Textainer Group Holdings Limited Reports Fourth-Quarter and Full-Year 2019 Results
HAMILTON, Bermuda, Feb. 11, 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 fourth-quarter and full-year ended December 31, 2019.
Key Financial Information (in thousands except for per share and TEU amounts) and Business Highlights:
QTD | Full-Year | ||||||||||||||
Q4 2019 | Q3 2019 | 2019 | 2018 | ||||||||||||
Lease rental income (1) | $ | 151,555 | $ | 155,848 | $ | 619,760 | $ | 612,704 | |||||||
Gain on sale of owned fleet containers, net | $ | 3,134 | $ | 6,092 | $ | 21,397 | $ | 36,071 | |||||||
Income from operations | $ | 64,579 | $ | 53,487 | $ | 222,684 | $ | 194,426 | |||||||
Net income attributable to Textainer Group HoldingsLimited common shareholders | $ | 28,782 | $ | 10,578 | $ | 56,724 | $ | 50,378 | |||||||
Net income attributable to Textainer Group HoldingsLimited common shareholders per diluted common share | $ | 0.50 | $ | 0.18 | $ | 0.99 | $ | 0.88 | |||||||
Adjusted net income (2) | $ | 10,977 | $ | 12,950 | $ | 55,375 | $ | 51,471 | |||||||
Adjusted net income per diluted common share (2) | $ | 0.19 | $ | 0.22 | $ | 0.96 | $ | 0.90 | |||||||
Adjusted EBITDA (2) | $ | 113,187 | $ | 118,254 | $ | 464,315 | $ | 443,090 | |||||||
Average fleet utilization | 96.4 | % | 97.3 | % | 97.4 | % | 98.1 | % | |||||||
Total fleet size at end of period (TEU) | 3,500,812 | 3,557,466 | 3,500,812 | 3,354,724 | |||||||||||
Owned percentage of total fleet at end of period | 85.4 | % | 80.7 | % | 85.4 | % | 78.9 | % | |||||||
(1) | "Lease rental income" includes both owned and managed fleet lease rental income. Q3 2019 amount has been adjusted to include a $1,183 reclassification from trading container sales proceeds, with no effect on the income from operations, net income and adjusted net income. |
(2) | "Adjusted net income" and "Adjusted EBITDA" are Non-GAAP Measures that are reconciled to GAAP measures in section "Reconciliation of GAAP financial measures to non-GAAP financial measures" below. Section "Reconciliation of GAAP financial measures to non-GAAP financial measures" provides certain qualifications and limitations on the use of Non-GAAP Measures. |
- Net income of $28.8 million for the fourth quarter and $56.7 million for the full year. These figures include a $14.0 million gain recorded during the fourth quarter related to a cash distribution from the Hanjin bankruptcy estate;
- Adjusted net income of $11.0 million for the fourth quarter, or $0.19 per diluted common share, as compared to $13.0 million, or $0.22 per diluted common share in the third quarter of 2019. Adjusted net income of $55.4 million for the full year, or $0.96 per diluted common share, as compared to $51.5 million, or $0.90 per diluted common share in the prior year;
- Adjusted EBITDA of $113.2 million for the fourth quarter, as compared to $118.3 million in the third quarter of 2019. Adjusted EBITDA of $464.3 million for the full year, as compared to $443.1 million in the prior year;
- Utilization averaged 96.4% for the fourth quarter, as compared to 97.3% for the third quarter of 2019. Utilization averaged 97.4% for the full year, as compared to 98.1% for the prior year;
- Container investments of approximately $28 million during the fourth quarter, for a total of $739 million for the full year. In addition, we also acquired a container investment company named Leased Assets Pool Company Limited ("LAPCO") on December 31, 2019. LAPCO's assets consisted primarily of approximately 165,000 TEU of containers previously part of our managed fleet;
- Repurchased approximately 638,000 shares and 879,000 shares of common stock during the fourth quarter and the full year, respectively, under the share repurchase program authorized on August 29, 2019; and
- Commenced a secondary, or dual, listing of Textainer's common shares on the Main Board of the Johannesburg Stock Exchange ("JSE") on December 11, 2019.
