Brian Sondey - CEO Simon Vernon - President John Burns - SVP & CFO.

Ken Hoexter - Bank of America Merrill Lynch Helane Becker - Cowen and Company Doug Mewhirter - SunTrust Robinson Humphrey.

Welcome to the Triton Third Quarter 2016 Earnings Results Conference Call. [Operator Instructions]. I would now like to turn the conference over to John Burns, Senior Vice President and Chief Financial Officer. Please go ahead, sir. .

Thanks. Good morning and thank you for joining us on today's call. We're here to discuss Triton's third quarter 2016 results which were reported yesterday evening. Joining me on this morning's call from Triton are Brian Sondey, CEO; and Simon Vernon, President.

Before I turn the call over to Brian I would like to note that our prepared remarks will follow along with the presentation that can be found on the webcast or in the Company presentation section of our website.

I would also like to point out that this conference call may contain forward-looking statements as determined and defined in the Private Securities Litigation Reform Act of 1995. It is possible the Company's future financial performance may differ from expectations due to a variety of factors.

Any forward-looking statements made on this call are based on certain assumptions and analysis made by the Company that it believes are appropriate. And any such statements are not a guarantee of future performance and actual results may vary materially from those projected.

Finally, the Company's views, estimates, plan and outlook as described in this call may change subsequent to this discussion. The Company is under no obligation to modify or update any or all of the statements that are made herein, despite any subsequent changes.

These statements involve risks and uncertainties, are only predictions and may differ materially from the actual future events or results. For a discussion of such risks and uncertainties, please see the risk factors located in the Company's registration statement filed on form S-4 with the SEC.

With these formalities out of the way, I will now turn the call over to Brian. .

Thanks, John and welcome to Triton International's third quarter 2016 investor conference call. We've included a presentation to go along with this call. I'll start with slide 3 of the presentation. Triton International was formed on July 12 through the merger of Triton Container and TAL International.

We're now the words largest, most capable and most efficient container leasing company. Merger integration is a major task for the Company but it is well underway. We're already seeing the benefits from the powerful combination of TCIL's and TAL's capabilities.

We're also making good progress on our plan to achieve $40 million of annual cost savings and the savings will become increasingly apparent over the next few quarters. Market conditions improved in the third quarter after a difficult stretch.

Modest trade growth and limited purchasing of containers have caused the global supply and demand balance to tighten. Leasing demand improved and has remained strong into the fourth quarter. This rebound in business conditions has allowed us to drive improvement in many of our key operating metrics.

The bankruptcy of Hanjin Shipping had a major impact in the third quarter. Our third quarter financials include almost $30 million of negative impacts from the default and the container recovery process is a major undertaking.

However, we're making good progress on the recovery and we expect the financial impact from the default to be lower in future quarters. Triton's financial performance remains under pressure but our operating profitability is improving.

We recorded a pretax loss of $56.8 million in the third quarter which includes large charges related to the merger and Hanjin. Excluding merger costs and Hanjin impact, our adjusted pretax income would have been roughly $30 million for the quarter, up $11 million from the combined TCIL and TAL results in the second quarter.

Triton declared a dividend of $0.45 per share this quarter. This dividend level remains outsized relative to our current operating profitability. But we have significant financial flexibility and we're experiencing a meaningful improvement in market conditions and our performance. Slide 4 shows the improving supply and demand balance per container.

New container production volumes have been low since the middle of 2015 which has combined with modest trade growth to drive our market from surplus to an increasingly tight shortage. The chart on the upper right shows the inventory of new containers at the container factories.

The chart shows that total factory inventory has decreased from over 1 million TEU of dry containers in the middle of last year to under 400,000 TEU today. It's important to note that there are now almost 40 million TEU in operation, so the current factory inventory represents only about 1% of the operated container fleet.

The chart on the bottom right shows Triton's total and available inventory of use containers in China. Our net available depot inventory in China has dropped from almost 200 TEU in the first quarter of 2016 to less than 25,000 TEU today.

This strong tightening of supply should continue to have many benefits for us, including improved utilization, increasing use container sale prices and higher market leasing rates. I'll now turn the call over to Simon Vernon. .

Thank you, Brian. Turning to slide 5, we will now look at the current market environment and our performance over the last quarter.

The improvements in the business climate that Brian just talked about can clearly be seen in the very strong rebound in utilization that began during the second quarter, that has continued through the third and maintains a very strong momentum today.

