HAMILTON, Bermuda, Feb. 13, 2024 (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 unaudited financial results for the fourth-quarter and full-year ended December 31, 2023.
Key Financial Information (in thousands except for per share and TEU amounts) (1) and Business Highlights:
| QTD | Full-Year | |||||||||||||||||||
| Q4 2023 | Q3 2023 | Q4 2022 | 2023 | 2022 | ||||||||||||||||
| Total lease rental income | $ | 190,830 | $ | 192,497 | $ | 202,912 | $ | 770,391 | $ | 810,014 | ||||||||||
| Gain on sale of owned fleet containers, net | $ | 3,967 | $ | 5,197 | $ | 15,033 | $ | 26,415 | $ | 76,947 | ||||||||||
| Income from operations | $ | 82,277 | $ | 92,165 | $ | 111,544 | $ | 372,499 | $ | 472,399 | ||||||||||
| Net income attributable to common shareholders | $ | 35,160 | $ | 44,677 | $ | 61,854 | $ | 184,795 | $ | 289,549 | ||||||||||
| Net income attributable to common shareholders per diluted common share | $ | 0.84 | $ | 1.07 | $ | 1.38 | $ | 4.33 | $ | 6.12 | ||||||||||
| Adjusted net income (1) | $ | 47,276 | $ | 45,410 | $ | 61,993 | $ | 197,641 | $ | 289,946 | ||||||||||
| Adjusted net income per diluted common share (1) | $ | 1.13 | $ | 1.08 | $ | 1.38 | $ | 4.63 | $ | 6.13 | ||||||||||
| Adjusted EBITDA (1) | $ | 154,237 | $ | 160,454 | $ | 179,464 | $ | 644,634 | $ | 745,514 | ||||||||||
| Average fleet utilization (2) | 99.2 | % | 99.0 | % | 99.0 | % | 98.9 | % | 99.4 | % | ||||||||||
| Total fleet size at end of period (TEU) (3) | 4,285,206 | 4,329,157 | 4,425,300 | 4,285,206 | 4,425,300 | |||||||||||||||
| Owned percentage of total fleet at end of period | 94.0 | % | 93.9 | % | 93.6 | % | 94.0 | % | 93.6 | % | ||||||||||
| (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 $184.8 million for the full year, or $4.33 per diluted common share, and $35.2 million for the fourth quarter of 2023, or $0.84 per diluted common share;
- Adjusted net income of $197.6 million for the full year, or $4.63 per diluted common share, as compared to $289.9 million, or $6.13 per diluted common share in the prior year. Adjusted net income of $47.3 million for the fourth quarter of 2023, or $1.13 per diluted common share, as compared to $45.4 million, or $1.08 per diluted common share in the third quarter of 2023;
- Adjusted EBITDA of $644.6 million for the full year, as compared to $745.5 million in the prior year. Adjusted EBITDA of $154.2 million for the fourth quarter of 2023, as compared to $160.5 million in the third quarter of 2023;
- Fourth quarter average and current utilization rate of 99.2% and 99.5%, respectively;
- Added $169.4 million of new containers during 2023, virtually all assigned to long-term leases;
- On October 22, 2023, Textainer announced it had entered into a definitive agreement to be acquired by Stonepeak in a transaction expected to close in the first quarter of 2024, subject to customary closing conditions, including approval by Textainer's shareholders and other required regulatory clearances and approvals;
- Repurchased 3,411,296 common shares at an average price of $36.31 per share during the first nine months of 2023. Textainer suspended its share repurchase program in September 2023 in light of the pending transaction with Stonepeak;
- 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 March 15, 2024, to holders of record as of March 1, 2024; and
- Textainer's board of directors, approved and declared a $0.30 per common share cash dividend, payable on March 15, 2024 to holders of record as of March 1, 2024.
