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Business Wire
HAMILTON, Bermuda -- November 06, 2008
Textainer Group Holdings Limited (NYSE:TGH) ("Textainer"), the world's
largest lessor of intermodal containers based on fleet size, today
reported results for the third quarter ended September 30, 2008.
Total revenues for the quarter increased by $4.4 million, or 7%, to $69.7
million compared to $65.3 million in the prior year quarter primarily due
to a $2.3 million, or 5%, increase in lease rental income to $50.9 million
compared to $48.6 million in the prior year quarter. EBITDA(1) for the
quarter increased by $2.7 million, or 6%, to $45.4 million compared to
$42.7 million in the prior year quarter.
Net income excluding unrealized (gains) losses on interest rate swaps,
net(1) for the quarter was $24.0 million, an 11% increase over the $21.5
million earned in the prior year quarter. Net income per diluted common
share excluding unrealized (gains) losses on interest rate swaps, net(1)
for the quarter was $0.50 per share, an 11% decrease from the $0.56 per
share in the prior year quarter. Textainer's higher number of weighted
average shares outstanding for the third quarter of 2008 compared to the
prior year quarter, which did not reflect the additional shares issued in
Textainer's initial public offering completed in the fourth quarter of
2007, contributed to a decrease in Textainer's net income per diluted
common share excluding unrealized (gains) losses on interest rate swaps,
net. Net income for the quarter was $24.6 million, a 27% increase over the
prior year quarter. Textainer's net income per diluted common share
increased by $0.01 per share, or 2%, to $0.51 per share for the third
quarter of 2008 from $0.50 per share in the prior year quarter.
There were three significant items that impacted income before income tax
and minority interest expense during the third quarter of 2008. First,
Textainer has experienced a significant increase in container resale
prices over the last few years as a result of (i) a lower number of
containers available for sale due to higher utilization and (ii) the
increased cost of new containers. Based on this extended period of higher
realized container resale prices and Textainer's expectation that new
equipment prices will remain near current levels, Textainer increased the
estimated future residual values of its containers used in the calculation
of depreciation expense during the third quarter of 2008. The effect of
this change for the third quarter of 2008 was a reduction in depreciation
expense of $3.6 million. Second, Textainer's gain on lost military
containers, net decreased by $4.2 million to $0.5 million compared to $4.6
million in the prior year quarter due to the U.S. military reporting fewer
lost containers during the third quarter of 2008. Finally, bad debt
expense, net increased $2.2 million to $2.5 million compared to $0.3
million in the prior year quarter primarily due to an increase in
Textainer's allowance for doubtful accounts resulting from the
bankruptcies of two of its customers.
"I am very pleased with our third quarter 2008 results. Overall demand for
our containers through September remained strong. Textainer's utilization
increased by almost 3% to 97% from the second quarter of 2008 to the third
quarter of 2008," commented John A. Maccarone, President and CEO of
Textainer.
As previously announced, in July, Textainer Marine Containers Limited
("TMCL"), Textainer's primary asset owning subsidiary, extended and
increased the size of its secured debt facility. The secured debt facility
was extended over an initial two-year revolving period, and the total
commitment under the secured debt facility was increased from $300 million
to $475 million.
Mr. Maccarone added, "We are extremely pleased to have been able to extend
and increase the size of TMCL's securitization facility. Given the current
challenging conditions in the credit markets in general, and the
asset-backed market in particular, we believe that the success of this
transaction demonstrates the participating banks' strong confidence and
commitment to Textainer."
"The successful completion of this transaction strengthens our liquidity
position. We believe that this facility, as well as Textainer Limited's
previously-announced $205 million, five-year revolving credit agreement,
will help to ensure that we have access to the financing necessary to
position Textainer for future growth."
Outlook
The current downturn in the world's major economies and the constraints in
the credit markets are expected to cause containerized cargo volume growth
to slow or become negative on some trade routes. Typically slow or
negative growth in containerized cargo volume leads to surplus containers,
lower utilization, higher direct costs (mainly storage costs) and weaker
shipping lines going out of business.