Triton moved our entire fleet that was unleased to Hanjin to off-lease status as far as utilization is concerned when core protection was applied for.

As you can see from the graph, by the end of this month we would've nearly recouped all of this negative affect from generating new lease sites for in-fleet containers from depots to capitalizing on the very strong pickup in the market.

Net pickup activity for dry containers remained meaningfully positive during the third quarter and for the first time since 2011 continues to strengthen as we move deeper into the fourth quarter.

Activity has been spread across a good portfolio of our customer base and we expect demand to continue right up to Chinese New Year at the end of January and then pick up quickly following the holiday period in China.

Lease rates for new long term business have improved materially from the lows we saw at the beginning of the year and during the second quarter, on the back of much greater demand, tight supply and rising new container prices.

However, average lease rates within the fleet continue to come under pressure as leases expire and are renegotiated close to the spot market levels we see today, but despite their improvement remain below our portfolio average.

Current newbuild prices are in the $1,700, two $1,850 range, depending on location and paint application, up from a low of $1,250 during the first quarter. We expect price rises to continue as we move into 2017. The continuing strength of the marketplace is being felt across the whole container leasing sector.

And one of the benefits are vastly reduced inventories in the depots is that far fewer containers have been designated to sale when off herd. This has led to supply restrictions for sale units and the creation of an environment which we have not seen for over four years now, where we can start to push disposal prices higher again.

Turning to the left hand chart on slide 6. We continue to believe that the recent demand for containers has been driven more by supply-side constraints, as only very limited new production has been placed during the first nine months of 2016 by shipping lines and leasing companies alike.

This supply-side discipline has helped the market to stabilize even though containerized trade growth remains below historical levels of growth.

This, coupled with a dislocation that was caused when Hanjin declared bankruptcy which in turn effectively meant that Hanjin's fleets have close to 1 million 20-foot equivalent units, became redundant and out of service has generated very strong demand from shortages caused by a better peak season and competitive shipping lines taking Hanjin cargo and needing to lease-in additional containers.

The chart on the top right of slide 6 shows the recent increase in both steel and 20-foot container pricing. As discussed, we believe this momentum will continue into next year.

The graph on the bottom right shows how margins have compressed for container manufacturers, given the very challenging and competitive environment we have faced, particularly over the last year or so, driven by the overall lack of demand for new containers.

It suggests that even if sale prices stay roughly where they are today, at about $450 per ton and demand remains. And the factories will do everything they can to restore margin at more historically acceptable levels which should push container prices up further by several hundred dollars.

This in turn should have further positive effects, especially for per diem levels within our existing fleet, as leases come up for expiration and repricing, while containers are placed back on lease ex tempore. Disposal prices should in turn be pushed higher by this projected increase in new container prices.

We're currently seeing attractive opportunities to build and grow organically for the first time in a long time and to participate in a number of customers sale and lease-back deals for older the containers.

Turning to slide 7, Hanjin Shipping Company, South Korea's biggest and the seventh largest shipping Company in the world, filed for bankruptcy in August 31. Triton's containers on lease to Hanjin at that time represented just under 3% of our total fleet.

The recovery price has been a very large effort and has involved personnel across all of our 20 offices. Having a very meaningful global footprint with a presence and nearly all the major shipping locations has been very helpful in the recovery process.

So far almost 50% of our fleet on lease to Hanjin has been recovered or cleared for delivery and we expect to recover at least 70% of our containers by the end of this year.

Early on into recovery, Triton focused on recovering the large blocks of containers located at marine terminals and secured vessel repositioning of the containers to key China ports. This activity helped reduce drayage, handling and storage costs by avoiding the movement of recovered containers back to local domestic depots.

Our financial results were negatively impacted by $30 million due to the Hanjin default which included a full reserve against pre-bankruptcy outstanding receivables and the impact of lost revenue. We expect any future financial impact to be much lower.

Triton maintains credit insurance of well over $100 million which covers recovery costs, including third-party payments to depots and terminals, repositioning where necessary, repairs and lost and economically abandoned containers.

We expect to accrue an insurance receivable against these recovery costs and payments for lost revenue will be recognized when received from the insurance companies.

As for containers recovered, the commercial arm of Triton is taking every step to leverage off the current strength in the market and redeploy the vast majority of the containers across a strong portfolio of leases with our best customers. With that, I will hand over to John. .

stabilizing disposal prices, improving utilization, the initial merger integration savings, all partially offset by the continued decrease in leasing rates. The largest driver in the improved results was the stabilization of disposal prices which led to a $13.6 million reduction in loss on sale from the prior quarter.

