Financial and Business Summaries
-
Lease rental income increased
$0.9 million (or 0.9 percent) from the prior quarter to$107.6 million ; -
Container impairments declined
$10.3 million (or 73 percent) from the prior quarter to$3.8 million (or$0.07 per diluted common share) for the quarter; -
Gains on sale of containers, net increased
$0.7 million (or 22 percent) from the prior quarter to$4.0 million (or$0.07 per diluted common share) for the quarter; -
New container prices are above
$2,200 per CEU, 75% higher than one year ago; -
Used container prices have increased more than 50% since the low point
in
August 2016 ; -
Net loss attributable to
Textainer Group Holdings Limited common shareholders of$7.0 million for the quarter, or$0.12 per diluted common share, an increase of$6.8 million from the prior quarter; -
Adjusted net loss (1) of
$9.1 million for the quarter, or$0.16 per diluted common share, a decrease of$4.3 million (or 32 percent) from the prior quarter; and - Utilization averaged 95.0 percent for the quarter and is currently at 96.0 percent.
“We saw our first sequential growth in lease revenue in more than two
years. That growth, combined with a quarter-to-quarter reduction in
container impairments and increase in gains on container sales, is
further evidence of the strong improvement that we are experiencing in
our industry. Both new and used container prices have increased
dramatically since the third quarter last year. Additionally, the lease
rates for both new and depot container lease-outs have increased even
faster than container prices indicating material improvement in lease
yields. Our utilization continues to improve as we lease out depot
inventory and containers recovered from Hanjin,” stated Philip K.
Brewer, President and Chief Executive Officer of
“With respect to the bankruptcy of
“During the quarter, we amended certain covenants of our bank financing facilities. Additionally, we set up a new facility to retire existing asset backed notes and are now evaluating opportunities to expand our financing sources,” concluded Mr. Brewer.
Key Financial Information (in thousands except for per share and TEU amounts):
Q1 QTD |
Q4 QTD 2016 |
Q1 QTD 2016 |
|||||||||||||
Lease rental income | $ | 107,617 | $ | 106,709 | $ | 122,348 | |||||||||
Total revenues | $ | 116,687 | $ | 120,200 | $ | 128,620 | |||||||||
Income from operations | $ | 20,039 | $ | 9,783 | $ | 29,374 | |||||||||
Net loss attributable to Textainer Group Holdings Limited common shareholders |
$ | (6,974 | ) | $ | (132 | ) | $ | (3,737 | ) | ||||||
Net loss attributable to Textainer Group Holdings Limited common shareholders per diluted common share |
$ | (0.12 | ) | $ | - | $ | (0.07 | ) | |||||||
Adjusted net (loss) income (1) | $ | (9,067 | ) | $ | (13,395 | ) | $ | 6,022 | |||||||
Adjusted net (loss) income per diluted common share (1) | $ | (0.16 | ) | $ | (0.24 | ) | $ | 0.11 | |||||||
Adjusted EBITDA (1) | $ | 82,112 | $ | 86,403 | $ | 96,235 | |||||||||
Average fleet utilization | 95.0 | % | 94.3 | % | 94.6 | % | |||||||||
Total fleet size at end of period (TEU) | 3,054,198 | 3,142,556 | 3,164,719 | ||||||||||||
Owned percentage of total fleet at end of period | 81.3 | % | 81.0 | % | 80.6 | % |
(a) | Certain amounts for the period ended December 31, 2016 have been restated for immaterial corrections of identified errors to reverse gains on sale of containers, net that were deemed uncollectible and to properly account for lease concessions. | |
(b) | Certain amounts for the period ended March 31, 2016 have been restated for immaterial corrections of identified errors pertaining to the classification of certain leases and to reverse gains on sale of containers, net that were deemed uncollectible. |
“Adjusted net (loss) income” and “adjusted EBITDA” are Non-GAAP Measures
that are reconciled to GAAP measures in footnote 1. “Adjusted net (loss)
income” is defined as net (loss) income attributable to
First-Quarter Results
Lease rental income decreased
In addition to the above-mentioned factors, Textainer’s first quarter
results were adversely impacted by an increase of
On the positive side, container impairments decreased
Outlook
“We believe the positive trends apparent in the first quarter will
continue over the summer. The quarter-to-quarter improvement in lease
revenue should continue due to higher container lease rates and revenue
from the reactivation of containers formerly leased to
“New container prices have declined slightly in the preceding weeks
consistent with declines in steel prices, but still remain over
“The outlook for the shipping lines is also improving. Freight rates are
much higher than they were one year ago and the latest indications are
that spot rates are firming up on deep sea trades. The commencement of
operations of the three major alliances at the beginning of
“We believe the limited inventory of new and depot containers will
continue to support lease rates at today’s attractive levels. In the
coming quarters, we expect to receive the proceeds from our
Investors’ Conference Call and Webcast
About
Important Cautionary Information Regarding Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of U.S. securities laws. Forward-looking statements include
statements that are not statements of historical facts and include,
without limitation, statements regarding: (i) Textainer’s expectation
that it will receive initial insurance payments of its
Textainer’s views, estimates, plans and outlook as described within this
document may change subsequent to the release of this press release.
