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Textainer Group Holdings Limited Reports Second-Quarter 2023 Results and Declares Dividend

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HAMILTON, Bermuda, Aug. 01, 2023 (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 second-quarter ended June 30, 2023.

Key Financial Information (in thousands except for per share and TEU amounts) and Business Highlights:

  QTD 
  Q2 2023  Q1 2023  Q2 2022 
Total lease rental income $192,163  $194,901  $203,232 
Gain on sale of owned fleet containers, net $7,703  $9,548  $23,213 
Income from operations $97,678  $100,379  $122,847 
Net income attributable to common shareholders $51,332  $53,626  $78,590 
Net income attributable to common shareholders
   per diluted common share
 $1.20  $1.22  $1.63 
Adjusted net income (1) $51,332  $53,624  $78,522 
Adjusted net income per diluted common share (1) $1.20  $1.22  $1.63 
Adjusted EBITDA (1) $162,958  $166,985  $191,086 
Average fleet utilization (2)  98.8%  98.8%  99.6%
Total fleet size at end of period (TEU) (3)  4,334,809   4,375,474   4,508,490 
Owned percentage of total fleet at end of period  93.8%  93.7%  93.3%

(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 $51.3 million for the second quarter, or $1.20 per diluted common share, as compared to $53.6 million, or $1.22 per diluted common share, for the first quarter of 2023;
  • Adjusted EBITDA of $163.0 million for the second quarter, as compared to $167.0 million for the first quarter of 2023;
  • Second quarter average and current utilization rate of 98.8% and 98.9%, respectively;
  • Added $135.2 million of new containers through the first six months of 2023, virtually all assigned to long-term leases with expected on-hire dates throughout the third quarter;
  • Repurchased 1,148,711 common shares at an average price of $36.86 per share during the second quarter. On July 24, 2023, Textainer's board of directors authorized a further increase of $100 million to the share repurchase program. Combined with the increased authorization, the remaining available authority under the share repurchase program totaled $139 million as of the end of the second quarter;
  • Textainer’s board of directors approved and declared a quarterly preferred cash dividend on its 7.00% Series A and its 6.25% Series B cumulative redeemable perpetual preference shares, payable on September 15, 2023, to holders of record as of September 1, 2023; and
  • Textainer’s board of directors approved and declared a $0.30 per common share cash dividend, payable on September 15, 2023 to holders of record as of September 1, 2023.

“We are very pleased with our second quarter results which demonstrate the stability and resilience of our long tenured lease portfolio combined with our well-structured fixed and hedged financing. For the quarter, utilization was stable at a high level of 98.8% and lease rental income remained firm at $192 million. Adjusted net income was $51 million, or $1.20 per diluted common share against $1.22 for the previous quarter,” stated Olivier Ghesquiere, President and Chief Executive Officer.

“The conditions across the overall container market remained consistent from the first quarter, with limited, new container demand and very low production volumes which we consider healthy for the industry following two years of elevated volumes. Our priority has therefore continued to focus on optimizing capital allocation and further securing our strong cash flows through continued action on operational efficiencies and lease renewals. As a result, our average lease duration remains at approximately 6 years, and we expect our utilization rate to remain elevated.”

“As we position ourselves for the return of higher cargo volumes in the second half of the year, we have observed the initial signs of higher ship loadings as well as firming ocean freight rates on major shipping routes. We have also noticed a reduction in off hires of older containers and have deployed some limited capex, mostly as a result of confirmed leases that will start generating revenue in the third quarter.”

“While we await the opportune market turn to deploy larger capex volumes, we continue to focus on long-term shareholder value creation as demonstrated by our steady increase in book value per share. In addition to de-leveraging, we continue our buyback program and have now repurchased 5.5% of our outstanding common shares over the first half of the year. We are furthermore pleased to announce that our board of directors has approved an increase of $100 million to our repurchase program, as we continue to view this program as accretive and beneficial to shareholders,” concluded Ghesquiere.

Conference Call and Webcast

A conference call to discuss the financial results for the second quarter of 2023 will be held at 11:00 am Eastern Time on Tuesday, August 1, 2023. The dial-in number for the conference call is 1-877-407-9039 (U.S. & Canada) and 1-201-689-8470 (International). The call and archived replay may also be accessed via webcast on Textainer’s Investor Relations website at http://investor.textainer.com.

