are generally structured for specific quantities of equipment, generally require the customer to keep the
equipment on-hire for its remaining useful life, and typically provide the customer with a purchase option at the end of the lease
term.
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The following table provides a summary of our equipment lease portfolio by lease type, based on CEU as of December 31,
2023:
Lease Portfolio
Long-term leases ..............................................................................................................
Finance leases ..................................................................................................................
Subtotal .........................................................................................................................
Service leases ...................................................................................................................
Expired long-term leases, non-sale age (units on hire) ....................................................
Expired long-term leases, sale-age (units on hire) ...........................................................
Total ..............................................................................................................................
By CEU
December 31, 2023
70.5 %
9.3
79.8
6.5
6.2
7.5
100.0 %
As of December 31, 2023, our long-term and finance leases combined had a weighted average remaining contractual term
by CEU of approximately 55 months assuming no leases are renewed. In addition, even without lease renewal, our equipment
on operating leases typically remains on-hire at the contractual per diem rate for an additional six to twelve months beyond the
end of the contractual lease term due to monthly drop-off volume limitations and the logistical requirements in our leases that
require our customers to return the containers and chassis to specific drop-off locations.
Logistics Management, Re-leasing, Depot Management and Equipment Disposals
We believe that managing the period after our equipment's first lease is the most important aspect of our business.
Successful management of this period requires disciplined logistics management, extensive re-lease capability, careful cost
control and effective sales of used equipment.
Logistics Management. Since the late 1990s, the shipping industry has been characterized by large regional trade
imbalances, with loaded containers generally flowing from export-oriented economies in Asia to North America and Western
Europe. Because of these trade imbalances, shipping lines have an incentive to return leased containers in North America and
Europe to reduce the cost of empty container backhaul. Triton attempts to mitigate the risk of these unbalanced trade flows by
maintaining a large portion of our fleet on long-term and finance leases and by contractually restricting the ability of our
customers to return containers outside of Asian demand locations.
In addition, we attempt to minimize the costs of any container imbalances by finding local users in surplus locations and by
moving empty containers as inexpensively as possible. While we believe we manage our logistics risks and costs effectively,
logistical risk remains an important element of our business due to competitive pressures, changing trade patterns and other
market factors and uncertainties.
Re-leasing. Since our operating leases allow customers to return containers and chassis prior to the end of their useful
lives, we typically place containers and chassis on several leases during their useful lives. Initial lease transactions for new
containers and chassis can usually be generated with a limited sales and customer service infrastructure because initial leases
for new containers and chassis typically cover large volumes of units and are fairly standardized transactions. Used equipment,
on the other hand, is typically leased out in small transactions that are structured to accommodate pick-ups and returns in a
variety of locations. As a result, leasing companies benefit from having an extensive global marketing and operations
infrastructure, a large number of customers, and a high level of operating contact with these customers.
Depot Management. As of December 31, 2023, we managed our equipment fleet through approximately 400 third-party
owned and operated depot facilities located in 46 countries. Our extensive third-party depot network allows us to offer leasing
and/or sales services globally.
Depot facilities are generally responsible for repairing our containers and chassis when they are returned by lessees and for
storing the equipment while it is off-hire. We have a global operations group that is responsible for managing our depot
relationships and they also regularly visit the depot facilities to conduct inventory and repair audits. We also supplement our
internal operations group with the use of independent inspection agents.
Our leases are generally structured so that the lessee is responsible for the customer damage portion of the repair costs, and
customers are billed for damages at the time the equipment is returned. We sometimes offer our customers a repair service
program whereby we, for an additional payment by the lessee (in the form of a higher per-diem rate or a flat fee at off-hire),
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assume financial responsibility for all or a portion of the cost of repairs upon return of the equipment.
Equipment Disposals. Our in-house equipment sales group has a worldwide team of specialists that manage the sale
process for our used containers and chassis from our lease fleet. We generally sell to portable storage companies, freight
forwarders (who often use the containers for one-way trips) and other purchasers of used containers. We believe we are one of
the world's largest sellers of used containers.
The sale prices we receive for our used containers are influenced by many factors, including the level of demand for used
containers compared to the number of used containers available for disposal in a particular location, the cost of new containers,
and the level of damage on the containers. While our total revenue is primarily made up of leasing revenues, gains or losses on
the sale of used containers can have a significant positive or negative impact on our profitability.
Equipment Trading. We also buy and sell new and used containers and chassis acquired from third parties. We typically
purchase our equipment trading fleet from container manufacturers, our shipping line customers or other sellers of used or new
equipment. Trading margins are dependent on the volume of units purchased and resold, selling prices, costs paid for
equipment sold and selling and administrative costs.
Locations
We have an extensive global presence, offering leasing services through 21 offices and 2 independent agencies located in
15 countries.
Customers
Our customers are mainly international shipping lines, though we also lease containers to freight forwarding companies and
manufacturers. We believe that we have strong, long-standing relationships with our largest customers, most of whom we have
done business with for more than 30 years. Our twenty largest customers account for 85% of our lease billings. The shipping
industry has been consolidating for a number of years, and further consolidation could increase the portion of our revenues that
come from our largest customers. A default by one of our major customers could have a material adverse impact on our
business, financial condition and future prospects.
Marketing and Customer Service
Our global marketing team and our customer service representatives are responsible for developing and maintaining
relationships with senior operations staff at our shipping line customers, supporting lease negotiations and maintaining day-to-
day coordination with junior level staff at our customers. This enables us to provide customers with a high level of service,
helps us to finalize lease contracts that satisfy our customers' operating needs, ensures that we are aware of our customers'
potential equipment requirements, and provides customers knowledge of our available equipment inventories.
Credit Controls
We monitor our customers' performance and our lease exposures on an ongoing basis. Our credit management processes
are aided by the long payment experience we have with most of our customers and our broad network of relationships in the
shipping industry that provides current information about our customers' market reputations. Credit criteria may include, but
are not limited to, customer payment history, customer financial position and performance (e.g., net worth, leverage, and
profitability), trade routes, country of domicile and the type of, and location of, equipment that is to be supplied.
Competition
We compete with at least five other major intermodal equipment leasing companies in addition to many smaller lessors,
manufacturers of intermodal equipment, and companies offering finance leases as distinct from operating leases. It is common
for our customers to utilize several leasing companies to meet their equipment needs.
Our competitors compete with us in many ways, including lease pricing, lease flexibility, supply reliability and customer
service. In times of weak demand or excess supply, leasing companies often respond by lowering leasing rates and increasing
the logistical flexibility offered in their lease agreements. In addition, new entrants into the leasing business are often
aggressive on pricing and lease flexibility. Furthermore, customers also have the option to purchase intermodal equipment and
utilize owned equipment instead of leasing, relying on their own fleets to satisfy their intermodal equipment needs and even
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leasing their excess container stock to other shipping companies.
While we are forced to compete aggressively on price, we attempt to emphasize our supply reliability and high level of
customer service to our customers. We invest heavily to ensure adequate equipment availability in high demand locations,
dedicate large portions of our organization to building customer relationships and maintaining close day-to-day coordination
with customers' operating staffs, and have developed self-service systems that allow our customers to transact with us through
the Internet.
Suppliers
We have long-standing relationships with all of our major suppliers. We purchase most of our equipment from third-party
manufacturers based in China. The container manufacturing industry is highly concentrated, with the largest manufacturers
accounting for substantially all of the global production volume. Our procurement and engineering staff reviews the designs for
our containers and periodically audits the production facilities of our suppliers. In addition, we use our procurement and
engineering group and third-party inspectors to visit factories when our containers are being produced to provide an extra layer
of quality control. Nevertheless, defects in our containers sometimes occur. We work with the manufacturers to correct these
defects, and our manufacturers have generally honored their warranty obligations in such cases.
Systems and Information Technology
The efficient operation of our business is highly dependent on our information technology systems to track transactions,
bill customers and provide the information needed to report our financial results. Our systems allow customers to facilitate
sales orders and drop-off requests on the Internet, view current inventories and check contractual terms in effect with respect to
any given container lease agreement. Our systems also maintain a database, which accounts for the containers in our fleet and
our leasing agreements, processes leasing and sale transactions, and bills our customers for their use of and damage to our
containers. We also use the information provided by these systems in our day-to-day business to make business decisions and
improve our operations and customer service.
Human Capital Resources
For a discussion of our human capital resources and human capital management, please refer to the section titled “Human
Capital Management” in Part III, Item 10. “Directors, Executive Officers, and Corporate Governance” of this Annual Report
on Form 10-K.
Environmental and Other Regulation
We are subject to various business impacts associated with environmental regulations, including potential liability due to
accidental discharge from our containers, potential equipment obsolescence or retrofitting expenses due to changes in
environmental regulations, and increased risk of container performance problems due to container design changes driven by
environmental factors. These risks are particularly significant for our refrigerated container product line, as environmental
regulations have targeted the global warming potential of chemical refrigerants and the blowing agent historically used in the
insulation for refrigerated containers. Refrigerated container manufacturers have also changed the treatment process for the
steel frame of refrigerated containers in a way that may lead to increased corrosion.
While we maintain environmental liability insurance coverage, and the terms of our leases and other arrangements for use
of our containers place the responsibility for environmental liability on the end user, we still may be subject to environmental
liability in connection with our current or historical operations. In certain countries like the United States, the owner of a leased
container may be liable for the costs of environmental damage from the discharge of the contents of the container even though
the owner is not at fault. Our lessees are required to indemnify us from environmental claims and our standard master tank
container lease agreement contains an insurance clause that requires our tank container lessees to carry pollution liability
insurance.
Our operations are also subject to regulations promulgated in various countries, including the United States, seeking to
protect the integrity of international commerce and prevent the use of equipment for international terrorism or other illicit
activities, as well as regulations implementing equipment safety measures. As these regulations develop and change, we may
incur increased compliance costs due to the acquisition of new, compliant equipment and/or the adaptation of existing
equipment to meet new requirements imposed by such regulations. Violations of these rules and regulations can also result in
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substantial fines and penalties, including potential limitations on operations or forfeitures of assets. Additionally, we may be
affected by future regulation related to supply chain management that could impact our equipment and operations.
ITEM 1A. RISK FACTORS
Risks Related to Our Business and Industry
The international nature of our business exposes us to numerous risks.
We are subject to numerous risks inherent in conducting business across national boundaries, any one of which could
adversely impact our business. Several of these risks are discussed in more detail throughout this Risk Factors section. These
risks include, but are not limited to:
•
•
•
the imposition of tariffs or other trade barriers;
difficulties with enforcement of lessees' obligations across various jurisdictions;
changes in governmental policy or regulation affecting our business and industry, including as a result of the political
relationship between the U.S. and other countries;
restrictions on the transfer of funds into or out of countries in which we operate;
political and social unrest or instability;
nationalization of foreign assets;
•
•
•
• military conflicts;
•
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•
government protectionism;
public health or similar issues, including epidemics and pandemics; and
labor or other disruptions at key ports or at manufacturing facilities of our suppliers.
Our ability to enforce lessees’ obligations will be subject to applicable law in the jurisdiction in which enforcement is
sought. As containers are used in international commerce, it is not possible to predict, with any degree of certainty, the
jurisdictions in which enforcement proceedings may be commenced. For example, repossession from defaulting lessees may be
difficult and more expensive in jurisdictions in which laws do not confer the same security interests and rights to creditors and
lessors as those in the United States and in other jurisdictions where recovery of containers from defaulting lessees is more
cumbersome. As a result, the costs, relative success and expedience of collecting receivables or pursuing enforcement
proceedings with respect to containers in various jurisdictions cannot be predicted. Any one or more of these or other factors
could adversely affect our current or future international operations and business.
Container leasing demand can be negatively affected by decreases in global trade due to global and regional economic
downturns and other adverse macroeconomic conditions.
Overall demand for containers depends largely on the rate of world trade and economic growth. Adverse macroeconomic
conditions, including significant downturns in global economic growth, recessionary conditions in major geographic regions,
inflation and attempts to control inflation, changes to fiscal and monetary policy, and higher interest rates, can negatively affect
container demand and lessors' decisions to lease containers. During economic downturns and periods of reduced trade,
shipping lines tend to use and lease fewer containers, or lease containers only at reduced rates, and tend to rely more on their
own fleets to satisfy a greater percentage of their requirements. As a result, during periods of weak global economic activity or
reduced trade, container lessors typically experience decreased leasing demand, decreased equipment utilization, lower average
rental rates, decreased leasing revenue, decreased used container resale prices and significantly decreased profitability.
The impacts of global and regional economic downturns and other adverse macroeconomic conditions could have a
material adverse effect on our business, profitability and cash flows.
Increased tariffs or other trade actions could adversely affect our business, financial condition and results of operations.
The international nature of our business and the container shipping industry exposes us to risks relating to the imposition of
import and export duties, quotas and tariffs. These risks have increased over the last several years as the United States and
other countries have adopted protectionist trade policies and as companies look to on-shoring or near-shoring their production
to address material and parts shortages and/or increased costs due to these actions. In recent years, trade disputes between the
United States and China have led both countries to impose tariffs on imported goods from the other, resulting in periods of
decreased trade growth and demand for leased containers. Significant uncertainty remains about the future relationship between
the United States and China as tariffs and other trade barriers remain historically high, other key areas of economic and foreign
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policy difference remain unresolved and tensions remain elevated. Given the importance of the United States and China in the
global economy, continued or increased tensions between these countries could significantly reduce the volume of goods traded
internationally and reduce the rate of global economic growth. Increased trade barriers and the risk of further disruptions is also
motivating some manufacturers and retailers to reduce their reliance on overseas production and could reduce the long-term
growth rate for international trade, leading to decreased demand for leased containers, lower new container prices, decreased
market leasing rates and lower used container disposal prices. These impacts could have a material adverse effect on our
business, profitability and cash flows.
Our business and results of operations are subject to risks resulting from the political and economic policies of China.
A substantial portion of our containers are leased out from locations in China and we have several customers that are
domiciled in China. The main manufacturers of containers are also located in China.
As a result, the political and economic policies of China and the level of economic activity in China may have a significant
impact on our business and financial performance. For example, changes in laws and policies in China, which could be enacted
with little notice, such as restrictions on private enterprise or foreign investment, the introduction of measures to control
inflation, changes in the rate or method of taxation, and the imposition of additional restrictions on currency conversion or
remittances abroad could significantly impact business investment and exports in China. Additionally, government policies that
reduce the emphasis on manufacturing and increase priorities for domestic consumption and services may alter trade patterns
and reduce demand for containers in China. Chinese government environmental laws and regulations may increase the cost of
manufacturing in China, leading to reduced exports and decreased container demand. Additionally, the imposition of policies
aimed at controlling future disease outbreaks, similar to those enacted during the COVID-19 pandemic, may reduce
manufacturing activity and exports and lead to logistical disruptions in global shipping. Changes in China’s laws and
regulations could also impact the cost and availability of new containers from the container manufacturers in China. These
factors could have a significant negative effect on our customers, the cost and availability of new containers and have a material
adverse effect on our business and results of operations.
In addition, a geo-political conflict involving China could significantly reduce global economic activity and trade and have
a material adverse effect on our business given the large share of global exports, container manufacturing and container lease-
outs represented by China.
International conflicts may negatively impact international trade and our business.
Given the nature of our and our customers’ business and global operations, political, economic and other conditions in
major regions, including geopolitical conflicts such as the current war in Ukraine and conflicts in the Middle East, may
adversely affect us. For example, the ongoing war between Russia and Ukraine has resulted in economic and trade disruptions,
as well as a significant humanitarian crisis. The conflict has led to significant stress on the global economy, as well as
economic sanctions and trade controls being placed on Russia, Belarus and related individuals and entities, limitations on
Russian and Belorussian banks' and entities' ability to access international payment systems, port restrictions on Russian ships
and decisions to suspend service to Russia and alter certain routes by several major ocean carriers. More recently, attacks on
shipping vessels in the Red Sea related to the armed conflict between Israel and Hamas have caused significant disruptions to
trade routes in the region, which may be prolonged. While we do not have any employees or Company facilities in any of these
major conflict areas, the extent and duration of military conflicts, resulting sanctions, embargoes, regional instability, shipping
bans or disruptions, increased cybersecurity risks, escalation of hostilities and the effects of the conflicts on our customers and
the global economy, including increased on-shoring and near-shoring, reduced global trade, heightened inflation and any other
related economic or market disruptions, are impossible to predict, but could be substantial, particularly if they persist for an
extended period of time or if geopolitical tensions result in expanded military conflict. These factors may negatively impact our
business and results of operations.
We face extensive competition in the container leasing industry.
The container leasing and sales business is highly competitive. We compete with several other major leasing companies,
many smaller container lessors, equipment financing companies, and manufacturers of container equipment, who sometimes
lease and finance containers directly with our shipping line customers. Some of these competitors may have greater financial
resources and access to capital than us and may have lower investment return expectations. Additionally, some of these
competitors may, at times, accumulate a high volume of underutilized inventories of containers, which could lead to significant
downward pressure on lease rates and margins. As market conditions evolve, we may see new competition entering the market.
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Competition among container leasing companies involves many factors, including, among others, lease rates, lease terms
(including lease duration, and drop-off and repair provisions), customer service, and the location, availability, quality and
individual characteristics of equipment. In addition, new technologies and the expansion of existing technologies, such as
digitalization and expanded online services, may increase competitive pressures in our industry. The highly competitive nature
of our industry may reduce our lease rates and margins and undermine our ability to maintain our current level of container
utilization or achieve our growth plans.
Our customers may decide to lease fewer containers. Should shipping lines decide to buy a larger percentage of the
containers they operate, our utilization rate and level of investment would decrease, resulting in decreased leasing revenues,
increased storage costs, increased repositioning costs and lower growth.
We, like other suppliers of leased containers, are dependent upon decisions by shipping lines to lease rather than buy their
container equipment. Should shipping lines decide to buy a larger percentage of the containers they operate, our utilization rate
would decrease, resulting in decreased leasing revenues, increased storage costs and increased repositioning costs. A
significant decrease in the portion of leased containers operated by shipping lines would also reduce our investment
opportunities and significantly constrain our growth. Most of the factors affecting the lease versus buy decisions of our
customers, including their operational and capital allocation priorities are outside of our control and may change from year to
year.
Market leasing rates may decrease due to a decrease in new container prices, weak leasing demand, increased competition
or other factors.
Market leasing rates have historically varied widely and changed suddenly. Market leasing rates are typically a function of,
among other things, new equipment prices (which are heavily influenced by steel prices), interest rates, the type and length of
the lease, the equipment supply and demand balance at a particular time and location, and other factors described in this “Risk
Factors” section.
A decrease in market leasing rates negatively impacts the leasing rates on both new container investments and the existing
containers in our fleet. Most of our existing containers are on operating leases, with lease terms shorter than the expected life of
the container, thus the lease rate we receive for the container is subject to change at the expiration of the current lease. The
profitability impact of decreasing lease rates on existing containers can be particularly severe since it leads to a reduction in
revenue with no corresponding reduction in investment or expenses.
We are exposed to customer credit risk, including the risk of lessee defaults.
Our containers and chassis are leased to numerous customers, who are responsible to pay lease rentals and other charges,
including repair fees and costs for damage to or loss of equipment. Some of our customers are privately owned and do not
provide detailed financial information regarding their operations. Our customers could incur financial difficulties, or otherwise
have difficulty making payments to us when due for any number of factors which we may be unable to anticipate. A delay or
diminution in amounts received under the leases, or a default in the performance of our lessees' obligations under the leases
could adversely affect our business, financial condition, results of operations and cash flows and our ability to make payments
on our debt.
In addition, when lessees default, we may fail to recover all of our equipment, and the equipment we do recover may be
returned in damaged condition or to locations where we may not be able to efficiently re-lease or sell the equipment. As a
result, we may have to repair our equipment and reposition it to other locations and we may lose lease revenues and incur
significant operating expenses. We also often incur extra costs when repossessing containers from a defaulting lessee. These
costs typically arise when our lessee has also defaulted on payments owed to container terminals or depot facilities where the
repossessed containers are located. In such cases, the terminal or depot facility may delay or bar us from taking possession of
our containers or sometimes seek to have us repay a portion of the lessee's unpaid bills as a condition to releasing the containers
back to us.
Historically, the container shipping industry has been characterized by recurring periods of excess vessel capacity and
weak financial performance. While our customers experienced significantly improved profitability during the COVID-19
pandemic, declining shipping demand and freight rates that began in the second half of 2022 and continued throughout 2023
have adversely affected their recent financial performance, which conditions may continue or worsen in the future. In addition,
the potential impact of a customer default has increased due to the large volume of high-priced containers purchased and leased
out in 2021. Also, following the bankruptcy of Hanjin Shipping Co. Ltd. in 2016, it has become more difficult and expensive to
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obtain credit insurance in our industry and we have chosen not to purchase credit insurance policies. As a result, a major
customer default could have a significant adverse impact on our business, financial condition and cash flows.
Our customer base is highly concentrated. A default by or significant reduction in leasing business from any of our large
customers could have a material adverse impact on our business and financial performance.
Our five largest customers represent approximately 60% of our lease billings. Furthermore, the shipping industry has
been consolidating for a number of years, and further consolidation could increase the portion of our revenues that come from
our largest customers. Given the high concentration of our customer base, a default by or a significant reduction in future lease
transactions with any of our major customers could materially reduce our leasing revenues, profitability, liquidity and growth
prospects.
We purchase containers from a small number of container manufacturers primarily based in China, potentially limiting our
ability to maintain an adequate supply of containers and increasing our risk of negative outcomes from any manufacturing
disputes.
The vast majority of intermodal containers are currently manufactured in China, and we currently purchase substantially all
of our equipment from third-party manufacturers based there. In addition, the container manufacturing industry in China is
highly concentrated. In the event that it were to become more difficult or more expensive for us to procure containers in China
because of further consolidation among container suppliers, reduced production or production disruptions by our suppliers,
increased tariffs imposed by the United States or other governments, pandemic lockdowns and other restrictions, regional
instability, or for any other reason, we may be unable to fully pass these increased costs through to our customers in the form of
higher lease rates and we may not be able to adequately invest in and grow our container fleet.
Additionally, we may face significant challenges in the event of disputes with container manufacturers due to the limited
number of potential alternative suppliers and higher uncertainty of outcomes for commercial disputes in China. Such disputes
could involve manufacturers’ warranties or manufacturers’ ability and willingness to comply with key terms of our purchase
agreements such as container quantities, container quality, delivery timing and price.
Manufacturers of equipment may be unwilling or unable to honor manufacturer warranties covering defects in our
equipment or we may incur significant increased costs or reductions in the useful life of equipment due to changes in
manufacturing processes, which could adversely affect our business, financial condition and results of operations.
We obtain warranties from the manufacturers of equipment that we purchase. When defects in the containers occur, we
work with the manufacturers to identify and rectify the problems. However, there is no assurance that manufacturers will be
willing or able to honor warranty obligations. In addition, manufacturers’ warranties typically do not cover the full expected
life of our containers. If the manufacturer is unwilling or unable to honor warranties covering failures occurring within the
warranty period or if defects are discovered in containers that are no longer covered by manufacturers' warranties, we could be
required to expend significant amounts of money to repair the containers, the useful lives of the containers could be shortened
and the value of the containers reduced.
Several key container components and manufacturing processes have undergone changes over the last several years, in
many cases due to environmental concerns. These changes include, but are not limited to, the following:
•
•
•
•
Changes in paint application systems to water-based from solvent-based;
Changes to the wood floorboard materials to farm-grown woods from tropical hard woods;
Changes to the refrigerant gasses used by refrigerated containers; and
Changes to insulation foaming processes for the walls of refrigerated containers.
These changes have not yet proven their durability over the typical 12 to 15 year life of a container in a marine
environment. In addition, due to increased container demand during the COVID 19 pandemic as a result of global supply chain
disruptions, manufacturers significantly accelerated their rate of production in order to keep pace with demand. The impact of
these and future changes in manufacturing processes or materials on the quality and durability of our equipment is uncertain
and may result in increased costs to maintain or a significant reduction in the useful life of the equipment.
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We may be exposed to increased repair and maintenance costs associated with our lessees’ failure to pay repair charges.
Under our lease agreements, lessees are responsible for many obligations, including maintaining the equipment while on-
hire and for payment for damage to equipment beyond normal wear at the end of the lease term. Improper use or handling of
our equipment, failure to perform required maintenance during the lease term or other damage caused to our equipment while
on lease could result in substantial damage to our equipment and the assessment of significant repair charges to our lessees at
the end of the lease term. Disputes with lessees over their responsibility for repair costs could require us to incur significant
unplanned maintenance and repair expenses upon the termination of the applicable lease to restore the equipment to an
acceptable condition prior to re-leasing or sale. A significant failure by our lessees to meet their obligations to maintain our
equipment or pay for damage could have a material adverse effect on our business, results of operations and cash flows.
Used container sales prices are volatile and sale prices can fall below our accounting residual values, leading to losses on
the disposal of our equipment and a large decrease in our cash flows.
Although our revenues primarily depend upon equipment leasing, our profitability is also affected by the gains or losses we
realize on the sale of used containers because, in the ordinary course of our business, we sell certain containers when they are
returned by customers upon lease expiration. The volatility of the selling prices and gains or losses from the disposal of such
equipment can be significant. Used container selling prices, which can vary substantially, depend upon, among other factors,
the cost of new containers, the global supply and demand balance for containers generally, the location of the containers, the
supply and demand balance for used containers at a particular location, the physical condition of the container and related
refurbishment needs, materials and labor costs and obsolescence of certain equipment or technology. Most of these factors are
outside of our control.
Containers are typically sold if it is in our best interest to do so after taking into consideration local and global leasing and
sale market conditions and the age, location and physical condition of the container. As these considerations vary, gains or
losses on sale of equipment will also fluctuate and any such losses may be significant if we sell large quantities of containers
below our estimated residual values. This could have a material adverse effect on our results of operations and cash flows.
Equipment trading results have been highly volatile and are subject to many factors outside of our control.
The profitability of our equipment trading activities has varied widely. Our ability to sustain a high level of equipment
trading profitability will require securing large volumes of additional trading equipment and continuing to achieve high selling
margins. Several factors could limit our trading volumes. Shipping lines that have sold containers to us could develop other
means for disposing of their equipment or develop their own sales networks. In addition, we may limit our purchases if we
have concerns that used container selling prices might decrease. Our equipment trading results would also be negatively
impacted by a reduction in our selling margins resulting from increased competition for purchasing trading containers or
decreased sales prices. If sales prices rapidly deteriorate and we hold a large inventory of equipment that was purchased when
prices for equipment were higher, we may incur significant trading losses.
A number of key personnel are critical to the success of our business.
We have senior executives and other management level employees with extensive industry experience. We rely on this
knowledge and experience in our strategic planning and in our day-to-day business operations. Our success depends in large
part upon our ability to retain our senior management, the loss of one or more of whom could have a material adverse effect on
our business. Our success also depends on our ability to retain our experienced sales team and technical personnel, as well as to
recruit new skilled sales, marketing and technical and other support personnel. Competition for experienced managers in our
industry can be intense. If we fail to retain and recruit the necessary personnel, our business and our ability to retain customers
and provide acceptable levels of customer service could suffer.
It may become more difficult and expensive for us to store and repair our off-hire containers.
We are dependent on third-party depot operators to repair and store our equipment in port areas throughout the world. At
times, particularly during times of decreasing fleet utilization, we may experience limited depot capacity and a refusal by
certain depots to accept additional containers due to space constraints. For example, as a result of reduced trade levels and
resulting lower demand for shipping containers following the subsiding of the COVID-19 pandemic, we have experienced
periods of storage capacity shortages in a number of important locations in China, North Europe and the West Coast of the
United States.
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Additionally, in certain locations, the land occupied by depots is increasingly being considered as prime real estate due to
its coastal location. As a result, existing depot locations may be redeveloped for other uses or become subject to increasing
restrictions on operations by local communities and may be forced to relocate to sites further from the port areas. These factors
have and may continue to impact available depot capacity, increase the cost of depot storage and repairs and increase the
operational complexity of managing our business.
We may incur future asset impairment charges.
An asset impairment charge may result from the occurrence of an adverse change in market conditions, unexpected adverse
events or management decisions that impact our estimates of expected cash flows generated from our long-lived assets. We
review our long-lived assets, including our container and chassis equipment, goodwill and other intangible assets, for
impairment when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. We
may be required to recognize asset impairment charges in the future as a result of reductions in demand for specific container
and chassis types, a weak economic environment, challenging market conditions, events related to particular customers or asset
types, or as a result of asset or portfolio sale decisions by management. The likelihood that we could incur asset impairment
charges increases during periods of low new container prices, low market lease rates and low used container selling prices.
In addition, while used container selling prices are currently above our estimated residual values, they are extremely
volatile and if disposal prices fall below our residual values for an extended period, we would likely need to revise our
estimates for residual values. Decreasing estimates for residual values would result in an immediate impairment charge on
containers older than the estimated useful life in our depreciation calculations and would result in increased depreciation
expense for all of our other containers in subsequent periods. Asset impairment charges could significantly impact our
profitability and could potentially cause us to breach the financial covenants contained in some or all of our debt agreements.
The impact of asset impairment charges and a potential covenant default could be severe.
We may incur significant costs associated with relocation of leased equipment.
When lessees return equipment to locations where supply exceeds demand, containers are routinely repositioned to higher
demand areas. Positioning expenses vary depending on geographic location, distance, freight rates and other factors.
Positioning expenses can be significant if a large portion of our containers are returned to locations with weak demand. We
seek to limit the number of containers that can be returned to areas where demand is not expected to be strong. However, future
market conditions may not enable us to continue such practices. In addition, we may not be successful in accurately
anticipating which port locations will be characterized by weak or strong demand in the future, and current contracts will not
provide much protection against positioning costs if ports that are expected to be strong demand ports turn out to be low
demand ports when the equipment is returned. In particular, many of our lease contracts are structured so that most containers
will be returned to areas with current strong demand, especially major ports in China. If the economy in China continues to
evolve in a way that leads to less focus on manufacturing and exports and more focus on consumer spending, imports and
services, we may face large positioning costs in the future to relocate containers dropped off into China.
Our business, results of operations and financial condition could be materially adversely affected by public health crises
such as major pandemics and disease outbreaks.
Public health crises, such as pandemics and disease outbreaks, have resulted in and may continue to result in significant
impacts to businesses and supply chains globally. For example, the initial outbreak of COVID-19 led to the imposition of
work, social and travel restrictions and a significant decrease in global economic activity and global trade. During this time, we
faced increased business continuity and customer credit risks and experienced decreasing profitability, utilization, market
leasing rates and used container sale prices and reduced container demand. A future pandemic or other public health crisis,
depending on duration and severity, could materially adversely impact the global economy and our industry, operations and
financial condition and performance.
Severe weather, climate change, terrorist attacks or other catastrophic events could negatively impact our operations and
profitability and may expose us to liability.
