UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of report (Date of earliest event reported): July 28, 2022 
 
TRITON INTERNATIONAL LIMITED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

															
Bermuda		001-37827		98-1276572	
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)	
 
Victoria Place, 5th Floor, 31 Victoria Street Hamilton HM 10, Bermuda
(Address of Principal Executive Offices, including Zip Code)
 
Telephone: (441) 294-8033
(Registrant's Telephone Number, Including Area Code)
 
Not applicable
(Former name or former address, if changed since last report)

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered	
   Common shares, $0.01 par value per share	TRTN	New York Stock Exchange	
8.50% Series A Cumulative Redeemable Perpetual Preference Shares	TRTN PRA	New York Stock Exchange	
8.00% Series B Cumulative Redeemable Perpetual Preference Shares	TRTN PRB	New York Stock Exchange	
7.375% Series C Cumulative Redeemable Perpetual Preference Shares	TRTN PRC	New York Stock Exchange	
6.875% Series D Cumulative Redeemable Perpetual Preference Shares	TRTN PRD	New York Stock Exchange	
5.75% Series E Cumulative Redeemable Perpetual Preference Shares	TRTN PRE	New York Stock Exchange	
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant any of the following provisions:
 
☐            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
☐            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
☐            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
☐            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
                                        Emerging growth company ☐

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

Item 2.02. Results of Operations and Financial Condition.
 
On July 28, 2022, Triton International Limited issued a press release announcing its results of operations for the quarter ended June 30, 2022.  A copy of the press release is furnished with this report as Exhibit 99.1.
 
The information in this Current Report on Form 8-K, including the attached exhibit, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be set forth by specific reference in such filing.
 
Item 9.01. Financial Statements and Exhibits.
 
(d)   Exhibits
 
99.1        Press release issued by Triton International Limited dated July 28, 2022.

 

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

												
 		Triton International Limited	
 	 	
Date: July 28, 2022		By:	/s/ John Burns	
 	 	Name:	John Burns	
 	 	Title:	Chief Financial Officer	

 

TRITON INTERNATIONAL REPORTS SECOND QUARTER 2022 RESULTS
AND DECLARES QUARTERLY DIVIDENDS

Hamilton, Bermuda – July 28, 2022 – Triton International Limited (NYSE: TRTN) ("Triton")

Highlights:
•Net income attributable to common shareholders for the three months ended June 30, 2022 was $184.6 million or $2.90 per diluted share.
•Adjusted net income was $186.0 million or $2.92 per diluted share, an increase of 36.4% from the second quarter of 2021 and 5.8% from the first quarter of 2022.
•Container utilization remains exceptionally high. Utilization averaged 99.4% in the second quarter of 2022 and ending utilization was 99.3% as of July 26, 2022.
•Triton repurchased 1.8 million common shares during the second quarter and has repurchased an additional 0.9 million common shares through July 26, 2022. See the tables to this press release for further information. Additionally, Triton again increased its share repurchase authorization back to $200 million in July.

Financial Results
The following table summarizes Triton’s selected key financial information for the three and six months ended June 30, 2022 and 2021 and the three months ended March 31, 2022.

	(in millions, except per share data)	
	Three Months Ended,		Six Months Ended,	
	June 30, 2022		March 31, 2022		June 30, 2021		June 30, 2022		June 30, 2021	
Total leasing revenues	$421.6 			$417.1 			$369.8 			$838.7 			$716.5 		
										
GAAP										
Net income attributable to common shareholders	$184.6 			$181.2 			$54.7 			$365.8 			$184.0 		
Net income per share - Diluted	$2.90 			$2.78 			$0.81 			$5.68 			$2.74 		
										
Non-GAAP (1)										
Adjusted net income	$186.0 			$179.6 			$144.2 			$365.7 			$272.9 		
Adjusted net income per share - Diluted	$2.92 			$2.76 			$2.14 			$5.67 			$4.06 		
										
Adjusted return on equity (2)	29.8 	%		30.3 	%		26.6 	%		30.1 	%		26.0 	%	
(1)Refer to the "Use of Non-GAAP Financial Items" and "Non-GAAP Reconciliations of Adjusted Net Income" set forth below.
(2)Refer to the “Calculation of Adjusted Return on Equity” set forth below.

