Textainer Group Holdings Limited (NYSE: TGH) (“Textainer”, “the
Company”, “we” and “our”), one of the world’s largest lessors of
intermodal containers, reported second-quarter 2017 results.
Financial and Business Summaries
- Lease rental income increased $1.2
million (or one percent) from the prior quarter to $108.8 million
for the quarter;
- Gains on sale of containers, net
increased $1.8 million (or 45 percent) from the prior quarter to
$5.9 million (or $0.10 per diluted common share) for the
quarter;
- Container impairments declined $3.1
million (or 81 percent) from the prior quarter to $0.7 million (or
$0.01 per diluted common share) for the quarter;
- Adjusted EBITDA(1) of $91.2 million for
the quarter, an increase of $9.1 million (or 11 percent) from the
prior quarter;
- Net loss attributable to Textainer
Group Holdings Limited common shareholders of $9.4 million for the
quarter, or $0.16 per diluted common share, an increase of $2.4
million (or 34 percent) from the prior quarter mainly due from the
write-off of unamortized deferred debt issuance costs and bond
discounts;
- Adjusted net loss(1) of $1.2 million
for the quarter, or $0.02 per diluted common share, an improvement
of $7.9 million (or 87 percent) from the prior quarter;
- Utilization averaged 96.3 percent for
the quarter and is currently at 96.6 percent, an improvement of 160
basis point over the prior quarter average; and
- Approximately $275 million of capex
year-to-date in 2017.
“We continue to see strong improvement in container leasing
market conditions with a quarter-to-quarter increase in lease
revenue, decrease in direct container expense, reduction in
container impairments and increase in gains on container sales. New
container prices were around $2,150 per CEU during the quarter
while used containers prices continued to increase. Our utilization
continues to improve as we lease out new-build and depot
inventory,” stated Philip K. Brewer, President and Chief Executive
Officer of Textainer Group Holdings Limited.
“Notwithstanding these very positive developments, the impact of
writing off several one-time items related to our refinancing
activity and non-cash GAAP tax expense, resulted in our reporting
GAAP net loss in the second quarter. However, we project that we
will return to profitability during the second half of this
year.”
“Due to the need to recover Hanjin containers and financing
limitations, our investment in new containers was extremely limited
during the first quarter. During the second quarter we raised $920
million to pay down existing term debt and bank facilities,
enabling us to free up liquidity and acquire new containers. We
have invested approximately $275 million year-to-date under very
attractive lease terms with initial yields above 12% and our low
leverage gives us the flexibility to continue investing. These
investments combined with on-going lease-outs of depot and
ex-Hanjin containers will continue to improve our earnings going
forward.”
“A week ago, we were very pleased to assume the management of
182,000 TEU fleet of containers from Magellan Maritime Services
GmbH. We were able to complete this integration within three weeks,
again demonstrating Textainer’s expertise at container management,”
concluded Mr. Brewer.
Key Financial Information (in thousands except for per share
and TEU amounts):
QTD YTD Q2 2017 Q1
2017 Q2 2016 (*) Q2 2017 Q2 2016
(*) Lease rental income $ 108,779 $ 107,617 $ 120,465 $ 216,396
$ 242,813 Total revenues $ 119,247 $ 116,687 $ 127,041 $ 235,934 $
255,661 Income from operations $ 33,512 $ 20,039 $ 26,398 $ 53,551
$ 55,772
Net loss attributable to Textainer Group
Holdings Limited common shareholders
$ (9,353 ) $ (6,974 ) $ (1,879 ) $ (16,327 ) $ (5,616 )
Net loss attributable to Textainer Group
Holdings Limited common shareholders per diluted common share
$ (0.16 ) $ (0.12 ) $ (0.03 ) $ (0.29 ) $ (0.10 ) Adjusted net
(loss) income (1) $ (1,195 ) $ (9,067 ) $ 2,537 $ (10,262 ) $ 8,559
Adjusted net (loss) income per diluted common share (1) $ (0.02 ) $
(0.16 ) $ 0.04 $ (0.18 ) $ 0.15 Adjusted EBITDA (1) $ 91,210 $
82,112 $ 95,214 $ 173,322 $ 191,449 Average fleet utilization 96.3
% 95.0 % 94.7 % 95.7 % 94.6 % Total fleet size at end of period
(TEU) 2,992,040 3,054,198 3,195,378 Owned percentage of total fleet
at end of period 81.3 % 81.3 % 81.0 %
(*) Certain amounts for the period ended June
30, 2016 have been restated for immaterial corrections of
identified errors pertaining to the classification of certain
leases and to reverse gains on sale of containers, net that were
deemed uncollectible.