Catastrophic natural events such as hurricanes, earthquakes, or fires, or other events, such as chemical explosions or other
industrial accidents could lead to extensive damage to our equipment, significant disruptions to trade and reduced demand for
containers. In addition, the potential effects of climate change could worsen the frequency and severity of natural events and
change weather patterns, posing increased risks of economic instability and extensive disruptions to world trade. The
incidence, severity and consequences of any of these events are unpredictable. These factors could impact the profitability of
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our customers and lead to higher credit risk, as well as significantly increase our operating costs, such as the cost of insurance
coverage.
It is also possible that our containers could be involved in a terrorist attack. Although our lease agreements typically
require our customers to indemnify us against all damages and liabilities arising out of the use of our containers and we carry
insurance to potentially offset any costs in the event that our customer indemnifications prove to be insufficient, our insurance
does not cover certain types of terrorist attacks. We may also experience reputational harm from a terrorist attack in which one
of our containers is involved.
Risks Related to Our Indebtedness and Liquidity
We have a substantial amount of debt outstanding and have significant debt service requirements. Our high level of
indebtedness may reduce our financial flexibility, impede our ability to operate and increase our risk of default.
We use substantial amounts of debt to fund our operations, particularly our purchase of equipment. As of December 31,
2023, we had outstanding indebtedness of approximately $7,518.3 million under our debt facilities.
Our substantial amount of debt could have important consequences for investors, including:
• making it more difficult for us to satisfy our obligations with respect to our debt facilities, which could result in an
event of default under the agreements governing such indebtedness and potentially lead to insolvency;
requiring us to dedicate a substantial portion of our cash flow from operations to make payments on our debt, thereby
reducing funds available for operations, capital expenditures, future business opportunities and other purposes; limiting
our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
reducing our profit margin and investment returns on new container investments if we are unable to pass along
increases in our cost of financing to our customers through higher lease rates, making it difficult for us to pay
dividends on or redeem our preference shares;
increasing our vulnerability to general adverse economic and industry conditions, including changes in interest rates;
and
placing us at a competitive disadvantage compared to our competitors having less debt.
•
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•
•
We may also incur substantial additional indebtedness in the future. To the extent that new indebtedness is added to
current debt levels, the risks described above would increase.
We may not be able to refinance our indebtedness on commercially reasonable terms or at all.
During difficult market environments, lenders to the container leasing industry may become more cautious, decreasing our
sources of available debt financing and increasing our borrowing costs. In addition, we are the largest container leasing
exposure for many of our lenders, and the amount of incremental loans available from our existing lenders may become
constrained due to single-name credit limitations. If we cannot refinance our indebtedness, we may have to take actions such as
selling assets, seeking additional capital or reducing or delaying future capital expenditures or other business investments,
which could have a material adverse impact on our growth rate, profitability, preference share price and cash flows.
Our credit facilities impose significant operating and financial restrictions, which may prevent us from pursuing certain
business opportunities and taking certain actions.
Our credit facilities and other indebtedness impose, and the terms of any future indebtedness may impose, significant
operating, financial and other restrictions on us and our subsidiaries. These restrictions may limit or prohibit, among other
things, our ability to:
incur additional indebtedness;
pay dividends on or redeem our preference shares;
•
•
• make loans and investments;
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•
•
•
•
create liens;
sell certain assets or merge with or into other companies;
enter into certain transactions with our shareholders and affiliates;
cause our subsidiaries to make dividend, distributions and other payments to us; and
otherwise conduct necessary corporate activities.
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These restrictions could adversely affect our ability to finance our future operations or capital needs and pursue available
business opportunities. In addition, certain agreements governing our indebtedness contain financial maintenance covenants
that require us to satisfy certain ratios such as maximum leverage and minimum interest coverage. A breach of any of the
above restrictions or financial covenants could result in an event of default in respect of the related indebtedness. If a default
occurs, the relevant lenders could elect to declare the indebtedness to be immediately due and payable and proceed against any
collateral securing that indebtedness.
Our ability to obtain debt financing and our cost of debt financing is, in part, dependent upon our credit ratings and
outlook. A credit downgrade or being placed on negative watch could adversely impact our liquidity, access to capital
markets and our financial results.
Maintaining our credit ratings depends on our financial results and on other factors, including the outlook of the rating
agencies on our sector and on the debt capital markets generally. A credit rating downgrade or being placed on negative watch
may make it more difficult or costly for us to raise debt financing, resulting in a negative impact on our liquidity and financial
results.
A significant increase in our borrowing costs could negatively affect our financial condition, cash flow and results of
operations.
The interest rates on our debt financings have several components, including credit spreads and underlying benchmark
rates. Given our substantial indebtedness, an increase in our interest rates for any reason can have a substantial negative effect
on our profitability and cash flow.
Our lease rental stream is generally fixed over the life of our leases. We employ various hedging strategies to attempt to
match the duration of our leases and fixed interest rates. Our hedging strategies rely considerably on assumptions and
projections regarding our assets and lease portfolio as well as general market factors. If any of these assumptions or projections
prove to be incorrect or our hedges do not adequately mitigate the impact of changes in interest rates, we may experience
volatility in our earnings that could adversely affect our profitability and financial condition.
Our strategy of attempting to match the duration of our leases and interest rates also typically means that the average
duration of our fixed interest rate debt is shorter than the average remaining duration of our container fleet. As a result, our
profitability will decrease if our interest rates increase in the future and we are unable to pass along the cost of this increase in
lease extension or re-lease transactions.
Furthermore, the benchmark rate underlying certain of our credit facilities is different than the benchmark rate underlying a
significant portion of our derivative instruments, which misalignment could have an adverse effect on the success of our
hedging strategies. In anticipation of the phase out of the London Interbank Offered Rate ("LIBOR") benchmark interest rate in
2023, we amended certain of our credit facilities to transition their pricing from LIBOR to Term Secured Overnight Financing
Rate ("term SOFR"). Additionally, effective July 1, 2023, our derivative instruments utilizing LIBOR transitioned to daily
Secured Overnight Financing Rate (“Daily SOFR”) as the alternative reference rate per the ISDA 2020 IBOR fallbacks
protocol. Due to the fact that the interest rates under certain of our credit facilities are based on term SOFR while a significant
portion of our interest rate swap agreements are indexed to Daily SOFR, our interest rate hedging strategies may not work as
planned or be as successful as they would have been if certain of our credit facilities and swap agreements were indexed to the
same benchmark.
In addition, we may not be able to find market participants that are willing to act as our hedging counterparties on
acceptable terms or at all, which could have an adverse effect on the success of our hedging strategies.
Risks Related to Information Technology and Data Security
We rely on our information technology systems to conduct our business. If these systems fail to adequately perform their
functions, or if we experience an interruption in our operations, our business and financial results could be adversely
affected.
The efficient operation of our business is highly dependent on our information technology systems, including our
transaction tracking and billing systems and our customer interface systems. These systems allow our customers to view
current inventory and check contractual terms in effect for their container lease agreements. These systems also process and
track transactions, such as container pick-ups, drop-offs and repairs, and bill customers for the use of and damage to our
19
equipment. If our information technology systems are damaged or an interruption is caused by a computer systems failure,
viruses, security breach, cyber or ransom attack, fire, natural disasters or power loss, we may not be able to process transactions
or accurately bill our customers for the containers they have on lease. The disruption to our normal business operations and
impact on our costs, competitiveness and financial results could be significant. In recent years, we have moved various
information technology systems and data to cloud-based storage providers and software vendors. We face additional risks from
relying on third parties to store, process and manage our data and software. A significant interruption of these third-party
systems could harm our business, results of operations and financial condition.
In addition, we rely on our financial systems and the integration of our financial and operating systems to provide timely
and accurate financial reports on our business. A system failure leading to inaccurate or delayed financial reporting could have
serious adverse consequences including the ability to manage our business, comply with our credit agreements, file our
financial statements or meet our other legal and tax compliance obligations.
Security breaches and other disruptions could compromise our information technology systems and expose us to liability,
which could cause our business and reputation to suffer.
In the ordinary course of our business, we collect and store confidential and sensitive data on our systems, including our
proprietary business information and that of our customers and suppliers, and personally identifiable information of our
employees and third parties. The secure storage, processing, maintenance and transmission of this information is critical to our
operations. Increased global cybersecurity vulnerabilities, threats and more sophisticated and targeted cybersecurity attacks,
including social engineering threats, pose a potentially significant risk to the security of our information technology systems, as
well as the confidentiality, availability and integrity of our data and the confidential data of our employees, customers, suppliers
and other third parties that we may hold. Despite the security measures we employ as a component of our information security
program, our information technology systems may be vulnerable to cyber attacks, breaches or other failures due to employee
error, malfeasance or other disruptions. Any such incidents could compromise these systems and the information stored therein
could be accessed, modified, publicly disclosed and/or lost or stolen. Any such incident could result in substantial remediation
costs, legal claims or proceedings, liability under laws that protect the privacy of personal information, disruption to our
operations, damage to our reputation and/or loss of competitive position.
Risks Related to Legal, Tax, and Other Regulatory and Compliance Matters
We may incur increased costs or be required to comply with increased restrictions due to the implementation of government
regulations.
Although trade and transportation activity is regulated in most major economies, international container leasing companies
have historically not been heavily impacted by regulations since containers have typically been viewed as international assets.
However, periods of significant supply chain disruptions and increased transportation costs, such as during the COVID-19
pandemic, have resulted in increased scrutiny and regulation of the ocean shipping sector in various jurisdictions, including the
United States. We could incur increased costs and operational complexity as a result of future regulations impacting our or our
customers’ business and operations.
We also may become subject to regulations seeking to protect the integrity of international commerce and prevent the use
of containers for international terrorism or other illicit activities or to set increased safety standards. For example, the Container
Safety Initiative, the Customs-Trade Partnership Against Terrorism and Operation Safe Commerce are among the programs
administered by the U.S. Department of Homeland Security that are designed to enhance security for containerized cargo
entering and leaving the United States. Moreover, the International Convention for Safe Containers applies to containers and
seeks to maintain a high level of safety of human life in the transport and handling of containers by providing uniform
international safety regulations. As these regulations develop and change, we may incur increased costs for the acquisition of
new, compliant equipment and/or the adaptation of existing equipment to meet any new requirements imposed by such
regulations. Additionally, future development of products designed to enhance the security of containers transported in
international commerce may result in increased costs associated with the adoption of these products, which could have a
material adverse effect on our business, financial condition, results of operations and cash flows.
The lack of an international title registry for containers increases the risk of ownership disputes.
There is no internationally recognized system for recording or filing to evidence our title to containers nor is there an
internationally recognized system for filing security interests in containers. Although this has not occurred to date, the lack of
20
an international title recordation system for containers could result in disputes with lessees, end-users, or third parties who may
improperly claim ownership of the containers.
If we fail to comply with applicable regulations that impact our international operations, our business, results of operations
or financial condition could be adversely affected.
Due to the international scope of our operations, we are subject to a numerous laws and regulations, including economic
sanctions, anti-corruption, anti-money laundering, import and export and similar laws. Recent years have seen a substantial
increase in the enforcement of many of these laws in the United States and other countries. Any failure or perceived failure to
comply with existing or new laws and regulations may subject us to significant fines, penalties, criminal and civil lawsuits,
forfeiture of significant assets, and other enforcement actions in one or more jurisdictions, result in significant additional
compliance requirements and costs, increase regulatory scrutiny of our business, result in the loss of customers, restrict our
operations and limit our ability to grow our business, adversely affect our results of operations, and harm our reputation.
Environmental regulations and liability may adversely affect our business and financial condition.
We are subject to U.S. federal, state, local and foreign laws and regulations relating to the protection of the environment,
including those governing the discharge of pollutants to air and water, the management and disposal of hazardous substances
and wastes and the cleanup of contaminated sites. We could incur substantial costs, including cleanup costs, fines and third-
party claims for property damage and personal injury, as a result of violations of or liabilities under environmental laws and
regulations in connection with our or our lessees’ current or historical operations. Under some environmental laws in the
United States and certain other countries, the owner of a leased container may be liable for environmental damage, cleanup or
other costs in the event of a spill or discharge of material from a container without regard to the owner's fault. Our insurance
coverage and any indemnities provided by our lessees may be insufficient to compensate us for losses arising from
environmental damage.
Changes in laws and regulations, or actions by authorities under existing laws or regulations, to address greenhouse gas
emissions and climate change could negatively impact our and our customers’ business. For example, restrictions on emissions
could significantly increase costs for our customers whose operations require significant amounts of energy. Customers’
increased costs could reduce their demand to lease our assets. Additionally, many countries, including the United States,
restrict, prohibit or otherwise regulate the use of chemical refrigerants due to their ozone depleting and global warming effects.
Our refrigerated containers currently use various refrigerants. Manufacturers of cooling machines for refrigerated containers
have begun selling units that utilize alternative and natural refrigerants, that may have less global warming potential than
current refrigerants. If future regulations prohibit the use or servicing of containers using current refrigerants, we could be
forced to incur large retrofitting expenses. In addition, refrigerated containers that are not retrofitted may become difficult to
lease, command lower rental rates and disposal prices, or may have to be scrapped.
Also, historically, the foam insulation in the walls of refrigerated intermodal containers required the use of a blowing agent
that contained chlorofluorocarbons ("CFCs"). The manufacturers producing our refrigerated containers have eliminated the use
of this blowing agent in the manufacturing process, but the majority of our refrigerated containers manufactured prior to 2014
contain these CFCs. Failure to comply with applicable regulatory restrictions on the sale or disposal of these containers could
subject us to associated fines and penalties. Also, if future international regulations change, we could be forced to incur large
retrofitting expenses and those containers that are not retrofitted may become more difficult to lease and command lower rental
rates and disposal prices. As laws and regulations addressing climate change and other environmental impacts are enacted,
interpreted and enforced, we and our customers may be required to incur substantial compliance costs to meet the requirements
imposed by these regulations. Potential consequences of changes in these laws and regulations could have a material adverse
effect on our financial condition and results of operations and cash flows.
Future foreign tax rule changes may have a material adverse effect on our results of operations.
We are a Bermuda company, and based on current laws we believe that the income derived from our operations will not be
subject to tax in Bermuda. Bermuda currently has no corporate income tax. However, Bermuda passed legislation on
December 8, 2023 to implement a 15% corporate income tax effective January 1, 2025. Based on our understanding of the
legislation as it applies to the Company and its Bermuda subsidiaries, we do not believe we will be subject to the corporate
income tax. This belief is based on our understanding of the current tax law as it applies to our current financial reporting
structure. A change in law or to our financial reporting structure could adversely impact the applicability of the Bermuda
corporate income tax.
21
We further believe that a significant portion of the income derived from our operations will not be subject to tax in many
other countries in which our customers or containers are located. However, this belief is also based on our understanding of the
current tax laws of the countries in which our customers use containers. The tax positions we take in various jurisdictions are
subject to review and possible challenge by taxing authorities and to possible changes in law or rates that may have retroactive
and prospective effects.
The Organization for Economic Co-operation and Development (“OECD”) has coordinated a global effort to reform
certain aspects of the international tax system. This effort included the December 2021 release of model rules for a 15% global
minimum tax regime, commonly known as Pillar Two. Numerous jurisdictions have enacted or are in the process of enacting
legislation to implement all or part of the Pillar Two model rules, with certain parts of the tax becoming effective January 1,
2024. As a result of the implementation of the Pillar Two global minimum tax, a material increase to our annual global income
tax expense and our annual global income tax payments may occur as soon as 2024. Further implementation of these rules and
related guidance are expected and could materially change the impact on our tax provision and results of operations. If the
Pillar Two rules are adopted in any jurisdiction where we operate, the profits earned in Bermuda may be subject to taxation up
to the minimum tax rate of 15% which would be expected to result in additional annual cash taxes and an increase to the
Company's consolidated effective tax rate.
Related to the OECD efforts to reform certain aspects of the international tax system, Bermuda implemented the Economic
Substance Act 2018 which requires affected Bermuda registered companies to maintain a substantial economic presence in
Bermuda. This legislation and/or other OECD efforts could require us to incur substantial additional costs to maintain
compliance, result in the imposition of significant penalties, create additional tax liabilities globally, and possibly require us to
re-domicile our company or any Bermuda subsidiary to a jurisdiction with higher tax rates. Our results of operations could be
materially and adversely affected if we become subject to these or other unanticipated tax liabilities.
Future U.S. tax rule changes that result in tax rate increases or a reduction in our level of continuing investment in U.S.
subsidiaries may subject us to unanticipated tax liabilities that may have a material adverse effect on our results of
operations and cash flows.
We are a Bermuda company, however, a significant portion of our operations is subject to taxation in the U.S. Our U.S.
subsidiaries record tax provisions in their financial statements based on current tax rates. If there was an increase in the tax rate
due to changes in enacted tax laws, our tax provision and effective tax rate would increase and our results of operations would
be negatively impacted.
Certain of these subsidiaries historically did not pay any meaningful U.S. income taxes primarily due to the benefit they
received from accelerated tax depreciation of their container investments. However, the long duration of recent leases has
limited the accelerated tax depreciation benefits of container investments, and as a result, we have limited the container
investments made by the U.S. subsidiaries. Additionally, beginning in 2022, our U.S. subsidiaries' net interest expense
deduction has become limited to 30% of its current year taxable income before net interest expense.
This reduced investment in containers by the U.S. subsidiaries, coupled with interest expense deduction limitations, has
resulted in an increase in cash tax payments in recent years. Any future change in rules governing the tax depreciation for these
U.S. subsidiaries' containers could further reduce or eliminate this tax benefit and further increase the U.S. subsidiaries' cash tax
payments.
Our U.S. investors could suffer adverse tax consequences if we are characterized as a passive foreign investment company
for U.S. federal income tax purposes.
Based upon the nature of our business activities, we may be classified as a passive foreign investment company ("PFIC")
for U.S. federal income tax purposes. Such characterization could result in adverse U.S. tax consequences for direct or indirect
U.S. investors in our preference shares. For example, if we are a PFIC, our U.S. investors could become subject to increased
tax liabilities under U.S. tax laws and regulations and could become subject to burdensome reporting requirements. The
determination of whether or not we are a PFIC is made on an annual basis and depends on the composition of our income and
assets from time to time. Specifically, for any taxable year, we will be classified as a PFIC for U.S. tax purposes if either:
•
•
75% or more of our gross income in a taxable year is passive income; or
the average percentage of our assets (which includes cash) by value in a taxable year which produce or are held for the
production of passive income is at least 50%.
22
Based on the composition of our income and valuation of our assets, we do not expect that we should be treated as a PFIC
for the current taxable year or for the foreseeable future. However, because the PFIC determination in our case is made by
taking into account all of the relevant facts and circumstances regarding our business without the benefit of clearly defined
bright line rules, it is possible that we may be a PFIC for any taxable year or that the U.S. Internal Revenue Service (the "IRS")
may challenge our determination concerning our PFIC status. U.S. investors should consult their own tax advisors regarding
the application of the PFIC rules, including the availability of any elections that may mitigate adverse U.S. tax consequences in
the event that we are or become a PFIC.
Risks Related to Our Sole Common Shareholder and Owning Our Securities
The interests of the sole holder of our common shares may differ from the interests of holders of our indebtedness and
preference shares.
Following the Merger, an affiliate of Brookfield Infrastructure owns all of the Company’s outstanding common shares and
Brookfield Infrastructure has the ability to appoint the members of our Board of Directors ("Board".) As a result, Brookfield
Infrastructure has significant influence over our business. The interests of Brookfield Infrastructure may differ from those of
holders of our outstanding indebtedness and preference shares in material respects. For example, Brookfield Infrastructure may
have an interest in pursuing acquisitions, divestitures, financings or other transactions that, in their judgment, could enhance
their overall equity investment, even though such transactions might involve risks to holders of our outstanding indebtedness or
preference shares. Brookfield Infrastructure is in the business of making investments in companies, and may from time to time
in the future, acquire interests in businesses that directly or indirectly compete with certain portions of our business or are our
suppliers or customers. The companies in which Brookfield Infrastructure invests may also pursue acquisition opportunities
that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us.
We only list preference shares on the NYSE and, as a result, qualify for and intend to rely on exemptions from certain
corporate governance requirements. Holders of our preference shares will not have the same protections afforded to
shareholders of companies that are subject to such requirements.
Following the Merger, our common shares were delisted from the NYSE and only our preference shares remain listed on
the NYSE. As a result, certain of the listing rules, corporate governance requirements and provisions of the Exchange Act are
no longer applicable to us. These include, for example, the requirements that:
•
•
•
•
a majority of our board of directors consist of independent directors;
we maintain a nominating committee and compensation committee composed entirely of independent directors;
we maintain a code of conduct and ethics and corporate governance guidelines; and
we comply with the proxy solicitation rules under the Exchange Act, including the furnishing of an annual proxy or
information statement.
Following the Merger, we have elected to utilize certain of the exemptions available to us and may elect to utilize all of the
exemptions available to us in the future. Accordingly, holders of our preference shares no longer have the same protections
afforded to shareholders of companies that are subject to all of the corporate governance requirements of the NYSE or certain
of the reporting obligations under the Exchange Act.
The price of our preference shares has been volatile and may decrease regardless of our operating performance.
The trading price of our preference shares has been and may remain volatile. Factors affecting the trading price of our
preference shares may include:
•
•
•
•
•
•
•
•
•
broad market and industry factors, including global and political instability, trade actions and interest rate and currency
changes;
variations in our financial results;
the public's response to press releases or other public announcements by us or our competitors;
changes in accounting standards, policies, guidance or interpretations or principles;
the operating and trading performance of other companies that investors may deem comparable to us;
changes in our dividend payments on our preference shares;
credit ratings of our preference shares and rating agencies’ outlook;
fluctuations in the worldwide equity or debt markets;
recruitment or departure of key personnel; and
23
•
other events or factors, including those described elsewhere in this "Risk Factors" section.
In addition, if the market for intermodal equipment leasing company securities or the stock market in general experiences a
loss of investor confidence, the trading price of our preference shares could decline for reasons unrelated to our business or
financial results. The trading price of our preference shares might also decline in reaction to events that affect other companies
in our industry even if these events do not directly affect us.
We are incorporated in Bermuda and a significant portion of our assets are located outside the United States. As a result, it
may not be possible for shareholders to enforce civil liability provisions of the federal or state securities laws of the United
States against the Company. Additionally, Bermuda law differs from the laws of the United States and may afford less
protections to shareholders.
We are incorporated under the laws of Bermuda and a significant portion of our assets are located outside the United
States. Additionally, several of our directors and officers are non-residents of the United States. As a result, it may be difficult
to effect service of process on those persons in the United States or enforce court judgments obtained in the United States
against us or those persons, based on the civil liability provisions of the federal or state securities laws of the United States. It is
uncertain whether the courts of Bermuda and other countries would recognize or enforce judgments of United States courts
obtained against us or our officers or directors based on the civil liability provisions of the federal or state securities laws of the
United States or would hear actions against us or those persons based on those laws. We have been advised by our legal
advisors in Bermuda that the United States and Bermuda do not currently have a treaty providing for the reciprocal recognition
and enforcement of judgments in civil and commercial matters. Therefore, a final judgment for the payment of money rendered
by any federal or state court in the United States based on civil liability, whether or not based solely on United States federal or
state securities laws, would not automatically be enforceable in Bermuda. Similarly, those judgments may not be enforceable in
countries, other than the United States, where we have assets.
Additionally, our shareholders might have more difficulty protecting their interests than would shareholders of a
corporation incorporated in a jurisdiction of the United States. As a Bermuda company, we are governed by the Bermuda
Companies Act. The Bermuda Companies Act differs in some material respects from laws generally applicable to United States
corporations and shareholders, including the provisions relating to interested directors, mergers, amalgamations and
acquisitions, takeovers, shareholder lawsuits and indemnification of directors.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
Triton maintains a cybersecurity risk management program designed to identify, protect, detect and mitigate cybersecurity
threats and ensure the reliability of our system applications and infrastructure (our “Information Security Program”). Our
Information Security Program, which is integrated within the Company’s enterprise risk management framework, leverages
recognized best practices and standards, including the National Institute of Standards and Technology cybersecurity framework,
and is comprised of a robust set of cybersecurity tools, processes and procedures as further described below.
Our internal information security team is led by Triton’s Chief Information Officer, who has held this role for 14 years and
holds over 30 years of experience in information technology, audit and risk management and holds certifications as a Certified
Information Systems Security Professional and Certified Information Systems Auditor. Our Director, Information Security and
Compliance holds over eight years of experience in cybersecurity management and oversight and over 20 years in information
technology portfolio, program and application management positions. Additionally, others in our information technology team
have relevant security experience and certifications. Our internal resources are augmented by external cybersecurity partners,
including those described below. Our information security leadership team is responsible for assessing and managing the
Company’s Information Security Program, informs senior management regarding the prevention, detection, mitigation, and
remediation of cybersecurity incidents and supervises such efforts. We also take a cross-departmental approach to managing
cybersecurity risk and have formed a Cybersecurity Incident Response Team (“CIRT”) comprised of senior representatives
from primary corporate functions as well as senior representatives from field operations to ensure a coordinated and effective
response and ongoing business continuity in the face of cybersecurity threats and incidents.
24
Triton’s Board is responsible for oversight of information technology and cybersecurity-related matters and monitoring
cybersecurity risk management, and the Board actively engages with senior management on the state of the Company’s
Information Security Program. The information security leadership team prepares briefings for the Board on the effectiveness
of the Company’s cyber risk management program, typically on a quarterly basis, which include a review of key performance
indicators, training and test results and related remediation, and recent threats and how the Company is managing those threats.
Triton’s Information Security Program includes policies and procedures concerning cybersecurity matters, which include a
cybersecurity incident response plan as well as other policies that directly or indirectly relate to cybersecurity, such as policies
related to password standards, antivirus protection, remote access, multifactor authentication, confidential information and the
use of electronic devices, electronic communications and social media. We perform routine vulnerability scanning of our
network, with a focus on timely remediation of vulnerabilities. Our information security team regularly monitors alerts and
meets to discuss threat levels, trends and remediation. We periodically perform simulations and tabletop exercises at an
information technology department and CIRT level and incorporate external resources and advisors as needed. All employees
and certain contractors are required to complete cybersecurity trainings annually. We conduct cybersecurity phishing exercises,
and follow-up training as necessary, to ensure employees maintain a high level of vigilance regarding cybersecurity risks.
Using external resources, we also conduct periodic cybersecurity risk assessments, penetration tests and internal threat testing to
assess our processes and procedures and the threat landscape and help guide and prioritize our cybersecurity investments and
solutions. In addition to assessing our own cybersecurity preparedness, we also consider and evaluate cybersecurity risks
associated with use of third-party service providers. Triton maintains dedicated backup systems and applications with enhanced
ransomware protection features. In the event of an incident, we intend to follow our detailed incident response plan, which
outlines the steps to be followed from incident detection to mitigation, recovery and notification, including notifying relevant
functional areas, as well as senior leadership and the Board, as appropriate. We also maintain incident response service
retainers with independent third parties to assist with response and recovery efforts. We continue to expand our cybersecurity
investments and defenses and are establishing a cybersecurity operations center to be managed by a third party to provide 24/7
monitoring of our global cybersecurity environment and assist with coordination, investigation and remediation of alerts.
Triton faces risks from cybersecurity threats that could have a material adverse effect on its business, financial condition,
results of operations, cash flows or reputation. Although such risks have not materially affected us to date, Triton has
experienced, and will continue to experience, cyber incidents in the normal course of its business. For more information on the
cybersecurity risks we face, please see “We rely on our information technology systems to conduct our business. If these
systems fail to adequately perform their functions, or if we experience an interruption in our operations, our business and
financial results could be adversely affected” and “Security breaches and other disruptions could compromise our information
technology systems and expose us to liability, which could cause our business and reputation to suffer” under Item 1A. "Risk
Factors" of this Annual Report on Form 10-K.
ITEM 2. PROPERTIES
Office Locations. As of December 31, 2023, we offer our services through 21 offices and 2 independent agencies located
across 15 countries. Our corporate headquarters located in Purchase, New York occupies approximately 40,000 square feet of
space under a lease that expires in 2035. We also lease other office space for our operations worldwide.
ITEM 3. LEGAL PROCEEDINGS
From time to time we are a party to various legal proceedings, including claims, suits and government proceedings and
investigations arising in connection with the normal course of our business. For a discussion of legal proceedings, please refer
to Note 15 - "Contingencies" to the Consolidated Financial Statements included in Part IV of this Annual Report on Form 10-K.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS, AND
ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
As of September 28, 2023, the Company’s common shares ceased trading on the NYSE and are no longer publicly traded
either on a stock exchange or over-the-counter market.
Holders
As of February 8, 2024, 100% of the Company’s issued and outstanding common shares are privately held by an affiliate
of Brookfield Infrastructure.
ITEM 6. [RESERVED]
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with
our audited consolidated financial statements and related notes and other financial information included elsewhere in this
Annual Report on Form 10-K. 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 discussed under "Risk Factors" and "Cautionary Note
Regarding Forward-Looking Statements" in our Annual Report on Form 10-K, and in any subsequent Quarterly Reports on
Form 10-Q to be filed by us, as well as in the 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. References in this Annual Report on
Form 10-K to the "Company," "Triton," "we," "us" and "our" refer to Triton International Limited and, where appropriate, its
consolidated subsidiaries.
Our Company
Triton 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.
Brookfield Infrastructure Transaction
Please refer to the section titled “Brookfield Infrastructure Transaction” in Part I, Item 1. "Business" of this Annual Report
on Form 10-K.
Operations
Our consolidated operations include the acquisition, leasing, re-leasing and subsequent sale of multiple types of intermodal
containers and chassis. As of December 31, 2023, our total fleet consisted of 4.0 million containers and chassis, representing
6.9 million TEU or 7.6 million CEU. We have an extensive global presence, offering leasing services through a worldwide
network of local offices, and we utilize third-party container depots spread across over 46 countries to provide customers global
access to our container fleet. Our primary customers include the world's largest container shipping lines.
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 and the margins generated from trading new and
used containers.
We lease five types of equipment: dry containers, refrigerated containers, special containers, tank containers, and chassis.
Our in-house equipment sales group manages the sale process for our used containers and chassis from our equipment leasing
fleet and sells used and new containers and chassis acquired from third parties.
27
The following table summarizes the percentage of our equipment fleet in terms of units and CEU as of December 31, 2023:
Equipment Type
Percentage of
total fleet
in units
Percentage of total
fleet in CEU
Dry ..............................................................................................................................
90.1 %
Refrigerated .................................................................................................................
Special .........................................................................................................................
Tank ............................................................................................................................
Chassis ........................................................................................................................
Equipment leasing fleet ............................................................................................
Equipment trading fleet ............................................................................................
5.5
2.5
0.3
0.7
99.1
0.9
71.1 %
21.5
3.4
1.4
1.9
99.3
0.7
Total .......................................................................................................................
100.0 %
100.0 %
TEU and CEU are standard industry measures of fleet size and are used to measure the quantity of containers that make up
our revenue earning assets. 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.
Operating Performance
Our financial performance throughout 2023 was strong despite limited trade growth and generally weak leasing demand.
