tgh-6k_20160809.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

August 9, 2016

Commission File Number 001-33725

 

Textainer Group Holdings Limited

(Translation of Registrant’s name into English)

 

Century House

16 Par-La-Ville Road

Hamilton HM 08

Bermuda

(441) 296-2500

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F   x     Form 40-F   o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):   o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):   o

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.    Yes   o     No   x

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): Not applicable

 

 

 

 


This report contains a copy of the press release entitled “Textainer Group Holdings Limited Reports Second-Quarter Results and Declares Quarterly Dividend,” dated August 9, 2016.

Exhibit

1.

Press Release dated August 9, 2016


Textainer Group Holdings Limited

Reports Second-Quarter Results

and Declares Quarterly Dividend

HAMILTON, Bermuda – (BUSINESS WIRE) –August 9, 2016 – Textainer Group Holdings Limited (NYSE: TGH) (“Textainer”, “the Company”, “we” and “our”), one of the world’s largest lessors of intermodal containers, reported second-quarter 2016 results.

Financial and Business Highlights

 

·

Lease rental income of $120.2 million for the quarter, a decrease of 6.3 percent from the prior year quarter;

 

·

Net loss attributable to Textainer Group Holdings Limited common shareholders of $1.5 million for the quarter, or $0.03 per diluted common share;

 

·

Adjusted net income (1) of $3.0 million for the quarter, or $0.05 per diluted common share;

 

·

We recorded $19.5 million of container impairments resulting from a write down of our inventory of containers that are pending disposal. Excluding these non-cash impairments, adjusted net income would have been $21.8 million, or $0.38 per diluted share;

 

·

Utilization improved 1.0 percentage point from its low point in the quarter and is currently at 95.1 percent;

 

·

Continued expansion with $432 million of capex invested year-to-date in 2016; and

 

·

A quarterly dividend of $0.03 per share was declared.

“Market conditions remain very challenging and the second quarter was no exception. The main driver of our decline in performance remains the low prices for new and used containers which results in reductions in lease rental income and impairments on containers held for sale,” stated Philip K. Brewer, President and Chief Executive Officer of Textainer Group Holdings Limited. “It is worth noting that although lease rental income declined from the year ago quarter, it declined far less than the drop in new container rental rates due largely to the structure of our leases and the long-term nature of our fleet.”  

“On the positive side, we saw an increase in new container prices during the quarter, a strong pick-up in demand and we continued to generate strong cash flow from operations.  New prices hit a historic low of approximately $1,200 on 20’ dry freight containers early in the year.  Prices increased by 20% to 25% during the second quarter but have subsequently declined somewhat. Low new container prices combined with a large supply of sales containers continues to put pressure on used container prices.”

“Our utilization improved and currently stands at 95.1%.  We saw stronger lease-out demand during the second quarter than we had anticipated, with the three highest lease-out booking weeks in our history all occurring during the quarter.  Our unbooked depot inventory decreased by 40% from the beginning of the second quarter until today and our utilization increased by 1.0 percentage point which is a significant increase over such a short period and containers have been picked up faster than we expected. The strength of our utilization is due to many factors: 85% of our fleet is subject to long-term and finance leases only 8.5% of which mature in 2016, the structure of our leases require a majority of containers to be returned in Asia where lease-out demand is strongest, and we dispose of containers when doing so is the right economic decision even if this results in high impairments. Additionally, we have invested $423 million year-to-date, purchasing more than 250,000 TEU of attractively priced containers,” concluded Mr. Brewer.


Key Financial Information (in thousands except for per share and TEU amounts):

 

 

Q2 QTD

 

 

Q2 YTD

 

 

 

2016

 

 

2015

 

 

% Change

 

 

2016

 

 

2015

 

 

% Change

 

Total revenues

 

$

127,449

 

 

$

138,165

 

 

 

-7.8

%

 

$

256,363

 

 

$

277,316

 

 

 

-7.6

%

Income from operations

 

$

26,832

 

 

$

62,839

 

 

 

-57.3

%

 

$

56,562

 

 

$

128,922

 

 

 

-56.1

%

Net (loss) income attributable to Textainer Group Holdings

   Limited common shareholders

 

$

(1,457

)

 

$

40,261

 

 

 

-103.6

%

 

$

(4,851

)

 

$

75,566

 

 

 