"Textainer achieved solid results in a challenging operating environment, delivering stable lease rental income of $619.8 million, Adjusted EBITDA growth of 4.8%, and adjusted net income growth of 7.6% during the full year 2019. We leased out over 400,000 TEU during the year, most of which was new production leased at attractive yields with double-digit returns related to specific market opportunities captured earlier in the year. Average utilization for the year remained high at 97.4%, and at year-end, we owned approximately 85.4% of the total fleet, which stood at 3.5 million TEU," stated Olivier Ghesquiere, President and Chief Executive Officer of Textainer Group Holdings Limited.
Ghesquiere continued, "While we are pleased with our performance for the year, our fourth quarter results reflect the continued atypical lull in market activity. Accordingly, fourth quarter lease rental income of $151.6 million, adjusted EBITDA of $113.2 million, and adjusted net income of $11.0 million all decreased modestly as compared to the third quarter."
Ghesquiere concluded, "We believe the market is poised to turnaround in the second half of the year, driven by an expected return of seasonal demand, as most elements of our business remain positive. Favorable fundamentals include low turn-in activity, high utilization, reasonable inventory levels, and a recent increase in container prices. We remain focused on improving our business to be best-in-class through our cost control initiatives and other efficiency investments such as improvements in our IT systems and continued optimization of our capital structure."
Fourth-Quarter and Full-Year Results
Lease rental income decreased $4.3 million from the third quarter of 2019, largely due to a decrease in utilization and fleet size. Lease rental income for the year increased $7.1 million from 2018, largely due to an increase in fleet size, partially offset by lower utilization and average rental rates.
Trading container margin increased $0.8 million from the third quarter of 2019 and for the year increased $3.9 million from 2018, due to an increase in sales volume, partially offset by a reduction in per unit margin.
Gain on sale of owned fleet containers, net, decreased $3.0 million from the third quarter of 2019 and for the year decreased $14.7 million from 2018, driven by a reduction in the average gain per container sold and a slight decrease in the number of containers sold. While average gains per container sold decreased, the resale container price environment still remains favorable.
Direct container expense – owned fleet was flat from the third quarter of 2019 in spite of a slight decrease in utilization. Direct container expense – owned fleet for the year decreased $8.0 million from 2018, resulting from a reduction in repositioning expense, maintenance expense and military sublease expense, partially offset by higher storage costs from lower utilization.
Depreciation expense decreased $1.5 million compared to the third quarter of 2019. Depreciation expense for the year increased $10.9 million from 2018, primarily due to an increase in the size of our owned depreciable fleet.
General and administrative expense was flat from the third quarter of 2019. General and administrative expense for the year decreased $6.2 million from 2018 mainly due to a decrease in compensation costs. The third quarter of 2018 included $2.4 million in costs associated with departing senior executive personnel.
Bad debt recovery was $0.6 million in the fourth quarter of 2019, primarily due to the improved financial conditions for certain lessees. Bad debt expense for the year was $2.0 million, which included $2.9 million to fully reserve for a non-performing lessee in 2019.
Gain on insurance recovery and legal settlement for 2019 and 2018 amounted to $14.9 million and $8.7 million, respectively. The 2019 figure includes a $14.0 million cash distribution from the Hanjin bankruptcy estate received during the fourth quarter of 2019. The 2018 figures include an insurance settlement associated with the Hanjin bankruptcy for insurable costs including primarily unrecovered containers and incurred container recovery costs, net of the insurance deductible.
Gain on settlement of pre-existing management agreement for 2019 amounted to $1.8 million which related to the termination of the container management agreement in conjunction with our acquisition of LAPCO.
Interest expense decreased $2.5 million compared to the third quarter of 2019, primarily due to a decrease in interest rates. Interest expense for the year increased $14.8 million from 2018, primarily due to a higher average debt balance, partially offset by a decrease in interest rates. Realized (loss) gain on derivative instruments, net, changed from a $0.2 million gain in the third quarter of 2019 to a $0.8 million loss in the fourth quarter of 2019. Realized gain on derivative instruments, net, for the year decreased $3.3 million from 2018. The change from gain to loss in the quarter and the decrease in gain in 2019 was primarily due to a decrease in interest rates.