Although Textainer's utilization is currently at 97%, Textainer has been
advised by some of its customers that they currently plan to reduce the
size of their container fleets because of lower cargo volumes. At the same
time, we anticipate that available container ship capacity worldwide will
expand by 10-12% in 2009, which would typically contribute to lower
freight rates. We have already noticed that some of our customers have
concluded that it would be more cost-effective to lease in-fleet
containers than to either buy containers at higher prices or lease new
containers. As a result, we expect that the extension of leases on
in-fleet containers will become a more important area of focus for
Textainer in 2009. We expect that leasing of in-fleet containers will
continue to be attractive to shipping lines seeking to reduce operating
costs because of declining freight rates.
Our long-term strategy is to grow both organically and through
acquisitions. We believe the factors noted above would likely result in
several potential acquisition opportunities. As a result of renewing,
amending and expanding our credit facilities earlier this year, Textainer
had over $400 million of liquidity with its credit facilities and
available cash and low leverage relative to past levels. Despite the great
difficulty in projecting future results in our current economic
environment, we intend to actively seek acquisition opportunities that we
believe would be accretive in the months ahead.
Another possible area for growth is the sale and leaseback of
customer-owned containers. We expect that these sale and leaseback
transactions would help free up cash for our customers to use for their
other needs, such as vessel financing. We also expect that these sale and
leaseback transactions would allow Textainer to buy attractively priced
older containers and place them on leases for the remainder of their
marine service lives. We intend to pursue several such opportunities.
We intend to focus on keeping utilization as high as possible during the
current economic downturn by promoting the extension of leases for
in-fleet containers. We believe that we are very well positioned to
capitalize on attractive opportunities in acquisitions, sale-leasebacks
and long-term lease transactions.
Dividend
On November 4, 2008, Textainer's board of directors approved and declared
a quarterly cash dividend of $0.23 per share on Textainer's issued and
outstanding common shares, payable on November 26, 2008 to shareholders of
record as of November 17, 2008. This dividend is unchanged from the second
quarter 2008 as Textainer takes a cautious approach until it can gauge the
effect of uncertain global economic conditions.
Investors' Webcast
Textainer will hold a conference call and a Webcast at 2:00 p.m. EST on
Thursday November 6, 2008 to discuss Textainer's third quarter 2008
results. An archive of the Webcast will be available one hour after the
live call through November 6, 2009. For callers in the U.S. the dial-in
number for the conference call is 1-800-762-8908; for callers outside the
U.S. the dial-in number for the conference call is 1-480-629-9572. 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 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,
although we also lease specialized and refrigerated 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 53,000
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 regarding (i) Textainer's expectation that
container resale prices and new equipment prices will remain near current
levels; (ii) Textainer's expectation that the pending global recession
will cause commercialized cargo volume growth to slow, or even become
negative on some trade routes; (iii) Textainer's expectation that
available container ship capacity worldwide will expand by 10-12% in 2009;
(iv) Textainer's expectations and intentions regarding the extension of
leases on in-fleet containers; (v) Textainer's expectation that the
leasing of in-fleet containers will continue to be attractive to shipping
lines seeking to reduce operating costs because of lower declining freight
rates; (vi) Textainer's intentions regarding acquisition opportunities;
(vii) Textainer's expectations and intentions regarding sale and lease
back transactions; and (viii) Textainer's belief that it is very well
positioned to capitalize on attractive opportunities in acquisitions,
sale-leaseback and long-term lease transactions. 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
risk that the current global credit crisis and pending global recession
may adversely affect our business, financial condition and results of
operations, including the risk that the current global credit crisis may
delay or prevent Textainer's customers from making payment; the risk 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; the international nature of the container
shipping industry exposes Textainer to numerous risks; 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 4 "Risk Factors" in Textainer's
Quarterly Report on Form 6-K for the three months ended March 31, 2008,
filed with the Securities and Exchange Commission on May 14, 2008.
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.