-106.4

%

Net (loss) income attributable to Textainer Group Holdings

   Limited common shareholders per diluted common share

 

$

(0.03

)

 

$

0.70

 

 

 

-104.3

%

 

$

(0.09

)

 

$

1.32

 

 

 

-106.8

%

Adjusted net income (1)

 

$

2,959

 

 

$

37,725

 

 

 

-92.2

%

 

$

9,324

 

 

$

78,273

 

 

 

-88.1

%

Adjusted net income per diluted common share (1)

 

$

0.05

 

 

$

0.66

 

 

 

-92.4

%

 

$

0.16

 

 

$

1.37

 

 

 

-88.3

%

Adjusted EBITDA (1)

 

$

95,622

 

 

$

111,027

 

 

 

-13.9

%

 

$

192,151

 

 

$

221,846

 

 

 

-13.4

%

Net cash provided by operating activities

 

 

 

 

 

 

 

 

 

 

 

 

 

$

149,448

 

 

$

177,187

 

 

 

-15.7

%

Average fleet utilization

 

 

94.7

%

 

 

97.3

%

 

 

-2.7

%

 

 

94.6

%

 

 

97.6

%

 

 

-3.1

%

Total fleet size at end of period (TEU)

 

 

3,195,378

 

 

 

3,276,509

 

 

 

-2.5

%

 

 

 

 

 

 

 

 

 

 

 

 

Owned percentage of total fleet at end of period

 

 

81.0

%

 

 

79.7

%

 

 

1.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

“Adjusted net income” and “adjusted EBITDA” are Non-GAAP Measures that are reconciled to GAAP measures in footnote 1. “Adjusted net income” is defined as net (loss) income attributable to Textainer Group Holdings Limited common shareholders before charges to interest expense for the write-off of unamortized debt issuance costs related to refinancing of debt, unrealized losses (gains) on interest rate swaps, collars and caps, net and the related impact of reconciling items on income tax expense and net income (loss) attributable to the non-controlling interests (“NCI”). “Adjusted EBITDA” is defined as net (loss) income attributable to Textainer Group Holdings Limited common shareholders before interest income and expense, realized and unrealized losses (gains) on interest rate swaps, collars and caps, net, income tax expense, net income (loss) attributable to the NCI, depreciation expense, container impairment, amortization expense and the related impact of reconciling items on net income (loss) attributable to the NCI. Footnote 1 provides certain qualifications and limitations on the use of Non-GAAP Measures.

Second-Quarter Results

Textainer’s second quarter results compared to the prior year quarter were adversely impacted primarily by an increase in container impairments due to a decrease in used container prices and an increase in the quantity of containers designated for disposal.  Depreciation expense increased primarily due to a reduction in the 40’ high-cube container residual value in 2015 and an increase in the size of our owned refrigerated container fleet.  Furthermore, lease rental income decreased due to a decrease in rental rates and lower utilization, direct container expense increased primarily due to an increase in storage costs resulting from lower utilization and higher storage rates and we had a net loss on trading containers in the second quarter of 2016 compared to a net gain in 2015 primarily due to lower sales prices.

During the second-quarter of 2016, $5.5 million insurance proceeds was received from a claim on a lessee that went into default in August 2015, which was recorded as a reduction to insurance receivable.

Dividend

On August 4, 2016, Textainer’s board of directors approved and declared a quarterly cash dividend of $0.03 per share on Textainer’s issued and outstanding common shares, payable on August 30, 2016 to shareholders of record as of August 19, 2016.

“We declared a dividend of $0.03 per share, a significant decline from the prior dividend level and an amount equal to 60% of this quarter’s adjusted net income(1). While we are not happy about reducing our dividend, our Board believes paying a lower dividend in order to preserve cash during these challenging times is in the best interests of our shareholders and the company and helps ensure that we have the resources to take advantage of opportunities that today’s challenging conditions may produce,” commented Mr. Brewer.

Based on the information available today, this distribution will qualify as a return of capital rather than a taxable dividend for U.S. tax purposes. Investors should consult with a tax adviser to determine the proper tax treatment of this distribution.

