Triton International Limited (TRTN-PD) 10-Q 2020 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For The Quarterly Period Ended March 31, 2021

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

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

(Address of principal executive office)

(441) 294-8033

(Registrant's telephone number including area code)

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

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

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

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

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

Large Accelerated Filer	☒	Accelerated Filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

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

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

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

Triton International Limited

Index

		Page No.
Item 1.	Financial Statements (unaudited)	4
	Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020	4
	Consolidated Statements of Operations for the three months ended March 31, 2021 and 2020	5
	Consolidated Statements of Comprehensive Income for the three months ended March 31, 2021 and 2020	6
	Consolidated Statements of Equity for the three months ended March 31, 2021 and 2020	7
	Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020	8
	Notes to Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	31
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 6.	Exhibits	33
Signature		34

2

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, that involve substantial risks and uncertainties. In addition, we, or our executive officers on our behalf, may from time to time make forward-looking statements in reports and other documents we file with the Securities and Exchange Commission, or SEC, or in connection with oral statements made to the press, potential investors or others. All statements, other than statements of historical facts, including statements regarding our strategy, future operations, future financial position, future revenues, future costs, prospects, plans and objectives of management are forward-looking statements. The words "expect," "estimate," "anticipate," "predict," "believe," "think," "plan," "will," "should," "intend," "seek," "potential" and similar expressions and variations are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

Forward-looking statements in this report are subject to a number of known and unknown risks and uncertainties that could cause our actual results, performance or achievements to differ materially from those described in the forward-looking statements, including, but not limited to: the impact of COVID-19 on our business and financial results; decreases in the demand for leased containers; decreases in market leasing rates for containers; difficulties in re-leasing containers after their initial fixed-term leases; customers' decisions to buy rather than lease containers; dependence on a limited number of customers and suppliers; customer defaults; decreases in the selling prices of used containers; extensive competition in the container leasing industry; difficulties stemming from the international nature of Triton's businesses; decreases in demand for international trade; disruption to Triton's operations resulting from political and economic policies of the United States and other countries, particularly China, including but not limited to, the impact of trade wars, duties and tariffs; disruption to Triton's operations from failure of, or attacks on, Triton's information technology systems; disruption to Triton's operations as a result of natural disasters; compliance with laws and regulations related to economic and trade sanctions, security, anti-terrorism, environmental protection and corruption; ability to obtain sufficient capital to support growth; restrictions imposed by the terms of Triton's debt agreements; changes in the tax laws in Bermuda, the United States and other countries; and other risks and uncertainties described in the section entitled "Risk Factors" in our Annual Report on Form 10-K, filed with the SEC on February 16, 2021 (the "Form 10-K"), in this Report on Form 10-Q and in any other Form 10-Q filed or to be filed by us, as well as in the other documents we file with the SEC from time to time, and such risks and uncertainties are specifically incorporated herein by reference.

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

3

ITEM 1.    FINANCIAL STATEMENTS

TRITON INTERNATIONAL LIMITED

Consolidated Balance Sheets

(In thousands, except share data)

(Unaudited)

	March 31, 2021		December 31, 2020
ASSETS:
Leasing equipment, net of accumulated depreciation of $3,497,805 and $3,370,652	$	9,198,780	$	8,630,696
Net investment in finance leases	271,347		282,131
Equipment held for sale	57,568		67,311
Revenue earning assets	9,527,695		8,980,138
Cash and cash equivalents	233,064		61,512
Restricted cash	153,272		90,484
Accounts receivable, net of allowances of $1,275 and $2,192	234,682		226,090
Goodwill	236,665		236,665
Lease intangibles, net of accumulated amortization of $269,355 and $264,791	29,102		33,666
Other assets	68,919		83,969
Fair value of derivative instruments	7,578		9
Total assets	$	10,490,977	$	9,712,533
LIABILITIES AND SHAREHOLDERS' EQUITY:
Equipment purchases payable	$	342,357	$	191,777
Fair value of derivative instruments	68,545		128,872
Accounts payable and other accrued expenses	96,989		95,235
Net deferred income tax liability	342,071		327,431
Debt, net of unamortized costs of $53,446 and $42,747	6,916,697		6,403,270
Total liabilities	7,766,659		7,146,585
Shareholders' equity:
Preferred shares, $0.01 par value, at liquidation preference	555,000		555,000
Common shares, $0.01 par value, 270,000,000 shares authorized, 81,273,334 and 81,151,723 shares issued, respectively	813		812
Undesignated shares, $0.01 par value, 7,800,000 shares authorized, 0 shares issued and outstanding	0		0
Treasury shares, at cost, 13,901,326 shares	(436,822)		(436,822)
Additional paid-in capital	902,891		905,323
Accumulated earnings	1,765,498		1,674,670
Accumulated other comprehensive income (loss)	(63,062)		(133,035)
Total shareholders' equity	2,724,318		2,565,948
Total liabilities and shareholders' equity	$	10,490,977	$	9,712,533

