Segment and Geographic Information

3 Months Ended

Sep. 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 September 30,
	2020										2019
	Equipment Leasing		Equipment Trading		Totals		Equipment Leasing		Equipment Trading		Totals
Total leasing revenues	$	325,279	$	2,478	$	327,757	$	336,088	$	580	$	336,668
Trading margin	—		3,869		3,869		—		4,150		4,150
Net gain on sale of leasing equipment	10,737		—		10,737		6,196		—		6,196
Depreciation and amortization expense	136,058		190		136,248		133,194		173		133,367
Interest and debt expense	62,138		638		62,776		77,058		343		77,401
Realized (gain) loss on derivative instruments, net	—		—		—		(536)		(3)		(539)
Income (loss) before income taxes⁽¹⁾	91,986		4,642		96,628		94,394		3,428		97,822
Purchases of leasing equipment and investments in finance leases⁽²⁾	$	134,637	$	—	$	134,637	$	10,532	$	—	$	10,532


	Nine Months Ended September 30,
	2020										2019
	Equipment Leasing		Equipment Trading		Totals		Equipment Leasing		Equipment Trading		Totals
Total leasing revenues	$	965,936	$	4,686	$	970,622	$	1,014,055	$	2,038	$	1,016,093
Trading margin	—		7,822		7,822		—		12,233		12,233
Net gain on sale of leasing equipment	19,351		—		19,351		22,184		—		22,184
Depreciation and amortization expense	401,692		543		402,235		402,797		527		403,324
Interest and debt expense	197,320		1,332		198,652		242,115		1,066		243,181
Realized (gain) loss on derivative instruments, net	(223)		(1)		(224)		(1,905)		(7)		(1,912)
Income (loss) before income taxes⁽¹⁾	248,346		8,468		256,814		285,154		10,278		295,432
Purchases of leasing equipment and investments in finance leases⁽²⁾	$	354,425	$	—	$	354,425	$	160,518	$	—	$	160,518

(1) Segment income before income taxes excludes unrealized gains or losses on derivative instruments and debt termination expense. The Company recorded an unrealized loss on derivative instruments of $0.3 million for the nine months ended September 30, 2020, and an unrealized loss on derivative instruments of $0.5 million and $2.8 million for the three and nine months ended September 30, 2019, respectively. The Company recorded debt termination expense of $24.3 million and $24.4 million for the three and nine months ended September 30, 2020 and $1.9 million and $2.4 million for the three and nine months ended September 30, 2019, respectively.

(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.


	September 30, 2020										December 31, 2019
	Equipment Leasing		Equipment Trading		Totals		Equipment Leasing		Equipment Trading		Totals
Equipment held for sale	$	75,266	$	29,657	$	104,923	$	89,755	$	24,749	$	114,504
Goodwill	220,864		15,801		236,665		220,864		15,801		236,665
Total assets	$	9,516,904	$	107,771	$	9,624,675	$	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 nine months ended September 30, 2020 and 2019 based on customers' primary domicile (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2020		2019		2020		2019
Total equipment leasing revenues:
Asia	$	115,084	$	133,787	$	353,464	$	405,592
Europe	175,629		164,197		503,106		490,190
Americas	25,055		28,701		81,668		90,391
Bermuda	450		515		1,331		1,732
Other International	11,539		9,468		31,053		28,188
Total	$	327,757	$	336,668	$	970,622	$	1,016,093

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 nine months ended September 30, 2020 and 2019 based on the location of the sale (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2020		2019		2020		2019
Total equipment trading revenues:
Asia	$	7,546	$	4,814	$	12,232	$	11,799
Europe	6,329		9,756		16,542		22,187
Americas	8,316		8,827		21,755		24,880
Bermuda	—		—		—		—
Other International	3,903		2,399		7,848		7,967
Total	$	26,094	$	25,796	$	58,377	$	66,833