Outlook

“Based on recent discussions with our customers, we believe the strong increase in demand for dry containers we experienced in the second quarter will continue into the third quarter although possibly at a slightly reduced pace. We do not expect a significant improvement in new container prices occurring prior to year-end.  As long as new container prices remain low, rental rates for new, depot and lease-renewal containers will remain under pressure and lease rental income can be expected to decline,” stated Mr. Brewer.  “The credit quality of certain shipping lines is a major concern.  While consolidation has strengthened some lines, the overall credit risk of our customer base has increased due to weak demand and low freight rates.”  


New dry freight container production could be less than 1.5 million TEU, compared to 2.5 million TEU produced last year, which is approximately equal to the quantity of containers disposed annually.  Refrigerated container production is also expected to be below last year’s record level.  This means the world’s container fleet is unlikely to grow and may decline this year.  As containers are not in an oversupply situation, we expect our utilization to continue to improve in the third quarter. Furthermore, should there be an unexpected spike in demand as has often happened in the past, the container leasing market could strengthen quickly.”

“We benefited this quarter by purchasing many containers at attractive prices.  These containers were leased out at terms which were better than the returns generated by containers leased during the preceding six months and they can be expected to perform very well over their useful lives as they depreciate,” concluded Mr. Brewer.

Investors’ Webcast

Textainer will hold a conference call and a Webcast at 11:00 am EDT on Tuesday, August 9, 2016 to discuss Textainer’s second quarter 2016 results. An archive of the Webcast will be available one hour after the live call through August 8, 2017. For callers in the U.S. the dial-in number for the conference call is 1-888-895-5271; for callers outside the U.S. the dial-in number for the conference call is 1-847-619-6547. The participant passcode for both dial-in numbers is 42901483. To access the live Webcast or archive, please visit Textainer’s investor website at http://investor.textainer.com.

About Textainer Group Holdings Limited

Textainer has operated since 1979 and is one of the world’s largest lessors of intermodal containers with a total of 2.1 million containers representing 3.2 million TEU in our owned and managed fleet. We lease containers to approximately 350 customers, including all of the world’s leading international shipping lines, and other lessees. Our fleet consists of standard dry freight, dry freight specials, and refrigerated intermodal containers. We also lease tank containers through our relationship with Trifleet Leasing and are the primary supplier of containers to the U.S. Military. Textainer is one of the largest and most reliable suppliers of new and used containers. In addition to selling older containers from our lease fleet, we buy older containers from our shipping line customers for trading and resale. We sold an average of almost 100,000 containers per year for the last five years to more than 1,200 customers making us the largest seller of used containers. Textainer operates via a network of 14 offices and approximately 500 depots worldwide.

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 belief that the strong increase in demand for dry containers it experienced in the second quarter will continue into the third quarter although possibly at a reduced pace; (ii) Textainer’s expectation that there will not be a significant improvement in new container prices occurring prior to year-end; (iii) Textainer’s belief that as long as new container prices remain low, rental rates for new, depot and lease-renewal containers will remain under pressure and lease rental income can be expected to decline, (iv) Textainer’s expectation that new dry freight container production could be less than 1.5 million TEU compared to 2.5 million TEU produced last year; (v) Textainer’s expectation that refrigerated container production will be below last year’s record level; (vi) Textainer’s belief that the world’s container fleet is unlikely to grow and may decline this year; (vii) Textainer’s expectation that utilization will improve in the third quarter since containers are not in an oversupply situation; (viii) Textainer’s belief that, should there be an unexpected spike in demand as has often happened in the past, the container leasing could strengthen quickly; and (ix) Textainer’s expectation that containers purchased during the second quarter at attractive prices will perform very well over their useful lives as they depreciate. 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, without limitation, the following items that could materially and negatively impact our business, results of operations, cash flows, financial condition and future prospects: any deceleration or reversal of the current domestic and global economic conditions; lease rates may decrease and lessees may default, which could decrease revenue and increase storage, repositioning, collection and recovery expenses; the demand for leased containers depends on many political and economic factors and is tied to international trade and if demand decreases due to increased barriers to trade or political or economic factors, or for other reasons, it reduces demand for intermodal container leasing; as we increase the number of containers in our owned fleet, we increase our capital at risk and may need to incur more debt, which could result in financial instability; Textainer faces extensive competition in the container leasing industry which tends to depress returns; the international nature of the container shipping industry exposes Textainer to numerous risks; gains and losses associated with the disposition of used equipment may fluctuate; our indebtedness reduces our financial flexibility and could impede our ability to operate; and other risks and uncertainties, including those set forth in Textainer’s filings with the Securities and Exchange Commission. For a discussion of some of these risks and uncertainties, see Item 3 “Key Information— Risk Factors” in Textainer’s Annual Report on Form 20-F filed with the Securities and Exchange Commission on March 11, 2016.