Global containerized trade volumes were negatively impacted in 2023 by a shift in consumer spending back to services
following a spike in goods consumption during the pandemic. Demand for containers was also impacted by improving supply
chain efficiency and the freeing of container capacity that had been absorbed by pandemic-related bottlenecks. These factors
led to reduced new container investment, limited container pick up activity and decreasing utilization during 2023. However,
our revenue and profitability remained resilient due to the strength of our long-term lease portfolio.
Our fleet size and the net book value of our revenue earning assets have decreased this year due to limited procurement as a
result of the slow market conditions. During 2023, we have invested $327.2 million in new containers of which $129.1 million
is for delivery in 2024.
Our utilization has also decreased in 2023, though at a moderate pace. Average utilization for the years ended
December 31, 2023 and 2022 was 96.9% and 99.1%, and ending utilization for the same periods was 96.5% and 98.1%,
respectively. 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.
Liquidity and Capital Resources
Our principal sources of liquidity are cash flows provided by operating activities, proceeds from the sale of our leasing
equipment, borrowings under our credit facilities and proceeds from other financing activities. Our principal uses of cash
include capital expenditures, debt service, and dividends.
For the year ended December 31, 2023, cash provided by operating activities, together with the proceeds from the sale of
our leasing equipment, was $1,502.8 million. In addition, as of December 31, 2023 we had $57.8 million of unrestricted cash
and cash equivalents and $1,955.0 million of borrowing capacity remaining under our existing credit facilities.
As of December 31, 2023, our cash commitments in the next twelve months include $953.4 million of scheduled principal
payments on our existing debt facilities, and $160.7 million of committed but unpaid capital expenditures, primarily for the
purchase of new 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 and beyond.
28
Capital Activity
During the year ended December 31, 2023, the Company paid dividends on preference shares of $52.1 million and paid
dividends on common shares of $115.6 million. The Company also made a distribution to Parent of $408.2 million to partially
fund the purchase price of the acquisition and pay transaction costs related to the Merger.
During the year ended December 31, 2023, the Company repurchased a total of 1,884,616 common shares at an average
price per share of $66.66 for a total cost of $125.7 million under its share repurchase program. On September 28, 2023, in
connection with the Merger, all previously issued and outstanding common shares of Triton were cancelled. Following the
closing of the Merger, 100% of the Company's issued and outstanding common shares are privately held by an affiliate of
Brookfield Infrastructure.
For additional information on capital activity and dividends, please refer to Note 11 - "Other Equity Matters" in the Notes
to the Consolidated Financial Statements.
Debt Activity
In the fourth quarter of 2023, the Company entered into swaps with a notional value of $250.0 million that commenced on
December 29, 2023 and have a termination date of December 31, 2033. These swaps were designated as cash flow hedges to
fix the interest rates on a portion of the Company's floating rate debt.
During the third quarter of 2023, the Company and its wholly-owned subsidiaries, Triton Container International Limited
and TAL International Container Corporation (the “Borrowers”), amended Triton’s term loan facility to increase the size of the
accordion feature under the term loan agreement to allow the Borrowers to increase the aggregate commitment amount under
the agreement by up to an additional $500.0 million. Concurrently with the closing of the amendment, the Borrowers exercised
the accordion and increased the borrowing under the term loan facility by $500.0 million. There was no change to the maturity
date or reference rate under the term loan facility as a result of the amendment and incremental borrowing.
In August 2023, the Company’s $600.0 million, 0.80% senior notes matured. Payment at maturity was primarily funded by
borrowings under Triton’s revolving credit facility. Additionally, three forward starting swaps with a total notional value of
$300.0 million became effective on August 1, 2023, to offset a portion of the interest expense related to the borrowing under the
revolving credit facility.
In the first quarter of 2023, the Company entered into forward starting swaps with a notional value of $300.0 million that
commenced on August 1, 2023 and have a termination date of March 31, 2025. These swaps were designated as cash flow
hedges to fix the interest rates on a portion of the Company's floating rate debt.
We may, from time to time, seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for
debt, in open-market purchases, privately negotiated transactions, tender offers or otherwise. Such repurchases or exchanges, if
any, may be funded from operating cash flows or other sources, will be on such terms and at prices as we may determine, and
will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts
involved may be material.
Credit Ratings
Our investment-grade corporate and long-term debt credit ratings enable us to lower our cost of funds and broaden our
access to attractively priced capital. While a ratings downgrade, on its own, would not result in a default under any of our debt
agreements, it could adversely affect our ability to issue debt and obtain new financings, or renew existing financings, and it
would increase the cost of our financings. Additionally, under the terms of our senior notes and preference shares, certain
ratings downgrades following the occurrence of a change of control, as more fully described in the relevant agreements
governing those instruments, could give holders of those instruments certain redemption or conversion rights. The Company's
long-term debt and corporate rating of BBB- from Fitch Ratings remained unchanged while S&P Global Ratings upgraded our
ratings from BBB- to BBB in the third quarter of 2023, after the completion of the Merger.
29
Debt Agreements
As of December 31, 2023, our outstanding indebtedness was comprised of the following (amounts in millions):
December 31, 2023
Outstanding
Borrowings
Maximum
Borrowing Level
Secured Debt Financings
Asset-backed securitization term instruments ................................................................ $
Asset-backed securitization warehouse ..........................................................................
Total secured debt financings .......................................................................................
2,579.8 $
240.0
2,819.8
Unsecured Debt Financings
Senior notes ....................................................................................................................
Term loan facility ...........................................................................................................
Revolving credit facility .................................................................................................
Total unsecured debt financings ...................................................................................
Total debt financings .........................................................................................................
Unamortized debt costs ......................................................................................................
Unamortized debt premiums & discounts .........................................................................
Debt, net of unamortized costs .......................................................................................... $
2,300.0
1,468.5
930.0
4,698.5
7,518.3
(43.9)
(3.8)
7,470.6 $
2,579.8
1,125.0
3,704.8
2,300.0
1,468.5
2,000.0
5,768.5
9,473.3
—
—
9,473.3
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 either borrowing bases or an unencumbered asset test that limits borrowing
capacity. Based on those limitations, the availability under these credit facilities at December 31, 2023 was approximately
$1,148.7 million.
As of December 31, 2023, we had a combined $6,726.8 million of total debt on facilities with fixed interest rates or
floating interest rates that have been synthetically fixed through interest rate swap contracts. This accounts for 89% of total
debt.
For additional information on our debt, please see Note 7 - "Debt" in the Notes to the Consolidated Financial Statements.
Debt Covenants
We are subject to certain financial covenants related to leverage and interest coverage as defined in our debt agreements.
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 December 31, 2023, we were in compliance
with all such covenants.
Cash Flow
The following table sets forth certain cash flow information for the years ended December 31, 2023 and 2022 (in
thousands):
Net cash provided by (used in) operating activities ............................. $
Net cash provided by (used in) investing activities ............................. $
Net cash provided by (used in) financing activities ............................. $
Year Ended December 31,
2023
1,150,208 $
144,291 $
(1,331,582) $
2022
1,884,868 $
(646,963) $
(1,282,134) $
Variance
(734,660)
791,254
(49,448)
30
Operating Activities
Net cash provided by operating activities decreased by $734.7 million to $1,150.2 million in 2023, compared to $1,884.9
million in 2022. The decrease is primarily due to lower profitability in the current period of $308.7 million which includes
$52.0 million paid for transaction costs. In addition, there was a $361.6 million decrease in the change in deferred revenue. In
the prior year, we received several lease prepayments for which we deferred revenue recognition compared to the amortization
of these prepayments in the current year. We also had a $63.4 million decrease in the change in accounts receivable due to the
timing of payments.
Investing Activities
Net cash provided by investing activities was $144.3 million in 2023 compared to net cash used in investing activities of
$647.0 million in 2022, a change of $791.3 million. The change was primarily due to a $734.8 million decrease in the
purchases of equipment and a $55.8 million increase in proceeds from the sale of equipment.
Financing Activities
Net cash used in financing activities was $1,331.6 million in 2023 compared to $1,282.1 million in 2022, an increase of
$49.5 million. The increase was primarily due to a $120.4 million increase in net debt repayments due to the decrease in
equipment purchases and related financing requirements. In addition, there was a distribution to Parent of $408.2 million to
partially fund the purchase price of the acquisition and pay transaction costs related to the Merger. These increases in cash used
were partially offset by a $424.3 million decrease in share repurchases and a $46.6 million decrease in common share dividends
paid in 2023 primarily as a result of the Merger.
31
Results of Operations
The following table summarizes our comparative results of operations for the years ended December 31, 2023 and 2022 (in
thousands):
Leasing revenues:
Year Ended December 31,
2023
2022
Variance
Operating leases ...................................................................................................................... $ 1,438,504 $ 1,564,486 $
(125,982)
Finance leases ..........................................................................................................................
105,288
115,200
(9,912)
Total leasing revenues ...........................................................................................................
1,543,792
1,679,686
(135,894)
Equipment trading revenues .......................................................................................................
95,998
147,874
Equipment trading expenses .......................................................................................................
(88,099)
(131,870)
Trading margin .....................................................................................................................
7,899
16,004
(51,876)
43,771
(8,105)
Net gain (loss) on sale of leasing equipment ..............................................................................
58,615
115,665
(57,050)
Operating expenses:
Depreciation and amortization ...................................................................................................
Direct operating expenses ..........................................................................................................
Administrative expenses ............................................................................................................
Transaction and other costs .......................................................................................................
Provision (reversal) for doubtful accounts .................................................................................
Total operating expenses .........................................................................................................
Operating income (loss) ........................................................................................................
575,551
101,552
88,839
79,000
(3,369)
841,573
768,733
634,837
42,381
93,011
—
(3,102)
767,127
(59,286)
59,171
(4,172)
79,000
(267)
74,446
1,044,228
(275,495)
Other (income) expenses:
Interest and debt expense ...........................................................................................................
240,838
226,091
Unrealized (gain) loss on derivative instruments, net ................................................................
Debt termination expense ...........................................................................................................
Other (income) expense, net .......................................................................................................
Total other (income) expenses ..............................................................................................
Income (loss) before income taxes .............................................................................................
Income tax expense (benefit) .....................................................................................................
(15)
—
(643)
240,180
528,553
54,464
(343)
1,933
(1,182)
226,499
817,729
70,807
14,747
328
(1,933)
539
13,681
(289,176)
(16,343)
Net income (loss) ....................................................................................................................... $
474,089 $
746,922 $
(272,833)
Less: dividend on preferred shares .............................................................................................
Net income (loss) attributable to common shareholder ........................................................ $
52,112
421,977 $
52,112
694,810 $
—
(272,833)
For the discussion on the Results of Operations for the Year Ended December 31, 2022 compared to the Year Ended
December 31, 2021, see the Results of Operations section in Part II, Item 7 of our 2022 Annual Report on Form 10-K, filed
with the SEC on February 15, 2023.
32
Comparison of the Year Ended December 31, 2023 to the Year Ended December 31, 2022
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):
Leasing revenues
Operating leases:
Year Ended December 31,
2023
2022
Variance
Per diem revenues .......................................................................................... $ 1,371,048 $ 1,505,388 $
(134,340)
Fee and ancillary revenues .............................................................................
67,456
59,098
Total operating lease revenues .......................................................................
1,438,504
1,564,486
Finance leases .....................................................................................................
105,288
115,200
Total leasing revenues .................................................................................... $ 1,543,792 $ 1,679,686 $
8,358
(125,982)
(9,912)
(135,894)
Total leasing revenues were $1,543.8 million in 2023 compared to $1,679.7 million in 2022, a decrease of $135.9 million.
Per diem revenues were $1,371.0 million in 2023 compared to $1,505.4 million in 2022, a decrease of $134.4 million. The
primary reasons for the decrease were as follows:
•
•
$119.0 million decrease due to a decrease of approximately 0.6 million CEU in the average number of containers on-
hire; and
$16.3 million decrease due to a decrease in the average lease rates for our dry and refrigerated container product lines
as a result of the impact of sizable lease extension transactions completed during 2023.
Fee and ancillary lease revenues were $67.5 million in 2023 compared to $59.1 million in 2022, an increase of $8.4
million, primarily due to a $17.9 million increase in repair and handling revenue due to a higher volume of redeliveries;
partially offset by a $10.3 million decrease in fee revenue due to lower pick up activity.
Finance lease revenues were $105.3 million in 2023 compared to $115.2 million in 2022, a decrease of $9.9 million. This
decrease was primarily due to the early buyout of containers under finance lease in the fourth quarter of 2022 and second
quarter of 2023.
Trading margin. Trading margin was $7.9 million in 2023 compared to $16.0 million in 2022, a decrease of $8.1
million. Container selling margins decreased in 2023 primarily due to a decrease in selling prices.
Net gain (loss) on sale of leasing equipment. Gain on sale of leasing equipment was $58.6 million in 2023 compared to
$115.7 million in 2022, a decrease of $57.1 million. The decrease was primarily due to a decrease in the average selling prices,
net of selling costs of used dry containers, partially offset by an increase in volume.
Depreciation and amortization. Depreciation and amortization was $575.6 million in 2023 compared to $634.8 million
in 2022, a decrease of $59.2 million. The primary reasons for the decrease were as follows:
•
•
$68.5 million decrease due to an increase in the number of containers that have become fully depreciated or
reclassified to assets held for sale; partially offset by a
$11.2 million increase due to new production units placed on-hire during 2022 that have a full year of depreciation in
2023, as well as new production units placed on-hire in the current year.
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 $101.6 million in 2023 compared to $42.4 million in 2022, an increase of $59.2 million. The primary
reasons for the increase were as follows:
•
•
$51.4 million increase in storage expense resulting from an increase in the number of idle units; and a
$6.8 million increase in repositioning and handling expense due to a higher volume of drop-off activity.
Administrative expenses. Administrative expenses were $88.8 million in 2023 compared to $93.0 million in 2022, a
decrease of $4.2 million. The primary reasons for the decrease were as follows:
$3.8 million decrease in overall compensation expense; and a
•
33
•
•
$2.4 million decrease in foreign exchange losses; partially offset by a
$2.2 million increase in travel and entertainment expenses and professional fees.
Transaction and other costs. Included in the twelve months ended December 31, 2023 was $79.0 million of transaction
and other related costs associated with the Merger, including $41.7 million of Advisory fees and $27.0 million of employee
compensation costs.
Interest and debt expense. Interest and debt expense was $240.8 million in 2023 compared to $226.1 million in 2022, an
increase of $14.7 million. The primary reasons for the increase were as follows:
•
•
$33.9 million increase due to an increase in the average effective interest rate to 3.08% from 2.65% due to an increase
in variable interest rates on the unhedged portion of our debt and the repayment of lower yielding fixed rate debt, some
of which was replaced with variable rate debt at a higher rate; partially offset by a
$19.2 million decrease due to a reduction in the average debt balance of $720.4 million.
Debt termination expense. During 2022, the Company incurred $1.9 million of debt termination costs related to the
prepayment of asset-backed securitization term notes. The Company did not incur any debt termination costs in 2023.
Income tax expense (benefit). Income tax expense was $54.5 million in 2023 compared to $70.8 million in 2022, a
decrease of $16.3 million. The decrease in income tax expense was primarily due to a decrease in pre-tax income, partially
offset by a higher effective tax rate. The Company's effective tax rate was 10.3% in 2023 compared to 8.7% in 2022. The
increase in the effective tax rate was primarily due to a decrease in the portion of the Company's income generated in lower tax
rate jurisdictions as well as nondeductible transaction costs incurred in connection with the Merger. In addition, a change in tax
law in certain U.S. states resulted in an increase in our effective U.S. state tax rate and a catch-up adjustment to our state
deferred tax liability.
Segments
Our leasing segment is discussed in our results of operations comparisons and the trading segment is discussed in the
trading margin comparison within the results of operations comparisons.
For additional information on our segments, please see Note 12 - "Segment and Geographic Information" in the Notes to
the Consolidated Financial Statements.
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 payment obligations to our equipment manufacturers.
The following table summarizes our contractual commitments and obligations as of December 31, 2023 and the effect such
obligations are expected to have on our liquidity and cash flows in future periods:
Contractual Obligations by Period
Contractual Obligations:
Total
2024
2025
2026
(dollars in millions)
2027
2028
2029 and
thereafter
Principal debt obligations .......................... $ 7,518.3 $ 953.4 $ 470.5 $ 2,119.6 $ 1,318.0 $ 591.8 $ 2,065.0
Interest on debt obligations(1)
82.9
234.7
....................
Operating leases (mainly facilities) ...........
8.9
2.5
Purchase obligations:
831.0
18.6
155.7
2.1
103.0
1.4
217.5
2.3
37.2
1.4
Equipment purchases payable .................
31.6
31.6
—
—
—
—
—
Equipment purchase commitments .........
—
129.1
Total contractual obligations ..................... $ 8,528.6 $ 1,351.3 $ 690.3 $ 2,277.4 $ 1,422.4 $ 630.4 $ 2,156.8
129.1
—
—
—
—
(1) Amounts include actual interest for fixed debt, estimated interest for floating-rate debt and interest rate swaps.
34
Critical Accounting Estimates
Our consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles
("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.
Leasing Equipment
We purchase new equipment from manufacturers for the purpose of leasing to customers. We also purchase used
equipment with the intention of selling in one or more years from the date of purchase.
Leasing equipment is recorded at cost and depreciated to a residual amount for each equipment type on a straight-line basis
over its estimated useful life. Capitalized costs for new equipment include the manufactured cost of the equipment, inspection,
delivery, and associated costs incurred in moving the equipment from the manufacturer to the initial on-hire location. Repair
and maintenance costs that do not extend the lives of the leasing equipment are charged to direct operating expenses at the time
the costs are incurred.
The estimated useful lives and residual values of our leasing equipment are based on our expectations of how long we will
lease the equipment and used container sales prices at the time we expect to sell the equipment. We evaluate estimates used in
our depreciation policies on a regular basis to determine whether changes, such as industry events, technological advances or
changes in standardization for containers have taken place that would suggest that a change in our depreciation estimates for
useful lives or residual values is warranted. Our evaluation utilizes over fifteen years of historical sales experience for each
major equipment type which takes into consideration varying business cycles including unusually high and low markets. Any
changes to depreciation estimates are applied prospectively. Due to the size of the depreciable fleet a change in residual values
could result in either large increases or decreases to annual depreciation expense depending on the direction of the change in
residual values. For 2023, we completed the annual review of depreciable lives and residual values during the fourth quarter
and concluded no change was necessary.
The estimated useful life for each major equipment type for the years ended December 31, 2023 and 2022 was 13 years for
Dry containers; 12 years for Refrigerated containers; 16 years for Special containers; and 20 years for Tank containers and
Chassis.
Depreciation on leasing equipment commences on the date of initial on-hire.
For equipment purchased for resale that may be leased for a period of time, we adjust our estimates for remaining useful
life and residual values based on our expectations for how long the equipment will remain on-hire to the current lessee and the
expected sales market for older containers when these units are redelivered.
Valuation of Leasing Equipment
Leasing equipment is evaluated for impairment whenever events or changes in circumstances indicate that its carrying
value may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying value
to its estimated undiscounted future cash flows expected to be generated by the asset. If the carrying value of an asset exceeds
our estimated undiscounted future cash flows, an impairment charge is recognized in the amount by which the carrying value of
the asset exceeds the fair value of the asset. Key indicators of impairment on leasing equipment include, among other factors, a
sustained decrease in operating profitability, a sustained decrease in utilization, or indications of technological obsolescence.
When testing for impairment, leasing equipment is generally grouped by equipment type, and is tested separately from
other groups of assets and liabilities. Some of the significant estimates and assumptions used to determine future undiscounted
cash flows and the measurement for impairment are the remaining useful life, expected utilization, expected future lease rates
and expected disposal prices of the equipment. We consider the assumptions on expected utilization and the remaining useful
life to have the greatest impact on the estimate of future undiscounted cash flows. These estimates are principally based on our
historical experience and management's judgment of market conditions at the time the calculations are prepared.
There were no key indicators of impairment and we did not record any impairment charges related to leasing equipment for
the years ended December 31, 2023, 2022 and 2021.
35
Equipment Held for Sale
When leasing equipment is returned off lease, we make a determination of whether to repair and re-lease the equipment or
sell the equipment. At the time we determine that equipment will be sold, we reclassify the carrying value of leasing equipment
to equipment held for sale. Equipment held for sale is recorded at the lower of its estimated fair value, less costs to sell, or
carrying value at the time identified for sale. Depreciation expense on equipment held for sale is halted and disposals generally
occur within 90 days. Initial write downs of equipment held for sale to fair value are recorded as an impairment charge and are
included in Net gain on sale of leasing equipment. Subsequent increases or decreases to the fair value of those assets are
recorded as adjustments to the carrying value of the equipment held for sale, however, any such adjustments may not exceed the
respective equipment's carrying value at the time it was initially classified as held for sale. Realized gains and losses resulting
from the sale of equipment held for sale are recorded in Net gain on sale of leasing equipment, and cash flows associated with
the disposal of equipment held for sale are classified as cash flows from investing activities.
Equipment purchased for our equipment trading segment is also included in Equipment held for sale. Gains and losses
resulting from the sale of this equipment is recorded in Trading margin, and cash flows associated with the purchase and sale of
this equipment are classified as cash flows from operating activities.
During the years ended December 31, 2023 and 2022, we recorded the following net gains or losses on equipment held for
sale on the Consolidated Statements of Operations (in thousands):
Impairment (loss) reversal on equipment held for sale .............................................................. $
Gain (loss) on sale of equipment, net of selling costs ................................................................
Net gain on sale of leasing equipment ....................................................................................... $
(7,144) $
65,759
58,615 $
(887)
116,552
115,665
Year Ended December 31,
2023
2022
Revenue Recognition
Lease Classification
We determine the classification of a lease at its inception as either operating leases or finance leases. If the provisions of
the lease change after lease inception, other than by renewal or extension, we evaluate whether that change may have resulted in
a different lease classification had the change been in effect at inception. If so, the revised agreement is considered a new lease
for lease classification purposes. The classification of the lease as either an operating lease or finance lease will impact revenue
recognition.
Operating Leases with Customers
The Company enters into long-term leases and service leases, principally as lessor in operating leases, for intermodal
equipment. Long-term leases provide customers with specified equipment for a specified term. The Company's leasing
revenues are based upon the number of equipment units leased, the applicable per diem rate and the length of the lease. Long-
term leases typically have initial contractual terms ranging from five to eight or more years. Revenues are recognized on a
straight-line basis over the life of the respective lease. Revenue from advance billings are deferred and recognized in the period
earned. Service leases do not specify the exact number of equipment units to be leased or the term that each unit will remain
on-hire, but allow the lessee to pick-up and drop-off units at various locations specified in the lease agreement. Under a service
lease, rental revenue is based on the number of equipment units on-hire for a given period. Revenue from customers considered
to be non-performing is deferred and recognized when the amounts are received.
The Company recognizes billings to customers for damages and certain other operating costs as leasing revenue when
earned based on the terms of the contractual agreements with the customer.
Finance Leases with Customers
The Company enters into finance leases as lessor for some of the equipment in its fleet. At the inception of the lease, the
Company records the total future minimum lease payments plus the estimated residual value, net of executory costs, if any.
Cash deposits reduce the gross finance lease receivable and are recorded on the statement of cash flows as deferred revenue
within operating activities. The net investment in finance leases represents the receivables due from lessees, net of unearned
income and amounts previously billed. As amounts are billed to a customer they are reclassified from gross finance lease
36
receivable to accounts receivable. Unearned income, which also includes any initial direct costs, is recognized on a constant
yield basis over the lease term and is recorded as leasing revenue. The Company's finance leases are usually long-term in
nature and typically include an option to purchase the equipment at the end of the lease term for a nominal price that the
Company deems reasonably certain to be exercised.
Equipment Trading Revenues and Expenses
Equipment trading revenues represent the proceeds from the sale of equipment purchased for resale and are recognized
when units are sold. Equipment trading expenses represent the cost of equipment sold including selling costs that are
recognized as incurred.
Goodwill
Goodwill is tested for impairment at least annually on October 31 of each fiscal year or more frequently if events occur or
circumstances exist that indicate that the fair value of a reporting unit may be below its carrying value. Goodwill has been
allocated to our reporting units, which are the same as our reporting segments.
In evaluating goodwill for impairment, we have the option to first assess qualitative factors to determine whether further
impairment testing is necessary. Among the relevant events and circumstances that affect the fair value of reporting units, we
consider individual factors such as macroeconomic conditions, changes in our industry and the markets in which we operate, as
well as our reporting units' historical and expected future financial performance. If, after assessing the totality of events and
circumstances, we determine it is more-likely-than-not that the fair value of a reporting unit is less than our carrying amount,
then a quantitative goodwill impairment test is performed. The quantitative goodwill impairment test compares the fair value of
a reporting unit with our carrying value, including goodwill. If the carrying value of the reporting unit is less than its fair value,
no impairment exists. If the carrying value of a reporting unit exceeds its fair value, an impairment loss shall be recognized in
an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.
We elected to perform the qualitative assessment for our evaluation of goodwill impairment during the year ended
December 31, 2023 and concluded there was no impairment. We have not recorded any impairment charges related to goodwill
for the years ended December 31, 2023, 2022, and 2021.
For additional information on our accounting policies, please see Note 2 - "Summary of Significant Accounting Policies" in
the Notes to the Consolidated Financial Statements.
37
ITEM 7A. 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 include 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 counterparty credit risks and the market value of outstanding
derivative instruments.
As of December 31, 2023, 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
Interest Rate Swap(1)
Notional Amount (in
millions)
Weighted Average
Fixed Leg (Pay) Interest Rate
$1,847.0
2.63%
Weighted Average
Remaining Term
3.7 years
(1) Excludes certain interest rate swaps with an effective date in a future period ("forward starting swaps"). Including these instruments will increase total notional amount by
$350.0 million and increase the weighted average remaining term to 4.6 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 December 31, 2023, we have certain interest rate cap agreements that are non-
designated derivatives and changes in fair value are recognized as unrealized (gain) loss on derivative instruments, net, on the
Consolidated Statements of Operations.
Approximately 89% of our debt is either fixed or hedged using derivative instruments which helps mitigate the impact of
changes in short-term interest rates. A 100 basis point increase in the interest rates on our unhedged debt (Term SOFR) would
result in an increase of approximately $7.6 million in interest expense over the next 12 months.
Foreign currency exchange rate risk
The U.S. dollar is the operating currency for the large majority of our leases and obligations, and most of our revenues and
expenses are denominated in U.S. dollars. However, we pay our non-U.S. staff in local currencies, and our direct operating
expenses and disposal transactions for our older containers are often denominated in foreign currencies. We record realized and
unrealized foreign currency exchange gains and losses primarily due to fluctuations in exchange rates related to our Euro and
Pound Sterling transactions and our foreign denominated assets and liabilities in Administrative expenses in the Consolidated
Statements of Operations.
For the year ended December 31, 2023, net foreign currency exchange gains were $0.4 million and for the year ended
December 31, 2022, net foreign currency exchange losses were $2.0 million.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements listed under Item 15—Exhibits and Financial Statement Schedules are filed as a
part of this Item 8.
38
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Management's Report Regarding the Effectiveness of Disclosure Controls and Procedures
We carried out an evaluation, under the supervision and with the participation of our management, including our Chief
Executive Officer and our Senior Vice President and Chief Financial Officer, of the effectiveness of the design and operation of
our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of
the period covered by this Annual Report on Form 10-K. Based upon management's evaluation of these disclosure controls and
procedures, our Chief Executive Officer and our Senior Vice President and Chief Financial Officer concluded, as of the end of
the period covered by this Annual Report on Form 10-K, that our disclosure controls and procedures were effective.
Management's Report on Internal Control Over Financial Reporting
We are responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control
over financial reporting is designed to provide reasonable assurance regarding the reliability of our financial reporting and the
preparation of financial statements for external purposes in accordance with GAAP.
We assessed our internal control over financial reporting as of December 31, 2023 and based our assessment on criteria
established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission. Based on our assessment, we have concluded that our internal control over financial reporting was
effective as of December 31, 2023.
Deloitte & Touche LLP, an independent registered public accounting firm, has audited the consolidated financial
statements included in this Annual Report on Form 10-K and, as part of the audit, has issued an attestation report on the
effectiveness of our internal control over financial reporting as of December 31, 2023. Please refer to "Report of Independent
Registered Public Accounting Firm" in Part IV, Item 15. "Exhibits and Financial Statement Schedules" of this Annual Report
on Form 10-K.
Changes in Internal Controls
There were no changes in our internal control over financial reporting identified in management's evaluation pursuant to
Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the three months ended December 31, 2023 that materially affected,
or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable
assurance of achieving the desired control objectives. Our senior management recognizes that any control system, no matter
how well designed and operated, is based upon certain judgments and assumptions and cannot provide absolute assurance that
its objectives will be met. Similarly, an evaluation of controls cannot provide absolute assurance that misstatements due to
error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected.
ITEM 9B. OTHER INFORMATION
Not applicable.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
39
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Our Amended and Restated Bye-Laws (the “Bye-Laws”) provide that the number of directors is fixed at not less than three (3)
and not more than fifteen directors or such other number of directors in excess of fifteen as determined pursuant to a resolution
of our Board. Our Bye-Laws also provide that any vacancies on the Board not filled at any general meeting of Triton will be
deemed casual vacancies and the Board, so long as a quorum of directors remains in office, will have the power at any time and
from time to time to appoint any individual to be a director to fill a casual vacancy. A director appointed to fill a casual
vacancy will hold office until the next following annual general meeting of shareholders.
On September 28, 2023, immediately prior to the closing of the Merger, all of the directors then serving on the Board resigned
from their positions as Board members and from any and all Board committees. Upon closing of the Merger, pursuant to the
terms of the Merger Agreement and the Statutory Merger Agreement, James A. Bodi and Gregory E. A. Morrison became
members of the Board. Immediately following the closing of the Merger, Mr. Morrison resigned from his position on the Board
and Brian M. Sondey, Terri A. Pizzuto, David Joynt, Benjamin Vaughan and John C. Hellmann were appointed to the Board to
fill existing vacancies on the Board. On January 29, 2024, as previously reported, Mr. Bodi stepped down as a member of the
Board and Roderick Romeo was appointed to fill the vacancy created by Mr. Bodi’s resignation. Our Board is currently
comprised of six (6) directors.
Directors and Executive Officers
Directors
The following table lists our directors as of the date of this Annual Report on Form 10-K.
Name
David Joynt
John C. Hellmann
Terri A. Pizzuto
Roderick Romeo
Brian M. Sondey
Benjamin Vaughan
Age
41
53
65
55
56
52
Position
Chairman
Director
Director
Director
Director, Chief Executive Officer
Director
Our Board believes that each of our directors is highly qualified to serve as a member of the Board and contributes to the mix of
skills, backgrounds, experiences and qualifications of our Board.