"We delivered solid full-year and fourth quarter 2023 results, demonstrating the strength in our business fundamentals. For the full year, lease rental income decreased by 5% to $770 million due to fleet attrition stemming from a slower capex environment. Fleet utilization has however increased to its highest level of the year at 99.3% as of the end of the fourth quarter. Adjusted net income was $198 million or $4.63 per diluted common share for the full year, while adjusted EBITDA was $644 million," stated Olivier Ghesquiere, President and Chief Executive Officer.
"We are incredibly excited about our pending transaction to be acquired by Stonepeak. We believe this acquisition provides a compelling value for our shareholders, while also benefiting the Textainer business and our customers," concluded Ghesquiere.
Transaction with Stonepeak
As previously announced on October 22, 2023, Textainer has entered into a definitive agreement under which Stonepeak will acquire all outstanding common shares of Textainer for $50.00 per share in cash. We currently expect that Textainer's Series A and B cumulative redeemable perpetual preference shares (and the corresponding depositary shares issued with respect to such preference shares) will be called for redemption at the amount set forth in the applicable certificate of designation for such preference shares no later than 120 days following the closing.
Textainer's special shareholder meeting to approve the Stonepeak transaction is scheduled on February 22, 2024. The transaction is expected to close in the first quarter of 2024, subject to customary closing conditions, including approval by Textainer's shareholders and other required regulatory clearances and approvals.
In light of the pending transaction, Textainer will not hold an earnings conference call to discuss its fourth quarter and full-year 2023 results.
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) the unaudited results for and balances as of the quarter and year ended December 31, 2023 reflected here in are subject to change or adjustment in connection the completion of the related audit thereof; (ii) risks related to continued market conditions, risks related to our contracted revenue and profitability being supported by long-term leases, and our fixed-rate financing; (iii) risks related to the proposed Stonepeak transaction (including those described below); and (iv) 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. Related risks of the proposed Stonepeak transaction include: the transaction may not close in the anticipated timeframe or at all (including as a result of any failure to timely obtain any required regulatory clearances or approvals or Textainer shareholder approval of the transaction); the occurrence of any event, change or other circumstance or condition that could give rise to the termination of the related Merger Agreement, including in circumstances requiring Textainer to pay a termination fee; the possibility that competing offers may be made; risks related to the ability to realize the anticipated benefits of the proposed acquisition, including the possibility that the expected benefits from the acquisition will not be realized or will not be realized within the expected time period; disruption from the transaction making it more difficult to maintain business and operational relationships; continued availability of capital and financing; disruptions in the financial markets; certain restrictions during the pendency of the transaction that may impact Textainer's ability to pursue certain business opportunities or strategic transactions; risks related to diverting management's attention from Textainer's ongoing business operation; negative effects following announcement of or the consummation of the proposed acquisition on the market price of Textainer's common shares, preference shares and/or operating results.
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.
Additional Information and Where to Find It
In connection with the special shareholder meeting to approve the proposed Stonepeak transaction, Textainer mailed or otherwise made available to Textainer's shareholders as of the January 5, 2024 record date a proxy statement describing the merger proposal to be voted upon at the special meeting, as well as logistical information related to the special meeting. The proxy statement is attached as Exhibit 99.1 to Textainer's Form 6-K furnished to the SEC on January 17, 2024. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PROXY STATEMENT, ANY AMENDMENTS OR SUPPLEMENTS THERETO AND ANY OTHER RELEVANT DOCUMENTS THAT MAY BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION OR INCORPORATED BY REFERENCE IN THE PROXY STATEMENT CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT TEXTAINER AND THE PROPOSED TRANSACTION.
Investors and security holders will be able to obtain copies of these materials and other documents containing important information about Textainer and the proposed transaction, once such documents are filed with the SEC free of charge through the website maintained by the SEC at www.sec.gov. Copies of documents filed with the SEC by Textainer will be made available free of charge on Textainer's investor relations website at https://investor.textainer.com/.
No Offer or Solicitation
This communication is for information purposes only and is not intended to and does not constitute, or form part of, an offer, invitation or the solicitation of an offer or invitation to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities, or the solicitation of any vote or approval in any jurisdiction, pursuant to the proposed transaction or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law.