1

Operating Performance
"Triton achieved another record quarter of profitability in the second quarter of 2022," commented Brian M. Sondey, Chief Executive Officer of Triton. “Triton generated $2.92 of Adjusted net income per share, an increase of 5.8% from the first quarter of 2022 and an increase of 36.4% from the second quarter of 2021. In addition, Triton achieved an annualized Adjusted return on equity of 29.8%."

"Triton’s outstanding profitability reflects durable enhancements made to our business as well as generally constructive market conditions. Our utilization remains well above 99%, reflecting the large portion of our container fleet on long-term lease and low drop off volumes. New container prices have decreased from their peak level reached last year, but remain historically high, with factories quoting in the $2,600 range for a 20' dry container, providing strong support for lease rates and disposal prices. We have also locked in low long-term interest rates through our extensive refinancing activity in 2020 and 2021."

"Our gains on container disposals and trading margins remained exceptionally high in the second quarter, reflecting a continued tight market for containers and Triton’s market-leading resale capabilities. We also benefited from several lease transactions for older containers in the second quarter which were accounted for as sales. These transactions generated substantial per container margins, reflecting the value embedded in our container fleet, and they boosted our disposal gains by $6.8 million in the second quarter, or $0.11 per share."

"Triton's new container investment has been moderate so far this year following our record investment and growth in 2021, as customers have been more cautious about further expanding their container fleets. As of July 26, 2022, we have ordered $546 million of new containers for delivery in 2022. Triton has shifted its investment focus and strong cash flow to share repurchases. Year to date, Triton has repurchased 3.9 million or 6.0% of our shares outstanding. Triton increased the pace of its repurchases during the second quarter and our Board of Directors has again increased our share repurchase authorization back to $200 million in July."

Outlook
Mr. Sondey continued, "We expect our performance will remain strong due to the durable enhancements we have made to our business. While we anticipate that market conditions will continue to moderate, we expect our cash flow, profitability and Adjusted return on equity will remain very high throughout the year and into the longer term. For the third quarter, we expect our Adjusted net income per share will remain in line with our very strong second quarter results, excluding the extra benefits to our disposal gains."

Common and Preferred Share Dividends
Triton’s Board of Directors has declared a quarterly cash dividend of $0.65 per common share, payable on September 22, 2022 to shareholders of record at the close of business on September 8, 2022.

The Company's Board of Directors also declared a cash dividend payable on September 15, 2022 to holders of record at the close of business on September 8, 2022 on Triton's issued and outstanding preferred shares as follows:

Preferred Share Series		Dividend Rate		Dividend Per Share	
Series A Preferred Shares (NYSE:TRTNPRA)		8.500%		$0.5312500	
Series B Preferred Shares (NYSE:TRTNPRB)		8.000%		$0.5000000	
Series C Preferred Shares (NYSE:TRTNPRC)		7.375%		$0.4609375	
Series D Preferred Shares (NYSE:TRTNPRD)		6.875%		$0.4296875	
Series E Preferred Shares (NYSE:TRTNPRE)		5.750%		$0.3593750	

2

Second Quarter 2022 Investor Webcast
Triton will hold a Webcast at 8:30 a.m. (New York time) on Thursday, July 28, 2022 to discuss its second quarter results. To listen by phone, please dial 1-877-418-5277 (domestic) or 1-412-717-9592 (international) approximately 15 minutes prior to the start time and reference the Triton International Limited conference call. To access the live Webcast please visit Triton's website at http://www.trtn.com. An archive of the Webcast will be available one hour after the live call.

About Triton International Limited
Triton International Limited is the world’s largest lessor of intermodal freight containers. With a container fleet of over 7 million twenty-foot equivalent units ("TEU"), Triton’s global operations include acquisition, leasing, re-leasing and subsequent sale of multiple types of intermodal containers and chassis.

Contact
Andrew Greenberg
Senior Vice President
Business Development & Investor Relations
(914) 697-2900
3

Utilization, Fleet, and Leasing Revenue Information

The following table summarizes the equipment fleet utilization for the periods indicated:

 	Quarter Ended	
 	June 30, 2022		March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021	
Average Utilization (1)	99.4 	%		99.6 	%		99.6 	%		99.6 	%		99.4 	%	
Ending Utilization (1)	99.3 	%		99.5 	%		99.6 	%		99.6 	%		99.5 	%	
(1)Utilization is computed by dividing 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.

