TRITON INTERNATIONAL LTD MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-Q)

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You should read the following discussion and analysis of our financial condition
and results of operations together with our consolidated financial statements
and related notes and other financial information included elsewhere in this
Quarterly Report on Form 10-Q and with the audited consolidated financial
statements included in our Annual Report on Form 10-K filed with the Securities
and Exchange Commission ("SEC") on February 15, 2022 (the "2021 Annual Report on
Form 10-K"). The statements in this discussion regarding industry outlook, our
expectations regarding our future performance, liquidity and capital resources
and other non-historical statements are subject to numerous risks and
uncertainties, including, but not limited to, the risks and uncertainties
discussed under "Risk Factors" and "Cautionary Note Regarding Forward-Looking
Statements" in our 2021 Annual Report on Form 10-K, in this Quarterly Report on
Form 10-Q and in any subsequent Quarterly Reports on Form 10-Q to be filed by
us, as well as in the other documents we file with the SEC from time to time.
Our actual results may differ materially from those contained in or implied by
any forward-looking statements.

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
June 30, 2022, our total fleet consisted of 4.3 million containers and chassis,
representing 7.3 million twenty-foot equivalent units ("TEU") or 8.0 million
cost equivalent units ("CEU"). We have an extensive global presence, offering
leasing services through 20 offices and 3 independent agencies located in 16
countries and 384 third-party owned and operated depot facilities in 46
countries as of June 30, 2022. Our primary customers include the world's largest
container shipping lines. For the six months ended June 30, 2022, our twenty
largest customers accounted for 85% of our lease billings, our five largest
customers accounted for 63% of our lease billings, and our three largest
customers accounted for 23%, 17%, and 11% 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 and the margins generated from trading new and used
containers.

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 the
road. Our in-house equipment sales group manages the sale process for our used
containers and chassis from our equipment leasing fleet and sells used and new
containers and chassis acquired from third parties.


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The following tables summarize our fleet of equipment at June 30, 2022,
December 31, 2021 and June 30, 2021 indicated in units, TEU and CEU. CEU and TEU are industry standard measures of fleet size and are used to measure the amount of containers that make up our revenue generating assets:

                                                             Equipment Fleet in Units                                                              

Park of equipment in TEU

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


                                                                              Equipment Fleet in CEU (1)
                                                   June 30, 2022                     December 31, 2021                  June 30, 2021
Operating leases                                       7,248,096                          7,291,769                          7,171,845
Finance leases                                           683,175                            623,136                            369,130
Equipment trading fleet                                   78,936                             81,136                             82,980
Total                                                  8,010,207                          7,996,041                          7,623,955


(1)In the equipment fleet tables above, we have included total fleet count
information based on CEU. CEU is a ratio used to convert the actual number of
containers in our fleet to a figure based on an estimate for the historical
average relative purchase prices of our various equipment types to that of a
20-foot dry container. For example, the CEU ratio for a 40-foot high cube dry
container is 1.70, and a 40-foot high cube refrigerated container is 7.50. These
factors may differ slightly from CEU ratios used by others in the industry.

The following table summarizes the percentage of our equipment fleet in terms of units and CFU at June 30, 2022 :

                                                                    Percentage of total            Percentage of total
Equipment Type                                                         fleet in units                  fleet in CEU
Dry                                                                                90.3  %                        71.8  %
Refrigerated                                                                        5.4  %                        21.4  %
Special                                                                             2.2  %                         3.0  %
Tank                                                                                0.3  %                         1.2  %
Chassis                                                                             0.6  %                         1.6  %
Equipment leasing fleet                                                            98.8  %                        99.0  %
Equipment trading fleet                                                             1.2  %                         1.0  %
Total                                                                             100.0  %                       100.0  %



We generally lease our equipment on a per diem basis to our customers under
three types of leases:
•Long-term leases typically have initial contractual terms ranging from five 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 generally 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 June 30, 2022, December 31, 2021 and June 30, 2021:
Lease Portfolio by CEU                             June 30, 2022           December 31, 2021          June 30, 2021
Long-term leases                                            71.2  %                   72.4  %                  75.3  %
Finance leases                                               8.8  %                    8.0  %                   5.0  %
Subtotal                                                    80.0  %                   80.4  %                  80.3  %
Service leases                                               6.9  %                    5.0  %                   6.0  %
Expired long-term leases, non-sale age (units on
hire)                                                        7.8  %                    8.4  %                   8.4  %
Expired long-term leases, sale-age (units on
hire)                                                        5.3  %                    6.2  %                   5.3  %
Total                                                      100.0  %                  100.0  %                 100.0  %
Weighted average remaining contractual term in
months for long-term and finance leases                  60                       61                        55