Textainer’s views, estimates, plans and outlook as described within this document may change subsequent to the release of this press release. 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.


Contact:

Textainer Group Holdings Limited

Hilliard C. Terry, III

Executive Vice President and Chief Financial Officer

Phone: +1 (415) 658-8214

ir@textainer.com

###

 

 


TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive (Loss) Income

Three and six months ended June 30, 2016 and 2015

(Unaudited)

(All currency expressed in United States dollars in thousands, except per share amounts)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease rental income

 

 

 

 

 

$

120,223

 

 

 

 

 

 

$

128,342

 

 

 

 

 

 

$

242,273

 

 

 

 

 

 

$

257,588

 

Management fees

 

 

 

 

 

 

3,294

 

 

 

 

 

 

 

4,010

 

 

 

 

 

 

 

6,638

 

 

 

 

 

 

 

8,027

 

Trading container sales proceeds

 

 

 

 

 

 

3,062

 

 

 

 

 

 

 

4,220

 

 

 

 

 

 

 

4,964

 

 

 

 

 

 

 

9,052

 

Gains on sale of containers, net

 

 

 

 

 

 

870

 

 

 

 

 

 

 

1,593

 

 

 

 

 

 

 

2,488

 

 

 

 

 

 

 

2,649

 

Total revenues

 

 

 

 

 

 

127,449

 

 

 

 

 

 

 

138,165

 

 

 

 

 

 

 

256,363

 

 

 

 

 

 

 

277,316

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct container expense

 

 

 

 

 

 

14,549

 

 

 

 

 

 

 

9,965

 

 

 

 

 

 

 

29,178

 

 

 

 

 

 

 

19,169

 

Cost of trading containers sold

 

 

 

 

 

 

3,614

 

 

 

 

 

 

 

3,916

 

 

 

 

 

 

 

6,258

 

 

 

 

 

 

 

8,608

 

Depreciation expense

 

 

 

 

 

 

51,757

 

 

 

 

 

 

 

44,673

 

 

 

 

 

 

 

104,306

 

 

 

 

 

 

 

88,472

 

Container impairment

 

 

 

 

 

 

19,484

 

 

 

 

 

 

 

4,685

 

 

 

 

 

 

 

36,776

 

 

 

 

 

 

 

7,855

 

Amortization expense

 

 

 

 

 

 

1,372

 

 

 

 

 

 

 

1,167

 

 

 

 

 

 

 

2,746

 

 

 

 

 

 

 

2,334

 

General and administrative expense

 

 

 

 

 

 

6,599

 

 

 

 

 

 

 

7,275

 

 

 

 

 

 

 

13,765

 

 

 

 

 

 

 

14,495

 

Short-term incentive compensation (benefit) expense

 

 

 

 

 

 

(93

)

 

 

 

 

 

 

719

 

 

 

 

 

 

 

680

 

 

 

 

 

 

 

1,438

 

Long-term incentive compensation expense

 

 

 

 

 

 

1,498

 

 

 

 

 

 

 

1,810

 

 

 

 

 

 

 

3,106

 

 

 

 

 

 

 

3,481

 

Bad debt expense, net

 

 

 

 

 

 

1,837

 

 

 

 

 

 

 

1,116

 

 

 

 

 

 

 

2,986

 

 

 

 

 

 

 

2,542

 

Total operating expenses

 

 

 

 

 

 

100,617

 

 

 

 

 

 

 

75,326

 

 

 

 

 

 

 

199,801

 

 

 

 

 

 

 

148,394

 

Income from operations

 

 

 

 

 

 

26,832

 

 

 

 

 

 

 

62,839

 

 

 

 

 

 

 

56,562

 

 

 

 

 

 

 

128,922

 

Other (expense) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

 

 

 

 

(20,022

)

 

 

 

 

 

 

(19,265

)

 

 

 

 

 

 

(39,987

)

 

 

 

 

 

 

(38,660

)

Interest income

 

 

 

 

 

 

103

 

 

 

 

 

