Textainer Group Holdings Limited Reports Second-Quarter 2020 Results
HAMILTON, Bermuda, Aug. 13, 2020 /PRNewswire/ -- Textainer Group Holdings Limited (NYSE: TGH; JSE: TXT) ("Textainer", "the Company", "we" and "our"), one of the world's largest lessors of intermodal containers, today reported financial results for the second-quarter ended June 30, 2020.
Key Financial Information (in thousands except for per share and TEU amounts) and Business Highlights:
QTD |
||||||||||||
Q2 2020 |
Q1 2020 |
Q2 2019 |
||||||||||
Lease rental income |
$ |
144,774 |
$ |
145,478 |
$ |
156,243 |
||||||
Gain on sale of owned fleet containers, net |
$ |
5,640 |
$ |
5,794 |
$ |
5,404 |
||||||
Income from operations |
$ |
49,265 |
$ |
46,409 |
$ |
45,918 |
||||||
Net income (loss) attributable to Textainer Group Holdings Limited common shareholders |
$ |
15,989 |
$ |
(4,379) |
$ |
314 |
||||||
Net income (loss) attributable to Textainer Group Holdings Limited common shareholders per diluted common share |
$ |
0.30 |
$ |
(0.08) |
$ |
0.01 |
||||||
Adjusted net income (1) |
$ |
14,794 |
$ |
9,702 |
$ |
9,006 |
||||||
Adjusted net income per diluted common share (1) |
$ |
0.28 |
$ |
0.17 |
$ |
0.16 |
||||||
Adjusted EBITDA (1) (4) |
$ |
109,977 |
$ |
110,439 |
$ |
114,745 |
||||||
Average fleet utilization (2) |
95.4 |
% |
96.2 |
% |
97.9 |
% |
||||||
Total fleet size at end of period (TEU) (3) |
3,458,080 |
3,450,680 |
3,601,681 |
|||||||||
Owned percentage of total fleet at end of period |
86.1 |
% |
85.6 |
% |
80.9 |
% |
||||||
(1) |
Refer to the "Use of Non-GAAP Financial Information" set forth below. |
(2) |
Utilization is computed by dividing total units on lease in CEUs (cost equivalent unit) by the total units in our fleet in CEUs, excluding CEUs that have been designated as held for sale units and manufactured for us but have not yet been delivered to a lessee. CEU is a unit of measurement based on the approximate cost of a container relative to the cost of a standard 20-foot dry container. These factors may differ slightly from CEU ratios used by others in the industry. |
(3) |
TEU refers to a twenty-foot equivalent unit, which is a unit of measurement used in the container shipping industry to compare shipping containers of various lengths to a standard 20-foot container, thus a 20-foot container is one TEU and a 40-foot container is two TEU. |
(4) |
Adjusted EBITDA for the first quarter 2020 has been restated to reflect an immaterial adjustment (see Reconciliation of Adjusted EBITDA). |
- Net income of $16.0 million for the second quarter or $0.30 per diluted common share;
- Adjusted net income of $14.8 million for the second quarter, or $0.28 per diluted common share, as compared to $9.7 million, or $0.17 per diluted common share in the first quarter of 2020;
- Adjusted EBITDA of $110.0 million for the second quarter, as compared to $110.4 million in the first quarter of 2020;
- Utilization averaged 95.4% for the second quarter, as compared to 96.2% for the first quarter of 2020;
- Container investments of approximately $190 million delivered through the first six months of the year; and
- Repurchased 1,633,794 shares of common stock at an average price of $8.33 per share during the second quarter under the share repurchase program.
"We are pleased with our performance in the second quarter, which proved resilient in spite of the global economic downturn. For the quarter, we delivered stable lease rental income of $144.8 million and adjusted EBITDA of $110.0 million, while improving our adjusted net income to $14.8 million," stated Olivier Ghesquiere, President and Chief Executive Officer of Textainer Group Holdings Limited.
