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 2017
results.
Financial and Business Summaries
- Lease rental income of $116.3 million
for the quarter, an increase of $4.1 million, or 3.7 percent, from
the prior quarter, and $444.9 million for the full year;
- Net income attributable to Textainer
Group Holdings Limited common shareholders of $17.2 million for the
quarter, or $0.30 per diluted common share, a $1.3 million decrease
from the prior quarter. The decrease was largely due to an increase
in third quarter net income resulting from a one-time $4.8 million
tax benefit that largely reversed in the fourth quarter. Pre-tax
income for the quarter increased by $4.3 million from the third
quarter;
- Net income attributable to Textainer
Group Holdings Limited common shareholders of $19.4 million for the
full year, or $0.34 per diluted share, an increase of $71.8 million
compared to 2016;
- Adjusted net income(1) of $14.8 million
for the quarter, or $0.26 per diluted common share, a $3.8 million
decrease from the prior quarter, and $23.2 million for the full
year, or $0.41 per diluted share, an increase of $81.1 million from
the prior year;
- Adjusted EBITDA(1) of $100.6 million
for the quarter, an improvement of $0.1 million from the prior
quarter, and $374.5 million for the full year, a $29.5 million
year-on-year increase;
- Utilization averaged 97.4 percent for
the quarter and is currently at 97.9 percent, an improvement of 70
basis points over the prior quarter average and 290 basis points
over utilization at the start of 2017; and
- Capex orders of approximately $625
million during 2017.
"We continue to see strong operating results and positive
momentum leading into the new year. Lease rental income increased
for the fourth consecutive quarter and is up 8% compared to the
first quarter of the year as we benefit from new container
investments and further improvements in utilization. The impact of
these investments will grow going forward as more new containers
are delivered and picked up by our customers,” stated Philip K.
Brewer, President and Chief Executive Officer of Textainer Group
Holdings Limited.
“Strong earnings momentum continued as reflected in our $4.3
million increase in pre-tax profit. We expect the favorable market
conditions we are seeing to continue into 2018, mostly driven by
solid trade growth, shipping lines preference to lease, and minimal
depot inventory. Yields on new leases have moderated slightly but
remain attractive and container prices are holding stable at
approximately $2,200. Inventory at the factories has risen to
approximately 700,000 TEU, though much of this inventory is already
committed to leases and the remainder is appropriate to meet
upcoming second quarter demand. Additionally, resale prices have
remained high as expected given stable new box prices as well as
low depot inventory and container turn-ins.”
Key Financial Information (in thousands except for per share
and TEU amounts):
QTD Full-Year
Q4 2017 Q3 2017 Q4
2016 (*) 2017 2016 (*) Lease
rental income $ 116,297 $ 112,195 $ 106,709 $ 444,888 $ 460,427
Total revenues $ 129,316 $ 125,600 $ 120,200 $ 490,850 $ 496,236
Income from operations $ 45,310 $ 45,005 $ 9,783 $ 143,866 $ 26,210
Net income (loss) attributable to Textainer Group Holdings
Limited common shareholders
$ 17,211 $ 18,481 $ (132 ) $ 19,365 $ (52,483 ) Net income (loss)
attributable to Textainer Group Holdings
Limited common shareholders per diluted
common share
$ 0.30 $ 0.32 $ - $ 0.34 $ (0.93 ) Adjusted net income (loss) (1) $
14,792 $ 18,635 $ (13,395 ) $ 23,165 $ (57,953 ) Adjusted net
income (loss) per diluted common share (1) $ 0.26 $ 0.33 $ (0.24 )
$ 0.41 $ (1.02 ) Adjusted EBITDA (1) $ 100,613 $ 100,606 $ 86,314 $
374,541 $ 345,000 Average fleet utilization 97.4 % 96.7 % 94.3 %
96.4 % 94.7 % Total fleet size at end of period (TEU) 3,279,892
3,202,140 3,142,556 Owned percentage of total fleet at end of
period 78.8 % 77.2 % 81.0 % (*) Certain
amounts for the periods ended December 31, 2016 have been restated
for immaterial corrections of identified errors pertaining to the
calculation of gain on sale of containers, net and to properly
account for lease concessions.