 

 

24

 

 

 

 

 

 

 

179

 

 

 

 

 

 

 

63

 

Realized losses on interest rate swaps, collars and caps, net

 

 

 

 

 

 

(2,378

)

 

 

 

 

 

 

(3,228

)

 

 

 

 

 

 

(4,731

)

 

 

 

 

 

 

(6,094

)

Unrealized (losses) gains on interest rate swaps, collars and

   caps, net

 

 

 

 

 

 

(5,022

)

 

 

 

 

 

 

3,326

 

 

 

 

 

 

 

(16,199

)

 

 

 

 

 

 

(2,675

)

Other, net

 

 

 

 

 

 

3

 

 

 

 

 

 

 

13

 

 

 

 

 

 

 

(5

)

 

 

 

 

 

 

13

 

Net other expense

 

 

 

 

 

 

(27,316

)

 

 

 

 

 

 

(19,130

)

 

 

 

 

 

 

(60,743

)

 

 

 

 

 

 

(47,353

)

(Loss) income before income tax and

    noncontrolling interests

 

 

 

 

 

 

(484

)

 

 

 

 

 

 

43,709

 

 

 

 

 

 

 

(4,181

)

 

 

 

 

 

 

81,569

 

Income tax expense

 

 

 

 

 

 

(797

)

 

 

 

 

 

 

(1,151

)

 

 

 

 

 

 

(817

)

 

 

 

 

 

 

(2,635

)

Net (loss) income

 

 

 

 

 

 

(1,281

)

 

 

 

 

 

 

42,558

 

 

 

 

 

 

 

(4,998

)

 

 

 

 

 

 

78,934

 

Less: Net (income) loss attributable to the noncontrolling

   interests

 

 

(176

)

 

 

 

 

 

 

(2,297

)

 

 

 

 

 

 

147

 

 

 

 

 

 

 

(3,368

)

 

 

 

 

Net (loss) income attributable to Textainer Group

   Holdings Limited common shareholders

 

$

(1,457

)

 

 

 

 

 

$

40,261

 

 

 

 

 

 

$

(4,851

)

 

 

 

 

 

$

75,566

 

 

 

 

 

Net (loss) income attributable to Textainer Group Holdings

   Limited common shareholders per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.03

)

 

 

 

 

 

$

0.71

 

 

 

 

 

 

$

(0.09

)

 

 

 

 

 

$

1.33

 

 

 

 

 

Diluted

 

$

(0.03

)

 

 

 

 

 

$

0.70

 

 

 

 

 

 

$

(0.09

)

 

 

 

 

 

$

1.32

 

 

 

 

 

Weighted average shares outstanding (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

56,580

 

 

 

 

 

 

 

56,990

 

 

 

 

 

 

 

56,575

 

 

 

 

 

 

 

56,985

 

 

 

 

 

Diluted

 

 

56,580

 

 

 

 

 

 

 

57,160

 

 

 

 

 

 

 

56,575

 

 

 

 

 

 

 

57,169

 

 

 

 

 

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

 

 

 

 

111

 

 

 

 

 

 

 

(4

)

 

 

 

 

 

 

(2

)

 

 

 

 

 

 

(119

)

Comprehensive (loss) income

 

 

 

 

 

 

(1,170

)

 

 

 

 

 

 

42,554

 

 

 

 

 

 

 

(5,000

)

 

 

 

 

 

 

78,815

 

Comprehensive (income) loss attributable to the

   noncontrolling interests

 

 

 

 

 

 

(176

)

 

 

 

 

 

 

(2,297

)

 

 

 

 

 

 

147

 

 

 

 

 

 

 

(3,368

)

Comprehensive (loss) income attributable to Textainer

   Group Holdings Limited common shareholders

 

 

 

 

 

$

(1,346

)

 

 

 

 

 

$

40,257

 

 

 

 

 

 

$

(4,853

)

 

 

 

 

 

$

75,447

 

 

 


TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

June 30, 2016 and December 31, 2015

(Unaudited)

(All currency expressed in United States dollars in thousands)

 

 

2016

 

 

2015

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

104,754

 

 

$

115,594

 

Accounts receivable, net of allowance for doubtful accounts of $16,744 and $14,053 in 2016 and

   2015, respectively

 

 

93,996

 

 

 

88,370

 