Participants in the Solicitation
Textainer and its directors and certain of its executive officers and other employees may be deemed to be participants in the solicitation of proxies from Textainer's shareholders in connection with the proposed Stonepeak transaction. Information about Textainer's directors and executive officers is set forth in the proxy statement, including information incorporated by reference into the proxy statement (such as Textainer's Report on Form 20-F, which was filed with the SEC on February 14, 2023). Investors may obtain additional information regarding the interest of such participants by reading the proxy statement and other relevant materials regarding the acquisition filed with or furnished to the SEC in respect of the proposed transaction. These documents can be obtained free of charge from the sources indicated above in "Additional Information and Where to Find It".
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 December 31, | Years Ended December 31, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Revenues: | |||||||||||||||
| Operating leases - owned fleet | $ | 141,525 | $ | 151,936 | $ | 572,611 | $ | 609,558 | |||||||
| Operating leases - managed fleet | 10,107 | 11,994 | 42,315 | 49,635 | |||||||||||
| Finance leases and container leaseback financing receivable - owned fleet | 39,198 | 38,982 | 155,465 | 150,821 | |||||||||||
| Total lease rental income | 190,830 | 202,912 | 770,391 | 810,014 | |||||||||||
| Management fees - non-leasing | 512 | 897 | 2,486 | 2,812 | |||||||||||
| Trading container sales proceeds | 3,848 | 4,990 | 16,987 | 23,791 | |||||||||||
| Cost of trading containers sold | (3,757 | ) | (4,904 | ) | (16,546 | ) | (21,939 | ) | |||||||
| Trading container margin | 91 | 86 | 441 | 1,852 | |||||||||||
| Gain on sale of owned fleet containers, net | 3,967 | 15,033 | 26,415 | 76,947 | |||||||||||
| Operating expenses: | |||||||||||||||
| Direct container expense - owned fleet | 10,709 | 10,965 | 41,284 | 31,980 | |||||||||||
| Distribution expense to managed fleet container investors | 9,006 | 10,723 | 37,652 | 44,150 | |||||||||||
| Depreciation and amortization | 67,498 | 74,140 | 283,549 | 292,828 | |||||||||||
| General and administrative expense | 25,721 | 11,898 | 66,220 | 48,349 | |||||||||||
| Bad debt expense (recovery), net | 40 | (3 | ) | (563 | ) | 740 | |||||||||
| Container lessee default expense (recovery), net | 149 | (339 | ) | (908 | ) | 1,179 | |||||||||
| Total operating expenses | 113,123 | 107,384 | 427,234 | 419,226 | |||||||||||
| Income from operations | 82,277 | 111,544 | 372,499 | 472,399 | |||||||||||
| Other (expense) income: | |||||||||||||||
| Interest expense | (42,317 | ) | (43,105 | ) | (170,336 | ) | (157,249 | ) | |||||||
| Debt termination expense | (366 | ) | - | (366 | ) | - | |||||||||
| Realized (loss) gain on financial instruments, net | - | (91 | ) | 15 | (91 | ) | |||||||||
| Unrealized (loss) gain on financial instruments, net | - | (176 | ) | 3 | (502 | ) | |||||||||
| Other, net | 2,279 | 658 | 8,545 | 2,406 | |||||||||||
| Net other expense | (40,404 | ) | (42,714 | ) | (162,139 | ) | (155,436 | ) | |||||||
| Income before income taxes | 41,873 | 68,830 | 210,360 | 316,963 | |||||||||||
| Income tax expense | (1,744 | ) | (2,007 | ) | (5,690 | ) | (7,539 | ) | |||||||
| Net income | 40,129 | 66,823 | 204,670 | 309,424 | |||||||||||
| Less: Dividends on preferred shares | 4,969 | 4,969 | 19,875 | 19,875 | |||||||||||
| Net income attributable to common shareholders | $ | 35,160 | $ | 61,854 | $ | 184,795 | $ | 289,549 | |||||||