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

4

TRITON INTERNATIONAL LIMITED

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

	Three Months Ended March 31,
	2021		2020
Leasing revenues:
Operating leases	$	339,794	$	312,804
Finance leases	6,949		8,664
Total leasing revenues	346,743		321,468
Equipment trading revenues	25,945		15,380
Equipment trading expenses	(17,804)		(13,447)
Trading margin	8,141		1,933
Net gain on sale of leasing equipment	21,967		4,077
Operating expenses:
Depreciation and amortization	143,307		132,695
Direct operating expenses	9,370		23,248
Administrative expenses	20,921		19,225
Provision (reversal) for doubtful accounts	(2,464)		4,279
Total operating expenses	171,134		179,447
Operating income (loss)	205,717		148,031
Other expenses:
Interest and debt expense	54,623		69,002
Debt termination expense	0		31
Other (income) expense, net	(481)		(3,584)
Total other expenses	54,142		65,449
Income (loss) before income taxes	151,575		82,582
Income tax expense (benefit)	11,737		5,546
Net income (loss)	$	139,838	$	77,036
Less: dividend on preferred shares	10,513		9,825
Net income (loss) attributable to common shareholders	$	129,325	$	67,211
Net income per common share—Basic	$	1.93	$	0.94
Net income per common share—Diluted	$	1.92	$	0.94
Cash dividends paid per common share	$	0.57	$	0.52
Weighted average number of common shares outstanding—Basic	66,935		71,596
Dilutive restricted shares	282		202
Weighted average number of common shares outstanding—Diluted	67,217		71,798

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

5

TRITON INTERNATIONAL LIMITED

Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2021		2020
Net income (loss)	$	139,838	$	77,036
Other comprehensive income (loss), net of tax:
Change in derivative instruments designated as cash flow hedges	62,850		(120,140)
Reclassification of (gain) loss on derivative instruments designated as cash flow hedges	7,102		1,411
Foreign currency translation adjustment	21		(262)
Other comprehensive income (loss), net of tax	69,973		(118,991)
Comprehensive income	209,811		(41,955)
Less:
Dividend on preferred shares	10,513		9,825
Comprehensive income attributable to common shareholders	$	199,298	$	(51,780)
Tax (benefit) provision on change in derivative instruments designated as cash flow hedges	$	2,558	$	(9,474)
Tax (benefit) provision on reclassification of (gain) loss on derivative instruments designated as cash flow hedges	$	468	$	(152)

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

6

TRITON INTERNATIONAL LIMITED

Consolidated Statements of Shareholders' Equity

(In thousands, except share amounts)

(Unaudited)

	Preferred Shares			Common Shares			Treasury Shares			Add'l Paid in Capital		Accumulated Earnings		Accumulated Other Comprehensive Income		Total Equity
	Shares	Amount		Shares	Amount		Shares	Amount
Balance as of December 31, 2020	22,200,000	$	555,000	81,151,723	$	812	13,901,326	$	(436,822)	$	905,323	$	1,674,670	$	(133,035)	$	2,565,948
Share-based compensation	—	—		207,077	2		—	—		1,713		—		—		1,715
Share repurchase to settle shareholder tax obligations	—	—		(85,466)	(1)		—	—		(4,145)		—		—		(4,146)
Net income (loss)	—	—		—	—		—	—		—		139,838		—		139,838
Other comprehensive income (loss)	—	—		—	—		—	—		—		—		69,973		69,973
Common shares dividend declared	—	—		—	—		—	—		—		(38,497)		—		(38,497)
Preferred shares dividend declared	—	—		—	—		—	—		—		(10,513)		—		(10,513)
Balance as of March 31, 2021	22,200,000	$	555,000	81,273,334	$	813	13,901,326	$	(436,822)	$	902,891	$	1,765,498	$	(63,062)	$	2,724,318