“Adjusted net income (loss)” and “adjusted EBITDA” are Non-GAAP
Measures that are reconciled to GAAP measures in footnote 1.
“Adjusted net income (loss)” is defined as net income (loss)
attributable to Textainer Group Holdings Limited common
shareholders before charges to write-off of unamortized deferred
debt issuance costs and bond discounts, unrealized gains on
interest rate swaps, collars and caps, net and the related impact
of reconciling items on income tax expense (benefit) and net income
(loss) attributable to the non-controlling interests (“NCI”).
“Adjusted EBITDA” is defined as net income (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 (gains) losses on
interest rate swaps, collars and caps, net, unrealized gains on
interest rate swaps, collars and caps, net, income tax expense
(benefit), 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 increased $9.6 million for the quarter,
compared to the fourth quarter of 2016, primarily due to an
increase in average rental rates and higher utilization. Lease
rental income decreased $15.5 million for the year, compared to the
full year 2016, primarily due to a decrease in average rental
rates, partially offset by an increase in utilization and the
average fleet size.
Gain on sale of containers, net increased $5.0 million for the
quarter and $19.4 million for the year, from the comparable periods
in 2016. The increase was primarily due to an increase in average
sales proceeds per unit, partially offset by a decrease in volume
of sales.
Direct container expense decreased $3.0 million for the quarter
and $2.3 million for the year, from the comparable periods in 2016,
mainly due to lower storage costs resulting from higher average
utilization in 2017. The decrease for the year was partially offset
by higher repositioning expense on recovered Hanjin units.
Depreciation expense decreased $8.1 million for the quarter and
$5.1 million for the year, from the comparable periods in 2016. The
decrease was primarily due to an increase in future residual values
on each of our three primary dry container types effective July 1,
2017, partially offset by an increase in the average fleet size,
excluding fully depreciated containers.
Container impairment decreased $12.5 million for the quarter and
$86.6 million for the year, from the comparable periods in 2016.
The quarterly decrease was primarily due to a $11.9 million
decrease in impairments to write down the value of containers held
for sale to their estimated fair value due to increased resale
prices. The 2017 full year decrease was primarily due to a $51.0
million decrease in impairments to write down the value of
containers held for sale to their estimated fair value and a $11.2
million reversal of previously recorded impairments on containers
held for sale, both due to rising used container prices during
2017, as well as a write-down of $17.4 million on terminated Hanjin
direct finance leases in 2016.
Bad debt expense was $20.7 million lower in 2017 compared to
2016 mainly due to a $19.0 million provision for the Hanjin
bankruptcy in the prior year with no comparable provision recorded
in the current year.
The above-mentioned improvements were partially offset by an
increase in interest expense including hedging costs of $2.9
million for the quarter and $24.5 million for the year, from the
comparable periods in 2016, primarily due to higher amortization of
deferred debt issuance costs and increased borrowing costs.
For the year, we recorded a tax expense of $1.6 million. The tax
expense in the fourth quarter benefited from the U.S. Tax Cuts and
Job Act (TCJA) that was signed into law on December 22, 2017. The
most significant effect of the law on the Company was the reduction
in the U.S. federal corporate tax rate from 35% to 21%. The TCJA
remeasurement of deferred income tax assets and liabilities
resulted in a $3.1 million benefit in the fourth quarter.
Outlook
“Three major determinants of our success in 2018 will be growth
in container trade, stable container prices and maintenance of
current investment return levels. Forecasted growth in 2018 GDP has
increased recently to around 4% due to several factors including
strengthening European economies and the tax cut in the US.