| Net income attributable to common shareholders per share: | |||||||||||||||
| Basic | $ | 0.86 | $ | 1.40 | $ | 4.43 | $ | 6.23 | |||||||
| Diluted | $ | 0.84 | $ | 1.38 | $ | 4.33 | $ | 6.12 | |||||||
| Weighted average shares outstanding (in thousands): | |||||||||||||||
| Basic | 41,014 | 44,149 | 41,736 | 46,471 | |||||||||||
| Diluted | 41,763 | 44,938 | 42,710 | 47,299 | |||||||||||
| TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES | ||||||||
| Consolidated Balance Sheets | ||||||||
| (Unaudited) | ||||||||
| (All currency expressed in United States dollars in thousands, except share data) | ||||||||
| December 31, 2023 | December 31, 2022 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 131,135 | $ | 164,818 | ||||
| Marketable securities | - | 1,411 | ||||||
| Accounts receivable, net of allowance of $1,578 and $1,582, respectively | 102,423 | 114,805 | ||||||
| Net investment in finance leases, net of allowance of $184 and $252, respectively | 136,568 | 130,913 | ||||||
| Container leaseback financing receivable, net of allowance of $33 and $62, respectively | 55,981 | 53,652 | ||||||
| Trading containers | 2,327 | 4,848 | ||||||
| Containers held for sale | 28,548 | 31,637 | ||||||
| Prepaid expenses and other current assets | 8,389 | 16,703 | ||||||
| Due from affiliates, net | 2,928 | 2,758 | ||||||
| Total current assets | 468,299 | 521,545 | ||||||
| Restricted cash | 92,465 | 102,591 | ||||||
| Containers, net of accumulated depreciation of $2,166,350 and $2,029,667, respectively | 3,975,669 | 4,365,124 | ||||||
| Net investment in finance leases, net of allowance of $608 and $1,027 respectively | 1,605,516 | 1,689,123 | ||||||
| Container leaseback financing receivable, net of allowance of $5 and $52, respectively | 807,048 | 770,980 | ||||||
| Derivative instruments | 109,452 | 149,244 | ||||||
| Deferred taxes | 520 | 1,135 | ||||||
| Other assets | 21,856 | 13,492 | ||||||
| Total assets | $ | 7,080,825 | $ | 7,613,234 | ||||
| Liabilities and Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 27,080 | $ | 24,160 | ||||
| Container contracts payable | 3,256 | 6,648 | ||||||
| Other liabilities | 5,316 | 5,060 | ||||||
| Due to container investors, net | 12,820 | 16,132 | ||||||
| Debt, net of unamortized costs of $7,871 and $7,938, respectively | 354,650 | 377,898 | ||||||
| Total current liabilities | 403,122 | 429,898 | ||||||
| Debt, net of unamortized costs of $20,702 and $26,946, respectively | 4,639,155 | 5,127,021 | ||||||
| Derivative instruments | 2,911 | - | ||||||
| Income tax payable | 13,703 | 13,196 | ||||||
| Deferred taxes | 11,682 | 13,105 | ||||||
| Other liabilities | 28,902 | 33,725 | ||||||
| Total liabilities | 5,099,475 | 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; 61,068,716 shares issued and 41,348,793 shares outstanding at December 31, 2023; 59,943,282 shares issued and 43,634,655 shares outstanding at December 31, 2022 | 611 | 599 | ||||||
| Treasury shares, at cost, 19,719,923 and 16,308,627 shares, respectively | (461,711 | ) | (337,551 | ) | ||||
| Additional paid-in capital | 460,421 | 442,154 | ||||||
| Accumulated other comprehensive income | 105,203 | 147,350 | ||||||
| Retained earnings | 1,576,826 | 1,443,737 | ||||||
| Total shareholders' equity | 1,981,350 | 1,996,289 | ||||||
| Total liabilities and shareholders' equity | $ | 7,080,825 | $ | 7,613,234 | ||||
| TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES | ||||||||
| Consolidated Statements of Cash Flows | ||||||||