“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 write-off of unamortized deferred
debt issuance costs and bond discounts, unrealized losses (gains)
on interest rate swaps, collars and caps, net and the related
impact of reconciling items on income tax expense and net (loss)
income attributable to the non-controlling interests (“NCI”).
“Adjusted EBITDA” is defined as net loss attributable to Textainer
Group Holdings Limited common shareholders before interest income
and expense, the write-off of unamortized deferred debt issuance
costs and bond discounts, realized and unrealized losses (gains) on
interest rate swaps, collars and caps, net, income tax expense, net
(loss) income attributable to the NCI, depreciation expense,
container impairment, amortization expense and the related impact
of reconciling items on net loss attributable to the NCI. Footnote
1 provides certain qualifications and limitations on the use of
Non-GAAP Measures.
Second-Quarter Results
Lease rental income decreased $11.7 million from the prior year
comparable period. The decrease was due to a decrease in average
rental rates and lost revenue from the Hanjin bankruptcy, partially
offset by higher utilization.
Gains on sale of containers, net was $5.9 million for the
current quarter compared to $0.2 million for the prior year
quarter; the $5.7 million increase was primarily due to an increase
in average sales proceeds per unit, partially offset by a decrease
in volume of sales. Container impairments decreased $18.8 million
from the prior year quarter primarily due to a decrease in the
volume of containers designated for disposal, an increase in used
container prices and a $4.9 million reversal of previous recorded
impairments on containers held for sale due to rising used
container prices during the second quarter 2017, partially offset
by a $3.7 million impairment for containers that were unlikely
recoverable from lessees in default.
Textainer’s second quarter results were adversely impacted by an
increase in depreciation expense of $7.9 million from the prior
year comparable period primarily due to a decrease in residual
values effective July 1, 2016, partially offset by an increase in
useful lives also effective July 1, 2016 and a decrease in our
owned fleet size excluding fully depreciated containers. Interest
expense, including realized losses on interest rate swaps, collars
and caps, net, increased $7.5 million from the prior year quarter
due to a 108 basis point increase in our effective interest
rate.
“Our average effective interest rate increased 108 basis points
when compared to the year-ago quarter. Approximately 60 basis
points of the increase was due to increased spreads following our
financing amendments as several below market rate facilities were
repriced to align with current market rates for container lessors.
Additionally, we have incremental fees because of our financing
activity and changes to LIBOR, offset by a hedging benefit. Several
below-market rate facilities being repriced as a part of the
amendment process to align with current market rates. Our
effective rate remained relatively flat versus first quarter of
this year and we are working to improve our funding costs going
forward,” commented Hilliard C. Terry, III, Executive Vice
President and Chief Financial Officer of Textainer Group Holdings
Limited.
“During the quarter, we completed two asset-backed notes
issuances totaling $920 million. Both were well received by fixed
income investors and oversubscribed by as much as six times. As a
result, we were able to tighten pricing versus other recent
issuances by competitors. The offerings achieved several milestones
in the container ABS markets: the largest container issuance in
over a decade and the largest annual issuance for any issuer in the
container ABS market. Our financings position us to take advantage
of the attractive leasing returns we are seeing in our market,”
concluded Mr. Terry.
In addition to the above-mentioned factors, Textainer’s second
quarter results were also negatively impacted by an increase of
$4.0 million in income tax expense from the prior year quarter
primarily due to a higher than forecasted percentage of our
business occurring in the United States relative to other
regions.
Outlook
“New container prices have not only remained stable but seem
likely to increase in the coming months due to production
constraints resulting from the challenges of using waterborne paint
during the winter months and increases in component costs. For
these reasons, we are optimistic. Used container prices have
increased 85% since the low point in August 2016 and are now at
levels significantly above the residual values we use for
depreciation purposes,” stated Mr. Brewer.
“We are excited about our outlook; the lease-out market is
strong and a number of sustainable trends appear to be in place for
this strength to persist. Production capacity is limited, new
container and depot inventories are very low, utilization is high
for all container lessors, and lessors are purchasing more than
half of all new production. The financial performance of shipping
lines is improving but they remain somewhat capital constrained and
are viewing leasing favorably. Our high utilization and attractive
used container prices should ensure gains on sale continue in the
coming quarters and we expect direct costs to further reduce as
storage and handling expenses continue to benefit from high
utilization.”