Looking forward, we anticipate the improved market conditions will lead to a further reduction in losses on disposals. The improved container demand environment led to a roughly 2% improvement in utilization during the quarter, excluding the impact of Hanjin.

The higher utilization, increased revenue and reduced storage costs were a combined benefit of over $5 million. A decline in average lease rates negatively impacted the third quarter results by $7.6 million compared to the prior quarter, as lease repricing pressures continue.

Our average portfolio lease rates are still well above the current market lease rates. Therefore, without a significant further increase in market lease rates, we will continue to face repricing pressure.

Since the transaction closed in July, the integration savings for the third quarter were limited to $1.2 million, because the first significant staff reductions did not take effect until the end of the quarter.

We remain confident that we will be able to achieve the $40 million in annualized savings by the middle of 2017 and expect that roughly half the savings will be in place by the end of the year. Turning to page 11.

Here's a summary of the September 30 balance sheet reflecting the combined balance sheet, together with purchase accounting entries, to arrive at the consolidated balance sheet on the right-hand side of the page.

As part of the accounting for the merger, we were required to allocate the purchase price of TAL based on fair value of the individual assets and liabilities as of the closing date. The purchase accounting is applied to the TAL because it was deemed to be the acquiree for accounting purposes.

The key impact of purchase accounting is a write-down of the TAL container fleet and a write-up of the above market portion of the lease portfolio as of the close of the transaction in July. As of September 30, these adjustments had amortized to $730 million and $275 million, respectively.

These purchase accounting adjustments are not pushed down to the TCIL or TAL subsidiaries and therefore have no impact on our debt facilities. These adjustments were based on new container prices and market lease rates at the time of the close.

However, if we had used the current new container prices which Simon noted are in the range of $1,700 to $1,850 and the related current market lease rates, these adjustments would be much smaller. Turning to page 12. Here we show the runoff of various purchase accounting adjustments and the net impact on reported earnings.

As a reminder, these are all non-cash items. The overall purchase accounting entries started out with a negative impact on a reported pretax earnings of $6.8 million in the third quarter and will be $4.5 million in the fourth quarter, then become neutral by the middle of 2017 and turn positive thereafter.

I will now return you to Brian for some additional comments. .

Thanks, John. As I mentioned earlier, we expect improved market conditions to continue through the fourth quarter and into the start of 2017. We should be able to use this ongoing market recovery to drive further improvements in our key business metrics. Our utilization should continue to climb as book containers are picked up.

We're also hopeful that demand will radiate from China as leasing stocks in China shrink. Our ex-Hanjin containers will also increasingly be bought back into the leasing market.

We're making a major effort to push used container sale prices up in response to the significant tightening in container supply and the recent increase in new container prices. Though we also expect to continue to face margin pressure from lease repricing as high-rate 2010 and 2011 leases expire.

The recent increase in market leasing rates would help diminish the size of this repricing impact if the recent positive momentum with rates continues. Slide 14 shows our current expectations of our adjusted pretax income and our normalized levels of profitability in the fourth quarter.

We expect our normalized level of profitability to increase from the third to the fourth quarter due to the expected improvements in our operating performance. Our adjusted pretax income should also improve from the third to the fourth quarter, though some impacts from the Hanjin bankruptcy and purchase accounting will continue.

Wrapping up on slide 15, the third quarter was both an exciting and challenging quarter for Triton International. We had to manage through a variety of major events and we incurred significant unusual charges. The market condition and our underlying performance improved and we expect further improvements in the fourth quarter.

We're in the midst of our merger integration but we're already excited by the strength of our new Company. We're experiencing meaningful benefits from the powerful combination of TCIL's and TAL's capabilities. And the merger benefits will only increase as the $40 million of expected annual cost savings are increasingly realized.

We're confident we will be able to use these advantages to outperform our peers over the cycle and make the most out of the current market recovery. I would like to thank all of our customers, employees, business partners, lenders and investors for helping us successfully launch Triton International. I will now open up the call for questions. .

[Operator Instructions]. Today's first question comes from Ken Hoexter of Merrill Lynch. Please go ahead..

Brian, sounds like you're talking about things really bottoming out in the third quarter, but you opened with a comment on the dividend being above maybe sustainable or cash flow levels. Maybe you could expand on that comment a little bit.

Is that your indication that you'd expect that to come down? Or that you need to see earnings grow into it? Maybe just a little bit about what you were trying to intimate there. .