We purchased a large volume of new containers in 2021, responding to exceptional
leasing demand. These containers were purchased for high prices and were placed
on very long duration leases that will cover most of the expected useful life of
this equipment. To better reflect the impact of these dynamics on our lease
portfolio, we have included the following equipment lease portfolio table based
on net book value of units on-hire, as of June 30, 2022, December 31, 2021 and
June 30, 2021:

Lease Portfolio by Net Book Value                  June 30, 2022           December 31, 2021          June 30, 2021
Long-term leases                                            71.8  %                   73.6  %                  80.7  %
Finance leases                                              15.5  %                   13.8  %                   4.9  %
Subtotal                                                    87.3  %                   87.4  %                  85.6  %
Service leases                                               4.3  %                    3.5  %                   4.9  %
Expired long-term leases, non-sale age (units on
hire)                                                        5.8  %                    6.2  %                   6.8  %
Expired long-term leases, sale-age (units on
hire)                                                        2.6  %                    2.9  %                   2.7  %
Total                                                      100.0  %                  100.0  %                 100.0  %
Weighted average remaining contractual term in
months for long-term and finance leases                  78                       78                        67




Operating Performance

Our operating and financial performance in the second quarter of 2022 continued
to be strong. Market conditions have moderated in 2022 after being
extraordinarily favorable, but new container prices, market leasing rates and
used container sale prices remain high compared to typical levels. We also
continue to benefit from significant operating and financial momentum provided
by our long-term lease portfolio and aggressive investing and refinancing
activity in 2021.

Fleet size. As of June 30, 2022, the net book value of our revenue earning
assets was $11.7 billion, an increase of 11.5% compared to June 30, 2021 and
relatively flat compared to December 31, 2021. The increase from June 30, 2021
was primarily due to our $3.6 billion of fleet investment in 2021 to support our
customers' sizable demand for new containers. In 2022, our investment in new
equipment has decreased as our customers have been more cautious about adding
further container capacity. As of July 26, 2022, we have placed orders for
$546.3 million of new containers for delivery in 2022.

Utilization. Our average utilization was 99.4% for the second quarter of 2022,
which was flat compared to the second quarter of 2021 and a decrease of 0.2%
compared to the first quarter of 2022. Our utilization increased steadily during
2021 as we benefited from exceptional container demand and a very high volume of
container pick-ups. Our utilization has decreased slightly in 2022 as market
conditions have moderated, but it remains historically high. Container drop-off
volumes remained low in the second quarter, reflecting the high percentage of
our containers on long-term lease and ongoing operational challenges for our
customers that have slowed container turn times. Our ending utilization as of
June 30, 2022 was 99.3% and currently remains at this level.
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The following tables summarize 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,      December 31,      September 30,      June 30,
                       June 30, 2022        2022             2021              2021             2021
Average Utilization           99.4  %        99.6  %           99.6  %            99.6  %       99.4  %
Ending Utilization            99.3  %        99.5  %           99.6  %            99.6  %       99.5  %




Average lease rates. Average lease rates for our dry container product line
increased by 6.0% in the second quarter of 2022 compared to the second quarter
of 2021. The increase in our average dry container lease rates was primarily
driven by the addition of new containers with lease rates well above the average
rates in our lease portfolio. New container prices and market lease rates were
very high throughout 2021 due to the surge in container demand and limited
availability of containers. Container prices have decreased from their peak
level of nearly $3,900 for a new 20' dry container reached in the third quarter
last year, but remain historically high with factories currently quoting in the
$2,600 range. Similarly, market leasing rates are down from their peak level in
2021, but also remain historically high and well above our portfolio average.

Average lease rates for our refrigerated container product line decreased by
1.7% in the second quarter of 2022 compared to the second quarter of 2021. In
the first quarter of 2022, we completed a large lease transaction for
refrigerated containers on expired contracts that lowered the lease rates. We
have also been experiencing larger differences in lease rates for older
refrigerated containers compared to rates on new equipment, and we expect our
average lease rates for refrigerated containers will continue to gradually trend
down.

