Highlights:
-
Total revenues of
$128.8 million , an increase of 9.6% from the prior year quarter; -
Income from operations of
$76.1 million , an increase of 11.9% from the prior year quarter; -
Adjusted EBITDA(1) of
$108.5 million , an increase of 20.1% from the prior year quarter; -
Continued strong pace of expansion, invested
$232 million in new and used containers year to date following$198 million of new containers in the fourth quarter of 2012 for lease outs in 2013; -
After the close of the quarter the Company refinanced one of its
revolving credit facilities, reducing the funding costs by 175 basis
points and increasing the size by
$50 million to $170 million ; and -
Increased our dividend by 2.2%, declaring a
$0.46 per share dividend in the second quarter of 2013, or 57% of adjusted net income and the Company’s thirteenth consecutive quarterly increase.
“Our first quarter results mark a good start to 2013 after achieving
robust results for 2012,” commented
“Since the beginning of the year our utilization has declined by 1.1 percentage points but has averaged 95.5% for the entire period. The last few weeks have shown signs that the decline in utilization has slowed or stopped and we are optimistic that we will see improvements in the near term. Of the new containers purchased since the beginning of the fourth quarter of 2012, approximately 50% are either already on-hire or booked for pickup prior to the end of the second quarter,” added Mr. Brewer.
Key Financial Information (in thousands except for per share and TEU amounts): |
||||||
Q1 2013 | Q1 2012 | % Change | ||||
Total revenues |
$128,763 |
$117,515 |
9.6% |
|||
Income from operations |
$76,070 |
$67,980 |
11.9% |
|||
Net income attributable to Textainer Group Holdings Limited common shareholders |
$48,334 |
$49,910 |
-3.2% |
|||
Net income attributable to Textainer Group Holdings Limited common shareholders per diluted common share |
$0.85 |
$0.99 |
-14.1% |
|||
Adjusted net income(1) |
$46,122 |
$48,842 |
-5.6% |
|||
Adjusted net income per diluted common share(1) |
$0.81 |
$0.97 |
-16.5% |
|||
Adjusted EBITDA(1) |
$108,540 |
$90,354 |
20.1% |
|||
Average fleet utilization |
95.4% |
96.9% |
-1.5% |
|||
Total fleet size at end of period (TEU) |
2,808,690 |
2,487,029 |
12.9% |
|||
Owned percentage of total fleet at end of period |
73.3% |
58.5% |
25.3% |
|||
“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
Textainer’s financial results benefited from a 34.3% increase in the
size of the owned container fleet in the first quarter 2013, compared to
the year ago quarter, offset by incremental increases in depreciation
expense and interest expense due to the increase in the size of the
owned container fleet and associated debt to fund this expansion and
slightly lower utilization. In addition,
After quarter end,
“We have continued to lower our funding costs as shown by our recent
refinancing and we expect there will also be opportunities to refinance
some of our existing ABS notes at more attractive levels. With our low
debt-to-equity ratio of 2.2 to 1, we have ample capacity to fund growth
to meet the demand from shipping lines,” commented
Outlook
“Demand was softer than expected during the first quarter and we saw several shipping lines purchasing containers,” stated Mr. Brewer. “Due in part to the abundance of liquidity in the marketplace, we have seen aggressive pricing for new business which has served to compress yields. Nevertheless, we are well positioned as we move through 2013 given our strong investments over the past six months at very attractive prices,” added Mr. Brewer.
“At this time, it is very difficult to predict market conditions for the remainder of the year. We currently expect to see stronger demand in the third quarter. We also expect that container lessors will purchase between 50-60% of total output although output is likely to fall below that of 2012. On the other hand, we expect to see an increasing number of purchase leaseback opportunities. We remain excited about our prospects for 2013,” concluded Mr. Brewer.
Dividend
On
“We increased our dividend by 2% from the prior quarter reflecting our positive outlook for the year. This results in a 57% payout ratio and is a 15% increase compared to the dividend declared for the first quarter of 2012,” added Mr. Brewer. “We believe our dividend policy strikes the right balance between our need to fund growth while providing income to our shareholders.”