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

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

7

TRITON INTERNATIONAL LIMITED

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2021		2020
Cash flows from operating activities:
Net income (loss)	$	139,838	$	77,036
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	143,307		132,695
Amortization of deferred debt cost and other debt related amortization	1,142		3,595
Lease related amortization	4,857		7,054
Share-based compensation expense	1,715		1,605
Net (gain) loss on sale of leasing equipment	(21,967)		(4,077)
Unrealized (gain) loss on derivative instruments	0		297
Debt termination expense	0		31
Deferred income taxes	11,615		5,505
Changes in operating assets and liabilities:
Accounts receivable	(10,828)		(3,775)
Accounts payable and other accrued expenses	1,886		(15,111)
Net equipment sold (purchased) for resale activity	1,579		1,435
Cash received (paid) for settlement of interest rate swaps	5,558		0
Cash collections on finance lease receivables, net of income earned	12,866		15,466
Other assets	9,420		(23,796)
Net cash provided by (used in) operating activities	300,988		197,960
Cash flows from investing activities:
Purchases of leasing equipment and investments in finance leases	(579,211)		(62,406)
Proceeds from sale of equipment, net of selling costs	53,512		49,498
Other	15		(216)
Net cash provided by (used in) investing activities	(525,684)		(13,124)
Cash flows from financing activities:
Issuance of preferred shares, net of underwriting discount	0		145,275
Purchases of treasury shares	0		(34,357)
Redemption of common shares for withholding taxes	(4,146)		(2,156)
Debt issuance costs	(13,803)		0
Borrowings under debt facilities	1,504,850		530,000
Payments under debt facilities and finance lease obligations	(979,199)		(425,073)
Dividends paid on preferred shares	(10,513)		(9,395)
Dividends paid on common shares	(38,153)		(37,110)
Other	0		(410)
Net cash provided by (used in) financing activities	459,036		166,774
Net increase (decrease) in cash, cash equivalents and restricted cash	$	234,340	$	351,610
Cash, cash equivalents and restricted cash, beginning of period	151,996		168,972
Cash, cash equivalents and restricted cash, end of period	$	386,336	$	520,582
Supplemental disclosures:
Interest paid	$	42,133	$	53,795
Income taxes paid (refunded)	$	155	$	139
Right-of-use asset for leased property	$	0	$	0
Supplemental non-cash investing activities:
Equipment purchases payable	$	342,357	$	29,109

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

8

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

Description of the Business

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

Basis of Presentation

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

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

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

Use of Estimates

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

Concentration of Credit Risk

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

9

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fair Value Measurements

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

Note 2—Equipment Held for Sale

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

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

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

	Three Months Ended March 31,
	2021		2020
Impairment (loss) reversal on equipment held for sale	$	5	$	(1,490)
Gain (loss) on sale of equipment, net of selling costs	21,962		5,567
Net gain on sale of leasing equipment	$	21,967	$	4,077

Note 3—Intangible Assets

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

Years ending December 31,	Total Intangible Assets
2021	$	11,985
2022	$	10,497
2023	$	4,657
2024	$	1,963
Total	$	29,102

Amortization expense related to intangible assets was $4.6 million and $6.2 million for the three months ended March 31, 2021, and 2020, respectively.

Note 4—Share-Based Compensation

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

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

10

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

During the three months ended March 31, 2021, the Company issued 207,077 restricted shares, and canceled 85,466 vested shares to settle payroll taxes on behalf of employees. Additional shares may be issued based upon the satisfaction of certain performance criteria.

Note 5—Other Equity Matters

Share Repurchase Program

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

The Company did not repurchase any shares during the three months ended March 31, 2021 and currently has $102.1 million available under the share repurchase program. 

Preferred Shares

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

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

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

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

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

11

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Dividends

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

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

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

(1)     Rounded to the nearest whole cent.