Average special container rental rates increased by 1.4% in the second quarter of 2022 compared to the second quarter of 2021, mainly due to the addition of new equipment with rental rates higher than the average rates of the portfolio of the fleet of special containers.

Interest and Debt Expense.  Our average debt balance increased by $1.1 billion,
compared to the second quarter of 2021, as we increased borrowings last year to
support the significant growth in our revenue earning assets. Despite this
increase in our average debt balance, our interest expense decreased compared to
the second quarter of 2021 reflecting a decrease in our effective interest rate.
This decrease was driven by our extensive refinancing activity over the last two
years as we took advantage of the low interest rate environment and the upgrade
of our corporate credit ratings to investment grade. Furthermore, we are well
protected from the recent increases in interest rates as 86% of our debt
portfolio was comprised of either fixed-rate debt or hedged floating-rate debt
as of June 30, 2022.

Equipment disposals. Disposal gains continued to be exceptionally strong in the
second quarter of 2022 reflecting high used container sale prices. In addition,
disposal gains in the second quarter were boosted by $6.8 million related to
certain lease buyout transactions. We expect used container sale prices and our
disposal gains will trend down toward normal levels if market conditions
continue to moderate.

Cash and capital resources

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

For the trailing twelve months ended June 30, 2022, cash provided by operating
activities, together with the proceeds from the sale of our leasing equipment,
was $2,055.5 million. In addition, as of June 30, 2022, we had $66.7 million of
unrestricted cash and cash equivalents and $1,908.0 million of borrowing
capacity remaining under our existing credit facilities.

As of June 30, 2022, our cash commitments in the next twelve months include
$423.6 million of scheduled principal payments on our existing debt facilities
and $178.7 million of committed but unpaid capital expenditures, primarily for
the purchase of equipment.

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

Capital activity

During the three and six months ended June 30, 2022, the Company paid dividends
on preferred shares of $13.0 million and $26.1 million, respectively, and paid
dividends on common shares of $40.9 million and $82.9 million, respectively.

During the three months ended June 30, 2022, the Company repurchased a total of
1.8 million common shares at an average price per share of $60.04 for a total
cost of $110.0 million under its share repurchase program. For the six months
ended June 30, 2022, the Company repurchased a total of 3.1 million common
shares at an average price per share of $61.55 for a total cost of $190.2
million.

For more information, please refer to Note 5 – “Other equity matters” of the Notes to the unaudited consolidated financial statements.

Debt activity

During the second quarter of 2022, the Company amended its existing ABS
warehouse facility with $1,125.0 million borrowing capacity to extend the
revolving period to April 27, 2025 and change the interest rate to SOFR plus
1.60%. After the revolving period, borrowings will convert to term notes with a
maturity date of April 27, 2029, paying interest at SOFR plus 2.60%. As part of
this transaction, the Company wrote off $0.3 million of debt related costs.
Additionally, the Company prepaid the $391.3 million outstanding balance on an
ABS term note. As a result, the Company wrote off $1.3 million of debt related
costs.

During the first quarter of 2022, the Company completed a $600.0 million 3.25%
senior notes offering with a maturity date of March 15, 2032. In addition, the
Company exercised an early buyout option and paid $14.9 million of its remaining
finance lease obligation.

Credit Ratings

Our investment-grade corporate and long-term debt credit ratings enable us to
lower our cost of funds and broaden our access to attractively priced capital.
While a ratings downgrade would not result in a default under any of our debt
agreements, it could adversely affect our ability to issue debt and obtain new
financings, or renew existing financings, and it would increase the cost of our
financings. The Company's long-term debt and corporate ratings of BBB- from both
S&P Global Ratings and Fitch Ratings have not changed since December 31, 2021.
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Debt agreements

At June 30, 2022 our outstanding indebtedness was comprised of the following
(amounts in millions):

                                                                            June 30, 2022
                                                                 Outstanding              Maximum
                                                                  Borrowings          Borrowing Level

Secured Debt Financings
Asset-backed securitization term notes                         $     3,233.8          $     3,233.8
Asset-backed securitization warehouse                                  452.0                1,125.0

Total secured debt financings                                        3,685.8                4,358.8
Unsecured Debt Financings
Senior notes                                                         2,900.0                2,900.0
Term loan facilities                                                 1,128.0                1,128.0
Revolving credit facilities                                            765.0                2,000.0
Total unsecured debt financings                                      4,793.0                6,028.0
Unamortized debt costs                                                 (62.2)                     -
Unamortized debt premiums & discounts                                   (5.3)                     -

