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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Textainer Group Holdings Limited | NYSE:TGH | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 49.99 | 0 | 01:00:00 |
Key Financial Information (in thousands except for per share and TEU amounts) and Business Highlights:
QTD | ||||||||||||
Q1 2023 | Q4 2022 | Q1 2022 | ||||||||||
Total lease rental income | $ | 194,901 | $ | 202,912 | $ | 198,718 | ||||||
Gain on sale of owned fleet containers, net | $ | 9,548 | $ | 15,033 | $ | 15,913 | ||||||
Income from operations | $ | 100,379 | $ | 111,544 | $ | 114,716 | ||||||
Net income attributable to common shareholders | $ | 53,626 | $ | 61,854 | $ | 72,705 | ||||||
Net income attributable to common shareholders per diluted common share | $ | 1.22 | $ | 1.38 | $ | 1.47 | ||||||
Adjusted net income (1) | $ | 53,624 | $ | 61,993 | $ | 72,869 | ||||||
Adjusted net income per diluted common share (1) | $ | 1.22 | $ | 1.38 | $ | 1.48 | ||||||
Adjusted EBITDA (1) | $ | 166,985 | $ | 179,464 | $ | 182,317 | ||||||
Average fleet utilization (2) | 98.8 | % | 99.0 | % | 99.7 | % | ||||||
Total fleet size at end of period (TEU) (3) | 4,375,474 | 4,425,300 | 4,402,158 | |||||||||
Owned percentage of total fleet at end of period | 93.7 | % | 93.6 | % | 93.0 | % |
“We are very pleased with our continued elevated utilization rate and resilient lease rental income in this traditionally slower part of the year. For the quarter, lease rental income was $195 million, despite two fewer billing days. Adjusted EBITDA was $167 million, and adjusted net income was $54 million, or $1.22 per diluted share, resulting in an annualized ROE of 13%,” stated Olivier Ghesquiere, President and Chief Executive Officer.
“Following two years of surging container demand and significant fleet expansion, we are now experiencing a healthy consolidation phase with limited new container production. We have instead been focusing on optimizing capital allocation and operational efficiency, with a particular focus on lease renewals and disposal of older sales age containers. As a result, our utilization rate remains very firm at 98.8% as of today, and will remain elevated for the coming quarters, ensuring stable cash flows are available to optimize our balance sheet and continue to return capital to shareholders.”
“We remain optimistic that the market environment will start showing positive momentum as we approach the traditional summer peak season. Resale prices for older containers have now stabilized, which will continue to provide normalized earnings support. Additionally, we believe that the current drop in cargo volume, which has largely been driven by management of inventory levels, will soon correct itself and lead to higher cargo volumes over the coming months.”
“In the meantime, we continue to focus on long-term shareholder value creation with our capital allocation program and solid net income generation continuing to grow our book value per common share. In addition to de-leveraging, we repurchased a total of 1.3 million shares for the quarter, or approximately 3% of our outstanding common shares as of the beginning of the year. Since commencing our share repurchase program in September of 2019, we have repurchased 16.9 million shares or 30% of the then outstanding common shares,” concluded Ghesquiere.
First-Quarter Results
Total lease rental income for the quarter decreased $8.0 million from the fourth quarter of 2022 due to two fewer billing days in the current quarter and fleet attrition.
Gain on sale of owned fleet containers, net for the quarter decreased $5.5 million from the fourth quarter of 2022 due to a reduction in average gain per container sold and slightly lower sales volumes. While resale prices have remained stable, the fourth quarter benefited from higher prices at the start of that quarter.
Direct container expense – owned fleet for the quarter decreased $0.9 million from the fourth quarter of 2022, primarily due to lower maintenance and handling expense from two fewer days in the current quarter, partially offset by a slight increase in storage expense.
Depreciation and amortization for the quarter decreased by $2.3 million from the fourth quarter of 2022, primarily due to two fewer days in the current quarter.
General and administrative expense for the quarter increased $1.2 million from the fourth quarter of 2022, primarily due to higher compensation and benefit costs.
Interest expense for the quarter decreased $1.0 million from the fourth quarter of 2022, primarily driven by two fewer days in the current quarter and a decrease in the average debt balance, partially offset by an increase in our average effective interest rate.
Other, net for the quarter increased $1.4 million from the fourth quarter of 2022, primarily related to the higher interest income and revaluation of cash balances which are denominated in currencies other than our functional currency.