Ghesquiere continued, "Though the second quarter saw a worsening in global trade, our container fleet of mostly long-term leases continued to perform strongly, with only a slight decrease in utilization. We were very pleased with the general improvement in our cash collections and have experienced no notable credit issues. The elevated credit risk of our customers, which had been a point of attention due to the COVID crisis, has mostly subsided, driven by their better than expected financial performance, access to government support, and a significant decrease in fuel cost."
Ghesquiere added, "As we begin the third quarter, we have seen a significant uptake in demand for containers. This change in market dynamics is driven by the cyclical increase in trade over the summer season in North America and Europe and is compounded by the restocking of inventories following the easing of quarantine measures in most developed economies. COVID-related disruptions to supply-chains have also caused a dislocation of containers for shipping lines, which is currently favorable to container lessors. As we look ahead to our performance for the second half of the year, we are encouraged by this recent rebound in activity which should lead to an increase in our utilization rate and lease rental revenue. We also expect our customers to continue to improve their financial performance and strengthen their balance sheets driven by the increased trade activity and higher freight rates."
"The pandemic continues to create uncertainty and market challenges, but we remain cautiously optimistic with our outlook for the balance of the year. Textainer remains well-positioned to participate in the rebound in market activity with a strong balance sheet, healthy liquidity, an optimized capital structure, and demonstrated expense control and efficiency," concluded Ghesquiere.
Second-Quarter Results
Lease rental income decreased $0.7 million from the first quarter of 2020, due primarily to a slight reduction in utilization.
Direct container expense increased $2.0 million from the first quarter of 2020, mostly due to the higher storage costs and handling expense resulting from slightly lower utilization.
Depreciation expense decreased $3.0 million from the first quarter of 2020, due primarily to improved mark to market value adjustments on certain containers held for sale.
Container lessee default recovery was $1.7 million in the second quarter of 2020, resulting from cash payments received in full on a settlement agreement with a small insolvent customer that had previously defaulted and was written-off in 2018.
Bad debt recovery was $0.3 million in the second quarter of 2020, resulting from a reduction in reserves due to improved collections, compared to an expense of $2.0 million in the first quarter of 2020.
Interest expense decreased $6.1 million compared to the first quarter of 2020. Realized loss on derivative instruments, net, increased $1.7 million compared to the first quarter of 2020. The combined expense reduction of $4.4 million was driven by a decrease in interest rates and a decrease in average outstanding debt.
Unrealized gain (loss) on derivative instruments, net, was a gain of $1.3 million for the quarter versus a loss of $14.9 million for the first quarter of 2020, resulting from an increase and a decrease, respectively, in the forward LIBOR curve at the end of the respective period ends, which increased the fair value of the current interest rate derivatives as of the end of the second quarter. Textainer uses interest rate derivatives to manage interest rate risk and intends to hold these derivatives until maturity. Changes in the fair value of derivatives result in non-cash adjustments to their carrying value that get recorded through net income for the portion of our derivatives not designated under hedge accounting at their inception.
Conference Call and Webcast
A conference call to discuss the financial results for the second quarter 2020 will be held at 5:00 pm Eastern Time on Thursday, August 13, 2020. 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 approximately 3.5 million TEU in our owned and managed fleet. We lease containers to approximately 250 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. We sold an average of approximately 140,000 containers per year for the last five years to more than 1,500 customers making us one of the largest sellers of used containers. Textainer operates via a network of 14 offices and approximately 500 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: Credit risk of our customers has mostly subsided and we expect them to continue to improve their financial performance and strengthen their balance sheets; The recent rebound in trade should lead to an increase in our utilization rate and lease rental revenue; Textainer is well positioned to navigate through the current crisis and participate in an eventual recovery; 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 30, 2020.
