Financial and Business Highlights
-
Lease rental income of
$129.2 million for the quarter, an increase of 7.1 percent from the prior year quarter; -
Net income attributable to
Textainer Group Holdings Limited common shareholders of$35.3 million for the quarter, or$0.62 per diluted common share; -
Adjusted net income(1) of
$40.5 million for the quarter, or$0.71 per diluted common share; -
Adjusted EBITDA(1) of
$110.8 million for the quarter, an increase of 7.2 percent from the prior year; - Utilization remained at very high levels, averaging 97.6 percent for the quarter, the highest since 2012, and is currently at 97.4 percent;
-
Continued our strong pace of expansion with more than
$415 million of capex for lease-out in 2015; - Total fleet size of over 3.2 million Twenty-Foot Equivalent Units (“TEU”), the largest in the industry, a year-over-year increase of 6.4 percent; and
-
A quarterly dividend of
$0.47 per share was declared.
“We are pleased with our performance during the first quarter, which is
traditionally the slowest quarter of the year. Average utilization
increased 3.2 percentage points year-over-year to 97.6 percent for the
quarter, the highest level in over two years. Lease rental income of
“New and used container prices continue to decline. Demand for containers is slower than expected and we face strong competition for the lease-out opportunities that do arise. As a result, we continue to see downward pressure on container rental rates. Our growing fleet, declining cost of funds and higher utilization have offset much of this decline in rental rates and sales prices and enabled us to deliver solid results.
“Excluding a
Q1 QTD | |||||||||
2015 | 2014 | % Change | |||||||
Total revenues | $139,151 | $135,422 | 2.8 | % | |||||
Income from operations | $66,083 | $64,340 | 2.7 | % | |||||
Net income attributable to Textainer Group Holdings Limited common shareholders | $35,305 | $59,649 | -40.8 | % | |||||
Net income attributable to Textainer Group Holdings Limited common
shareholders per
diluted common share |
$0.62 | $1.05 | -41.0 | % | |||||
Adjusted net income(1) | $40,548 | $59,104 | -31.4 | % | |||||
Adjusted net income per diluted common share(1) | $0.71 | $1.04 | -31.7 | % | |||||
Adjusted EBITDA(1) | $110,819 | $103,412 | 7.2 | % | |||||
Average fleet utilization | 97.6 | % | 94.4 | % | 3.4 | % | |||
Total fleet size at end of period (TEU) | 3,244,162 | 3,049,244 | 6.4 | % | |||||
Owned percentage of total fleet at end of period | 79.2 | % | 76.4 | % | |||||
“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 income attributable to
First-Quarter Results
Textainer’s first-quarter results benefited from higher revenue due to
an increase in our owned container fleet size and an increase in
utilization, which also resulted in lower direct container expense.
Dividend
On
Outlook
“We are cautious about 2015. While we believe our utilization will stay high, we also expect competition to remain strong with continued pressure on rental rates due to the high level of liquidity available to container lessors coupled with low new container prices, ample factory capacity and low interest rates. Given the outlook for steel prices and muted demand, new container prices will not increase in the near term and are likely to decrease further,” continued Mr. Brewer.
“We have been in the container leasing business for more than 30 years. We are in a cyclical business and have successfully and profitably managed through many cycles. 83% of our fleet is subject to term or finance leases which have a weighted average remaining term of 40 months. With the largest fleet, least leverage among public peers and lowest operating costs in the industry, we are comfortable looking at the medium- to longer-term. We do not believe that there is a surplus of containers in the world. The average age of containers in service has been increasing and many need to be replaced over the next few years. Shipping lines are taking delivery of larger and larger vessels with a current order book equal to approximately 18% of current capacity. We believe containers purchased today will generate strong returns over their life, especially when container prices and/or interest rates increase and these containers are re-leased under stronger market conditions.”