Container trade is expected to grow at an even faster rate. We
expect container prices to remain stable given the recent increase
in steel prices and ongoing demand. Resale prices are also expected
to remain high given the level of new container prices and the
limited supply of containers placed on sale as a result of near
full utilization. Yields on new leases have slightly moderated as
competition increases. However, assuming disciplined ordering by
lessors and shipping lines, we expect returns to remain at
attractive levels,” continued Mr. Brewer.
“We enter 2018 with great momentum and the support of a
favorable market environment. We were the second largest purchaser
of containers among our peers in 2017 and have the size, resources,
and liquidity to continue investing in new containers while returns
remain attractive. We expect our performance in the first quarter
of 2018 to be better than the fourth quarter of 2017, with
increasing profitability as we move into 2018,” 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 15, 2018 to discuss Textainer’s
fourth quarter 2017 results. An archive of the Webcast will be
available one hour after the live call through February 14,
2019. 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 46320999. 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 approximately
3.3 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 130,000
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 more than 500
independent 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) the
favorable impact of container investments in future periods; (ii)
favorable market conditions in 2018; (iii) appropriateness of
current factory inventory to meet second quarter demand; (iv)
forecasts of GDP and container trade growth; (v) stability of new
container and resale container prices; (vi) yields on new leases
remaining at attractive levels; (vii) first quarter of 2018
performance to be better than the fourth quarter of 2017. 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 Income (Loss)
Three Months and Years Ended December 31,
2017 and 2016
(Unaudited)
(All currency expressed in United States
dollars in thousands, except per share amounts)
Three Months Ended December 31,
Years Ended December 31, 2017
2016 (a) 2017 2016 (a) Revenues:
Lease
rental income $ 116,297 $ 106,709 $ 444,888 $ 460,427 Management
fees 4,045 3,646 14,994 13,420 Trading container sales proceeds 669
6,525 4,758 15,628 Gain on sale of containers, net 8,305 3,320
26,210 6,761 Total revenues 129,316 120,200 490,850 496,236
Operating expenses: Direct container expense 14,747 17,727 60,321
62,596 Cost of trading containers sold 456 4,999 3,302 15,904
Depreciation expense 55,437 63,530 231,043 236,144 Container
impairment 1,591 14,125 8,072 94,623 Amortization expense 1,045 937
4,092 5,053 General and administrative expense 8,811 6,399 30,697
26,311 Short-term incentive compensation expense 1,314 1,174 3,481
2,242 Long-term incentive compensation expense 1,245 1,423 5,499
5,987 Bad debt (benefit) expense, net (640) 103 477 21,166 Total
operating expenses 84,006 110,417 346,984 470,026 Income from
operations 45,310 9,783 143,866 26,210 Other (expense) income:
Interest expense (29,089) (23,972) (117,475) (85,215)
Write-off of unamortized deferred debt
issuance costs and bond discounts
(84) - (7,550) - Interest income 205 126 613 408 Realized gains
(losses) on interest rate swaps, collars and caps, net 296 (1,929)
(1,191) (8,928)
Unrealized gains on interest rate swaps,
collars and caps, net
2,881 15,252 4,094 6,210
Other, net
4 1 3 (8) Net other expense (25,787) (10,522) (121,506) (87,533)
Income (loss) before income tax and
noncontrolling interests
19,523 (739) 22,360 (61,323) Income tax (expense) benefit, net
(1,187) 1,094 (1,618) 3,447 Net income (loss) 18,336 355 20,742
(57,876)
Less: Net (income) loss attributable to
the noncontrolling interests
(1,125)
(487)
(1,377)
5,393
Net income (loss) attributable to
Textainer Group Holdings Limited common shareholders
$ 17,211
$ (132)
$ 19,365
$ (52,483)
Net income (loss) attributable to
Textainer Group Holdings
Limited common shareholders per share:
Basic
$ 0.30
$ (0.00)
$ 0.34
$ (0.93)
Diluted
$ 0.30
$ (0.00)
$ 0.34
$ (0.93)
Weighted average shares outstanding (in thousands): Basic
56,961
56,690
56,845
56,608
Diluted
57,505
56,690
57,159
56,608
Other comprehensive income (loss):
Foreign currency translation
adjustments
58 (151) 207 (233) Comprehensive income (loss) 18,394 204 20,949
(58,109)
Comprehensive (income) loss attributable
to the noncontrolling interests
(1,125) (487) (1,377) 5,393
Comprehensive income (loss) attributable
to Textainer Group Holdings Limited common shareholders
$ 17,269 $ (283) $ 19,572 $ (52,716) (a) Certain
amounts for the periods ended December 31, 2016 have been restated
for immaterial corrections of identified errors pertaining to the
calculation of gain on sale of containers, net and to properly
account for lease concessions.
