Third Quarter Results:
Textainer’s financial results benefited from a 11.7 percent increase in the average size of the owned container fleet in the third quarter of 2013, compared to the year ago quarter, offset by incremental increases in depreciation expense and direct container expense due to the larger owned fleet and lower utilization. Depreciation expense and impairment of containers also included a $4.7 million charge in the third quarter of 2013 for containers that were considered likely to be economically unrecoverable from lessees in default. The third quarter also included $4.3 million of bad debt expense primarily related to a previously identified customer that filed for bankruptcy. We have been successfully recovering the containers that were on-lease with this customer.
During the third quarter, Textainer established a $300 million asset-backed revolving credit facility (the “Revolving Credit Facility”) to provide Textainer a source of financing for a diversified pool of older containers to assist in managing the container age limits in the Company’s other term and warehouse facilities. The interest rate on the Revolving Credit Facility, payable monthly, is LIBOR plus 2.25 percent. The Company also issued $300.9 million in aggregate principal amount of asset-backed term notes (the “Notes”). The Notes are fully amortizing notes payable on a straight-line basis over a scheduled payment term of ten years, with a maximum payment term of fifteen years. The Notes have a fixed interest rate, payable monthly, of 3.90 percent per annum and were sold at approximately 99.5 percent of par resulting in a bond equivalent yield on the Notes of 4.05 percent per annum. The company’s current average interest rate stands at 3.55 percent versus 4.76 percent in the year ago quarter and 3.84 percent in the second quarter of this year.
Outlook“We continue to experience a very competitive environment marked by compressed returns, continued access to low cost funds by us and our peers and a short lead time for ordering new containers. We expect these market conditions to continue for the near term,” commented Mr. Brewer.