Textainer Group Holdings Limited Reports First-Quarter 2022 Results and Declares Dividend
Textainer Group Holdings Limited (TGH) reported strong Q1 2022 results, with lease rental income of $198.7 million, up 17% year-over-year. Net income attributable to common shareholders was $72.7 million, or $1.47 per share. The company declared a $0.25 per common share cash dividend, payable on June 15, 2022. Textainer's average fleet utilization stood at 99.7%, with a fleet size of 4.4 million TEU. A $50 million increase to the share repurchase program was also announced, bringing the total to $250 million since its inception.
- Lease rental income increased to $198.7 million, a 17% year-over-year increase.
- Net income of $72.7 million or $1.47 per diluted share, compared to $62.1 million last year.
- Declared a $0.25 per common share cash dividend, reinforcing shareholder returns.
- Average fleet utilization maintained at 99.7%.
- Increased share repurchase program by $50 million, total now $250 million.
- Trading container margin slightly decreased by $0.9 million from the previous quarter.
- Interest expense rose by $0.4 million, attributed to a higher debt balance.
HAMILTON, Bermuda, May 05, 2022 (GLOBE NEWSWIRE) -- 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 first-quarter ended March 31, 2022.
Key Financial Information (in thousands except for per share and TEU amounts) and Business Highlights:
| QTD | ||||||||||||
| Q1 2022 | Q4 2021 | Q1 2021 | ||||||||||
| Lease rental income | $ | 198,718 | $ | 198,222 | $ | 169,244 | ||||||
| Gain on sale of owned fleet containers, net | $ | 15,913 | $ | 16,007 | $ | 12,358 | ||||||
| Income from operations | $ | 114,716 | $ | 113,986 | $ | 92,101 | ||||||
| Net income attributable to common shareholders | $ | 72,705 | $ | 72,885 | $ | 62,050 | ||||||
| Net income attributable to common shareholders per diluted common share | $ | 1.47 | $ | 1.45 | $ | 1.22 | ||||||
| Adjusted net income (1) | $ | 72,869 | $ | 73,229 | $ | 59,152 | ||||||
| Adjusted net income per diluted common share (1) | $ | 1.48 | $ | 1.46 | $ | 1.16 | ||||||
| Adjusted EBITDA (1) | $ | 182,317 | $ | 182,150 | $ | 153,110 | ||||||
| Average fleet utilization (2) | 99.7 | % | 99.7 | % | 99.6 | % | ||||||
| Total fleet size at end of period (TEU) (3) | 4,402,158 | 4,322,367 | 3,961,491 | |||||||||
| Owned percentage of total fleet at end of period | 93.0 | % | 92.8 | % | 90.2 | % | ||||||
(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 and units manufactured for us but not yet 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 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.
- Net income of
$72.7 million for the first quarter, or$1.47 per diluted common share, as compared to$72.9 million , or$1.45 per diluted common share, for the fourth quarter of 2021; - Adjusted net income of
$72.9 million , or$1.48 per diluted common share, and Adjusted EBITDA of$182.3 million for the first quarter, in line with the fourth quarter of 2021; - Average and ending utilization rate for the first quarter of
99.7% ; - Added
$497 million of new containers during the first quarter, primarily assigned to long-term finance leases; - Repurchased 957,689 shares of common stock at an average price of
$37.91 per share during the first quarter. On April 29, 2022, Textainer's board of directors authorized a further increase of$50 million to the share repurchase program, bringing the total authorization level to$250 million since inception of the program in 2019. Combined with the increased authorization, the remaining authority under the share repurchase program totaled$65 million as of the end of the first quarter; - Textainer’s board of directors approved and declared a quarterly preferred cash dividend on its
7.00% Series A and its6.25% Series B cumulative redeemable perpetual preference shares, payable on June 15, 2022, to holders of record as of June 3, 2022; and - Textainer’s board of directors approved and declared a
$0.25 per common share cash dividend, payable on June 15, 2022 to holders of record as of June 3, 2022.
“We are very pleased with our strong results for the start of the year. For the first quarter, lease rental income of
“This is in line with our expectation of continued high utilization and strong performance for the year. Additionally, we invested
“As we move into the busy summer season, cargo demand is expected to increase again on the back of consumer demand while inventory levels remain low and supply chain constraints remain a significant global issue. While we see demand for new containers normalizing following high production levels in 2021, we continue to expect more localized growth opportunities and further back-to-back deals. Our inventory of new containers is at a moderate level and the current order book for future deliveries is approximately
“Our focus on longer term leases at attractive yields, matched with fixed-rate debt and a proactive hedging strategy, have secured our profitability and stable cash generation to largely mitigate future market cyclicality risk. We remain committed to returning capital to shareholders through our active share repurchase and dividend programs. During the first quarter, we repurchased 957,689 common shares, and since the inception of the program in September 2019, have repurchased approximately
“As we evaluate the remainder of 2022, we are confident in the strength of our underlying business fundamentals. We remain focused on delivering a long-term balanced approach of driving organic growth through disciplined and accretive capex investments, while returning capital to common shareholders through our ongoing share repurchase and dividend programs,” concluded Ghesquiere.