Debt, net of unamortized costs                                 $     8,411.3          $    10,386.8




The maximum borrowing levels depicted in the table above may not reflect the
actual availability under all of the credit facilities. Certain of these
facilities are governed by either borrowing bases or an unencumbered asset test
that limits borrowing capacity. As of June 30, 2022, the availability under
these credit facilities without adding additional assets was $1,413.2 million.
As of June 30, 2022, we had a combined $7,278.6 million of total debt on
facilities with fixed interest rates or floating interest rates that have been
synthetically fixed through interest rate swap contracts. This accounts for 86%
of our total debt.

Under the terms of certain loan agreements, we are required to maintain certain amounts in restricted cash accounts. From June 30, 2022we had restricted cash of $113.4 million.

For more information on our debt, please refer to Note 7 – “Debt” in the Notes to the Unaudited Consolidated Financial Statements.

Debt commitments

We are subject to certain financial covenants related to leverage and interest
coverage as defined in our debt agreements. Failure to comply with these
covenants could result in a default under the related credit agreements and the
acceleration of our outstanding debt if we were unable to obtain a waiver from
the creditors. As of June 30, 2022, we were in compliance with all such
covenants.

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Cash flow

The following table presents certain cash flow information for the six months ended June 30, 2022 and 2021 (in thousands):

                                                          Six Months Ended 

June 30th,

                                                           2022             

2021

Net cash provided by (used in) operating activities $1,037,455 $

613 319

Net cash provided by (used in) investing activities $(623,608) $(1,600,092)
Net cash provided by (used in) financing activities ($464,280) $1,039,653



Operating Activities

Net cash provided by operating activities increased by $424.1 million to
$1,037.5 million in the six months ended June 30, 2022 compared to $613.3
million in the same period in 2021. The significant increase was due to
increased profitability along with increased cash collections primarily due to
large prepayments on certain leases and increased cash collections on finance
leases due to an increase in our finance lease portfolio.

Investing activities

Net cash used in investing activities was $623.6 million within six months
June 30, 2022 compared to $1,600.1 million the same period in 2021. The variation is mainly due to a $967.8 million decrease in equipment purchases.

Fundraising activities

Net cash used in financing activities was $464.3 million in the six months ended
June 30, 2022, compared to net cash provided by financing activities of $1,039.7
million in the same period in 2021. The change was primarily due to a $1,326.0
million decrease in net borrowings due to the decrease in equipment purchases
and related financing requirements. In addition, we paid $188.0 million for
share repurchases in 2022.



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Operating results

The following table summarizes our comparative operating results for the three months ended June 30, 2022 and 2021 (in thousands).

Three months completed June 30th,

                                                              2022                2021              Variance
Leasing revenues:
Operating leases                                          $  392,091          $  360,859          $   31,232
Finance leases                                                29,517               8,925              20,592

Total leasing revenues                                       421,608             369,784              51,824

Equipment trading revenues                                    48,108              33,183              14,925
Equipment trading expenses                                   (41,706)            (22,457)            (19,249)
Trading margin                                                 6,402              10,726              (4,324)

Net gain on sale of leasing equipment                         35,072              31,391               3,681

Operating expenses:
Depreciation and amortization                                160,922             154,056               6,866
Direct operating expenses                                      7,398               6,337               1,061
Administrative expenses                                       24,968              22,979               1,989

Provision (reversal) for doubtful accounts                        46                 (26)                 72

Total operating expenses                                     193,334             183,346               9,988
Operating income (loss)                                      269,748             228,555              41,193
Other expenses:
Interest and debt expense                                     54,659              60,004              (5,345)

Unrealized (gain) loss on derivative instruments, net            100                   -                 100
Debt termination expense                                       1,627              89,863             (88,236)
Other (income) expense, net                                     (189)               (261)                 72
Total other expenses                                          56,197             149,606             (93,409)
Income (loss) before income taxes                            213,551              78,949             134,602
Income tax expense (benefit)                                  15,932              13,732               2,200
Net income (loss)                                         $  197,619        

$65,217 $132,402

Less: dividend on preferred shares                            13,028              10,513               2,515

Net income (loss) attributable to common shareholders $184,591

$54,704 $129,887

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Comparison of the three months ended June 30, 2022 and 2021

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 revenues for the periods
indicated below (in thousands):

                                        Three Months Ended June 30,
                                     2022           2021         Variance
Leasing revenues:
Operating leases
Per diem revenues                $  378,414      $ 353,277      $ 25,137
Fee and ancillary revenues           13,677          7,582         6,095
Total operating lease revenues      392,091        360,859        31,232
Finance leases                       29,517          8,925        20,592

Total leasing revenues           $  421,608      $ 369,784      $ 51,824


Total rental income was $421.6 million for the three months ended June 30, 2022compared to $369.8 million over the same period in 2021, an increase of
$51.8 million.