Conference Call and Webcast
A conference call to discuss the financial results for the first quarter of 2023 will be held at 11:00 am Eastern Time on Tuesday, May 2, 2023. The dial-in number for the conference call is 1-877-407-9039 (U.S. & Canada) and 1-201-689-8470 (International). The call and archived replay may also be accessed via webcast on 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 more than 4 million TEU in our owned and managed fleet. We lease containers to approximately 200 customers, including all of the world’s leading international shipping lines, and other lessees. Our fleet consists of standard dry freight, refrigerated intermodal containers, and dry freight specials. We also lease tank containers through our relationship with Trifleet Leasing and are a 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 fleet, we buy older containers from our shipping line customers for trading and resale and we are one of the largest sellers of used containers. Textainer operates via a network of 14 offices and approximately 400 independent depots worldwide. Textainer has a primary listing on the New York Stock Exchange (NYSE: TGH) and a secondary listing on the Johannesburg Stock Exchange (JSE: TXT). Visit www.textainer.com for additional information about Textainer.
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 may relate to, but are not limited to, expectations or estimates of future operating results or financial performance, capital expenditures, introduction of new products, regulatory compliance, plans for growth and future operations, as well as assumptions relating to the foregoing. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “intend,” “potential,” “continue” or the negative of these terms or other similar terminology. 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: (i) As a result, our utilization rate remains very firm at 98.8% as of today, and will remain elevated for the coming quarters, ensuring stable cash flows are available to optimize our balance sheet and continue to return capital to shareholders; (ii) We remain optimistic that the market environment will start showing positive momentum as we approach the traditional summer peak season; (iii) Resale prices for older containers have now stabilized, which will continue to provide normalized earnings support; (iv) Additionally, we believe that the current drop in cargo volume, which has largely been driven by management of inventory levels, will soon correct itself and lead to higher cargo volumes over the coming months; 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 February 14, 2023.
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 Investor Relations Phone: +1 (415) 658-8333 ir@textainer.com
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited) (All currency expressed in United States dollars in thousands, except per share amounts)
Three Months Ended March 31, | |||||||||
2023 | 2022 | ||||||||
Revenues: | |||||||||
Operating leases - owned fleet | $ | 145,324 | $ | 151,492 | |||||
Operating leases - managed fleet | 11,110 | 12,641 | |||||||
Finance leases and container leaseback financing receivable - owned fleet | 38,467 | 34,585 | |||||||
Total lease rental income | 194,901 | 198,718 | |||||||
Management fees - non-leasing | 744 | 532 | |||||||
Trading container sales proceeds | 3,966 | 7,618 | |||||||
Cost of trading containers sold | (4,121 | ) | (6,756 | ) | |||||
Trading container margin | (155 | ) | 862 | ||||||
Gain on sale of owned fleet containers, net | 9,548 | 15,913 | |||||||
Operating expenses: | |||||||||
Direct container expense - owned fleet | 10,043 | 5,519 | |||||||
Distribution expense to managed fleet container investors | 9,925 | 11,173 | |||||||
Depreciation and amortization | 71,838 | 72,493 | |||||||
General and administrative expense | 13,119 | 11,527 | |||||||
Bad debt (recovery) expense , net | (305 | ) | 477 | ||||||
Container lessee default expense, net | 39 | 120 | |||||||
Total operating expenses | 104,659 | 101,309 | |||||||
Income from operations | 100,379 | 114,716 | |||||||
Other (expense) income: | |||||||||
Interest expense | (42,130 | ) | (35,309 | ) | |||||
Other, net | 1,822 | (94 | ) | ||||||
Net other expense | (40,308 | ) | (35,403 | ) | |||||
Income before income taxes | 60,071 | 79,313 | |||||||
Income tax expense | (1,476 | ) | (1,639 | ) | |||||
Net income | 58,595 | 77,674 | |||||||
Less: Dividends on preferred shares | 4,969 | 4,969 | |||||||
Net income attributable to common shareholders | $ | 53,626 | $ | 72,705 | |||||
Net income attributable to common shareholders per share: | |||||||||
Basic | $ | 1.24 | $ | 1.50 | |||||
Diluted | $ | 1.22 | $ | 1.47 | |||||
Weighted average shares outstanding (in thousands): | |||||||||
Basic | 43,115 | 48,403 | |||||||
Diluted | 43,850 | 49,303 |
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES Consolidated Balance Sheets (Unaudited) (All currency expressed in United States dollars in thousands, except share data)
March 31, 2023 | December 31, 2022 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 142,598 | $ | 164,818 | ||||
Marketable securities | 755 | 1,411 | ||||||
Accounts receivable, net of allowance of $1,716 and $1,582, respectively | 116,960 | 114,805 | ||||||
Net investment in finance leases, net of allowance of $190 and $252, respectively | 130,381 | 130,913 | ||||||
Container leaseback financing receivable, net of allowance of $47 and $62, respectively | 54,710 | 53,652 | ||||||
Trading containers | 6,115 | 4,848 | ||||||
Containers held for sale | 37,368 | 31,637 | ||||||
