HAMILTON, Bermuda, Feb 21, 2008 (BUSINESS WIRE) -- Textainer Group Holdings Limited (NYSE:TGH) (“Textainer”), the world’s largest lessor of intermodal containers based on fleet size, today reported results for the fourth quarter and the year ended December 31, 2007.
Total revenues for the quarter increased by $12.9 million, or 22%, to $70.6 million compared to $57.7 million in the prior year quarter primarily due to an increase in trading container sales proceeds of $9.6 million, or 377%, to $12.2 million compared to $2.6 million in the prior year quarter. EBITDA(1) for the quarter increased by $5.1 million, or 14%, to $41.2 million compared to $36.1 million in the prior year quarter.
Net income for the quarter was $15.0 million, which was a decrease of $2.0 million, or 12%, compared to $17.1 million in the prior year quarter. Textainer recorded $3.8 million more in unrealized losses on interest rate swaps, net in the fourth quarter of 2007 compared to the prior year quarter. Excluding this non-cash, non-operating item(1) Textainer’s net income would have increased 6% from $17.3 million in the fourth quarter of 2006 to $18.4 million in the fourth quarter of 2007. Textainer’s net income per diluted common share decreased by $0.12 per share, or 27%, to $0.32 per share for the fourth quarter of 2007 from $0.44 per share in the prior year quarter. The decrease in Textainer’s net income per diluted common share was partly due to the increase in Textainer’s weighted average number of shares outstanding for the fourth quarter of 2007 as a result of the additional shares issued in Textainer’s initial public offering in that quarter.
Total revenues for the year ended December 31, 2007 increased by $29.3 million, or 13%, to $255.8 million compared to $226.5 million for the year ended December 31, 2006. EBITDA(1) for the year ended December 31, 2007 increased by $21.6 million, or 16%, to $154.0 million compared to $132.4 million for the year ended December 31, 2006.
Net income for the year ended December 31, 2007 was $67.7 million, which was an increase of $11.4 million, or 20%, compared to $56.3 million for the prior year. Textainer recorded $7.7 million more in unrealized losses on interest rate swaps, net in the year ended December 31, 2007 compared to the prior year. Excluding this non-cash, non-operating item(1), Textainer’s net income would have increased $16.6 million, or 29%, from $56.7 million in 2006 to $73.3 million in 2007. Textainer’s net income per diluted common share increased by $0.20 per share, or 14%, to $1.66 per share for the year ended December 31, 2007 compared to $1.46 per share for the year ended December 31, 2006. Textainer’s net income for the year ended December 31, 2007 included a gain on disposal of $4.6 million that was recorded in the third quarter due to the reported loss by the U.S. military of approximately 28,000 on-lease containers. The U.S. military may report additional losses in the future, but we do not expect such losses, if any, to be of such a significant number of containers.
“I am very pleased with our 2007 fourth quarter and full year results. Overall demand for our containers through December was strong. Textainer’s utilization continued to remain above 93% during the fourth quarter of 2007,“ commented John A. Maccarone, President and CEO of Textainer.
He continued, “Our container resale segment had the best quarter in its history. Full year resale income before taxes of $10.3 million exceeded last year’s record results by $4.8 million, or 89%, compared to $5.5 million in the prior year.“
“For us, the major event in the fourth quarter was our initial public offering in October which allowed us to raise approximately $138 million, net of underwriting discounts and offering expenses. We used a portion of the proceeds to repay approximately $56 million that we had previously borrowed under our secured debt facility to fund our purchase of the exclusive rights to manage the approximately 500,000 TEU container fleet of Capital Lease, a competitor. We also used a portion of the proceeds to purchase, for $71 million, additional shares of Textainer Marine Containers Limited (TMCL), representing 50% of the shares formerly owned by Fortis Bank, our joint venture partner. For many years one of our primary goals has been to increase the size of our owned container fleet, which is now 40% of our total fleet of over 2 million TEU. We believe the return earned on investments in containers remains very attractive. The TMCL transaction was a significant step toward achieving this goal.“
Outlook
The initial outlook for 2008 is somewhat complex due to forecasts of lower GDP growth in many countries, including China. Lower China export growth in 2008 would reflect lower demand for imports in both North America and the European Union, and would also impact intra-Asia trade. There is also uncertainty about freight rates due to the large number of new vessels forecasted to enter service this year. If freight rates decline, and liner profitability weakens, there is a good chance that Textainer’s customers may decide to lease a larger portion of their total container requirements in 2008 than in the previous three years. The cost of borrowing is also increasing and some shipping lines may even find that their ability to borrow, regardless of cost, has been reduced. This is another reason which may cause shipping lines to lease a larger portion of their total container requirements in 2008.
