Textainer Group Holdings Limited (NYSE: TGH) (“Textainer”, “the
Company”, “we” and “our”), one of the world’s largest lessors of
intermodal containers, reported fourth-quarter and full-year 2016
results.
Financial and Business Summaries
- Lease rental income of $105.9 million
for the quarter, a decrease of $19.1 million (or 15.3 percent) from
the prior year quarter; $7.2 million of this reduction was due to
lost rental income from Hanjin Shipping Co. (“Hanjin”). Lease
rental income, adjusted for Hanjin decreased 9.5 percent from the
prior year quarter;
- Net loss attributable to Textainer
Group Holdings Limited common shareholders of $0.3 million for the
quarter, or $0.01 per diluted common share, a decrease of $45.6
million (or 99.2 percent) from the prior quarter;
- Adjusted net loss (1) of $13.6 million
for the quarter, or $0.24 per diluted common share, a decrease of
$38.7 million (or 74.0 percent) from the prior quarter;
- Net loss and adjusted net loss (1)
attributable to Textainer Group Holdings Limited common
shareholders of $50.7 million, or $0.89 per diluted common share
and $56.1 million, or $0.99 per diluted common share, respectively,
for the full year;
- Recorded container impairments to write
down our inventory of containers that are pending disposal to their
fair value of $12.9 million (or $0.23 per diluted common share) for
the quarter and $66.5 (or $1.17 per diluted common share) for the
full year;
- Financial impact for the full year as a
result of the Hanjin bankruptcy was $53.3 million (or $0.94 per
diluted common share), including a $12.1 million reduction of
revenue for the full year;
- Utilization averaged 94.3 percent for
the quarter and is currently at 94.5 percent; and
- Invested $480 million to purchase more
than 286,000 TEU of new and used containers for the year.
“Our fourth quarter results improved significantly compared to
the prior quarter, primarily due to improved market conditions and
the prior quarter’s results being significantly impacted by Hanjin.
Our adjusted net loss decreased by $38.7 million, compared to the
prior quarter,” stated Philip K. Brewer, President and Chief
Executive Officer of Textainer Group Holdings Limited. “During
2016, we invested $480 million to purchase 286,000 TEU of new and
used containers and our utilization remained high at 94.5
percent.”
“We are pleased with our progress recovering containers from
Hanjin, who had been one of our major customers that filed for
bankruptcy in August 2016. To date we have recovered or are in the
process of recovering 80 percent of the containers leased to
Hanjin. We are also actively negotiating the release of another 13
percent of our containers although we do not know whether all
negotiations will result in successful recoveries. The remaining 7
percent of containers are being recovered in small batches. At this
time, we expect to recover around 90 percent of our containers. We
have $80 million of insurance which we expect will substantially
cover unrecovered containers, lost revenue and recovery and repair
costs.”
“Our results were negatively affected by ongoing container
impairments of $12.9 million for the quarter and $66.5 million for
the full year due to low used container prices. These impairments
prompted our decision to reduce residual values for certain
equipment types, effective July 1, 2016. Subsequently, used
container prices increased significantly causing the level of
impairments to decline. Impairments for containers held for
disposal decreased 22 percent from an average of $5.5 million per
month during the third quarter of 2016 to $4.3 million per month
during the fourth quarter of 2016.”
“New container prices today are about $850 (or 70 percent) per
CEU higher than they were at the low point last year. Used
container prices have increased 15 to 25 percent since September.
More importantly, rental rates and margins on new and depot
container lease-outs have more than doubled to levels not seen for
several years. After adjusting for Hanjin recoveries, our lease-out
to turn-in ratio for the fourth quarter was 1.8:1.0. These are
among the many positive signs we are currently seeing,” concluded
Mr. Brewer.
