6-K
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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

For the quarterly period ended March 31, 2023

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)

 

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class

Trading Symbols

Name of each exchange on which registered

Common Shares, $0.01 par value

TGH

New York Stock Exchange

7.00% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preference Shares, $0.01 par value

TGH PRA

New York Stock Exchange

6.25% Series B Fixed Rate Cumulative Redeemable Perpetual Preference Shares, $0.01 par value

TGH PRB

New York Stock Exchange

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 Form 40-F

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):

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):

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 No

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

 

 

1


 

 

TEXTAINER GROUP HOLDINGS LIMITED

Quarterly Report on Form 6-K for the Three Months Ended March 31, 2023

Table of Contents

 

 

Page

 

 

 

Information Regarding Forward-Looking Statements; Cautionary Language

 

3

 

 

 

Item 1. Condensed Consolidated Financial Statements (Unaudited):

 

4

 

 

 

 

 

Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022

 

4

 

 

 

 

 

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2023 and 2022

 

5

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2023 and 2022

 

6

 

 

 

 

 

Condensed Consolidated Statements of Shareholders’ Equity for the Three Months Ended March 31, 2023 and 2022

 

7

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022

 

8

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

 

9

 

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

24

 

 

 

Item 3. Quantitative and Qualitative Disclosures About Market and Credit Risk

 

33

 

 

 

Item 4. Risk Factors

 

34

 

 

 

Signature

 

36

 

 

2


 

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS; CAUTIONARY LANGUAGE

This Quarterly Report on Form 6-K, including the section entitled Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contains forward-looking statements within the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that are not statements of historical facts and may relate to, but are not limited to, expectations or estimates of future operating results or financial performance, capital expenditures, regulatory compliance, plans for growth and future operations, as well as assumptions relating to the foregoing. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “intend,” “potential,” “continue” or the negative of these terms or other similar terminology. The forward-looking statements contained in this Quarterly Report on Form 6-K include, but are not limited to, statements regarding (i) factors that are likely to continue to affect our performance and (ii) our belief that, assuming that our lenders remain solvent that our cash flow from operations, proceeds from the sale of containers and borrowing availability under our debt facilities are sufficient to meet our liquidity needs, including for the payment of dividends, for the next twelve months.

Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy, and actual results may differ materially from those we anticipated due to a number of uncertainties, many of which cannot be foreseen. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including, among others, the risk described in Item 4, “Risk Factors” of this Quarterly Report on Form 6-K and the risks we face that are described in the section entitled Item 3, “Key Information -- Risk Factors” included in our Annual Report on Form 20-F for the fiscal year ended December 31, 2022 filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 14, 2023 (our “2022 Form 20-F”).

We believe that it is important to communicate our expectations about the future to potential investors, shareholders and other readers. However, there may be events in the future that we are not able to accurately predict or control and that may cause actual events or results to differ materially from the expectations expressed in or implied by our forward-looking statements. The risk factors listed in Item 3, “Key Information -- Risk Factors” included in our 2022 Form 20-F, as well as any cautionary language in this Quarterly Report on Form 6-K, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Before you decide to buy, hold or sell our common shares, you should be aware that the occurrence of the events described in Item 3, “Key Information -- Risk Factors” included in our 2022 Form 20-F and elsewhere in this Quarterly Report on Form 6-K could negatively impact our business, cash flows, results of operations, financial condition and share price. Potential investors, shareholders and other readers are cautioned not to place undue reliance on our forward-looking statements.

Forward-looking statements regarding our present plans or expectations for fleet size, management contracts, container purchases, sources and availability of financing, and growth involve risks and uncertainties relative to return expectations and related allocation of resources, and changing economic or competitive conditions, as well as the negotiation of agreements with container investors, which could cause actual results to differ from present plans or expectations, and such differences could be material. Similarly, forward-looking statements regarding our present expectations for operating results and cash flow involve risks and uncertainties related to factors such as utilization rates, per diem rates, container prices, demand for containers by container shipping lines, supply, the anticipated trends and effects in respect of the COVID-19 pandemic and post-pandemic, and other factors discussed under Item 3, “Key Information -- Risk Factors” included in our 2022 Form 20-F or elsewhere in this Quarterly Report on Form 6-K, which could also cause actual results to differ from present plans. Such differences could be material.