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

Common Share Dividends

The Company paid the following quarterly dividends during the three months ended March 31, 2021 and 2020 on its issued common shares:

Record Date	Payment Date	Aggregate Payment	Per Share Payment
March 12, 2021	March 26, 2021	$38.2 Million	$0.57
March 13, 2020	March 27, 2020	$37.1 Million	$0.52

Accumulated Other Comprehensive Income

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

	Cash Flow Hedges		Foreign Currency Translation		Accumulated Other Comprehensive (Loss) Income
Balance as of December 31, 2020	$	(128,526)	$	(4,509)	$	(133,035)
Change in derivative instruments designated as cash flow hedges(1)	62,850		0		62,850
Reclassification of (gain) loss on derivative instruments designated as cash flow hedges(1)	7,102		0		7,102
Foreign currency translation adjustment	0		21		21
Balance as of March 31, 2021	$	(58,574)	$	(4,488)	$	(63,062)

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

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

12

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 6—Leases

Lessee

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

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

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

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

		Three Months Ended March 31,
Income Statement	Financial statement caption	2021		2020
Operating lease cost(1)	Administrative expenses	$	722	$	759

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

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

Lessor

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

	March 31, 2021		December 31, 2020
Future minimum lease payment receivable(1)	$	338,471	$	355,755
Estimated residual receivable(2)	53,789		53,892
Gross finance lease receivables(3)	392,260		409,647
Unearned income(4)	(120,913)		(127,516)
Net investment in finance leases(5)	$	271,347	$	282,131

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

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

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

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

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

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

13

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 7—Debt

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

	Contractual Weighted Avg Interest Rate(1)	Maturity Range(1)		March 31, 2021		December 31, 2020
		From	To
Institutional notes	4.59%	Jun 2021	Jun 2029	$	1,611,371	$	1,642,314
Asset-backed securitization term notes	1.98%	Aug 2023	Feb 2031	4,076,059		2,920,807
Term loan facility	1.61%	Nov 2023	Nov 2023	820,000		840,000
Asset-backed securitization warehouse	1.96%	Nov 2027	Nov 2027	20,000		264,000
Revolving credit facilities	1.76%	Sep 2023	Jul 2024	426,400		760,500
Finance lease obligations	4.93%	Feb 2024	Feb 2024	16,746		17,304
Total debt outstanding				6,970,576		6,444,925
Unamortized debt costs				(53,446)		(42,747)
Unamortized debt premiums & discounts				(1,941)		(599)
Unamortized fair value debt adjustment				1,508		1,691
Debt, net of unamortized costs				$	6,916,697	$	6,403,270

(1)     Data as of March 31, 2021.

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

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

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

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

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

14

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Date	Total Offering	Contractual Weighted Avg Interest Rate	Expected Maturity
February 3, 2021	$502.9 Million	1.69%	Feb 2031
March 17, 2021	$725.0 Million	1.89%	Dec 2030

Institutional Notes

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

Asset-Backed Securitization Term Notes

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

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

Term Loan Facility

The term loan facility amortizes in quarterly installments. This facility provides for an advance rate against the net book values of designated eligible equipment.

Asset-Backed Securitization Warehouse

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

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

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

Revolving Credit Facilities

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

15

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Finance Lease Obligations

Certain containers are leased with a financial institution. The lease is accounted for as a finance lease, with interest expense recognized on a level yield basis over the period preceding early purchase options, which is five to seven years from the transaction date.

Note 8—Derivative Instruments

Interest Rate Swaps / Caps

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

The counterparties to these agreements are highly rated financial institutions. In the unlikely event that the counterparties fail to meet the terms of these agreements, the Company's exposure is limited to the interest rate differential on the notional amount at each monthly settlement period over the life of the agreements. The Company does not anticipate any non-performance by the counterparties. Certain assets of the Company's subsidiaries are pledged as collateral for various credit facilities and the amounts payable under certain agreements.

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

Derivative Instrument	Date Canceled	Notional Amount	Funds Received
Interest rate swap	January 25, 2021	$150.0 million	$0.3 million
Interest rate swap	January 27, 2021	$150.0 million	$0.3 million
Interest rate swap	February 19, 2021	$150.0 million	$2.4 million
Interest rate swap	February 19, 2021	$150.0 million	$2.4 million

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

Derivatives	Notional Amount	Weighted Average Fixed Leg (Pay) Interest Rate	Cap Rate	Weighted Average Remaining Term
Interest Rate Swap(1)	$1,697.6 Million	2.02%	n/a	4.8 years
Interest Rate Cap	$200.0 Million	n/a	5.5%	2.7 years

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

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

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

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

16

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fair Value of Derivative Instruments

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

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

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

Note 9—Segment and Geographic Information

Segment Information

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

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

•Equipment trading - the Company purchases containers from shipping line customers, and other sellers of containers, and resells these containers to container retailers and users of containers for storage or one-way shipment. Included in the equipment trading segment revenues are leasing revenues from equipment purchased for resale that is currently on lease until the containers are dropped off.