Key Financial Information (in thousands except for per share
and TEU amounts):
Q4 QTD Full-year
2016 2015 (a) % Change
2016 2015 (a) % Change Total
revenues $ 120,075 $ 129,691 -7.4 % $ 498,189 $ 544,278
-8.5 % Income from operations $ 9,658 $ 38,041 -74.6 % $
28,163 $ 211,819 -86.7 %
Net (loss) income attributable to
Textainer Group Holdings Limited common shareholders
$ (346 ) $ 21,673 -101.6 % $ (50,662 ) $ 108,408 -146.7 %
Net (loss) income attributable to
Textainer Group Holdings Limited common shareholders per diluted
common share
$ (0.01 ) $ 0.38 -102.6 % $ (0.89 ) $ 1.90 -146.8 % Adjusted net
(loss) income (1) $ (13,609 ) $ 12,941 -205.2 % $ (56,132 ) $
110,171 -150.9 % Adjusted net (loss) income per diluted common
share (1) $ (0.24 ) $ 0.23 -204.3 % $ (0.99 ) $ 1.93 -151.3 %
Adjusted EBITDA (1) $ 86,189 $ 104,476 -17.5 % $ 346,953 $ 432,129
-19.7 % Net cash provided by operating activities $ 286,089 $
371,958 -23.1 % Average fleet utilization 94.3 % 95.7 % -1.5 % 94.7
% 96.8 % -2.2 % Total fleet size at end of period (TEU) 3,142,556
3,147,690 -0.2 % Owned percentage of total fleet at end of period
81.0 % 80.1 % 1.1 %
(a) Certain amounts for the periods ended December 31, 2015 have
been restated for immaterial corrections of identified errors
pertaining to the classification of certain leases.
“Adjusted net (loss) income” and “adjusted EBITDA” are Non-GAAP
Measures that are reconciled to GAAP measures in footnote 1.
“Adjusted net (loss) 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 (gains) losses on interest rate swaps, collars and caps,
net and the related impact of reconciling items on income tax
(benefit) 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 (gains) losses on interest rate swaps, collars and
caps, net, income tax (benefit) 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.
Fourth-Quarter and Full-Year Results
Lease rental income decreased 15.3 percent for the quarter and
10.3 percent for the year, from the prior year comparable periods.
The decrease was due to a decrease in average rental rates, lower
utilization and lost revenue from the Hanjin bankruptcy, partially
offset by an increase in our owned fleet size. Direct container
expense also increased primarily due to an increase in storage
costs resulting from lower utilization and higher storage
rates.
In August 2016, Hanjin filed for bankruptcy. The Company
maintains insurance to cover the value of containers that are
unlikely to be recovered from its customers, the cost to recover
containers, up to 183 days of lost lease rental income and a
portion of the accounts receivable balance. Our 2016 results
included a $17.4 million impairment to write down the carrying
value of containers on terminated direct financing leases to Hanjin
to their estimated fair market value. An impairment of $4.8 million
was also recognized for $24.9 million of containers unlikely to be
recovered, net of $20.1 million of anticipated insurance proceeds.
These impairments net of estimated insurance proceeds totaled $22.1
million. In addition, bad debt expense of $19.0 million, net of
insurance receivable of $2.6 million, was recorded in 2016 to fully
reserve for Hanjin’s outstanding accounts receivable.
Based on the extended period of lower realized container resale
prices and longer useful lives, we decreased the residual values
and increased the useful lives of several container types,
effective July 1, 2016. The decrease in estimated residual values
and increase in estimated useful lives resulted in $10.2 million of
additional depreciation expense in the fourth quarter of 2016 and
$25.2 million for the second half of 2016, of which $4.4 million
was a one-time charge for containers that were fully depreciated to
the previous residual values.
In addition to the above mentioned factors, Textainer’s 2016
results included $12.9 million for the fourth quarter and $66.5 for
the full year of container impairments to write down our inventory
of containers that are pending disposal to their fair market
value.
Outlook
“As we look to the rest of 2017, we see a number of positive
trends that should help us turn the corner from a difficult 2016.
Total new dry freight container production last year of 1.8 million
TEU was not significantly higher than the 1.5 million TEU which
were disposed, meaning the world’s container fleet barely grew. New
dry freight container inventories at factories are currently near a
historical low of 300,000 TEU and our inventory of unbooked depot
containers is below 100,000 TEU. Utilization remains high
throughout the industry. These all bode well for a good
supply-demand balance even if only modest trade growth materializes
in 2017,” stated Mr. Brewer.
“Steel prices are 80 percent higher than they were one year ago
which, combined with the switch to waterborne paint, should help
support new container prices at their current level above $2,000.