Unrealized gain (loss) on derivative instruments, net, was a gain of $2.9 million for the fourth quarter of 2019 and a loss of $15.4 million for the year, resulting from an increase and a decrease, respectively, in the forward LIBOR curve at the end of the respective period end which increased and reduced, respectively, the fair value of the current interest rate derivatives. 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 fourth quarter and full year 2019 will be held at 5:00 pm Eastern Time on Tuesday, February 11, 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 more than 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: expectation of future market activity; market turnaround with organic demand; impact of political and economic factors and international trade; our future financial flexibility; 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 25, 2019.
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 | |||||||||||||||||||||||||||||||
Condensed Consolidated Statements of Comprehensive Income | |||||||||||||||||||||||||||||||
Three Months and Years Ended December 31, 2019 and 2018 | |||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||
(All currency expressed in United States dollars in thousands, except per share amounts) | |||||||||||||||||||||||||||||||
Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||||||
Revenue: | |||||||||||||||||||||||||||||||
Lease rental income - owned fleet | $ | 127,304 | $ | 129,723 | $ | 517,859 | $ | 501,362 | |||||||||||||||||||||||
Lease rental income - managed fleet | 24,251 | 27,392 | 101,901 | 111,342 | |||||||||||||||||||||||||||
Lease rental income | 151,555 | 157,115 | 619,760 | 612,704 | |||||||||||||||||||||||||||
Management fees - non-leasing | 1,767 | 2,250 | 7,590 | 8,529 | |||||||||||||||||||||||||||
Trading container sales proceeds | 20,959 | 6,887 | 58,734 | 19,568 | |||||||||||||||||||||||||||
Cost of trading containers sold | (18,965) | (5,583) | (51,336) | (16,118) | |||||||||||||||||||||||||||
Trading container margin | 1,994 | 1,304 | 7,398 | 3,450 | |||||||||||||||||||||||||||
Gain on sale of owned fleet containers, net | 3,134 | 9,591 | 21,397 | 36,071 | |||||||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||||
Direct container expense - owned fleet (a) | 11,760 | 12,740 | 45,831 | 53,845 | |||||||||||||||||||||||||||
Distribution expense to managed fleet container investors | 22,323 | 25,341 | 93,858 | 102,992 | |||||||||||||||||||||||||||
Depreciation expense (b) | 66,129 | 64,801 | 260,372 | 249,500 | |||||||||||||||||||||||||||
Container lessee default expense, net (a) | 149 | 6,943 | 7,867 | 17,948 | |||||||||||||||||||||||||||
Amortization expense | 517 | 502 | 2,093 | 3,721 | |||||||||||||||||||||||||||
General and administrative expense | 9,504 | 10,652 | 38,142 | 44,317 | |||||||||||||||||||||||||||
Bad debt (recovery) expense, net | (648) | 1,639 | 2,002 | 2,697 | |||||||||||||||||||||||||||
Gain on insurance recovery and legal settlement | (14,040) | (8,692) | (14,881) | (8,692) | |||||||||||||||||||||||||||
Gain on settlement of pre-existing management agreement | (1,823) | - | (1,823) | - | |||||||||||||||||||||||||||
Total operating expenses | 93,871 | 113,926 | 433,461 | 466,328 | |||||||||||||||||||||||||||
Income from operations | 64,579 | 56,334 | 222,684 | 194,426 | |||||||||||||||||||||||||||
Other (expense) income: | |||||||||||||||||||||||||||||||
Interest expense | (37,486) | (36,589) | (153,185) | (138,427) | |||||||||||||||||||||||||||
Write-off of unamortized deferred debt issuance costs | — | — | — | (881) | |||||||||||||||||||||||||||
Interest income | 458 | 556 | 2,505 | 1,709 | |||||||||||||||||||||||||||
Realized (loss) gain on derivative instruments, net | (763) | 1,287 | 1,946 | 5,238 | |||||||||||||||||||||||||||
Unrealized gain (loss) on derivative instruments, net | 2,873 | (8,038) | (15,442) | (5,790) | |||||||||||||||||||||||||||
Other, net | 6 | 1 | (4) | — | |||||||||||||||||||||||||||
Net other expense | (34,912) | (42,783) | (164,180) | (138,151) | |||||||||||||||||||||||||||
Income before income tax andnoncontrolling interests | 29,667 | 13,551 | 58,504 | 56,275 | |||||||||||||||||||||||||||
Income tax expense | (478) | (763) | (1,948) | (2,025) | |||||||||||||||||||||||||||