“Should current market conditions continue going forward, we
project our revenue to increase significantly due to the repricing
of maturing leases which are at rates well below the current
market. We believe that these positive changes and trends,
especially the future impact of lease repricing, may not be
recognized by the market,” concluded Mr. Brewer.
Investors’ Conference Call and Webcast
Textainer will hold a conference call and a Webcast at 11:00 am
EDT on Tuesday, August 8, 2017 to discuss Textainer’s second
quarter 2017 results. An archive of the Webcast will be available
one hour after the live call through August 8, 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 45276645. 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
2.0 million containers representing 3.0 million TEU in
our owned and managed fleet. We lease containers to approximately
300 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 more than 120,000 containers per year for the
last five years to more than 1,400 customers making us one of the
largest sellers 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 return to profitability during the second
half of this year; (ii) Textainer’s expectation that its new
container investments combined with on-going-lease-outs of depot
and ex-Hanjin containers will continue to improve its earnings
going forward; (iii) Textainer’s belief that new container prices
have not only remained stable but seem likely to increase in the
coming months due to production constraints resulting from the
challenges of using waterborne paint during the winter months and
increases in component costs; (iv) Textainer’s expectation that its
high utilization and attractive used container prices should ensure
gains on sale continue in the coming quarters and direct costs to
further reduce as storage and handling expense continue to benefit
from high utilization; (v) Textainer’s expectation that should
current market conditions continue going forward, its revenue will
increase due to the repricing of maturing leases which are at rates
well below the current market; and (vi) Textainer’s belief that the
positive changes and trends, especially the future impact of lease
repricing, may not be recognized by the market. 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 27, 2017.
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
Three and Six Months Ended June 30,
2017 and 2016
(Unaudited)
(All currency expressed in United States
dollars in thousands, except per share amounts)
Three Months Ended June 30, Six
Months Ended June 30, 2017 2016 (1)
2017 2016 (1) Revenues:
Lease rental income $ 108,779 $ 120,465 $ 216,396 $ 242,813
Management fees 3,534 3,294 6,756 6,638 Trading container sales
proceeds 1,052 3,062 2,852 4,964 Gains on sale of containers, net
5,882 220 9,930 1,246 Total revenues
119,247 127,041 235,934 255,661
Operating expenses: Direct container expense 14,889 14,549 34,548
29,178 Cost of trading containers sold 716 3,614 2,005 6,258
Depreciation expense 59,644 51,783 120,252 104,394 Container
impairment 714 19,484 4,525 36,776 Amortization expense 948 1,372
1,896 2,746 General and administrative expense 7,309 6,599 14,654
13,765 Short-term incentive compensation expense (benefit) 2 (93 )
1,362 680 Long-term incentive compensation expense 1,405 1,498
2,781 3,106 Bad debt expense, net 108 1,837
360 2,986 Total operating expenses 85,735
100,643 182,383 199,889 Income from operations
33,512 26,398 53,551 55,772 Other (expense)
income: Interest expense (29,404 ) (20,022 ) (58,317 ) (39,987 )
Write-off of unamortized deferred debt
issuance costs and bond discounts
(7,228 ) - (7,228 ) - Interest income 89 103 217 179
Realized losses on interest rate swaps,
collars and caps, net
(479 ) (2,378 ) (1,641 ) (4,731 )
Unrealized (losses) gains on interest rate
swaps, collars and caps, net
(1,232 ) (5,022 ) 1,062 (16,199 ) Other, net 17 3
3 (5 ) Net other expense (38,237 )
(27,316 ) (65,904 ) (60,743 )
Loss before income tax and noncontrolling
interests
(4,725 ) (918 ) (12,353 ) (4,971 ) Income tax expense (4,767
) (797 ) (5,214 ) (817 ) Net loss (9,492 )
(1,715 ) (17,567 ) (5,788 )
Less: Net loss (income) attributable to
the noncontrolling interests
139 (164 ) 1,240 172
Net loss attributable to Textainer Group
Holdings Limited common shareholders
$ (9,353 ) $ (1,879 ) $ (16,327 ) $ (5,616 )
Net loss attributable to Textainer Group
Holdings Limited common shareholders per share:
Basic $ (0.16 ) $ (0.03 ) $ (0.29 ) $ (0.10 ) Diluted $ (0.16 ) $
(0.03 ) $ (0.29 ) $ (0.10 ) Weighted average shares outstanding (in
thousands): Basic 56,803 56,580 56,797 56,575 Diluted 56,803 56,580
56,797 56,575 Other comprehensive loss: Foreign currency
translation adjustments 64 111 96 (2 )
Comprehensive loss (9,428 ) (1,604 ) (17,471 ) (5,790 )
Comprehensive loss attributable to the
noncontrolling interests
139 (164 ) 1,240 172
Comprehensive loss attributable to
Textainer Group Holdings Limited common shareholders
$ (9,289 ) $ (1,768 ) $ (16,231 ) $ (5,618 )
(1) Certain amounts for the periods ended June 30, 2016 have
been restated for immaterial corrections of identified errors
pertaining to the classification of certain leases and the
calculation of gains on sale of containers, net.