The public container manufacturers all reported significant losses
during the first half of 2016 and are focused on returning to
profitability. Used container prices have increased significantly,
especially in Asia. New container rental rates have increased to a
greater degree than new container prices, demonstrating an
improvement in margins, and depot lease-out rates have also
improved.”
“However, we expect our 2017 results to continue to be
negatively affected by the costs of recovering Hanjin containers,
impairments of containers put to disposal, increased depreciation
expense due to the recent changes to our depreciation policy and
our expectation that our effective interest rate will increase.
These factors are projected to result in accounting losses over the
near term. Furthermore, the full impact of new container rental
rates will only build over time as our fleet reprices and we put
new containers on-lease. The important point is that our industry
has passed the bottom of this cycle and is showing strong signs of
recovery,” concluded Mr. Brewer.
Investors’ Conference Call and Webcast
Textainer will hold a conference call and a Webcast at 11:00 am
EDT on Thursday, February 16, 2017 to discuss Textainer’s
fourth quarter 2016 results. An archive of the Webcast will be
available one hour after the live call through February 15,
2018. 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 44184538. To access the live
Webcast or archive, please visit Textainer’s Investor Relations
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 3.1 million TEU in
our owned and managed fleet. We lease containers to approximately
320 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 120,000 containers per year for the
last five years to more than 1,400 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
expectation that it will recover around 90 percent of its
containers from Hanjin; (ii) Textainer’s belief that its insurance
coverage will substantially cover Hanjin’s unrecovered containers,
lost revenue and recovery and repair costs; (iii) Textainer’s
belief that with steel prices 80 percent higher than they were one
year ago, which combined with the switch to waterborne paint,
should help support new container prices at their current level
above $2,000; (iv) Textainer’s expectation that 2017 results will
continue to be negatively affected by the costs of recovering
Hanjin containers, impairments of containers put to disposal and
increased depreciation expense due to the recent changes to its
depreciation policy; (v) Textainer’s expectation that it will have
accounting losses over the near term; (vi) Textainer’s belief that
the full impact of new container rental rates will only build over
time as its fleet reprices and it puts new containers on-lease; and
(vii) Textainer’s belief that its industry has passed the bottom of
its cycle and is showing strong signs of recovery. 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.
TEXTAINER GROUP HOLDINGS LIMITED AND
SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive (Loss) Income
Three Months and Years ended December 31, 2016 and 2015 (Unaudited)
(All currency expressed in United States dollars in thousands,
except per share amounts)
Three Months Ended December
31, Years Ended December 31, 2016 2015
(1) 2016 2015 (1) Revenues:
Lease rental income $ 105,870 $ 125,008 $ 459,588 $
512,544 Management fees 3,646 3,632 13,420 15,610 Trading container
sales proceeds 6,525 1,338 15,628 12,670 Gains on sale of
containers, net 4,034 (287 ) 9,553
3,454 Total revenues 120,075 129,691 498,189
544,278 Operating expenses: Direct container expense 17,727
14,856 62,596 47,342 Cost of trading containers sold 4,999 1,268
15,904 12,475 Depreciation expense 63,530 51,726 236,144 191,930
Container impairment 14,125 15,211 94,623 35,345 Amortization
expense 937 1,239 5,053 4,741 General and administrative expense
6,399 6,016 26,311 27,645 Short-term incentive compensation expense
1,174 (732 ) 2,242 913 Long-term incentive compensation expense
1,423 2,199 5,987 7,040 Bad debt expense, net 103
(133 ) 21,166 5,028 Total operating expenses
110,417 91,650 470,026 332,459 Income from
operations 9,658 38,041 28,163 211,819
Other (expense) income: Interest expense (23,972 ) (18,882 )
(85,215 ) (76,521 ) Interest income 126 35 408 125