Prepaid expenses and other current assets | 18,028 | 16,703 | ||||||
Due from affiliates, net | 2,867 | 2,758 | ||||||
Total current assets | 509,782 | 521,545 | ||||||
Restricted cash | 102,011 | 102,591 | ||||||
Containers, net of accumulated depreciation of $2,062,674 and $2,029,667, respectively | 4,256,456 | 4,365,124 | ||||||
Net investment in finance leases, net of allowance of $735 and $1,027 respectively | 1,657,127 | 1,689,123 | ||||||
Container leaseback financing receivable, net of allowance of $27 and $52, respectively | 757,003 | 770,980 | ||||||
Derivative instruments | 124,151 | 149,244 | ||||||
Deferred taxes | 1,163 | 1,135 | ||||||
Other assets | 12,644 | 13,492 | ||||||
Total assets | $ | 7,420,337 | $ | 7,613,234 | ||||
Liabilities and Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 20,235 | $ | 24,160 | ||||
Container contracts payable | 1,817 | 6,648 | ||||||
Other liabilities | 5,203 | 5,060 | ||||||
Due to container investors, net | 15,518 | 16,132 | ||||||
Debt, net of unamortized costs of $7,781 and $7,938, respectively | 394,186 | 377,898 | ||||||
Total current liabilities | 436,959 | 429,898 | ||||||
Debt, net of unamortized costs of $24,762 and $26,946, respectively | 4,950,036 | 5,127,021 | ||||||
Derivative instruments | 4,885 | — | ||||||
Income tax payable | 13,483 | 13,196 | ||||||
Deferred taxes | 14,276 | 13,105 | ||||||
Other liabilities | 32,322 | 33,725 | ||||||
Total liabilities | 5,451,961 | 5,616,945 | ||||||
Equity: | ||||||||
Textainer Group Holdings Limited shareholders' equity: | ||||||||
Cumulative redeemable perpetual preferred shares, $0.01 par value, $25,000 liquidation preference per share. Authorized 10,000,000 shares; 12,000 shares issued and outstanding (equivalent to 12,000,000 depositary shares at $25.00 liquidation preference per depositary share) | 300,000 | 300,000 | ||||||
Common shares, $0.01 par value. Authorized 140,000,000 shares; 59,970,152 shares issued and 42,395,343 shares outstanding at 2023; 59,943,282 shares issued and 43,634,655 shares outstanding at 2022 | 600 | 599 | ||||||
Treasury shares, at cost, 17,574,809 and 16,308,627 shares, respectively | (379,210 | ) | (337,551 | ) | ||||
Additional paid-in capital | 444,751 | 442,154 | ||||||
Accumulated other comprehensive income | 117,737 | 147,350 | ||||||
Retained earnings | 1,484,498 | 1,443,737 | ||||||
Total shareholders’ equity | 1,968,376 | 1,996,289 | ||||||
Total liabilities and shareholders' equity | $ | 7,420,337 | $ | 7,613,234 | ||||
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited) (All currency expressed in United States dollars in thousands)
Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 58,595 | $ | 77,674 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 71,838 | 72,493 | ||||||
Bad debt (recovery) expense, net | (305 | ) | 477 | |||||
Amortization of unamortized debt issuance costs and accretion of bond discounts | 2,344 | 2,615 | ||||||
Gain on sale of owned fleet containers, net | (9,548 | ) | (15,913 | ) | ||||
Share-based compensation expense | 2,261 | 1,727 | ||||||
Changes in operating assets and liabilities | 27,056 | 48,886 | ||||||
Total adjustments | 93,646 | 110,285 | ||||||
Net cash provided by operating activities | 152,241 | 187,959 | ||||||
Cash flows from investing activities: | ||||||||
Purchase of containers | (7,775 | ) | (204,445 | ) | ||||
Payment on container leaseback financing receivable | — | (303,894 | ) | |||||
Proceeds from sale of containers | 41,908 | 29,656 | ||||||
Receipt of principal payments on container leaseback financing receivable | 13,156 | 7,444 | ||||||
Other | 5 | (2,031 | ) | |||||
Net cash provided by (used in) investing activities | 47,294 | (473,270 | ) | |||||
Cash flows from financing activities: | ||||||||
Proceeds from debt | — | 482,100 | ||||||
Payments on debt | (163,041 | ) | (149,262 | ) | ||||
Principal repayments on container leaseback financing liability, net | (204 | ) | (200 | ) | ||||
Purchase of treasury shares | (41,659 | ) | (36,409 | ) | ||||
Issuance of common shares upon exercise of share options | 337 | 3,906 | ||||||
Dividends paid on common shares | (12,865 | ) | (12,054 | ) | ||||
Dividends paid on preferred shares | (4,969 | ) | (4,969 | ) | ||||
Net cash (used in) provided by financing activities | (222,401 | ) | 283,112 | |||||
Effect of exchange rate changes | 66 | (56 | ) | |||||
Net change in cash, cash equivalents and restricted cash | (22,800 | ) | (2,255 | ) | ||||
Cash, cash equivalents and restricted cash, beginning of the year | 267,409 | 282,572 | ||||||
Cash, cash equivalents and restricted cash, end of the period | $ | 244,609 | $ | 280,317 | ||||
Supplemental disclosures of cash flow information: | ||||||||
Interest paid | $ | 39,475 | $ | 32,266 | ||||
Income taxes paid | $ | 3 | $ | 140 | ||||
Receipt of payments on finance leases, net of income earned | $ | 33,142 | $ | 53,132 | ||||
Supplemental disclosures of noncash investing activities: | ||||||||
Decrease in accrued container purchases | $ | 4,831 | $ | 10,913 | ||||
Containers placed in finance leases | $ | 736 | $ | 57,361 |
Use of Non-GAAP Financial Information
To supplement Textainer’s consolidated financial statements presented in accordance with U.S. generally accepted accounting principles (“GAAP”), the company uses non-GAAP measures of certain components of financial performance. These non-GAAP measures include adjusted net income, adjusted net income per diluted common share, adjusted EBITDA, headline earnings and headline earnings per basic and diluted common share.