The following table summarizes the equipment fleet as of June 30, 2022, December 31, 2021 and June 30, 2021 (in units, TEUs and CEUs):

 	Equipment Fleet in Units		Equipment Fleet in TEU	
 	June 30, 2022		December 31, 2021		June 30, 2021		June 30, 2022		December 31, 2021		June 30, 2021	
	
Dry	3,867,875 			3,843,719 			3,604,794 			6,585,556 			6,531,816 			6,084,381 		
Refrigerated	231,470 			235,338 			236,978 			449,850 			457,172 			459,389 		
Special	92,068 			92,411 			93,238 			168,578 			169,004 			170,259 		
Tank	11,908 			11,692 			11,513 			11,908 			11,692 			11,513 		
Chassis	23,985 			24,139 			24,275 			44,902 			44,554 			44,391 		
Equipment leasing fleet	4,227,306 			4,207,299 			3,970,798 			7,260,794 			7,214,238 			6,769,933 		
Equipment trading fleet	52,177 			53,204 			53,802 			83,147 			83,692 			84,455 		
Total	4,279,483 			4,260,503 			4,024,600 			7,343,941 			7,297,930 			6,854,388 		

																		
	Equipment in CEU(1)	
 	June 30, 2022		December 31, 2021		June 30, 2021	
	
Operating leases	7,248,096 			7,291,769 			7,171,845 		
Finance leases	683,175 			623,136 			369,130 		
Equipment trading fleet	78,936 			81,136 			82,980 		
Total	8,010,207 			7,996,041 			7,623,955 		
(1)In the equipment fleet tables above, we have included total fleet count information based on CEU. CEU is a ratio used to convert the actual number of containers in our fleet to a figure based on the relative purchase prices of our various equipment types to that of a 20-foot dry container. For example, the CEU ratio for a 40-foot high cube dry container is 1.70, and a 40-foot high cube refrigerated container is 7.50. These factors may differ slightly from CEU ratios used by others in the industry.

The following table provides a summary of our equipment lease portfolio by lease type, based on CEU and net book value, as of June 30, 2022:
															
Lease Portfolio		By CEU		By Net Book Value	
Long-term leases		71.2 	%		71.8 	%	
Finance leases		8.8 			15.5 		
Subtotal		80.0 			87.3 		
Service leases		6.9 			4.3 		
Expired long-term leases, non-sale age (units on hire)		7.8 			5.8 		
Expired long-term leases, sale-age (units on hire)		5.3 			2.6 		
Total		100.0 	%		100.0 	%	

4

The following table summarizes our leasing revenue for the periods indicated (in thousands):
																		
 	Three Months Ended,	
 	June 30, 2022		March 31, 2022		June 30, 2021	
Operating leases	 		 			
Per diem revenues	$	378,414 			$	377,514 			$	353,277 		
Fee and ancillary revenues	13,677 			11,431 			7,582 		
Total operating lease revenues	392,091 			388,945 			360,859 		
Finance leases	29,517 			28,143 			8,925 		
	
Total leasing revenues	$	421,608 			$	417,088 			$	369,784 		

Share Repurchase Information

The following table provides information with respect to our purchases of the Company's common shares for the periods indicated:
															
		Total Number of Shares Purchased		Average Price Paid per Share	
July 1, 2021 through September 30, 2021		378,765		$	51.19 		
October 1, 2021 through December 31, 2021		1,149,408		$	57.52 		
2021 Total		1,528,173		$	55.95 		
					
January 1, 2022 through March 31, 2022		1,257,374		$	63.74 		
April 1, 2022 through June 30, 2022		1,832,240		$	60.04 		
July 1, 2022 through July 26, 2022		850,000		$	54.98 		
2022 Total		3,939,614		$	60.13 		
					