Net investment in direct financing and sales-type leases

 

 

107,947

 

 

 

87,706

 

Trading containers

 

 

5,012

 

 

 

4,831

 

Containers held for sale

 

 

35,346

 

 

 

43,245

 

Prepaid expenses and other current assets

 

 

18,970

 

 

 

8,385

 

Insurance receivable

 

 

6,838

 

 

 

11,435

 

Due from affiliates, net

 

 

765

 

 

 

514

 

Total current assets

 

 

373,628

 

 

 

360,080

 

Restricted cash

 

 

34,587

 

 

 

33,917

 

Containers, net of accumulated depreciation of $889,023 and $810,393 at 2016 and

   2015, respectively

 

 

3,669,374

 

 

 

3,698,011

 

Net investment in direct financing and sales-type leases

 

 

258,831

 

 

 

243,428

 

Fixed assets, net of accumulated depreciation of $10,226 and $9,836 at 2016 and

   2015, respectively

 

 

1,877

 

 

 

1,663

 

Intangible assets, net of accumulated amortization of $38,455 and $35,709 at 2016 and

   2015, respectively

 

 

17,504

 

 

 

20,250

 

Interest rate swaps, collars and caps

 

 

-

 

 

 

814

 

Deferred taxes

 

 

1,522

 

 

 

1,203

 

Other assets

 

 

7,637

 

 

 

6,988

 

Total assets

 

$

4,364,960

 

 

$

4,366,354

 

Liabilities and Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

11,603

 

 

$

10,477

 

Accrued expenses

 

 

6,855

 

 

 

6,816

 

Container contracts payable

 

 

66,550

 

 

 

41,356

 

Other liabilities

 

 

278

 

 

 

291

 

Due to owners, net

 

 

5,114

 

 

 

11,806

 

Revolving credit facility

 

 

32,853

 

 

 

-

 

Term loan

 

 

30,911

 

 

 

31,097

 

Bonds payable

 

 

58,915

 

 

 

58,788

 

Total current liabilities

 

 

213,079

 

 

 

160,631

 

Revolving credit facilities

 

 

1,037,862

 

 

 

1,013,252

 

Secured debt facilities

 

 

1,045,868

 

 

 

1,062,539

 

Term loan

 

 

383,638

 

 

 

403,500

 

Bonds payable

 

 

404,979

 

 

 

434,472

 

Interest rate swaps, collars and caps

 

 

18,797

 

 

 

3,412

 

Income tax payable

 

 

9,242

 

 

 

8,678

 

Deferred taxes

 

 

10,922

 

 

 

10,420

 

Other liabilities

 

 

2,391

 

 

 

2,523

 

Total liabilities

 

 

3,126,778

 

 

 

3,099,427

 

Equity:

 

 

 

 

 

 

 

 

Textainer Group Holdings Limited shareholders’ equity:

 

 

 

 

 

 

 

 

Common shares, $0.01 par value. Authorized 140,000,000 shares; 57,220,797 shares

   issued and 56,590,797 shares outstanding at 2016; 57,163,095 shares issued and

   56,533,095 shares outstanding at 2015

 

 

572

 

 

 

572

 

Additional paid-in capital

 

 

388,333

 

 

 

385,020

 

Treasury shares, at cost, 630,000 shares

 

 

(9,149

)

 

 

(9,149

)

Accumulated other comprehensive income

 

 

(285

)

 

 

(283

)

Retained earnings

 

 

794,606

 

 

 

826,515

 

Total Textainer Group Holdings Limited shareholders’ equity

 

 

1,174,077

 

 

 

1,202,675

 

Noncontrolling interest

 

 

64,105

 

 

 

64,252

 

Total equity

 

 

1,238,182

 

 

 

1,266,927

 

Total liabilities and equity

 

$

4,364,960

 

 

$

4,366,354

 


TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

Six months ended June 30, 2016 and 2015

(Unaudited)

(All currency expressed in United States dollars in thousands)

 

 

2016

 

 

2015

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(4,998

)

 

$

78,934

 

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation expense

 

 

104,306

 

 

 

88,472

 

Container impairment

 

 

36,776

 

 

 

7,855

 

Bad debt expense, net

 

 

2,986

 

 

 

2,542

 

Unrealized losses on interest rate swaps, collars and caps, net

 

 

16,199

 

 

 