All future written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. New risks and uncertainties arise from time to time, and we cannot predict those events or how they may affect us. The forward-looking statements contained in this Quarterly Report on Form 6-K speak only as of, and are based on information available to us on, the date of the filing of this Quarterly Report on Form 6-K. We assume no obligation to, and do not plan to, update any forward-looking statements after the date of this Quarterly Report on Form 6-K as a result of new information, future events or developments, except as expressly required by U.S. federal securities laws. You should read this Quarterly Report on Form 6-K and the documents that we reference and have furnished as exhibits with the understanding that we cannot guarantee future results, levels of activity, performance or achievements and that actual results may differ materially from what we expect.

In this Quarterly Report on Form 6-K, unless otherwise specified, all monetary amounts are in U.S. dollars. To the extent that any monetary amounts are not denominated in U.S. dollars, they have been translated into U.S. dollars in accordance with our accounting policies as described in Item 18, “Financial Statements” included in our 2022 Form 20-F.

 

 

3


 

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)

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

 

 

 

March 31, 2023

 

 

December 31, 2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

142,598

 

 

$

164,818

 

Marketable securities

 

 

755

 

 

 

1,411

 

Accounts receivable, net of allowance of $1,716 and $1,582, respectively

 

 

116,960

 

 

 

114,805

 

Net investment in finance leases, net of allowance of $190 and $252, respectively

 

 

130,381

 

 

 

130,913

 

Container leaseback financing receivable, net of allowance of $47 and $62, respectively

 

 

54,710

 

 

 

53,652

 

Trading containers

 

 

6,115

 

 

 

4,848

 

Containers held for sale

 

 

37,368

 

 

 

31,637

 

Prepaid expenses and other current assets

 

 

18,028

 

 

 

16,703

 

Due from affiliates, net

 

 

2,867

 

 

 

2,758

 

Total current assets

 

 

509,782

 

 

 

521,545

 

Restricted cash

 

 

102,011

 

 

 

102,591

 

Containers, net of accumulated depreciation of $2,062,674 and $2,029,667, respectively

 

 

4,256,456

 

 

 

4,365,124

 

Net investment in finance leases, net of allowance of $735 and $1,027, respectively

 

 

1,657,127

 

 

 

1,689,123

 

Container leaseback financing receivable, net of allowance of $27 and $52, respectively

 

 

757,003

 

 

 

770,980

 

Derivative instruments

 

 

124,151

 

 

 

149,244

 

Deferred taxes

 

 

1,163

 

 

 

1,135

 

Other assets

 

 

12,644

 

 

 

13,492

 

Total assets

 

$

7,420,337

 

 

$

7,613,234

 

Liabilities and Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

20,235

 

 

$

24,160

 

Container contracts payable

 

 

1,817

 

 

 

6,648

 

Other liabilities

 

 

5,203

 

 

 

5,060

 

Due to container investors, net

 

 

15,518

 

 

 

16,132

 

Debt, net of unamortized costs of $7,781 and $7,938, respectively

 

 

394,186

 

 

 

377,898

 

Total current liabilities

 

 

436,959

 

 

 

429,898

 

Debt, net of unamortized costs of $24,762 and $26,946, respectively

 

 

4,950,036

 

 

 

5,127,021

 

Derivative instruments

 

 

4,885

 

 

 

 

Income tax payable

 

 

13,483

 

 

 

13,196

 

Deferred taxes

 

 

14,276

 

 

 

13,105

 

Other liabilities

 

 