Total		5,467,787		$	58.96 		
5

Important Cautionary Information Regarding Forward-Looking Statements

Certain statements in this release, other than purely historical information, are "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, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, among others, statements relating to Triton's future financial and operating performance and key drivers thereof; anticipated trends in the market and industry; future capital expenditures, including anticipated payments of dividends and amount, manner and timing of share repurchases under the share repurchase authorization; and other statements regarding prospects and business strategies. Statements that include the words "expect," "intend," "plan," "seek," "believe," "project," "predict," "anticipate," "potential," "will," "may," "would" and similar statements of a future or forward-looking nature may be used to identify forward-looking statements. 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: the impact of COVID-19 on our business and financial results; decreases in the demand for leased containers; decreases in market leasing rates for containers; difficulties in re-leasing containers after their initial fixed-term leases; our customers' decisions to buy rather than lease 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 business, including global and regional economic conditions, including inflation and attempts to control inflation, and geopolitical risks such as the ongoing war in Ukraine; 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; compliance with laws and regulations related to economic and trade sanctions, security, anti-terrorism, environmental protection and anti-corruption; 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 risk factors set forth in the section entitled "Risk Factors" in our Form 10-K filed with the Securities and Exchange Commission ("SEC") on February 15, 2022, in any subsequent Form 10-Q filed or to be filed by Triton, and in 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 herein are qualified in their entirety by these cautionary statements. 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.

-Financial Tables Follow-
6

TRITON INTERNATIONAL LIMITED
Consolidated Balance Sheets
(In thousands, except share data)
(Unaudited)

	June 30, 2022		December 31, 2021	
ASSETS:	 		 	
Leasing equipment, net of accumulated depreciation of $4,151,317 and $3,919,181	$	9,887,026 			$	10,201,113 		
Net investment in finance leases	1,743,192 			1,558,290 		
Equipment held for sale	79,402 			48,746 		
Revenue earning assets	11,709,620 			11,808,149 		
Cash and cash equivalents	66,713 			106,168 		
Restricted cash	113,392 			124,370 		
Accounts receivable, net of allowances of $1,183 and $1,178	289,681 			294,792 		
Goodwill	236,665 			236,665 		
Lease intangibles, net of accumulated amortization of $286,750 and $281,340	11,707 			17,117 		
	
Other assets	30,609 			50,346 		
Fair value of derivative instruments	71,201 			6,231 		
Total assets	$	12,529,588 			$	12,643,838 		
LIABILITIES AND SHAREHOLDERS' EQUITY:	 		 	
Equipment purchases payable	$	43,348 			$	429,568 		
Fair value of derivative instruments	2,030 			48,277 		
Deferred revenue	335,025 			92,198 		
Accounts payable and other accrued expenses	67,361 			70,557 		
Net deferred income tax liability	396,253 			376,009 		
Debt, net of unamortized costs of $62,204 and $63,794	8,411,271 			8,562,517 		
Total liabilities	9,255,288 			9,579,126 		
				
Shareholders' equity:	 		 	
Preferred shares, $0.01 par value, at liquidation preference	730,000 			730,000 		
Common shares, $0.01 par value, 270,000,000 shares authorized, 81,389,809 and 81,295,366 shares issued, respectively	814 			813 		
Undesignated shares, $0.01 par value, 800,000 shares authorized, no shares issued and outstanding	— 			— 		
Treasury shares, at cost, 18,519,113 and 15,429,499 shares, respectively	(712,575)			(522,360)		
Additional paid-in capital	904,841 			904,224 		
Accumulated earnings	2,283,084 			2,000,854 		
Accumulated other comprehensive income (loss)	68,136 			(48,819)		
Total shareholders' equity	3,274,300 			3,064,712 		

Total liabilities and shareholders' equity	$	12,529,588 			$	12,643,838 		

7

TRITON INTERNATIONAL LIMITED
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)

 	Three Months Ended June 30,		Six Months Ended June 30,	
	2022		2021		2022		2021	
Leasing revenues:	 		 					
Operating leases	$	392,091 			$	360,859 			$	781,036 			$	700,653 		
Finance leases	29,517 			8,925 			57,660 			15,874 		
	
Total leasing revenues	421,608 			369,784 			838,696 			716,527 		
								
Equipment trading revenues	48,108 			33,183 			82,228 			59,128 		
Equipment trading expenses	(41,706)			(22,457)			(71,685)			(40,261)		
Trading margin	6,402 			10,726 			10,543 			18,867 		
								
Net gain on sale of leasing equipment	35,072 			31,391 			64,041 			53,358 		

Operating expenses:								
Depreciation and amortization	160,922 			154,056 			321,638 			297,363 		
Direct operating expenses	7,398 			6,337 			13,618 			15,707 		
Administrative expenses	24,968 			22,979 			46,268 			43,900 		
	
