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Textainer Group Holdings Limited Reports Fourth-Quarter And Full-Year 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 Months and Years Ended December 31, 2012 and 2011
(Unaudited)
(All currency expressed in United States dollars in thousands, except per share amounts)
                 
Three Months Ended December 31, Years Ended December 31,
2012 2011 2012 2011
 
Revenues:
Lease rental income $ 106,816 $ 87,072 $ 383,989 $ 327,627
Management fees 5,880 6,628 26,169 29,324
Trading container sales proceeds 6,760 14,770 42,099 34,214
Gains on sale of containers, net   7,828     7,907     34,837     31,631  
Total revenues   127,284     116,377     487,094     422,796  
Operating expenses:
Direct container expense 7,584 5,554 25,173 18,307
Cost of trading containers sold 5,767 12,219 36,810 29,456
Depreciation expense 33,522 21,501 104,844 83,177
Amortization expense 1,140 1,335 5,020 6,110
General and administrative expense 5,974 5,453 23,015 23,495
Short-term incentive compensation expense 1,837 1,209 5,310 4,921
Long-term incentive compensation expense 1,721 1,486 6,950 5,950
Bad debt (recovery) expense, net (1,618 ) 782 1,525 3,007
Gain on sale of containers to noncontrolling interest   -     -     -     (19,773 )
Total operating expenses   55,927     49,539     208,647     154,650  
Income from operations   71,357     66,838     278,447     268,146  
Other income (expense):
Interest expense (20,195 ) (14,649 ) (72,886 ) (44,891 )
Interest income 43 12 146 32
Realized losses on interest rate swaps and caps, net (2,541 ) (2,654 ) (10,163 ) (10,824 )
Unrealized gains (losses) on interest rate swaps and caps, net 2,343 1,909 5,527 (3,849 )
Bargain purchase gain 9,441 - 9,441 -
Other, net   43     3     44     (115 )
Net other expense   (10,866 )   (15,379 )   (67,891 )   (59,647 )
Income before income tax and noncontrolling interests 60,491 51,459 210,556 208,499
Income tax (expense) benefit   (372 )   3,030     (5,493 )   (4,481 )
Net income 60,119 54,489 205,063 204,018
Less: Net loss (income) attributable to the noncontrolling interests   454   430   1,887   (14,412 )
Net income attributable to Textainer Group Holdings
Limited common shareholders $ 60,573 $ 54,919 $ 206,950 $ 189,606  
 
Net income attributable to Textainer Group Holdings Limited

common shareholders per share:

Basic $ 1.09 $ 1.12 $ 4.04 $ 3.88
Diluted $ 1.07 $ 1.10 $ 3.96 $ 3.80
 
Weighted average shares outstanding (in thousands):
Basic 55,753 48,931 51,277 48,859
Diluted 56,585 49,910 52,231 49,839
 
Other comprehensive income:
Foreign currency translation adjustments   69     (165 )   142     24  
Comprehensive income 60,188 54,324 205,205 204,042
Less: Comprehensive loss (income) attributable to the noncontrolling interest   454     430     1,887     (14,412 )
Comprehensive income attributable to Textainer Group Holdings
Limited common shareholders $ 60,642   $ 54,754   $ 207,092   $ 189,630  
 
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
December 31, 2012 and December 31, 2011
(Unaudited)

(All currency expressed in United States dollars in thousands)

   
2012 2011
Assets
Current assets:
Cash and cash equivalents $ 100,127 $ 74,816

Accounts receivable, net of allowance for doubtful accounts of $8,025 and $7,840 in 2012 and 2011, respectively

94,102 86,428
Net investment in direct financing and sales-type leases 43,253 25,075
Trading containers 7,296 12,970
Containers held for sale 15,717 7,832
Prepaid expenses 14,006 10,243
Deferred taxes 2,332 2,443
Due from affiliates, net   4,377   -  
Total current assets 281,210 219,807
Restricted cash 54,945 45,858

Containers, net of accumulated depreciation of $490,930 and $377,731 at 2012 and 2011, respectively

2,916,673 1,903,855
Net investment in direct financing and sales-type leases 173,634 85,121

Fixed assets, net of accumulated depreciation of $9,189 and $9,027 at 2012 and 2011, respectively

1,621 1,717

Intangible assets, net of accumulated amortization of $26,963 and $33,340 at 2012 and 2011, respectively