Net income | 29,189 | 12,788 | 56,556 | 54,250 | |||||||||||||||||||||||||||
Less: Net (income) loss attributable to the noncontrollinginterests | (407) | (547) | 168 | (3,872) | |||||||||||||||||||||||||||
Net income attributable to Textainer GroupHoldings Limited common shareholders | $ | 28,782 | $ | 12,241 | $ | 56,724 | $ | 50,378 | |||||||||||||||||||||||
Net income attributable to Textainer Group HoldingsLimited common shareholders per share: | |||||||||||||||||||||||||||||||
Basic | $ | 0.51 | $ | 0.21 | $ | 0.99 | $ | 0.88 | |||||||||||||||||||||||
Diluted | $ | 0.50 | $ | 0.21 | $ | 0.99 | $ | 0.88 | |||||||||||||||||||||||
Weighted average shares outstanding (in thousands): | |||||||||||||||||||||||||||||||
Basic | 56,923 | 57,363 | 57,349 | 57,200 | |||||||||||||||||||||||||||
Diluted | 57,070 | 57,511 | 57,459 | 57,487 | |||||||||||||||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||||||||||||||
Change in derivative instruments designated as cash flow hedges | (124) | — | (124) | — | |||||||||||||||||||||||||||
Reclassification of realized gain on derivative instruments designatedas cash flow hedges | 7 | — | 7 | — | |||||||||||||||||||||||||||
Foreign currency translation adjustments | 94 | (45) | 42 | (127) | |||||||||||||||||||||||||||
Comprehensive income | 29,166 | 12,743 | 56,481 | 54,123 | |||||||||||||||||||||||||||
Comprehensive (income) loss attributable to thenoncontrolling interests | (407) | (547) | 168 | (3,872) | |||||||||||||||||||||||||||
Comprehensive income attributable to TextainerGroup Holdings Limited common shareholders | $ | 28,759 | $ | 12,196 | $ | 56,649 | $ | 50,251 | |||||||||||||||||||||||
(a) | Amounts for container write-off and container recovery costs from lessee default for the periods ended December 31, 2018 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 expense, net" to conform with the 2019 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 December 31, 2018 have been reclassified out of the previously reported line item "container impairment" and included within "depreciation expense" to conform with the 2019 presentation. |
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES | |||||||
Condensed Consolidated Balance Sheets | |||||||
December 31, 2019 and 2018 | |||||||
(Unaudited) | |||||||
(All currency expressed in United States dollars in thousands) | |||||||
2019 | 2018 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 180,552 | $ | 137,298 | |||
Accounts receivable, net of allowance for doubtful accounts of $6,299 and $5,729, respectively | 109,384 | 134,225 | |||||
Net investment in direct financing and sales-type leases | 40,940 | 39,270 | |||||
Container leaseback financing receivable | 20,547 | - | |||||
Trading containers | 11,330 | 40,852 | |||||
Containers held for sale | 41,884 | 21,874 | |||||
Prepaid expenses and other current assets | 14,816 | 23,139 | |||||
Due from affiliates, net | 1,880 | 1,692 | |||||
Total current assets | 421,333 | 398,350 | |||||
Restricted cash | 97,353 | 87,630 | |||||
Containers, net of accumulated depreciation of $1,443,167 and $1,322,221, respectively | 4,156,151 | 4,134,016 | |||||
Net investment in direct financing and sales-type leases | 254,363 | 127,790 | |||||
Container leaseback financing receivable | 251,111 | - | |||||
Fixed assets, net of accumulated depreciation of $12,266 and $11,525, respectively | 1,128 | 2,066 | |||||
Intangible assets, net of accumulated amortization of $45,359 and $43,266, respectively | 5,291 | 7,384 | |||||
Derivative instruments | 135 | 5,555 | |||||
Deferred taxes | 1,388 | 2,087 | |||||
Other assets | 14,364 | 3,891 | |||||
Total assets | $ | 5,202,617 | $ | 4,768,769 | |||
Liabilities and Equity | |||||||
Current liabilities: | |||||||
Accounts payable and accrued expenses | $ | 23,404 | $ | 27,297 | |||
Container contracts payable | 9,394 | 42,710 | |||||
Other liabilities | 2,636 | 219 | |||||
Due to container investors, net | 21,978 | 30,672 | |||||
Debt, net of unamortized deferred financing costs of $8,120 and $5,738, respectively | 213,863 | 191,689 | |||||
Total current liabilities | 271,275 | 292,587 | |||||
Debt, net of unamortized deferred financing costs of $21,446 and $22,248, respectively | 3,583,866 | 3,218,138 | |||||