Investors’ Webcast
About
Important Cautionary Information Regarding Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of U.S. securities laws. Forward-looking statements include
statements that are not statements of historical facts and include,
without limitation, statements regarding: (i) Textainer’s belief that
its utilization will stay high; (ii) Textainer’s expectation that
competition will remain strong with continued pressure on rental rates
due to the high level of liquidity available to container lessors
coupled with low new container prices, ample factory capacity and low
interest rates; (iii) Textainer’s belief that, given the outlook for
steel prices and muted demand, new container prices will not increase in
the near term and are likely to decrease further; (iv) Textainer’s
belief that there is not a surplus of containers in the world; and (v)
Textainer’s belief that containers purchased today will generate strong
returns over their life, especially when container prices and/or
interest rates increase and these containers are re-leased under
stronger market conditions. 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 recoveries; 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 were to decrease due to increased
barriers to trade or political or economic factors, or for any other
reason, it could reduce demand for intermodal container leasing; as we
increase the number of containers in our owned fleet, we will have
significant capital at risk and may need to incur more debt, which could
result in financial instability;
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES | ||||||||||||||||
Condensed Consolidated Statements of Comprehensive Income | ||||||||||||||||
Three months ended March 31, 2015 and 2014 | ||||||||||||||||
(Unaudited) | ||||||||||||||||
(All currency expressed in United States dollars in thousands, except per share amounts) | ||||||||||||||||
Three Months Ended March 31, | ||||||||||||||||
2015 | 2014 | |||||||||||||||
Revenues: | ||||||||||||||||
Lease rental income | $ | 129,246 | $ | 120,654 | ||||||||||||
Management fees | 4,017 | 4,401 | ||||||||||||||
Trading container sales proceeds | 4,832 | 6,840 | ||||||||||||||
Gains on sale of containers, net | 1,056 | 3,527 | ||||||||||||||
Total revenues | 139,151 | 135,422 | ||||||||||||||
Operating expenses: | ||||||||||||||||
Direct container expense | 9,204 | 12,282 | ||||||||||||||
Cost of trading containers sold | 4,692 | 7,075 | ||||||||||||||
Depreciation expense and
container impairment |
46,969 | 40,415 | ||||||||||||||
Amortization expense | 1,167 | 953 | ||||||||||||||
General and administrative expense | 7,220 | 6,699 | ||||||||||||||
Short-term incentive compensation expense | 719 | 695 | ||||||||||||||
Long-term incentive compensation expense | 1,671 | 1,558 | ||||||||||||||
Bad debt expense, net | 1,426 | 1,405 | ||||||||||||||
Total operating expenses | 73,068 | 71,082 | ||||||||||||||
Income from operations | 66,083 | 64,340 | ||||||||||||||
Other (expense) income: | ||||||||||||||||
Interest expense | (19,395 | ) | (22,189 | ) | ||||||||||||
Interest income | 39 | 30 | ||||||||||||||
Realized losses on interest rate swaps, collars and caps, net | (2,866 | ) | (2,022 | ) | ||||||||||||
Unrealized (losses) gains on interest rate swaps, collars and caps, net | (6,001 | ) | 516 | |||||||||||||
Other, net | - | (7 | ) | |||||||||||||
Net other expense | (28,223 | ) | (23,672 | ) | ||||||||||||
Income before income tax and noncontrolling interests | 37,860 | 40,668 | ||||||||||||||
Income tax (expense) benefit | (1,484 | ) | 20,305 | |||||||||||||
Net income | 36,376 | 60,973 | ||||||||||||||
Less: Net income attributable to the noncontrolling interests | (1,071 | ) | (1,324 | ) | ||||||||||||
Net income attributable to Textainer Group Holdings Limited common shareholders |
$ | 35,305 | $ | 59,649 | ||||||||||||
Net income attributable to Textainer Group Holdings Limited common
shareholders per share: |
||||||||||||||||
Basic | $ | 0.62 | $ | 1.05 | ||||||||||||
Diluted | $ | 0.62 | $ | 1.05 | ||||||||||||