Realized losses on interest rate swaps,
collars and caps, net
(1,929 ) (3,241 ) (8,928 ) (12,823 )
Unrealized gains (losses) on interest rate
swaps, collars and caps, net
15,252 10,106 6,210 (1,947 ) Other, net 1 1 (8
) 26 Net other expense (10,522 ) (11,981 )
(87,533 ) (91,140 )
(Loss) income before income tax and
noncontrolling interests
(864 ) 26,060 (59,370 ) 120,679 Income tax benefit (expense)
1,094 (2,435 ) 3,447 (6,695 ) Net (loss)
income 230 23,625 (55,923 ) 113,984
Less: Net (income) loss attributable to
the noncontrolling interests
(576 ) (1,952 ) 5,261 (5,576 )
Net (loss) income attributable to
Textainer Group Holdings Limited common shareholders
$ (346 ) $ 21,673 $ (50,662 ) $ 108,408
Net (loss) income attributable to
Textainer Group Holdings Limited common shareholders per share:
Basic $ (0.01 ) $ 0.38 $ (0.89 ) $ 1.90 Diluted $ (0.01 ) $ 0.38 $
(0.89 ) $ 1.90 Weighted average shares outstanding (in thousands):
Basic 56,690 56,832 56,608 56,953 Diluted 56,690 56,929 56,608
57,093 Other comprehensive loss (income): Foreign currency
translation adjustments (151 ) (35 ) (233 )
(240 ) Comprehensive income (loss) 79 23,590 (56,156 )
113,744
Comprehensive (income) loss attributable
to the noncontrolling interests
(576 ) (1,952 ) 5,261 (5,576 )
Comprehensive (loss) income attributable
to Textainer Group Holdings Limited common shareholders
$ (497 ) $ 21,638 $ (50,895 ) $ 108,168
(1) Certain amounts for the periods ended December 31, 2015 have
been restated for immaterial corrections of identified errors
pertaining to the classification of certain leases.
TEXTAINER GROUP HOLDINGS LIMITED AND
SUBSIDIARIES
Condensed Consolidated Balance Sheets December 31, 2016 and 2015
(Unaudited) (All currency expressed in United States dollars in
thousands)
2016 2015 (1) Assets Current
assets: Cash and cash equivalents $ 84,045 $ 115,594
Accounts receivable, net of allowance for
doubtful accounts of $31,844 and $14,053 in 2016 and 2015,
respectively
75,708 88,370 Net investment in direct financing and sales-type
leases 64,951 86,404 Trading containers 4,363 4,831 Containers held
for sale 25,513 43,245 Prepaid expenses and other current assets
13,584 8,385 Insurance receivable 44,785 11,435 Due from
affiliates, net 869 514 Total current assets 313,818
358,778 Restricted cash 58,078 33,917
Containers, net of accumulated
depreciation of $990,784 and $814,790 at 2016 and 2015,
respectively
3,720,334 3,696,311 Net investment in direct financing and
sales-type leases 172,283 245,388
Fixed assets, net of accumulated
depreciation of $10,136 and $9,836 at 2016 and 2015,
respectively
1,993 1,663
Intangible assets, net of accumulated
amortization of $40,762 and $35,709 at 2016 and 2015,
respectively
15,197 20,250 Interest rate swaps, collars and caps 4,816 814
Deferred taxes 1,385 1,203 Other assets 8,075 6,988
Total assets $ 4,295,979 $ 4,365,312
Liabilities and Equity
Current liabilities: Accounts payable $ 12,060 $ 10,477 Accrued
expenses 9,721 6,816 Container contracts payable 11,990 41,356
Other liabilities 265 291 Due to owners, net 18,132 11,806 Credit
facility 31,822 - Secured debt facility 20,740 - Term loan 30,771
31,097 Bonds payable 58,970 58,788 Total current
liabilities 194,471 160,631 Credit facilities 1,085,196 1,013,252
Secured debt facilities 1,071,385 1,062,539 Term loan 363,961
403,500 Bonds payable 375,452 434,472 Interest rate swaps, collars
and caps 1,204 3,412 Income tax payable 9,076 8,678 Deferred taxes
6,237 10,420 Other liabilities 2,259 2,523 Total
liabilities 3,109,241 3,099,427 Equity: Textainer
Group Holdings Limited shareholders’ equity:
Common shares, $0.01 par value. Authorized
140,000,000 shares; 57,417,119 shares issued and 56,787,119 shares
outstanding at 2016; 57,163,095 shares issued and 56,533,095 shares
outstanding at 2015
572 572 Additional paid-in capital 390,783 385,020 Treasury shares,
at cost, 630,000 shares (9,149 ) (9,149 ) Accumulated other
comprehensive income (516 ) (283 ) Retained earnings 746,057
825,473 Total Textainer Group Holdings Limited shareholders’
equity 1,127,747 1,201,633 Noncontrolling interest 58,991
64,252 Total equity 1,186,738 1,265,885 Total
liabilities and equity $ 4,295,979 $ 4,365,312
(1) Amounts as of December 31, 2015 have been restated for
immaterial corrections of identified errors pertaining to the
classification of certain leases.