Management believes that adjusted net income and adjusted net income per diluted common share are useful in evaluating Textainer’s operating performance. Adjusted net income is defined as net income attributable to common shareholders excluding unrealized (loss) gain on marketable securities and the related impacts on income taxes. Management considers adjusted EBITDA a widely used industry measure and useful in evaluating Textainer’s ability to fund growth and service long-term debt and other fixed obligations. Headline earnings is reported as a requirement of Textainer’s listing on the JSE. Headline earnings and headline earnings per basic and diluted common shares are calculated from net income which has been determined based on GAAP.
Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included in the tables below for the three months ended March 31, 2023, December 31, 2022 and March 31, 2022.
Non-GAAP measures are not financial measures calculated in accordance with GAAP and are presented solely as supplemental disclosures. Non-GAAP measures have limitations as analytical tools, and should not be relied upon in isolation, or as a substitute to net income, income from operations, cash flows from operating activities, or any other performance measures derived in accordance with GAAP. Some of these limitations are:
Three Months Ended, | ||||||||||||
March 31, 2023 | December 31, 2022 | March 31, 2022 | ||||||||||
(Dollars in thousands, | ||||||||||||
except per share amounts) | ||||||||||||
(Unaudited) | ||||||||||||
Reconciliation of adjusted net income: | ||||||||||||
Net income attributable to common shareholders | $ | 53,626 | $ | 61,854 | $ | 72,705 | ||||||
Adjustments: | ||||||||||||
Unrealized (gain) loss on marketable securities, net | (3 | ) | 176 | 207 | ||||||||
Impact of reconciling items on income tax | 1 | (37 | ) | (43 | ) | |||||||
Adjusted net income | $ | 53,624 | $ | 61,993 | $ | 72,869 | ||||||
Adjusted net income per diluted common share | $ | 1.22 | $ | 1.38 | $ | 1.48 | ||||||
Three Months Ended, | ||||||||||||
March 31, 2023 | December 31, 2022 | March 31, 2022 | ||||||||||
(Dollars in thousands) | ||||||||||||
(Unaudited) | ||||||||||||
Reconciliation of adjusted EBITDA: | ||||||||||||
Net income attributable to common shareholders | $ | 53,626 | $ | 61,854 | $ | 72,705 | ||||||
Adjustments: | ||||||||||||
Interest income | (2,082 | ) | (1,818 | ) | (36 | ) | ||||||
Interest expense | 42,130 | 43,105 | 35,309 | |||||||||
Unrealized (gain) loss on marketable securities, net | (3 | ) | 176 | 207 | ||||||||
Income tax expense | 1,476 | 2,007 | 1,639 | |||||||||
Depreciation and amortization | 71,838 | 74,140 | 72,493 | |||||||||
Adjusted EBITDA | $ | 166,985 | $ | 179,464 | $ | 182,317 | ||||||
Three Months Ended, | ||||||||||||
March 31, 2023 | December 31, 2022 | March 31, 2022 | ||||||||||
(Dollars in thousands, | ||||||||||||
except per share amount) | ||||||||||||
(Unaudited) | ||||||||||||
Reconciliation of headline earnings: | ||||||||||||
Net income attributable to common shareholders | $ | 53,626 | $ | 61,854 | $ | 72,705 | ||||||
Adjustments: | ||||||||||||
— | — | — | ||||||||||
Headline earnings | $ | 53,626 | $ | 61,854 | $ | 72,705 | ||||||
Headline earnings per basic common share | $ | 1.24 | $ | 1.40 | $ | 1.50 | ||||||
Headline earnings per diluted common share | $ | 1.22 | $ | 1.38 | $ | 1.47 |
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