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

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

	Three Months Ended March 31,
	2021						2020
	Equipment Leasing		Equipment Trading		Totals		Equipment Leasing		Equipment Trading		Totals
Total leasing revenues	$	343,805	$	2,938	$	346,743	$	321,037	$	431	$	321,468
Trading margin	0		8,141		8,141		0		1,933		1,933
Net gain on sale of leasing equipment	21,967		0		21,967		4,077		0		4,077
Depreciation and amortization expense	143,137		170		143,307		132,518		177		132,695
Interest and debt expense	54,221		402		54,623		68,699		303		69,002
Segment income (loss) before income taxes(1)	142,189		9,386		151,575		81,517		1,393		82,910
Purchases of leasing equipment and investments in finance leases(2)	$	579,211	$	0	$	579,211	$	62,406	$	0	$	62,406

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

(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.

17

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

	March 31, 2021						December 31, 2020
	Equipment Leasing		Equipment Trading		Totals		Equipment Leasing		Equipment Trading		Totals
Equipment held for sale	$	30,415	$	27,153	$	57,568	$	43,275	$	24,036	$	67,311
Goodwill	220,864		15,801		236,665		220,864		15,801		236,665
Total assets	$	10,390,561	$	100,416	$	10,490,977	$	9,612,251	$	100,282	$	9,712,533

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

Geographic Segment Information

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

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

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

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

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

	Three Months Ended March 31,
	2021		2020
Total equipment trading revenues:
Asia	$	7,459	$	1,532
Europe	7,122		4,952
Americas	8,541		6,595
Bermuda	0		0
Other International	2,823		2,301
Total	$	25,945	$	15,380

18

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 10—Commitments and Contingencies

Container Equipment Purchase Commitments

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

Contingencies

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

Note 11—Income Taxes

The Company's effective tax rates were 7.7% and 6.7% for the three months ended March 31, 2021 and 2020, respectively. The Company has computed the provision for income taxes based on the estimated annual effective tax rate and the application of discrete items, if any, in the applicable period. The increase in the effective tax rate in 2021 compared to the same period of 2020 was primarily the result of an increased proportion of the Company's income generated in higher tax jurisdictions.

Note 12—Related Party Transactions

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

Note 13—Subsequent Events

On April 15, 2021, the Company completed a $600.0 million senior secured investment grade bond offering. The bond offering has a contractual interest rate of 2.05% and expected maturity date of April 15, 2026.

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

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

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

19

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

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

Our Company

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

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

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

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

Operations

Our consolidated operations include the acquisition, leasing, re-leasing and subsequent sale of multiple types of intermodal containers and chassis. As of March 31, 2021, our total fleet consisted of 3.8 million containers and chassis, representing 6.5 million twenty-foot equivalent units ("TEU") or 7.3 million cost equivalent units ("CEU"). We have an extensive global presence, offering leasing services through 19 offices and 3 independent agencies located in 16 countries and 411 third-party owned and operated depot facilities in 46 countries as of March 31, 2021. Our primary customers include the world's largest container shipping lines. For the three months ended March 31, 2021, our twenty largest customers accounted for 86% of our lease billings, our five largest customers accounted for 60% of our lease billings, and our three largest customers accounted for 21%, 14%, and 10% of our lease billings.

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

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

20

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

	Equipment Fleet in Units			Equipment Fleet in TEU
	March 31, 2021	December 31, 2020	March 31, 2020	March 31, 2021	December 31, 2020	March 31, 2020
Dry	3,417,293	3,295,908	3,239,306	5,711,032	5,466,421	5,324,756
Refrigerated	232,550	227,519	225,026	450,087	439,956	434,263
Special	94,266	93,885	93,743	171,781	170,792	170,225
Tank	11,339	11,312	12,469	11,339	11,312	12,469
Chassis	24,078	24,781	24,319	43,858	45,188	44,828
Equipment leasing fleet	3,779,526	3,653,405	3,594,863	6,388,097	6,133,669	5,986,541
Equipment trading fleet	60,242	64,243	17,549	93,514	98,991	26,185
Total	3,839,768	3,717,648	3,612,412	6,481,611	6,232,660	6,012,726