First-Quarter Results
Lease rental income for the quarter increased
Trading container margin for the quarter decreased
Gain on sale of owned fleet containers, net for the quarter remained positive at
General and administrative expense for the quarter decreased
Interest expense for the quarter increased
Conference Call and Webcast
A conference call to discuss the financial results for the first quarter of 2022 will be held at 11:00 am Eastern Time on Thursday, May 5, 2022. The dial-in number for the conference call is 1-877-300-8521 (U.S. & Canada) and 1-412-317-6026 (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. We sold an average of approximately 130,000 containers per year for the last five years to more than 1,000 customers making us 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) Cargo demand is expected to increase again on the back of consumer demand; (ii) While we see demand for new containers normalizing following high production levels in 2021, we continue to expect more localized growth opportunities and further back-to-back deals; (iii) Expectation of continued high utilization and strong performance for the year; (iv) New container prices are around
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, | ||||||||
| 2022 | 2021 | |||||||
| Revenues: | ||||||||
| Lease rental income - owned fleet | $ | 186,077 | $ | 154,423 | ||||
| Lease rental income - managed fleet | 12,641 | 14,821 | ||||||
| Lease rental income | 198,718 | 169,244 | ||||||
| Management fees - non-leasing | 532 | 1,036 | ||||||
| Trading container sales proceeds | 7,618 | 7,611 | ||||||
| Cost of trading containers sold | (6,756 | ) | (5,445 | ) | ||||
| Trading container margin | 862 | 2,166 | ||||||
| Gain on sale of owned fleet containers, net | 15,913 | 12,358 | ||||||
| Operating expenses: | ||||||||
| Direct container expense - owned fleet | 5,519 | 6,797 | ||||||
| Distribution expense to managed fleet container investors | 11,173 | 13,495 | ||||||
| Depreciation expense | 72,444 | 65,806 | ||||||
| Amortization expense | 49 | 800 | ||||||
| General and administrative expense | 11,527 | 10,900 | ||||||
| Bad debt expense (recovery), net | 477 | (1,127 | ) | |||||
| Container lessee default expense (recovery), net | 120 | (3,968 | ) | |||||
| Total operating expenses | 101,309 | 92,703 | ||||||
| Income from operations | 114,716 | 92,101 | ||||||
| Other (expense) income: | ||||||||
| Interest expense | (35,309 | ) | (29,106 | ) | ||||
| Debt termination expense | — | (267 | ) | |||||
| Realized loss on financial instruments, net | — | (2,956 | ) | |||||
| Unrealized (loss) gain on financial instruments, net | (207 | ) | 3,192 | |||||
| Other, net | 113 | 152 | ||||||
| Net other expense | (35,403 | ) | (28,985 | ) | ||||
| Income before income taxes | 79,313 | 63,116 | ||||||
| Income tax expense | (1,639 | ) | (1,066 | ) | ||||
| Net income | 77,674 | 62,050 | ||||||
| Less: Dividends on preferred shares | 4,969 | — | ||||||
| Net income attributable to common shareholders | $ | 72,705 | $ | 62,050 | ||||
| Net income attributable to common shareholders per share: | ||||||||
| Basic | $ | 1.50 | $ | 1.24 | ||||
| Diluted | $ | 1.47 | $ | 1.22 | ||||
| Weighted average shares outstanding (in thousands): | ||||||||
| Basic | 48,403 | 50,150 | ||||||
| Diluted | 49,303 | 50,865 | ||||||
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
(All currency expressed in United States dollars in thousands, except share data)
| March 31, 2022 | December 31, 2021 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 198,022 | $ | 206,210 | ||||
| Accounts receivable, net of allowance of | 131,375 | 125,746 | ||||||
| Net investment in finance leases, net of allowance of | 115,849 | 113,048 | ||||||
| Container leaseback financing receivable, net of allowance of | 50,239 | 30,317 | ||||||
| Trading containers | 7,292 | 12,740 | ||||||
| Containers held for sale | 11,178 | 7,007 | ||||||
| Prepaid expenses and other current assets | 15,267 | 14,184 | ||||||
| Due from affiliates, net | 2,639 | 2,376 | ||||||
| Total current assets | 531,861 | 511,628 | ||||||
| Restricted cash | 82,295 | 76,362 | ||||||
| Marketable securities | 2,660 | 2,866 | ||||||
| Containers, net of accumulated depreciation of | 4,707,731 | 4,731,878 | ||||||
| Net investment in finance leases, net of allowance of | 1,683,450 | 1,693,042 | ||||||
| Container leaseback financing receivable, net of allowance of | 682,200 | 323,830 | ||||||
| Derivative instruments | 72,817 | 12,278 | ||||||
| Deferred taxes | 1,070 | 1,073 | ||||||
| Other assets | 15,634 | 14,487 | ||||||
| Total assets | $ | 7,779,718 | $ | 7,367,444 | ||||
| Liabilities and Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 18,285 | $ | 22,111 | ||||