TEXTAINER GROUP HOLDINGS
LIMITED AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
December 31, 2017 and 2016
(Unaudited)
(All currency expressed in United States
dollars in thousands)
2017 2016 (a)
Assets Current assets: Cash and cash equivalents $ 137,894 $
84,045
Accounts receivable, net of allowance for
doubtful accounts of $5,775 and $31,844 in 2017 and 2016,
respectively
78,312 76,547 Net investment in direct financing and sales-type
leases 56,959 64,951 Trading containers 10,752 4,363 Containers
held for sale 22,089 25,513 Prepaid expenses and other current
assets 12,243 13,584 Insurance receivable 15,909 44,785 Due from
affiliates, net 1,134 869 Total current assets
335,292 314,657 Restricted cash 99,675 58,078
Containers, net of accumulated
depreciation of $1,172,355 and $990,784 at 2017 and 2016,
respectively
3,791,610 3,717,542 Net investment in direct financing and
sales-type leases 125,665 172,283
Fixed assets, net of accumulated
depreciation of $10,788 and $10,136 at 2017 and 2016,
respectively
2,151 1,993
Intangible assets, net of accumulated
amortization of $44,279 and $40,762 at 2017 and 2016,
respectively
11,105 15,197 Interest rate swaps, collars and caps 7,787 4,816
Deferred taxes 1,563 1,385 Other assets 5,494 8,075
Total assets $ 4,380,342 $ 4,294,026
Liabilities and Equity
Current liabilities: Accounts payable $ 6,867 $ 12,060 Accrued
expenses 13,365 9,721 Container contracts payable 131,087 11,990
Other liabilities 235 265 Due to owners, net 11,131 18,132
Debt, net of unamortized deferred
financing costs of $3,989 and $6,137 at 2017 and 2016,
respectively
233,681 205,081 Total current liabilities 396,366
257,249
Debt, net of unamortized deferred
financing costs of $20,045 and $10,267 at 2017 and 2016,
respectively
2,756,627 2,833,216 Interest rate swaps, collars and caps 81 1,204
Income tax payable 9,081 9,076 Deferred taxes 5,881 6,237 Other
liabilities 2,024 2,259 Total liabilities
3,170,060 3,109,241 Equity: Textainer Group Holdings Limited
shareholders’ equity:
Common shares, $0.01 par value. Authorized
140,000,000 shares; 57,727,220 shares
issued and 57,097,220 shares outstanding
at 2017; 57,417,119 shares issued and
56,787,119 shares outstanding at 2016
578 575 Additional paid-in capital 397,821 390,780 Treasury shares,
at cost, 630,000 shares (9,149) (9,149) Accumulated other
comprehensive income (309) (516) Retained earnings 763,601
744,236 Total Textainer Group Holdings Limited shareholders’
equity 1,152,542 1,125,926 Noncontrolling interest 57,740
58,859 Total equity 1,210,282 1,184,785 Total
liabilities and equity $ 4,380,342 $ 4,294,026 (a)
Certain amounts as of December 31, 2016 have been restated for
immaterial corrections related to the calculation of gain 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
Years Ended December 31, 2017 and 2016
(Unaudited)
(All currency expressed in United States
dollars in thousands)
2017 2016 (a) Cash
flows from operating activities: Net income (loss) $ 20,742
$ (57,876 ) Adjustments to reconcile net income (loss) to net cash
provided by operating activities: Depreciation expense 231,043
236,144 Container impairment 8,072 94,623 Bad debt expense, net 477
21,166 Unrealized gains on interest rate swaps, collars and caps,
net (4,094 ) (6,210 )
Amortization and write-off of unamortized
deferred debt issuance costs and accretion of bond discount
20,814 9,704 Amortization of intangible assets 4,092 5,053 Gain on
sale of containers, net (26,210 ) (6,761 ) Share-based compensation
expense 6,083 6,573 Changes in operating assets and liabilities
(10,044 ) (24,522 ) Total adjustments 230,233
335,770 Net cash provided by operating
activities 250,975 277,894 Cash flows
from investing activities: Purchase of containers and fixed assets