	Equipment Fleet in CEU (1)
	March 31, 2021	December 31, 2020	March 31, 2020
Operating leases	6,892,129	6,649,350	6,474,701
Finance leases	297,168	295,784	338,242
Equipment trading fleet	92,570	98,420	35,632
Total	7,281,867	7,043,554	6,848,575

(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 summarizes the percentage of our equipment fleet in terms of units and CEU as of March 31, 2021:

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

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

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

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

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

We also have expired long-term leases whose fixed terms have ended but for which the related units remain on-hire and for which we continue to receive rental payments pursuant to the terms of the initial contract. Some leases have contractual terms that have features reflective of both long-term and service leases and we classify such leases as either long-term or service leases, depending upon which features we believe are predominant.

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

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

As of March 31, 2021, December 31, 2020 and March 31, 2020, our long-term and finance leases combined had an average remaining contractual term of approximately 51 months, 49 months, and 48 months, respectively, assuming no leases are renewed.

Market Overview and COVID-19

The COVID-19 pandemic continues to have a meaningful impact on global trade and our business. The outbreak of COVID-19 and the initial global economic and social lockdowns caused a sharp decrease in trade volume and pressured our operating and financial performance in the first half of 2020. However, the easing of the lockdowns during the second quarter of 2020 and a shift in consumer spending from services and experiences to goods drove a sharp rebound in global containerized trade volumes and container demand beginning in the second half of 2020. The increase in trade volumes coupled with logistical challenges that have slowed the global movement of containers has resulted in a worldwide shortage of containers that has continued into the first quarter of this year. This shortage has driven our fleet to near full utilization, and led to significant increases in new container prices, market leasing rates and used container disposal prices. We have also significantly increased our procurement of new containers. All of these factors have contributed to a sharp increase in our profitability over the prior year period.

Operating Performance

Our operating and financial performance in the first quarter of 2021 benefited from the very favorable market conditions that are being driven by strong global trade activity coupled with a limited availability of containers.

Fleet size. As of March 31, 2021, our revenue earning assets had a net book value of $9.5 billion, an increase of 8.4% from March 31, 2020 and 6.1% from December 31, 2020. This increase was primarily due to increased purchases of containers that began in the second half of 2020 and accelerated into 2021 in response to a surge in global containerized trade volumes and lease demand. Through April 23, 2021, we have purchased approximately $2.6 billion of new containers for delivery in 2021, of which $702.6 million were accepted in the first quarter. The vast majority of these containers have already been committed to leases. We expect our existing orders will translate to asset growth of close to 20% in 2021.

Utilization. Our average utilization was 99.1% for the quarter ended March 31, 2021, an increase of 3.7% compared to the first quarter of 2020 and an increase of 1.0% from the fourth quarter of 2020. Our utilization has increased steadily since the third quarter of 2020 due to a very high volume of container pick-ups and limited drop-off activity. As of April 23, 2021, our utilization was 99.4%.

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

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

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

Average lease rates for our refrigerated container product line decreased by 4.8% in the first quarter of 2021 compared to the first quarter of 2020. We have been experiencing larger differences in lease rates for older refrigerated containers compared to rates on new equipment, and we expect our average lease rates for refrigerated containers will continue to gradually trend down. The average lease rates for special containers remained flat in the first quarter of 2021 compared to the first quarter of 2020.

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

Liquidity and Capital Resources

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

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

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

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

Asset-backed Securitization ("ABS") Note Issuances

During the three months ended March 31, 2021, the Company issued $1.2 billion in ABS notes at a weighted average interest rate of 1.8%. The proceeds from these issuances were used to facilitate additional capital expenditures and investment in our fleet.

Share Repurchase Program

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

Dividends

During the three months ended March 31, 2021 and 2020, the Company paid dividends on preferred shares of $10.5 million and $9.4 million, respectively, and paid dividends on common shares of $38.2 million and $37.1 million, respectively.