| (Unaudited) | ||||||||
| (All currency expressed in United States dollars in thousands) | ||||||||
| Years Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 204,670 | $ | 309,424 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 283,549 | 292,828 | ||||||
| Bad debt (recovery) expense, net | (563 | ) | 740 | |||||
| Container (recovery) write-off from lessee default, net | (1,160 | ) | 1,910 | |||||
| Unrealized (gain) loss on financial instruments, net | (3 | ) | 502 | |||||
| Amortization of unamortized debt issuance costs and accretion of bond discounts | 9,224 | 10,129 | ||||||
| Debt termination expense | 366 | - | ||||||
| Gain on sale of owned fleet containers, net | (26,415 | ) | (76,947 | ) | ||||
| Share-based compensation expense | 13,432 | 7,728 | ||||||
| Changes in operating assets and liabilities | 146,386 | 206,205 | ||||||
| Total adjustments | 424,816 | 443,095 | ||||||
| Net cash provided by operating activities | 629,486 | 752,519 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchase of containers | (76,795 | ) | (403,783 | ) | ||||
| Payment on container leaseback financing receivable | (96,005 | ) | (533,867 | ) | ||||
| Proceeds from sale of containers | 152,693 | 199,158 | ||||||
| Receipt of principal payments on container leaseback financing receivable | 58,454 | 59,719 | ||||||
| Other | 14 | (2,538 | ) | |||||
| Net cash provided by (used in) investing activities | 38,361 | (681,311 | ) | |||||
| Cash flows from financing activities: | ||||||||
| Proceeds from debt | 119,000 | 989,650 | ||||||
| Payments on debt | (636,572 | ) | (831,010 | ) | ||||
| Payment of debt issuance costs | (3,132 | ) | (4,370 | ) | ||||
| Principal repayments on container leaseback financing liability, net | (816 | ) | (799 | ) | ||||
| Purchase of treasury shares | (124,160 | ) | (179,092 | ) | ||||
| Issuance of common shares upon exercise of share options | 9,825 | 5,485 | ||||||
| Share repurchase to settle shareholder tax obligations | (4,978 | ) | - | |||||
| Dividends paid on common shares | (51,068 | ) | (46,235 | ) | ||||
| Dividends paid on preferred shares | (19,875 | ) | (19,875 | ) | ||||
| Net cash used in financing activities | (711,776 | ) | (86,246 | ) | ||||
| Effect of exchange rate changes | 120 | (125 | ) | |||||
| Net change in cash, cash equivalents and restricted cash | (43,809 | ) | (15,163 | ) | ||||
| Cash, cash equivalents and restricted cash, beginning of the year | 267,409 | 282,572 | ||||||
| Cash, cash equivalents and restricted cash, end of the year | $ | 223,600 | $ | 267,409 | ||||
| Supplemental disclosures of cash flow information: | ||||||||
| Interest paid | $ | 160,048 | $ | 144,637 | ||||
| Income taxes paid | $ | 2,551 | $ | 815 | ||||
| Receipt of payments on finance leases, net of income earned | $ | 136,901 | $ | 193,157 | ||||
| Supplemental disclosures of noncash investing activities: | ||||||||
| Decrease in accrued container purchases | $ | 3,392 | $ | 134,320 | ||||
| Containers placed in finance leases | $ | 57,056 | $ | 219,813 | ||||
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. Additionally, adjusted net income excludes transaction and other costs associated with the proposed acquisition, costs associated with departing employees, debt termination expense, and the related impacts on income taxes as they are not normal, recurring operating expenses. 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 twelve months ended December 31, 2023 and 2022 and for the three months ended September 30, 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, | Years Ended, | |||||||||||||||||||