David Joynt
Dave Joynt has served as a director since September 2023 and Chairman of our Board since October 2023. Mr. Joynt is a
member of the Compensation Committee of the Board. Mr. Joynt is a Managing Partner in Brookfield’s Infrastructure Group, a
position he has held since 2020. In this role, he leads infrastructure investment activities in North America with a global focus
on the transport sector. He also co-leads the investment team in Toronto. Prior to Brookfield, Mr. Joynt was a senior principal
at Canada Pension Plan Investment Board, which he joined in 2011, and served on its infrastructure team across a number of
geographies, including as Chief Financial Officer ("CFO") of its Australian rail business. Prior to that, Mr. Joynt worked in
private equity and advisory. Mr. Joynt holds a Master of Business Administration degree from the Harvard Business School,
where he graduated as a Baker Scholar, and an Honours Business Administration degree from the Richard Ivey School of
Business.
Qualifications: Mr. Joynt brings to the Board knowledge and experience in a variety of areas, including financial and
investment expertise and subject matter knowledge of the global transport sector. His investment judgment and experience with
global infrastructure investments and activities provides the Board with valuable insights.
40
John C. Hellmann
John C. Hellmann has served as a director since September 2023. Mr. Hellmann is the Executive Chairman of the North
American and UK/Europe boards of directors of Genesee & Wyoming Inc. (“G&W”) and Vice Chair of Brookfield
Infrastructure, positions he has held since September 2023. Prior to that, Mr. Hellmann served as Chairman and Chief
Executive Officer of G&W since May 2017, Chief Executive Officer since 2007, President since 2005 and Chief Financial
Officer from 2000 to 2005. Prior to joining G&W, Mr. Hellmann was an investment banker at Lehman Brothers Inc. and
Schroder & Co. Inc. in New York. He also worked for Weyerhaeuser Company in Tokyo, Japan and Beijing, China. Mr.
Hellmann also serves on the board of directors of the Association of American Railroads. Mr. Hellmann holds an A.B. from
Princeton University, an M.B.A. from the Wharton School of the University of Pennsylvania and an M.A. in International
Studies from the Johns Hopkins University School of Advanced International Studies (SAIS).
Qualifications: Mr. Hellmann brings to the Board extensive managerial capabilities and in-depth knowledge of the operations of
companies in the infrastructure industry. His various leadership roles at G&W, significant international business experience,
skill in valuing companies and success in developing effective growth strategies provides the Board with valuable expertise.
Terri A. Pizzuto
Terri A. Pizzuto has served as a director since April 2023. Ms. Pizzuto is the Chair of the Audit Committee of the Board. She
served as Executive Vice President, Chief Financial Officer and Treasurer of Hub Group, Inc., a publicly traded supply chain
solutions provider that offers multi-modal transportation services throughout North America, from 2007 until her retirement in
2020. Prior to that, she served as Vice President, Finance of Hub Group from 2002 to 2007. Before joining Hub Group, Ms.
Pizzuto spent 22 years at Arthur Andersen, LLP, including the last six years as an audit partner, where she served a wide variety
of SEC registrants and other clients in logistics, manufacturing, high tech and other industries. Ms. Pizzuto also serves on the
board of directors of The Shyft Group, Inc., a North American leader in specialty vehicle manufacturing, assembly, and upfit
for the commercial, retail and service specialty vehicle markets, as well as on the boards of directors of several private
companies. Ms. Pizzuto is a certified public accountant and received a B.S. in Accountancy from the University of Illinois at
Urbana-Champaign.
Qualifications: Ms. Pizzuto brings to the Board knowledge and experience in a variety of areas, including financial and
accounting expertise, SEC regulatory compliance, investor relations, technology transformations, acquisitions and divestitures
and asset management. In addition, her experience with diversity, equity and inclusion, climate/environmental sustainability
and human capital management initiatives strengthens the Board of Directors’ collective knowledge, capabilities, and
experience. Further, Ms. Pizzuto’s background in accountancy provides the Audit Committee with valuable financial expertise.
Roderick Romeo
Roderick Romeo joined our Board of Directors in January 2024. He has also served as President and a director of our Bermuda
subsidiary Triton Container International Limited ("TCIL") since January 2024. Mr. Romeo has over 20 years of experience in
financial leadership roles in the insurance and reinsurance industries. Prior to joining the Company, Mr. Romeo was the CFO –
Reinsurance of Vantage Risk Ltd. from September 2021 to June 2022. Prior to that, he held various positions at Arch
Reinsurance Ltd., including as CFO from October 2018 to April 2021, and Controller – Strategic Ventures from July 2013 to
September 2018. Previously, he held positions with Aeolus Capital Management Ltd., Aeolus Re. Ltd., and XL Group and its
subsidiaries. Earlier in his career, Mr. Romeo served as an assistant manager at the Bermuda Monetary Authority and as an
audit senior associate with PricewaterhouseCoopers in Bermuda. Mr. Romeo is a chartered professional accountant and
received a Bachelor of Commerce degree with a major in Accounting from Saint Mary’s University, Halifax, Nova Scotia,
Canada.
Qualifications: Mr. Romeo brings to the Board knowledge and experience in a variety of areas, including financial and
accounting expertise, risk management expertise, as well as financial leadership experience which strengthens the Board’s
collective knowledge, capabilities, and experience.
Brian M. Sondey
Brian M. Sondey has served as a director and our Chief Executive Officer ("CEO") since the closing of the merger of TCIL and
TAL International Group, Inc. (“TAL”) in July 2016 (the “TCIL/TAL Merger”). Mr. Sondey also served as Chairman of our
Board from the TCIL/TAL Merger to the closing of the Merger. Prior to the TCIL/TAL Merger, Mr. Sondey served as the
Chairman, President and CEO of TAL since 2004. Mr. Sondey joined TAL’s former parent, Transamerica Corporation, in
41
April 1996 as Director of Corporate Development. He then joined TAL International Container Corporation in November 1998
as Senior Vice President of Business Development. In September 1999, Mr. Sondey became President of TAL International
Container Corporation. Prior to his work with Transamerica Corporation and TAL International Container Corporation, Mr.
Sondey worked as a Management Consultant at the Boston Consulting Group and as a Mergers & Acquisitions Associate at J.P.
Morgan. Mr. Sondey holds an MBA from The Stanford Graduate School of Business and a BA degree in Economics from
Amherst College.
Qualifications: Mr. Sondey brings to the Board extensive industry, Company and operational experience from serving as our
CEO, and prior to that from having served as the CEO of TAL. He has a breadth of experience managing a global business and
in the areas of corporate finance and capital allocation, risk management, human capital management, strategic planning and
mergers and acquisitions, as well as subject matter knowledge in the areas of logistics and international trade. As our CEO, he
provides our Board with valuable perspectives regarding our business, strategy and performance and strengthens the Board’s
collective knowledge, capabilities, and experience.
Benjamin Vaughan
Benjamin Vaughan has served as a director since September 2023. He is a member of the Compensation Committee of the
Board. Mr. Vaughan is a Managing Partner of Brookfield Asset Management and is the Operating Partner and Chief Operating
Officer of Brookfield Infrastructure. He joined Brookfield in 2001. Prior to his current roles, Mr. Vaughan held a series of
executive positions within Brookfield’s Renewable Group. In addition to his role in the renewable power business, Mr.
Vaughan played a key role in Brookfield’s investment activities across South America. He serves on the board of directors of
Arteris S.A., a highway concession company in Brazil, in addition to several private Brookfield portfolio company boards. Mr.
Vaughan holds a Bachelor of Commerce degree from Queen’s University in Canada and is a Chartered Professional
Accountant.
Qualifications: Mr. Vaughan’s extensive financial and investment expertise brings to the Board important insights into business
strategy and growth opportunities. The operational experience and business development expertise gained while serving in
various leadership positions within the Brookfield organization enables him to make valuable contributions to the Board.
Further, Mr. Vaughan’s background in accountancy provides the Board with significant financial insights.
Executive Officers
The following table lists our executive officers as of the date of this Annual Report on Form 10-K.
Name
Brian M. Sondey
Michael S. Pearl
John F. O'Callaghan
Kevin Valentine
Carla Heiss
Age
Position
56
47
63
59
54
Chief Executive Officer
Senior Vice President and Chief Financial Officer
Executive Vice President and Global Head of Marketing & Operations
Executive Vice President, Triton Container Sales
Senior Vice President, General Counsel and Secretary
Information concerning the business experience of Mr. Sondey is provided under the section titled “Directors” above.
Michael S. Pearl
Michael Pearl is our Senior Vice President and CFO and has served in this role since January 2023. Prior to this role, Mr. Pearl
served as our Senior Vice President, Treasurer since February 2022. Upon the closing of the TCIL/TAL Merger in July 2016,
Mr. Pearl became our Vice President, Treasurer. Prior to that time he had served as Assistant Treasurer and Head of Credit
since 2014 and Assistant Treasurer and Director, Business Development between 2009 and 2014. Prior to joining the
Company, Mr. Pearl worked for a number of companies in the financial sector, including National City Bank, Wachovia Bank,
and S&P Global. Mr. Pearl holds an MBA from the University of Michigan and a BA degree in Economics from Colby
College.
42
John F. O'Callaghan
John O’Callaghan is our Executive Vice President and Global Head of Field Marketing and Operations. Upon the closing of
the TCIL/TAL Merger in July 2016, Mr. O’Callaghan, who had served as the Senior Vice President for Europe, North America,
South America and the Indian Subcontinent of TCIL since 2006, became the Executive Vice President, Global Head of Field
Marketing & Operations of Triton. Mr. O’Callaghan joined TCIL in 1994 as Marketing Manager of Refrigerated Containers
and progressed over time to positions of increasing responsibility. Prior to his work with TCIL, Mr. O’Callaghan worked as an
Architect at Buro Bolles Wilson, Germany & Young LLP and was also an Architect at Canary Wharf development with Koetter
Kim. Mr. O’Callaghan studied engineering at Trinity College Dublin and qualified with Royal Institute of British Architects as
an architect with the Architectural Association in London.
Kevin Valentine
Kevin Valentine is our Executive Vice President, Triton Container Sales. Mr. Valentine assumed his current role in February
2024. Prior to that, he served as Senior Vice President, Triton Container Sales since the closing of the TCIL/TAL Merger in
July 2016. Previously, Mr. Valentine served as Senior Vice President, Trader and Global Operations of TAL since 2011. Mr.
Valentine joined TAL in 1994 as Regional Marketing Manager and progressed over time to positions of increasing
responsibility. Prior to his work with TAL, Mr. Valentine worked as a Marketing Manager at Tiphook Container Rental. Mr.
Valentine received a BA (Hons) degree in Business from Middlesex University, London, England.
Carla Heiss
Carla Heiss is our Senior Vice President, General Counsel and Secretary and has served in this role since December 2019.
Prior to joining Triton, Ms. Heiss was Deputy General Counsel and Secretary at Bunge, a global leader in agribusiness, food
and ingredients, where she worked from 2003 to 2019. Ms. Heiss began her legal career at Shearman & Sterling, LLP from
1994 to 2003. Ms. Heiss holds a JD degree from the George Washington University Law School and earned her BA degree in
Government from Cornell University.
Corporate Governance
Following the Merger, our common shares were delisted from the NYSE. Because we only have preference shares listed on the
NYSE, we qualify for and rely on exemptions from certain NYSE corporate governance requirements, including the rules
requiring that:
•
•
•
•
our Board be composed of at least a majority of independent directors;
we maintain a nominating/corporate governance committee composed entirely of independent directors;
we maintain a compensation committee composed entirely of independent directors; and
we adopt and disclose corporate governance guidelines.
See “Director Independence” under Part III, Item 13. “Certain Relationships and Related Transactions, and Director
Independence” of this Annual Report on Form 10-K for more information on director independence.
Codes of Conduct
Our Board has adopted a Code of Conduct that applies to all of our employees, officers, and directors, including our principal
executive officer and principal financial officer. The Code of Conduct, which is designed to help officers, directors and
employees conduct business in an ethical and legal manner, covers topics including but not limited to conflicts of interest,
confidentiality of information and compliance with laws and regulations. In addition, we also have a Code of Ethics for Chief
Executive and Senior Financial Officers. Our Code of Conduct and Code of Ethics for Chief Executive and Senior Financial
Officers are available, free of charge, within the Corporate Governance portion of the "Investors" section of our website.
Copies of these documents may also be obtained by sending a request in writing to our Corporate Secretary at Triton
International Limited, Victoria Place, 5th Floor, 31 Victoria Street, Hamilton HM 10, Bermuda.
If we make any substantive amendment to, or grant a waiver from, a provision of the Code of Conduct (to the extent applicable
to certain officers and our directors) or the Code of Ethics for Chief Executive and Senior Financial Officers, we will promptly
disclose the nature of the amendment or waiver on our website at www.trtn.com to the extent required by applicable law or
regulation.
43
Board of Directors
Board Committees
To support effective corporate governance, our Board has two standing committees: the Audit Committee and the
Compensation Committee. Each of the committees regularly discusses with the Board the work it has performed to discharge
its responsibilities, and it may also report to the Board at any time regarding any matter it deems of sufficient importance. Each
committee has the authority to engage legal counsel or other advisors or consultants as they deem appropriate to carry out their
responsibilities.
Board and Committee Composition
The table below sets forth our current Board and committee composition.
Name
David Joynt
John C. Hellmann
Terri A. Pizzuto
Roderick Romeo
Brian M. Sondey
Benjamin Vaughan
Audit Committee
Board
Chair
Member
Member
Member
Member
Member
Audit Committee
Compensation Committee
Member
Member
Member
The Audit Committee is responsible for assisting the Board in:
•
•
overseeing our financial reporting and disclosure processes, including the adequacy and effectiveness of our internal
controls over financial reporting and our disclosure controls and procedures;
appointing, overseeing and establishing the compensation of the independent registered accounting firm, and the
independence of such firm with respect to services performed;
• monitoring management’s implementation of guidelines and policies governing the process by which management assesses
and manages our exposure to risk, as well as major financial risk exposures, compliance with legal and regulatory
requirements, and related person transactions/conflicts of interest; and
overseeing the work and performance of the internal audit function.
•
In discharging its duties, the Audit Committee has the authority to retain independent legal, accounting and other advisors and
has the sole authority (subject, if applicable, to shareholder ratification) to appoint, retain, replace or terminate the independent
auditor. The Audit Committee met four times during the fiscal year ended December 31, 2023.
As of the date of this Annual Report on Form 10-K, Ms. Pizzuto was the sole member of the Audit Committee. Our Board,
after reviewing all of the relevant facts, circumstances and attributes, has determined that Ms. Pizzuto qualifies as an “audit
committee financial expert” as defined by Item 407 (d)(5)(ii) of Regulation S-K of the Exchange Act and is considered
“financially literate” under NYSE rules. In addition, the Board has determined that Ms. Pizzuto is independent in accordance
with SEC and NYSE independence standards for audit committee members.
The Audit Committee operates under a written Audit Committee Charter adopted by our Board, which was most recently
amended and restated effective September 28, 2023 in connection with the closing of the Merger. The Audit Committee
Charter is available on our website at www.trtn.com.
Compensation Committee
The Compensation Committee is responsible for assisting the Board in:
•
•
establishing and overseeing our general compensation philosophy, strategy and principles;
approving the goals and objectives relevant to compensation of the CEO and other executive officers and conducting, in
consultation with the full Board, an annual evaluation of the Chief Executive Officer’s performance;
44
reviewing and approving the compensation of our executive officers;
•
•
reviewing our compensation programs to evaluate unnecessary or excessive risk taking; and
• making recommendations to the Board regarding the compensation of non-employee directors.
As of the date of this Annual Report on Form 10-K, Messrs. Joynt and Vaughan comprised the Compensation Committee. The
Compensation Committee met five times during the fiscal year ended December 31, 2023.
The Compensation Committee operates under a Compensation Committee Charter adopted by our Board, which was most
recently amended and restated effective September 28, 2023 in connection with the closing of the Merger, including, among
other things, to change its name from the Compensation and Talent Management Committee. The Compensation Committee
Charter is available on our website at www.trtn.com.
Nomination of Directors
Following the Merger, the Company is wholly owned by Brookfield Infrastructure and the Board does not maintain a standing
nominating committee or committee performing a similar function. Rather, the Company’s full Board performs the functions
of a nominating committee. The Board believes that the directors can satisfactorily carry out the responsibility of properly
recommending or approving director nominees without the formation of a standing nominating committee.
As we have no standing nominating committee, the Company does not have a nominating committee charter or similar
document in place. The Board’s pre-Merger Nominating and Corporate Governance Committee met three times during the
fiscal year ended December 31, 2023 prior to its dissolution in connection with the closing of the Merger.
The Board’s Role in Risk Oversight
The Board has overall responsibility for the oversight of risk management at Triton. Management is responsible for the day-to-
day assessment and management of risk. The Board and its committees provide active oversight of these efforts, with senior
management engaging with and reporting to the Board and the relevant Board committees on a regular basis to address high
priority risks and how management is seeking to manage and mitigate risks.
At each Board meeting, the Board reviews and discusses with senior management key areas of financial, operational and
strategic risk affecting Triton, including key market risks and risks related to Triton’s capital structure, liquidity and financing,
procurement strategy, competitive environment, customer credit and other strategic developments. The Board also regularly
engages with management with respect to the oversight of other risks, including succession planning and talent management,
environmental, social and governance ("ESG") matters and cybersecurity and information technology risks. See Item 1C.
“Cybersecurity” under Part I of this Annual Report on Form 10-K for more information on our Information Security Program.
Each of the Audit Committee and Compensation Committee has been delegated responsibility for oversight of risk categories
related to its specific areas of focus. See “Audit Committee” and “Compensation Committee” above for descriptions of the risk
categories that each of our committees is responsible for overseeing. Each committee regularly reports on its activities to the
full Board to promote effective coordination and ensure that the entire Board remains apprised of major risks, how those risks
may interrelate, and how management addresses those risks.
Human Capital Management
We seek to attract, retain, and develop the best talent available in order to drive our continued success and achieve our business
goals. Our workforce as of December 31, 2023 was comprised of approximately 249 employees located in 21 offices and 13
countries. We are not a party to any collective bargaining agreements. Our workforce remained relatively unchanged in 2023
compared to 2022. Voluntary workforce turnover for the year was approximately 7%.
Human Capital Governance
We believe that human capital management, including employee recruiting and retention, talent development and succession
planning are key to our continued success. The Board as a whole and through its committees engages with management on a
broad range of human capital management topics, including organizational structure and culture, bench strength in key business
and functional areas, succession planning and talent development, employee recruiting and retention, employee health and
safety matters and diversity, equity and inclusion.
45
Company Culture
Our approach to human capital management is underpinned by our corporate culture, which seeks to foster an inclusive and
respectful work environment where employees are empowered at all levels to implement new ideas to better serve our global
customer base and continuously improve our processes and operations. This culture is supported by a flat organizational
structure that enables speed of decision making and execution; compensation programs that emphasize Company-wide common
shared objectives; a diverse, international team that mirrors our local communities and customer base; robust training and
development opportunities; and resources for employees to seek guidance and raise concerns when needed. We hold regular
virtual Company-wide town hall meetings to keep our employees informed about the business, answer questions on topics of
interest to our employees and maintain high levels of engagement. We believe the combination of competitive compensation
and benefits, career growth and development opportunities and our strong corporate culture promote long employee tenure and
low voluntary turnover. As of December 31, 2023, our average employee tenure was 13 years for all employees and 21 years
for leadership (defined as vice president level and above). In 2023, 46% of open positions were filled with internal candidates.
Workforce Diversity
We believe a diverse workforce directly supports the success of our business and we believe in empowering and supporting all
employees throughout our Company. Through our policies and practices, we are committed to providing equal opportunity in
all aspects of employment. We also promote employee engagement through our Employee Resource Group (“ERG”) program.
Our ERGs are voluntary, employee led groups that foster a diverse and inclusive workplace and empower employees to
celebrate our diversity and build community with others.
As of December 31, 2023, our global workforce was approximately 60% male and 40% female. We are a global business, with
approximately 40% of our workforce located outside the United States. In the United States, approximately 30% of our
workforce was comprised of racial and ethnic minorities.
Total Rewards
We seek to provide our employees with compensation packages that fairly and equitably reward employees for their
contributions to the Company and enable the Company to attract and retain high quality talent. In addition, we seek to structure
our compensation plans so that they are straightforward for our employees to understand and value, and relatively easy for the
Company to administer. We offer competitive salary and incentive programs that recognize individual contributions and
performance as well as shared achievement of Company-wide goals.
Health and Wellness
We offer our employees a competitive set of overall benefits that focuses on total wellness, including health and welfare
benefits, mental health resources, and various paid time off and leave programs. We also offer an employee assistance program
designed to support employees managing personal difficulties or life challenges.
Performance, Learning and Development
We seek to provide our employees with the opportunity to develop both personally and professionally to realize their full
potential, including:
•
•
•
•
organization-wide learning management system offering a comprehensive library of professional development courses;
opportunities for internal cross training, secondments and job rotations;
global mentoring program that pairs mentors and mentees from different regions, business units and functions for the
benefit of mutual learning and career development; and
tuition and professional development reimbursement benefits.
In recent years we have increased our investment in developing and upskilling our employees by rolling out several new
training programs, including management training for new managers, financial literacy, communications and negotiations skills
training and leadership presence and presentation. We continue to strengthen talent review and bench strength analysis for
senior positions across our Company and engage senior managers in comprehensive talent review discussions to ensure
consistent application of performance and compensation practices, as well as increase and expand the important dialogue
regarding the performance and development of our people.
46
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires Triton’s officers and directors, and holders of more than 10% of a registered class of
Triton’s equity securities, to file reports of ownership of such securities with the SEC. Officers, directors and greater than ten
percent beneficial owners are required by applicable regulations to furnish Triton with copies of all Section 16(a) forms they
file.
Following the Merger and deregistration of our common shares under Section 12 of the Exchange Act, we are no longer subject
to the insider reporting requirements and short-swing profit rules of Section 16 of the Exchange Act with respect to our
common shares. Thus, our directors, officers and persons who beneficially own more than 10% of our common shares no
longer need to file beneficial ownership reports with respect to our common shares with the SEC. Our directors, officers and
persons who beneficially own more than 10% of our preference shares continue to be subject to the requirements of Section 16
of the Exchange Act with respect to our preference shares.
Based on a review of the copies of Forms 3, 4 and 5 furnished to Triton and written representations by our directors and
officers, Triton believes that all Section 16(a) filing requirements applicable to its officers, directors and 10% holders were
complied within a timely manner during the last fiscal year, except with respect to:
•
•
a Form 4 filed by Simon Vernon on October 2, 2023, which corrected the balance in Mr. Vernon’s previously filed Forms
3 and Forms 4 to include 8,689 common shares that, due to administrative error, were not reported in connection with the
TCIL/TAL Merger; and
a Form 4 filed by John F. O’Callaghan on October 2, 2023, which corrected the balance in Mr. O’Callaghan’s previously
filed Forms 3 and Forms 4 to include 4,634 common shares that, due to administrative error, were not reported in
connection with the TCIL/TAL Merger.
ITEM 11. EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
This Compensation Discussion and Analysis (“CD&A”) describes the material elements of our compensation program for our
Chief Executive Officer, Chief Financial Officer and three other most highly compensated executive officers (the “Named
Executive Officers” or “NEOs”).
Named Executive Officers
For 2023, our Named Executive Officers include the following individuals:
Brian M. Sondey, Chief Executive Officer;
•
• Michael S. Pearl, Senior Vice President, Chief Financial Officer(1);
•
•
•
John F. O'Callaghan, Executive Vice President, Global Head of Field Marketing and Operations;
Kevin Valentine, Senior Vice President, Triton Container Sales(2); and
Carla Heiss, Senior Vice President, General Counsel and Secretary.
(1) Mr. Pearl assumed the role effective January 1, 2023.
(2) Mr. Valentine was named Executive Vice President, Triton Container Sales in February 2024.
Compensation Philosophy and Objectives
We seek to provide our senior executives with compensation packages that:
Allow the company to attract and retain highly qualified executives;
•
Fairly reward the executives for their contributions to the Company;
•
Link a substantial portion of overall compensation to highly impactful short-term and long-term measures of performance
•
that incentivize our executives to create long-term value;
Are straightforward for our executives to understand and value; and
Do not promote excessive risk taking.
•
•
47
Summary and Highlights for 2023
Compensation Highlights— Brookfield Infrastructure Transaction
On September 28, 2023, the Company was acquired by Brookfield Infrastructure. Prior to the closing of the Merger, the
principal elements of our executive compensation program consisted of (i) base salary, (ii) annual cash incentive awards, (iii)
time-based restricted share awards with three-year cliff vesting and (iv) performance-based restricted share awards with vesting
based on the attainment of performance metrics over a three-year period. Each of these elements is described in more detail
below in this CD&A.
In accordance with the Merger Agreement, annual incentive awards for 2023 for our NEOs were guaranteed at no less than
target levels. Additionally, unvested restricted shares granted to our NEOs that were outstanding immediately prior to the
closing of the Merger were converted into a contingent right to receive an amount in cash equal to the number of shares subject
to those awards, assuming attainment of the maximum level of performance for performance-based awards, multiplied by the
cash value of the merger consideration of $83.16 per share, plus accrued dividends through the closing date. This amount will
be paid to the NEOs upon the earlier of the original vesting date of the award and the 12-month anniversary of the closing date,
generally subject to the NEO's continued service with the Company. See “Annual Incentive Program,” “Long-Term Equity
Incentive Compensation Granted Prior to the Merger” and “Long-Term Equity Incentive Termination and Change in Control
Provisions” discussed below in this CD&A for more information.
Principal Elements of Executive Compensation
Base Salary
The Compensation Committee of our Board of Directors reviews and sets the salary levels for our NEOs annually. Base
salaries are set at levels considered to be appropriate for the scope of the job function and the level of responsibility of the
individual, the skills and qualifications of the individual, individual performance, the amount of time spent in the position,
internal pay relationships and geographic circumstances. Base salaries are also evaluated relative to the amounts paid to
executive officers with similar qualifications, experience and responsibilities at the peer group companies.
The following is a summary of our Named Executive Officers’ base salaries for 2023. Each of our NEOs, other than Mr.
Sondey, received a base salary increase in 2023 to reflect their level of responsibility (and, in the case of Mr. Pearl, his
appointment to Chief Financial Officer) and continued strong performance, as well as to address pay competitiveness:
Name
Brian M. Sondey
Michael S. Pearl
John F. O'Callaghan(1)
Kevin Valentine
Carla Heiss
2023 Base Salary
$
$
$
$
$
1,010,000
415,000
510,118
445,000
480,000
(1) Mr. O’Callaghan’s 2023 Base Salary amount shown in the table uses a conversion rate of USD 1.266 to GBP 1.0.
Annual Incentive Program
Our annual cash-based incentive program is designed to incentivize our Named Executive Officers to achieve annual financial
and strategic priorities.
2023 Annual Incentive Plan Target Levels and Performance Criteria
The Compensation Committee established a 2023 annual incentive plan that covered all Triton executives, including our NEOs.
The Compensation Committee establishes the target incentive compensation amounts and incentive compensation ranges
annually. Target incentive opportunities for our NEOs are set at levels considered appropriate for the job function and skills of
each individual and to reflect the individual’s ability to impact Company performance. Target incentive opportunities are also
evaluated relative to peer group levels.
48
2023 Annual Incentive Award Opportunity for Named Executive Officers
The 2023 annual incentive compensation targets and ranges for our NEOs, expressed as a percentage of base salary, are set
forth in the table below:
Name
Brian M. Sondey
Michael S. Pearl
John F. O'Callaghan
Kevin Valentine
Carla Heiss
Target (% of Salary) Range (% of Salary)
100
70
70
70
70
0 - 200
0 - 140
0 - 140
0 - 140
0 - 140
For 2023, performance criteria under the annual incentive plan were based on both Triton’s 2023 consolidated financial
performance and on individual performance. The weighting of the financial performance portion of the annual incentive plan
was 75% for our CEO and CFO, and 65% for our other NEOs. Actual payouts under the Company financial performance and
individual performance elements of the plan may range from 0% to 200% based on actual performance compared to target
goals, and the Compensation Committee could also use a subjective assessment of the perceived strength and contributions of
each of the NEOs to increase or decrease the calculated payout levels.
2023 Financial Performance Goals
For 2023, the financial performance criteria for annual incentive bonuses for our NEOs were based on the following
performance metrics:
Performance Metric
Weighting
Rationale
Adjusted Earnings Per Share
Growth in Revenue Earning Assets
Cash Flow Before Capital Expenditures
2023 Individual Performance Goals
Measures our core profitability and success in achieving
profitable growth for our shareholders.
60 %
20 %
20 %
Measures our ability to grow our business and market
position in a competitive environment.
Measures cash flow generated to fund asset growth,
dividends, share repurchases and other value-creating
opportunities.
In addition to financial performance, each NEO is evaluated on the achievement of pre-set Company-wide operational and
strategic objectives, as well as individual performance objectives relating to the NEO’s position. These objectives are intended
to be challenging. They can be both qualitative and quantitative and they vary for each Named Executive Officer. For 2023,
these objectives included maintaining high levels of operating performance while market conditions were weak while
positioning the Company to capitalize on eventual improvement in market conditions; progressing identified strategic business
initiatives; continuing to progress talent development initiatives; and increasing our corporate focus on ESG initiatives.
49
2023 Annual Incentive Payouts
As provided in the Merger Agreement, annual incentive awards for 2023 for our NEOs were guaranteed at no less than target
levels, and the Compensation Committee was able to consider the effects of the Merger on performance targets in determining
annual bonus payouts. The Compensation Committee’s determinations of annual incentive bonuses for 2023 are shown in the
following table:
Name
Brian M. Sondey
Michael S. Pearl
John F. O'Callaghan
Kevin Valentine
Carla Heiss
Financial
Individual
Performance Weighting
Performance Weighting
2023 Annual
Incentive
Award
Total Payout
as a % of
Target
100 %
100 %
100 %
100 %
100 %
75 %
75 %
65 %
65 %
65 %
100 %
150 %
100 %
150 %
150 %
25 % $ 1,010,000
25 % $
326,820
35 % $
357,087
35 % $
366,020
35 % $
394,810
100 %
113 %
100 %
118 %
118 %
Long-Term Equity Incentive Compensation Granted Prior to the Merger
Prior to the Merger, we utilized annual grants of long-term equity-based awards for key employees, including our Named
Executive Officers, to align their compensation with the growth of long-term value for our shareholders, to motivate them to
achieve long-range goals and as a retention tool. In determining the value of awards granted to the Named Executive Officers,
the Compensation Committee considered individual performance, the contributions of each NEO to the Company’s success,
each individual's relative experience and future leadership potential and how the individual's total and long-term equity-linked
compensation compared to levels at our peer group companies.
We historically utilized a mix of time-based and performance-based restricted share awards under our equity incentive program.
For 2023, the weighting of long-term equity awards granted to our NEOs was 60% performance-based and 40% time-based.
Additionally, the maximum payout level for the performance-based awards granted to each NEO was 200%. All awards were
subject to three-year cliff vesting and were designed to pay out in Triton common shares, plus dividends accrued over the
vesting period on earned shares.
For performance-based share awards granted in 2023, the performance criteria were equally weighted between the Company’s
total shareholder return performance over the three-year performance cycle relative to a selected peer group and the
achievement of specified Adjusted Return on Equity targets over the performance cycle. At the end of the performance cycle,
the number of shares actually earned by the NEOs could range from 50% to 200% of the target number of performance-based
shares granted based on actual performance against the established metrics.
