Triton International LtdTRTN-PA
Triton International Ltd Leases Disclosure
Leases
The Company’s finance lease portfolio lessees are primarily large international shipping lines. In its estimate of expected credit losses, the Company evaluates the overall credit quality of its finance lease portfolio. The Company considers an account past due when a payment has not been received in accordance with the terms of the related lease agreement and maintains allowances, if necessary, for doubtful accounts. These allowances are based on, but not limited to, historical experience which includes stronger and weaker economic cycles, each lessee's payment history, management's current assessment of each lessee's financial condition, consideration of current economic conditions and reasonable market forecasts.
Lessee
The Company's leases are primarily for multiple office facilities which are contracted under various cancellable and non-cancellable operating leases, most of which provide extension or early termination options. The Company's lease agreements do not contain any residual value guarantees or material restrictive covenants.
The Company entered into an amended lease agreement in September 2022 to relocate office space in Purchase, New York (Triton's principal U.S. corporate office). The new lease commenced on August 1, 2023, with a lease term of 12 years.
The following table summarizes the impact of the Company's leases in its financial statements (in thousands):
| Balance Sheet | Financial statement caption | December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||
| Right-of-use asset - operating | $ | 10,093 | $ | 3,145 | ||||||||||||||||||||||
| Lease liability - operating | $ | 13,510 | $ | 3,465 | ||||||||||||||||||||||
| Year Ended December 31, | ||||||||||||||||||||||||||
| Income Statement | Financial statement caption | 2023 | 2022 | 2021 | ||||||||||||||||||||||
Operating lease cost(1) | Administrative expenses | $ | 2,869 | $ | 3,205 | $ | 3,183 | |||||||||||||||||||
(1) Includes short-term leases that are immaterial.
Cash paid for amounts included in the measurement of lease liabilities included in operating cash flows was $2.9 million, $3.4 million, and $3.3 million for the years ended December 31, 2023, 2022, and 2021, respectively.
The following represents the Company's future undiscounted cash flows related to lease liabilities for each of the next five years and thereafter as of December 31, 2023 (in thousands):
| Years ending December 31, | |||||
| 2024 | $ | 2,293 | |||
| 2025 | 2,211 | ||||
| 2026 | 1,729 | ||||
| 2027 | 1,364 | ||||
| 2028 | 1,333 | ||||
| 2029 and thereafter | 8,912 | ||||
| Total undiscounted future cash flows related to lease payments | $ | 17,842 | |||
| Less: imputed interest | (4,332) | ||||
| Total present value of lease liability | $ | 13,510 | |||
The following table includes supplemental information related to the Company's operating leases:
| December 31, 2023 | December 31, 2022 | ||||||||||
| Weighted-Average Remaining Lease Team (years) | 9.5 years | 1.6 years | |||||||||
| Weighted-Average Discount Rate | 5.67 | % | 3.98 | % | |||||||
Lessor
Operating Leases
The following is the minimum future rental income as of December 31, 2023 under non-cancelable operating leases, assuming the minimum contractual lease term (in thousands):
| Years ending December 31, | |||||
| 2024 | $ | 947,292 | |||
| 2025 | 801,865 | ||||
| 2026 | 632,268 | ||||
| 2027 | 501,203 | ||||
| 2028 | 409,448 | ||||
| 2029 and thereafter | 1,064,472 | ||||
| Total | $ | 4,356,548 | |||
As of December 31, 2023, the Company has deferred revenue balances related to operating leases with uneven payment terms. These amounts will be amortized into revenue as follows (in thousands):
| Years ending December 31, | |||||
| 2024 | $ | 76,256 | |||
| 2025 | 65,540 | ||||
| 2026 | 42,761 | ||||
| 2027 | 16,241 | ||||
| 2028 | 15,077 | ||||
| 2029 and thereafter | 43,148 | ||||
| Total | $ | 259,023 | |||
Finance Leases
The following table summarizes the components of the net investment in finance leases (in thousands):
| December 31, 2023 | December 31, 2022 | ||||||||||
Future minimum lease payment receivable(1) | $ | 1,928,167 | $ | 2,161,192 | |||||||
Estimated residual receivable(2) | 218,199 | 218,004 | |||||||||
Gross finance lease receivables(3) | 2,146,366 | 2,379,196 | |||||||||
Unearned income(4) | (636,486) | (739,365) | |||||||||
Finance lease reserve(5) | (2,588) | — | |||||||||
Net investment in finance leases(6) | $ | 1,507,292 | $ | 1,639,831 | |||||||
(1) There were no executory costs included in gross finance lease receivables as of December 31, 2023 and December 31, 2022.
(2) The Company's finance leases generally include a purchase option at nominal amounts that is reasonably certain to be exercised, and therefore, the Company has immaterial residual value risk for assets.
(3) The gross finance lease receivable is reduced as billed to customers and reclassified to accounts receivable until paid by customers.
(4) There were no unamortized initial direct costs as of December 31, 2023 and December 31, 2022.
(5) As of December 31, 2023, the Company had a finance lease reserve of $2.6 million that was a reserve on leasing equipment.
(6) One major customer represented 93% and 90% of the Company's finance lease portfolio as of December 31, 2023 and 2022, respectively. No other customer represented more than 10% of the Company's finance lease portfolio in each of those periods.
Maturities of the Company's gross finance lease receivables subsequent to December 31, 2023 are as follows (in thousands):
| Years ending December 31, | |||||
| 2024 | $ | 205,910 | |||
| 2025 | 202,864 | ||||
| 2026 | 196,361 | ||||
| 2027 | 172,641 | ||||
| 2028 | 167,466 | ||||
| 2029 and thereafter | 1,201,124 | ||||
| Total | $ | 2,146,366 | |||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2023 | Feb 29, 2024 | Showing above |
| 2022 | Feb 14, 2023 | |
| 2021 | Feb 15, 2022 | |
| 2020 | Feb 16, 2021 | |
| 2019 | Feb 14, 2020 | |
| 2018 | Feb 19, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | Mar 20, 2017 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.