TEXTAINER GROUP HOLDINGS LIMITED AND
SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows Years ended
December 31, 2016 and 2015 (Unaudited) (All currency expressed in
United States dollars in thousands)
2016 2015
(1) Cash flows from operating activities: Net (loss) income $
(55,923 ) $ 113,984 Adjustments to reconcile net (loss) income to
net cash provided by operating activities: Depreciation expense
236,144 191,930 Container impairment 94,623 35,345 Bad debt
expense, net 21,166 5,028 Unrealized losses on interest rate swaps,
collars and caps, net (6,210 ) 1,947 Amortization of debt issuance
costs and accretion of bond discount 9,704 7,887 Amortization of
intangible assets 5,053 4,741 Gains on sale of containers, net
(9,553 ) (3,454 ) Share-based compensation expense 6,573 7,743
Changes in operating assets and liabilities (15,488 )
6,807 Total adjustments 342,012 257,974 Net cash
provided by operating activities 286,089 371,958 Cash
flows from investing activities: Purchase of containers and fixed
assets (505,528 ) (533,306 ) Proceeds from sale of containers and
fixed assets 126,560 129,452 Receipt of payments on direct
financing and sales-type leases, net of income earned 90,343
98,227 Net cash used in investing activities (288,625
) (305,627 ) Cash flows from financing activities: Proceeds
from credit facilities 349,500 406,177 Principal payments on credit
facilities (245,529 ) (331,447 ) Proceeds from secured debt
facilities 233,000 160,000 Principal payments on secured debt
facilities (206,040 ) (107,600 ) Principal payments on term loan
(39,787 ) (39,600 ) Principal payments on bonds payable (60,230 )
(60,230 ) (Increase) decrease in restricted cash (24,161 ) 26,393
Purchases of treasury shares — (9,149 ) Debt issuance costs (5,969
) (5,853 ) Issuance of common shares upon exercise of share options
— 301 Net tax benefit from share-based compensation awards (810 )
(1,333 ) Capital contributions from noncontrolling interest — 1,850
Dividends paid to Textainer Group Holdings Limited shareholders
(28,754 ) (94,079 ) Dividends paid to noncontrolling interest
— (2,994 ) Net cash used in financing activities
(28,780 ) (57,564 ) Effect of exchange rate changes
(233 ) (240 ) Net (decrease) increase in cash and
cash equivalents (31,549 ) 8,527 Cash and cash equivalents,
beginning of the year 115,594 107,067 Cash and cash
equivalents, end of the year $ 84,045 $ 115,594
(1) Certain amounts for the year ended December 31, 2015 have
been restated for immaterial corrections of identified errors
pertaining to the classification of certain leases.