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
the decline in its utilization has slowed or stopped out and that
improvements will be seen in the near term; (ii) Textainer’s expectation
that there will be opportunities to refinance some of its existing ABS
notes at attractive levels; (iii) Textainer’s belief that it is well
positioned as it moves through 2013 given its strong investments over
the past six months at very attractive prices; (iv) Textainer’s
expectation that it will see stronger demand in the third quarter and
that container lessors will purchase between 50-60% of total output
although output is likely to fall below that of 2012; and (v)
Textainer’s expectation that it will see an increasing number of
purchase leaseback opportunities. 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 increasing storage,
repositioning, collection and recovery expenses; we own a large and
growing number of containers in our fleet and are subject to significant
ownership risk; further consolidation of container manufacturers or the
disruption of manufacturing for the major manufacturers could result in
higher new container prices and/or decreased supply of new containers
and any increase in the cost or reduction in the supply of new
containers; the demand for leased containers depends on many political
and economic factors beyond
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES | |||||||||||||||
Condensed Consolidated Statements of Comprehensive Income | |||||||||||||||
Three Months Ended March 31, 2013 and 2012 | |||||||||||||||
(Unaudited) | |||||||||||||||
(All currency expressed in United States dollars in thousands, except per share amounts) | |||||||||||||||
March 31, | |||||||||||||||
2013 | 2012 | ||||||||||||||
Revenues: | |||||||||||||||
Lease rental income | $ | 113,227 | $ | 87,888 | |||||||||||
Management fees | 5,283 | 6,801 | |||||||||||||
Trading container sales proceeds | 2,793 | 11,537 | |||||||||||||
Gains on sale of containers, net | 7,460 | 11,289 | |||||||||||||
Total revenues | 128,763 | 117,515 | |||||||||||||
Operating expenses: | |||||||||||||||
Direct container expense | 9,004 | 6,060 | |||||||||||||
Cost of trading containers sold | 2,465 | 10,002 | |||||||||||||
Depreciation expense | 32,683 | 21,580 | |||||||||||||
Amortization expense | 1,087 | 1,306 | |||||||||||||
General and administrative expense | 6,437 | 5,723 | |||||||||||||
Short-term incentive compensation expense | 687 | 992 | |||||||||||||
Long-term incentive compensation expense | 1,080 | 2,154 | |||||||||||||
Bad debt (recovery) expense, net | (750 | ) | 1,718 | ||||||||||||
Total operating expenses | 52,693 | 49,535 | |||||||||||||
Income from operations | 76,070 | 67,980 | |||||||||||||
Other income (expense): | |||||||||||||||
Interest expense | (21,629 | ) | (14,719 | ) | |||||||||||
Interest income | 38 | 28 | |||||||||||||
Realized losses on interest rate swaps and caps, net | (2,390 | ) | (2,550 | ) | |||||||||||
Unrealized gains on interest rate swaps and caps, net | 2,287 | 1,048 | |||||||||||||
Other, net | (19 | ) | (1 | ) | |||||||||||
Net other expense | (21,713 | ) | (16,194 | ) | |||||||||||
Income before income tax and noncontrolling interest | 54,357 | 51,786 | |||||||||||||
Income tax expense | (4,541 | ) | (2,323 | ) | |||||||||||
Net income | 49,816 | 49,463 | |||||||||||||
Less: Net (income) loss attributable to the noncontrolling interest | (1,482 | ) | 447 | ||||||||||||
Net income attributable to Textainer Group Holdings | |||||||||||||||
Limited common shareholders | $ | 48,334 | $ | 49,910 | |||||||||||
Net income attributable to Textainer Group Holdings Limited
common shareholders per share: |
|||||||||||||||
Basic | $ | 0.86 | $ | 1.01 | |||||||||||
Diluted | $ | 0.85 | $ | 0.99 | |||||||||||
Weighted average shares outstanding (in thousands): | |||||||||||||||
Basic | 56,228 | 49,425 | |||||||||||||
Diluted | 56,955 | 50,384 | |||||||||||||
Other comprehensive income: | |||||||||||||||
Foreign currency translation adjustments | (97 | ) | 77 | ||||||||||||
Comprehensive income | 49,719 | 49,540 | |||||||||||||
Comprehensive (income) loss attributable to the noncontrolling interest | (1,482 | ) | 447 | ||||||||||||
Comprehensive income attributable to Textainer Group Holdings | |||||||||||||||
Limited common shareholders | $ | 48,237 | $ | 49,987 | |||||||||||
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES | ||||||