32,322

 

 

 

33,725

 

Total liabilities

 

 

5,451,961

 

 

 

5,616,945

 

Shareholders’ Equity:

 

 

 

 

 

 

Cumulative redeemable perpetual preferred shares, $0.01 par value, $25,000 liquidation preference
  per share. Authorized
10,000,000 shares; 12,000 shares issued and outstanding (equivalent to
  
12,000,000 depositary shares at $25.00 liquidation preference per depositary share)

 

 

300,000

 

 

 

300,000

 

Common shares, $0.01 par value. Authorized 140,000,000 shares; 59,970,152 shares issued
   and
42,395,343 shares outstanding at 2023; 59,943,282 shares issued and 43,634,655 shares
   outstanding at 2022

 

 

600

 

 

 

599

 

Treasury shares, at cost, 17,574,809 and 16,308,627 shares, respectively

 

 

(379,210

)

 

 

(337,551

)

Additional paid-in capital

 

 

444,751

 

 

 

442,154

 

Accumulated other comprehensive income

 

 

117,737

 

 

 

147,350

 

Retained earnings

 

 

1,484,498

 

 

 

1,443,737

 

Total shareholders’ equity

 

 

1,968,376

 

 

 

1,996,289

 

Total liabilities and shareholders’ equity

 

$

7,420,337

 

 

$

7,613,234

 

 

 

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

4


 

TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited)

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

 

 

 

 

Three Months Ended March 31,

 

 

 

2023

 

 

2022

 

Revenues:

 

 

 

 

 

 

Operating leases - owned fleet (1)

 

$

145,324

 

 

$

151,492

 

Operating leases - managed fleet (1)

 

 

11,110

 

 

 

12,641

 

Finance leases and container leaseback financing receivable - owned fleet (1)

 

 

38,467

 

 

 

34,585

 

Total lease rental income

 

 

194,901

 

 

 

198,718

 

 

 

 

 

 

 

 

Management fees - non-leasing

 

 

744

 

 

 

532

 

 

 

 

 

 

 

 

Trading container sales proceeds

 

 

3,966

 

 

 

7,618

 

Cost of trading containers sold

 

 

(4,121

)

 

 

(6,756

)

Trading container margin

 

 

(155

)

 

 

862

 

 

 

 

 

 

 

 

Gain on sale of owned fleet containers, net

 

 

9,548

 

 

 

15,913

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

Direct container expense - owned fleet

 

 

10,043

 

 

 

5,519

 

Distribution expense to managed fleet container investors

 

 

9,925

 

 

 

11,173

 

Depreciation and amortization (1)

 

 

71,838

 

 

 

72,493

 

General and administrative expense

 

 

13,119

 

 

 

11,527

 

Bad debt (recovery) expense, net

 

 

(305

)

 

 

477

 

Container lessee default expense, net

 

 

39

 

 

 

120

 

Total operating expenses

 

 

104,659

 

 

 

101,309

 

Income from operations

 

 

100,379

 

 

 

114,716

 

Other (expense) income:

 

 

 

 

 

 

Interest expense

 

 

(42,130

)

 

 

(35,309

)

Other, net (1)

 

 

1,822

 

 

 

(94

)

Net other expense

 

 

(40,308

)

 

 

(35,403

)

Income before income taxes

 

 

60,071

 

 

 

79,313

 

Income tax expense

 

 

(1,476

)

 

 

(1,639

)

Net income

 

 

58,595

 

 

 

77,674

 

Less: Dividends on preferred shares

 

 

4,969

 

 

 

4,969

 

Net income attributable to common shareholders

 

$

53,626

 

 

$

72,705

 

 

 

 

 

 

 

 

Net income attributable to common shareholders per share:

 

 

 

 

 

 

Basic

 

$

1.24

 

 

$

1.50

 

Diluted

 

$

1.22

 

 

$

1.47

 

Weighted average shares outstanding (in thousands):

 

 

 

 

 

 

Basic

 

 

43,115

 

 

 

48,403

 

Diluted

 

 

43,850

 

 

 

49,303

 

 

(1)
Amounts for the period ended March 31, 2022 have been reclassified to conform with the 2023 presentation (see Note 2 (f) “Reclassifications and Changes in Presentation”).