Management believes that Textainer is well positioned to win a significant share of leased container opportunities in 2008 due to Textainer’s access to competitively priced capital, and container buying power. Textainer has already ordered 39,600 TEU of new containers for first quarter 2008 delivery. Management also believes that limited access to credit for some lessors may present acquisition opportunities for Textainer.
As we announced on January 3, 2008, Textainer re-entered the refrigerated container market, which we had exited in the 1990’s, because we perceive conditions in that market to now be favorable. Management believes that it can place at least $30 million worth of refrigerated containers into service on long term leases in 2008, which would increase Textainer’s capital expenditures by about 10% above its original budget. Textainer already has sales/marketing and operations/technical expertise in-house, and refrigerated containers are leased by our existing customer base, which is supported by Textainer’s current sales team. Therefore, the incremental overhead costs to Textainer for entering and operating in this market are expected to be minimal.
Textainer also expects that its Resale Division will continue to experience attractive pricing and relatively high sales volumes.
Dividend
On February 20, 2008, Textainer’s board of directors approved and declared a quarterly cash dividend of $0.21 per share on Textainer’s issued and outstanding common shares, payable on March 10, 2008 to shareholders of record as of March 3, 2008. This is an increase of $0.01 per share, or 5%, from the third quarter 2007 cash dividend of $0.20 per share.
Investors’ Webcast
Textainer will hold a conference call and a Webcast at 2:00 p.m. EST on Friday February 22, 2008 to discuss Textainer’s fiscal fourth quarter 2007 and full year results. An archive of the Webcast will be available one hour after the live call through February 22, 2008. The dial-in number for the conference call is 1-877-675-4757; outside the U.S. call 1-719-325-4930. To access the live Webcast or archive, please visit Textainer’s website at http://www.textainer.com.
About Textainer Group Holdings Limited
Textainer has operated since 1979 and is the world’s largest lessor of intermodal containers based on fleet size. We have a total of more than 1.3 million containers, representing over 2,000,000 twenty-foot equivalent units (TEU), in our owned and managed fleet. We lease containers to more than 400 shipping lines and other lessees. We principally lease dry freight containers, which are by far the most common of the three principal types of intermodal containers. We have also been one of the largest purchasers of new containers among container lessors over the last 10 years. We believe we are also one of the largest sellers of used containers, having sold an average of more than 50,000 containers per year for the last five years. We provide our services worldwide via a network of 14 regional and area offices and over 350 independent depots in more than 130 locations.
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 (i) that the return earned on investments in containers remains very attractive, (ii) that Textainer is on track to purchase more than the 39,600 TEU of new containers that Textainer has already ordered, (iii) that the U.S. military may report additional losses in the future, but management does not expect such losses, if any, to be of such a significant number of containers, (iv) Textainer is well positioned to win a significant share of leased container opportunities in 2008, (v) limited access to credit for some lessors may present acquisition opportunities for Textainer, (vi) Textainer can place at least $30 million worth of refrigerated containers into service on long term leases in 2008, (vii) regarding the expected incremental overhead costs for entering and operating in the refrigerated container market and (viii) regarding Textainer’s expectations for its Resale Division. Readers are cautioned that these forward-looking statements involve risks and uncertainties, are only predictions and may differ materially from actual future events or results. These risks and uncertainties include that gains and losses associated with the disposition of equipment may fluctuate; Textainer’s ability to finance continued purchase of containers; the demand for leased containers depends on many political and economic factors beyond Textainer’s control; lease and freight rates may decline; the demand for leased containers is partially tied to international trade; Textainer faces extensive competition in the container leasing industry; and the international nature of the container shipping industry exposes Textainer to numerous risks. For a discussion of such risks and uncertainties, see “Risk Factors” in Textainer’s final prospectus relating to Textainer’s initial public offering dated October 9, 2007 and filed with the Securities and Exchange Commission on October 11, 2007 and Form 6-K for the quarter ended September 30, 2007 and filed with the Securities and Exchange Commission on November 19, 2007.
