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Textainer Group Holdings Limited Reports Record Fourth-Quarter And Full-Year 2011 Results And Increases Quarterly Dividend

Investors’ Webcast

Textainer will hold a conference call and a Webcast with an accompanying slide presentation at 11:00 am EST on Tuesday, February 14, 2012 to discuss Textainer’s 2011 fourth-quarter and full-year results. An archive of the Webcast will be available one hour after the live call through February 14, 2013. For callers in the U.S. the dial-in number for the conference call is 877-303-9078; for callers outside the U.S. the dial-in number for the conference call is 970-315-0455. To access the live Webcast or archive, please visit Textainer’s website at http://www.textainer.com.

About Textainer Group Holdings Limited

Textainer Group Holdings Limited and its subsidiaries (“Textainer”) is the world's largest lessor of intermodal containers based on fleet size. The Company began operations in 1979 and as of the most recent quarter end had more than 1.6 million containers, representing more than 2.4 million TEU, in its owned and managed fleet. Textainer leases dry freight, refrigerated, and specialized containers. Each year the Company is one of the largest purchasers of new containers as well as one of the largest sellers of used containers. Textainer leases containers to approximately 400 shipping lines and other lessees and sells containers to more than 1,000 customers worldwide and provides services worldwide via a network of regional and area offices, as well as independent depots.

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 include, without limitation, statements regarding: (i) Textainer’s belief that it is in a strong position to continue purchasing both new and used containers to meet market demand and maintain its industry leading position; (ii) Textainer’s expectation that utilization may continue its slight decline during the first quarter of 2012, but that the overall level will remain attractive and (iii) Textainer’s expectation that its sizeable contracted revenue stream will continue to provide its shareholders with attractive returns. 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: any deceleration or reversal of the current domestic and global economic recoveries; lease rates may decrease and lessees may default, which could decrease revenue and increasing storage, repositioning, collection and recovery expenses; we own a large and growing number of containers in our fleet and are subject to significant ownership risk; further consolidation of container manufacturers or the disruption of manufacturing for the major manufacturers could result in higher new container prices and/or decreased supply of new containers and any increase in the cost or reduction in the supply of new containers; the demand for leased containers depends on many political and economic factors beyond Textainer's control; the demand for leased containers is partially tied to international trade and if this demand were to decrease due to increased barriers to trade, or for any other reason, it could reduce demand for intermodal container leasing; as we increase the number of containers in our owned fleet, we will have significant capital at risk and may need to incur more debt, which could result in financial instability; Textainer faces extensive competition in the container leasing industry; the international nature of the container shipping industry exposes Textainer to numerous risks; gains and losses associated with the disposition of used equipment may fluctuate; our indebtedness reduces our financial flexibility and could impede our ability to operate; 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 4 “Risk Factors” in Textainer’s Quarterly Report on Form 6-K and Item 3 "Key Information-- Risk Factors" in Textainer's Annual Report on Form 20-F filed with the Securities and Exchange Commission on November 14, 2011 and March 18, 2011, respectively.

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 AND SUBSIDIARIES
Condensed Consolidated Statements of Income
Three Months and Years Ended December 31, 2011 and 2010
(Unaudited)
(All currency expressed in United States dollars in thousands, except per share amounts)
           
Three Months Ended Years Ended
December 31, December 31,
  2011     2010     2011     2010  
 
Revenues:
Lease rental income $ 87,072 $ 68,237 $ 327,627 $ 235,827
Management fees 6,628 8,072 29,324 29,137
Trading container sales proceeds 14,770 1,445 34,214 11,291
Gains on sale of containers, net   7,907     6,245     31,631     27,624  
Total revenues   116,377     83,999     422,796     303,879  
Operating expenses (income):
Direct container expense 5,554 4,094 18,307 25,542
Cost of trading containers sold 12,219 1,146 29,456 9,046
Depreciation expense 21,501 18,050 83,177 58,972
Amortization expense 1,335 1,756 6,110 6,544
General and administrative expense 5,453 5,575 23,495 21,670
Short-term incentive compensation expense 1,209 1,342 4,921 4,805
Long-term incentive compensation expense 1,486 1,118 5,950 5,318
Bad debt expense, net 782 399 3,007 145
Gain on sale of containers to noncontrolling interest   -     -     (19,773 )   -  
Total operating expenses, net   49,539     33,480     154,650     132,042  
Income from operations   66,838     50,519     268,146     171,837  
Other income (expense):
Interest expense (14,649 ) (6,658 ) (44,891 ) (18,151 )
Interest income 12 13 32 27
Realized losses on interest rate swaps and caps, net (2,654 ) (2,445 ) (10,824 ) (9,844 )
Unrealized gains (losses) on interest rate swaps, net 1,909 5,495 (3,849 ) (4,021 )
Other, net   3     (762 )   (115 )   (1,591 )
Other expense, net   (15,379 )   (4,357 )   (59,647 )   (33,580 )
Income before income tax and noncontrolling interest 51,459 46,162 208,499 138,257
Income tax benefit (expense)   3,030     (1,274 )   (4,481 )   (4,493 )
Net income 54,489 44,888 204,018 133,764
Net loss (income) attributable to the noncontrolling interest   430     (4,841 )   (14,412 )   (13,733 )
Net income attributable to Textainer Group Holdings
Limited common shareholders $ 54,919   $ 40,047   $ 189,606   $ 120,031  
 

Net income attributable to Textainer Group Holdings Limited common

shareholders per share:

