1.

Press Release dated October 31, 2019

QTD

Q3 2019

Q2 2019

Q3 2018

Lease rental income ⁽¹⁾

$

154,665

$

155,110

$

157,760

Gain on sale of owned fleet containers, net

$

6,092

$

5,404

$

8,450

Income from operations

$

53,487

$

45,918

$

37,156

Net income attributable to Textainer Group Holdings

   Limited common shareholders

$

10,578

$

314

$

1,913

Net income attributable to Textainer Group Holdings

   Limited common shareholders per diluted common share

$

0.18

$

0.01

$

0.03

Adjusted net income ⁽²⁾

$

12,950

$

9,006

$

4,815

Adjusted net income per diluted common share ⁽²⁾

$

0.22

$

0.16

$

0.08

Adjusted EBITDA ⁽²⁾

$

118,254

$

114,745

$

113,697

Average fleet utilization

97.3

%

97.9

%

98.0

%

Total fleet size at end of period (TEU)

3,557,466

3,601,681

3,451,293

Owned percentage of total fleet at end of period

80.7

%

80.9

%

76.8

%

(1)

“Lease rental income” includes both owned and managed fleet lease rental income. See note (a) within the attached Condensed Consolidated Statements of Comprehensive Income.

(2)

“Adjusted net income” and “Adjusted EBITDA” are Non-GAAP Measures that are reconciled to GAAP measures in section “Reconciliation of GAAP financial measures to non-GAAP financial measures” below. Section “Reconciliation of GAAP financial measures to non-GAAP financial measures” provides certain qualifications and limitations on the use of Non-GAAP Measures.

•

Lease rental income of $154.7 million for the third quarter, as compared to $155.1 million in the second quarter of 2019;

•

Adjusted net income of $13.0 million for the third quarter, or $0.22 per diluted common share, as compared to $9.0 million, or $0.16 per diluted common share in the second quarter of 2019;

•

Adjusted EBITDA of $118.3 million for the third quarter, as compared to $114.7 million in the second quarter of 2019;

•

Utilization averaged 97.3% for the third quarter, as compared to 97.9% for the second quarter of 2019;

•

Container investments of approximately $67 million during the third quarter, for a total of $710 million delivered through the first nine months of the year; and

•

Repurchased approximately 240,000 shares of common stock during the third quarter under the share repurchase program authorized on August 29, 2019.

Three Months Ended September 30,

Nine Months Ended September 30,

2019

2018

2019

2018

Revenue:

Lease rental income - owned fleet

$

129,372

$

129,834

$

387,651

$

371,639

Lease rental income - managed fleet (a)

25,293

27,926

77,650

83,950

Lease rental income

154,665

157,760

465,301

455,589

Management fees - non-leasing (a)

1,582

1,994

5,823

6,279

Trading container sales proceeds (b)

11,852

7,123

40,679

12,681

Cost of trading containers sold (b)

(9,469

)

(5,319

)

(32,371

)

(10,535

)

Trading container margin

2,383

1,804

8,308

2,146

Gain on sale of owned fleet containers, net (b)

6,092

8,450

18,263

26,480

Operating expenses:

Direct container expense - owned fleet (c)

11,810

14,072

34,071

41,105

Distribution to managed fleet container investors (a)

23,318

25,889

71,535

77,651

Depreciation expense (d)

67,644

68,821

194,243

184,699

Container lessee default (recovery) expense, net (c)

(184

)

10,869

7,718

11,005

Amortization expense

481

439

1,576

3,219

General and administrative expense (e)

9,364

12,487

28,638

33,665

Bad debt (recovery) expense, net

(1,198

)

275

2,650

1,058

Gain on insurance recovery and legal settlement

-

-

(841

)

-

Total operating expenses

111,235

132,852

339,590

352,402

Income from operations

53,487

37,156

158,105

138,092

Other (expense) income:

Interest expense

(39,970

)

(35,706

)

(115,699

)

(101,838

)

Write-off of unamortized deferred debt issuance costs

    and bond discounts

-

(881

)

-

(881

)

Interest income

680

446

2,047

1,153

Realized gain on interest rate swaps, collars

   and caps, net

170

1,268

2,709

3,951

Unrealized (loss) gain on interest rate swaps, collars and

   caps, net

(2,478

)

22

(18,315

)

2,248

Other, net

(10

)

(1

)

(10

)

(1

)

Net other expense

(41,608

)

(34,852

)

(129,268

)

(95,368

)

Income before income tax and

    noncontrolling interests

11,879

2,304

28,837

42,724

Income tax (expense) benefit

(1,318

)

224

(1,470

)

(1,262

)