Textainer’s views, estimates, plans and outlook as described within this document may change subsequent to the release of this statement. Textainer is under no obligation to modify or update any or all of the statements it has made herein despite any subsequent changes Textainer may make in its views, estimates, plans or outlook for the future.
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 2007 and 2006
(Unaudited)
(All currency expressed in United States dollars in thousands)
2007 2006
----------- ---------
Assets
Current assets:
Cash and cash equivalents $ 69,447 $ 41,163
Accounts receivable, net of allowance for
doubtful accounts of $3,160 and $2,320 in
2007 and 2006, respectively 44,688 41,348
Net investment in direct financing and sales-
type leases 9,116 6,182
Containers held for resale 3,798 3,964
Prepaid expenses 2,527 2,009
Deferred taxes 352 3,234
Due from affiliates, net 9 15
----------- ---------
Total current assets 129,937 97,915
Restricted cash 16,742 21,989
Containers, net 856,874 763,612
Net investment in direct financing and sales-
type leases 48,075 36,040
Fixed assets, net 1,230 1,340
Intangible assets, net 72,646 17,960
Interest rate swaps 127 4,172
Other assets 2,715 4,239
----------- ---------
Total assets $1,128,346 $947,267
=========== =========
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable $ 4,612 $ 4,618
Accrued expenses 11,115 13,167
Container contracts payable 28,397 32,927
Due to owners, net 18,019 6,570
Secured debt facility 6,585 --
Bonds payable 58,000 58,000
----------- ---------
Total current liabilities 126,728 115,282
Revolving credit facility 21,500 --
Secured debt facility 124,391 53,000
Bonds payable 370,938 430,167
Interest rate swaps 4,409 180
Long-term income tax payable, net 15,733 7,912
Deferred taxes 10,814 13,510
----------- ---------
Total liabilities 674,513 620,051
----------- ---------
Minority interest 49,717 85,922
----------- ---------
Shareholders’ equity:
Common shares, $0.01 par value. Authorized
140,000,000 shares; issued and outstanding
47,604,640 and 38,274,640 shares at 2007 and
2006, respectively 476 383
Additional paid-in capital 163,753 24,093
Notes receivable from shareholders (432) (1,180)
Accumulated other comprehensive income 579 380
Retained earnings 239,740 217,618
----------- ---------
Total shareholders’ equity 404,116 241,294
----------- ---------
Total liabilities and shareholders’ equity $1,128,346 $947,267
=========== =========
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Statements of Income
Three Months and Years Ended December 31, 2007 and 2006
(Unaudited)
(All currency expressed in United States dollars in thousands, except
per share amounts)
Three months ended Years ended
December 31, December 31,
------------------- -------------------
2007 2006 2007 2006
--------- -------- --------- ---------
Revenues:
Lease rental income $ 47,119 $47,406 $192,342 $186,093
Management fees 7,587 4,871 24,125 16,194
Trading container sales
proceeds 12,182 2,554 25,497 14,137
Gain on sale of containers,
net 3,749 2,735 13,544 9,558
Other, net (6) 152 284 480
-------- ------- -------- --------
Total revenues 70,631 57,718 255,792 226,462
-------- ------- -------- --------
Operating expenses:
Direct container expense 6,539 7,309 32,895 29,757
Cost of trading containers
sold 10,206 1,986 20,753 11,480
Depreciation expense 12,861 10,934 48,757 54,330
Amortization expense 1,699 565 3,677 1,023
General and administrative
expense 5,335 3,902 18,063 15,870
Short-term incentive
compensation expense 1,037 1,725 4,094 4,694
Long-term incentive
compensation expense 912 69 932 285
Bad debt expense, net (156) (73) 1,133 664
-------- ------- -------- --------
Total operating
expenses 38,433 26,417 130,304 118,103
-------- ------- -------- --------
Income from
operations 32,198 31,301 125,488 108,359
-------- ------- -------- --------
Other income (expense):
Interest expense (9,716) (8,869) (37,094) (33,083)
Interest income 1,299 651 3,422 2,286
Realized gains on interest
rate swaps, net 492 900 3,204 2,848
Unrealized losses on
interest rate swaps, net (4,197) (363) (8,274) (574)
Gain on disposal of lost
military containers, net - - 4,639 -
Other, net 97 411 56 243
-------- ------- -------- --------
Net other expense (12,025) (7,270) (34,047) (28,280)
-------- ------- -------- --------
Income before income
tax and minority
interest 20,173 24,031 91,441 80,079
-------- ------- -------- --------
Income tax expense (2,169) (1,349) (6,847) (4,299)