2,675

 

Amortization of debt issuance costs and accretion of bond discount

 

 

3,765

 

 

 

4,219

 

Amortization of intangible assets

 

 

2,746

 

 

 

2,334

 

Gains on sale of containers, net

 

 

(2,488

)

 

 

(2,649

)

Share-based compensation expense

 

 

3,423

 

 

 

3,801

 

Changes in operating assets and liabilities

 

 

(13,267

)

 

 

(10,996

)

Total adjustments

 

 

154,446

 

 

 

98,253

 

Net cash provided by operating activities

 

 

149,448

 

 

 

177,187

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchase of containers and fixed assets

 

 

(228,073

)

 

 

(370,524

)

Proceeds from sale of containers and fixed assets

 

 

61,154

 

 

 

59,964

 

Receipt of payments on direct financing and sales-type leases, net of income earned

 

 

46,858

 

 

 

49,430

 

Net cash used in investing activities

 

 

(120,061

)

 

 

(261,130

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from revolving credit facilities

 

 

153,000

 

 

 

159,177

 

Principal payments on revolving credit facilities

 

 

(95,322

)

 

 

(140,321

)

Proceeds from secured debt facilities

 

 

40,000

 

 

 

160,000

 

Principal payments on secured debt facilities

 

 

(58,600

)

 

 

(21,500

)

Principal payments on term loan

 

 

(19,800

)

 

 

(19,800

)

Principal payments on bonds payable

 

 

(30,115

)

 

 

(30,115

)

(Increase) decrease in restricted cash

 

 

(670

)

 

 

17,828

 

Debt issuance costs

 

 

(1,550

)

 

 

(4,154

)

Issuance of common shares upon exercise of share options

 

 

 

 

 

194

 

Net tax benefit from share-based compensation awards

 

 

(110

)

 

 

94

 

Capital contributions from noncontrolling interests

 

 

 

 

 

1,850

 

Dividends paid

 

 

(27,058

)

 

 

(53,564

)

Net cash (used in) provided by financing activities

 

 

(40,225

)

 

 

69,689

 

Effect of exchange rate changes

 

 

(2

)

 

 

(119

)

Net decrease in cash and cash equivalents

 

 

(10,840

)

 

 

(14,373

)

Cash and cash equivalents, beginning of the year

 

 

115,594

 

 

 

107,067

 

Cash and cash equivalents, end of the period

 

$

104,754

 

 

$

92,694

 

 

 


TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES

Reconciliation of GAAP financial measures to non-GAAP financial measures

Three and six Months Ended June 30, 2016 and 2015

(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 and six months ended June 30, 2016 and 2015, including:

 

(a)

net (loss) income attributable to Textainer Group Holdings Limited common shareholders to adjusted EBITDA (Adjusted EBITDA defined as net (loss) income attributable to Textainer Group Holdings Limited common shareholders before interest income and expense, realized and unrealized losses (gains) on interest rate swaps, collars and caps, net, income tax expense, net income (loss) attributable to the noncontrolling interests (“NCI”), depreciation expense, container impairment, amortization expense and the related impact of reconciling items on net income (loss) attributable to the NCI);

 

(b)

net cash provided by operating activities to Adjusted EBITDA;

 

(c)

net (loss) income attributable to Textainer Group Holdings Limited common shareholders to adjusted net income (defined as net (loss) income attributable to Textainer Group Holdings Limited common shareholders before the write-off of unamortized debt issuance costs, unrealized losses (gains) on interest rate swaps, collars and caps, net, the related impact of reconciling items on income tax expense and net income (loss) attributable to the NCI); and

 

(d)

net (loss) income attributable to Textainer Group Holdings Limited common shareholders per diluted common share to adjusted net income per diluted common share (defined as net (loss) income attributable to Textainer Group Holdings Limited common shareholders per diluted common share before the write-off of unamortized debt issuance costs, unrealized losses (gains) on interest rate swaps, collars and caps, net, the related impact of reconciling items on income tax expense and net income (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, 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 income may be a useful performance measure because Textainer intends to hold its interest rate swaps, collars and caps until maturity and over the life of an interest rate swap, collar or cap the unrealized losses (gains) will net to zero. Adjusted 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 adjusted net income and adjusted net income per diluted common share are useful in evaluating our operating performance because unrealized losses (gains) 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 o