| Container contracts payable | 130,055 | 140,968 | ||||||
| Other liabilities | 4,915 | 4,895 | ||||||
| Due to container investors, net | 19,097 | 17,985 | ||||||
| Debt, net of unamortized costs of | 389,303 | 380,207 | ||||||
| Total current liabilities | 561,655 | 566,166 | ||||||
| Debt, net of unamortized costs of | 5,286,670 | 4,960,313 | ||||||
| Derivative instruments | 7 | 2,139 | ||||||
| Income tax payable | 10,990 | 10,747 | ||||||
| Deferred taxes | 9,249 | 7,589 | ||||||
| Other liabilities | 37,970 | 39,236 | ||||||
| Total liabilities | 5,906,541 | 5,586,190 | ||||||
| Shareholders' equity: | ||||||||
| Cumulative redeemable perpetual preferred shares, Authorized 10,000,000 shares; 12,000 shares issued and outstanding (equivalent to 12,000,000 depositary shares at | 300,000 | 300,000 | ||||||
| Common shares, 48,018,141 shares outstanding at 2022; 59,503,710 shares issued and 48,831,855 shares outstanding at 2021 | 596 | 595 | ||||||
| Treasury shares, at cost, 11,629,544 and 10,671,855 shares, respectively | (194,868 | ) | (158,459 | ) | ||||
| Additional paid-in capital | 434,577 | 428,945 | ||||||
| Accumulated other comprehensive income | 71,798 | 9,750 | ||||||
| Retained earnings | 1,261,074 | 1,200,423 | ||||||
| Total shareholders’ equity | 1,873,177 | 1,781,254 | ||||||
| Total liabilities and shareholders' equity | $ | 7,779,718 | $ | 7,367,444 | ||||
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, | ||||||||
| 2022 | 2021 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 77,674 | $ | 62,050 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation expense | 72,444 | 65,806 | ||||||
| Bad debt expense (recovery), net | 477 | (1,127 | ) | |||||
| Container recovery from lessee default, net | — | (5,712 | ) | |||||
| Unrealized loss (gain) on financial instruments, net | 207 | (3,192 | ) | |||||
| Amortization of unamortized debt issuance costs and accretion of bond discounts | 2,615 | 2,162 | ||||||
| Debt termination expense | — | 267 | ||||||
| Amortization of intangible assets | 49 | 800 | ||||||
| Gain on sale of owned fleet containers, net | (15,913 | ) | (12,358 | ) | ||||
| Share-based compensation expense | 1,727 | 1,334 | ||||||
| Changes in operating assets and liabilities | 48,679 | 24,483 | ||||||
| Total adjustments | 110,285 | 72,463 | ||||||
| Net cash provided by operating activities | 187,959 | 134,513 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchase of containers and fixed assets | (206,476 | ) | (311,995 | ) | ||||
| Payment on container leaseback financing receivable | (303,894 | ) | (6,425 | ) | ||||
| Proceeds from sale of containers and fixed assets | 29,656 | 29,654 | ||||||
| Receipt of principal payments on container leaseback financing receivable | 7,444 | 8,721 | ||||||
| Net cash used in investing activities | (473,270 | ) | (280,045 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from debt | 482,100 | 1,153,599 | ||||||
| Payments on debt | (149,262 | ) | (969,991 | ) | ||||
| Payment of debt issuance costs | — | (6,845 | ) | |||||
| Proceeds from container leaseback financing liability, net | — | 6,801 | ||||||
| Principal repayments on container leaseback financing liability, net | (200 | ) | (94 | ) | ||||
| Purchase of treasury shares | (36,409 | ) | (10,778 | ) | ||||
| Issuance of common shares upon exercise of share options | 3,906 | 1,842 | ||||||
| Dividends paid on common shares | (12,054 | ) | — | |||||
| Dividends paid on preferred shares | (4,969 | ) | — | |||||
| Purchase of noncontrolling interest | — | (21,500 | ) | |||||
| Net cash provided by financing activities | 283,112 | 153,034 | ||||||
| Effect of exchange rate changes | (56 | ) | (46 | ) | ||||
| Net (decrease) increase in cash, cash equivalents and restricted cash | (2,255 | ) | 7,456 | |||||
| Cash, cash equivalents and restricted cash, beginning of the year | 282,572 | 205,165 | ||||||
| Cash, cash equivalents and restricted cash, end of the period | $ | 280,317 | $ | 212,621 | ||||
| Supplemental disclosures of cash flow information: | ||||||||
| Cash paid for interest expense and realized loss on derivative instruments, net | $ | 32,266 | $ | 29,812 | ||||
| Income taxes paid | $ | 140 | $ | 248 | ||||
| Receipt of payments on finance leases, net of income earned | $ | 53,132 | $ | 14,467 | ||||
| Supplemental disclosures of noncash investing activities: | ||||||||
| (Decrease) increase in accrued container purchases | $ | (10,913 | ) | $ | 258,275 | |||
| Containers placed in finance leases | $ | 57,361 | $ | 207,171 | ||||
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 debt termination expense, unrealized (loss) gain on derivative instruments and 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, 2022, December 31, 2021 and March 31, 2021.