Minority interest expense (2,960) (5,607) (16,926) (19,499)
-------- ------- -------- --------
Net income $ 15,044 $17,075 $ 67,668 $ 56,281
======== ======= ======== ========
Net income per share:
Basic $ 0.32 $ 0.45 $ 1.66 $ 1.47
Diluted $ 0.32 $ 0.44 $ 1.66 $ 1.46
Weighted average shares
outstanding (in thousands):
Basic 47,605 38,255 40,800 38,186
Diluted 47,605 38,503 40,841 38,488
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years Ended December 31, 2007 and 2006
(Unaudited)
(All currency expressed in United States dollars in thousands)
2007 2006
---------- ----------
Cash flows from operating activities:
Net income $ 67,668 $ 56,281
---------- ----------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation expense 48,757 54,330
Provision for containers held for resale 2 (1)
Bad debt expense, net 1,133 664
Unrealized losses on interest rate swaps,
net 8,274 574
Amortization of debt issuance costs 1,395 1,405
Amortization of intangible assets 3,677 1,023
Gains on sale of containers and disposal
of lost military containers, net (18,183) (9,558)
Long-term incentive compensation expense 911 285
Minority interest expense 16,926 19,499
Decrease (increase) in:
Accounts receivable, net (4,473) 215
Containers held for resale 702 334
Prepaid expenses (411) 1,293
Due from affiliates, net 6 36
Other assets (383) (1,280)
(Decrease) increase in:
Accounts payable (6) (3,153)
Accrued expenses (1,357) (8,020)
Due to owners, net 11,449 559
Long-term income tax payable, net 7,821 7,912
Deferred taxes, net 526 1,030
---------- ----------
Total adjustments 76,766 67,147
---------- ----------
Net cash provided by operating
activities 144,434 123,428
---------- ----------
Cash flows from investing activities:
Purchase of additional shares of Textainer
Marine Containers Ltd (71,131) -
Purchase of containers and fixed assets (207,171) (104,818)
Purchase of intangible assets (56,000) (18,983)
Proceeds from sale of containers and fixed
assets 70,200 34,142
Receipt of principal payments on direct
finance and sales-type leases 7,594 6,456
---------- ----------
Net cash used in investing
activities (256,508) (83,203)
---------- ----------
Cash flows from financing activities:
Proceeds from revolving credit facility 49,500 -
Principal payments on revolving credit
facility (28,000) -
Proceeds from secured debt facility 236,000 74,000
Principal payments on secured debt facility (157,300) (21,000)
Principal payments on bonds payable (58,000) (58,000)
Decrease (increase) in restricted cash 5,247 (8,610)
Debt issuance costs (297) (1,339)
Initial public offering costs (2,905) -
Issuance of common shares 140,872 56
Repayments of notes receivable from
shareholders 1,623 658
Retirement of common shares - (97)
Dividends paid (46,581) (27,311)
---------- ----------
Net cash provided by (used in)
financing activities 140,159 (41,643)
---------- ----------
Effect of exchange rate changes 199 350
---------- ----------
Net increase (decrease) in cash and
cash equivalents 28,284 (1,068)
Cash and cash equivalents, beginning of the year 41,163 42,231
---------- ----------
Cash and cash equivalents, end of the year $ 69,447 $ 41,163
========== ==========
Supplemental disclosures of cash flow
information:
Cash paid during the year for:
Interest $ 32,478 $ 28,812
Income taxes $ 850 $ 981
Supplemental disclosures of noncash investing
activities:
(Decrease) increase in accrued container
purchases $ (4,530) $ 30,373
Containers placed in direct finance leases $ 23,488 $ 15,667
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES
Non-GAAP Reconciliation of Net Income to EBITDA and Net Income to Net
Income Excluding Unrealized Losses on Interest Rate Swaps, Net
Three Months and Years Ended December 31, 2007 and 2006
(Unaudited)
(All currency expressed in United States dollars in thousands, except
per share amounts)
(1) The following is a reconciliation of net income to EBITDA and a
reconciliation of net income to net income excluding unrealized
losses on interest rate swaps, net for the three months and years
ended December 31, 2007 and 2006. EBITDA (defined as net income,
before interest income and interest expense, realized and unrealized
(gains) losses on interest rate swaps, net, income tax expense,
minority interest expense and depreciation and amortization expense)
and net income excluding unrealized losses on interest rate swaps,
net (defined as net income, before unrealized losses on interest rate
swaps, net and the related impact on income tax expense and minority
