Textainer Group Holdings Limited Reports Third-Quarter 2012 Results And Increases Quarterly Dividend

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 Comprehensive Income
Three and Nine Months Ended September 30, 2012 and 2011
(Unaudited)
(All currency expressed in United States dollars in thousands, except per share amounts)
						Three Months Ended September 30,															Nine Months Ended September 30,
						2012							2011								2012							2011
Revenues:
		Lease rental income							$	97,494						$	85,147							$	277,173							$	240,555
		Management fees								6,195							7,397								20,289								22,696
		Trading container sales proceeds								11,058							9,024								35,339								19,444
		Gains on sale of containers, net								7,558							7,913								27,009								23,724
				Total revenues						122,305							109,481								359,810								306,419
Operating expenses:
		Direct container expense								5,425							4,480								17,589								12,753
		Cost of trading containers sold								9,911							8,047								31,043								17,237
		Depreciation expense								26,941							18,809								71,322								61,676
		Amortization expense								1,275							1,443								3,880								4,775
		General and administrative expense								5,496							5,801								17,041								18,042
		Short-term incentive compensation expense								1,159							1,259								3,473								3,712
		Long-term incentive compensation expense								1,551							1,356								5,229								4,464
		Bad debt expense, net								682							1,681								3,143								2,225
		Gain on sale of containers to noncontrolling interest								-							-								-								(19,773	)
				Total operating expenses						52,440							42,876								152,720								105,111
				Income from operations						69,865							66,605								207,090								201,308
Other income (expense):
		Interest expense								(19,441	)						(13,708	)							(52,691	)							(30,242	)
		Interest income								40							6								103								20
		Realized losses on interest rate swaps and caps, net								(2,543	)						(2,763	)							(7,622	)							(8,170	)
		Unrealized gains (losses) on interest rate swaps and caps, net								1,111							(3,516	)							3,184								(5,758	)
		Other, net								3							12								1								(118	)
				Net other expense						(20,830	)						(19,969	)							(57,025	)							(44,268	)
				Income before income tax and noncontrolling interest						49,035							46,636								150,065								157,040
Income tax benefit (expense)										1,324							(1,131	)							(5,121	)							(7,511	)
				Net income						50,359							45,505								144,944								149,529
Less: Net loss (income) attributable to the noncontrolling interest							299							295								1,433							(14,842	)
				Net income attributable to Textainer Group Holdings Limited common shareholders		$	50,658						$	45,800							$	146,377						$	134,687
Net income attributable to Textainer Group Holdings Limited common shareholders per share:
		Basic				$	1.01						$	0.94							$	2.94						$	2.76
		Diluted				$	0.99						$	0.92							$	2.88						$	2.70
Weighted average shares outstanding (in thousands):
		Basic					50,348							48,916								49,774							48,832
		Diluted					51,199							49,692								50,743							49,809
Other comprehensive income:
		Foreign currency translation adjustments								68							69								73								189
Comprehensive income										50,427							45,574								145,017								149,718
		Less: Comprehensive loss (income) attributable to the noncontrolling interest								299							295								1,433								(14,842	)
Comprehensive income attributable to Textainer Group Holdings
		Limited common shareholders							$	50,726						$	45,869							$	146,450							$	134,876

TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
September 30, 2012 and December 31, 2011
(Unaudited)
(All currency expressed in United States dollars in thousands)
						2012			2011
Assets
Current assets:
		Cash and cash equivalents				$	113,586		$	74,816
		Accounts receivable, net of allowance for doubtful accounts of $9,508 and $7,840 in 2012 and 2011, respectively					96,201			86,428
		Net investment in direct financing and sales-type leases					30,627			25,075
		Trading containers					12,054			12,970
		Containers held for sale					9,660			7,832
		Prepaid expenses					13,324			10,243
		Deferred taxes					2,449			2,443
		Due from affiliates, net					3			-
				Total current assets			277,904			219,807
Restricted cash							50,632			45,858
Containers, net of accumulated depreciation of $425,779 and $377,731 at 2012 and 2011, respectively							2,633,988			1,903,855
Net investment in direct financing and sales-type leases							110,754			85,121
Fixed assets, net of accumulated depreciation of $9,010 and $9,027 at 2012 and 2011, respectively							1,774			1,717
Intangible assets, net of accumulated amortization of $34,824 and $33,340 at 2012 and 2011, respectively							34,869			46,675
Other assets							16,833			7,171
				Total assets		$	3,126,754		$	2,310,204
Liabilities and Equity
Current liabilities:
		Accounts payable				$	4,296		$	2,616
		Accrued expenses					11,617			18,491
		Container contracts payable					160,149			25,510
		Deferred revenue					1,841			6,245
		Due to owners, net					16,776			15,812
		Secured debt facility					-			41,035
		Bonds payable					131,500			91,500
				Total current liabilities			326,179			201,209
Revolving credit facilities							217,002			133,047
Secured debt facilities							825,000			779,383
Bonds payable							739,167			464,226
Deferred revenue							-			1,136
Interest rate swaps and caps							12,926			16,110
Income tax payable							25,666			22,729
Deferred taxes							6,726			7,438
				Total liabilities			2,152,666			1,625,278
Equity:
Textainer Group Holdings Limited shareholders' equity:
		Common shares, $0.01 par value. Authorized 140,000,000 shares; issued and outstanding 55,749,610 and 48,951,114 at 2012 and 2011, respectively					557			490
		Additional paid-in capital					352,892			154,460
		Accumulated other comprehensive loss					44			(28	)
		Retained earnings					616,340			528,906
				Total Textainer Group Holdings Limited shareholders’ equity			969,833			683,828
		Noncontrolling interest					4,255			1,098
				Total equity			974,088			684,926
				Total liabilities and equity		$	3,126,754		$	2,310,204

TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30, 2012 and 2011
(Unaudited)
(All currency expressed in United States dollars in thousands)
								Nine Months Ended September 30,
								2012				2011
Cash flows from operating activities:
		Net income						$	144,944			$	149,529
		Adjustments to reconcile net income to net cash provided by operating activities:
				Depreciation expense					71,322				61,676
				Bad debt expense, net					3,143				2,225
				Unrealized (gains) losses on interest rate swaps and caps, net					(3,184	)			5,758
				Amortization of debt issuance costs					9,002				5,878
				Amortization of intangible assets					3,880				4,775
				Amortization of acquired below-market leases					(33	)			(353	)
				Amortization of deferred revenue					(5,293	)			(6,425	)
				Amortization of unearned income on direct financing and sales-type leases					(8,390	)			(6,798	)
				Gains on sale of containers, net					(27,009	)			(23,724	)
				Gain on sale of containers to noncontrolling interest					-				(19,773	)
				Share-based compensation expense					6,010				4,663
				Changes in operating assets and liabilities					(7,283	)			(18,433	)
						Total adjustments			42,165				9,469
						Net cash provided by operating activities			187,109				158,998
Cash flows from investing activities:
		Purchase of containers and fixed assets							(758,868	)			(761,191	)
		Payment for Textainer Marine Containers Ltd. capital restructuring, net of cash acquired							-				(11,783	)
		Proceeds from sale of containers and fixed assets							67,841				57,308
		Receipt of principal payments on direct financing and sales-type leases							29,100				22,858
						Net cash used in investing activities			(661,927	)			(692,808	)
Cash flows from financing activities:
		Proceeds from revolving credit facilities							209,530				166,000
		Principal payments on revolving credit facilities							(125,575	)			(134,000	)
		Proceeds from secured debt facilities							839,000				591,000
		Principal payments on secured debt facilities							(834,697	)			(353,802	)
		Proceeds from bonds payable							400,000				400,000
		Principal payments on bonds payable							(85,292	)			(48,625	)
		Increase in restricted cash							(4,774	)			(27,031	)
		Debt issuance costs							(23,113	)			(8,312	)
		Issuance of common shares upon exercise of share options							4,605				5,840
		Issuance of common shares in public offering							185,220				-
		Excess tax benefit from share-based compensation awards							2,965				3,491
		Capital contributions from noncontrolling interest							4,589				749
		Dividends paid							(58,943	)			(45,421	)
						Net cash provided by financing activities			513,515				549,889
Effect of exchange rate changes									73				189
						Net increase in cash and cash equivalents			38,770				16,268
Cash and cash equivalents, beginning of the year									74,816				57,081
Cash and cash equivalents, end of period								$	113,586			$	73,349

TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIESReconciliation of GAAP financial measures to non-GAAP financial measuresThree and Nine Months Ended September 30, 2012 and 2011(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 and nine months ended September 30, 2012 and 2011, including:
		(a)	net income attributable to Textainer Group Holdings Limited common shareholders to adjusted EBITDA (Adjusted EBITDA defined as net income attributable to Textainer Group Holdings Limited common shareholders before interest income and interest expense, realized and unrealized losses on interest rate swaps and caps, net, income tax (benefit) expense, net (loss) income attributable to the noncontrolling interest (“NCI”), depreciation and amortization expense, gain on sale of containers to NCI and the related impact of reconciling items on net (loss) income attributable to the NCI);
		(b)	net cash provided by operating activities to Adjusted EBITDA;
		(c)	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 unrealized (gains) losses on interest rate swaps and caps, net, gain on sale of containers to NCI and the related impact of reconciling items on net (loss) income attributable to the NCI); and
		(d)	net income attributable to Textainer Group Holdings Limited common shareholders per diluted common share to adjusted net income per diluted common share (defined as net income attributable to Textainer Group Holdings Limited common shareholders per diluted common share before unrealized (gains) losses on interest rate swaps and caps, net, gain on sale of containers to NCI and the related impact of reconciling items on net (loss) income attributable to the NCI).

Non-GAAP Measures are not financial measures calculated in accordance with U.S. generally accepted accounting principles ("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 interest rate swaps until maturity and over the life of an interest rate swap or cap held to maturity the unrealized (gains) losses will net to zero. Adjusted EBITDA is not calculated in the same manner by all companies and, accordingly, may not be an appropriate measure for comparison.

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