Per diem revenues were $378.4 million for the three months ended June 30, 2022
compared to $353.3 million in the same period in 2021, an increase of $25.1
million. The primary reasons for this increase are as follows:
•$14.7 million increase primarily due to an increase in average per diem rates
for our dry containers partially offset by a decrease in average per diem rates
for our refrigerated containers; and
•$8.6 million increase due to an increase in the average number of containers
on-hire of approximately 0.2 million CEU.

Fee and ancillary lease revenues were $13.7 million for the three months ended
June 30, 2022 compared to $7.6 million in the same period in 2021, an increase
of $6.1 million, primarily due to an increase in fee revenues related to the
repositioning of containers and an increase in repair revenue due to a higher
volume of redeliveries.

Finance lease revenues were $29.5 million for the three months ended June 30,
2022 compared to $8.9 million in the same period in 2021, an increase of $20.6
million. This increase is primarily due to the addition of $1.4 billion of net
finance lease receivables since July 2021 partially offset by the runoff of the
existing portfolio.

Trading margin.  Trading margin was $6.4 million for the three months ended June
30, 2022 compared to $10.7 million in the same period in 2021, a decrease of
$4.3 million. Container selling margins decreased in 2022 from the high levels
experienced in 2021 as a result of an increase in the cost of equipment sold
combined with a decrease in selling prices.

Net gain (loss) on sale of leasing equipment.  Gain on sale of equipment was
$35.1 million for the three months ended June 30, 2022 compared to $31.4 million
in the same period in 2021, an increase of $3.7 million. The increase was
primarily due to a $6.8 million gain related to certain lease buyout
transactions partially offset by a 23.4% decrease in sales volumes due to our
limited inventory of containers available for sale.

Depreciation and amortization.  Depreciation and amortization was $160.9 million
for the three months ended June 30, 2022 compared to $154.1 million in the same
period in 2021, an increase of $6.8 million. The primary reasons for the
increase are as follows:
•$16.5 million increase due to the increased size of our container fleet;
partially offset by
•$9.1 million decrease due to an increase in the number of containers that have
become fully depreciated.

Direct operating expenses.  Direct operating expenses primarily consist of our
costs to repair equipment returned off lease, store equipment when it is not on
lease and reposition equipment from locations with weak leasing demand. Direct
operating expenses were $7.4 million for the three months ended June 30, 2022
compared to $6.3 million in the same period in 2021, an increase of $1.1
million. The primary reasons for the increase are as follows:
•$0.7 million increase in repair and handling expense primarily due to higher
volume of drop-off activity; and
•$0.7 million increase in storage expense due to higher daily storage rates;
partially offset by
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•$0.4 million decrease in positioning expense due to lower volume of containers
repositioned.

Administrative expenses.   Administrative expenses were $25.0 million for the
three months ended June 30, 2022 compared to $23.0 million in the same period in
2021, an increase of $2.0 million. The primary reasons for this increase are as
follows:
•$1.1 million increase in foreign exchange losses;
•$0.8 million increase due to higher incentive compensation costs; and
•$0.5 million increase in travel expenses.

Interest and debt expense.  Interest and debt expense was $54.7 million for the
three months ended June 30, 2022, compared to $60.0 million in the same period
in 2021, a decrease of $5.3 million. The primary reasons for the decrease are as
follows:
•$14.1 million decrease due to a decrease in the average effective interest rate
to 2.54% from 3.20%; partially offset by
•$8.8 million increase due to an increase in the average debt balance of
$1.1 billion.

Debt termination expense.  Debt termination expense was $1.6 million for the
three months ended June 30, 2022 compared to $89.9 million expense in the same
period in 2021. The decrease was primarily due to the payment of a make-whole
premium related to the prepayment of $821.0 million of institutional notes in
June 2021.