TEXTAINER GROUP HOLDINGS LIMITED AND
SUBSIDIARIES
Condensed Consolidated Balance Sheets
June 30, 2017 and December 31, 2016
(Unaudited)
(All currency expressed in United States
dollars in thousands)
2017 2016 (1) Assets
Current assets: Cash and cash equivalents $ 138,727 $ 84,045
Accounts receivable, net of allowance for
doubtful accounts of $28,648 and $31,844 in 2017 and 2016,
respectively
72,892 76,547 Net investment in direct financing and sales-type
leases 56,568 64,951 Trading containers 3,165 4,363 Containers held
for sale 32,856 25,513 Prepaid expenses and other current assets
12,915 13,584 Insurance receivable 25,162 44,785 Due from
affiliates, net 1,091 869 Total current assets
343,376 314,657 Restricted cash 86,414 58,078
Containers, net of accumulated
depreciation of $1,084,766 and $990,784 at 2017 and 2016,
respectively
3,553,155 3,717,542 Net investment in direct financing and
sales-type leases 152,073 172,283
Fixed assets, net of accumulated
depreciation of $10,513 and $10,136 at 2017 and 2016,
respectively
1,741 1,993
Intangible assets, net of accumulated
amortization of $42,658 and $40,762 at 2017 and 2016,
respectively
13,301 15,197 Interest rate swaps, collars and caps 5,113 4,816
Deferred taxes 1,389 1,385 Other assets 6,749 8,075
Total assets $ 4,163,311 $ 4,294,026
Liabilities and Equity
Current liabilities: Accounts payable $ 8,552 $ 12,060 Accrued
expenses 15,381 9,721 Container contracts payable 5,432 11,990
Other liabilities 250 265 Due to owners, net 10,564 18,132
Debt, net of unamortized deferred
financing costs of $5,562 and $6,137 at 2017 and 2016,
respectively
266,625 205,081 Total current liabilities 306,804
257,249 Debt, net of unamortized deferred financing costs of
$17,437 and $10,267 at 2017 and 2016, respectively 2,663,559
2,833,216 Interest rate swaps, collars and caps 439 1,204 Income
tax payable 8,787 9,076 Deferred taxes 11,183 6,237 Other
liabilities 2,141 2,259 Total liabilities
2,992,913 3,109,241 Equity: Textainer Group Holdings Limited
shareholders’ equity:
Common shares, $0.01 par value. Authorized
140,000,000 shares; 57,443,680 shares issued and 56,813,680 shares
outstanding at 2017; 57,417,119 shares issued and 56,787,119 shares
outstanding at 2016
575 575 Additional paid-in capital 393,864 390,780 Treasury shares,
at cost, 630,000 shares (9,149 ) (9,149 ) Accumulated other
comprehensive income (420 ) (516 ) Retained earnings 727,909
744,236 Total Textainer Group Holdings Limited shareholders’
equity 1,112,779 1,125,926 Noncontrolling interest 57,619
58,859 Total equity 1,170,398 1,184,785 Total
liabilities and equity $ 4,163,311 $ 4,294,026 (1) Certain
amounts as of December 31, 2016 have been restated for immaterial
corrections related to the calculation of gains on sale of
containers, net, to properly account for lease concessions and to
reclassify debt balances to conform with the 2017 presentation.