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

Debt Agreements

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

	March 31, 2021		Maximum Borrowing Level
Institutional notes	$	1,611.4	$	1,611.4
Asset-backed securitization term notes	4,076.1		4,076.1
Term loan facility	820.0		820.0
Asset-backed securitization warehouse	20.0		1,125.0
Revolving credit facilities	426.4		1,560.0
Finance lease obligations	16.7		16.7
Total debt outstanding	$	6,970.6	$	9,209.2
Unamortized debt costs	(53.5)		—
Unamortized debt premiums & discounts	(1.9)		—
Unamortized fair value debt adjustment	1.5		—
Debt, net of unamortized costs	$	6,916.7	$	9,209.2

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

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

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

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

Debt Covenants

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

	TCIL		TAL
Financial Covenant	Covenant	Actual	Covenant	Actual
Fixed charge coverage ratio	Shall not be less than 1.25:1	2.99:1	Shall not be less than 1.10:1	2.41:1
Minimum net worth	Shall not be less than $855 million	$2,144.6 million	Shall not be less than $500 million	$987.8 million
Leverage ratio	Shall not exceed 4.0:1	2.19:1	Shall not exceed 4.75:1	1.68:1

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Cash Flow

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

	Three Months Ended March 31,
	2021		2020
Net cash provided by (used in) operating activities	$	300,988	$	197,960
Net cash provided by (used in) investing activities	$	(525,684)	$	(13,124)
Net cash provided by (used in) financing activities	$	459,036	$	166,774

Operating Activities

Net cash provided by operating activities increased by $103.0 million to $301.0 million in the three months ended March 31, 2021 compared to $198.0 million in the same period in 2020. The significant increase was primarily due to an increase in profitability due to strong market conditions. Additionally, changes in working capital accounts were positive compared to the same period last year.

Investing Activities

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

Financing Activities

Net cash provided by financing activities increased by $292.2 million to $459.0 million in the three months ended March 31, 2021, compared to $166.8 million in the same period in 2020. The increase was primarily due to a $420.7 million increase in net borrowings to finance substantial purchases of leasing equipment in 2021.

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Results of Operations

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

	Three Months Ended March 31,				Variance
	2021		2020
Leasing revenues:
Operating leases	$	339,794	$	312,804	$	26,990
Finance leases	6,949		8,664		(1,715)
Total leasing revenues	346,743		321,468		25,275
Equipment trading revenues	25,945		15,380		10,565
Equipment trading expenses	(17,804)		(13,447)		(4,357)
Trading margin	8,141		1,933		6,208
Net gain on sale of leasing equipment	21,967		4,077		17,890
Operating expenses:
Depreciation and amortization	143,307		132,695		10,612
Direct operating expenses	9,370		23,248		(13,878)
Administrative expenses	20,921		19,225		1,696
Provision (reversal) for doubtful accounts	(2,464)		4,279		(6,743)
Total operating expenses	171,134		179,447		(8,313)
Operating income (loss)	205,717		148,031		57,686
Other expenses:
Interest and debt expense	54,623		69,002		(14,379)
Debt termination expense	—		31		(31)
Other (income) expense, net	(481)		(3,584)		3,103
Total other expenses	54,142		65,449		(11,307)
Income (loss) before income taxes	151,575		82,582		68,993
Income tax expense (benefit)	11,737		5,546		6,191
Net income (loss)	$	139,838	$	77,036	$	62,802
Less: dividend on preferred shares	10,513		9,825		688
Net income (loss) attributable to common shareholders	$	129,325	$	67,211	$	62,114

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

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

	Three Months Ended March 31,				Variance
	2021		2020
Leasing revenues:
Operating leases
Per diem revenues	$	331,252	$	298,486	$	32,766
Fee and ancillary revenues	8,542		14,318		(5,776)
Total operating lease revenues	339,794		312,804		26,990
Finance leases	6,949		8,664		(1,715)
Total leasing revenues	$	346,743	$	321,468	$	25,275

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

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

•$32.9 million increase due to an increase in average units on-hire; and

•$1.6 million increase due to a decrease in lease intangible amortization; partially offset by

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

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

Finance lease revenues were $6.9 million for the three months ended March 31, 2021 compared to $8.7 million in the same period in 2020, a decrease of $1.8 million, primarily due to the runoff of the existing portfolio.

Trading margin.    Trading margin was $8.1 million for the three months ended March 31, 2021 compared to $1.9 million in the same period in 2020, an increase of $6.2 million. The increase was due to increased per container selling margins due to a significant increase in used container selling prices.