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
[email protected]
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES Condensed Consolidated Statements of Comprehensive Income (Loss) Three and Six Months Ended June 30, 2020 and 2019 (Unaudited) (All currency expressed in United States dollars in thousands, except per share amounts) |
||||||||||||||||||||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||||||||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||||||||||||||||||||
Revenue: |
||||||||||||||||||||||||||||||||
Lease rental income - owned fleet |
$ |
128,648 |
$ |
130,439 |
$ |
258,720 |
$ |
260,000 |
||||||||||||||||||||||||
Lease rental income - managed fleet |
16,126 |
25,804 |
31,532 |
52,357 |
||||||||||||||||||||||||||||
Lease rental income |
144,774 |
156,243 |
290,252 |
312,357 |
||||||||||||||||||||||||||||
Management fees - non-leasing |
544 |
1,940 |
2,028 |
4,241 |
||||||||||||||||||||||||||||
Trading container sales proceeds |
7,427 |
14,394 |
17,012 |
27,106 |
||||||||||||||||||||||||||||
Cost of trading containers sold |
(6,856) |
(12,170) |
(15,792) |
(22,902) |
||||||||||||||||||||||||||||
Trading container margin |
571 |
2,224 |
1,220 |
4,204 |
||||||||||||||||||||||||||||
Gain on sale of owned fleet containers, net |
5,640 |
5,404 |
11,434 |
12,171 |
||||||||||||||||||||||||||||
Operating expenses: |
||||||||||||||||||||||||||||||||
Direct container expense - owned fleet (a) |
15,248 |
10,681 |
28,512 |
22,261 |
||||||||||||||||||||||||||||
Distribution expense to managed fleet container investors |
14,692 |
23,737 |
28,855 |
48,217 |
||||||||||||||||||||||||||||
Depreciation expense (b) |
63,848 |
64,135 |
130,682 |
126,599 |
||||||||||||||||||||||||||||
Amortization expense |
557 |
493 |
1,121 |
1,095 |
||||||||||||||||||||||||||||
General and administrative expense |
9,866 |
9,444 |
20,004 |
19,274 |
||||||||||||||||||||||||||||
Bad debt (recovery) expense, net |
(276) |
3,689 |
1,769 |
3,848 |
||||||||||||||||||||||||||||
Container lessee default (recovery) expense, net (a) (b) |
(1,671) |
8,555 |
(1,683) |
7,902 |
||||||||||||||||||||||||||||
Gain on insurance recovery and legal settlement |
— |
(841) |
— |
(841) |
||||||||||||||||||||||||||||
Total operating expenses |
102,264 |
119,893 |
209,260 |
228,355 |
||||||||||||||||||||||||||||
Income from operations |
49,265 |
45,918 |
95,674 |
104,618 |
||||||||||||||||||||||||||||
Other (expense) income: |
||||||||||||||||||||||||||||||||
Interest expense |
(30,022) |
(38,213) |
(66,134) |
(75,729) |
||||||||||||||||||||||||||||
Write-off of unamortized deferred debt issuance costs |
— |
— |
(122) |
— |
||||||||||||||||||||||||||||
Interest income |
56 |
729 |
456 |
1,367 |
||||||||||||||||||||||||||||
Realized (loss) gain on derivative instruments, net |
(3,267) |
1,095 |
(4,793) |
2,539 |
||||||||||||||||||||||||||||
Unrealized gain (loss) on derivative instruments, net |
1,342 |
(10,099) |
(13,595) |
(15,837) |
||||||||||||||||||||||||||||
Other, net |
(3) |
— |
(56) |
— |
||||||||||||||||||||||||||||
Net other expense |
(31,894) |
(46,488) |
(84,244) |
(87,660) |
||||||||||||||||||||||||||||
Income (loss) before income tax and |
17,371 |
(570) |
11,430 |
16,958 |
||||||||||||||||||||||||||||
Income tax (expense) benefit |
(1,074) |
221 |
(241) |
(152) |
||||||||||||||||||||||||||||
Net income (loss) |
16,297 |
(349) |
11,189 |
16,806 |
||||||||||||||||||||||||||||
Less: Net (income) loss attributable to the noncontrolling interest |
(308) |
663 |
421 |
558 |
||||||||||||||||||||||||||||
Net income attributable to Textainer Group |
$ |
15,989 |
$ |
314 |
$ |
11,610 |
$ |
17,364 |
||||||||||||||||||||||||
Net income attributable to Textainer Group Holdings Limited common shareholders per share: |
||||||||||||||||||||||||||||||||
Basic |
$ |
0.30 |
$ |
0.01 |
$ |
0.21 |
$ |
0.30 |
||||||||||||||||||||||||
Diluted |
$ |
0.30 |
$ |
0.01 |
$ |
0.21 |
$ |
0.30 |
||||||||||||||||||||||||
Weighted average shares outstanding (in thousands): |
||||||||||||||||||||||||||||||||
Basic |
53,715 |
57,500 |
55,084 |
57,488 |
||||||||||||||||||||||||||||
Diluted |
53,776 |
57,576 |
55,148 |
57,578 |
