Segment and Geographic Information

6 Months Ended

Jun. 30, 2020

Segment Information

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


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


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

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

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



	Three Months Ended June 30,
	2020						2019
	Equipment Leasing		Equipment Trading		Totals		Equipment Leasing			Equipment Trading			Totals
Total leasing revenues	$	319,620	$	1,777	$	321,397	$	337,897		$	669		$	338,566
Trading margin	—		2,020		2,020		—			4,496			4,496
Net gain on sale of leasing equipment	4,537		—		4,537		7,519			—			7,519
Depreciation and amortization expense	133,116		176		133,292		135,181			167			135,348
Interest and debt expense	66,483		391		66,874		81,883			377			82,260
Realized (gain) loss on derivative instruments, net	11		—		11		(667		)	(2		)	(669		)
Income (loss) before income taxes⁽¹⁾	74,843		2,433		77,276		92,294			3,669			95,963
Purchases of leasing equipment and investments in finance leases⁽²⁾	$	157,382	$	—	$	157,382	$	106,005		$	—		$	106,005



	Six Months Ended June 30,
	2020									2019
	Equipment Leasing			Equipment Trading			Totals			Equipment Leasing			Equipment Trading			Totals
Total leasing revenues	$	640,657		$	2,208		$	642,865		$	677,967		$	1,458		$	679,425
Trading margin	—			3,953			3,953			—			8,083			8,083
Net gain on sale of leasing equipment	8,614			—			8,614			15,988			—			15,988
Depreciation and amortization expense	265,634			353			265,987			269,603			354			269,957
Interest and debt expense	135,182			694			135,876			165,057			723			165,780
Realized (gain) loss on derivative instruments, net	(223		)	(1		)	(224		)	(1,369		)	(4		)	(1,373		)
Income (loss) before income taxes⁽¹⁾	156,360			3,826			160,186			190,760			6,850			197,610
Purchases of leasing equipment and investments in finance leases⁽²⁾	$	219,788		$	—		$	219,788		$	149,986		$	—		$	149,986

(1)

Segment income before income taxes excludes unrealized gains or losses on derivative instruments and debt termination expense. The Company recorded an immaterial unrealized gain on derivative instruments and an unrealized loss on derivative instruments of $0.3 million for the three and six months ended June 30, 2020, respectively, and $1.3 million and $2.3 million for the three and six months ended June 30, 2019, respectively. The Company recorded an immaterial amount for debt termination expense for the three and six months ended June 30, 2020 and $0.6 million for both the three and six months ended June 30, 2019.


(2)	Represents cash disbursements for purchases of leasing equipment and investments in finance lease as reflected in the consolidated statements of cash flows for the periods indicated, but excludes cash flows associated with the purchase of equipment held for resale.



	June 30, 2020						December 31, 2019
	Equipment Leasing		Equipment Trading		Totals		Equipment Leasing		Equipment Trading		Totals
Equipment held for sale	$	106,035	$	38,921	$	144,956	$	89,755	$	24,749	$	114,504
Goodwill	220,864		15,801		236,665		220,864		15,801		236,665
Total assets	$	9,563,689	$	118,065	$	9,681,754	$	9,596,263	$	46,370	$	9,642,633

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

Geographic Segment Information

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

The following table summarizes the geographic allocation of equipment leasing revenues for the three and six months ended June 30, 2020 and 2019 based on customers' primary domicile (in thousands):



	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Total equipment leasing revenues:
Asia	$	117,574	$	134,355	$	238,380	$	271,805
Europe	163,214		163,436		327,477		325,993
Americas	30,352		30,908		56,613		61,690
Bermuda	438		539		881		1,217
Other International	9,819		9,328		19,514		18,720
Total	$	321,397	$	338,566	$	642,865	$	679,425

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

The following table summarizes the geographic allocation of equipment trading revenues for the three and six months ended June 30, 2020 and 2019 based on the location of the sale (in thousands):



	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Total equipment trading revenues:
Asia	$	3,154	$	3,693	$	4,686	$	6,985
Europe	5,261		7,560		10,213		12,431
Americas	6,844		9,288		13,439		16,053
Bermuda	—		—		—		—
Other International	1,644		2,668		3,945		5,568
Total	$	16,903	$	23,209	$	32,283	$	41,037