(300,125 ) (505,528 ) Proceeds from sale of containers and fixed
assets 135,299 126,560 Receipt of payments on direct financing and
sales-type leases, net of income earned 66,846 90,343 Insurance
proceeds received for unrecoverable containers 12,616
8,195 Net cash provided by (used in) investing
activities (85,364 ) (280,430 ) Cash flows from
financing activities: Proceeds from debt 1,729,580 582,500
Principal payments on debt (1,770,715 ) (551,586 ) Debt issuance
costs (27,702 ) (5,969 ) Issuance of common shares upon exercise of
share options 961 — Net tax benefit from share-based compensation
awards — (810 ) Dividends paid to noncontrolling interest (2,496 )
— Dividends paid to shareholders — (28,754 )
Net cash used in financing activities (70,372 )
(4,619 ) Effect of exchange rate changes 207
(233 ) Net increase (decrease) in cash, cash equivalents and
restricted cash 95,446 (7,388 ) Cash, cash equivalents and
restricted cash, beginning of the year 142,123
149,511 Cash, cash equivalents and restricted cash, end of
the period $ 237,569 $ 142,123 (a)
Certain amounts for the period ended December 31, 2016 have been
restated for immaterial corrections of identified errors pertaining
to the calculation of gain on sale of containers, net and to
properly account for lease concessions, 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
SUBSIDIARIESReconciliation of GAAP financial measures to
non-GAAP financial measuresThree Months and Years Ended
December 31, 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
months and years ended December 31, 2017 and 2016,
including:
(a) net income (loss) attributable to
Textainer Group Holdings Limited common shareholders to adjusted
EBITDA (Adjusted EBITDA defined as net income (loss) attributable
to Textainer Group Holdings Limited common shareholders before
interest income and expense, realized (gains) losses on interest
rate swaps, collars and caps, net, unrealized gains on interest
rate swaps, collars and caps, net, income tax (expense) benefit,
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 income (loss) attributable to
Textainer Group Holdings Limited common shareholders to adjusted
net income (loss) (defined as net income (loss) attributable to
Textainer Group Holdings Limited common shareholders before the
write-off of unamortized deferred debt issuance costs and bond
discounts, unrealized gains on interest rate swaps, collars and
caps, net, the related impact of reconciling items on income tax
(expense) benefit and net income (loss) attributable to the NCI);
and
(d) net income (loss) attributable to
Textainer Group Holdings Limited common shareholders per diluted
common share to adjusted net income (loss) per diluted common share
(defined as net income (loss) 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 gains on interest rate swaps,
collars and caps, net, the related impact of reconciling items on
income tax (expense) benefit 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 income (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 income (loss) 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 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 income (loss) per diluted common share are
useful in evaluating our operating performance because unrealized
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 (loss) or adjusted net income (loss)
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,
2017 2016 (a) 2017
2016 (a) (Dollars in thousands) (Dollars in
thousands) (Unaudited) (Unaudited)
Reconciliation of adjusted net income (loss): Net income
(loss) attributable to Textainer Group Holdings
Limited common shareholders
$ 17,211 $ (132 ) $ 19,365 $ (52,483 ) Adjustments: Write-off of