Yes, when we look at our quarterly dividend, we're paying out roughly, I think it's low $30 millions per quarter. That compares to the normalized profitability that John described of around $30 million in the third quarter.

And so, effectively, we're paying out something in the range of 100% of our normalized profitability right now, based upon current profitability and the current dividend. Looking back historically at TAL, we paid much more a share of our ongoing profitability as a dividend just to retain capital to fund our growth.

The point I was trying to make is that we don't really want to be a company that pays out 100% of our earnings as a dividend, but we do see things improving a lot right now, both in our market as well as in our performance.

Certainly the hope is that the earnings will improve to the point that the dividend is again rightsize relative to what our earnings will be. If that doesn't happen, if the market doesn't turn up and our performance doesn't improve, we'll have to reconsider the dividend at that point.

But as I mentioned, we've got a fair bit of financial flexibility and things are moving in the right direction. .

Talking about that, looking at rates starting to go up, what prices do boxes need to get to, or per diem rates do you think, what kind of percentage increase before we get to that base where it matches the base rates?.

Maybe I'll just say this, two different periods. We've seen a pretty significant improvement in market lease rate over the last month or two. And we're getting, maybe, even within striking distance. We're not there yet, for sure.

But you're getting to the point where maybe you could see, if things continue to progress, us getting into the range of the portfolio average. That said, the initial wave of lease expirations, or at least the wave we expect for the next 12 months or so, are higher than our average lease rate.

That the deals we did in 2010 and 2011 and the first part of 2012 that are expiring now, and that are going to be expiring next year, are well above the average. We do think that almost regardless of where rates go in the near term, we'll see some negative effect from repricing this year coming up.

But the more rates improve, the less that effect is and the quicker it ends. .

Right.

So if you think about where market rates are right now relative to that overall, is there a percentage you would say that the average is still at a discount? Is it 10%, 20%, 30%?.

It's still for sure at a discount. I'll have to look at the exact number. Quite frankly, the rates have been moving very quickly over the last month or so. I think before we really talk confidently about where the market rates is, we want to see the markets stabilize, and have a little more time with the much-improved position. .

So you're not saying this one, two month is the stablest -- you're looking forward to it being, but you're not making the absolute bottom call. .

Well, I'd say this. The conditions have changed dramatically. Where we were in the second quarter of this year, starting to improve in the third quarter, and this improvement has really accelerated into the fourth quarter.

And the thing that gives us some confidence that it's going to continue is that to some extent it's not really driven by strong demand. In fact, trade growth has remained somewhat disappointing in 2016. It's driven just by very tight container supply.

And we think there's a variety of things that's going to keep the supply tight even as the markets improve. That includes the fact that the factories have really ramped down their labor forces and moved down to one shift from two shifts. It takes time to add workers back, especially before Chinese New Year. I think that's practically very difficult.

In addition, we think that the tough industry, both for the shipping lines and leasing companies over the last year or two, has really constrained financing availability for a lot of players in the space. So even as performance improves, I think it's going to be hard for companies to add back a lot of container capacity.

And then finally, and this is sort of technical, but there is a regulation in China that factories across China have to shift from using solvent-based paints to water-based paints over the course of the first half of 2017. And we've seen where that's happened already, that's created a lot of production disruptions.

All those things we think will combine to keep supply tight even though we're seeing the market improve. .

Great. I think you just answered my next question, which was going to be utilization is up, is that solely supply-side or trade demand? But it sounds like it's virtually all on the supply side.

That would be my last one is, where do you see utilization based on -- does it continue to creep up here?.

Yes, we think it will, and for a couple of things. One, I was just talking about supply will stay tight we think, and that'll help keep utilization going. Secondly, we are hearing from our customers. Not that trade growth has been wildly above what they thought, but we have heard that the fourth quarter has been a lot better than they expected.

So rather than seeing the typical ramp down in volumes from the third to the fourth quarter, volumes are sort of holding steady. And that's created a shortage that we hope will continue into the first part of next year.

And then finally, as we're able to recover and redeploy the Hanjin boxes, we've taken those out of utilization, and those will add to utilization as they come back. The first waves are starting to come already, so I think that'll be another driver. .

Our next question comes from Helane Becker of Cowen and Company. Please go ahead..

I just have some housekeeping questions.

When do you expect the payments from insurance? Is it one claim? At the end? Is it over the quarters? And how do we account for that in our models?.