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES |
||||||||||||||||||||
Condensed Consolidated Statements of Comprehensive Loss |
||||||||||||||||||||
Three Months ended March 31, 2017 and 2016 |
||||||||||||||||||||
(Unaudited) |
||||||||||||||||||||
(All currency expressed in United States dollars in thousands, except per share amounts) |
||||||||||||||||||||
Three Months Ended March 31, |
||||||||||||||||||||
2017 | 2016 (1) | |||||||||||||||||||
Revenues: | ||||||||||||||||||||
Lease rental income | $ | 107,617 | $ | 122,348 | ||||||||||||||||
Management fees | 3,222 | 3,344 | ||||||||||||||||||
Trading container sales proceeds | 1,800 | 1,902 | ||||||||||||||||||
Gains on sale of containers, net | 4,048 | 1,026 | ||||||||||||||||||
Total revenues | 116,687 | 128,620 | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||
Direct container expense | 19,659 | 14,629 | ||||||||||||||||||
Cost of trading containers sold | 1,289 | 2,644 | ||||||||||||||||||
Depreciation expense | 60,608 | 52,611 | ||||||||||||||||||
Container impairment | 3,811 | 17,292 | ||||||||||||||||||
Amortization expense | 948 | 1,374 | ||||||||||||||||||
General and administrative expense | 7,345 | 7,166 | ||||||||||||||||||
Short-term incentive compensation expense | 1,360 | 773 | ||||||||||||||||||
Long-term incentive compensation expense | 1,376 | 1,608 | ||||||||||||||||||
Bad debt expense, net | 252 | 1,149 | ||||||||||||||||||
Total operating expenses | 96,648 | 99,246 | ||||||||||||||||||
Income from operations | 20,039 | 29,374 | ||||||||||||||||||
Other (expense) income: | ||||||||||||||||||||
Interest expense | (28,913 | ) | (19,965 | ) | ||||||||||||||||
Interest income | 128 | 76 | ||||||||||||||||||
Realized losses on interest rate swaps, collars and caps, net |
(1,162 | ) | (2,353 | ) | ||||||||||||||||
Unrealized gains (losses) on interest rate swaps, collars and caps, net |
2,294 | (11,177 | ) | |||||||||||||||||
Other, net | (14 | ) | (8 | ) | ||||||||||||||||
Net other expense | (27,667 | ) | (33,427 | ) | ||||||||||||||||
Loss before income tax and noncontrolling interests |
(7,628 | ) | (4,053 | ) | ||||||||||||||||
Income tax expense | (447 | ) | (20 | ) | ||||||||||||||||
Net loss | (8,075 | ) | (4,073 | ) | ||||||||||||||||
Less: Net loss attributable to the noncontrolling interests |
1,101 | 336 | ||||||||||||||||||
Net loss attributable to Textainer Group Holdings Limited common shareholders |
$ | (6,974 | ) | $ | (3,737 | ) | ||||||||||||||
Net loss attributable to Textainer Group Holdings Limited common shareholders per share: |
||||||||||||||||||||
Basic | $ | (0.12 | ) | $ | (0.07 | ) | ||||||||||||||
Diluted | $ | (0.12 | ) | $ | (0.07 | ) | ||||||||||||||
Weighted average shares outstanding (in thousands): | ||||||||||||||||||||
Basic | 56,790 | 56,570 | ||||||||||||||||||
Diluted | 56,790 | 56,570 | ||||||||||||||||||
Other comprehensive loss: | ||||||||||||||||||||
Foreign currency translation adjustments | 32 | (113 | ) | |||||||||||||||||
Comprehensive loss | (8,043 | ) | (4,186 | ) | ||||||||||||||||
Comprehensive loss attributable to the noncontrolling interests |
1,101 | 336 | ||||||||||||||||||
Comprehensive loss attributable to Textainer Group Holdings Limited common shareholders |
$ | (6,942 | ) | $ | (3,850 | ) |
(1) Certain amounts for the period ended March 31, 2016 have been restated for immaterial corrections of identified errors pertaining to the classification of certain leases and to reverse gains on sale of containers, net that were deemed uncollectible. |
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES |
|||||||||
Condensed Consolidated Balance Sheets |
|||||||||
March 31, 2017 and December 31, 2016 |
|||||||||
(Unaudited) |
|||||||||
(All currency expressed in United States dollars in thousands) |
|||||||||
2017 | 2016 (1) | ||||||||
Assets | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 94,018 | $ | 84,045 | |||||
Accounts receivable, net of allowance for doubtful accounts of $31,875 and $31,844 in 2017 and 2016, respectively |
69,896 | 76,547 | |||||||
Net investment in direct financing and sales-type leases | 61,629 | 64,951 | |||||||
Trading containers | 3,673 | 4,363 | |||||||
Containers held for sale | 32,689 | 25,513 | |||||||
Prepaid expenses and other current assets | 14,124 | 13,584 | |||||||
Insurance receivable | 63,001 | 44,785 | |||||||
Due from affiliates, net |
1,064 | 869 | |||||||
Total current assets | 340,094 | 314,657 | |||||||
Restricted cash | 68,835 | 58,078 | |||||||
Containers, net of accumulated depreciation of $1,035,770 and $990,784 at 2017 and 2016, respectively |
3,617,954 | 3,717,542 | |||||||
Net investment in direct financing and sales-type leases | 161,411 | 172,283 | |||||||
Fixed assets, net of accumulated depreciation of $10,309 and $10,136 at 2017 and 2016, respectively |
1,814 | 1,993 | |||||||
Intangible assets, net of accumulated amortization of $41,710 and $40,762 at 2017 and 2016, respectively |
14,249 | 15,197 | |||||||
Interest rate swaps, collars and caps | 6,283 | 4,816 | |||||||
Deferred taxes | 1,385 | 1,385 | |||||||
Other assets | 7,517 | 8,075 | |||||||
Total assets | $ | 4,219,542 | $ | 4,294,026 | |||||
Liabilities and Equity | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 11,686 | $ | 12,060 | |||||
Accrued expenses | 15,803 | 9,721 | |||||||
Container contracts payable | 4,660 | 11,990 | |||||||
Other liabilities | 257 | 265 | |||||||
Due to owners, net | 14,297 | 18,132 | |||||||
Credit facility | 30,078 | 31,822 | |||||||
Secured debt facility | 86,413 | 83,518 | |||||||
Term loan | 30,407 | 30,771 | |||||||
Bonds payable | 419,729 | 58,970 | |||||||
Total current liabilities | 613,330 | 257,249 | |||||||
Credit facilities | 1,059,396 | 1,085,196 | |||||||
Secured debt facilities | 997,357 | 1,008,607 | |||||||
Term loan | 353,222 | 363,961 | |||||||
Bonds payable | - | 375,452 | |||||||
Interest rate swaps, collars and caps | 377 | 1,204 | |||||||
Income tax payable | 8,663 | 9,076 | |||||||
Deferred taxes | 6,657 | 6,237 | |||||||
Other liabilities | 2,200 | 2,259 | |||||||
Total liabilities | 3,041,202 | 3,109,241 | |||||||
Equity: | |||||||||
Textainer Group Holdings Limited shareholders’ equity: | |||||||||
Common shares, $0.01 par value. Authorized 140,000,000 shares; 57,424,309 shares issued and 56,794,309 shares outstanding at 2017; 57,417,119 shares issued and 56,787,119 shares outstanding at 2016 |
575 | 575 | |||||||
Additional paid-in capital | 392,377 | 390,780 | |||||||
Treasury shares, at cost, 630,000 shares | (9,149 | ) | (9,149 | ) | |||||
Accumulated other comprehensive income | (484 | ) | (516 | ) | |||||
Retained earnings | 737,263 | 744,236 | |||||||
Total Textainer Group Holdings Limited shareholders’ equity | 1,120,582 | 1,125,926 | |||||||
Noncontrolling interest | 57,758 | 58,859 | |||||||
Total equity | 1,178,340 | 1,184,785 | |||||||
Total liabilities and equity | $ | 4,219,542 | $ | 4,294,026 |
(1) Certain amounts as of December 31, 2016 have been restated for immaterial corrections of identified errors to reverse gains on sale of containers, net that were deemed uncollectible and to properly account for lease concessions. |