Weighted average shares outstanding (in thousands): | ||||||||||||||||
Basic | 56,980 | 56,648 | ||||||||||||||
Diluted | 57,173 | 57,030 | ||||||||||||||
Other comprehensive income: | ||||||||||||||||
Foreign currency translation adjustments | (115 | ) | 31 | |||||||||||||
Comprehensive income | 36,261 | 61,004 | ||||||||||||||
Comprehensive income attributable to the noncontrolling interests | (1,071 | ) | (1,324 | ) | ||||||||||||
Comprehensive income attributable to Textainer Group Holdings Limited common shareholders |
$ | 35,190 | $ | 59,680 |
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES | ||||||||
Condensed Consolidated Balance Sheets | ||||||||
March 31, 2015 and December 31, 2014 | ||||||||
(Unaudited) | ||||||||
(All currency expressed in United States dollars in thousands) | ||||||||
2015 | 2014 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 100,830 | $ | 107,067 | ||||
Accounts receivable, net of allowance for doubtful accounts of $13,515 and $12,139 at 2015 and 2014, respectively |
92,678 | 91,866 | ||||||
Net investment in direct financing and sales-type leases | 90,916 | 89,003 | ||||||
Trading containers | 5,693 | 6,673 | ||||||
Containers held for sale | 26,192 | 25,213 | ||||||
Prepaid expenses and other current assets | 17,667 | 17,593 | ||||||
Deferred taxes | 2,088 | 2,100 | ||||||
Total current assets | 336,064 | 339,515 | ||||||
Restricted cash | 50,777 | 60,310 | ||||||
Containers, net of accumulated depreciation of $706,827 and $685,667
at 2015
and 2014, respectively |
3,739,825 | 3,629,882 | ||||||
Net investment in direct financing and sales-type leases | 280,247 | 280,002 | ||||||
Fixed assets, net of accumulated depreciation of $9,281 and $9,139
at 2015 and
2014, respectively |
1,333 | 1,385 | ||||||
Intangible assets, net of accumulated amortization of $32,135 and
$30,968 at 2015
and 2014, respectively |
23,823 | 24,991 | ||||||
Interest rate swaps, collars and caps | 38 | 1,568 | ||||||
Other assets | 21,315 | 21,324 | ||||||
Total assets | $ | 4,453,422 | $ | 4,358,977 | ||||
Liabilities and Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 6,870 | $ | 5,652 | ||||
Accrued expenses | 8,146 | 11,935 | ||||||
Container contracts payable | 84,596 | 63,323 | ||||||
Other liabilities | 311 | 317 | ||||||
Due to owners, net | 9,356 | 11,003 | ||||||
Term loan | 31,600 | 31,600 | ||||||
Bonds payable | 59,966 | 59,959 | ||||||
Total current liabilities | 200,845 | 183,789 | ||||||
Revolving credit facilities | 910,238 | 944,790 | ||||||
Secured debt facilities | 1,135,600 | 1,017,100 | ||||||
Term loan | 434,200 | 444,100 | ||||||
Bonds payable | 483,433 | 498,428 | ||||||
Interest rate swaps, collars and caps | 6,690 | 2,219 | ||||||
Income tax payable | 7,293 | 7,696 | ||||||
Deferred taxes | 6,733 | 5,675 | ||||||
Other liabilities | 2,742 | 2,815 | ||||||
Total liabilities | 3,187,774 | 3,106,612 | ||||||
Equity: | ||||||||
Textainer Group Holdings Limited shareholders' equity: | ||||||||
Common shares, $0.01 par value. Authorized 140,000,000 shares; issued and outstanding 56,983,324 and 56,863,094 at 2015 and 2014, respectively
|
565 | 565 | ||||||
Additional paid-in capital | 380,267 | 378,316 | ||||||
Accumulated other comprehensive income | (158 | ) | (43 | ) | ||||
Retained earnings | 822,231 | 813,707 | ||||||
Total Textainer Group Holdings Limited shareholders’ equity | 1,202,905 | 1,192,545 | ||||||
Noncontrolling interest | 62,743 | 59,820 | ||||||
Total equity | 1,265,648 | 1,252,365 | ||||||
Total liabilities and equity | $ | 4,453,422 | $ | 4,358,977 |
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES | ||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||
Three months ended March 31, 2015 and 2014 | ||||||||
(Unaudited) | ||||||||
(All currency expressed in United States dollars in thousands) | ||||||||
2015 | 2014 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 36,376 | $ | 60,973 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation expense and container impairment | 46,969 | 40,415 | ||||||
Bad debt expense, net | 1,426 | 1,405 | ||||||