||||||||||||||||||||||||||||
Other comprehensive income (loss), before tax: |
||||||||||||||||||||||||||||||||
Change in derivative instruments designated as cash flow hedges |
(4,393) |
— |
(13,251) |
— |
||||||||||||||||||||||||||||
Reclassification of realized loss on derivative instruments designated |
590 |
— |
528 |
— |
||||||||||||||||||||||||||||
Foreign currency translation adjustments |
(39) |
(40) |
(102) |
67 |
||||||||||||||||||||||||||||
Comprehensive income (loss), before tax |
12,455 |
(389) |
(1,636) |
16,873 |
||||||||||||||||||||||||||||
Income tax benefit related to items of other comprehensive income (loss) |
39 |
— |
132 |
— |
||||||||||||||||||||||||||||
Comprehensive income (loss), after tax |
12,494 |
(389) |
(1,504) |
16,873 |
||||||||||||||||||||||||||||
Comprehensive (income) loss attributable to the |
(308) |
663 |
421 |
558 |
||||||||||||||||||||||||||||
Comprehensive income (loss) attributable to Textainer |
$ |
12,186 |
$ |
274 |
$ |
(1,083) |
$ |
17,431 |
||||||||||||||||||||||||
(a) Amounts for container write-off and recovery and container recovery costs from lessee default for the periods ended June 30, 2019 have been reclassified out of the previously reported line item "container impairment" and "direct container expense – owned fleet", respectively, and included within "container lessee default recovery, net" to conform with the 2020 presentation. |
(b) Amounts to write-down the carrying value of containers held for sale to their estimated fair value less costs to sell for the periods ended June 30, 2019 have been reclassified out of the previously reported line item "container impairment" and included within "depreciation expense" to conform with the 2020 presentation. |
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES Condensed Consolidated Balance Sheets June 30, 2020 and December 31, 2019 (Unaudited) (All currency expressed in United States dollars in thousands) |
||||||||
2020 |
2019 |
|||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ |
189,848 |
$ |
180,552 |
||||
Accounts receivable, net of allowance for doubtful accounts of $7,009 and $6,299, respectively |
106,761 |
109,384 |
||||||
Net investment in finance leases, net of allowance for credit losses of $199 and $0, respectively |
38,112 |
40,940 |
||||||
Container leaseback financing receivable, net of allowance for credit losses of $117 and $0, respectively |
21,412 |
20,547 |
||||||
Trading containers |
9,140 |
11,330 |
||||||
Containers held for sale |
50,422 |
41,884 |
||||||
Prepaid expenses and other current assets |
12,068 |
14,816 |
||||||
Due from affiliates, net |
2,270 |
1,880 |
||||||
Total current assets |
430,033 |
421,333 |
||||||
Restricted cash |
91,129 |
97,353 |
||||||
Containers, net of accumulated depreciation of $1,522,009 and $1,443,167, respectively |
4,054,337 |
4,156,151 |
||||||
Net investment in finance leases, net of allowance for credit losses of $983 and $0, respectively |
318,398 |
254,363 |
||||||
Container leaseback financing receivable, net of allowance for credit losses of $445 and $0, respectively |
249,384 |
251,111 |
||||||
Fixed assets, net of accumulated depreciation of $12,490 and $12,266, respectively |
943 |
1,128 |
||||||
Intangible assets, net of accumulated amortization of $46,480 and $45,359, respectively |
4,170 |
5,291 |
||||||
Derivative instruments |
- |
135 |
||||||
Deferred taxes |
1,383 |
1,388 |
||||||
Other assets |
13,435 |
14,364 |
||||||
Total assets |
$ |
5,163,212 |
$ |
5,202,617 |
||||
Liabilities and Equity |
||||||||
Current liabilities: |
||||||||
Accounts payable and accrued expenses |
$ |
25,466 |
$ |
23,404 |
||||
Container contracts payable |
136,937 |
9,394 |
||||||
Other liabilities |
2,325 |
2,636 |
||||||
Due to container investors, net |
19,458 |
21,978 |
||||||
Debt, net of unamortized deferred financing costs of $6,186 and $8,120, respectively |
241,519 |
242,433 |
||||||
Total current liabilities |
425,705 |
299,845 |
||||||
Debt, net of unamortized deferred financing costs of $19,240 and $21,446, respectively |
3,406,474 |
3,555,296 |
||||||
Derivative instruments |
39,961 |
13,778 |
||||||