unamortized deferred debt issuance costs and bond discounts 84 —
7,550 — Unrealized gains on interest rate swaps, collars and caps,
net (2,881 ) (15,252 ) (4,094 ) (6,210 ) Impact of reconciling
items on income tax expense (benefit) 47 253 (56 ) 104
Impact of reconciling items on net income
(loss) attributable to the noncontrolling interests
331 1,736 400 636
Adjusted net income (loss) $ 14,792 $ (13,395
) $ 23,165 $ (57,953 )
Reconciliation of adjusted net
income (loss) per diluted common share: Net income (loss)
attributable to Textainer Group Holdings
Limited common shareholders per diluted
common share
$ 0.30 $ - $ 0.34 $ (0.93 ) Adjustments: Write-off of unamortized
deferred debt issuance costs and bond discounts - — 0.13 —
Unrealized gains on interest rate swaps, collars and caps, net
(0.05 ) (0.27 ) (0.07 ) (0.10 ) Impact of reconciling items on
income tax expense (benefit) — — — — Impact of reconciling items on
net income (loss) attributable to
the noncontrolling interests
0.01 0.03 0.01
0.01
Adjusted net income (loss) per diluted common
share $ 0.26 $ (0.24 ) $ 0.41 $ (1.02 ) (a)
Certain amounts for the periods ended December 31,
2016 have been restated for immaterial corrections of identified
errors pertaining to the calculation of gain on sale of containers,
net and to properly account for lease concessions.
Three Months Ended Years Ended
December 31, December 31, 2017
2016 (a) 2017 2016 (a)
(Dollars in thousands) (Dollars in thousands)
(Unaudited) (Unaudited) Reconciliation of adjusted
EBITDA: Net income (loss) attributable to Textainer Group
Holdings
Limited common shareholders
$ 17,211 $ (132) $ 19,365 $ (52,483) Adjustments: Interest income
(205) (126) (613) (408) Interest expense 29,089 23,972 117,475
85,215 Write-off of unamortized deferred debt issuance costs and
bond discounts 84 — 7,550 — Realized (gains) losses on interest
rate swaps, collars and caps, net (296) 1,929 1,191 8,928
Unrealized gains on interest rate swaps, collars and caps, net
(2,881) (15,252) (4,094) (6,210) Income tax expense (benefit) 1,187
(1,094) 1,618 (3,447) Net income (loss) attributable to the
noncontrolling interests 1,125 487 1,377 (5,393) Depreciation
expense 55,437 63,530 231,043 236,144 Container impairment 1,591
14,125 8,072 94,623 Amortization expense 1,045 937 4,092 5,053
Impact of reconciling items on net income (loss) attributable to
the noncontrolling interests
(2,774) (2,062) (12,535) (17,022) Adjusted EBITDA $ 100,613 $
86,314 $ 374,541 $ 345,000 Net cash provided by operating
activities $ 250,975 $ 277,894 Adjustments: Bad debt expense, net
(477) (21,166)
Amortization and write-off of unamortized
deferred debt issuance costs and accretion of bond discount
(20,814) (9,704) Gain on sale of containers, net 26,210 6,761
Share-based compensation expense (6,083) (6,573) Interest income
(613) (408) Interest expense 117,475 85,215 Write-off of
unamortized deferred debt issuance costs and bond discounts 7,550 —
Realized losses on interest rate swaps, collars and caps, net 1,191
8,928 Income tax expense (benefit) 1,618 (3,447) Changes in
operating assets and liabilities 10,044 24,522
Impact of reconciling items on net income
(loss) attributable to the noncontrolling interests
(12,535) (17,022) Adjusted EBITDA $ 374,541 $ 345,000 (a)
Certain amounts for the periods ended December 31, 2016 have
been restated for immaterial corrections of identified errors
pertaining to the calculation of gain on sale of containers, net
and to properly account for lease concessions, 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/20180215005362/en/
Textainer Group Holdings LimitedHilliard C. Terry, III, +1
415-658-8214Executive Vice President and Chief Financial
Officerir@textainer.com
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