| December 31, 2023 | September 30, 2023 | December 31, 2022 | December 31, 2023 | December 31, 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 | $ | 35,160 | $ | 44,677 | $ | 61,854 | $ | 184,795 | $ | 289,549 | ||||||||||
| Adjustments: | ||||||||||||||||||||
| Transaction and other costs (including net income tax impact on 162(m) and 280G) | 10,818 | 733 | - | 11,551 | - | |||||||||||||||
| Costs associated with departing employees | 973 | 973 | ||||||||||||||||||
| Debt termination expense | 366 | - | - | 366 | - | |||||||||||||||
| Unrealized loss (gain) on marketable securities, net | - | - | 176 | (3 | ) | 502 | ||||||||||||||
| Impact of reconciling items on income tax | (41 | ) | - | (37 | ) | (41 | ) | (105 | ) | |||||||||||
| Adjusted net income | $ | 47,276 | $ | 45,410 | $ | 61,993 | $ | 197,641 | $ | 289,946 | ||||||||||
| Adjusted net income per diluted common share | $ | 1.13 | $ | 1.08 | $ | 1.38 | $ | 4.63 | $ | 6.13 | ||||||||||
| Three Months Ended, | Years Ended, | |||||||||||||||||||
| December 31, 2023 | September 30, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | ||||||||||||||||
| (Dollars in thousands) | (Dollars in thousands) | |||||||||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||||||
| Reconciliation of adjusted EBITDA: | ||||||||||||||||||||
| Net income attributable to common shareholders | $ | 35,160 | $ | 44,677 | $ | 61,854 | $ | 184,795 | $ | 289,549 | ||||||||||
| Adjustments: | ||||||||||||||||||||
| Interest income | (2,266 | ) | (2,357 | ) | (1,818 | ) | (9,090 | ) | (3,261 | ) | ||||||||||
| Interest expense | 42,317 | 43,751 | 43,105 | 170,336 | 157,249 | |||||||||||||||
| Debt termination expense | 366 | - | - | 366 | - | |||||||||||||||
| Unrealized loss (gain) on marketable securities, net | - | - | 176 | (3 | ) | 502 | ||||||||||||||
| Income tax expense | 1,744 | 1,124 | 2,007 | 5,690 | 7,539 | |||||||||||||||
| Depreciation and amortization | 67,498 | 73,686 | 74,140 | 283,549 | 292,828 | |||||||||||||||
| Container (recovery) write-off from lessee default, net | - | (1,160 | ) | - | (1,160 | ) | 1,108 | |||||||||||||
| Transaction and other costs | 8,445 | 733 | - | 9,178 | - | |||||||||||||||
| Cost associated with departing employees | 973 | - | - | 973 | - | |||||||||||||||
| Adjusted EBITDA | $ | 154,237 | $ | 160,454 | $ | 179,464 | $ | 644,634 | $ | 745,514 | ||||||||||
| Three Months Ended, | Years Ended, | |||||||||||||||||||
| December 31, 2023 | September 30, 2023 | December 31, 2022 | December 31, 2023 | December 31, 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 | $ | 35,160 | $ | 44,677 | $ | 61,854 | $ | 184,795 | $ | 289,549 | ||||||||||
| Adjustments: | ||||||||||||||||||||
| Container (recovery) write-off from lessee default, net | - | (1,160 | ) | - | (1,160 | ) | 1,108 | |||||||||||||
| Transaction and other costs (including net income tax impact on 162(m) and 280G) | 10,818 | 733 | - | 11,551 | - | |||||||||||||||
| Cost associated with departing employees | 973 | - | - | 973 | - | |||||||||||||||
| Impact of reconciling items on income tax | (38 | ) | 10 | - | (28 | ) | (10 | ) | ||||||||||||
| Headline earnings | $ | 46,913 | $ | 44,260 | $ | 61,854 | $ | 196,131 | $ | 290,647 | ||||||||||
| Headline earnings per basic common share | $ | 1.14 | $ | 1.08 | $ | 1.40 | $ | 4.70 | $ | 6.25 | ||||||||||
| Headline earnings per diluted common share | $ | 1.12 | $ | 1.06 | $ | 1.38 | $ | 4.59 | $ | 6.14 | ||||||||||