Basic $ 1.12 $ 0.83 $ 3.88 $ 2.50
Diluted $ 1.10 $ 0.81 $ 3.80 $ 2.43
 
Weighted average shares outstanding (in thousands):
Basic 48,931 48,255 48,859 48,108
Diluted 49,910 49,532 49,839 49,307
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
December 31, 2011 and December 31, 2010
(Unaudited)
(All currency expressed in United States dollars in thousands)
    2011       2010  

 

 

Assets
Current assets:
Cash and cash equivalents $ 74,816 $ 57,081

Accounts receivable, net of allowance for doubtful accounts of $7,840 and $8,653 in 2011 and 2010, respectively

86,428 63,511
Net investment in direct financing and sales-type leases 25,075 19,117
Trading containers 12,970 404
Containers held for sale 7,832 2,883
Prepaid expenses 10,243 8,603
Deferred taxes   2,443     1,895  

Total current assets

219,807 153,494
Restricted cash 45,858 15,034

Containers, net of accumulated depreciation of $377,731 and $361,791 at 2011 and 2010, respectively

1,903,855 1,437,259
Net investment in direct financing and sales-type leases 85,121 72,224

Fixed assets, net of accumulated depreciation of $9,027 and $8,820 at 2011 and 2010, respectively

1,717 1,804

Intangible assets, net of accumulated amortization of $33,340 and $27,441 at 2011 and 2010, respectively

46,675 60,122
Interest rate swaps - 1,320
Other assets   7,171     5,950  

Total assets

$ 2,310,204   $ 1,747,207  
Liabilities and Equity
Current liabilities:
Accounts payable $ 2,616 $ 6,296
Accrued expenses 18,491 11,988
Container contracts payable 25,510 98,731
Deferred revenue 6,245 6,855
Due to owners, net 15,812 17,545
Secured debt facility 41,035 -
Bonds payable   91,500     51,500  

Total current liabilities

201,209 192,915
Revolving credit facility 133,047 104,000
Secured debt facility 779,383 558,127
Bonds payable 464,226 175,570
Deferred revenue 1,136 2,994
Interest rate swaps 16,110 13,581
Income tax payable 22,729 20,821
Deferred taxes   7,438     8,632  

Total liabilities

  1,625,278     1,076,640  
Equity:
Textainer Group Holdings Limited shareholders' equity:

Common shares, $0.01 par value. Authorized 140,000,000 shares; issued and outstanding 48,951,114 and 48,318,058 at 2011 and 2010, respectively

490 483
Additional paid-in capital 154,460 181,602
Accumulated other comprehensive loss (28 ) (52 )
Retained earnings   528,906     401,849  

Total Textainer Group Holdings Limited shareholders’ equity

683,828 583,882

Noncontrolling interest

  1,098     86,685  

Total equity

  684,926     670,567  

Total liabilities and equity

$ 2,310,204   $ 1,747,207  
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
Years Ended December 31, 2011 and 2010
(Unaudited)
(All currency expressed in United States dollars in thousands)
    Years Ended December 31,
  2011       2010  
Cash flows from operating activities:
Net income $ 204,018   $ 133,764  
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense 83,177 58,972
Bad debt expense, net 3,007 145
Unrealized losses on interest rate swaps, net 3,849 4,021
Amortization of debt issuance costs 8,101 4,399
Amortization of intangible assets 6,110 6,544
Amortization of acquired net (below) above-market leases (411 ) 26
Amortization of deferred revenue (9,181 ) (7,082 )
Amortization of unearned income on direct financing and sales-type leases (9,055 ) (7,853 )
Gains on sale of containers, net (31,631 ) (27,624 )
Gain on sale of containers to noncontrolling interest (19,773 ) -
Share-based compensation expense 6,177 5,457
Changes in operating assets and liabilities   (31,043 )   (6,886 )
Total adjustments   9,327     30,119  
Net cash provided by operating activities   213,345     163,883  
Cash flows from investing activities:
Purchase of containers and fixed assets (823,694 ) (402,286 )

Payment for Textainer Marine Containers Ltd. capital restructuring, net of cash acquired

(11,783 ) -
Proceeds from sale of containers and fixed assets 75,311 58,166

Receipt of principal payments on direct financing and sales-type leases

  35,042     41,156  
Net cash used in investing activities   (725,124 )   (302,964 )
Cash flows from financing activities:
Proceeds from revolving credit facility 202,100 152,000
Principal payments on revolving credit facility (173,053 ) (127,000 )
Proceeds from secured debt facility 627,000 327,000
Principal payments on secured debt facility (364,803 ) (98,500 )
Proceeds from bonds payable 400,000 -
Principal payments on bonds payable (71,500 ) (51,500 )
Increase in restricted cash (30,824 ) (8,448 )
Debt issuance costs (8,402 ) (11,670 )
Issuance of common shares upon exercise of share options 6,065 5,033
Excess tax benefit from share-based payment awards 3,633 -
Capital contributions from noncontrolling interest 1,823 -
Dividends paid   (62,549 )   (47,631 )
Net cash provided by financing activities   529,490     139,284  
Effect of exchange rate changes   24     59  
Net increase in cash and cash equivalents 17,735 262
Cash and cash equivalents, beginning of the year   57,081     56,819  
Cash and cash equivalents, end of the year $ 74,816   $ 57,081  

TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIESReconciliation of GAAP financial measures to non-GAAP financial measuresThree Months and Years Ended December 31, 2011 and 2010(Unaudited)(All currency expressed in United States dollars in thousands, except per share amounts)

(1) The following is a reconciliation of certain GAAP measures to non-GAAP financial measures (such items listed in (a) to (d) below and defined as “Non-GAAP Measures”) for the three months and years ended December 31, 2011 and 2010, including:

4 of 7

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