Provision (reversal) for doubtful accounts	46 			(26)			19 			(2,490)		
	
Total operating expenses	193,334 			183,346 			381,543 			354,480 		
Operating income (loss)	269,748 			228,555 			531,737 			434,272 		
Other expenses:								
Interest and debt expense	54,659 			60,004 			109,169 			114,627 		
	
Unrealized (gain) loss on derivative instruments, net	100 			— 			(339)			— 		
Debt termination expense	1,627 			89,863 			1,663 			89,863 		
Other (income) expense, net	(189)			(261)			(497)			(742)		
Total other expenses	56,197 			149,606 			109,996 			203,748 		
Income (loss) before income taxes	213,551 			78,949 			421,741 			230,524 		
Income tax expense (benefit)	15,932 			13,732 			29,864 			25,469 		
Net income (loss)	$	197,619 			$	65,217 			$	391,877 			$	205,055 		
	
Less: dividend on preferred shares	13,028 			10,513 			26,056 			21,026 		
Net income (loss) attributable to common shareholders	$	184,591 			$	54,704 			$	365,821 			$	184,029 		
Net income per common share—Basic	$	2.91 			$	0.82 			$	5.70 			$	2.75 		
Net income per common share—Diluted	$	2.90 			$	0.81 			$	5.68 			$	2.74 		
Cash dividends paid per common share	$	0.65 			$	0.57 			$	1.30 			$	1.14 		
Weighted average number of common shares outstanding—Basic	63,457 			66,951 			64,168 			66,943 		
Dilutive restricted shares	288 			331 			277 			295 		
Weighted average number of common shares outstanding—Diluted	63,745 			67,282 			64,445 			67,238 		
 
8

TRITON INTERNATIONAL LIMITED
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

 	Six Months Ended June 30,	
 	2022		2021	
Cash flows from operating activities:	 		 	
Net income (loss)	$	391,877 			$	205,055 		
Adjustments to reconcile net income (loss) to net cash provided by operating activities:	 		 	
Depreciation and amortization	321,638 			297,363 		
Amortization of deferred debt cost and other debt related amortization	6,541 			4,255 		
	
Lease related amortization	5,893 			9,549 		

Share-based compensation expense	6,247 			5,010 		
Net (gain) loss on sale of leasing equipment	(64,041)			(53,358)		
	
Unrealized (gain) loss on derivative instruments	(339)			— 		
Debt termination expense	1,663 			89,863 		
Deferred income taxes	12,542 			25,228 		
Changes in operating assets and liabilities:				
Accounts receivable	(1,459)			(40,419)		
Deferred revenue	266,802 			25,801 		
Accounts payable and other accrued expenses	(2,957)			(5,842)		
Net equipment sold (purchased) for resale activity	(14,015)			8,787 		
Cash received (paid) for settlement of interest rate swaps	16,588 			5,481 		
Cash collections on finance lease receivables, net of income earned	72,004 			27,124 		
Other assets	18,471 			9,422 		
Net cash provided by (used in) operating activities	1,037,455 			613,319 		
Cash flows from investing activities:	 		 	
Purchases of leasing equipment and investments in finance leases	(750,021)			(1,717,843)		
Proceeds from sale of equipment, net of selling costs	126,818 			117,688 		

Other	(405)			63 		
Net cash provided by (used in) investing activities	(623,608)			(1,600,092)		
Cash flows from financing activities:	 		 	
	
Purchases of treasury shares	(187,967)			— 		

Debt issuance costs	(8,348)			(31,502)		
Borrowings under debt facilities	1,505,600 			5,663,432 		
Payments under debt facilities and finance lease obligations	(1,659,002)			(4,490,788)		
Dividends paid on preferred shares	(26,056)			(21,026)		
Dividends paid on common shares	(82,878)			(76,317)		

Other	(5,629)			(4,146)		
Net cash provided by (used in) financing activities	(464,280)			1,039,653 		
Net increase (decrease) in cash, cash equivalents and restricted cash	$	(50,433)			$	52,880 		
Cash, cash equivalents and restricted cash, beginning of period	230,538 			151,996 		
Cash, cash equivalents and restricted cash, end of period	$	180,105 			$	204,876 		
Supplemental disclosures:				
Interest paid	$	94,321 			$	106,182 		
Income taxes paid (refunded)	$	17,538 			$	3,445 		
Right-of-use asset for leased property	$	210 			$	1,453 		
Supplemental non-cash investing activities:	 		 	
Equipment purchases payable	$	43,348 			$	411,454 		
9

Use of Non-GAAP Financial Items

We use the terms "Adjusted net income" and "Adjusted return on equity" throughout this press release.