Income taxes. Income tax expense was $15.9 million for the three months ended
June 30, 2022 compared to $13.7 million in the same period in 2021, an increase
of $2.2 million. The Company's effective tax rate was 7.5% for the three months
ended June 30, 2022 compared to 17.4% in the same period in 2021. The increase
in income tax expense was primarily the result of an increase in pre-tax income
in the second quarter of 2022 compared to the same period in 2021, partially
offset by a decrease in the effective tax rate. The high tax rate for the three
months ended June 30, 2021 was due to an $89.9 million debt termination expense
in the second quarter of 2021 which significantly reduced the portion of the
Company's income generated in lower tax jurisdictions.
































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Operating results

The following table summarizes our comparative operating results for the six months ended June 30, 2022 and 2021 (in thousands).

                                                                        Six 

Months ended June 30th,

                                                              2022                2021              Variance
Leasing revenues:
Operating leases                                          $  781,036          $  700,653          $   80,383
Finance leases                                                57,660              15,874              41,786

Total leasing revenues                                       838,696             716,527             122,169

Equipment trading revenues                                    82,228              59,128              23,100
Equipment trading expenses                                   (71,685)            (40,261)            (31,424)
Trading margin                                                10,543              18,867              (8,324)

Net gain on sale of leasing equipment                         64,041              53,358              10,683

Operating expenses:
Depreciation and amortization                                321,638             297,363              24,275
Direct operating expenses                                     13,618              15,707              (2,089)
Administrative expenses                                       46,268              43,900               2,368

Provision (reversal) for doubtful accounts                        19              (2,490)              2,509

Total operating expenses                                     381,543             354,480              27,063
Operating income (loss)                                      531,737             434,272              97,465
Other expenses:
Interest and debt expense                                    109,169             114,627              (5,458)

Unrealized (gain) loss on derivative instruments, net           (339)                  -                (339)
Debt termination expense                                       1,663              89,863             (88,200)
Other (income) expense, net                                     (497)               (742)                245
Total other expenses                                         109,996             203,748             (93,752)
Income (loss) before income taxes                            421,741             230,524             191,217
Income tax expense (benefit)                                  29,864              25,469               4,395
Net income (loss)                                         $  391,877        

$205,055 $186,822

Less: dividend on preferred shares                            26,056              21,026               5,030

Net income (loss) attributable to common shareholders $365,821

$184,029 $181,792

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Comparison of the six months ended June 30, 2022 and 2021

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):

                                         Six Months Ended June 30,
                                    2022           2021         Variance
Leasing revenues:
Operating leases
Per diem revenues                $ 755,928      $ 684,529      $  71,399

Fees and related income 25,108 16,124 8,984 Total operating rental income 781,036 700,653 80,383 Finance lease

                      57,660         15,874         41,786

Total leasing revenues           $ 838,696      $ 716,527      $ 122,169



Total leasing revenues were $838.7 million for the six months ended June 30,
2022, compared to $716.5 million, in the same period in 2021, an increase of
$122.2 million.

Per diem revenues were $755.9 million for the six months ended June 30, 2022
compared to $684.5 million in the same period in 2021, an increase of $71.4
million. The primary reasons for this increase are as follows:
•$34.7 million increase due to an increase of approximately 0.4 million CEU in
the average number of containers on-hire; and
•$33.1 million increase primarily due to an increase in average per diem rates
for our dry containers partially offset by a decrease in average per diem rates
for our refrigerated containers.

Fee and ancillary lease revenues were $25.1 million for the six months ended
June 30, 2022 compared to $16.1 million in the same period in 2021, an increase
of $9.0 million, primarily due to an increase in fee revenues related to the
repositioning of containers and an increase in repair revenue due to a higher
volume of redeliveries.

Finance lease revenues were $57.7 million for the six months ended June 30, 2022
compared to $15.9 million in the same period in 2021, an increase of $41.8
million. This increase is primarily due to the addition of $1.4 billion of net
finance lease receivable since July 2021 partially offset by the runoff of the
existing portfolio.

Trading margin.  Trading margin was $10.5 million for the six months ended June
30, 2022 compared to $18.9 million in the same period in 2021, a decrease of
$8.4 million. Container selling margins decreased in 2022 from the high levels
experienced in 2021 as a result of an increase in the cost of equipment sold
combined with a decrease in selling prices.