Unrealized losses (gains) on interest rate swaps, collars and caps, net | 6,001 | (516 | ) | |||||
Amortization of debt issuance costs and accretion of bond discount | 2,226 | 2,951 | ||||||
Amortization of intangible assets | 1,167 | 953 | ||||||
Gains on sale of containers, net | (1,056 | ) | (3,527 | ) | ||||
Share-based compensation expense | 1,806 | 1,826 | ||||||
Changes in operating assets and liabilities | (5,942 | ) | (26,905 | ) | ||||
Total adjustments | 52,597 | 16,602 | ||||||
Net cash provided by operating activities | 88,973 | 77,575 | ||||||
Cash flows from investing activities: | ||||||||
Purchase of containers and fixed assets | (189,531 | ) | (180,412 | ) | ||||
Proceeds from sale of containers and fixed assets | 29,110 | 31,180 | ||||||
Receipt of payments on direct financing and sales-type leases, net of income earned |
22,753 | 16,218 | ||||||
Net cash used in investing activities | (137,668 | ) | (133,014 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from revolving credit facilities | 76,411 | 68,840 | ||||||
Principal payments on revolving credit facilities | (110,963 | ) | (58,582 | ) | ||||
Proceeds from secured debt facilities | 120,000 | 90,000 | ||||||
Principal payments on secured debt facilities | (1,500 | ) | (18,000 | ) | ||||
Principal payments on term loan | (9,900 | ) | - | |||||
Principal payments on bonds payable | (15,058 | ) | (40,398 | ) | ||||
Decrease in restricted cash | 9,533 | 6,545 | ||||||
Debt issuance costs | (1,166 | ) | - | |||||
Issuance of common shares upon exercise of share options | 62 | 601 | ||||||
Excess tax benefit from share-based compensation awards | 83 | 1,070 | ||||||
Capital contributions from noncontrolling interests | 1,851 | 2,250 | ||||||
Dividends paid | (26,780 | ) | (26,626 | ) | ||||
Net cash provided by financing activities | 42,573 | 25,700 | ||||||
Effect of exchange rate changes | (115 | ) | 31 | |||||
Net decrease in cash and cash equivalents | (6,237 | ) | (29,708 | ) | ||||
Cash and cash equivalents, beginning of the year | 107,067 | 120,223 | ||||||
Cash and cash equivalents, end of period | $ | 100,830 | $ | 90,515 | ||||
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES
Reconciliation
of GAAP financial measures to non-GAAP financial measures
Three
months ended
(Unaudited)
(All currency
expressed in
(1) The following is a reconciliation of certain GAAP measures to
non-GAAP financial measures (such items listed in (a) to (d) below and
defined as “Non-GAAP Measures”) for the three months ended
(a) net income attributable to
(b) net cash provided by operating activities to Adjusted EBITDA;
(c) net income attributable to Textainer Group Holdings Limited common
shareholders to adjusted net income (defined as net income attributable
to
(d) net income attributable to
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 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
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 our long-term debt and other fixed obligations and on our ability to fund our expected growth with internally generated funds. Non-GAAP Measures have limitations as analytical tools, and you should not consider either of them in isolation, or as a substitute for analysis of our operating results or cash flows as reported under GAAP. Some of these limitations are:
- They do not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;
- They do not reflect changes in, or cash requirements for, our working capital needs;
- Adjusted EBITDA does not reflect interest expense or cash requirements necessary to service interest or principal payments on our debt;
- Although depreciation expense and container impairment is a noncash charge, the assets being depreciated may be replaced in the future, and neither adjusted EBITDA, adjusted net income or adjusted net income per diluted common share reflects any cash requirements for such replacements;
- They are not adjusted for all noncash income or expense items that are reflected in our statements of cash flows; and
- Other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures.