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:
- 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, | ||||||||||||
| March 31, 2022 | December 31, 2021 | March 31, 2021 | ||||||||||
| (Dollars in thousands, except per share amount) | ||||||||||||
| (Unaudited) | ||||||||||||
| Reconciliation of adjusted net income: | ||||||||||||
| Net income attributable to common shareholders | $ | 72,705 | $ | 72,885 | $ | 62,050 | ||||||
| Adjustments: | ||||||||||||
| Debt termination expense | — | 131 | 267 | |||||||||
| Unrealized loss (gain) on financial instruments, net | 207 | 272 | (3,192 | ) | ||||||||
| Impact of reconciling items on income tax | (43 | ) | (59 | ) | 27 | |||||||
| Adjusted net income | $ | 72,869 | $ | 73,229 | $ | 59,152 | ||||||
| Adjusted net income per diluted common share | $ | 1.48 | $ | 1.46 | $ | 1.16 | ||||||
| Three Months Ended, | ||||||||||||
| March 31, 2022 | December 31, 2021 | March 31, 2021 | ||||||||||
| (Dollars in thousands) | ||||||||||||
| (Unaudited) | ||||||||||||
| Reconciliation of adjusted EBITDA: | ||||||||||||
| Net income attributable to common shareholders | $ | 72,705 | $ | 72,885 | $ | 62,050 | ||||||
| Adjustments: | ||||||||||||
| Interest income | (36 | ) | (40 | ) | (37 | ) | ||||||
| Interest expense | 35,309 | 34,888 | 29,106 | |||||||||
| Debt termination expense | — | 131 | 267 | |||||||||
| Realized loss on derivative instruments, net | — | — | 2,956 | |||||||||
| Unrealized loss (gain) on financial instruments, net | 207 | 272 | (3,192 | ) | ||||||||
| Income tax expense | 1,639 | 883 | 1,066 | |||||||||
| Depreciation expense | 72,444 | 72,915 | 65,806 | |||||||||
| Container recovery from lessee default, net | — | (34 | ) | (5,712 | ) | |||||||
| Amortization expense | 49 | 250 | 800 | |||||||||
| Adjusted EBITDA | $ | 182,317 | $ | 182,150 | $ | 153,110 | ||||||
| Three Months Ended, | ||||||||||||
| March 31, 2022 | December 31, 2021 | March 31, 2021 | ||||||||||
| (Dollars in thousands, except per share amount) | ||||||||||||
| (Unaudited) | ||||||||||||
| Reconciliation of headline earnings: | ||||||||||||
| Net income attributable to common shareholders | $ | 72,705 | $ | 72,885 | $ | 62,050 | ||||||
| Adjustments: | ||||||||||||
| Container recovery from lessee default, net | — | (34 | ) | (5,712 | ) | |||||||
| Impact of reconciling items on income tax | — | — | 53 | |||||||||
| Headline earnings | $ | 72,705 | $ | 72,851 | $ | 56,391 | ||||||
| Headline earnings per basic common share | $ | 1.50 | $ | 1.48 | $ | 1.12 | ||||||
| Headline earnings per diluted common share | $ | 1.47 | $ | 1.45 | $ | 1.11 | ||||||
FAQ
What is Textainer's lease rental income for Q1 2022?
When is the dividend payment date for Textainer's common stock?
What was Textainer's net income for Q1 2022?
What is the average fleet utilization rate for Textainer?
How much has Textainer authorized for share repurchase?