TEXTAINER GROUP HOLDINGS LIMITED AND
SUBSIDIARIES
Condensed Consolidated Statements of Cash
Flows
Six Months Ended June 30, 2017 and
2016
(Unaudited)
(All currency expressed in United States
dollars in thousands)
2017 2016 (1) Cash flows from operating
activities: Net loss $ (17,567 ) $ (5,788 ) Adjustments to
reconcile net loss to net cash provided by operating activities:
Depreciation expense 120,252 104,394 Container impairment 4,525
36,776 Bad debt expense, net 360 2,986 Unrealized (gains) losses on
interest rate swaps, collars and caps, net (1,062 ) 16,199
Amortization and write-off of unamortized
deferred debt issuance costs and accretion of bond discount
14,970 3,765 Amortization of intangible assets 1,896 2,746 Gains on
sale of containers, net (9,930 ) (1,246 ) Share-based compensation
expense 3,084 3,423 Changes in operating assets and liabilities
1,008 (18,767 ) Total adjustments 135,103
150,276 Net cash provided by operating activities
117,536 144,488 Cash flows from investing activities:
Purchase of containers and fixed assets (24,994 ) (228,073 )
Proceeds from sale of containers and fixed assets 66,049 61,154
Receipt of payments on direct financing and sales-type leases, net
of income earned 32,999 46,318 Insurance proceeds received for
unrecoverable containers 13,801 5,500 Net cash
provided by (used in) investing activities 87,855
(115,101 ) Cash flows from financing activities: Proceeds from debt
1,356,000 193,000 Principal payments on debt (1,458,201 ) (203,837
) Debt issuance costs (20,268 ) (1,550 ) Net tax benefit from
share-based compensation awards — (110 ) Dividends paid to
Textainer Group Holdings Limited shareholders —
(27,058 ) Net cash used in financing activities (122,469 )
(39,555 ) Effect of exchange rate changes 96
(2 ) Net increase (decrease) in cash, cash equivalents and
restricted cash 83,018 (10,170 ) Cash, cash equivalents and
restricted cash, beginning of the year 142,123
149,511 Cash, cash equivalents and restricted cash, end of the
period $ 225,141 $ 139,341
(1) Certain amounts for the period ended June 30, 2016 have been
restated for immaterial corrections of identified errors pertaining
to the classification of certain leases, the calculation of gains
on sale of containers, net, to reclassify debt balances in order to
conform with the 2017 presentation and for the adoption of
Accounting Standards Update No. 2016-15, Statement of Cash Flows
(Topic 230): Classification of Certain Cash Receipts and Cash
Payments and Accounting Standards Update No. 2016-18, Statement of
Cash Flows (Topic 230): Restricted Cash.
TEXTAINER GROUP HOLDINGS LIMITED AND
SUBSIDIARIES
Reconciliation of GAAP financial measures
to non-GAAP financial measures
Three and Six Months Ended June 30, 2017 and 2016 (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 and six months ended June 30,
2017 and 2016, including: (a) net loss attributable
to Textainer Group Holdings Limited common shareholders to adjusted
EBITDA (Adjusted EBITDA defined as net loss attributable to
Textainer Group Holdings Limited common shareholders before
interest income and expense, realized and unrealized losses (gains)
on interest rate swaps, collars and caps, net, income tax expense,
net (loss) income attributable to the noncontrolling interests
(“NCI”), depreciation expense, container impairment, amortization
expense and the related impact of reconciling items on net loss
attributable to the NCI); (b) net cash provided by operating
activities to Adjusted EBITDA; (c) net loss attributable to
Textainer Group Holdings Limited common shareholders to adjusted
net (loss) income (defined as net loss attributable to Textainer
Group Holdings Limited common shareholders before the write-off of
unamortized deferred debt issuance costs and bond discounts,
unrealized losses (gains) on interest rate swaps, collars and caps,
net, the related impact of reconciling items on income tax expense
and net (loss) income attributable to the NCI); and (d) net
loss 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 deferred debt
issuance costs and bond discounts, unrealized losses (gains) on
interest rate swaps, collars and caps, net, the related impact of
reconciling items on income tax expense and net (loss) income
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 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 losses (gains) 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 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 (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 Six Months Ended