33,383 46,675
Other assets   14,614   7,171  
Total assets $ 3,476,080 $ 2,310,204  
Liabilities and Equity
Current liabilities:
Accounts payable $ 4,451 $ 2,616
Accrued expenses 14,329 18,491
Container contracts payable 87,708 25,510
Deferred revenue and other 1,681 6,245
Due to owners, net 13,218 15,812
Secured debt facility - 41,035
Bonds payable   131,500   91,500  
Total current liabilities 252,887 201,209
Revolving credit facilities 549,911 133,047
Secured debt facilities 874,000 779,383
Bonds payable 706,291 464,226
Deferred revenue and other 3,210 1,136
Interest rate swaps and caps 10,819 16,110
Income tax payable 27,580 22,729
Deferred taxes   5,249   7,438  
Total liabilities   2,429,947   1,625,278  
Equity:
Textainer Group Holdings Limited shareholders' equity:

Common shares, $0.01 par value. Authorized 140,000,000 shares; issued and outstanding 55,754,529 and 48,951,114 at 2012 and 2011, respectively

558 490
Additional paid-in capital 354,448 154,460
Accumulated other comprehensive loss 114 (28 )
Retained earnings   652,383   528,906  
Total Textainer Group Holdings Limited shareholders’ equity 1,007,503 683,828
Noncontrolling interests   38,630   1,098  
Total equity   1,046,133   684,926  
Total liabilities and equity $ 3,476,080 $ 2,310,204  
 
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
Years Ended December 31, 2012 and 2011
(Unaudited)
(All currency expressed in United States dollars in thousands)
 
Years Ended

December 31,

2012   2011
Cash flows from operating activities:
Net income $ 205,063   $ 204,018  
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense 104,844 83,177
Bad debt expense, net 1,525 3,007
Unrealized (gains) losses on interest rate swaps and caps, net (5,527 ) 3,849
Amortization of debt issuance costs 11,700 8,101
Amortization of intangible assets 5,020 6,110
Amortization of acquired below-market leases (33 ) (411 )
Amortization of deferred revenue (6,026 ) (9,181 )
Amortization of unearned income on direct financing and sales-type leases (11,828 ) (9,055 )
Gains on sale of containers, net (34,837 ) (31,631 )
Bargain purchase gain (9,441 ) -
Gain on sale of containers to noncontrolling interest - (19,773 )
Share-based compensation expense 7,968 6,177
Changes in operating assets and liabilities   (1,901 )   (31,043 )
Total adjustments   61,464     9,327  
Net cash provided by operating activities   266,527     213,345  
Cash flows from investing activities:
Purchase of containers and fixed assets (1,087,489 ) (823,694 )
Acquisition of TAP Funding Ltd. (20,532 ) -
Payment for Textainer Marine Containers Ltd. capital restructuring, net of cash acquired - (11,783 )
Proceeds from sale of containers and fixed assets 91,324 75,311
Receipt of principal payments on direct financing and sales-type leases   42,410     35,042  
Net cash used in investing activities   (974,287 )   (725,124 )
Cash flows from financing activities:
Proceeds from revolving credit facilities 435,720 202,100
Principal payments on revolving credit facilities (127,327 ) (173,053 )
Proceeds from secured debt facilities 907,000 627,000
Principal payments on secured debt facilities (853,697 ) (364,803 )
Proceeds from bonds payable 400,000 400,000
Principal payments on bonds payable (118,168 ) (71,500 )
Increase in restricted cash (7,173 ) (30,824 )
Debt issuance costs (24,048 ) (8,402 )
Issuance of common shares upon exercise of share options 4,669 6,065
Issuance of common shares in public offering 185,220 -
Public offering costs (381 ) -
Excess tax benefit from share-based compensation awards 2,580 3,633
Capital contributions from noncontrolling interest 12,007 1,823
Dividends paid   (83,473 )   (62,549 )
Net cash provided by financing activities   732,929     529,490  
Effect of exchange rate changes   142     24  
Net increase in cash and cash equivalents 25,311 17,735
Cash and cash equivalents, beginning of the year   74,816     57,081  
Cash and cash equivalents, end of year $ 100,127   $ 74,816  
 

TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES

Reconciliation of GAAP financial measures to non-GAAP financial measures

Three Months and Years Ended December 31, 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 months and years ended December 31, 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 (gains) on interest rate swaps and caps, net, income tax expense (benefit), net (loss) income attributable to the noncontrolling interests (“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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