Net gain on sale of leasing equipment.    Gain on sale of equipment was $22.0 million for the three months ended March 31, 2021 compared to $4.1 million in the same period in 2020, an increase of $17.9 million. The increase was primarily due to a 90.2% increase in the average sale price of our used dry containers. This increase was partially offset by a 47.2% decrease in sales volume due to the limited global availability of containers.

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

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

•$7.5 million decrease due to an increase in containers that have become fully depreciated.

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

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

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

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Administrative expenses.    Administrative expenses were $20.9 million for the three months ended March 31, 2021 compared to $19.2 million in the same period in 2020, an increase of $1.7 million. The primary reason for the increase is higher employee compensation costs, partially offset by a decrease in travel expense due to travel restrictions caused by the COVID-19 pandemic.

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

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

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

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

Income taxes. Income tax expense was $11.7 million for the three months ended March 31, 2021 compared to $5.5 million in the same period in 2020, an increase in income tax expense of $6.2 million. The increase in income tax expense was the result of an increase in pre-tax income and an increase in the portion of income generated in higher tax jurisdictions.

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Contractual Obligations

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

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

	Contractual Obligations by Period
Contractual Obligations:	Total		Remaining 2021		2022		2023		2024		2025		2026 and thereafter
	(dollars in millions)
Principal debt obligations	$	6,953.9	$	617.5	$	816.7	$	1,634.4	$	1,129.0	$	474.9	$	2,281.4
Interest on debt obligations(1)	834.6		153.5		182.0		152.2		104.3		78.2		164.4
Finance lease obligations(2)	18.3		2.3		3.1		3.1		9.8		—		—
Operating leases (mainly facilities)	6.7		2.4		2.6		1.6		0.1		—		—
Purchase obligations:
Equipment purchases payable	342.4		342.4		—		—		—		—		—
Equipment purchase commitments	1,398.6		1,398.6		—		—		—		—		—
Total contractual obligations	$	9,554.5	$	2,516.7	$	1,004.4	$	1,791.3	$	1,243.2	$	553.1	$	2,445.8

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

(2)Amounts include interest.

Off-Balance Sheet Arrangements

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

Critical Accounting Policies

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

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ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

Interest Rate Risk

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

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

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

Derivatives	Notional Amount	Weighted Average Fixed Leg (Pay) Interest Rate	Cap Rate	Weighted Average Remaining Term
Interest Rate Swap(1)	$1,697.6 Million	2.02%	n/a	4.8 years
Interest Rate Cap	$200.0 Million	n/a	5.5%	2.7 years

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

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

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

Foreign currency exchange rate risk

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

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ITEM 4.    CONTROLS AND PROCEDURES.

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

Changes in Internal Control over Financial Reporting

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

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PART II—OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS.

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

ITEM 1A.    RISK FACTORS.

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

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

Share Repurchase Program

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

	Issuer Purchases of Common Shares
Period	Total number of shares purchased(1)	Average price paid per share		Approximate dollar value of shares that may yet be purchased under the plan (in thousands)
January 1, 2021 through January 31, 2021	—	$	—	$	102,089
February 1, 2021 through February 28, 2021	—	$	—	$	102,089
March 1, 2021 through March 31, 2021	—	$	—	$	102,089
Total	—	$	—	$	102,089

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

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ITEM 6.    EXHIBITS.

Exhibit Number	Exhibit Description
10.1*	Triton International Limited Amended and Restated 2016 Equity Incentive Plan
10.2*	Form of Restricted Share Award Agreement under the Triton International Limited Amended and Restated 2016 Equity Incentive Plan
10.3*	Form of Restricted Share Unit Award Agreement under the Triton International Limited Amended and Restated 2016 Equity Incentive Plan
31.1*	Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended
31.2*	Certification of the Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended
32.1**	Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350
32.2**	Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350
101.INS	XBRL Instance Document - the instance document does not appear on the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH	XBRL Instance Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase
104	Cover Page Inline XBRL Data (formatted as Inline XBRL and contained in Exhibit 101)

______________________________________________________________________________

*	Filed herewith.
**	Furnished herewith.

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SIGNATURE

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

	TRITON INTERNATIONAL LIMITED
April 29, 2021	By:	/s/ JOHN BURNS
		John Burns
		Chief Financial Officer

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