June 30, June 30, 2017 2016 (1)
2017 2016 (1) (Dollars in thousands)
(Dollars in thousands) (Unaudited) (Unaudited)
Reconciliation of adjusted net loss:
Net loss attributable to Textainer Group
Holdings Limited common shareholders
$ (9,353 ) $ (1,879 ) $ (16,327 ) $ (5,616 ) Adjustments: Write-off
of unamortized deferred debt issuance costs and bond discounts
7,228 — 7,228 — Unrealized losses (gains) on interest rate swaps,
collars and caps, net 1,232 5,022 (1,062 ) 16,199 Impact of
reconciling items on income tax expense (142 ) (61 ) (104 ) (266 )
Impact of reconciling items on net (loss)
income attributable to the noncontrolling interests
(160 ) (545 ) 3 (1,758 )
Adjusted
net (loss) income $ (1,195 ) $ 2,537 $ (10,262 ) $ 8,559
Reconciliation of adjusted net (loss) income per diluted common
share:
Net loss attributable to Textainer Group
Holdings Limited common shareholders per diluted common share
$ (0.16 ) $ (0.03 ) $ (0.29 ) $ (0.10 ) Adjustments: Write-off of
unamortized deferred debt issuance costs and bond discounts 0.13 —
0.13 — Unrealized losses (gains) on interest rate swaps, collars
and caps, net 0.01 0.08 (0.02 ) 0.28 Impact of reconciling items on
income tax expense — — — —
Impact of reconciling items on net (loss)
income attributable to the noncontrolling interests
— (0.01 ) — (0.03 )
Adjusted net
(loss) income per diluted common share $ (0.02 ) $ 0.04 $ (0.18
) $ 0.15 (1) Certain amounts for the periods ended June 30,
2016 have been restated for immaterial corrections of identified
errors pertaining to the classification of certain leases and the
calculation of gains on sale of containers, net.
Three Months Ended Six Months Ended June
30, June 30, 2017 2016 (1)
2017 2016 (1) (Dollars in thousands)
(Dollars in thousands) (Unaudited) (Unaudited)
Reconciliation of adjusted EBITDA:
Net loss attributable to Textainer Group
Holdings Limited common shareholders
$ (9,353 ) $ (1,879 ) $ (16,327 ) $ (5,616 ) Adjustments: Interest
income (89 ) (103 ) (217 ) (179 ) Interest expense 29,404 20,022
58,317 39,987 Write-off of unamortized deferred debt issuance costs
and bond discounts 7,228 — 7,228 — Realized losses on interest rate
swaps, collars and caps, net 479 2,378 1,641 4,731 Unrealized
losses (gains) on interest rate swaps, collars and caps, net 1,232
5,022 (1,062 ) 16,199 Income tax expense 4,767 797 5,214 817 Net
(loss) income attributable to the noncontrolling interests (139 )
164 (1,240 ) (172 ) Depreciation expense 59,644 51,783 120,252
104,394 Container impairment 714 19,484 4,525 36,776 Amortization
expense 948 1,372 1,896 2,746
Impact of reconciling items on net loss
attributable to the noncontrolling interests
(3,625 ) (3,826 ) (6,905 ) (8,234 )
Adjusted EBITDA $ 91,210 $ 95,214 $ 173,322 $ 191,449 Net
cash provided by operating activities $ 117,536 $ 144,488
Adjustments: Bad debt expense, net (360 ) (2,986 )
Amortization and write-off of unamortized
deferred debt issuance costs and accretion of bond discount
(14,970 ) (3,765 ) Gains on sale of containers, net 9,930 1,246
Share-based compensation expense (3,084 ) (3,423 ) Interest income
(217 ) (179 ) Interest expense 58,317 39,987 Write-off of
unamortized deferred debt issuance costs and bond discounts 7,228 —
Realized losses on interest rate swaps, collars and caps, net 1,641
4,731 Income tax expense 5,214 817 Changes in operating assets and
liabilities (1,008 ) 18,767
Impact of reconciling items on net loss
attributable to the noncontrolling interests
(6,905 ) (8,234 ) Adjusted EBITDA $ 173,322 $ 191,449
(1) Certain amounts for the periods ended June 30, 2016 have
been restated for immaterial corrections of identified errors
pertaining to the classification of certain leases, the calculation
of gains on sale of containers, net and for the adoption of
Accounting Standards Update No. 2016-15, Statement of Cash Flows
(Topic 230): Classification of Certain Cash Receipts and Cash
Payments.
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version on businesswire.com: http://www.businesswire.com/news/home/20170808005402/en/
Textainer Group Holdings LimitedHilliard C. Terry, III, +1
415-658-8214Executive Vice President and Chief Financial
Officerir@textainer.com
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