Income tax payable |
9,976 |
9,909 |
||||||
Deferred taxes |
7,683 |
7,789 |
||||||
Other liabilities |
17,101 |
30,355 |
||||||
Total liabilities |
3,906,900 |
3,916,972 |
||||||
Equity: |
||||||||
Textainer Group Holdings Limited shareholders' equity: |
||||||||
Common shares, $0.01 par value. Authorized 140,000,000 shares; 58,389,184 shares issued and |
584 |
583 |
||||||
Treasury shares, at cost, 5,089,874 shares and 1,508,637 shares, respectively |
(46,828) |
(17,746) |
||||||
Additional paid-in capital |
412,739 |
410,595 |
||||||
Accumulated other comprehensive loss |
(13,204) |
(511) |
||||||
Retained earnings |
877,183 |
866,458 |
||||||
Total Textainer Group Holdings Limited shareholders' equity |
1,230,474 |
1,259,379 |
||||||
Noncontrolling interest |
25,838 |
26,266 |
||||||
Total equity |
1,256,312 |
1,285,645 |
||||||
Total liabilities and equity |
$ |
5,163,212 |
$ |
5,202,617 |
||||
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows Six Months Ended June 30, 2020 and 2019 (Unaudited) (All currency expressed in United States dollars in thousands) |
||||||||
2020 |
2019 |
|||||||
Cash flows from operating activities: |
||||||||
Net income |
$ |
11,189 |
$ |
16,806 |
||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation expense |
130,682 |
126,599 |
||||||
Bad debt expense, net |
1,769 |
3,848 |
||||||
Container (recovery) write-off from lessee default, net |
(1,558) |
7,730 |
||||||
Unrealized loss on derivative instruments, net |
13,595 |
15,837 |
||||||
Amortization and write-off of unamortized deferred debt issuance costs and |
4,210 |
3,875 |
||||||
Amortization of intangible assets |
1,121 |
1,095 |
||||||
Gain on sale of owned fleet containers, net |
(11,434) |
(12,171) |
||||||
Gain on insurance recovery and legal settlement |
— |
(841) |
||||||
Share-based compensation expense |
2,145 |
2,115 |
||||||
Changes in operating assets and liabilities |
36,501 |
47,130 |
||||||
Total adjustments |
177,031 |
195,217 |
||||||
Net cash provided by operating activities |
188,220 |
212,023 |
||||||
Cash flows from investing activities: |
||||||||
Purchase of containers and fixed assets |
(52,660) |
(335,067) |
||||||
Payment on leaseback financing receivable |
(9,919) |
— |
||||||
Receipt of principal payments on container leaseback financing receivable |
10,310 |
— |
||||||
Proceeds from sale of containers and fixed assets |
62,920 |
70,591 |
||||||
Net cash provided by (used in) investing activities |
10,651 |
(264,476) |
||||||
Cash flows from financing activities: |
||||||||
Proceeds from debt |
41,800 |
550,634 |
||||||
Principal payments on debt |
(195,676) |
(472,667) |
||||||
Principal repayments on container leaseback financing liability, net |
(12,682) |
— |
||||||
Purchase of treasury shares |
(29,082) |
— |
||||||
Debt issuance costs |
(57) |
(3,854) |
||||||
Dividends paid to noncontrolling interest |
— |
(2,744) |
||||||
Issuance of common shares upon exercise of share options |
— |
93 |
||||||
Net cash (used in) provided by financing activities |
(195,697) |
71,462 |
||||||
Effect of exchange rate changes |
(102) |
67 |
||||||
Net increase in cash, cash equivalents and restricted cash |
3,072 |
19,076 |
||||||
Cash, cash equivalents and restricted cash, beginning of the year |
277,905 |
224,928 |
||||||
Cash, cash equivalents and restricted cash, end of the period |
$ |
280,977 |
$ |
244,004 |
||||
(a) Amounts to write-down the carrying value of containers held for sale to their estimated fair value less costs to sell for the period ended June 30, 2019 have been reclassified out of the previously reported line item "container impairment" and included within "depreciation expense" to conform with the 2020 presentation. |
(b) Amounts for container write-off and recovery from lessee default for the period ended June 30, 2019 have been reclassified out of the previously reported line item "container impairment" and included within "container recovery from lessee default, net" to conform with the 2020 presentation. |
Use of Non-GAAP Financial Information
To supplement Textainer's condensed 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 dilute common share.