In connection with the closing of the Merger, our Amended and Restated 2016 Equity Incentive Plan was terminated, and no
future awards will be granted under the plan.
Pre-Merger Restricted Share Awards Granted in 2023
The following table lists the restricted share grants made to the Named Executive Officers in 2023 and the range of shares that
could be earned at the completion of the three-year performance cycle:
Name
Brian M. Sondey
Michael S. Pearl
John F. O'Callaghan
Kevin Valentine
Carla Heiss
Performance-Based (#)
Time-Based (#)
Minimum
20,318
15,239
2,423
3,153
3,328
3,065
1,817
2,365
2,496
2,299
Target
30,478
3,635
4,729
4,992
4,598
Maximum
60,955
7,270
9,458
9,984
9,196
As previously disclosed in connection with the Merger, all of our NEOs’ restricted share awards outstanding as of the closing of
the Merger were converted into a contingent right to receive an amount in cash equal to the number of shares subject to those
50
awards, assuming attainment of the maximum level of performance for performance-based awards, multiplied by the cash value
of the merger consideration of $83.16 per share, plus accrued dividends through the closing date. This amount will be paid to
the NEOs upon the earlier of (i) the original vesting date of the award and (ii) the 12-month anniversary of the closing date,
generally subject to the NEO's continued service with the Company.
Restricted Share Awards Vested in 2023
The following table shows the time-based and performance-based equity awards that vested in January 2023 for our NEOs. For
all NEOs, performance-based awards shown below reflect the vesting of awards granted in 2020 following the end of the three-
year performance cycle. The performance metric for these awards was three-year relative Total Shareholder Return ("TSR").
Based on the Company’s actual three-year relative TSR attained, which was in the middle third of the peer group companies,
the performance-based awards vested at target levels. Amounts shown below are included in the "Options Exercised and Stock
Vested Table" in the "Executive Compensation Tables" section further below.
Name
Brian M. Sondey
Michael S. Pearl
John F. O'Callaghan
Time-Based Awards
Performance-Based Awards
Number of Shares
Acquired on Vesting
(#)
Value Realized
on Vesting
($)
Number of Shares
Acquired on Vesting
(#)
Value Realized
on Vesting
($)
31,347 $
2,004 $
5,882 $
2,225,324
142,264
417,563
31,347 $
2,003 $
5,881 $
2,225,324
142,193
417,492
Kevin Valentine
Carla Heiss(1)
(1) Ms. Heiss received a restricted share grant upon joining the Company in December 2019 intended to cover the 2020 compensation period and thus
408,405
5,752 $
5,753 $
408,334
— $
— $
—
—
pursuant to her employment offer letter did not receive an equity incentive award in 2020.
Post-Merger Long-Term Incentive Awards Granted by Brookfield Infrastructure
Subsequent to the Merger, in December 2023, Brookfield Infrastructure established a new long-term incentive program for
certain senior executives of the Company, including the NEOs. The program consists of one-time grants of profits interest
awards in the case of U.S. participants, and will consist of one-time bonus unit awards in the case of non-U.S. participants (non-
U.S. awards are expected to be granted in 2024). The program is designed to create long-term alignment between Brookfield
Infrastructure and Triton management by enabling key executives to participate in the appreciation of the Company’s valuation
over time. Payment obligations under the program (if any) are the responsibility of Brookfield Infrastructure.
The awards (the “Incentive Units”) represent a conditional right to receive a return tied to a profit-sharing pool based upon the
appreciation of the Company’s valuation from the date of grant in excess of a specified hurdle rate, subject to a cap (as set forth
in grant documentation). The number of Incentive Units granted to the NEOs is set forth in the "Grant of Plan-Based Awards
Table" in the "Executive Compensation Tables" section below.
The Incentive Units will vest in five equal annual installments on each of the first five anniversaries of the closing date of the
Merger, subject to the NEO’s continued employment or service. The Incentive Units also provide for annual liquidity windows
beginning on the fifth anniversary of the closing date of the Merger that entitle the NEO to have his or her Incentive Units
repurchased by Brookfield Infrastructure based on the then-prevailing valuation of the Company, subject to certain limitations.
The Incentive Units (both vested and unvested) are subject to forfeiture (and recoupment of previously paid amounts, if any) if
the NEO’s employment is terminated for “cause” or if the NEO fails to comply with specified restrictive covenants. Unvested
Incentive Units are subject to forfeiture in the event of the NEO’s termination of employment, including the NEO’s resignation
for any reason. In the event of the NEO’s termination of employment or service (other than for cause), the NEO will be entitled
to receive payment in respect of his or her vested Incentive Units based on the then-prevailing valuation of the Company. The
Incentive Units also provide for accelerated vesting upon the consummation of a sale of the Company by Brookfield
Infrastructure.
Other Compensation Elements
Retirement Benefits
We provide health and welfare benefits to our employees, including all of our Named Executive Officers. For our U.S. based
Named Executive Officers, we provide a defined contribution 401(k) plan with a 100% Company matching contribution up to
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$6,000, subject to IRS regulations and plan contribution limits. For Mr. O’Callaghan, we provide a UK stakeholder pension
scheme with a 100% Company matching contribution on up to 5% of the employee’s annual salary, subject to HMRC’s
regulations and plan contribution limits.
We do not offer a deferred compensation plan to our Named Executive Officers. We also do not offer a defined benefit pension
plan to our Named Executive Officers.
Perquisites and Personal Benefits
Consistent with our pay-for-performance philosophy, we provide limited executive perquisites. See the “All Other
Compensation” column of the Summary Compensation Table and the notes to the table in the "Executive Compensation"
section of this Annual Report on Form 10-K for a description of the perquisites provided to the Named Executive Officers.
Executive Officer Employment Agreements
The Company does not have any employment agreements with our NEOs.
Executive Severance Plan
Our NEOs participate in the Triton International Limited Executive Severance Plan. Under the Executive Severance Plan,
subject to the execution of a release of claims, selected senior management employees of the Company and its subsidiaries,
including the Named Executive Officers, are eligible to receive severance payments and benefits in the event the Company
terminates their employment without “cause” or they resign their employment for “good reason,” as defined in the Executive
Severance Plan.
Upon a termination of employment without cause or a resignation for good reason other than in connection with a change in
control, Named Executive Officers would receive the following severance benefits: (i) a payment equal to their base salary in
effect at the time of termination, plus their target bonus opportunity for the fiscal year of termination, multiplied by one (1) (or
by 1.5 in the case of Mr. Sondey) and (ii) their pro-rated target bonus opportunity for the fiscal year of termination. Named
Executive Officers are also entitled to COBRA continuation coverage paid by the Company for 18 months (or, if earlier, until
the date on which they become eligible for coverage under another employer-provided plan).
The Executive Severance Plan contains a "double trigger" requirement for the payment of severance benefits in connection with
a change in control of the Company (as defined in the Executive Severance Plan). Upon a termination of employment without
cause or a resignation for good reason during a “change in control protection period,” as defined in the Executive Severance
Plan, Named Executive Officers would receive the following severance benefits: (i) a payment equal to their base salary in
effect at the time of termination, plus their target bonus opportunity for the fiscal year of termination, multiplied by 1.5 (or by 2
in the case of Mr. Sondey) and (ii) their full target bonus opportunity for the fiscal year of termination. Named Executive
Officers are also entitled to COBRA continuation coverage paid by the Company for 18 months (or, if earlier, until the date on
which they become eligible for coverage under another employer-provided plan). We completed the Merger on September 28,
2023. The completion of the Merger constituted a “change in control” under the Executive Severance Plan and, accordingly, a
“change in control protection period” will be in effect with respect to the Merger until September 28, 2025.
As a condition to participating in the Executive Severance Plan, participants are required to agree to be subject to certain
protective covenants, including non-competition, non-solicitation, confidentiality and non-disparagement covenants. The non-
competition and non-solicitation covenants apply for 12-months following a Named Executive Officer’s termination of
employment for any reason. The confidentiality and non-disparagement covenants apply for an indefinite period.
If any payments to the Named Executive Officers under the Executive Severance Plan or otherwise would be subject to “golden
parachute” excise taxes under the Internal Revenue Code, the payments will be reduced to limit or avoid the excise taxes if and
to the extent such reduction would produce an expected better after-tax result for the executive.
Long-Term Equity Incentive Termination and Change in Control Provisions
As previously discussed, unvested restricted share awards outstanding immediately prior to the Merger were converted into a
contingent right to receive an amount in cash equal to the number of shares subject to those awards, assuming attainment of the
maximum level of performance for performance-based awards, multiplied by the cash value of the merger consideration of
$83.16 per share, plus accrued dividends through the closing date. This amount will be paid to the NEOs upon the earlier of (i)
52
the original vesting date of the award and (ii) the 12-month anniversary of the closing date, generally subject to the NEO's
continued service with the Company. The cash amounts in respect of these awards will otherwise generally remain subject to
the same terms and conditions that were applicable to the underlying awards prior to the Merger, including accelerated vesting
in the event of a qualifying termination of employment following the Merger. See “Potential Payments Upon Termination or
Change in Control” in the "Executive Compensation Tables" section below for more information.
Tax Gross-Ups
We do not have any agreements or severance arrangements that provide for tax “gross-ups” to our NEOs.
Compensation Governance
We believe that a collaborative process best ensures that compensation decisions reflect the principles of our executive
compensation program. Set forth below is a summary of the roles and responsibilities of the key participants that were involved
in making decisions relating to the compensation of our Named Executive Officers in 2023.
Roles and Responsibilities
Responsible Party
Compensation Committee
CEO (assisted by other members of Triton's
management team)
Independent Compensation Consultant
Roles and Responsibilities
•Reviews the Company’s general compensation philosophy and the design,
development and implementation of the Company’s executive compensation
program, including associated risks.
•Approves annual performance goals and objectives for the CEO and NEOs.
•Annually evaluates the performance of the CEO in consultation with the full
Board in light of the goals and objectives established by the Committee. Reviews
the annual performance evaluations of the other NEOs.
•Approves the CEO’s compensation level (including the individual components
of compensation) and the compensation of our other NEOs.
•Approves any changes to our executive compensation peer group.
•Retains outside advisors as it deems appropriate to assist it in the performance
of its duties.
•Provides performance evaluations and compensation recommendations for the
other NEOs.
•Provides input and recommendations to the Compensation Committee regarding
the performance goals and targets for our annual and equity incentive programs
for consideration by the Compensation Committee. The Compensation
Committee retains full discretion in making compensation decisions.
•The CEO is not present during the deliberations on his pay.
•Provides the Compensation Committee with information, analysis and objective
advice regarding our executive compensation program, including:
•advice and recommendations regarding the composition of the executive
compensation peer group;
•expert knowledge of market trends and best practices relating to executive
compensation; and
•analysis of each element of and total target direct compensation for each of the
NEOs relative to the executive compensation peer group.
During 2023, the Compensation Committee was assisted by its independent compensation consultant, Meridian Partners LLC
(“Meridian”). Other than the support that it provided to the Committee, Meridian provided no other services to the Company or
Triton management. During 2023, the Committee considered the independence of Meridian based on the relevant regulations
of the SEC and the NYSE listing standards and concluded that the services performed by Meridian did not raise any conflicts of
interest.
Competitive Market Positioning – Peer Group
In assessing compensation elements and making compensation decisions for our Named Executive Officers for 2023, the
Compensation Committee considered the pay levels and mix of compensation of a select group of relevant peer companies
consistent with past practice. The Compensation Committee has not as a matter of policy specifically linked the target or actual
compensation levels of our Named Executive Officers to those at the selected peer companies, but rather has used the peer
53
analysis as a point of reference when determining appropriate overall compensation levels and mix of compensation for our
Named Executive Officers. The Compensation Committee could set compensation levels at, above or below the median of the
peer companies in its reasonable discretion taking into account factors such as executive performance, tenure, market
conditions, job responsibilities, experience, skill sets and actual or potential contributions to Triton. In addition, actual
compensation earned in any year could be at, above, or below the median depending on the individual's and Triton's
performance for the year. The Compensation Committee also evaluated the Company’s financial performance relative to the
financial performance of the selected peer companies.
The composition of the peer group was historically reviewed annually to ensure it remained appropriate in terms of company
size and business focus and to reflect mergers, acquisitions or other business related changes that may have occurred. The peer
group companies used by the Compensation Committee in the 2023 review were:
•Air Lease Corp.
•Air Transport Services Group Inc.
•Atlas Air Worldwide Holdings
•Cubesmart
•Forward Air Corporation
•GATX Corporation
•H&E Equipment Services, Inc.
•Herc Holdings Inc.
•Hub Group, Inc.
•LifeStorage Inc.
•Matson, Inc.
•McGrath RentCorp.
•Werner Enterprises, Inc.
•WillScot Mobile Mini Inc.
Clawback Policy
The Company has historically had a clawback policy to encourage sound risk management and accountability. Following the
recent adoption of final rules by the SEC and the NYSE relating to clawback requirements under the Dodd-Frank Act, the
Company timely adopted our Clawback Policy: Recovery of Erroneously Awarded Incentive-Based Compensation (“Clawback
Policy”) to comply with the new mandates. Under the Clawback Policy, the Compensation Committee, or the majority of
independent directors on the Board, will have the authority to administer and make determinations with respect to the policy.
To date, no NEOs have been subject to any clawbacks. The Clawback Policy is filed as an exhibit to this Annual Report on
Form 10-K.
Tax Deductibility of Compensation
Section 162(m) of the Internal Revenue Code generally precludes a publicly traded corporation from taking a tax deduction for
compensation in excess of $1 million payable in any fiscal year to the corporation’s chief executive officer and other “covered
employees,” as defined in Section 162(m). Although our executive compensation program has sought to maximize the tax
deductibility of compensation payable to the Named Executive Officers to the extent permitted by law, the Compensation
Committee continues to retain flexibility to make compensation decisions that are driven by market competitiveness and based
on the other factors discussed in this CD&A when necessary or appropriate (as determined by the Compensation Committee in
its sole discretion) to enable the Company to continue to attract, retain, reward, and motivate its highly qualified executives.
Compensation Risk Assessment
The Compensation Committee oversees our executive compensation program and practices, including our annual and long-term
incentive programs, and in doing so, reviews each compensation element annually to see that they do not encourage excessive
risk taking. We believe that our compensation practices, which consist of a mix of fixed and variable components, link a
substantial portion of executive pay to the Company’s long-term performance, utilize multiple performance metrics, include
caps on maximum level of payouts and incorporate risk mitigation features such as clawback policies, mitigate excessive risk
taking.
Compensation Committee Report
The Compensation Committee has reviewed and discussed the above CD&A with management and, based on such review and
discussions, the Compensation Committee recommended to the Board that the CD&A be included in this Annual Report on
Form 10-K.
Compensation Committee:
David Joynt
Benjamin Vaughan
54
Executive Compensation Tables
Summary Compensation Table
The following table summarizes the compensation of our Named Executive Officers for the fiscal years ended December 31,
2023, 2022 and 2021.
Name and Principal
Position
Brian M. Sondey
Chief Executive Officer
Michael S. Pearl(6)
Senior Vice President
and Chief Financial
Officer
John F. O'Callaghan(7)
Executive Vice President,
Global Head of Field
Marketing and
Operations
Kevin Valentine
Senior Vice President,
Triton Container Sales
Carla Heiss
Senior Vice President,
General Counsel and
Secretary
Year
Salary
($)
2023 1,010,000
Share Awards
($)(1)(2)
3,671,027
Option
Awards
($)(3)
Non-Equity
Incentive Plan
Compensation
($)(4)
All Other
Compensation
($)(5)
Total
($)
6,500,000
1,010,000
19,311 12,210,338
2022 1,010,000
3,456,299
2021 975,000
2023 415,000
2,827,182
437,812
3,300,000
1,254,925
1,950,000
326,820
19,291 5,740,515
16,550 5,768,732
6,764 4,486,396
2023 510,118
2022 460,337
569,632
531,758
2021 491,373
516,494
2023 445,000
601,286
3,300,000
2022 420,000
2021 400,000
558,320
543,667
2023 480,000
553,805
1,650,000
2022 450,000
2021 420,000
499,806
478,452
357,087
382,172
589,648
366,020
374,409
480,000
394,810
379,103
472,500
49,048 1,485,885
43,967 1,418,234
41,132 1,638,647
15,936 4,728,242
16,534 1,369,263
15,673 1,439,340
14,943 3,093,558
14,842 1,343,751
14,754 1,385,706
(1) The share award values shown in this column represent the grant date fair value of the time-based and performance-based restricted shares granted by the
Company as calculated in accordance with FASB ASC Topic 718 - “Compensation - Stock Compensation” (“ASC 718”). These awards were originally
granted as restricted shares and were subsequently converted into contingent cash awards as a result of the Merger. See “Compensation Highlights –
Brookfield Infrastructure Transaction” in the CD&A section of this Annual Report on Form 10-K for additional information.
(2) The grant date fair value of the performance-based restricted shares reported in this column assumes that these awards would be earned at the target level
of performance. If the maximum level of performance had been assumed, the grant date fair value of the time-based and the performance-based restricted
shares granted to our Named Executive Officers would have been as follows for 2023: Mr. Sondey: $5,873,600; Mr. Pearl: $700,513; Mr. O’Callaghan:
$911,397; Mr. Valentine: $962,058; and Ms. Heiss: $886,102.
(3) The Company believes that, although the Incentive Units do not require the payment of an exercise price, they are most similar economically to stock
options or stock appreciation rights, and as such, they are properly classified as “options” under the definition provided in Item 402 of Regulation S-K as
an instrument with an “option-like feature” for disclosure purposes. The amounts disclosed in this column are computed using acceptable valuation
methodologies in accordance with ASC 718.
(4) Represents payment of cash awards granted under our annual incentive compensation program. As provided in the Merger Agreement, annual incentive
awards for 2023 were guaranteed at no less than target levels and the Compensation Committee was able to consider the effects of the Merger on
performance targets in determining payouts. For further discussion, see “2023 Annual Incentive Payouts” in the CD&A section of this Annual Report on
Form 10-K.
(5) For 2023, All Other Compensation consisted of the following:
Name
Brian M. Sondey
Michael S. Pearl
John F. O'Callaghan
Kevin Valentine
Carla Heiss
Savings Plan
Company Match
($)
Other
Compensation
($)(a)
$
$
$
$
$
6,000 $
6,000 $
13,311 $
764 $
29,026 $
20,022 $
6,000 $
6,000 $
9,936 $
8,943 $
Total
19,311
6,764
49,048
15,936
14,943
(a) Other compensation includes Company paid car allowances, Company paid life insurance premiums for coverage exceeding $50,000 and Company
matching gift donations. In addition, for Mr. O’Callaghan the amount also includes club membership fees.
(6) Michael S. Pearl assumed the role of Triton's Chief Financial Officer effective January 1, 2023 and is a Named Executive Officer for the first time in
2023.
(7) Amounts reported in the table for Mr. O’Callaghan were paid in GBP and converted for purposes of this table from GBP to U.S. dollars at an exchange
rate of USD 1.266 to GBP 1.0 for 2023.
55
Grants of Plan-Based Awards Table
The following table sets forth information with respect to awards granted to our Named Executive Officers during the fiscal
year ended December 31, 2023:
Estimated Future Payouts under
Non-Equity Incentive Awards
Estimated Future Payouts under
Equity Incentive Awards
Grant
Date
Minimum
($)(1)
Target
($)
Maximum
($)
Minimum
(#)
Target
(#)
Maximum
(#)
2/07/2023 $
— $ 1,010,000 $ 2,020,000
15,239
30,478
60,955
All Other
Share
Awards:
Number
of Shares
(#)(2)
All Other
Option
Awards:
Number
of Units
(#)(3)
Exercise
or Base
Price of
Option
Awards
($/Sh)(4)
Name
Brian M.
Sondey
Michael S.
Pearl
John F. (6)
O'Callaghan
Kevin
Valentine
Carla Heiss
2/07/2023
12/29/2023
2/07/2023 $
— $ 290,500 $ 581,000
1,817
3,635
7,270
2/07/2023
12/29/2023
2/07/2023 $
— $ 357,082 $ 714,165
2,365
4,729
9,458
2/07/2023
2/07/2023 $
— $ 311,500 $ 623,000
2,496
4,992
9,984
2/07/2023
12/29/2023
2/07/2023 $
— $ 336,000 $ 672,000
2,299
4,598
9,196
2/07/2023
12/29/2023
20,318
2,423
3,153
3,328
3,065
Grant Date
Fair Value
of Share or
Option
Awards(5)
$ 2,202,645
$ 1,468,382
300 $
— $ 6,500,000
$ 262,701
$ 175,110
150 $
— $ 3,300,000
$ 341,765
$ 227,867
$ 360,772
$ 240,515
150 $
— $ 3,300,000
$ 332,297
$ 221,508
75 $
— $ 1,650,000
(1) Awards granted under our annual incentive plan do not have a minimum performance payout
(2) Represents time-based restricted share awards.
(3) Represents the number of Incentive Units granted by Brookfield Infrastructure subsequent to the Merger. Each Incentive Unit represents a conditional
right to receive a return tied to a profit-sharing pool based upon the appreciation of the Company’s valuation from the date of grant in excess of a
specified hurdle rate (as set forth in the Incentive Unit documents). The Incentive Units do not have minimum or target payouts and are subject to a cap.
The Incentive Units are discussed in greater detail in “Post-Merger Long-Term Incentive Awards Granted by Brookfield Infrastructure” in the CD&A.
(4) The Company believes that, although the Incentive Units do not require the payment of an exercise price, they are most similar economically to stock
options or stock appreciation rights, and as such, they are properly classified as “options” under the definition provided in Item 402 of Regulation S-K as
an instrument with an “option-like feature” for disclosure purposes. Holders of Incentive Units are only entitled to payout of these awards if the
Company’s valuation exceeds a specified hurdle rate.
(5) Calculated based on target equity incentive awards using the February 7, 2023 closing share price of $72.27.
(6) Amounts reported in the “Estimated Future Payouts under Non-Equity Incentive Awards” column are based on an exchange rate of USD 1.266 to GBP
1.0.
Outstanding Equity Awards at Fiscal Year End Table
As described above, in connection with the Merger, unvested restricted share awards outstanding immediately prior to the
Merger were converted into a contingent right to receive an amount in cash equal to the number of shares subject to those
awards, assuming attainment of the maximum level of performance for performance-based awards, multiplied by the dollar
value of the merger consideration of $83.16 per share, plus accrued dividends through the closing date of the Merger.
56
The following table sets forth information concerning unvested awards for our Named Executive Officers as of December 31,
2023:
Option Awards(1)
Number of Securities
Underlying
Unexercised Options
(#) Exercisable
Number of Securities
Underlying
Unexercised Options
(#) Unexercisable
Option
Exercise Price
($)
Option
Expiration
Date
Grant Award
Date
—
—
—
—
—
300
150
—
150
75
—
—
—
—
—
N/A
N/A
—
N/A
N/A
12/29/2023
12/29/2023
—
12/29/2023
12/29/2023
Named Executive Officer
Brian M. Sondey
Michael S. Pearl
John F. O'Callaghan
Kevin Valentine
Carla Heiss
(1) Represents the number of Incentive Units granted by Brookfield Infrastructure subsequent to the Merger. Each Incentive Unit represents a conditional
right to receive a return tied to a profit-sharing pool based upon the appreciation of the Company’s valuation from the date of grant in excess of a
specified hurdle rate (as set forth in the Incentive Unit documents). The Incentive Units do not have an exercise price or minimum or target payouts and
are subject to a cap. The Incentive Units are discussed in greater detail in “Post-Merger Long-Term Incentive Awards Granted by Brookfield
Infrastructure” in the CD&A.
Options Exercised and Stock Vested Table
The shares shown in the table below represent time-based and performance-based restricted shares that vested on January 10,
2023 (for all NEO’s other than Ms. Heiss). The closing share price on January 10, 2023 was $70.99. We did not grant stock
options to our executives as part of our equity incentive program.
Name
Brian M. Sondey
Michael S. Pearl
John F. O'Callaghan
Kevin Valentine
Carla Heiss
Pension Benefits
Stock Awards
Number of Shares
Acquired on Vesting
(#)
Value Realized on
Vesting
($)
62,694 $
4,007 $
11,763 $
11,505 $
— $
4,450,648
284,457
835,055
816,739
—
We do not provide our Named Executive Officers with any plans providing for payments or other benefits at, following or in
connection with retirement, other than our tax-qualified defined contribution 401(k) plan and our UK Stakeholders Scheme for
Mr. O’Callaghan.
Nonqualified Deferred Compensation
We do not provide our Named Executive Officers with any plans providing for nonqualified deferred compensation.
Potential Payments Upon Termination or Change in Control
This section describes and quantifies the potential payments and benefits that our Named Executive Officers would have been
eligible to receive in connection with a termination event set forth in the table below. As described in “Executive Severance
Plan” in the CD&A of this Annual Report on Form 10-K, we have adopted an Executive Severance Plan that provides for
specified severance arrangements for our NEOs. Vesting of contingent cash amounts payable in respect of long-term equity
incentive awards outstanding prior to the Merger in connection with a qualified termination of employment is governed by the
terms of the Merger Agreement, the Amended and Restated 2016 Equity Incentive Plan and the applicable award agreements
for those awards. The completion of the Merger on September 28, 2023 constituted a "change in control" under the Executive
Severance Plan. Accordingly, a "change in control protection period" under the Executive Severance Plan will be in effect until
September 28, 2025.
57
The information provided in this section assumes that the applicable termination of employment occurred on December 31,
2023, and that the value of the contingent cash awards is equivalent to the cash value of the merger consideration of $83.16, and
also includes accrued dividends payable with respect to the contingent cash awards through the closing date of the Merger.
Name
Benefit
Brian M. Sondey
Michael S. Pearl
John F. O'Callaghan(4)
Kevin Valentine
Carla Heiss
Cash Severance(1) $
Contingent Rights(2) $
Other(3) $
TOTAL $
Cash Severance(1) $
Contingent Rights(2) $
Other(3) $
TOTAL $
Cash Severance(1) $
Contingent Rights(2) $
Other(3) $
TOTAL $
Cash Severance(1) $
Contingent Rights(2) $
Other(3) $
TOTAL $
Cash Severance(1) $
Contingent Rights(2) $
Other(3) $
TOTAL $
Termination without
Cause or with Good
Reason Outside of a
Change in Control
Termination Event
Termination without
Cause or with Good
Reason in connection
with a Change in
Control
4,040,001 $
20,728,429 $
51,784 $
5,050,001 $
20,728,429 $
51,784 $
Termination due to
death or disability
—
20,728,429
—
24,820,214 $
25,830,214 $
20,728,429
996,000 $
1,609,556 $
51,784 $
2,657,340 $
1,224,283 $
3,377,715 $
24,294 $
4,626,292 $
1,068,000 $
3,555,435 $
51,784 $
4,675,219 $
1,152,000 $
3,194,042 $
51,784 $
4,397,826 $
1,348,750 $
1,609,556 $
51,784 $
3,010,090 $
1,657,883 $
3,377,715 $
24,294 $
5,059,892 $
1,446,250 $
3,555,435 $
51,784 $
5,053,469 $
1,560,000 $
3,194,042 $
51,784 $
4,805,826 $
—
1,609,556
—
1,609,556
—
3,377,715
—
3,377,715
—
3,555,435
—
3,555,435
—
3,194,042
—
3,194,042
(1) As described in “Executive Severance Plan” in the CD&A of this Annual Report on Form 10-K.
(2) Amounts reflect full vesting of contingent cash awards in respect of restricted share awards outstanding prior to the Merger and include accrued dividends
through the closing date of the Merger.
(3) Reflects assumed total cost of continuing health care premiums, as provided under the Executive Severance Plan. As of December 31, 2023, the Incentive
Units have not met the relevant hurdle rate for these awards; therefore, no amounts are reportable for 2023 with respect to the Incentive Units. The
Incentive Units are discussed in greater detail in "Post-Merger Long-Term Incentive Awards Granted by Brookfield Infrastructure" in the CD&A.
(4) Amounts shown in the table use a conversion rate of USD 1.266 to GBP 1.0.
Compensation Committee Interlocks and Insider Participation
During 2023, no member of the Compensation Committee served as an officer, employee or former officer of the Company,
and no executive officer of the Company served as a member of the compensation committee (or other committee performing
equivalent functions) or board of directors of another entity one of whose executive officers served on the Compensation
Committee or as a director of the Company.
CEO Pay Ratio
Pursuant to SEC rules, we are required to calculate and disclose the ratio of the CEO’s annual total compensation (as calculated
in the Summary Compensation Table) to that of the Company’s median employee.
To determine the median employee, we made a direct determination from our global employee population (other than our CEO)
of approximately 248 individuals. We established a consistently applied compensation measure inclusive of base pay,
overtime, annual incentives, and allowances to identify the Company’s median employee. Our employee population was
58
evaluated as of December 31, 2023, and reflects compensation paid from January 1, 2023, through December 31, 2023. Where
allowed under the applicable SEC rule, we have annualized compensation for full-time and part-time employees newly hired in
2023. Non-U.S. compensation was converted to U.S. dollars based on the applicable exchange rates as of December 31, 2023.
Based on the above, the annual total compensation for the median employee for 2023 was $128,779. Using the CEO’s total
2023 compensation of $12,210,338 as presented in the Summary Compensation Table, the resulting ratio is 95:1.
Director Compensation
Prior to the closing of the Merger, non-employee directors of the Company received compensation in accordance with our non-
employee director compensation program, in addition to reimbursement of expenses incurred in connection with their
attendance at meetings. For 2023, prior to the closing of the Merger, this consisted of (i) a base annual retainer fee of $75,000,
(ii) an additional cash retainer of $10,000 for serving on more than one Board committee, (iii) an additional retainer of $15,000
for serving as chair of the Audit Committee or Compensation Committee, (iv) an additional retainer of $10,000 for serving as
chair of the Nominating and Corporate Governance Committee, and (v) a supplemental retainer of $30,000 for serving as our
lead independent director. Cash retainer fees were payable quarterly, in arrears.
In addition, to further align the interests of our non-employee directors with those of our shareholders, non-employee directors
were eligible to receive a grant of immediately vested restricted shares with a value of $160,000 annually following our annual
general meeting of shareholders. For 2023, given the Merger was pending as of the date of our annual general meeting, the
value of the equity-based retainer was paid to our non-employee directors in the form of an immediately vested cash award.
Subsequent to the Merger, only one of our non-employee directors, Ms. Pizzuto, receives any compensation for service on our
Board. Ms. Pizzuto is entitled to receive an annual cash retainer of $200,000 payable quarterly in arrears, in addition to
reimbursement for reasonable business expenses. As a result of their affiliation with Brookfield Infrastructure, Messrs. Joynt,
Vaughan, and Hellman do not receive (and during his tenure on the Board, Mr. Bodi did not receive) additional compensation
for service on our Board other than reimbursement for reasonable expenses incurred in connection with attendance at meetings.