Derivative instruments | 13,778 | 3,639 | |||||
Income tax payable | 9,909 | 9,570 | |||||
Deferred taxes | 7,789 | 7,039 | |||||
Other liabilities | 30,355 | 1,805 | |||||
Total liabilities | 3,916,972 | 3,532,778 | |||||
Equity: | |||||||
Textainer Group Holdings Limited shareholders' equity: | |||||||
Common shares, $0.01 par value. Authorized 140,000,000 shares; 58,326,555 shares issued and56,817,918 shares outstanding at 2019; 58,032,164 shares issued and 57,402,164 sharesoutstanding at 2018 | 583 | 581 | |||||
Treasury shares, at cost, 1,508,637 shares and 630,000 shares, respectively | (17,746) | (9,149) | |||||
Additional paid-in capital | 410,595 | 406,083 | |||||
Accumulated other comprehensive loss | (511) | (436) | |||||
Retained earnings | 866,458 | 809,734 | |||||
Total Textainer Group Holdings Limited shareholders' equity | 1,259,379 | 1,206,813 | |||||
Noncontrolling interests | 26,266 | 29,178 | |||||
Total equity | 1,285,645 | 1,235,991 | |||||
Total liabilities and equity | $ | 5,202,617 | $ | 4,768,769 | |||
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES | |||||||
Condensed Consolidated Statements of Cash Flows | |||||||
Years Ended December 31, 2019 and 2018 | |||||||
(Unaudited) | |||||||
(All currency expressed in United States dollars in thousands) | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 56,556 | $ | 54,250 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation expense (a) | 260,372 | 249,500 | |||||
Container write-down from lessee default, net (b) | 7,179 | 12,980 | |||||
Bad debt expense, net | 2,002 | 2,697 | |||||
Unrealized loss on derivative instruments, net | 15,442 | 5,790 | |||||
Amortization and write-off of unamortized deferred debt issuance costs andaccretion of bond discounts | 7,953 | 9,531 | |||||
Amortization of intangible assets | 2,093 | 3,721 | |||||
Gain on sale of owned fleet containers, net | (21,397) | (36,071) | |||||
Gain on insurance recovery and legal settlement | — | (8,692) | |||||
Gain on settlement of pre-existing management agreement | (1,823) | — | |||||
Share-based compensation expense | 4,388 | 7,355 | |||||
Changes in operating assets and liabilities | 95,780 | 15,058 | |||||
Total adjustments | 371,989 | 261,869 | |||||
Net cash provided by operating activities | 428,545 | 316,119 | |||||
Cash flows from investing activities: | |||||||
Purchase of containers and fixed assets | (466,993) | (854,383) | |||||
Payment for TW Container Leasing, Ltd. capital restructuring | — | (29,658) | |||||
Payment for Leased Assets Pool Company Limited, net of cash acquired | (171,841) | — | |||||
Payments on container leaseback financing receivable | (281,445) | — | |||||
Receipt of principal payments on container leaseback financing receivable | 7,745 | — | |||||
Proceeds from sale of containers and fixed assets | 150,742 | 147,254 | |||||
Net cash used in investing activities | (761,792) | (736,787) | |||||
Cash flows from financing activities: | |||||||
Proceeds from debt | 1,439,223 | 2,029,025 | |||||
Principal payments on debt | (1,049,857) | (1,608,753) | |||||
Proceeds from container leaseback financing liability, net | 17,448 | — | |||||
Purchase of treasury shares | (8,597) | — | |||||
Debt issuance costs | (9,417) | (10,252) | |||||
Dividends paid to noncontrolling interest | (2,744) | (1,996) | |||||
Issuance of common shares upon exercise of share options | 126 | 130 | |||||
Net cash provided by financing activities | 386,182 | 408,154 | |||||
Effect of exchange rate changes | 42 | (127) | |||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 52,977 | (12,641) | |||||
Cash, cash equivalents and restricted cash, beginning of the year | 224,928 | 237,569 | |||||
Cash, cash equivalents and restricted cash, end of the year | $ | 277,905 | $ | 224,928 | |||
(a) | Amount to write-down the carrying value of containers held for sale to their estimated fair value less costs to sell for the year ended December 31, 2018 has been reclassified out of the previously reported line item "container impairment" and included within "depreciation expense" to conform with the 2019 presentation. |