Three Months Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
(Dollars in thousands) | ||||||||
(Unaudited) | ||||||||
Reconciliation of adjusted net income: | ||||||||
Net income attributable to Textainer Group Holdings Limited common shareholders | $ | 35,305 | $ | 59,649 | ||||
Adjustments: | ||||||||
Write-off of unamortized debt issuance costs | 298 | - | ||||||
Unrealized losses (gains) on interest rate swaps, collars and caps, net | 6,001 | (516 | ) | |||||
Impact of reconciling items on income tax expense | (262 | ) | - | |||||
Impact of reconciling item on net income attributable to the noncontrolling interests | (794 | ) | (29 | ) | ||||
Adjusted net income | $ | 40,548 | $ | 59,104 | ||||
Reconciliation of adjusted net income per diluted common share: | ||||||||
Net income attributable to Textainer Group Holdings Limited common shareholders per diluted common share | $ | 0.62 | $ | 1.05 | ||||
Adjustments: | ||||||||
Write-off of unamortized debt issuance costs | - | - | ||||||
Unrealized losses (gains) on interest rate swaps, collars and caps, net | 0.10 | (0.01 | ) | |||||
Impact of reconciling items on income tax expense | - | - | ||||||
Impact of reconciling item on net income attributable to the noncontrolling interests | (0.01 | ) | - | |||||
Adjusted net income per diluted common share | $ | 0.71 | $ | 1.04 |
Three Months Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
(Dollars in thousands) | ||||||||
(Unaudited) | ||||||||
Reconciliation of adjusted EBITDA: | ||||||||
Net income attributable to Textainer Group Holdings Limited common shareholders | $ | 35,305 | $ | 59,649 | ||||
Adjustments: | ||||||||
Interest income | (39 | ) | (30 | ) | ||||
Interest expense | 19,395 | 22,189 | ||||||
Realized losses on interest rate swaps, collars and caps, net | 2,866 | 2,022 | ||||||
Unrealized losses (gains) on interest rate swaps, collars and caps, net | 6,001 | (516 | ) | |||||
Income tax expense (benefit) | 1,484 | (20,305 | ) | |||||
Net income attributable to the noncontrolling interests | 1,071 | 1,324 | ||||||
Depreciation expense and container impairment | 46,969 | 40,415 | ||||||
Amortization expense | 1,167 | 953 | ||||||
Impact of reconciling items on net income attributable to the noncontrolling interests | (3,400 | ) | (2,289 | ) | ||||
Adjusted EBITDA | $ | 110,819 | $ | 103,412 | ||||
Net cash provided by operating activities | $ | 88,973 | $ | 77,575 | ||||
Adjustments: | ||||||||
Bad debt expense, net | (1,426 | ) | (1,405 | ) | ||||
Amortization of debt issuance costs and accretion of bond discount | (2,226 | ) | (2,951 | ) | ||||
Gains on sale of containers, net | 1,056 | 3,527 | ||||||
Share-based compensation expense | (1,806 | ) | (1,826 | ) | ||||
Interest income | (39 | ) | (30 | ) | ||||
Interest expense | 19,395 | 22,189 | ||||||
Realized losses on interest rate swaps, collars and caps, net | 2,866 | 2,022 | ||||||
Income tax expense (benefit) | 1,484 | (20,305 | ) | |||||
Changes in operating assets and liabilities | 5,942 | 26,905 | ||||||
Impact of reconciling items on net income attributable to the noncontrolling interests | (3,400 | ) | (2,289 | ) | ||||
Adjusted EBITDA | $ | 110,819 | $ | 103,412 |
Source:
Textainer Group Holdings Limited
Hilliard C. Terry, III,
+1-415-658-8214
Executive Vice President and Chief Financial Officer
ir@textainer.com