Mr. Sondey and Mr. Romeo also do not receive additional compensation for service as directors.
2023 Non-Employee Director Compensation Table
The following table provides information on the compensation of our non-employee directors for the year ended December 31,
2023. All non-employee directors listed below, other than Ms. Pizzuto, ceased serving on the Board upon the closing of the
Merger on September 28, 2023.
Fees Earned or Paid
in Cash
Cash Retainer in Lieu
of Equity-Based
Award
All Other
Compensation(1)
Robert W. Alspaugh
Malcolm P. Baker
Annabelle Bexiga
Claude Germain
Kenneth J. Hanau
John S. Hextall
Terri Pizzuto
Niharika Ramdev
Robert L. Rosner
Simon R. Vernon
$
$
$
$
$
$
$
$
$
$
67,500 $
56,250 $
56,250 $
75,000 $
56,250 $
63,750 $
82,083 $
56,250 $
93,750 $
56,250 $
160,000 $
160,000 $
160,000 $
160,000 $
160,000 $
160,000 $
160,000 $
160,000 $
160,000 $
160,000 $
— $
— $
— $
— $
— $
— $
— $
— $
— $
80,000 $
Totals
227,500
216,250
216,250
235,000
216,250
223,750
242,083
216,250
253,750
296,250
(1)
Includes $80,000 earned by Mr. Vernon for service as the Company’s representative on other companies’ boards of directors. See “Transactions with
Related Persons” under Part III, Item 13. “Certain Relationships and Related Transactions, and Directors Independence” for more information.
59
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED SHAREHOLDER MATTERS
The table below sets forth information as of February 8, 2024 as to the beneficial ownership of our common shares. None of
our officers or directors beneficially own any of our common or preference shares.
Name of Beneficial Owner
Thanos Holdings Limited
Common Shares Beneficially Owned
101,158,891(1)
Percent of Class (%)
100
(1) All issued and outstanding common shares of the Company are held by the Company’s direct parent, Thanos Holdings Limited, an exempted company
limited by shares incorporated under the laws of Bermuda (“Thanos Holdings”). Brookfield Corporation, a corporation formed under the laws of the
Province of Ontario, Canada (“Brookfield”) is the ultimate parent of Thanos Holdings. BAM Partners Trust (the “BAM Partnership”), a trust formed
under the laws of the Province of Ontario, Canada, owns 85,120 class B limited voting shares of Brookfield (the "Brookfield Class B Shares")
representing 100% of such shares. The trustee of the BAM Partnership is BAM Class B Partners Inc., an Ontario corporation. The Brookfield Class B
Shares entitle the holders thereof to appoint one half of the board of directors of Brookfield. The principal business address of the entities listed in clauses
(i) through (xiii) is 181 Bay Street, Suite 100, Brookfield Place, Toronto, Ontario M5J 2T3, Canada.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Certain Relationships and Related Party Transactions
Policies and Procedures
Triton’s codes described in “Codes of Conduct” under Part III, Item 10. “Directors, Executive Officers and Corporate
Governance” and other policies discourage conflicts of interest or the appearance of conflicts of interest and provide guidance
for identifying, handling and reporting conflicts of interest. Additionally, the Board has adopted a written policy regarding
related person transactions. These are defined, subject to certain exceptions, as any transaction or series of transactions (i) in
which the Company or a subsidiary was or is a participant, (ii) where the amount involved exceeds or is expected to exceed
$120,000 in any fiscal year and (iii) in which the related person (i.e., a director, director nominee, executive officer, greater than
five percent beneficial owner of the Company’s common shares) or any immediate family member has or will have a direct or
indirect material interest.
Pursuant to its charter and the related person transactions policy, the Audit Committee reviews and approves or ratifies related
person transactions. Triton has multiple processes for reporting conflicts of interests, including related person transactions. In
connection with their initial nomination or appointment and annually thereafter, our directors and executive officers complete
questionnaires designed to elicit information about potential related person transactions and/or conflicts of interest. In addition,
the directors and executive officers are expected to promptly advise our General Counsel if there are any changes to the
information they previously provided. Transactions deemed reasonably likely to be related person transactions are reviewed by
the Audit Committee at its next meeting, unless action is required sooner. In such a case, the transaction would be submitted to
the Audit Committee Chair for approval in advance of the next scheduled Audit Committee meeting. In reviewing related
person transactions, the following factors will generally be considered:
•
•
•
•
•
•
•
the nature of the related person’s interest in the transaction;
the purpose and material terms of the transaction, including the amount and type of transaction;
the importance of the transaction to the related person and to Triton;
whether the transaction is in the ordinary course of Triton’s business and whether it was initiated by Triton or the related
person;
whether the transaction is on terms no less favorable to Triton than terms that could have been reached with an unrelated
third party;
whether the transaction would impair the judgment of a director or executive officer to act in the best interest of Triton; and
any other matters deemed appropriate with respect to the particular transaction.
Transactions with Related Persons
Simon Vernon served as the President of the Company until his retirement in 2018 and as a director on our Board until his
resignation in September 2023 in connection with the closing of the Merger. Following his retirement as President, Mr. Vernon
has served as the Company’s representative on the Board of Directors of the Through Transport (TT) Club, a mutual insurance
company, and is paid $20,000 for each meeting of the Board of Directors of the TT Club that he attends. In 2023, he earned
$40,000 for the meetings that he attended. Additionally, Mr. Vernon is the Company’s representative on the Board of Directors
of Tristar Container Services (Asia) Private Limited and is paid $40,000 a year, plus an additional $10,000 for meetings held in
60
India. In 2023, he earned $40,000 in connection with his service. He is also reimbursed for reasonable expenses that he incurs
in providing the above services.
Certain portfolio companies and other affiliates of Brookfield Infrastructure have from time to time entered into, and may
continue to enter into, arrangements with the Company regarding the lease or purchase of our equipment in the ordinary course
of their business, which may result in revenues to the Company in excess of $120,000 annually. In addition, the Company has
entered into, and may continue to enter into, arrangements with certain portfolio companies or other affiliates of Brookfield
Infrastructure regarding use of their products and services in the ordinary course of business, which may result in revenues to
those parties in excess of $120,000 annually.
Director Independence
At the closing of the Merger, the Company delisted its common shares from the NYSE. As a result, the Company only has
preference shares listed on the NYSE and therefore qualifies for and relies on exemptions from certain NYSE corporate
governance requirements, including the requirement that a majority of its Board be comprised of independent directors. If the
Company were subject to the NYSE independence requirements with respect to its Board, we believe that only Ms. Pizzuto
could be determined to meet the NYSE independence standards for members of the board of directors. We believe that none of
our other directors would be determined to meet the NYSE independence standards for members of the board of directors
because of the relationships of Messrs. Joynt, Hellmann and Vaughan with Brookfield Infrastructure and because of Mr.
Sondey’s and Mr. Romeo’s employment with the Company.
Following the Merger and the removal of our common shares from listing on the NYSE, the Company is also no longer subject
to the NYSE independence rules requiring that it maintain a compensation committee composed entirely of directors satisfying
the independence requirements for members of the compensation committee. If the Company were subject to the NYSE
independence requirements with respect to its Compensation Committee, we believe that neither Mr. Joynt nor Mr. Vaughan,
who constitute the Compensation Committee, would be determined to meet the NYSE independence standards for
compensation committee members.
Under the NYSE's audit committee independence requirement for issuers of preferred or debt securities, Ms. Pizzuto, who
constitutes the Audit Committee, is considered independent in accordance with the SEC and NYSE independence standards for
audit committee members.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Our independent registered public accounting firm is Deloitte & Touche LLP ("Deloitte"), New York, NY, Auditor Firm ID:
34.
KPMG LLP (“KPMG”) served as the independent registered public accounting firm for the Company for the period from July
12, 2016 (inception) through the year ended December 31, 2022, and the subsequent interim period until September 28, 2023.
On September 28, 2023, our Audit Committee approved the change in the Company’s independent registered public accounting
firm, effective September 28, 2023, to Deloitte.
The following table represents the aggregate fees from our current principal accountant, Deloitte, for the year ended December
31, 2023 and our former principal accountant, KPMG, for the years ended December 31, 2022 and 2023:
Type of Fees
Audit Fees
Audit-Related Fees
Tax Fees
All Other Fees
Total Fees
Deloitte
2023
KPMG
2023
2022
$
$
1,554,000 $
845,234 $
2,097,876
245,000
—
76,000
31,500
618,908
—
—
657,651
96,000
1,875,000 $
1,495,642 $
2,851,527
61
In accordance with the SEC’s definitions and rules, “audit fees” are fees for professional services in connection with the audit
of Triton’s consolidated financial statements included in its Annual Report on Form 10-K, and for services that are normally
provided in connection with statutory and regulatory filings or engagements; “audit-related fees” are fees for services
reasonably related to the performance of the audit, other than “audit fees”; “tax fees” are fees for tax compliance and tax advice;
and “all other fees” are fees for any services not included in the first three categories, which were principally comprised of
agreed upon procedures related to various debt issuances and ongoing debt compliance.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Accountant
The Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by the Company’s
independent registered public accounting firm. These services may include audit services, audit-related services, tax services
and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular
service or category of services and is generally subject to a specific budget. Deloitte and management are required to
periodically report to the Audit Committee regarding the extent of services provided by Deloitte in accordance with this pre-
approval, and the fees for the services performed to date. The Audit Committee may also pre-approve particular services on a
case-by-case basis. All of the services relating to the fees set forth on the above table were pre-approved by the Audit
Committee.
62
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Financial Statements
Report of Independent Registered Public Accounting Firms ......................................................................................
Consolidated Balance Sheets as of December 31, 2023 and December 31, 2022 .......................................................
Consolidated Statements of Operations for the years ended December 31, 2023, 2022, and 2021 ............................
Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022, and 2021 ........
Consolidated Statements of Shareholders' Equity for the years ended December 31, 2023, 2022, and 2021 ............
Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022, and 2021 ...........................
Page
F-2
F-5
F-6
F-7
F-8
F-9
Notes to Consolidated Financial Statements ...............................................................................................................
F-10
(b) Financial Statement Schedules
Financial statement schedules are omitted because the information required to be set forth therein is not applicable or is shown
in the accompanying consolidated financial statements or notes described in Item 15(a) above.
(c) Exhibits
The following exhibits are filed as part of and incorporated by reference into this Annual Report on Form 10-K:
Exhibit
No.
2.1
3.1
4.1
4.2
4.3
4.4
4.5
4.6
Description
Agreement and Plan of Merger, dated as of April 11, 2023, by and among Triton International Limited,
Brookfield Infrastructure Corporation, Thanos Holdings Limited and Thanos MergerSub Limited
(incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed April 12,
2023)
Amended and Restated Bye-Laws of Triton International Limited, dated April 27, 2021 (incorporated by
reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
2021, filed July 27, 2021)
Memorandum of Association of Triton International Limited, dated September 29, 2015, as amended
September 28, 2023 (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-
K filed September 28, 2023)
Certificate of Designations of 8.50% Series A Cumulative Redeemable Perpetual Preference Shares
(incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed March 14,
2019)
Certificate of Designations of 8.00% Series B Cumulative Redeemable Perpetual Preference Shares
(incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed June 20,
2019)
Certificate of Designations of 7.375% Series C Cumulative Redeemable Perpetual Preference Shares
(incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed November 6,
2019)
Certificate of Designations of 6.875% Series D Cumulative Redeemable Perpetual Preference Shares
(incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed January 21,
2020)
Certificate of Designations of 5.75% Series E Cumulative Redeemable Perpetual Preference Shares
(incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed August 17,
2021)
63
Exhibit
No.
4.7*
4.8*†
4.9*
4.10
10.1†
10.2†
10.3†*
10.4+
10.5*
21.1
22.1
24.1*
Description
Indenture (Conformed), dated as of September 21, 2020, between Triton Container Finance VIII LLC and
Wilmington Trust, National Association, as indenture trustee, as amended by Amendment No. 1 to
Indenture, dated as of December 20, 2021, and the First Omnibus Amendment, dated as of November 1,
2023
Series 2020-1 Supplement (Conformed), dated as of September 21, 2020, between Triton Container
Finance VIII LLC and Wilmington Trust, National Association, as indenture trustee, as amended by
Amendment No. 1 to Series 2020-1 Supplement to Indenture, dated as of December 20, 2021, and
Amendment No. 2 to Series 2020-1 Supplement to Indenture, dated as of November 1, 2023
Description of the Registrant's Securities Registered Pursuant to Section 12 of the Securities Exchange Act
of 1934
As permitted by Item 601(b)(4)(iii)(A) of Regulation S-K, the Company has not filed with this Annual
Report on Form 10-K certain instruments defining the rights of holders of long-term debt of the Company
and its subsidiaries because such long-term debt is not being registered and the total amount of securities
authorized under any of such instruments does not exceed 10% of the total assets of the Company and its
subsidiaries on a consolidated basis. The Company agrees to furnish a copy of any such agreements to the
Securities and Exchange Commission upon request.
Eleventh Restated and Amended Credit Agreement (Conformed), dated as of October 14, 2021, by and
among Triton Container International Limited and TAL International Container Corporation, as borrowers,
Triton International Limited, as guarantor, various lenders from time to time party thereto, and Bank of
America, N.A., as administrative agent and letter of credit issuer, as amended by First Amendment to
Eleventh Restated and Amended Credit Agreement, dated as of October 26, 2022, as amended by Consent
and Second Amendment to Eleventh Restated and Amended Credit Agreement, dated as of April 28, 2023
(incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 2023, filed November 9, 2023)
Amended and Restated Term Loan Agreement (Conformed), dated as of October 14, 2021, by and among
Triton Container International Limited and TAL International Container Corporation, as borrowers, Triton
International Limited, as guarantor, various lenders from time to time party thereto, and PNC Bank,
National Association, as a lender and administrative agent, as amended by First Amendment to Amended
and Restated Term Loan Agreement, dated as of October 26, 2022, as amended by Consent and Second
Amendment to Amended and Restated Term Loan Agreement, dated as of April 28, 2023, as amended by
Third Amendment to Amended and Restated Term Loan Agreement, dated as of September 1, 2023
(incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 2023, filed November 9, 2023)
Loan and Security Agreement (Conformed), dated as of December 13, 2018, among TIF Funding LLC, as
borrower, certain other wholly-owned subsidiaries of Triton International Limited, Wells Fargo Bank,
National Association, as administrative agent, certain lenders party thereto and Wilmington Trust, National
Association, as collateral agent and securities intermediary, as amended by Amendment Number 1 to Loan
and Security Agreement, dated as of February 8, 2019, Amendment Number 2 to Loan and Security
Agreement, dated as of November 4, 2019, Omnibus Amendment No. 1, dated as of November 13, 2020,
Amendment Number 4 to Loan and Security Agreement, dated as of December 20, 2021, Omnibus
Amendment No. 2 to Loan and Security Agreement, dated as of April 27, 2022, and Amendment Number 5
to Loan and Security Agreement, dated as of January 22, 2024
Triton International Limited Executive Severance Plan (incorporated by reference to Exhibit 10.1 to the
Company's Current Report on Form 8-K filed February 14, 2022)
Form of Indemnification Agreement for Directors and Certain Officers
List of Subsidiaries (incorporated by reference to Exhibit 21.1 to the Company's Annual Report on Form
10-K for the year ended December 31, 2022, filed February 14, 2023)
List of Subsidiary Guarantors and Issuers of Guaranteed Securities (incorporated by reference to Exhibit
22.1 to the Company's Current Report on Form 8-K filed January 19, 2022)
Powers of Attorney (included on the signature page to this Annual Report on Form 10-K)
64
Exhibit
No.
31.1*
31.2*
Description
Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities
Exchange Act of 1934, as amended
Certification of the Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) of 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
97.1*
Triton International Limited Clawback Policy: Recovery of Erroneously Awarded Incentive-Based
Compensation
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
104
Inline 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
Inline XBRL Instance Extension Schema
Inline XBRL Taxonomy Extension Calculation Linkbase
Inline XBRL Taxonomy Extension Definition Linkbase
Inline XBRL Taxonomy Extension Label Linkbase
Inline XBRL Taxonomy Extension Presentation Linkbase
Cover Page Inline XBRL Data (formatted as Inline XBRL and contained in Exhibit 101)
+ Indicates a management contract or compensatory plan or arrangement.
* Filed herewith.
** Furnished herewith.
† Schedules (or similar attachments) to these exhibits have not been filed since they do not contain information material to
an investment or voting decision and that information is not otherwise disclosed in these exhibits or the Form 10-K.
ITEM 16. FORM 10-K SUMMARY
None.
65
Pursuant to the requirements of Section 13 or 15(d) 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.
SIGNATURES
Date: February 29, 2024
TRITON INTERNATIONAL LIMITED
By:
/s/ BRIAN M. SONDEY
Brian M. Sondey
Director and Chief Executive Officer
66
POWER OF ATTORNEY AND SIGNATURES
We, the undersigned officers and directors of Triton International Limited hereby severally constitute and appoint Brian M.
Sondey and Michael S. Pearl and each of them singly, our true and lawful attorneys, with the power to them and each of them
singly, to sign for us and in our names in the capacities indicated below, any amendments to this Annual Report on Form 10-K,
and generally to do all things in our names and on our behalf in such capacities to enable Triton International Limited to comply
with the provisions of the Securities Exchange Act of 1934, as amended, and all the requirements of the Securities and
Exchange Commission.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant, in the capacities indicated, on the 29th day of February, 2024.
Signature
Title(s)
/s/ BRIAN M. SONDEY
Brian M. Sondey
/s/ MICHAEL S. PEARL
Michael S. Pearl
/s/ MICHELLE GALLAGHER
Michelle Gallagher
/s/ DAVID JOYNT
David Joynt
/s/ JOHN C. HELLMANN
John C. Hellmann
/s/ TERRI A. PIZZUTO
Terri A. Pizzuto
/s/ RODERICK ROMEO
Roderick Romeo
/s/ BENJAMIN VAUGHAN
Benjamin Vaughan
Director and Chief Executive Officer
Senior Vice President and Chief Financial Officer
Senior Vice President and Chief Accounting Officer
Chairman of the Board
Director
Director
Director
Director
67
INDEX TO FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firms ...........................................................................................
Consolidated Balance Sheets as of December 31, 2023 and 2022 ...................................................................................
Consolidated Statements of Operations for the years ended December 31, 2023, 2022, and 2021 .................................
Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022, and 2021 ............
Consolidated Statements of Shareholders' Equity for the years ended December 31, 2023, 2022, and 2021 .................
Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022, and 2021 ...............................
Notes to Consolidated Financial Statements ....................................................................................................................
Page
F-2
F-5
F-6
F-7
F-8
F-9
F-10
F-1
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Triton International Limited
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheet of Triton International Limited and subsidiaries (the
"Company") as of December 31, 2023, the related consolidated statements of operations, comprehensive income, shareholders'
equity, and cash flows, for the year then ended, and the related notes (collectively referred to as the "financial statements"). We
also have audited the Company’s internal control over financial reporting as of December 31, 2023, based on criteria
established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO).
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the
Company as of December 31, 2023, and the results of its operations and its cash flows for the year then ended, in conformity
with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained,
in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established
in Internal Control — Integrated Framework (2013) issued by COSO.
Basis for Opinions
The Company’s management is responsible for these financial statements, for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the
accompanying Management’s Report Regarding the Effectiveness of Internal Control Over Financial Reporting. Our
responsibility is to express an opinion on these financial statements and an opinion on the Company’s internal control over
financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audit of the financial statements included performing procedures to assess the risks of material misstatement of the
financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also
included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the
overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included
performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a
reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
F-2
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and
we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
Estimated Residual Values of Leasing Equipment – Refer to Note 2 to the financial statements
Critical Audit Matter Description
Leasing equipment is recorded at cost and depreciated to an estimated residual value on a straight-line basis over its estimated
useful lives. The estimated residual value represents the amount the Company estimates that it will recover upon the sale or
other disposition of the leasing equipment at the end of their useful lives. The estimates of residual value are based on a number
of factors including historical sales experience for each major equipment type. The Company reviews the estimated residual
values on a regular basis to determine whether a change in their estimates of residual values is warranted.
We identified the estimated residual values of leasing equipment as a critical audit matter because of the significant estimates
and assumptions management makes in evaluating whether current estimated residual values are reasonable. This required a
high degree of auditor judgment when performing audit procedures to evaluate the reasonableness of management’s estimated
residual values of leasing equipment.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the evaluation of estimated residual values of leasing equipment included the following, among
others:
• We tested the effectiveness of controls relating to the Company's evaluation of estimated residual values of the leasing
equipment, including controls over the key information, such as historical sales data used to estimate residual values of
leasing equipment.
• We tested a sample of the historical selling prices of used containers for accuracy and completeness by examining
sales invoices and cash receipts.
• We tested the mathematical accuracy of the Company's calculations supporting the residual values and compared the
average historical selling prices per container type in the calculation to current estimated residual values.
• We compared the average selling prices for used containers to published industry reports.
/s/ Deloitte & Touche LLP
New York, New York
February 29, 2024
We have served as the Company's auditor since 2023.
F-3
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Triton International Limited:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheet of Triton International Limited and subsidiaries (the Company)
as of December 31, 2022, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and
cash flows for each of the years in the two-year period ended December 31, 2022, and the related notes (collectively, the
consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects,
the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for each of
the years in the two-year period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the
Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management,
as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provides a
reasonable basis for our opinion.
/s/ KPMG LLP
We served as the Company’s auditor from 2014 to 2023.
New York, New York
February 14, 2023
F-4
TRITON INTERNATIONAL LIMITED
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 31,
2023
December 31,
2022
ASSETS:
Leasing equipment, net of accumulated depreciation of $4,482,185 and $4,289,259 .... $
8,768,917 $
Net investment in finance leases .....................................................................................
Equipment held for sale ..................................................................................................
1,507,292
185,502
9,530,396
1,639,831
138,506
Revenue earning assets ..............................................................................................
10,461,711
11,308,733
Cash and cash equivalents ..............................................................................................
Restricted cash ................................................................................................................
Accounts receivable, net of allowances of $738 and $2,075 ..........................................
Goodwill .........................................................................................................................
Lease intangibles, net of accumulated amortization of $296,494 and $291,837 ............
Other assets .....................................................................................................................
Fair value of derivative instruments ...............................................................................
57,776
91,450
243,443
236,665
1,963
44,254
95,606
83,227
103,082
226,554
236,665
6,620
28,383
115,994
Total assets ................................................................................................................ $
11,232,868 $
12,109,258
LIABILITIES AND SHAREHOLDERS' EQUITY:
Equipment purchases payable ......................................................................................... $
31,597 $
Fair value of derivative instruments ..............................................................................
Deferred revenue
Accounts payable and other accrued expenses ...............................................................
Net deferred income tax liability ....................................................................................
Debt, net of unamortized costs of $43,924 and $55,863 ................................................
Total liabilities ............................................................................................................
Shareholders' equity:
Preferred shares, $0.01 par value, at liquidation preference ...........................................
Common shares, $0.01 par value, 270,000,000 shares authorized, 101,158,891 and
81,383,024 shares issued, respectively ...........................................................................
Undesignated shares, $0.01 par value, 800,000 shares authorized, no shares issued
and outstanding ...............................................................................................................
Treasury shares, at cost, 0 and 24,494,785 shares, respectively .....................................
Additional paid-in capital (deficit) .................................................................................
Accumulated earnings ....................................................................................................
Accumulated other comprehensive income (loss) ..........................................................
Total shareholders' equity .........................................................................................
1,827
259,023
116,888
415,901
7,470,634
8,295,870
11,817
2,117
333,260
71,253
411,628
8,074,820
8,904,895
730,000
730,000
1,012
—
—
(308,114)
2,428,531
85,569
2,936,998
814
—
(1,077,559)
909,911
2,531,928
109,269
3,204,363
Total liabilities and shareholders' equity ............................................................... $
11,232,868 $
12,109,258
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.
F-5
TRITON INTERNATIONAL LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Year Ended
December 31,
2023
Year Ended
December 31,
2022
Year Ended
December 31,
2021
Leasing revenues:
Operating leases ............................................................................................ $
Finance leases ...............................................................................................
Total leasing revenues .................................................................................
1,438,504 $
105,288
1,543,792
1,564,486 $
115,200
1,679,686
1,480,495
53,385
1,533,880
Equipment trading revenues ............................................................................
Equipment trading expenses ............................................................................
Trading margin ...........................................................................................
95,998
(88,099)
7,899
147,874
(131,870)
16,004
142,969
(108,870)
34,099
Net gain on sale of leasing equipment .............................................................
58,615
115,665
107,060
Operating expenses:
Depreciation and amortization .........................................................................
Direct operating expenses ................................................................................
Administrative expenses ..................................................................................
Transaction and other costs ............................................................................
Provision (reversal) for doubtful accounts ......................................................
Total operating expenses ...............................................................................
Operating income (loss) ..............................................................................
Other (income) expenses:
Interest and debt expense .................................................................................
Unrealized (gain) loss on derivative instruments, net ......................................
Debt termination expense ................................................................................
Other (income) expense, net ............................................................................
Total other (income) expenses ....................................................................
Income (loss) before income taxes ..................................................................
Income tax expense (benefit) ...........................................................................
Net income (loss) ............................................................................................ $
Less: dividend on preferred shares ..................................................................
Net income (loss) attributable to common shareholder ............................. $
575,551
101,552
88,839
79,000
(3,369)
841,573
768,733
634,837
42,381
93,011
—
(3,102)
767,127
1,044,228
240,838
226,091
(15)
—
(643)
240,180
528,553
54,464
474,089 $
52,112
421,977 $
(343)
1,933
(1,182)
226,499
817,729
70,807
746,922 $
52,112
694,810 $
626,240
26,860
89,319
—
(2,475)
739,944
935,095
222,024
—
133,853
(1,379)
354,498
580,597
50,357
530,240
45,740
484,500
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.
F-6
TRITON INTERNATIONAL LIMITED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
Net income (loss) ............................................................................................ $
474,089 $
746,922 $
530,240
Year Ended
December 31,
2023
Year Ended
December 31,
2022
Year Ended
December 31,
2021
Other comprehensive income (loss), net of tax:
Change in derivative instruments designated as cash flow hedges ...............
Reclassification of (gain) loss on derivative instruments designated as
cash flow hedges ...........................................................................................
Foreign currency translation adjustment .......................................................
19,048
157,647
55,599
(42,797)
49
1,168
(727)
28,722
(105)
84,216
Other comprehensive income (loss), net of tax ...............................................
(23,700)
158,088
Comprehensive income ................................................................................... $
450,389 $
905,010 $
614,456
Less:
Dividend on preferred shares ...........................................................................
52,112
52,112
45,740
Comprehensive income attributable to common shareholder ................... $
398,277 $
852,898 $
568,716
Tax (benefit) provision on change in derivative instruments designated as
cash flow hedges .............................................................................................. $
Tax (benefit) provision on reclassification of (gain) loss on derivative
instruments designated as cash flow hedges .................................................... $
1,100 $
10,509 $
3,586
(4,851) $
(908) $
1,916
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.
F-7
TRITON INTERNATIONAL LIMITED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands, except share amounts)
Preferred Shares
Common Shares
Treasury Shares
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 ...
22,200,000
$ 555,000
81,151,723
$
812
13,901,326
$
(436,822) $ 905,323
$ 1,674,670
$
(133,035)
$ 2,565,948
Issuance of preferred shares, net of
offering expenses ..............................
Share-based compensation ................
Treasury shares acquired ...................
Share repurchase to settle
shareholder tax obligations ...............
Net income (loss) ..............................
Other comprehensive income (loss) ..
Common shares dividend declared
($2.36 per share) ...............................
Preferred shares dividend declared ...
7,000,000
175,000
—
231,383
—
2
—
—
—
—
(6,177)
9,363
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,528,173
(85,538)
—
(87,740)
—
—
—
—
(1)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(4,285)
—
—
—
—
—
—
—
—
530,240
—
(158,735)
(45,321)
—
—
—
—
—
84,216
168,823
9,365
(85,538)
(4,286)
530,240
84,216
—
—
(158,735)
(45,321)
Balance as of December 31, 2021 ...
29,200,000
$ 730,000
81,295,366
$
813
15,429,499
$
(522,360) $ 904,224
$ 2,000,854
$
(48,819)
$ 3,064,712
Share-based compensation ................
Treasury shares acquired ...................
Share repurchase to settle
shareholder tax obligations ...............
Net income (loss) ..............................
Other comprehensive income (loss) ..
Common shares dividend declared
($2.65 per share) ...............................
Preferred shares dividend declared ...
—
—
—
—
—
—
—
—
—
—
—
—
—
—
198,367
2
—
—
12,510
—
—
9,065,286
(555,199)
—
(110,709)
—
—
—
—
(1)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(6,823)
—
—
—
—
—
—
—
746,922
—
—
—
—
—
158,088
(163,736)
(52,112)
—
—
12,512
(555,199)
(6,824)
746,922
158,088
(163,736)
(52,112)
Balance as of December 31, 2022 ...
29,200,000
$ 730,000
81,383,024
$
814
24,494,785
$ (1,077,559) $ 909,911
$ 2,531,928
$
109,269
$ 3,204,363
Share-based compensation expense ..
Treasury shares acquired ...................
Share repurchase to settle
shareholder tax obligations ...............
Net income (loss) ..............................
Other comprehensive income (loss) ..
Reclassification of share-based
awards to a liability ...........................
Return of capital to Parent ................
Common shares dividend declared
($2.10 per share) ...............................
Preferred shares dividend declared ...
Cancellation of Common Stock ........
Cancellation of Treasury Stock .........
Issuance of Common stock to Parent
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
138,727
1
—
—
—
—
1,884,616
(125,661)
(81,190)
(1)
—
—
—
—
—
—
—
—
—
—
—
—
(81,440,561)
(814)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
7,304
—
(5,802)
—
—
(16,109)
—
—
—
814
—
—
(26,379,401)
1,203,220
(1,203,220)
101,158,891
1,012
—
—
$
—
—
(1,012)
—
—
—
474,089
—
—
(408,190)
(117,184)
(52,112)
—
—
—
—
—
—
—
7,305
(125,661)
(5,803)
474,089
(23,700)
(23,700)
—
—
—
—
—
—
—
(16,109)
(408,190)
(117,184)
(52,112)
—
—
—
Balance as of December 31, 2023 ...
29,200,000
$ 730,000
101,158,891
$
1,012
$ (308,114) $ 2,428,531
$
85,569
$ 2,936,998
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.
F-8
TRITON INTERNATIONAL LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Cash flows from operating activities:
Net income (loss) ............................................................................................................... $
474,089 $
746,922 $
530,240
Year Ended
December 31, 2023
Year Ended
December 31, 2022
Year Ended
December 31, 2021
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization ........................................................................................
Amortization of deferred debt cost and other debt related amortization ........................
Lease related amortization ..............................................................................................
Share-based compensation expense ................................................................................
Net (gain) loss on sale of leasing equipment ..................................................................
Unrealized (gain) loss on derivative instruments ...........................................................
Debt termination expense ...............................................................................................
Deferred income taxes ....................................................................................................