(b) | Amounts for container write-off and container recovery costs from lessee default for the year ended 31, 2018 has been reclassified out of the previously reported line item "container impairment" and "direct container expense – owned fleet" and included within "container lessee default expense, net" to conform with the 2019 presentation. |
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES
Reconciliation of GAAP financial measures to non-GAAP financial measures
Three Months and Years Ended December 31, 2019 and 2018
(Unaudited)
(All currency expressed in United States dollars in thousands, except per share amounts)
The following is a reconciliation of certain U.S. generally accepted accounting principles ("GAAP") measures to non-GAAP financial measures (such items listed in (a) to (c) below and defined as "Non-GAAP Measures") for the three months and years ended December 31, 2019 and 2018, including:
(a) | net income attributable to Textainer Group Holdings Limited common shareholders to adjusted EBITDA (defined as net income attributable to Textainer Group Holdings Limited common shareholders before interest income and expense, write-off of unamortized deferred debt issuance costs, realized loss (gain) on derivative instruments, net, unrealized (gain) loss on derivative instruments, net, costs associated with departing senior executives, gain on insurance recovery and legal settlement, gain on settlement of pre-existing management agreement, income tax expense, net income attributable to the noncontrolling interests ("NCI"), depreciation expense, container write-off from lessee default, amortization expense and the related impact of reconciling items on net income attributable to the NCI); |
(b) | net income attributable to Textainer Group Holdings Limited common shareholders to adjusted net income (defined as net income attributable to Textainer Group Holdings Limited common shareholders before the write-off of unamortized deferred debt issuance costs, unrealized (gain) loss on derivative instruments, net, costs associated with departing senior executives, gain on insurance recovery and legal settlement, gain on settlement of pre-existing management agreement, the related impact of reconciling items on income tax expense and net income attributable to the NCI); and |
(c) | net income attributable to Textainer Group Holdings Limited common shareholders to headline earnings (defined as net income attributable to Textainer Group Holdings Limited common shareholders before the container impairment to write down the carrying value of containers held for sale to their estimated fair value less costs to sell and for container write-off from lessee default, costs associated with departing senior executives, gain on insurance recovery and legal settlement, gain on settlement of pre-existing management agreement, the related impact of reconciling items on income tax expense and net income attributable to the NCI). Headline earnings and headline earnings per basic and dilute common share is calculated from net income which has been determined based on GAAP. |
The inclusion of headline earnings in this press release is a requirement of our listing on the JSE. |
Non-GAAP Measures are not financial measures calculated in accordance with GAAP and should not be considered as an alternative to net income, income from operations or any other performance measures derived in accordance with GAAP or as an alternative to cash flows from operating activities as a measure of our liquidity. Non-GAAP Measures are presented solely as supplemental disclosures. Management believes that adjusted EBITDA may be a useful performance measure that is widely used within our industry and adjusted net income may be a useful performance measure because Textainer intends to hold its derivative instruments until maturity and over the life of a derivative instrument the unrealized (gain) loss will net to zero. Non-GAAP measures are 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 per diluted common share are useful in evaluating our operating performance because unrealized (gain) loss on derivative instruments, 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 are a noncash 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 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, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(Dollars in thousands) | (Dollars in thousands) | ||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||