Certainly. The way it works is we put in a preliminary claim around the six-month time frame from the event. And the insurance companies, after an audit, will pay out 60% of the claim. And then within about a year's time frame, the final claim is put in, and after an audit, they pay out the balance of the amounts due.

As far as from an accounting perspective, I think we noted that we don't anticipate that we will accrue for expenses that we're incurring, from this point forward, a receivable. So that there should be minimum impact on the P&L. We will not accrue for the lost revenue. But the lost revenue, there will be a portion of lost revenue that we'll collect.

And when we do collect that from a cash perspective, that's when we'll record that revenue. .

Okay. And then, when the shipping lines are consolidating, what's the effect on their containers? Do they put those containers, do they -- I don't know the right word, do they ground those containers? Do they come back into the market? What do they do with their consolidation? It's a little bit different from our industry consolidation. .

Yes, I'll take a first crack and then see if Simon agrees or has other comments. We've typically seen -- the industry in the shipping side has been consolidating for a long time now. And there are some positives in that for us. Typically it leads to financially stronger customers. And typically bigger customers need supply from a bigger supplier.

And that has benefits for the bigger people in the industry, like us. On the downside from consolidation, sometimes you see the shipping lines find relatively significant container efficiencies. Obviously it's a stronger negotiating counterparty.

In terms of the situations where it typically leads to container efficiencies, in our experience, at least my experience, it has been when you see shipping lines combine that have complementary trade structure.

So if a east-west carrier combines with a north-south carrier, that tends to -- that's led to a fair bit of efficiencies and might minimize that company's need for leasing. Typically they wouldn't take a bunch of boxes and sideline them, they might focus on returning lease containers rather than picking up additional ones.

I think most of the acquisitions or mergers that we've seen, at least recently, are more companies combining that have complementary -- excuse me, similar type operations. I don't know that we'll see a tremendous amount of container efficiencies out of these combinations.

Any --?.

Really no additional comments, apart from to say that certainly from the TCIL experience pre-merger, we really didn't see much change to container demand post shipping line mergers.

I think on occasions, the bigger shipping line tended to like to come to the leasing companies that had a larger portfolio of containers on offer, a larger portfolio of containers available in China. So on occasions it's been very beneficial for the -- if you like, the legacy leasing companies with larger fleets. .

Okay. And then, I know it's too early on this election thing to ask you your thoughts about trade and so on, but I want to ask the question this way.

Do you think some of the fourth-quarter strength that you're seeing -- or maybe not strength, that's too strong a word, but improvement we're seeing, could be potentially people moving stuff around and goods around ahead of a potentially more protectionist world going forward?.

It's a good question. And obviously we're watching what's going to happen with -- we're curious. Of course we benefit when trade rules become easier and barriers lower and the opposite wouldn't be so good. But we do think that the global economy has reached a level of integration that will be pretty difficult to disentangle.

And so while we're certainly don't have any more visibility than you do into what's going to happen, at least we're hopeful that nothing dramatic would happen.

In terms of the current volumes, certainly I don't hear from anyone that the fourth quarter -- better-than-expected fourth-quarter volumes or that stability from the third to the fourth quarter was caused by election concerns. I think partially it's the natural thing that happened when peak season just got spread.

Peak season wasn't so significant and maybe things just got spread forward. I don't know, Simon? That's our view for now. .

Okay. I just have one last question on the dividend. If I heard all your comments and your responses to Ken's questions, which were pretty similar to mine, is there a point where you would say, okay, this improvement didn't go quite as we planned, so we have to cut the dividend.

Would that be like the next quarter or within the next six or nine months? How should I think about the dividend? I don't know if the -- maybe the dividend policy from the Board. .

Obviously we set the dividend quarter to quarter. And so I don't want to commit to any future timing. But that said, the dividend is -- we consider it a very important part of the value that we bring to shareholders. We've paid a lot of dividends over the years and I think that's reflected a lot of the total return from investing in the shares.

And so there is certainly a lot of focus on maintaining it. Also, as I said, we have a lot of financial flexibility. We're not white-knuckling with the dividend this quarter and hoping for the best. We do have a fair bit of capacity to sustain the dividend for quite some time.

And at some point, of course, certainly market conditions could convince us that we're not going to get where we need to be, and of course we'd have to take action at that time. But again, while I can't commit to anything forward, it doesn't feel like we're on the edge right now. .