Changes in operating assets and liabilities: ....................................................................
Accounts receivable, net ...............................................................................................
Deferred revenue ..........................................................................................................
Change in share-based awards liability ........................................................................
Accounts payable and other accrued expenses .............................................................
Equipment sold (purchased) for resale activity ............................................................
Cash received (paid) for settlement of interest rate swaps ...........................................
Cash collections on finance lease receivables, net of income earned ..........................
Other assets ...................................................................................................................
575,551
8,572
4,979
7,305
(58,615)
(15)
—
8,024
(19,459)
(74,237)
18,765
6,291
26,428
—
172,717
(187)
Net cash provided by (used in) operating activities .............................................
1,150,208
Cash flows from investing activities:
Purchases of leasing equipment and investments in finance leases ...................................
Proceeds from sale of equipment, net of selling costs .......................................................
Other ...................................................................................................................................
Net cash provided by (used in) investing activities ..............................................
Cash flows from financing activities:
Issuance of preferred shares, net of underwriting discount ................................................
Purchases of treasury shares ...............................................................................................
Debt issuance costs ............................................................................................................
Borrowings under debt facilities ........................................................................................
Payments under debt facilities and finance lease obligations ............................................
Dividends paid on preferred shares ....................................................................................
Dividends paid on common shares ....................................................................................
Return of capital to Parent ..................................................................................................
Other ..................................................................................................................................
Net cash provided by (used in) financing activities ..............................................
Net increase (decrease) in cash, cash equivalents and restricted cash ........................ $
Cash, cash equivalents and restricted cash, beginning of period .......................................
Cash, cash equivalents and restricted cash, end of period ........................................... $
Supplemental disclosures:
Interest paid ........................................................................................................................ $
Income taxes paid (refunded) ............................................................................................. $
Non-cash operating activities: .........................................................................................
(208,242)
352,549
(16)
144,291
—
(129,776)
(3,008)
1,610,000
(2,227,139)
(52,112)
(115,554)
(408,190)
(5,803)
(1,331,582)
634,837
11,112
11,285
12,512
(115,665)
(343)
1,933
26,018
44,119
287,328
—
4,620
(93)
19,026
180,075
21,182
1,884,868
(943,062)
296,737
(638)
(646,963)
—
(554,095)
(10,162)
1,952,600
(2,449,367)
(52,112)
(162,174)
—
(6,824)
(1,282,134)
626,240
11,603
17,654
9,365
(107,060)
—
133,853
43,077
(50,336)
83,600
—
(6,860)
7,606
5,497
74,117
26,568
1,405,164
(3,434,394)
217,078
(70)
(3,217,386)
169,488
(82,528)
(42,631)
8,690,006
(6,635,987)
(45,321)
(157,312)
—
(4,951)
1,890,764
78,542
151,996
230,538
211,412
7,933
(37,083) $
186,309
149,226 $
234,945 $
46,407 $
(44,229) $
230,538
186,309 $
208,714 $
47,010 $
Right-of-use assets obtained in exchange for new operating lease liabilities .................... $
9,564 $
907 $
2,517
Non-cash investing activities:
Equipment purchases payable ............................................................................................ $
31,597 $
11,817 $
429,568
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.
F-9
TRITON INTERNATIONAL LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1—Description of the Business and Basis of Presentation
Description of the Business and Basis of Presentation
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.
The consolidated financial statements and accompanying notes include the accounts of the Company and its subsidiaries
and are prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). Certain reclassifications have
been made to the accompanying prior period financial statements and notes to conform to the current year's presentation.
Note 2—Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and subsidiaries in which it has a controlling
interest, and variable interest entities of which the Company is the primary beneficiary. The equity method of accounting is
applied when the Company does not have a controlling interest in an entity but exerts significant influence over the entity. All
significant intercompany balances and transactions have been eliminated in consolidation.
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, goodwill and intangible assets. Actual results could differ from those
estimates.
Segment Reporting
The Company conducts its business activities in one industry, intermodal transportation equipment, and has two reporting
segments, Equipment leasing and Equipment trading. The Company also segregates total equipment leasing revenues and total
equipment trading revenues by geographic location based upon the primary domicile of the Company's customers.
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. As a percent of its lease billings, the
Company's three largest customers accounted for 20%, 17% and 12% during 2023, 20%, 17% and 11% during 2022 and 21%,
16% and 10% during 2021. Similarly, as a percent of its accounts receivable, the Company's three largest customers accounted
for 19%, 14% and 10% as of December 31, 2023, and 11% for each customer as of December 31, 2022.
Other financial instruments that are exposed to concentration of credit risk are cash and cash equivalents, and restricted
cash balances. Cash and cash equivalents, and restricted cash are held with financial institutions of high quality. Balances may
exceed the amount of insurance provided on such deposits.
F-10
TRITON INTERNATIONAL LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Fair Value Measurements
Fair value represents the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The determination of fair value may require an entity to make
significant judgments or develop assumptions about market participants to reflect risks specific to the asset being valued. The
Company uses the following fair value hierarchy when selecting inputs for its valuation techniques, with the highest priority
given to Level 1:
•
•
•
Level 1—quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2—inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and
Level 3—unobservable inputs in which little or no market activity exists, therefore requiring an entity to develop its
own assumptions about the assumptions that market participants would use in pricing.
Cash and cash equivalents, restricted cash, accounts receivable, equipment purchases payable and accounts payable
carrying amounts approximate fair values because of the short-term nature of these instruments. The Company's other financial
and non-financial assets, which include leasing equipment, net investment in finance leases, intangible assets and goodwill, are
not required to be measured at fair value on a recurring basis. However, if certain triggering events occur, or if an annual
impairment test is required, the Company may determine that these assets should be written down to their fair value after
completing an evaluation.
For information on the fair value of equipment held for sale, debt, and the fair value of derivative instruments, please refer
to Note 4 - "Equipment Held for Sale", Note 7 - "Debt" and Note 8 - "Derivative Instruments", respectively.
Cash and Cash Equivalents
Cash and cash equivalents consist of all cash balances and highly liquid investments having original maturities of three
months or less at the time of purchase.
Restricted Cash
The Company's restricted cash relates to amounts held at financial institutions pursuant to certain debt arrangements. The
restricted cash balances represent cash proceeds collected and required to be used to pay debt service and other related
expenses.
Allowance for Doubtful Accounts
The Company's allowance for doubtful accounts is estimated based upon a review of the collectability of its receivables.
This review is based on the risk profile of the receivables, credit quality indicators such as the level of past-due amounts and
economic conditions. Generally, the Company does not require collateral on accounts receivable balances. An account is
considered past due when a payment has not been received in accordance with the contractual terms. Changes in economic
conditions or other events may necessitate additions or deductions to the allowance for doubtful accounts. The allowance for
doubtful accounts is intended to provide for losses in the receivables, and requires the application of estimates and judgments as
to the outcome of collection efforts, among other things. The Company believes its allowance for doubtful accounts is adequate
to provide for credit losses expected in its existing receivables.
For our net investment in finance leases and accounts receivable for sales of equipment, the Company measures expected
credit loss by evaluating the overall credit quality of its customers. Expected credit losses for these financial assets are
estimated using historical experience which includes multiple economic cycles, customer payment history, management's
assessment of the customer's financial condition, and consideration of current conditions and reasonable forecasts.
F-11
TRITON INTERNATIONAL LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Net Investment in Finance Leases
The Company has entered into various lease agreements that qualify as finance leases. These leases are long-term in
nature, ranging for a period of three to fourteen years, and typically include an option to purchase the equipment at the end of
the lease term for a nominal price that the Company deems reasonably certain to be exercised. At the inception of a finance
lease, a net investment is recorded based on the gross investment (representing the total future minimum lease payments plus
the estimated residual value), net of unearned income. Unearned income represents the excess of the gross investment over the
fair value of the leased equipment at lease commencement. Any gain or loss is recognized at commencement and recorded in
Net gain on sale of leasing equipment.
Leasing Equipment
The Company purchases new equipment from manufacturers for the purpose of leasing to customers. The Company also
purchases used equipment with the intention of selling in one or more years from the date of purchase.
Leasing equipment is recorded at cost and depreciated to a residual amount for each equipment type on a straight-line basis
over its estimated useful life. Capitalized costs for new equipment include the manufactured cost of the equipment, inspection,
delivery, and associated costs incurred in moving the equipment from the manufacturer to the initial on-hire location. Repair
and maintenance costs that do not extend the lives of the leasing equipment are charged to direct operating expenses at the time
the costs are incurred.
The estimated useful lives and residual values of the Company's leasing equipment are based on the Company's
expectations of how long it will lease the equipment and used container sales prices at the time it expects to sell the equipment.
The Company evaluates estimates used in its depreciation policies on a regular basis to determine whether changes, such as
industry events, technological advances or changes in standardization for containers have taken place that would suggest that a
change in its depreciation estimates for useful lives or residual values is warranted. The Company's evaluation utilizes over
fifteen years of historical sales experience for each major equipment type which takes into consideration varying business
cycles including unusually high and low markets. Any changes to depreciation estimates are applied prospectively. Due to the
size of the depreciable fleet a change in residual values could result in either large increases or decreases to annual depreciation
expense depending on the direction of the change in residual values. For 2023, the Company completed its annual review of
depreciable lives and residual values during the fourth quarter and concluded no change was necessary.
The estimated useful life for each major equipment type for the years ended December 31, 2023 and 2022 was 13 years for
Dry containers; 12 years for Refrigerated containers; 16 years for Special containers; and 20 years for Tank containers and
Chassis.
The net book value of the Company's leasing equipment by major equipment type as of the dates indicated was (in
thousands):
December 31,
2023
December 31,
2022
Dry container ....................................................................................................................... $
6,926,220 $
7,550,616
Refrigerated container ..........................................................................................................
1,182,683
1,364,012
Special container ..................................................................................................................
Tank container .....................................................................................................................
Chassis .................................................................................................................................
316,062
122,241
221,711
287,106
112,166
216,496
Total ..................................................................................................................................... $
8,768,917 $
9,530,396
Included in the amounts above are units not on lease at December 31, 2023 and 2022 with a total net book value of $727.6
million and $525.4 million respectively.
Depreciation on leasing equipment commences on the date of initial on-hire.
For equipment purchased for resale that may be leased for a period of time, the Company adjusts its estimates for
remaining useful life and residual values based on our expectations for how long the equipment will remain on-hire to the
current lessee and the expected sales market for older containers when these units are redelivered.
F-12
TRITON INTERNATIONAL LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Valuation of Leasing Equipment
Leasing equipment is evaluated for impairment whenever events or changes in circumstances indicate that its carrying
value may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying value
to its estimated undiscounted future cash flows expected to be generated by the asset. If the carrying value of an asset exceeds
its estimated undiscounted future cash flows, an impairment charge is recognized in the amount by which the carrying value of
the asset exceeds the fair value of the asset. Key indicators of impairment on leasing equipment include, among other factors, a
sustained decrease in operating profitability, a sustained decrease in utilization, or indications of technological obsolescence.
When testing for impairment, leasing equipment is generally grouped by equipment type, and is tested separately from
other groups of assets and liabilities. Some of the significant estimates and assumptions used to determine future undiscounted
cash flows and the measurement for impairment are the remaining useful life, expected utilization, expected future lease rates
and expected disposal prices of the equipment. The Company considers the assumptions on expected utilization and the
remaining useful life to have the greatest impact on the estimate of future undiscounted cash flows. These estimates are
principally based on the Company's historical experience and management's judgment of market conditions at the time the
calculations are prepared.
The Company has not recorded any impairment charges related to leasing equipment for the years ended December 31,
2023, 2022 and 2021.
Equipment Held for Sale
When leasing equipment is returned off lease, the Company makes a determination of whether to repair and re-lease the
equipment or sell the equipment. At the time the Company determines that equipment will be sold, it reclassifies the carrying
value of leasing equipment to equipment held for sale. Equipment held for sale is recorded at the lower of its estimated fair
value less costs to sell or carrying value at the time identified for sale. Depreciation expense on equipment held for sale is
halted and disposals generally occur within 90 days. Initial write downs of equipment held for sale to fair value are recorded as
an impairment charge and are included in Net gain on sale of leasing equipment. Subsequent increases or decreases to the fair
value of those assets are recorded as adjustments to the carrying value of the equipment held for sale, however, any such
adjustments may not exceed the respective equipment's carrying value at the time it was initially classified as held for sale.
Realized gains and losses resulting from the sale of equipment held for sale are recorded in Net gain on sale of leasing
equipment, and cash flows associated with the disposal of equipment held for sale are classified as cash flows from investing
activities.
Equipment purchased for the Company's equipment trading segment is also included in Equipment held for sale. Gains and
losses resulting from the sale of this equipment is recorded in Trading margin, and cash flows associated with the purchase and
sale of this equipment are classified as cash flows from operating activities.
Operating Leases
The Company leases office space and office equipment and evaluates whether these leases are classified as operating or
financing at the inception of the lease. The classification is based on certain assumptions that require judgment, such as the
asset's fair value, the asset's estimated residual value, the interest rate implicit in the lease, and the asset's economic useful life.
For operating leases, the Company records a lease liability based on the present value of the remaining minimum payments
and a corresponding right-of-use ("ROU") asset. The Company uses its estimated incremental borrowing rate at the
commencement date to determine the present value of lease payments. The benefits of lease incentives, including rent-free or
reduced rent periods, and the cost of future rent escalations are recognized on a straight-line basis over the term of the lease. A
lease liability and a corresponding ROU asset are not recognized when, at the commencement date of the lease, the term is 12
months or less.
Property, Furniture and Equipment
Costs of major additions of property, furniture, equipment and improvements are capitalized and are included in Other
assets on the Consolidated Balance Sheets. The original cost is depreciated on a straight-line basis over the estimated useful
lives of such property, furniture and equipment. Leasehold improvements are amortized on a straight-line basis over the shorter
of the lease term or the estimated useful lives of the leased assets. Other fixed assets, which consist primarily of computer
F-13
TRITON INTERNATIONAL LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
software and hardware, are recorded at cost and amortized on a straight-line basis over their respective estimated useful lives,
which range from three to five years. Expenditures for maintenance and repairs are expensed as they are incurred.
Goodwill
Goodwill is tested for impairment at least annually on October 31 of each fiscal year or more frequently if events occur or
circumstances exist that indicate that the fair value of a reporting unit may be below its carrying value. Goodwill has been
allocated to the Company's reporting units, which are the same as its reporting segments.
In evaluating goodwill for impairment, the Company has the option to first assess qualitative factors to determine whether
further impairment testing is necessary. Among the relevant events and circumstances that affect the fair value of reporting
units, the Company considers individual factors such as macroeconomic conditions, changes in its industry and the markets in
which the Company operates, as well as its reporting units' historical and expected future financial performance. If, after
assessing the totality of events and circumstances, the Company determines it is more-likely-than-not that the fair value of a
reporting unit is less than its carrying amount, then a quantitative goodwill impairment test is performed. The quantitative
goodwill impairment test compares the fair value of a reporting unit with its carrying value, including goodwill. If the carrying
value of the reporting unit is less than its fair value, no impairment exists. If the carrying value of a reporting unit exceeds its
fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill
allocated to that reporting unit.
The Company elected to perform the qualitative assessment for its evaluation of goodwill impairment during the year
ended December 31, 2023 and concluded there was no impairment. The Company has not recorded any impairment charges
related to goodwill for the years ended December 31, 2023, 2022, and 2021.
Intangible Assets
Intangible assets with finite useful lives such as acquired lease intangibles are initially recorded at fair value and are
amortized over their respective estimated useful lives and subsequently reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of the asset may not be recoverable. The Company has not recorded any
impairment charges related to intangible assets for the years ended December 31, 2023, 2022, and 2021.
Revenue Recognition
Lease Classification
We determine the classification of a lease at its inception as either operating leases or finance leases. If the provisions of
the lease change after lease inception, other than by renewal or extension, we evaluate whether that change may have resulted in
a different lease classification had the change been in effect at inception. If so, the revised agreement is considered a new lease
for lease classification purposes. The classification of the lease as either an operating lease or finance lease will impact revenue
recognition.
Operating Leases with Customers
The Company enters into long-term leases and service leases, principally as lessor in operating leases for intermodal
equipment. Long-term leases provide customers with specified equipment for a specified term. The Company's leasing
revenues are based upon the number of equipment units leased, the applicable per diem rate and the length of the lease. Long-
term leases typically have initial contractual terms ranging from five to eight or more years. Revenues are recognized on a
straight-line basis over the life of the respective lease. Revenue from advance billings are deferred and recognized in the period
earned. Service leases do not specify the exact number of equipment units to be leased or the term that each unit will remain
on-hire, but allow the lessee to pick-up and drop-off units at various locations specified in the lease agreement. Under a service
lease, rental revenue is based on the number of equipment units on-hire for a given period. Revenue from customers considered
to be non-performing is deferred and recognized when the amounts are received.
The Company recognizes billings to customers for damages and certain other operating costs as leasing revenue when
earned based on the terms of the contractual agreements with the customer.
F-14
TRITON INTERNATIONAL LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Finance Leases with Customers
The Company enters into finance leases as lessor for some of the equipment in its fleet. At the inception of the lease, the
Company records the total future minimum lease payments plus the estimated residual value, net of executory costs, if any.
Cash deposits reduce the gross finance lease receivable and are recorded on the statement of cash flows as deferred revenue
within operating activities. The net investment in finance leases represents the receivables due from lessees, net of unearned
income and amounts previously billed. As amounts are billed to a customer they are reclassified from gross finance lease
receivable to accounts receivable. Unearned income, which also includes any initial direct costs, is recognized on a constant
yield basis over the lease term and is recorded as leasing revenue. The Company's finance leases are usually long-term in
nature and typically include an option to purchase the equipment at the end of the lease term for a nominal price that the
Company deems reasonably certain to be exercised.
Equipment Trading Revenues and Expenses
Equipment trading revenues represent the proceeds from the sale of equipment purchased for resale and are recognized
when units are sold. Equipment trading expenses represent the cost of equipment sold including selling costs that are
recognized as incurred.
Direct Operating Expenses
Direct operating expenses are directly related to the Company's equipment under and available for lease. These expenses
primarily consist of the Company's costs to repair and maintain the equipment, to reposition the equipment and to store the
equipment when it is not on lease. These costs are recognized when incurred. Certain positioning costs may be capitalized
when incurred to place new equipment on an initial lease.
Debt Costs
Debt costs represent the fees incurred in connection with debt obligation arrangements. These costs are capitalized and
amortized based on the effective interest method or on a straight-line basis over the term of the related obligation, depending on
the type of debt obligation to which they relate. Unamortized debt costs may be written off when the related debt obligations
are refinanced or extinguished prior to maturity.
Derivative Instruments
The Company primarily uses derivatives in the management of its interest rate exposure on its long-term borrowings. The
Company records derivative instruments on its balance sheet at fair value and establishes criteria for both the designation and
effectiveness of hedging activities.
The Company has entered into interest rate swap agreements with certain financial institutions. The interest rate swap
agreements require the Company to make payments to counterparties at fixed rates in return for receipts based upon variable
rates indexed to the Secured Overnight Financing Rate ("SOFR").
Derivative instruments are designated or non-designated for hedge accounting purposes. The fair value of the derivative
instruments is measured at each balance sheet date and is reflected on a gross basis on the consolidated balance sheets. The
change in fair value of the derivative instruments designated as a cash flow hedge are recorded on the Consolidated Balance
Sheets in Accumulated other comprehensive income (loss) and are re-classified to interest and debt expense when the hedged
interest payments are recognized. The change in fair value of non-designated derivative instruments is recorded in the
Consolidated Statements of Operations as unrealized (gain) loss on derivative instruments, net.
Income Taxes
The Company uses the liability method of accounting for income taxes, which requires recognition of deferred tax assets
and liabilities based on the expected future tax consequences of temporary differences that currently exist between the tax basis
and financial reporting basis of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
Any change in the tax rate which has an effect on deferred tax assets and liabilities is recognized as an increase or decrease to
income in the period that includes the enactment date of the law that resulted in the change in tax rate.
F-15
TRITON INTERNATIONAL LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The Company recognizes the effect of income tax positions which are more-likely-than-not of being sustained. If a
position does not meet the more-likely-than-not criteria, the Company records a reserve against the tax position such that a tax
benefit is recognized only in the amount that has a greater than 50% likelihood of being recognized. The full impact of any
change in recognition or measurement of an uncertain tax position is reflected in the period in which such change occurs.
Potential interest and penalties associated with such uncertain tax positions are recorded as a component of income tax expense.
Foreign Currency Translation and Re-measurement
The Company uses the U.S. dollar as its functional currency. The Company's U.K. subsidiary operations and net assets are
denominated in British pounds and are subject to foreign currency translation. The balance sheet accounts of this subsidiary are
converted at rates of exchange in effect as of the balance sheet date and the statements of operations accounts are converted at
the annual weighted average exchange rate. The effects of changes in exchange rates in translating foreign subsidiaries'
financial statements are included in shareholders' equity as accumulated other comprehensive (loss) income.
The Company also has certain cash accounts, certain finance lease receivables and certain obligations that are denominated
in currencies other than the Company's functional currency. These assets and liabilities are generally denominated in euros or
British pounds, and are re-measured at each balance sheet date at the exchange rates in effect as of those dates. The impact of
changes in exchange rates on the re-measurement of assets and liabilities are included in Administrative expenses on the
Consolidated Statements of Operations. The Company recorded a gain of $0.4 million, a loss of $2.0 million and a loss of
$1.0 million in net foreign currency exchange gains or losses for the years ended December 31, 2023, 2022 and 2021,
respectively.
Recently Issued Accounting Standards
Segment Reporting
Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable
Segment Disclosures, was issued in November 2023, which requires enhancements to the disclosure requirements for operating
segments, primarily disclosures about significant segment expenses, in the Company’s annual and interim consolidated
financial statements. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods
within fiscal years beginning after December 15, 2024, on a retrospective basis with early adoption permitted. The Company is
currently evaluating the impact, if any, that the adoption of this standard will have on its financial disclosures.
Income Taxes
ASU No. 2023-09, Improvements to Income Tax Disclosures was issued in December 2023, which modifies the rules on
income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from
continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax
expense or benefit from continuing operations (separated by federal, state and foreign). The new guidance also requires entities
to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance
is effective for annual reporting periods beginning after December 15, 2024. The Company is currently evaluating the impact,
if any, that the adoption of this standard will have on financial disclosures.
Note 3 —Merger
Brookfield Infrastructure Transaction
On September 28, 2023, the Company completed the transactions contemplated by the Agreement and Plan of Merger,
dated as of April 11, 2023 (the “Merger Agreement”), by and among the Company, Brookfield Infrastructure Corporation
(“BIPC”), Thanos Holdings Limited (“Parent”) and Thanos MergerSub Limited, a subsidiary of Parent (“Merger Sub”).
Pursuant to the Merger Agreement, Merger Sub merged with and into Triton (the “Merger”), with Triton surviving the Merger
as a subsidiary of Parent.
F-16
TRITON INTERNATIONAL LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Pursuant to the Merger Agreement, at the effective time of the Merger, each common share of the Company issued and
outstanding immediately prior to the effective time (other than certain excluded common shares), was cancelled and
automatically converted into the right to receive, at the election of each shareholder, (x) mixed consideration of $68.50 in cash
and 0.3895 Class A exchangeable subordinate voting shares (“BIPC Shares”) of BIPC, (y) all-cash consideration in an amount
equivalent in value to the mixed consideration, which was equal to approximately $83.16, or (z) all-BIPC Share consideration
in an amount equivalent in value to the mixed consideration, which was equal to approximately 2.21 BIPC Shares (the “Merger
Consideration”). The number of BIPC Shares issued in exchange for each common share was subject to a collar mechanism set
forth in the Merger Agreement, which was based on the weighted average price of BIPC Shares on the New York Stock
Exchange (the “NYSE”) over the 10 consecutive trading days ending on the second trading day prior to the effective time of the
Merger (the “BIPC Final Share Price”). The BIPC Final Share Price was approximately $37.64.
In connection with the closing of the Merger, Triton’s common shares were delisted from the NYSE on September 28,
2023. The last trading day for the common shares on the NYSE was September 27, 2023. On October 10, 2023, Triton filed a
certification on Form 15 with the Securities and Exchange Commission ("SEC") requesting the deregistration of its common
shares under the Securities Exchange Act of 1934, as amended, ("the Exchange Act."). As of December 31, 2023, there were
101,158,891 common shares outstanding, all of which were held by an affiliate of Brookfield Infrastructure; therefore, earnings
per share data is not presented.
Triton’s Series A-E cumulative redeemable perpetual preference shares remained outstanding as an obligation of the
Company and continued to be listed on the NYSE following the closing of the Merger.
Parent has accounted for the Merger under the acquisition method of accounting with the Company deemed to be the
acquiree for accounting purposes. The Company and Parent have elected not to push down purchase accounting adjustments to
reflect the assets and liabilities acquired at fair value, and therefore amounts reflected in the financial statements have not been
adjusted.
Triton incurred transaction and other costs related to the Merger which are included in Transaction and other costs in the
Company’s Consolidated Statements of Operations.
Transaction and other costs were comprised of the following (in thousands):
Year Ended
December 31,
2023
Employee compensation costs .................................................................................................................. $
Advisory fees ............................................................................................................................................
Legal and professional expenses ...............................................................................................................
Other ..........................................................................................................................................................
Total .......................................................................................................................................................... $
26,956
41,673
9,039
1,332
79,000
There were no transaction related costs in the prior year.
Employee compensation costs include $24.2 million in costs related to share-based compensation for unvested shares
granted in 2021, 2022, and 2023 pursuant to the 2016 Equity Incentive Plan which awards were modified as a result of the
Merger. See Note 10 - "Share-based Compensation" for more detailed information regarding the modification. Employee
compensation costs also include $2.2 million related to employee incentive and retention compensation related to the Merger.
As of December 31, 2023, employee compensation costs of $43.8 million, which includes accrued dividends on the unvested
restricted shares prior to the closing of the Merger has been accrued and included in Accounts payable and other accrued
expenses and is expected to be paid within the next year.
Advisory fees include costs paid for financial advisory services directly related to the closing of the Merger.
Legal and professional expenses include costs related to legal and accounting fees incurred in connection with the Merger.
F-17
TRITON INTERNATIONAL LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 4 —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. 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 components of Net gain on sale of leasing equipment on the Consolidated Statements of Operations
(in thousands):
Year Ended December 31,
2022
2023
2021
Impairment (loss) reversal on equipment held for sale ......................................... $
Gain (loss) on sale of equipment, net of selling costs ...........................................
Net gain on sale of leasing equipment ................................................................... $
(7,144) $
65,759
58,615 $
(887) $
116,552
115,665 $
16
107,044
107,060
Note 5—Intangible Assets
Intangible assets consist of lease intangibles for leases acquired with lease rates above market in a business combination.
As of December 31, 2023, the remaining $2.0 million of intangible assets will be fully amortized in 2024.
Amortization expense related to intangible assets was $4.7 million, $10.5 million, and $16.5 million for the years ended
December 31, 2023, 2022, and 2021, respectively.
Note 6—Restricted Cash
The components of restricted cash were as follows for the periods ended (in thousands):
Collection accounts .......................................................................................................... $
29,447 $
Trust accounts ..................................................................................................................
Other restricted cash accounts ..........................................................................................
18,932
43,071
37,432
16,316
49,334
Total restricted cash ......................................................................................................... $
91,450 $
103,082
December 31,
2023
December 31,
2022
Collection accounts
The Company maintains bank accounts for collections related to its containers that are financed ("the Collection
Accounts"). Cash proceeds collected from leasing and disposition are deposited into the Collection Accounts and all expenses
related to the operation of the containers are paid from the Collection Accounts. The Company considers the portion of the
Collection Accounts which is being held in trust for the benefit of Asset Backed Securitization ("ABS") noteholders as
restricted and the portion of the balance attributable to containers that are unsecured as unrestricted.
Trust accounts
Pursuant to certain debt agreements, cash is transferred from the Collection Accounts to separate accounts (the "Trust
Accounts"). The Trust Accounts are maintained by an indenture trustee on behalf of certain ABS noteholders. The cash in the
Trust Accounts is used to pay related ABS debt service and related expenses. After such payments, any remaining cash in these
accounts is transferred to certain unrestricted bank accounts of the Company and is included in Cash and cash equivalents on
the Consolidated Balance Sheets.
Other restricted cash accounts
Pursuant to certain asset-backed debt agreements, cash is held at separate accounts in order to maintain an amount equal to
projected interest expense for a specified number of months.
F-18
TRITON INTERNATIONAL LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 7—Debt
The table below summarizes the Company's key terms and carrying value of debt as of the periods indicated:
December 31, 2023
Outstanding
Borrowings
(in thousands)
Contractual
Weighted Avg
Interest Rate
Maturity Range
From
To
December 31, 2022
Outstanding
Borrowings
(in thousands)
Secured Debt Financings ...............................
Asset-backed securitization term instruments $
2,579,832
2.04 % February 2028
February 2031 $
2,890,467
Asset-backed securitization warehouse ..........
240,000
6.96 %
April 2029
April 2029
Total secured debt financings ......................
2,819,832
Unsecured Debt Financings ...........................
Senior notes ....................................................
Term loan facility ...........................................
Revolving credit facility .................................
Total unsecured debt financings ..................
Total debt financings
Unamortized debt costs ..................................
Unamortized debt premiums & discounts ......
2,300,000
1,468,496
930,000
4,698,496
7,518,328
(43,924)
(3,770)
2.45 %
6.71 %
June 2024
March 2032
May 2026
May 2026
6.71 % October 2027
October 2027
320,000
3,210,467
2,900,000
1,080,000
945,000
4,925,000
8,135,467
(55,863)
(4,784)
Debt, net of unamortized costs .................... $
7,470,634
$
8,074,820
Asset-Backed Securitization Term Instruments
Under the Company's ABS facilities, indirect wholly-owned subsidiaries of the Company enter into debt agreements for
ABS term instruments, including 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 GAAP. The Company is required to maintain restricted cash balances on deposit in
designated bank accounts equal to nine months of interest expense.
Asset-Backed Securitization Warehouse
Under the Company’s 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 ABS warehouse facility has a borrowing capacity of $1,125.0 million that is available on a revolving basis
to April 27, 2025, paying interest at term SOFR plus 1.60%. After the revolving period, borrowings will convert to term notes
with a maturity date of April 27, 2029, paying interest at SOFR plus 2.60%.
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 GAAP. The Company is
required to maintain restricted cash balances on deposit in designated bank accounts equal to three months of interest expense.
F-19
TRITON INTERNATIONAL LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Senior Notes
The Company’s senior notes are unsecured and have initial maturities ranging from 3 to 10 years and interest payments due
semi-annually. The senior notes are prepayable (in whole or in part) at the Company's option at any time prior to the maturity
date, subject to certain provisions in the senior note agreements, including the payment of a make-whole premium in respect to
such prepayment.