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES | ||||||||
Condensed Consolidated Statements of Cash Flows |
||||||||
Three months ended March 31, 2017 and 2016 |
||||||||
(Unaudited) |
||||||||
(All currency expressed in United States dollars in thousands) |
||||||||
2017 | 2016 (1) | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (8,075 | ) | $ | (4,073 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Depreciation expense | 60,608 | 52,611 | ||||||
Container impairment | 3,811 | 17,292 | ||||||
Bad debt expense, net | 252 | 1,149 | ||||||
Unrealized (gains) losses on interest rate swaps, collars and caps, net | (2,294 | ) | 11,177 | |||||
Amortization of debt issuance costs and accretion of bond discount | 4,639 | 1,886 | ||||||
Amortization of intangible assets | 948 | 1,374 | ||||||
Gains on sale of containers, net | (4,048 | ) | (1,026 | ) | ||||
Share-based compensation expense | 1,597 | 1,763 | ||||||
Changes in operating assets and liabilities | (10,743 | ) | (11,271 | ) | ||||
Total adjustments | 54,770 | 74,955 | ||||||
Net cash provided by operating activities | 46,695 | 70,882 | ||||||
Cash flows from investing activities: | ||||||||
Purchase of containers and fixed assets | (11,487 | ) | (144,699 | ) | ||||
Proceeds from sale of containers and fixed assets | 34,330 | 32,291 | ||||||
Receipt of payments on direct financing and sales-type leases, net of income earned | 17,616 | 22,162 | ||||||
Net cash provided by (used in) investing activities | 40,459 | (90,246 | ) | |||||
Cash flows from financing activities: | ||||||||
Proceeds from credit facilities | - | 110,000 | ||||||
Principal payments on credit facilities | (24,583 | ) | (17,857 | ) | ||||
Proceeds from secured debt facilities | 30,000 | - | ||||||
Principal payments on secured debt facilities | (39,006 | ) | (32,800 | ) | ||||
Principal payments on term loan | (10,329 | ) | (9,900 | ) | ||||
Principal payments on bonds payable | (15,058 | ) | (15,058 | ) | ||||
Increase in restricted cash | (10,757 | ) | (1,266 | ) | ||||
Debt issuance costs | (7,480 | ) | — | |||||
Net tax benefit from share-based compensation awards | — | (109 | ) | |||||
Dividends paid to Textainer Group Holdings Limited shareholders | — | (13,481 | ) | |||||
Net cash used in (provided by) financing activities | (77,213 | ) | 19,529 | |||||
Effect of exchange rate changes | 32 | (113 | ) | |||||
Net increase in cash and cash equivalents | 9,973 | 52 | ||||||
Cash and cash equivalents, beginning of the year | 84,045 | 115,594 | ||||||
Cash and cash equivalents, end of the period | $ | 94,018 | $ | 115,646 |
(1) Certain amounts for the period ended March 31, 2016 have been restated for immaterial corrections of identified errors pertaining to the classification of certain leases and to reverse gains on sale of containers, net that were deemed uncollectible. |
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES |
||||
Reconciliation of GAAP financial measures to non-GAAP financial measures | ||||
Three Months Ended March 31, 2017 and 2016 | ||||
(Unaudited) | ||||
(All currency expressed in United States dollars in thousands, except per share amounts) |
||||
(1) | The following is a reconciliation of certain GAAP measures to non-GAAP financial measures (such items listed in (a) to (d) below and defined as “Non-GAAP Measures”) for the three months ended March 31, 2017 and 2016, including: | |||