Reconciliation of adjusted net income: | |||||||||||||||
Net income attributable to Textainer Group HoldingsLimited common shareholders | $ | 28,782 | $ | 12,241 | $ | 56,724 | $ | 50,378 | |||||||
Adjustments: | |||||||||||||||
Write-off of unamortized deferred debt issuance costs | — | — | — | 881 | |||||||||||
Unrealized (gain) loss on derivative instruments, net | (2,873) | 8,038 | 15,442 | 5,790 | |||||||||||
Costs associated with departing senior executives | — | — | — | 2,368 | |||||||||||
Gain on insurance recovery and legal settlement | (14,040) | (8,692) | (14,881) | (8,692) | |||||||||||
Gain on settlement of pre-existing management agreement | (1,823) | — | (1,823) | — | |||||||||||
Impact of reconciling items on income tax expense (benefit) | 551 | 6 | 378 | (478) | |||||||||||
Impact of reconciling items on net income (loss) attributable tothe noncontrolling interests | 380 | 324 | (465) | 1,224 | |||||||||||
Adjusted net income | $ | 10,977 | $ | 11,917 | $ | 55,375 | $ | 51,471 | |||||||
Adjusted net income per diluted common share | $ | 0.19 | $ | 0.21 | $ | 0.96 | $ | 0.90 | |||||||
Three Months Ended | Years Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(Dollars in thousands) | (Dollars in thousands) | |||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
Reconciliation of adjusted EBITDA: | ||||||||||||||||
Net income attributable to Textainer Group HoldingsLimited common shareholders | $ | 28,782 | $ | 12,241 | $ | 56,724 | $ | 50,378 | ||||||||
Adjustments: | ||||||||||||||||
Interest income | (458) | (556) | (2,505) | (1,709) | ||||||||||||
Interest expense | 37,486 | 36,589 | 153,185 | 138,427 | ||||||||||||
Write-off of unamortized deferred debt issuance costs | — | — | — | 881 | ||||||||||||
Realized loss (gain) on derivative instruments, net | 763 | (1,287) | (1,946) | (5,238) | ||||||||||||
Unrealized (gain) loss on derivative instruments, net | (2,873) | 8,038 | 15,442 | 5,790 | ||||||||||||
Costs associated with departing senior executives | — | — | — | 2,368 | ||||||||||||
Gain on insurance recovery and legal settlement | (14,040) | (8,692) | (14,881) | (8,692) | ||||||||||||
Gain on settlement of pre-existing management agreement | (1,823) | — | (1,823) | — | ||||||||||||
Income tax expense | 478 | 763 | 1,948 | 2,025 | ||||||||||||
Net income (loss) attributable to the noncontrolling interests | 407 | 547 | (168) | 3,872 | ||||||||||||
Depreciation expense | 66,129 | 64,801 | 260,372 | 249,500 | ||||||||||||
Container write-off from lessee default, net | 25 | 4,554 | 7,179 | 12,980 | ||||||||||||
Amortization expense | 517 | 502 | 2,093 | 3,721 | ||||||||||||
Impact of reconciling items on net income (loss) attributable tothe noncontrolling interests | (2,206) | (2,500) | (11,305) | (11,213) | ||||||||||||
Adjusted EBITDA | $ | 113,187 | $ | 115,000 | $ | 464,315 | $ | 443,090 | ||||||||
Three Months Ended | Years Ended | |||||||||||||
December 31, | December 31, | |||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||
(Dollars in thousands) | (Dollars in thousands) | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||
Reconciliation of headline earnings: | ||||||||||||||
Net income attributable to Textainer Group HoldingsLimited common shareholders | $ | 28,782 | $ | 12,241 | $ | 56,724 | $ | 50,378 | ||||||
Adjustments: | ||||||||||||||
Container impairment | 4,348 | 8,221 | 21,417 | 26,775 | ||||||||||
Costs associated with departing senior executives | — | — | — | 2,368 | ||||||||||
Gain on insurance recovery and legal settlement | (14,040) | (8,692) | (14,881) | (8,692) | ||||||||||
Gain on settlement of pre-existing management agreement | (1,823) | — | (1,823) | — | ||||||||||
Impact of reconciling items on income tax expense | 477 | 5 | 319 | (670) | ||||||||||
Impact of reconciling items attributable to the noncontrolling interests | 100 | 682 | (363) | 112 | ||||||||||
Headline earnings | $ | 17,844 | $ | 12,457 | $ | 61,393 | $ | 70,271 | ||||||
Headline earnings per basic common share | $ | 0.31 | $ | 0.22 | $ | 1.07 | $ | 1.23 | ||||||
Headline earnings per diluted common share | $ | 0.31 | $ | 0.22 | $ | 1.07 | $ | 1.22 | ||||||
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SOURCE Textainer Group Holdings Limited