Condensed Consolidated Balance Sheets | ||||||
March 31, 2013 and December 31, 2012 | ||||||
(Unaudited) | ||||||
(All currency expressed in United States dollars in thousands) | ||||||
2013 | 2012 | |||||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 76,971 | $ | 100,127 | ||
Accounts receivable, net of allowance for doubtful accounts of $7,261 and $8,025 in 2013 and 2012, respectively |
105,529 | 94,102 | ||||
Net investment in direct financing and sales-type leases | 54,143 | 43,253 | ||||
Trading containers | 5,370 | 7,296 | ||||
Containers held for sale | 20,179 | 15,717 | ||||
Prepaid expenses | 14,098 | 14,006 | ||||
Deferred taxes | 2,296 | 2,332 | ||||
Due from affiliates, net | 77 | 4,377 | ||||
Total current assets | 278,663 | 281,210 | ||||
Restricted cash | 54,586 | 54,945 | ||||
Containers, net of accumulated depreciation of $476,248 and $490,930 at 2013 and 2012, respectively |
3,008,124 | 2,916,673 | ||||
Net investment in direct financing and sales-type leases | 209,211 | 173,634 | ||||
Fixed assets, net of accumulated depreciation of $8,273 and $9,189 at 2013 and 2012, respectively |
1,658 | 1,621 | ||||
Intangible assets, net of accumulated amortization of $28,050 and $26,963 at 2013 and 2012, respectively |
32,296 | 33,383 | ||||
Other assets | 11,885 | 14,614 | ||||
Total assets | $ | 3,596,423 | $ | 3,476,080 | ||
Liabilities and Equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 5,319 | $ | 4,451 | ||
Accrued expenses | 10,217 | 14,329 | ||||
Container contracts payable | 65,053 | 87,708 | ||||
Deferred revenue | 698 | 1,681 | ||||
Due to owners, net | 13,746 | 13,218 | ||||
Bonds payable | 131,500 | 131,500 | ||||
Total current liabilities | 226,533 | 252,887 | ||||
Revolving credit facilities | 682,908 | 549,911 | ||||
Secured debt facility | 891,500 | 874,000 | ||||
Bonds payable | 673,417 | 706,291 | ||||
Interest rate swaps and caps | 8,532 | 10,819 | ||||
Income tax payable | 28,752 | 27,580 | ||||
Deferred taxes | 5,336 | 5,249 | ||||
Other liabilities | 3,391 | 3,210 | ||||
Total liabilities | 2,520,369 | 2,429,947 | ||||
Equity: | ||||||
Textainer Group Holdings Limited shareholders' equity: | ||||||
Common shares, $0.01 par value. Authorized 140,000,000 shares; issued and outstanding 56,257,143 and 55,754,529 at 2013 and 2012, respectively |
563 | 558 | ||||
Additional paid-in capital | 358,984 | 354,448 | ||||
Accumulated other comprehensive income | 16 | 114 | ||||
Retained earnings | 675,404 | 652,383 | ||||
Total Textainer Group Holdings Limited shareholders’ equity | 1,034,967 | 1,007,503 | ||||
Noncontrolling interest | 41,087 | 38,630 | ||||
Total equity | 1,076,054 | 1,046,133 | ||||
Total liabilities and equity | $ | 3,596,423 | $ | 3,476,080 | ||
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES | ||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||
Three Months Ended March 31, 2013 and 2012 | ||||||||
(Unaudited) | ||||||||
(All currency expressed in United States dollars in thousands) | ||||||||
Three Months Ended |
||||||||
2013 | 2012 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 49,816 | $ | 49,463 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation expense | 32,683 | 21,580 | ||||||
Bad debt (recovery) expense, net | (750 | ) | 1,718 | |||||
Unrealized gains on interest rate swaps and caps, net | (2,287 | ) | (1,048 | ) | ||||
Amortization of debt issuance costs | 2,743 | 2,418 | ||||||
Amortization of intangible assets | 1,087 | 1,306 | ||||||
Amortization of acquired below-market leases | - | (33 | ) | |||||
Amortization of deferred revenue | (674 | ) | (2,404 | ) | ||||
Amortization of unearned income on direct financing and sales-type leases | (5,166 | ) | (2,861 | ) | ||||
Gains on sale of containers, net | (7,460 | ) | (11,289 | ) | ||||
Share-based compensation expense | 1,255 | 2,510 | ||||||
Changes in operating assets and liabilities | (6,106 | ) | (8,453 | ) | ||||
Total adjustments | 15,325 | 3,444 | ||||||
Net cash provided by operating activities | 65,141 | 52,907 | ||||||
Cash flows from investing activities: | ||||||||
Purchase of containers and fixed assets | (229,419 | ) | (105,496 | ) | ||||
Proceeds from sale of containers and fixed assets | 26,737 | 23,229 | ||||||
Receipt of principal payments on direct financing and sales-type leases | 17,552 | 8,808 | ||||||
Net cash used in investing activities | (185,130 | ) | (73,459 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from revolving credit facilities | 136,978 | 69,630 | ||||||