(a) | net loss attributable to Textainer Group Holdings Limited common shareholders to adjusted EBITDA (Adjusted EBITDA defined as net loss attributable to Textainer Group Holdings Limited common shareholders before interest income and expense, realized and unrealized (gains) losses on interest rate swaps, collars and caps, net, income tax expense, net loss attributable to the noncontrolling interests (“NCI”), depreciation expense, container impairment, amortization expense and the related impact of reconciling items on net loss attributable to the NCI); | |||
(b) | net cash provided by operating activities to Adjusted EBITDA; | |||
(c) | net loss attributable to Textainer Group Holdings Limited common shareholders to adjusted net (loss) income (defined as net loss attributable to Textainer Group Holdings Limited common shareholders before unrealized (gains) losses on interest rate swaps, collars and caps, net, the related impact of reconciling items on income tax expense and net loss attributable to the NCI); and | |||
(d) | net loss attributable to Textainer Group Holdings Limited common shareholders per diluted common share to adjusted net loss per diluted common share (defined as net loss attributable to Textainer Group Holdings Limited common shareholders per diluted common share before unrealized (gains) losses on interest rate swaps, collars and caps, net, the related impact of reconciling items on income tax expense and net loss attributable to the NCI). |
Non-GAAP Measures are not financial measures calculated in accordance
with U.S. generally accepted accounting principles (“GAAP”) and should
not be considered as an alternative to net loss, income from operations
or any other performance measures derived in accordance with GAAP or as
an alternative to cash flows from operating activities as a measure of
our liquidity. Non-GAAP Measures are presented solely as supplemental
disclosures. Management believes that adjusted EBITDA may be a useful
performance measure that is widely used within our industry and adjusted
net (loss) income may be a useful performance measure because
Management also believes that adjusted net income and adjusted net (loss) income per diluted common share are useful in evaluating our operating performance because unrealized (gains) losses on interest rate swaps, collars and caps, net is a noncash, non-operating item. We believe Non-GAAP Measures provide useful information on our earnings from ongoing operations. We believe that adjusted EBITDA provides useful information on our ability to service our long-term debt and other fixed obligations and on our ability to fund our expected growth with internally generated funds. Non-GAAP Measures have limitations as analytical tools, and you should not consider either of them in isolation, or as a substitute for analysis of our operating results or cash flows as reported under GAAP. Some of these limitations are:
- They do not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;
- They do not reflect changes in, or cash requirements for, our working capital needs;
- Adjusted EBITDA does not reflect interest expense or cash requirements necessary to service interest or principal payments on our debt;
- Although depreciation expense and container impairment is a noncash charge, the assets being depreciated may be replaced in the future, and neither adjusted EBITDA, adjusted net (loss) income or adjusted net (loss) income per diluted common share reflects any cash requirements for such replacements;
- They are not adjusted for all noncash income or expense items that are reflected in our statements of cash flows; and
- Other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures.