About Textainer Group Holdings Limited

Textainer has operated since 1979 and is one of the world’s largest lessors of intermodal containers with more than 4 million TEU in our owned and managed fleet. We lease containers to approximately 200 customers, including all of the world’s leading international shipping lines, and other lessees. Our fleet consists of standard dry freight, refrigerated intermodal containers, and dry freight specials. We also lease tank containers through our relationship with Trifleet Leasing and are a supplier of containers to the U.S. Military. Textainer is one of the largest and most reliable suppliers of new and used containers. In addition to selling older containers from our fleet, we buy older containers from our shipping line customers for trading and resale and we are one of the largest sellers of used containers. Textainer operates via a network of 14 offices and approximately 400 independent depots worldwide. Textainer has a primary listing on the New York Stock Exchange (NYSE: TGH) and a secondary listing on the Johannesburg Stock Exchange (JSE: TXT). Visit www.textainer.com for additional information about Textainer.

Important Cautionary Information Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of U.S. securities laws. Forward-looking statements include statements that are not statements of historical facts and may relate to, but are not limited to, expectations or estimates of future operating results or financial performance, capital expenditures, introduction of new products, regulatory compliance, plans for growth and future operations, as well as assumptions relating to the foregoing. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “intend,” “potential,” “continue” or the negative of these terms or other similar terminology. Readers are cautioned that these forward-looking statements involve risks and uncertainties, are only predictions and may differ materially from actual future events or results. These risks and uncertainties include, without limitation, the following items that could materially and negatively impact our business, results of operations, cash flows, financial condition and future prospects: (i) As a result, our average lease duration remains at approximately 6 years, and we expect our utilization rate to remain elevated; (ii) and other risks and uncertainties, including those set forth in Textainer’s filings with the Securities and Exchange Commission. For a discussion of some of these risks and uncertainties, see Item 3 “Key Information— Risk Factors” in Textainer’s Annual Report on Form 20-F filed with the Securities and Exchange Commission on February 14, 2023.

Textainer’s views, estimates, plans and outlook as described within this document may change subsequent to the release of this press release. Textainer is under no obligation to modify or update any or all of the statements it has made herein despite any subsequent changes Textainer may make in its views, estimates, plans or outlook for the future.

Textainer Group Holdings Limited
Investor Relations
Phone: +1 (415) 658-8333
ir@textainer.com


TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
(All currency expressed in United States dollars in thousands, except per share amounts)

 Three Months Ended June 30,  Six Months Ended June 30, 
 2023  2022  2023  2022 
Revenues:               
Operating leases - owned fleet $143,484   $152,590   $288,808   $304,082 
Operating leases - managed fleet  10,693    12,678    21,803    25,319 
Finance leases and container leaseback financing receivable - owned fleet  37,986    37,964    76,453    72,549 
Total lease rental income  192,163    203,232    387,064    401,950 
                
Management fees - non-leasing  710    673    1,454    1,205 
                
Trading container sales proceeds  4,849    5,392    8,815    13,010 
Cost of trading containers sold  (4,650)   (4,945)   (8,771)   (11,701)
Trading container margin  199    447    44    1,309 
                
Gain on sale of owned fleet containers, net  7,703    23,213    17,251    39,126 
                
Operating expenses:               
Direct container expense - owned fleet  10,399    6,779    20,442    12,298 
Distribution expense to managed fleet container investors  9,507    11,302    19,432    22,475 
Depreciation and amortization  70,527    72,957    142,365    145,450 
General and administrative expense  12,752    13,185    25,871    24,712 
Bad debt (recovery) expense, net  (100)   60    (405)   537 
Container lessee default expense, net  12    435    51    555 
Total operating expenses  103,097    104,718    207,756    206,027 
Income from operations  97,678    122,847    198,057    237,563 
Other (expense) income:               
Interest expense  (42,138)   (37,593)   (84,268)   (72,902)
Other, net  2,107    352    3,929    258 
Net other expense  (40,031)   (37,241)   (80,339)   (72,644)
Income before income taxes  57,647    85,606    117,718    164,919 
Income tax expense  (1,346)   (2,047)   (2,822)   (3,686)
Net income  56,301    83,559    114,896    161,233 
Less: Dividends on preferred shares  4,969    4,969    9,938    9,938 
Net income attributable to common shareholders $51,332   $78,590   $104,958   $151,295 
Net income attributable to common shareholders per share:               
Basic $1.22   $1.66   $2.47   $3.16 
Diluted $1.20   $1.63   $2.42   $3.10 
Weighted average shares outstanding (in thousands):               
Basic  41,963    47,486    42,536    47,942 
Diluted  42,862    48,305    43,365    48,799 
                    


TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
(All currency expressed in United States dollars in thousands, except share data)

  June 30, 2023  December 31, 2022 
Assets      
Current assets:      
Cash and cash equivalents $153,738  $164,818 
Marketable securities  -   1,411 
Accounts receivable, net of allowance of $1,633 and $1,582, respectively  118,931   114,805 
Net investment in finance leases, net of allowance of $191 and $252, respectively  130,681   130,913 
Container leaseback financing receivable, net of allowance of $48 and $62, respectively  59,519   53,652 
Trading containers  6,651   4,848 
Containers held for sale  40,261   31,637 
Prepaid expenses and other current assets  8,100   16,703 
Due from affiliates, net  3,040   2,758 
Total current assets  520,921   521,545 
Restricted cash  102,336   102,591 
Containers, net of accumulated depreciation of $2,092,858 and $2,029,667, respectively  4,182,242   4,365,124 
Net investment in finance leases, net of allowance of $701 and $1,027 respectively  1,624,264   1,689,123 
Container leaseback financing receivable, net of allowance of $15 and $52, respectively  834,809   770,980 
Derivative instruments  146,994   149,244 
Deferred taxes  1,165   1,135 
Other assets  22,425   13,492 
Total assets $7,435,156  $7,613,234 
Liabilities and Equity      
Current liabilities:      
Accounts payable and accrued expenses $21,363  $24,160 
Container contracts payable  72,618   6,648 
Other liabilities  5,667   5,060 
Due to container investors, net  14,879   16,132 
Debt, net of unamortized costs of $7,607 and $7,938, respectively  392,720   377,898 
Total current liabilities  507,247   429,898 
Debt, net of unamortized costs of $22,619 and $26,946, respectively  4,872,129   5,127,021 
Derivative instruments  475    
Income tax payable  13,889   13,196 
Deferred taxes  16,055   13,105 
Other liabilities  31,578   33,725 
Total liabilities  5,441,373   5,616,945 
Equity:      
Textainer Group Holdings Limited shareholders' equity:      
Cumulative redeemable perpetual preferred shares, $0.01 par value, $25,000 liquidation preference
   per share. Authorized 10,000,000 shares; 12,000 shares issued and outstanding (equivalent
  to 12,000,000 depositary shares at $25.00 liquidation preference per depositary share)
  300,000   300,000 
Common shares, $0.01 par value. Authorized 140,000,000 shares; 60,060,224 shares issued
  and 41,336,704 shares outstanding at June 30, 2023; 59,943,282 shares issued and 43,634,655 shares
  outstanding at December 31, 2022
  601   599 
Treasury shares, at cost, 18,723,520 and 16,308,627 shares, respectively  (421,656)  (337,551)
Additional paid-in capital  447,886   442,154 
Accumulated other comprehensive income  144,665   147,350 
Retained earnings  1,522,287   1,443,737 
Total shareholders’ equity  1,993,783   1,996,289 
Total liabilities and shareholders' equity $7,435,156  $7,613,234 
  


TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
(All currency expressed in United States dollars in thousands)

  Six Months Ended June 30, 
  2023  2022 
Cash flows from operating activities:      
Net income $114,896  $161,233 
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization  142,365   145,450 
Bad debt (recovery) expense, net  (405)  537 
Container write-off from lessee default, net     241 
Amortization of unamortized debt issuance costs and accretion
    of bond discounts
  4,659   5,206 
Gain on sale of owned fleet containers, net  (17,251)  (39,126)
Share-based compensation expense  4,551   3,498 
Changes in operating assets and liabilities  59,975   107,190 
Total adjustments  193,894   222,996 
Net cash provided by operating activities  308,790   384,229 
Cash flows from investing activities:      
Purchase of containers  (32,015)  (254,963)
Payment on container leaseback financing receivable  (37,193)  (468,252)
Proceeds from sale of containers  85,402   91,292 
Receipt of principal payments on container leaseback financing receivable  27,062   30,098 
Other  3   (2,119)
Net cash provided by (used in) investing activities  43,259   (603,944)
Cash flows from financing activities:      
Proceeds from debt  57,000   844,650 
Payments on debt  (301,729)  (483,313)
Principal repayments on container leaseback financing liability, net  (410)  (398)
Purchase of treasury shares  (84,105)  (81,603)
Issuance of common shares upon exercise of share options  1,183   3,979 
Dividends paid on common shares  (25,398)  (23,858)
Dividends paid on preferred shares  (9,938)  (9,938)
Net cash (used in) provided by financing activities  (363,397)  249,519 
Effect of exchange rate changes  13   (236)
Net change in cash, cash equivalents and restricted cash  (11,335)  29,568 
Cash, cash equivalents and restricted cash, beginning of the year  267,409   282,572 
Cash, cash equivalents and restricted cash, end of the period $256,074  $312,140 
       