Principal payments on revolving credit facilities | (3,981 | ) | (392 | ) | ||||
Proceeds from secured debt facility | 30,000 | 12,000 | ||||||
Principal payments on secured debt facility | (12,500 | ) | - | |||||
Principal payments on bonds payable | (32,874 | ) | (22,875 | ) | ||||
Increase in restricted cash | 359 | (25,111 | ) | |||||
Debt issuance costs | - | (552 | ) | |||||
Issuance of common shares upon exercise of share options | 1,221 | 3,344 | ||||||
Excess tax benefit from share-based compensation awards | 2,065 | 2,837 | ||||||
Capital contributions from noncontrolling interest | 975 | 1,492 | ||||||
Dividends paid | (25,313 | ) | (18,288 | ) | ||||
Net cash provided by financing activities | 96,930 | 22,085 | ||||||
Effect of exchange rate changes | (97 | ) | 77 | |||||
Net (decrease) increase in cash and cash equivalents | (23,156 | ) | 1,610 | |||||
Cash and cash equivalents, beginning of the year | 100,127 | 74,816 | ||||||
Cash and cash equivalents, end of period | $ | 76,971 | $ | 76,426 | ||||
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 (gains) losses on interest rate swaps 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 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, | ||||||||
2013 | 2012 | |||||||
(Dollars in thousands) | ||||||||
(Unaudited) | ||||||||
Reconciliation of adjusted EBITDA: | ||||||||
Net income attributable to Textainer Group Holdings Limited common shareholders |
$ | 48,334 | $ | 49,910 | ||||
Adjustments: | ||||||||
Interest income | (38 | ) | (28 | ) | ||||
Interest expense | 21,629 | 14,719 | ||||||
Realized losses on interest rate swaps and caps, net | 2,390 | 2,550 | ||||||
Unrealized gains on interest rate swaps and caps, net | (2,287 | ) | (1,048 | ) | ||||
Income tax expense | 4,541 | 2,323 | ||||||
Net income (loss) attributable to the noncontrolling interest | 1,482 | (447 | ) | |||||
Depreciation expense | 32,683 | 21,580 | ||||||
Amortization expense | 1,087 | 1,306 | ||||||
Impact of reconciling items on net income (loss) attributable to the noncontrolling interest |
(1,281 | ) | (511 | ) | ||||
Adjusted EBITDA | $ | 108,540 | $ | 90,354 | ||||
Net cash provided by operating activities | $ | 65,141 | $ | 52,907 | ||||
Adjustments: | ||||||||
Bad debt expense, net | 750 | (1,718 | ) | |||||
Amortization of debt issuance costs | (2,743 | ) | (2,418 | ) | ||||
Amortization of acquired net below market leases | - | 33 | ||||||
Amortization of deferred revenue | 674 | 2,404 | ||||||
Amortization of unearned income on direct financing and sales-type leases |
5,166 | 2,861 | ||||||
Gains on sale of containers, net | 7,460 | 11,289 | ||||||
Share-based compensation expense | (1,255 | ) | (2,510 | ) | ||||
Interest income | (38 | ) | (28 | ) | ||||
Interest expense | 21,629 | 14,719 | ||||||
Realized losses on interest rate swaps and caps, net | 2,390 | 2,550 | ||||||
Income tax expense | 4,541 | 2,323 | ||||||
Changes in operating assets and liabilities | 6,106 | 8,453 | ||||||
Impact of reconciling items on net income (loss) attributable to the noncontrolling interest |
(1,281 | ) | (511 | ) | ||||
Adjusted EBITDA | $ | 108,540 | $ | 90,354 | ||||
Three Months Ended | ||||||||
March 31, | ||||||||
2013 | 2012 | |||||||
(Dollars in thousands) | ||||||||
(Unaudited) | ||||||||
Reconciliation of adjusted net income: | ||||||||
Net income attributable to Textainer Group Holdings Limited common shareholders |
$ | 48,334 | $ | 49,910 | ||||
Adjustments: | ||||||||
Unrealized gains on interest rate swaps and caps, net | (2,287 | ) | (1,048 | ) | ||||
Impact of reconciling item on net income (loss) attributable to noncontrolling interest |
75 | (20 | ) | |||||
Adjusted net income | $ | 46,122 | $ | 48,842 | ||||
Reconciliation of adjusted net income per diluted common share: | ||||||||
Net income attributable to Textainer Group Holdings Limited common shareholders per diluted common share |
$ | 0.85 | $ | 0.99 | ||||
Adjustments: | ||||||||
Unrealized gains on interest rate swaps and caps, net | (0.04 | ) | (0.02 | ) | ||||
Impact of reconciling item on net income (loss) attributable to noncontrolling interest |
- | - | ||||||
Adjusted net income per diluted common share | $ | 0.81 | $ | 0.97 | ||||
Source:
Textainer Group Holdings Limited
Hilliard C. Terry, III, +1
415-658-8214
Executive Vice President and Chief Financial Officer
ir@textainer.com