 

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

 

5


 

TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

(All currency expressed in United States dollars in thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2023

 

 

2022

 

Net income

 

$

58,595

 

 

$

77,674

 

Other comprehensive income (loss), before tax:

 

 

 

 

 

 

Change in derivative instruments designated as cash flow hedges

 

 

(13,584

)

 

 

59,380

 

Reclassification of realized (gain) loss on derivative instruments designated as
   cash flow hedges

 

 

(16,394

)

 

 

3,291

 

Foreign currency translation adjustments

 

 

66

 

 

 

(56

)

Comprehensive income, before tax

 

 

28,683

 

 

 

140,289

 

Income tax benefit (expense) related to items of other comprehensive income

 

 

299

 

 

 

(567

)

Comprehensive income, after tax

 

 

28,982

 

 

 

139,722

 

Less: Dividends on preferred shares

 

 

4,969

 

 

 

4,969

 

Comprehensive income attributable to common shareholders

 

$

24,013

 

 

$

134,753

 

 

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

6


 

TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES

Condensed Consolidated Statements of Shareholders’ Equity

(Unaudited)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

other

 

 

 

 

 

Total

 

 

 

Preferred shares

 

 

Common shares

 

 

Treasury shares

 

 

paid-in

 

 

comprehensive

 

 

Retained

 

 

shareholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

capital

 

 

income

 

 

earnings

 

 

equity

 

Balances, December 31, 2021

 

 

12,000

 

 

$

300,000

 

 

 

59,503,710

 

 

$

595

 

 

 

(10,671,855

)

 

$

(158,459

)

 

$

428,945

 

 

$

9,750

 

 

$

1,200,423

 

 

$

1,781,254

 

Exercise of share options

 

 

 

 

 

 

 

 

143,975

 

 

 

1

 

 

 

 

 

 

 

 

 

3,905

 

 

 

 

 

 

 

 

 

3,906

 

Purchase of treasury shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(957,689

)

 

 

(36,409

)

 

 

 

 

 

 

 

 

 

 

 

(36,409

)

Share-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,727

 

 

 

 

 

 

 

 

 

1,727

 

Preferred shares dividends declared

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,969

)

 

 

(4,969

)

Dividends declared to common shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,054

)

 

 

(12,054

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

77,674

 

 

 

77,674

 

Comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in derivative instruments designated
   as cash flow hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

59,380

 

 

 

 

 

 

59,380

 

Reclassification of realized loss on derivative
   instruments designated as cash flow hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,291

 

 

 

 

 

 

3,291

 

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(56

)

 

 

 

 

 

(56

)

Income tax expense related to items of other
   comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(567

)

 

 

 

 

 

(567

)

Total comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

62,048

 

Balances, March 31, 2022

 

 

12,000

 

 

$

300,000

 

 

 

59,647,685

 

 

$

596

 

 

 

(11,629,544

)

 

$

(194,868

)

 

$

434,577

 

 

$

71,798

 

 

$

1,261,074

 

 

$

1,873,177

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances, December 31, 2022

 

 

12,000

 

 

$

300,000

 

 

 

59,943,282

 

 

$

599

 

 

 

(16,308,627

)

 

$

(337,551

)

 

$

442,154

 

 

$

147,350

 

 

$

1,443,737

 

 

$

1,996,289

 

Exercise of share options

 

 

 

 

 

 

 

 

26,870

 

 

 

1

 

 

 

 

 

 

 

 

 

336

 

 

 

 

 

 

 

 

 

337

 

Purchase of treasury shares