Supplemental disclosures of cash flow information:      
Interest paid $79,020  $66,344 
Income taxes paid $239  $140 
Receipt of payments on finance leases, net of income earned $67,562  $95,712 
Supplemental disclosures of noncash investing activities:      
Increase in accrued container purchases $65,970  $3,604 
Containers placed in finance leases $1,225  $169,620 
         


Use of Non-GAAP Financial Information

To supplement Textainer’s consolidated financial statements presented in accordance with U.S. generally accepted accounting principles (“GAAP”), the company uses non-GAAP measures of certain components of financial performance. These non-GAAP measures include adjusted net income, adjusted net income per diluted common share, adjusted EBITDA, headline earnings and headline earnings per basic and diluted common share.

Management believes that adjusted net income and adjusted net income per diluted common share are useful in evaluating Textainer’s operating performance. Adjusted net income is defined as net income attributable to common shareholders excluding unrealized gain (loss) on marketable securities and the related impacts on income taxes. Management considers adjusted EBITDA a widely used industry measure and useful in evaluating Textainer’s ability to fund growth and service long-term debt and other fixed obligations. Headline earnings is reported as a requirement of Textainer’s listing on the JSE. Headline earnings and headline earnings per basic and diluted common shares are calculated from net income which has been determined based on GAAP.

Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included in the tables below for the three and six months ended June 30, 2023 and 2022 and for the three months ended March 31, 2023.

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,  Six Months Ended, 
  June 30, 2023  March 31, 2023  June 30, 2022  June 30, 2023  June 30, 2022 
  (Dollars in thousands,  (Dollars in thousands, 
  except per share amounts)  except per share amounts) 
  (Unaudited)  (Unaudited) 
Reconciliation of adjusted net income:               
Net income attributable to common shareholders $51,332  $53,626  $78,590  $104,958  $151,295 
Adjustments:               
Unrealized (gain) loss on marketable securities, net     (3)  (85)  (3)  122 
Impact of reconciling items on income tax     1   17   1   (26)
Adjusted net income $51,332  $53,624  $78,522  $104,956  $151,391 
                
Adjusted net income per diluted common share $1.20  $1.22  $1.63  $2.42  $3.10 
                
  


  Three Months Ended,  Six Months Ended, 
  June 30, 2023  March 31, 2023  June 30, 2022  June 30, 2023  June 30, 2022 
  (Dollars in thousands)  (Dollars in thousands) 
  (Unaudited)  (Unaudited) 
Reconciliation of adjusted EBITDA:               
Net income attributable to common shareholders $51,332  $53,626  $78,590  $104,958  $151,295 
Adjustments:               
Interest income  (2,385)  (2,082)  (257)  (4,467)  (293)
Interest expense  42,138   42,130   37,593   84,268   72,902 
Unrealized (gain) loss on marketable securities, net     (3)  (85)  (3)  122 
Income tax expense  1,346   1,476   2,047   2,822   3,686 
Depreciation and amortization  70,527   71,838   72,957   142,365   145,450 
Container write-off from lessee default, net        241      241 
Adjusted EBITDA $162,958  $166,985  $191,086  $329,943  $373,403 
                


  Three Months Ended,  Six Months Ended, 
  June 30, 2023  March 31, 2023  June 30, 2022  June 30, 2023  June 30, 2022 
  (Dollars in thousands,  (Dollars in thousands, 
  except per share amount)  except per share amount) 
  (Unaudited)  (Unaudited) 
Reconciliation of headline earnings:               
Net income attributable to common shareholders $51,332  $53,626  $78,590  $104,958  $151,295 
Adjustments:               
Container write-off from lessee default, net        241      241 
Impact of reconciling items on income tax        (2)     (2)
Headline earnings $51,332  $53,626  $78,829  $104,958  $151,534 
                
Headline earnings per basic common share $1.22  $1.24  $1.66  $2.47  $3.16 
Headline earnings per diluted common share $1.20  $1.22  $1.63  $2.42  $3.11 


Textainer Group Holdings Limited

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