Three Months Ended | |||||||||||
March 31, | |||||||||||
2017 | 2016 (1) | ||||||||||
(Dollars in thousands) | |||||||||||
(Unaudited) | |||||||||||
Reconciliation of adjusted net loss: | |||||||||||
Net loss attributable to Textainer Group Holdings Limited common shareholders |
$ | (6,974 | ) | $ | (3,737 | ) | |||||
Adjustments: | |||||||||||
Unrealized (gains) losses on interest rate swaps, collars and caps, net |
(2,294 | ) | 11,177 | ||||||||
Impact of reconciling items on income tax expense |
38 | (205 | ) | ||||||||
Impact of reconciling items on net loss attributable to the noncontrolling interests |
163 | (1,213 | ) | ||||||||
Adjusted net loss (income) | $ | (9,067 | ) | $ | 6,022 | ||||||
Reconciliation of adjusted net (loss) income per diluted common share: |
|||||||||||
Net loss attributable to Textainer Group Holdings Limited common shareholders per diluted common share |
$ | (0.12 | ) | $ | (0.07 | ) | |||||
Adjustments: | |||||||||||
Unrealized (gains) losses on interest rate swaps, collars and caps, net | (0.04 | ) | 0.20 | ||||||||
Impact of reconciling items on income tax expense | — | — | |||||||||
Impact of reconciling items on net loss attributable to the noncontrolling interests |
— | (0.02 | ) | ||||||||
Adjusted net (loss) income per diluted common share | $ | (0.16 | ) | $ | 0.11 |
(1) Certain amounts for the period ended March 31, 2016 have been restated for immaterial corrections of identified errors pertaining to the classification of certain leases and to reverse gains on sale of containers, net that were deemed uncollectible. |
Three Months Ended | |||||||||||
March 31, | |||||||||||
2017 | 2016 (1) | ||||||||||
(Dollars in thousands) | |||||||||||
(Unaudited) | |||||||||||
Reconciliation of adjusted EBITDA: |
|||||||||||
Net loss attributable to Textainer Group Holdings Limited common shareholders |
$ | (6,974 | ) | $ | (3,737 | ) | |||||
Adjustments: | |||||||||||
Interest income | (128 | ) | (76 | ) | |||||||
Interest expense | 28,913 | 19,965 | |||||||||
Realized losses on interest rate swaps, collars and caps, net |
1,162 | 2,353 | |||||||||
Unrealized (gains) losses on interest rate swaps, collars and caps, net |
(2,294 | ) | 11,177 | ||||||||
Income tax expense | 447 | 20 | |||||||||
Net loss attributable to the noncontrolling interests | (1,101 | ) | (336 | ) | |||||||
Depreciation expense | 60,608 | 52,611 | |||||||||
Container impairment | 3,811 | 17,292 | |||||||||
Amortization expense | 948 | 1,374 | |||||||||
Impact of reconciling items on net loss attributable to the noncontrolling interests |
(3,280 | ) | (4,408 | ) | |||||||
Adjusted EBITDA | $ | 82,112 | $ | 96,235 | |||||||
Net cash provided by operating activities | $ | 46,695 | $ | 70,882 | |||||||
Adjustments: | |||||||||||
Bad debt expense, net | (252 | ) | (1,149 | ) | |||||||
Amortization of debt issuance costs and accretion of bond discount |
(4,639 | ) | (1,886 | ) | |||||||
Gains on sale of containers, net | 4,048 | 1,026 | |||||||||
Share-based compensation expense | (1,597 | ) | (1,763 | ) | |||||||
Interest income | (128 | ) | (76 | ) | |||||||
Interest expense | 28,913 | 19,965 | |||||||||
Realized losses on interest rate swaps, collars and caps, net |
1,162 | 2,353 | |||||||||
Income tax expense | 447 | 20 | |||||||||
Changes in operating assets and liabilities | 10,743 | 11,271 | |||||||||
Impact of reconciling items on net loss attributable to the noncontrolling interests |
(3,280 | ) | (4,408 | ) | |||||||
Adjusted EBITDA | $ | 82,112 | $ | 96,235 |
(1) Certain amounts for the period ended March 31, 2016 have been restated for immaterial corrections of identified errors pertaining to the classification of certain leases and to reverse gains on sale of containers, net that were deemed uncollectible. |
View source version on businesswire.com: http://www.businesswire.com/news/home/20170504005389/en/
Source:
Textainer Group Holdings Limited
Hilliard C. Terry, III, +1
415-658-8214
Executive Vice President and Chief Financial Officer
ir@textainer.com