On August 1, 2023, the Company’s $600.0 million, 0.80% senior notes matured. Payment at maturity was primarily
funded by borrowings under Triton’s revolving credit facility. Additionally, three forward starting swaps with a total notional
value of $300.0 million became effective on August 1, 2023, to offset a portion of the interest expense related to the borrowing
under the revolving credit facility.
Term Loan Facility
The Company's term loan facility has a maturity date of May 27, 2026, which amortizes in quarterly installments and has a
reference rate of term SOFR plus 1.35%. This facility is subject to covenants customary for unsecured financings of this type,
including financial covenants that require us to maintain a minimum ratio of unencumbered assets to certain financial
indebtedness.
On September 1, 2023, the Company and its wholly-owned subsidiaries, Triton Container International Limited and TAL
International Container Corporation (the "Borrowers"), amended Triton's term loan facility to increase the size of the accordion
feature under the term loan agreement to allow the Borrowers to increase the aggregate commitment amount under the
agreement by up to an additional $500.0 million. Concurrently with the closing of the amendment, the Borrowers exercised the
accordion and increased their borrowing under the term loan facility by $500.0 million. There was no change to the maturity
date or reference rate under the term loan facility as a result of the amendment and incremental borrowing.
Revolving Credit Facility
The revolving credit facility has a maturity date of October 26, 2027, and has a maximum borrowing capacity of $2,000.0
million. The reference rate is term SOFR plus 1.35%. This facility is subject to covenants customary for unsecured financings
of this type, primarily financial covenants that require us to maintain a minimum ratio of unencumbered assets to certain
financial indebtedness.
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 December 31, 2023:
Balance
Outstanding
(in thousands)
Contractual
Weighted Avg
Interest Rate
Maturity Range
To
From
Weighted Avg
Remaining
Term
Excluding impact of derivative instruments:
Fixed-rate debt .....................................................
$4,879,832
Floating-rate debt .................................................
$2,638,496
2.23%
6.73%
Jun 2024 Mar 2032
May 2026 Apr 2029
4.2 years
3.0 years
Including impact of derivative instruments:
Fixed-rate debt .....................................................
$4,879,832
Hedged floating-rate debt .....................................
1,847,000
Total fixed and hedged debt ....................................
6,726,832
Unhedged floating-rate debt .................................
Total debt outstanding .............................................
791,496
$7,518,328
2.23%
4.00%
2.72%
6.73%
3.13%
The fair value of total debt outstanding was $6,905.9 million and $7,264.7 million as of December 31, 2023 and
December 31, 2022, respectively, and was measured using Level 2 inputs.
F-20
TRITON INTERNATIONAL LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of December 31, 2023, the maximum borrowing levels for the ABS warehouse and the revolving credit facility were
$1,125.0 million and $2,000.0 million, respectively. Certain of these facilities are governed by either borrowing bases or an
unencumbered asset test that limits borrowing capacity. Based on those limitations, the availability under these credit facilities
at December 31, 2023 was approximately $1,148.7 million.
The Company is subject to certain financial covenants under its debt financings. As of December 31, 2023, the Company
was in compliance with all financial covenants in accordance with the terms of its debt agreements.
Debt Maturities
At December 31, 2023, the Company's scheduled principal repayments and maturities were as follows (in thousands):
Years ending December 31,
2024 .................................................................................................................................................................. $
2025 ..................................................................................................................................................................
2026 ..................................................................................................................................................................
2027 ..................................................................................................................................................................
2028 ..................................................................................................................................................................
2029 and thereafter ...........................................................................................................................................
Total debt outstanding ..................................................................................................................................... $
953,357
470,517
2,119,575
1,317,992
591,830
2,065,057
7,518,328
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. These swaps are designated as cash flow hedges for accounting purposes and accordingly,
changes in the fair value are recorded in accumulated other comprehensive income (loss) and reclassified to interest and debt
expense when they are realized.
The Company has entered into offsetting $500.0 million notional interest rate cap agreements with substantially similar
economic terms related to certain debt facility requirements. These derivatives are not designated as hedging instruments, and
because they offset, changes in fair value have an immaterial impact on the financial statements.
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 ABS facilities. Additionally, the
Company may be required to post cash collateral on certain derivative agreements if the fair value of these contracts represents
a liability. Any amounts of cash collateral posted are included in Other assets on the Consolidated Balance Sheets and are
presented in operating activities on the Consolidated Statements of Cash Flows. As of December 31, 2023, the Company had
cash collateral on derivative instruments of $1.1 million.
Within the next twelve months, the Company expects to reclassify $41.4 million of net unrealized and realized gains
related to derivative instruments designated as cash flow hedges from accumulated other comprehensive income (loss) into
earnings.
F-21
TRITON INTERNATIONAL LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of December 31, 2023, the Company had derivative agreements in place to fix interest rates on a portion of the
borrowings under its debt facilities with floating interest rates as summarized below:
Derivatives
Interest Rate Swap(1)
Notional Amount (in
millions)
Weighted Average
Fixed Leg (Pay) Interest Rate
Weighted Average
Remaining Term
$1,847.0
2.63%
3.7 years
(1) Excludes certain interest rate swaps with an effective date in a future period ("forward starting swaps"). Including these instruments will increase total
notional amount by $350.0 million and increase the weighted average remaining term to 4.6 years.
In the fourth quarter of 2023, the Company entered into swaps with a notional value of $250.0 million that commenced on
December 29, 2023 and have a termination date of December 31, 2033. These swaps were designated as cash flow hedges to
fix the interest rates on a portion of the Company's floating rate debt.
In the first quarter of 2023, the Company entered into forward starting swaps with a notional value of $300.0 million that
commenced on August 1, 2023 and have a termination date of March 31, 2025. These swaps were designated as cash flow
hedges to fix the interest rates on a portion of the Company's floating rate debt.
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):
Financial statement caption
Year Ended December 31,
2023
2022
2021
Non-Designated Derivative Instruments
Realized (gains) losses ......................... Debt termination expense ............................................ $
Unrealized (gains) losses ...................... Unrealized (gain) loss on derivative instruments, net . $
Designated Derivative Instruments
Realized (gains) losses ......................... Interest and debt (income) expense ............................. $
— $
(15) $
— $
(343) $
883
—
(47,648) $
260 $
30,638
Unrealized (gains) losses ...................... Comprehensive (income) loss ....................................
$
(20,148) $
(168,156) $
(59,185)
Fair Value of Derivative Instruments
The Company presents the fair value of derivative financial instruments on a gross basis as a separate line item on the
Consolidated Balance Sheet.
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 SOFR and swap rates and credit risk at commonly quoted intervals). The
London Interbank Offered Rate ("LIBOR") reference rate sunset on June 30, 2023. Effective July 1, 2023, the Company’s
derivative instruments utilizing LIBOR transitioned to SOFR as the alternative reference rate per the ISDA 2020 IBOR
fallbacks protocol.
Note 9—Leases
Lessee
The Company's leases are primarily for multiple office facilities which are contracted under various cancellable and non-
cancellable 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.
The Company entered into an amended lease agreement in September 2022 to relocate office space in Purchase, New York
(Triton's principal U.S. corporate office). The new lease commenced on August 1, 2023, with a lease term of 12 years.
F-22
TRITON INTERNATIONAL LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table summarizes the impact of the Company's leases in its financial statements (in thousands):
Balance Sheet
Financial statement caption
December 31,
2023
December 31,
2022
Right-of-use asset - operating Other assets ........................................................................... $
Lease liability - operating ...... Accounts payable and other accrued expenses ..................... $
10,093 $
13,510 $
3,145
3,465
Income Statement
Operating lease cost(1)
(1)
Includes short-term leases that are immaterial.
Financial statement caption
............ Administrative expenses ......................... $
Year Ended December 31,
2022
2021
2023
2,869 $
3,205 $
3,183
Cash paid for amounts included in the measurement of lease liabilities included in operating cash flows was $2.9 million,
$3.4 million, and $3.3 million for the years ended December 31, 2023, 2022, and 2021, respectively.
The following represents the Company's future undiscounted cash flows related to lease liabilities for each of the next five
years and thereafter as of December 31, 2023 (in thousands):
Years ending December 31,
2024 ............................................................................................................................................................. $
2025 .............................................................................................................................................................
2026 .............................................................................................................................................................
2027 .............................................................................................................................................................
2028 .............................................................................................................................................................
2029 and thereafter .....................................................................................................................................
Total undiscounted future cash flows related to lease payments ................................................................ $
Less: imputed interest .................................................................................................................................
Total present value of lease liability ........................................................................................................... $
The following table includes supplemental information related to the Company's operating leases:
2,293
2,211
1,729
1,364
1,333
8,912
17,842
(4,332)
13,510
Weighted-Average Remaining Lease Team (years)
Weighted-Average Discount Rate
Lessor
Operating Leases
December 31,
2023
December 31,
2022
9.5 years
5.67 %
1.6 years
3.98 %
The following is the minimum future rental income as of December 31, 2023 under non-cancelable operating leases,
assuming the minimum contractual lease term (in thousands):
Years ending December 31,
2024 ................................................................................................................................................................... $
2025 ...................................................................................................................................................................
2026 ...................................................................................................................................................................
2027 ...................................................................................................................................................................
2028 ...................................................................................................................................................................
2029 and thereafter ...........................................................................................................................................
Total .................................................................................................................................................................. $
947,292
801,865
632,268
501,203
409,448
1,064,472
4,356,548
F-23
TRITON INTERNATIONAL LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of December 31, 2023, the Company has deferred revenue balances related to operating leases with uneven payment
terms. These amounts will be amortized into revenue as follows (in thousands):
Years ending December 31,
2024 ................................................................................................................................................................... $
2025 ...................................................................................................................................................................
2026 ...................................................................................................................................................................
2027 ...................................................................................................................................................................
2028 ...................................................................................................................................................................
2029 and thereafter ...........................................................................................................................................
Total .................................................................................................................................................................. $
76,256
65,540
42,761
16,241
15,077
43,148
259,023
Finance Leases
The following table summarizes the components of the net investment in finance leases (in thousands):
December 31,
2023
December 31,
2022
................................................................. $
.......................................................................................
Future minimum lease payment receivable(1)
Estimated residual receivable(2)
Gross finance lease receivables(3)
Unearned income(4)
Finance lease reserve(5)
Net investment in finance leases(6)
(1) There were no executory costs included in gross finance lease receivables as of December 31, 2023 and December 31, 2022.
(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
.........................................................................................................
...................................................................................................
.................................................................................. $
....................................................................................
1,928,167 $
1,507,292 $
(636,486)
2,161,192
2,379,196
1,639,831
2,146,366
(739,365)
(2,588)
218,004
218,199
—
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 December 31, 2023 and December 31, 2022.
(5) As of December 31, 2023, the Company had a finance lease reserve of $2.6 million that was a reserve on leasing equipment.
(6) One major customer represented 93% and 90% of the Company's finance lease portfolio as of December 31, 2023 and 2022, respectively. No other customer represented more
than 10% of the Company's finance lease portfolio in each of those periods.
Maturities of the Company's gross finance lease receivables subsequent to December 31, 2023 are as follows (in
thousands):
Years ending December 31,
2024 ................................................................................................................................................................... $
2025 ...................................................................................................................................................................
2026 ...................................................................................................................................................................
2027 ...................................................................................................................................................................
2028 ...................................................................................................................................................................
2029 and thereafter ...........................................................................................................................................
Total .................................................................................................................................................................. $
205,910
202,864
196,361
172,641
167,466
1,201,124
2,146,366
The Company’s finance lease portfolio lessees are primarily large 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.
F-24
TRITON INTERNATIONAL LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 10—Share-Based Compensation
Prior to the completion of the Merger, the Company recognized share-based compensation expense for share-based
payment transactions based on the grant date fair value. The expense was recognized over the employee's requisite service
period, or vesting period of the equity award, approximately three years. The Company recognized share-based compensation
expense in Administrative expenses on the Consolidated Statements of Operations of $7.3 million, $12.5 million, and $9.4
million for the years ended December 31, 2023, 2022, and 2021, respectively.
During the year ended December 31, 2023, the Company issued 138,727 restricted shares, and cancelled 81,190 vested
shares to settle payroll taxes on behalf of employees.
In accordance with the Merger Agreement, upon closing of the Merger, Triton’s unvested restricted shares and restricted
share units that were outstanding immediately prior to the closing of the Merger were converted into a contingent right to
receive an amount in cash equal to the number of shares subject to such award, assuming attainment of the maximum level of
performance for performance-based awards, multiplied by $83.16 per share. This amount will be paid upon the earlier of the
original vesting date of the award and the twelve month anniversary of the Merger closing date subject to the participant's
continued service with the Company. The modification of the unvested share-based awards changed the classification of the
awards from equity to liability, as well as modified the original service period of the awards. As a result of the change in the
classification of the awards, the Company reclassified $16.1 million from equity to Accounts payable and other accrued
expenses. Further, the Company recorded $24.2 million in share-based compensation expense as a result of the modification to
recognize the fair value of the awards based on the portion of the service period completed through December 31, 2023. This
amount is included in Transaction and other costs in the Consolidated Statements of Operations. The remaining unrecognized
compensation liability of $12.0 million at December 31, 2023 related to the share-based awards is expected to be recognized in
Transaction and other costs over the remaining vesting period through September 30, 2024.
Note 11—Other Equity Matters
In connection with the Merger, the Company suspended its share repurchase program after the close of business on April 6,
2023. Prior to the suspension of the share repurchase program, the Company repurchased a total of 1,884,616 common shares,
at an average price per-share of $66.66 for a total of $125.7 million. In connection with the Merger, all previously issued and
outstanding common shares of Triton were cancelled and following the closing of the Merger, 100% of the Company’s issued
and outstanding common shares are privately held by an affiliate of Brookfield Infrastructure.
During 2023, the Company made a distribution to Parent of $408.2 million to partially fund the purchase price of the
acquisition and pay transaction costs related to the Merger.
Preference Shares
The following table summarizes the Company's preference share issuances (each, a "Series"):
Issuance
Preference Share Series
Series A 8.50% Cumulative Redeemable Perpetual
Preference Shares ("Series A") ......................................
Series B 8.00% Cumulative Redeemable Perpetual
Preference Shares ("Series B") ......................................
Series C 7.375% Cumulative Redeemable Perpetual
Preference Shares ("Series C") ...................................... November 2019
Series D 6.875% Cumulative Redeemable Perpetual
Preference Shares ("Series D") ......................................
Series E 5.75% Cumulative Redeemable Perpetual
Preference Shares ("Series E") ......................................
January 2020
August 2021
June 2019
March 2019 $
Liquidation
Preference (in
thousands)
# of Shares(1)
Underwriting
Discounts (in
thousands)
86,250
3,450,000 $
2,717
143,750
5,750,000 $
4,528
175,000
7,000,000 $
5,513
150,000
6,000,000 $
4,725
175,000
7,000,000 $
5,513
(1) Represents number of shares authorized, issued, and outstanding.
$
730,000
29,200,000 $
22,996
F-25
TRITON INTERNATIONAL LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Each Series of preference 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, plus an amount equal to all accumulated and unpaid dividends,
whether or not declared. The Company may also redeem each Series of preference shares prior to the lapse of the five year
period upon the occurrence of certain events as described in each instrument, 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 preference shares may have the right to convert their preference shares
into common shares. Specifically for Series E only, the Company may redeem the Series E Preference Shares if an applicable
rating agency changes the methodology or criteria that were employed in assigning equity credit to securities similar to the
Series E Preference Shares when originally issued, which either (a) shortens the period of time during which equity credit
pertaining to the Series E Preference Shares would have been in effect had the methodology not been changed or (b) reduces
the amount of equity credit as compared with the amount of equity credit that the rating agency had assigned to the Series E
Preference Shares when originally issued.
Holders of preference 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.
Following the closing of the Merger, Triton's preference shares remained outstanding as an obligation of the Company,
entitled to the same dividends and other preferences and privileges that they previously had, and continued to be listed on the
NYSE.
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 years ended December 31, 2023, 2022, and 2021 on its
issued and outstanding Series (in millions except for the per-share amounts):
2023
Year ended December 31,
2022
2021
Series
Per Share
Payment
Aggregate
Payment
Per Share
Payment
Aggregate
Payment
Per Share
Payment
Aggregate
Payment
A(1)
B
C(1)
D(1)
E(1)
Total
$2.12
$2.00
$1.84
$1.72
$1.44
$
$
$
$
$
$
7.2
11.6
12.8
10.4
10.1
52.1
$2.12
$2.00
$1.84
$1.72
$1.44
$
$
$
$
$
$
7.2
11.6
12.8
10.4
10.1
52.1
$2.12
$2.00
$1.84
$1.72
$0.47
$
$
$
$
$
$
7.2
11.6
12.8
10.4
3.3
45.3
(1) Per share payments rounded to the nearest whole cent.
As of December 31, 2023, the Company had cumulative unpaid preference dividends of $2.2 million.
Note 12—Segment and Geographic Information
Segment Information
The Company operates its business in one industry, intermodal transportation equipment, and has two 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.
F-26
TRITON INTERNATIONAL LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
•
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.
The following tables summarizes the Company's segment information and the consolidated totals reported (in thousands):
As of and for the Year Ended December 31, 2023
Equipment Leasing
Equipment Trading
Totals
Total leasing revenues ................................................................................. $
1,537,351 $
6,441 $
1,543,792
Trading margin ............................................................................................
Net gain on sale of leasing equipment .........................................................
Depreciation and amortization expense .......................................................
Interest and debt expense .............................................................................
Segment income (loss) before income taxes(1)
Equipment held for sale ...............................................................................
..........................................
Goodwill ......................................................................................................
Total assets ..................................................................................................
Purchases of leasing equipment and investments in finance leases(2)
......... $
—
58,615
574,767
239,844
515,975
165,184
220,864
11,164,052
7,899
—
784
994
12,563
20,318
15,801
68,816
7,899
58,615
575,551
240,838
528,538
185,502
236,665
11,232,868
208,242 $
— $
208,242
As of and for the Year Ended December 31, 2022
Equipment Leasing
Equipment Trading
Totals
Total leasing revenues ................................................................................. $
1,665,880 $
13,806 $
1,679,686
Trading margin ............................................................................................
Net gain on sale of leasing equipment .........................................................
Depreciation and amortization expense .......................................................
Interest and debt expense .............................................................................
Segment income (loss) before income taxes(1)
Equipment held for sale ...............................................................................
..........................................
Goodwill ......................................................................................................
Total assets ..................................................................................................
Purchases of leasing equipment and investments in finance leases(2)
......... $
—
115,665
634,090
224,470
794,280
97,463
220,864
12,010,654
16,004
—
747
1,621
25,039
41,043
15,801
98,604
16,004
115,665
634,837
226,091
819,319
138,506
236,665
12,109,258
943,062 $
— $
943,062
As of and for the Year Ended December 31, 2021
Equipment Leasing
Equipment Trading
Totals
Total leasing revenues ................................................................................. $
1,519,434 $
14,446 $
1,533,880
Trading margin ............................................................................................
Net gain on sale of leasing equipment .........................................................
Depreciation and amortization expense .......................................................
Interest and debt expense .............................................................................
Segment income (loss) before income taxes(1)
Equipment held for sale ...............................................................................
..........................................
Goodwill ......................................................................................................
—
107,060
625,519
220,292
673,477
16,936
220,864
34,099
—
721
1,732
40,973
31,810
15,801
34,099
107,060
626,240
222,024
714,450
48,746
236,665
Total assets ..................................................................................................
Purchases of leasing equipment and investments in finance leases(2)
......... $
12,543,270
100,568
12,643,838
3,434,394 $
— $
3,434,394
(1) Segment income before income taxes excludes unrealized gains or losses on derivative instruments and debt termination expense. The Company recorded
debt termination expense of nil, $1.9 million, and $133.9 million for the years ended December 31, 2023, 2022, and 2021, respectively and an immaterial
amount of unrealized gain, an unrealized gain of $0.3 million, and nil for the years ended December 31, 2023, 2022, and 2021, 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.
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
F-27
TRITON INTERNATIONAL LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 total leasing revenues for the years ended December 31, 2023,
2022, and 2021 based on customers' primary domicile (in thousands):
Year Ended December 31,
2022
2023
2021
Total leasing revenues:
Asia .......................................................................................................... $
Europe .....................................................................................................
Americas ..................................................................................................
Bermuda ..................................................................................................
Other International ..................................................................................
Total ...................................................................................................... $
529,150 $
822,902
132,930
4,203
54,607
1,543,792 $
602,985 $
876,691
142,822
3,135
54,053
1,679,686 $
556,837
807,735
118,430
2,424
48,454
1,533,880
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 years ended December 31,
2023, 2022 and 2021 based on the location of the sale (in thousands):
Year Ended December 31,
2022
2023
2021
Total equipment trading revenues:
Asia .......................................................................................................... $
Europe .....................................................................................................
Americas ..................................................................................................
Bermuda ..................................................................................................
Other International ..................................................................................
Total ...................................................................................................... $
32,673 $
19,978
23,897
—
19,450
95,998 $
71,739 $
27,620
43,120
—
5,395
147,874 $
64,588
22,167
47,644
—
8,570
142,969
Note 13—Income Taxes
The Company is a Bermuda exempted company. Bermuda does not currently impose a corporate income tax. The
Company is subject to taxation in certain foreign jurisdictions on a portion of its income attributable to such jurisdictions. The
two main subsidiaries of Triton are Triton Container International Limited ("TCIL") and TAL International Group ("TAL".)
TCIL is a Bermuda exempted company and therefore no income tax is imposed. However, a portion of TCIL’s income is
subject to taxation in the U.S. TAL is a U.S. company and therefore is subject to taxation in the U.S.
Effects of Pillar 2
The Organization for Economic Co-operation and Development (the “OECD”) has issued various proposals that would
change long-standing global tax principles. These proposals include a two-pillar approach to global taxation, focusing on global
profit allocation and a global minimum tax rate ("Pillar Two"). Numerous jurisdictions where the Company, its ultimate parent
Brookfield Corporation, and its subsidiaries operate have enacted Pillar Two or are actively considering changes to their tax
laws to adopt Pillar Two. The Company continues to assess the impact of Pillar Two as countries actively consider changes to
F-28
TRITON INTERNATIONAL LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
their tax laws to adopt certain parts of the OECD's proposal, and will continue to monitor and reflect the impact of such
legislative changes in future financial statements as appropriate.
The following table sets forth income tax expense (benefit) for the periods indicated (in thousands):
Year Ended December 31,
2023
2022
2021
Current taxes:
Bermuda .......................................................................................... $
— $
— $
U.S. ..................................................................................................
Foreign .............................................................................................
45,861
580
46,380
952
$
46,441 $
47,332 $
Deferred taxes:
Bermuda .......................................................................................... $
— $
— $
U.S. ..................................................................................................
Foreign .............................................................................................
8,010
13
8,023
23,522
(47)
23,475
Total income tax expense (benefit) .................................................... $
54,464 $
70,807 $
—
6,528
230
6,758
—
43,604
(5)
43,599
50,357
The following table sets forth the components of income (loss) before income taxes (in thousands):
Year Ended December 31,
2023
2022
2021
Bermuda sources .............................................................................. $
U.S. sources .....................................................................................
Foreign sources ................................................................................
Income (loss) before income taxes ..................................................... $
325,453 $
201,960
1,140
528,553 $
532,391 $
284,468
870
817,729 $
346,023
233,518
1,056
580,597
The following table sets forth the difference between the Bermuda statutory income tax rate and the effective tax rate on
the Consolidated Statements of Operations for the periods indicated below:
Year Ended December 31,
2023
2022
2021
Bermuda tax rate .................................................................................
Change in enacted tax act ...................................................................
U.S. income taxed at other than the statutory rate ..............................
Effect of uncertain tax positions .........................................................
Foreign income taxed at other than the statutory rate ........................
Effect of permanent differences .........................................................
Other discrete items ............................................................................
Effective income tax rate ....................................................................
— %
0.86 %
8.54 %
— %
0.10 %
0.75 %
0.05 %
10.30 %
— %
0.66 %
7.58 %
(0.06) %
0.16 %
0.10 %
0.22 %
8.66 %
— %
— %
8.75 %
(0.09) %
0.11 %
0.21 %
(0.31) %
8.67 %
F-29
TRITON INTERNATIONAL LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table sets forth the components of deferred income tax assets and liabilities (in thousands):
December 31,
2023
December 31,
2022
Deferred income tax assets: ..............................................................................................
Net operating loss and interest expense limitation carryforwards ................................. $
Deferred income ............................................................................................................
Accrued liabilities and other payables ...........................................................................
Total gross deferred tax assets .......................................................................................
Less: Valuation allowance .............................................................................................
Net deferred tax assets ................................................................................................... $
Deferred income tax liabilities: ........................................................................................
Accelerated depreciation ................................................................................................ $
Deferred partnership income (loss) ................................................................................
Goodwill and other intangible amortization ..................................................................
Derivative instruments ...................................................................................................
Deferred income ............................................................................................................
Total gross deferred tax liability ....................................................................................
Net deferred income tax liability ................................................................................... $
6,244 $
2,344
5,191
13,779
—
13,779 $
321,494 $
100,961
4,055
3,170
—
429,680
415,901 $
3,669
2,444
3,076
9,189
(200)
8,989
337,375
73,583
3,974
5,383
302
420,617
411,628
At December 31, 2023, the Company had U.S. state net operating loss carryforwards of $10.1 million that expire at various
times beginning in 2025 and net interest expense limitation carryforwards of $26.4 million that have an indefinite carryforward
period. The Company held a valuation allowance of $0.2 million at December 31, 2022 related to U.S. state net operating
losses. The Company released the entire valuation allowance of $0.2 million at December 31, 2023, as it is more likely than not
that Triton will be able to utilize these state net operating losses.
In assessing the potential future realization of deferred tax assets, management considers whether it is more likely than not
that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in which those temporary differences become
deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax
planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future
taxable income over the periods during which the deferred tax assets are deductible, the Company believes it is more likely than
not that the Company will realize the benefits of these deductible differences at December 31, 2023.
Certain income taxes on unremitted earnings have not been reflected on the consolidated financial statements because such
earnings are intended to be permanently reinvested in those jurisdictions. Such earnings and related income taxes are estimated
to be approximately $378.5 million and $113.4 million, respectively, at December 31, 2023.
The following table sets forth the unrecognized tax benefit amounts (in thousands):
Beginning balance at January 1 ...................................................................................... $
Lapse of statute of limitations ........................................................................................
Ending balance at December 31 ..................................................................................... $
— $
—
— $
327
(327)
—
The Company files income tax returns in several jurisdictions including the U.S. and certain U.S. states. The tax years
2020 through 2023 remain subject to examination by major tax jurisdictions.
December 31,
2023
December 31,
2022
F-30
TRITON INTERNATIONAL LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The Company accrues interest and penalties related to income taxes in the provision for income taxes. The following table
summarizes interest and penalty expense (in thousands):
Year Ended December 31,
2023
2022
2021
Interest expense (benefit) ....................................................................................... $
Penalty expense (benefit) ....................................................................................... $
— $
— $
(86) $
(98) $
(78)
(97)
The following table summarizes the components of income taxes payable included in Accounts payable and other accrued
expenses on the Consolidated Balance Sheets (in thousands):
Corporate income taxes payable ..................................................................................... $
Unrecognized tax benefits ...............................................................................................
Interest accrued ...............................................................................................................
Penalties ..........................................................................................................................
Income taxes payable ................................................................................................... $
99 $
—
—
—
99 $
—
—
—
—
—
December 31,
2023
December 31,
2022
Note 14—Other Postemployment Benefits
The Company's U.S. employees participate in a defined contribution plan. Under the provisions of the plan, an employee is
fully vested with respect to Company contributions after four years of service. The Company matches employee contributions
of 100% up to a maximum of $6,000 of qualified compensation and may, at its discretion, make voluntary contributions. The
Company's contributions were $0.8 million for the years ended December 31, 2023 and 2022, and $0.7 million for the year
ended December 31, 2021.
Note 15—Commitments and Contingencies
Container Equipment Purchase Commitments
As of December 31, 2023, the Company had commitments to purchase equipment in the amount of $129.1 million to be
paid in 2024.
Contingencies
Legal Proceedings
The Company is party to various pending or threatened legal or regulatory proceedings arising in the ordinary course of its
business. The ability to predict the ultimate outcome of such matters involves judgments, estimates and inherent uncertainties.
Triton records liabilities related to legal matters when the exposure item becomes probable and can be reasonably estimated.
Management does not expect these matters to have a material adverse effect on Triton’s financial condition, results of
operations, or liquidity. However, these matters are subject to inherent uncertainties and it is possible that a liability arising
from these matters could have a material adverse impact in the period in which the uncertainties are resolved, depending in part
on the operating results for such period.
In connection with the Merger, a putative Triton shareholder filed two petitions demanding an appraisal of its shares under
Bermuda law in the Supreme Court of Bermuda. The actions, captioned Oasis Core Investments Fund Ltd. v. Triton
International Limited, 2023: Nos. 263 and 265, purport to demand appraisal in respect of 1,184,300 common shares of the
Company (approximately 2.15% of the outstanding Triton common shares prior to the closing of the Merger). If a Bermuda
court were to find that the fair value of the Triton common shares exceeded the value of the Merger Consideration, under the
terms of the Merger Agreement, the Company would have to pay the additional amount for each Triton common share for
which appraisal was validly sought in accordance with Bermuda law. The court may in its discretion award the prevailing party
its costs, including attorney's fees, at the conclusion of the proceeding. Brookfield Infrastructure has already paid the Merger
Consideration due under the terms of the Merger Agreement in cash with respect to these shares, but the Company has not
F-31
TRITON INTERNATIONAL LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
provided for any additional amounts or costs. The proceedings are at a very early stage and the Company cannot predict at this
time the outcome of the appraisal proceeding or when this matter will be resolved.
Note 16—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 Sheets. The Company received payments
on finance leases with Tristar of $2.0 million for both the years ended December 31, 2023 and 2022. The Company has a
finance lease receivable balance with Tristar of $5.7 million and $7.4 million as of the years ended December 31, 2023 and
December 31, 2022, respectively.
Note 17—Subsequent Events
On January 29, 2024, the Company's Board of Directors approved and declared a cash dividend of $201.9 million on its
issued and outstanding common shares to Parent, which was paid on February 15, 2024.
On January 29, 2024, the Company's Board of Directors approved and declared a cash dividend on its issued and
outstanding preference shares, payable on March 15, 2024 to holders of record at the close of business on March 8, 2024 as
follows:
Preference Share Series
Dividend Rate
Dividend Per Share
Series A ..........................................................................................................
Series B ..........................................................................................................
Series C ..........................................................................................................
Series D ..........................................................................................................
Series E ..........................................................................................................
8.500%
8.000%
7.375%
6.875%
5.750%
$0.5312500
$0.5000000
$0.4609375
$0.4296875
$0.3593750
On January 22, 2024, the Company amended its $1,125.0 million ABS warehouse facility extending the conversion date to
January 22, 2027, after which any borrowings will convert to term notes with a final maturity date of January 22, 2031.
Additionally, the interest rate benchmark was amended from term SOFR to daily compounded SOFR. The margin over the
benchmark rate was unchanged as a result of the amendment.
F-32