Adjusted net income and Adjusted return on equity are not items presented in accordance with U.S. GAAP and should not be considered as alternatives to, or more meaningful than, amounts determined in accordance with U.S. GAAP, including net income.

Adjusted net income is adjusted for certain items management believes are not representative of our operating performance. Adjusted net income is defined as net income attributable to common shareholders excluding debt termination expenses net of tax, unrealized gains and losses on derivative instruments net of tax, and foreign and other income tax adjustments.

We believe that Adjusted net income is useful to an investor in evaluating our operating performance because this item:

•is widely used by securities analysts and investors to measure a company's operating performance;

•helps investors to more meaningfully evaluate and compare the results of our operations from period to period by removing certain non-routine events which we do not expect to occur in the future; and

•is used by our management for various purposes, including as measures of operating performance and liquidity, to assist in comparing performance from period to period on a consistent basis, in presentations to our board of directors concerning our financial performance and as a basis for strategic planning and forecasting.

We have provided a reconciliation of net income attributable to common shareholders, the most directly comparable U.S. GAAP measure, to Adjusted net income in the table below for the three months ended June 30, 2022, March 31, 2022, and June 30, 2021 and for the six months ended June 30, 2022 and June 30, 2021.

Additionally, the calculation for Adjusted return on equity is adjusted annualized earnings divided by average shareholders' equity. Management utilizes Adjusted return on equity in evaluating how much profit the Company generates on the shareholders' equity in the Company and believes it is useful for comparing the profitability of companies in the same industry.

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TRITON INTERNATIONAL LIMITED
Non-GAAP Reconciliations of Adjusted Net Income
(In thousands, except per share amounts)	
						
	Three Months Ended,		Six Months Ended	
	June 30, 2022		March 31, 2022		June 30, 2021		June 30, 2022		June 30, 2021	
Net income attributable to common shareholders	$	184,591 			$	181,230 			$	54,704 			$	365,821 			$	184,029 		
Add (subtract):										
Unrealized loss (gain) on derivative instruments, net	139 			(439)			— 			(300)			— 		
	
Debt termination expense	1,304 			36 			89,485 			1,340 			89,485 		

Tax benefit from vesting of restricted shares	— 			(1,184)			— 			(1,184)			(643)		
	
Adjusted net income	$	186,034 			$	179,643 			$	144,189 			$	365,677 			$	272,871 		
	
Adjusted net income per common share—Diluted	$	2.92 			$	2.76 			$	2.14 			$	5.67 			$	4.06 		
	
Weighted average number of common shares outstanding—Diluted	63,745 			65,154 			67,282 			64,445 			67,238 		

TRITON INTERNATIONAL LIMITED
Calculation of Adjusted Return on Equity
(In thousands)	
				
	Three Months Ended,		Six Months Ended,	
	June 30, 2022		March 31, 2022		June 30, 2021		June 30, 2022		June 30, 2021	
Adjusted net income	$	186,034 			$	179,643 			$	144,189 			$	365,677 			$	272,871 		
Annualized Adjusted net income (1)	746,180 			728,552 			578,340 			737,415 			550,265 		

	
Average Shareholders' equity (2)(3)	$	2,507,427 			$	2,402,633 			$	2,170,698 			$	2,449,855 			$	2,117,448 		
										
Adjusted return on equity	29.8%		30.3%		26.6%		30.1 	%		26.0 	%	
(1)Annualized Adjusted net income was calculated based on calendar days per quarter.
(2)Average Shareholders' equity was calculated using the quarter’s beginning and ending Shareholder’s equity for the three-month ended periods, and the ending Shareholder's equity from each quarter in the current year and December 31 of the previous year for the six-month ended periods.
(3)Average Shareholders' equity was adjusted to exclude preferred shares.
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