interest expense) 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 income, 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. EBITDA and net income
excluding unrealized losses on interest rate swaps, net are presented
solely as supplemental disclosures. Management believes that EBITDA
may be a useful performance measure that is widely used within our
industry. EBITDA is not calculated in the same manner by all
companies and, accordingly, may not be an appropriate measure for
comparison. Management also believes that net income excluding
unrealized losses on interest rate swaps, net is useful in evaluating
our operating performance because unrealized losses on interest rate
swaps, net is a non-cash, non-operating item. We believe EBITDA and
net income excluding unrealized losses on interest rate swaps, net
both provide useful information on our earnings from ongoing
operations. We believe that EBITDA provides useful information on
our ability to service our long-term debt and other fixed obligations
and on our ability to fund our continued growth with internally
generated funds. EBITDA and net income excluding unrealized losses
on interest rate swaps, net 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;
-- EBITDA does not reflect interest expense or cash requirements
necessary to service interest or principal payments on our debt;
-- Although depreciation is a non-cash charge, the assets being
depreciated may be replaced in the future, and neither EBITDA or net
income excluding unrealized losses on interest rate swaps, net
reflects any cash requirements for such replacements;
-- They are not adjusted for all non-cash 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 Years Ended
December 31 December 31
----------------------------------------------------------------------
2007 2006 2007 2006
----------------------------------------------------------------------
Reconciliation of EBITDA:
----------------------------------------------------------------------
Net income $ 15,044 $17,075 $ 67,668 $ 56,281
----------------------------------------------------------------------
Adjustments:
----------------------------------------------------------------------
Interest income (1,299) (651) (3,422) (2,286)
----------------------------------------------------------------------
Interest expense 9,716 8,869 37,094 33,083
----------------------------------------------------------------------
Realized gains on interest
rate swaps, net (492) (900) (3,204) (2,848)
----------------------------------------------------------------------
Unrealized losses on interest
rate swaps, net 4,197 363 8,274 574
----------------------------------------------------------------------
Income tax expense 2,169 1,349 6,847 4,299
----------------------------------------------------------------------
Minority interest expense 2,960 5,607 16,926 19,499
----------------------------------------------------------------------
Depreciation expense 12,861 10,934 48,757 54,330
----------------------------------------------------------------------
Amortization expense 1,699 565 3,677 1,023
----------------------------------------------------------------------
Impact of reconciling items
on minority interest expense (5,677) (7,069) (28,595) (31,598)
--------------------------------=========-========-=========-=========
EBITDA $ 41,178 $36,142 $154,022 $132,357
--------------------------------=========-========-=========-=========
Reconciliation of net income
excluding unrealized losses on
interest rate swaps, net:
----------------------------------------------------------------------
Net income $ 15,044 $17,075 $ 67,668 $ 56,281
----------------------------------------------------------------------
Adjustments:
----------------------------------------------------------------------
Unrealized losses on interest
rate swaps, net 4,197 363 8,274 574
----------------------------------------------------------------------
Income tax expense - - - -
----------------------------------------------------------------------
Minority interest Expense (862) (152) (2,594) (151)
--------------------------------=========-========-=========-=========
Net income excluding unrealized
losses on interest rate swaps,
net $ 18,379 $17,286 $ 73,348 $ 56,704
--------------------------------=========-========-=========-=========
SOURCE: Textainer Group Holdings Limited
Textainer Group Holdings Limited Mr. Tom Gallo, 415-658-8227 Corporate Compliance Officer ir@textainer.com
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