Management believes that adjusted net income and adjusted net income per diluted common share are useful in evaluating Textainer's operating performance, as we intend to hold derivative instruments until maturity and any unrealized gain or loss on derivative instruments is a non-cash, non-operating item. 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 dilute common share are calculated from net income (loss) 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 and six months ended June 30, 2020 and 2019 and for the three months ended March 31, 2020.
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 in isolation, or as a substitute to net income (loss), income from operations, cash flows from operating activities, or any other performance measures derived in accordance with GAAP. Some of these limitations are:
- They do not reflect cash expenditures, or future requirements, for capital expenditures or contractual commitments;
- They do not reflect changes in, or cash requirements for, working capital needs;
- Adjusted EBITDA does not reflect interest expense or cash requirements necessary to service interest or principal payments on debt;
- Although depreciation expense and container impairment are a non-cash charge, the assets being depreciated may be replaced in the future, and neither adjusted EBITDA, adjusted net income or adjusted net income per diluted common share reflects any cash requirements for such replacements;
- They are not adjusted for all non-cash 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, |
March 31, |
June 30, |
June 30, |
June 30, |
||||||||||||||||
(Dollars in thousands) |
(Dollars in thousands) |
|||||||||||||||||||
(Unaudited) |
(Unaudited) |
|||||||||||||||||||
Reconciliation of adjusted net income: |
||||||||||||||||||||
Net income (loss) attributable to Textainer Group Holdings Limited common shareholders |
$ |
15,989 |
$ |
(4,379) |
$ |
314 |
$ |
11,610 |
$ |
17,364 |
||||||||||
Adjustments: |
||||||||||||||||||||
Write-off of unamortized deferred debt issuance costs |
— |
122 |
— |
122 |
— |
|||||||||||||||
Unrealized (gain) loss on derivative instruments, net |
(1,342) |
14,937 |
10,099 |
13,595 |
15,837 |
|||||||||||||||
Gain on insurance recovery and legal settlement |
— |
— |
(841) |
— |
(841) |
|||||||||||||||
Impact of reconciling items on income tax expense (benefit) |
13 |
(150) |
(89) |
(137) |
(146) |
|||||||||||||||
Impact of reconciling items attributable to the noncontrolling interest |
134 |
(828) |
(477) |
(694) |
(765) |
|||||||||||||||
Adjusted net income |
$ |
14,794 |
$ |
9,702 |
$ |
9,006 |
$ |
24,496 |
$ |
31,449 |
||||||||||
Adjusted net income per diluted common share |
$ |
0.28 |
$ |
0.17 |
$ |
0.16 |
$ |
0.44 |
$ |
0.55 |
||||||||||
Three Months Ended, |
Six Months Ended |
|||||||||||||||||||
June 30, |
March 31, |
June 30, |
June 30, |
June 30, |
||||||||||||||||
(Dollars in thousands) |
(Dollars in thousands) |
|||||||||||||||||||
(Unaudited) |
(Unaudited) |
|||||||||||||||||||
Reconciliation of adjusted EBITDA: |
||||||||||||||||||||