Net gain (loss) on sale of leasing equipment.  Gain on sale of equipment was
$64.0 million for the six months ended June 30, 2022 compared to $53.4 million
in the same period in 2021, an increase of $10.6 million. The increase was
primarily due to a $6.8 million gain related to certain lease buyout
transactions and a 14.5% increase in the average sale price of our used dry
containers. These increases were partially offset by a 26.3% decrease in selling
volumes due to the limited inventory of containers available for sale.

Depreciation and amortization.  Depreciation and amortization was $321.6 million
for the six months ended June 30, 2022 compared to $297.4 million in the same
period in 2021, an increase of $24.2 million. The primary reasons for the
increase are as follows:
•$42.2 million increase due to the increased size of our container fleet;
partially offset by
•$16.9 million decrease due to an increase in the number of containers that have
become fully depreciated.




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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 $13.6 million for the six months ended June 30, 2022
compared to $15.7 million in the same period in 2021, a decrease of $2.1
million. The primary reasons for the decrease are as follows:
•$1.1 million decrease in repair costs due to timing of completed repairs; and
•$0.9 million decrease in positioning expense due to lower volume of containers
repositioned.

Administrative expenses.  Administrative expenses were $46.3 million for the six
months ended June 30, 2022 compared to $43.9 million in the same period in 2021,
an increase of $2.4 million. The primary reasons for this increase are as
follows:
•$1.2 million increase in foreign exchange losses; and
•$0.6 million increase in travel expenses.

Provision (reversal) for doubtful accounts.  Reversal for doubtful accounts was
immaterial for the six months ended June 30, 2022 compared to $2.5 million in
the same period in 2021. We reversed reserves in 2021 which were originally
recorded in 2020 against a mid-sized customer's receivable.

Interest and debt expense.  Interest and debt expense was $109.2 million for the
six months ended June 30, 2022, compared to $114.6 million in the same period in
2021, a decrease of $5.4 million. The primary reasons for the decrease are as
follows:
•$31.4 million decrease due to a decrease in the average effective interest rate
to 2.52% from 3.25%; partially offset by
•$26.0 million increase due to an increase in the average debt balance of
$1.6 billion.

Debt termination expense.  Debt termination expense was $1.7 million for the six
months ended June 30, 2022 compared to $89.9 million in the same period in 2021.
The decrease was primarily due to the payment of a make-whole premium related to
the prepayment of $821.0 million of institutional notes in June 2021.

Income taxes. Income tax expense was $29.9 million for the six months ended June
30, 2022 compared to $25.5 million in the same period in 2021, an increase of
$4.4 million. The Company's effective tax rate was 7.1% for the six months ended
June 30, 2022 compared to 11.0% in the same period in 2021. The increase in
income tax expense was primarily the result of an increase in pre-tax income in
the six months ended June 30, 2022 compared to the same period in 2021,
partially offset by a decrease in the effective tax rate. The high tax rate for
the six months ended June 30, 2021 was due to an $89.9 million debt termination
expense in the second quarter of 2021 which significantly reduced the portion of
the Company's income generated in lower tax jurisdictions.
                                       34
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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 payment 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 commitments and obligations as of
June 30, 2022 and the effect these obligations are expected to have on our liquidity and cash flows in future periods:

                                                                                     Contractual Obligations by Period
                                                                                                                                                            2027 and
Contractual Obligations:               Total            Remaining 2022             2023               2024              2025              2026             thereafter
                                                                                           (dollars in millions)

Main debt securities $8,478.8 $211.3

$1,186.7 $906.8 $438.1 $2,514.3

  $   3,221.6
Interest on debt obligations(1)       1,067.4                   106.4              201.8              179.6            166.5              129.3                283.8

Operating leases (mainly
facilities)                               5.1                     1.8                2.5                0.7              0.1                  -                    -
Purchase obligations:
Equipment purchases payable              43.3                    43.3                  -                  -                -                  -                    -
Equipment purchase commitments          135.4                   135.4                  -                  -                -                  -                    -

Total contractual obligations $9,730.0 $498.2

$1,391.0 $1,087.1 $604.7 $2,643.6

$3,505.4

(1) Amounts include actual interest for fixed rate debt, estimated interest for floating rate debt and interest rate swaps.

Critical accounting estimates

Our consolidated financial statements have been prepared in conformity with U.S.
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. For a discussion of our critical accounting estimates, see Part
II, Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations in our 2021 Annual Report on Form 10-K. There have been no
significant changes to our critical accounting estimates since our 2021 Annual
Report on Form 10-K.
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