TEXTAINER GROUP HOLDINGS LIMITED AND
SUBSIDIARIES
Reconciliation of GAAP financial measures to non-GAAP financial
measures Three Months and Years Ended December 31, 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 months and years ended December 31,
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 (gains) losses on interest rate
swaps, collars and caps, net, income tax (benefit) 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 (loss) income (defined as net (loss)
income attributable to Textainer Group Holdings Limited common
shareholders before the write-off of unamortized debt issuance
costs, unrealized (gains) losses on interest rate swaps, collars
and caps, net, the related impact of reconciling items on income
tax (benefit) 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 (loss) 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 (gains) losses on
interest rate swaps, collars and caps, net, the related impact of
reconciling items on income tax (benefit) 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 (loss) 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 (gains) losses 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 (loss) income per diluted common share are useful in evaluating
our operating performance because unrealized (gains) losses 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 (loss) income or adjusted net (loss) 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 Years
Ended December 31, December 31, 2016
2015 (1) 2016 2015 (1)
(Dollars in thousands) (Dollars in thousands)
(Unaudited) (Unaudited) Reconciliation of adjusted
net (loss) income:
Net (loss) income attributable to
Textainer Group Holdings Limited common shareholders
$ (346 ) $ 21,673 $ (50,662 ) $ 108,408 Adjustments: Write-off of
unamortized debt issuance costs — — — 458 Unrealized (gains) losses
on interest rate swaps, collars and caps, net (15,252 ) (10,106 )
(6,210 ) 1,947 Impact of reconciling items on income tax benefit
(expense) 253 464 104 (129 )
Impact of reconciling items on net income
(loss) attributable to the noncontrolling interests
1,736 910 636 (513 )
Adjusted net
(loss) income $ (13,609 ) $ 12,941 $ (56,132 ) $ 110,171
Reconciliation of adjusted net (loss) income per diluted common
share:
Net (loss) income attributable to
Textainer Group Holdings Limited common shareholders per diluted
common share
$ (0.01 ) $ 0.38 $ (0.89 ) $ 1.90 Adjustments: Write-off of
unamortized debt issuance costs — — — 0.01 Unrealized (gains)
losses on interest rate swaps, collars and caps, net (0.26 ) (0.18
) (0.11 ) 0.03 Impact of reconciling items on income tax benefit
(expense) — 0.01 — -
Impact of reconciling items on net income
(loss) attributable to the noncontrolling interests
0.03 0.02 0.01 (0.01 )
Adjusted net
(loss) income per diluted common share $ (0.24 ) $ 0.23 $ (0.99
) $ 1.93
(1) Certain amounts for the periods ended December 31, 2015 have
been restated for immaterial corrections of identified errors
pertaining to the classification of certain leases.
Three Months Ended Years
Ended December 31, December 31, 2016
2015 (1) 2016 2015 (1)
(Dollars in thousands) (Dollars in thousands)
(Unaudited) (Unaudited) Reconciliation of adjusted
EBITDA:
Net (loss) income attributable to
Textainer Group Holdings Limited common shareholders
$ (346 ) $ 21,673 $ (50,662 ) $ 108,408 Adjustments: Interest
income (126 ) (35 ) (408 ) (125 ) Interest expense 23,972 18,882
85,215 76,521 Realized losses on interest rate swaps, collars and
caps, net 1,929 3,241 8,928 12,823 Unrealized (gains) losses on
interest rate swaps, collars and caps, net (15,252 ) (10,106 )
(6,210 ) 1,947 Income tax (benefit) expense (1,094 ) 2,435 (3,447 )
6,695
Net income (loss) attributable to the
noncontrolling interests
576 1,952 (5,261 ) 5,576 Depreciation expense 63,530 51,726 236,144
191,930 Container impairment 14,125 15,211 94,623 35,345
Amortization expense 937 1,239 5,053 4,741
Impact of reconciling items on net income
(loss) attributable to the noncontrolling interests
(2,062 ) (1,742 ) (17,022 ) (11,732 )
Adjusted EBITDA $ 86,189 $ 104,476 $ 346,953 $ 432,129 Net cash
provided by operating activities $ 286,089 $ 371,958 Adjustments:
Bad debt expense, net (21,166 ) (5,028 )
Amortization of debt issuance costs and
accretion of bond discount
(9,704 ) (7,887 ) Gains on sale of containers, net 9,553 3,454
Share-based compensation expense (6,573 ) (7,743 ) Interest income
(408 ) (125 ) Interest expense 85,215 76,521 Realized losses on
interest rate swaps, collars and caps, net 8,928 12,823 Income tax
(benefit) expense (3,447 ) 6,695 Changes in operating assets and
liabilities 15,488 (6,807 )
Impact of reconciling items on net income
(loss) attributable to the noncontrolling interests
(17,022 ) (11,732 ) Adjusted EBITDA $ 346,953 $
432,129
(1) Certain amounts for the periods ended December 31, 2015 have
been restated for immaterial corrections of identified errors
pertaining to the classification of certain leases.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170216005307/en/
Textainer Group Holdings LimitedHilliard C. Terry, III, +1
415-658-8214Executive Vice President and Chief Financial
Officerir@textainer.com
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