I just thought of one last question with respect to the outlook for next year, and that's with respect to taxes. One of the big things you guys talk about is your deferred tax account and how we should ignore taxes because obviously some of your competitors don't pay taxes, and so on.

But if the new administration is successful in lowering the corporate tax rate, what implication have you thought about yet? Or maybe it's too soon and you get to say that, what the implications would be for you to lower the corporate tax rate and take some of that money back. .

Yes. Certainly lower tax rates in the US would always be positive. We're going to be a mix of a US tax asset-owning company and a Bermuda tax asset-owning company for quite some time.

One of the benefits of the merger that we talked about is that we're going to be able to increasingly push the majority of the assets to where our parent is, the Bermuda location. And that will have the effect both of lowering the average GAAP tax rate and actually creates more protection against ever paying any cash taxes.

But for sure, because again, we're going to have a foot in the US, with a US tax Company for a while, lowering the tax rate in the US would be from an accounting statement it's beneficial. From a cash flow, it would virtually no effect, but from an accounting statement standpoint, it would be positive. .

[Operator Instructions]. Our next question comes from Doug Mewhirter of SunTrust. Please go ahead..

First, a couple of clarifications on some of the numbers. First, John, could you clarify a statement you made about your forward revenue impact from Hanjin? You said we wouldn't be accruing lost revenues.

Do I interpret that in a negative sense in terms of you're not going to book them so there won't be -- you won't book any Hanjin revenues? Or a positive way is that because you assume you would be getting your insurance, you would actually be booking them in future quarters?.

We will not be booking, so it's roughly $3 million a month of Hanjin revenue. The insurance policies pay up to six months of lost revenue after the event. And it's up to -- if you capture the unit, get it ready for lease and subsequently leased, the revenue would stop [with us] before the 180 days.

But we will not accrue any of that, and only recognize it when we get it paid by the insurance company. .

Okay. That was actually my assumption, I just wanted to clarify that. Also on the purchase accounting, obviously your base of depreciable assets went down because of the adjustment and that benefit has slowed through this quarter. Doing a quick calculation, it was like depreciation was about 4.2% of cost basis of assets.

Is that a good rough run rate, the low 4%s to maybe mid-4% on gross assets? Or was there some other one-time adjustment?.

No other one-time adjustments other than the purchase accounting. And that number will move around a little bit as new priced containers come into the overall portfolio. I have to look at it and come back to you, but nothing unusual other than purchase accounting. .

And then keep in mind that I think on the income statements that we show going forward, we're combining the lease amortization with that depreciation, which will make it higher for a point in time in terms of reporting financials. .

Okay, that makes sense. And also, your effective interest rate dropped quite a bit.

I know that there's some purchase accounting adjustments, but even if I backed out that $2 million and change of lower interest expense, your effective interest rate on your blended liabilities, interest-bearing liabilities, went down quite a bit sequentially, I think like 3.6% this quarter.

And it was like in the low 4%s last quarter on a pro-forma basis.

Is the high 3%s a good rate? Or again, was there something in there that may have distorted the numbers a bit?.

No, again, the purchase accounting as part of that. You mark the debt to markets in addition, eliminate deferred financing fees that have been amortized into interest expense over the term of a debt transaction. So that's the big significant change in the overall.

And again, that is only for the TAL portfolio, there was no adjustment in the TCIL portfolio. .

Okay, thanks. And pulling back a bit to a more strategic perspective, you talked about the dividend and the capital management. And, Brian, you were pretty clear on that. I appreciate the detail. What about leverage targets? Would you take the opportunity to deleverage a bit? I know that a lot of your debt amortizes, so that naturally occurs.

But it looks like you're about in the 80% range of debt-to-net container assets and I was wondering if you want to be more in the high 70%s or you're comfortable here?.

Well, I'd say, Doug, the first thing to note is that the debt percentage of debt versus net assets went up mainly because of purchase accounting. And so when we wrote down the TAL revenue-earning equipment by $750 million, that had the mathematical effect of making leverage look like it was going up.

If you look through the purchase accounting, the combined financing entities of TAL and TCIL, the debt to revenue-earning assets on a pre-purchase accounting basis, is still in the lower 70%s. .

This concludes the question-and-answer session. I'd like to turn the conference back over to Mr. Burns and the rest of the team for any closing remarks. .

I'd just like to thank all of our investors for your continued interest in Triton International. We look forward to keeping up with you going forward. Thank you very much. .

Thank you, sir. The conference has now concluded and we thank you all for attending today's presentation. You may now disconnect your lines..