Net income (loss) attributable to Textainer Group Holdings Limited common shareholders |
$ |
15,989 |
$ |
(4,379) |
$ |
314 |
$ |
11,610 |
$ |
17,364 |
||||||||||
Adjustments: |
||||||||||||||||||||
Interest income |
(56) |
(400) |
(729) |
(456) |
(1,367) |
|||||||||||||||
Interest expense |
30,022 |
36,112 |
38,213 |
66,134 |
75,729 |
|||||||||||||||
Write-off of unamortized deferred debt issuance costs |
— |
122 |
— |
122 |
— |
|||||||||||||||
Realized loss (gain) on derivative instruments, net |
3,267 |
1,526 |
(1,095) |
4,793 |
(2,539) |
|||||||||||||||
Unrealized (gain) loss on derivative instruments, net |
(1,342) |
14,937 |
10,099 |
13,595 |
15,837 |
|||||||||||||||
Gain on insurance recovery and legal settlement |
— |
— |
(841) |
— |
(841) |
|||||||||||||||
Income tax expense (benefit) |
1,074 |
(833) |
(221) |
241 |
152 |
|||||||||||||||
Net income (loss) attributable to the noncontrolling interest |
308 |
(729) |
(663) |
(421) |
(558) |
|||||||||||||||
Depreciation expense |
63,848 |
66,834 |
64,135 |
130,682 |
126,599 |
|||||||||||||||
Container (recovery) write-off from lessee default, net |
(1,557) |
(1) |
8,450 |
(1,558) |
7,730 |
|||||||||||||||
Amortization expense |
557 |
564 |
493 |
1,121 |
1,095 |
|||||||||||||||
Impact of reconciling items attributable to the noncontrolling interest (a) |
(2,133) |
(3,314) |
(3,410) |
(5,447) |
(6,327) |
|||||||||||||||
Adjusted EBITDA (a) |
$ |
109,977 |
$ |
110,439 |
$ |
114,745 |
$ |
220,416 |
$ |
232,874 |
||||||||||
(a) Adjusted EBITDA for the three months ended March 31, 2020 has been restated to reflect an immaterial adjustment due to correction on impact of reconciling items attributable to the noncontrolling interest. |
||||||||||||||||||||
Three Months Ended |
Six Months Ended |
|||||||||||||||||||
June 30, |
March 31, |
June 30, |
June 30, |
June 30, |
||||||||||||||||
(Dollars in thousands) |
(Dollars in thousands) |
|||||||||||||||||||
(Unaudited) |
(Unaudited) |
|||||||||||||||||||
Reconciliation of headline earnings: |
||||||||||||||||||||
Net income (loss) attributable to Textainer Group Holdings Limited common shareholders |
$ |
15,989 |
$ |
(4,379) |
$ |
314 |
$ |
11,610 |
$ |
17,364 |
||||||||||
Adjustments: |
||||||||||||||||||||
Container impairment |
1,197 |
4,586 |
10,918 |
5,783 |
11,718 |
|||||||||||||||
Gain on insurance recovery and legal settlement |
— |
— |
(841) |
— |
(841) |
|||||||||||||||
Impact of reconciling items on income tax benefit |
(12) |
(46) |
(98) |
(58) |
(106) |
|||||||||||||||
Impact of reconciling items attributable to the noncontrolling interest |
(43) |
(115) |
(293) |
(158) |
(325) |
|||||||||||||||
Headline earnings |
$ |
17,131 |
$ |
46 |
$ |
10,000 |
$ |
17,177 |
$ |
27,810 |
||||||||||
Headline earnings per basic common share |
$ |
0.32 |
$ |
- |
$ |
0.17 |
$ |
0.31 |
$ |
0.48 |
||||||||||
Headline earnings per diluted common share |
$ |
0.32 |
$ |
- |
$ |
0.17 |
$ |
0.31 |
$ |
0.48 |
||||||||||
SOURCE Textainer Group Holdings Limited
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