Net income

10,561

2,528

27,367

41,462

Less: Net loss (income) attributable to the noncontrolling

   interests

17

(615

)

575

(3,325

)

Net income attributable to Textainer Group

   Holdings Limited common shareholders

$

10,578

$

1,913

$

27,942

$

38,137

Net income attributable to Textainer Group Holdings

   Limited common shareholders per share:

Basic

$

0.18

$

0.03

$

0.49

$

0.67

Diluted

$

0.18

$

0.03

$

0.49

$

0.66

Weighted average shares outstanding (in thousands):

Basic

57,503

57,212

57,493

57,144

Diluted

57,598

57,426

57,586

57,438

Other comprehensive income:

Foreign currency translation adjustments

(119

)

(93

)

(52

)

(82

)

Comprehensive income

10,442

2,435

27,315

41,380

Comprehensive loss (income) attributable to the

   noncontrolling interests

17

(615

)

575

(3,325

)

Comprehensive income attributable to Textainer

   Group Holdings Limited common shareholders

$

10,459

$

1,820

$

27,890

$

38,055

(a)

Management fees for managed fleet leasing revenue for the periods ended September 30, 2018 have been reclassified to present the gross amount of revenue and expense under separate line items “lease rental income – managed fleet” and “distribution to managed fleet container investors” to conform with the 2019 presentation. Management fees - non-leasing include acquisition fees and sales commission earned on the managed fleet.

(b)

Amounts for the periods ended September 30, 2018 have been reclassified to conform with the 2019 presentation.

(c)

Amounts for container write-down and container recovery costs from lessee default for the periods ended September 30, 2018 have been reclassified out of the previously reported line item “container impairment” and “direct container expense – owned fleet” and included within “container lessee default (recovery) expense, net” to conform with the 2019 presentation.  

(d)

Amounts to write-down the carrying value of containers held for sale to their estimated fair value less costs to sell for the periods ended September 30, 2018 have been reclassified out of the previously reported line item “container impairment” and included within “depreciation expense” to conform with the 2019 presentation.  

(e)

Amounts for the periods ended September 30, 2018 have been reclassified out of the separate line items “short term incentive compensation expense” and “long term incentive compensation expense” and included within “general and administrative expense” to conform with the 2019 presentation.  

2019

2018

Assets

Current assets:

Cash and cash equivalents

$

163,387

$

137,298

Accounts receivable, net of allowance for doubtful accounts of $7,068 and $5,729, respectively (a)

124,505

134,225

Net investment in direct financing and sales-type leases

36,811

39,270

Container leaseback financing receivable

18,464

-

Trading containers

26,549

40,852

Containers held for sale

27,452

21,874

Prepaid expenses and other current assets (a)

15,303

23,139

Due from affiliates, net

1,666

1,692

Total current assets

414,137

398,350

Restricted cash

104,087

87,630

Containers, net of accumulated depreciation of $1,415,081 and $1,322,221, respectively

4,117,631

4,134,016

Net investment in direct financing and sales-type leases

223,723

127,790

Container leaseback financing receivable

248,627

-

Fixed assets, net of accumulated depreciation of $11,975 and $11,525, respectively

1,333

2,066

Intangible assets, net of accumulated amortization of $44,842 and $43,266, respectively

5,808

7,384

Interest rate swaps, collars and caps

426

5,555

Deferred taxes

2,080

2,087

Other assets

14,441

3,891

Total assets

$

5,132,293

$

4,768,769

Liabilities and Equity

Current liabilities:

Accounts payable and accrued expenses (a)

$

24,009

$

27,297

Container contracts payable

7,005

42,710

Other liabilities

2,262

219

Due to container investors, net (a)

27,742

30,672

Debt, net of unamortized deferred financing costs of $7,926 and $5,738, respectively

278,707

191,689

Total current liabilities

339,725

292,587

Debt, net of unamortized deferred financing costs of $22,055 and $22,248, respectively

3,469,651

3,218,138

Interest rate swaps, collars and caps

16,825

3,639

Income tax payable

9,845

9,570

Deferred taxes

7,992

7,039

Other liabilities

26,917

1,805

Total liabilities

3,870,955

3,532,778

Equity:

Textainer Group Holdings Limited shareholders' equity:

Common shares, $0.01 par value. Authorized 140,000,000 shares; 58,079,743 shares issued and

  57,208,954 shares outstanding at 2019; 58,032,164 shares issued and 57,402,164 shares

  outstanding at 2018

581

581

Treasury shares, at cost, 870,789 shares and 630,000 shares, respectively

(11,707

)

(9,149

)

Additional paid-in capital

409,417

406,083

Accumulated other comprehensive loss

(488

)

(436

)

Retained earnings

837,676

809,734

Total Textainer Group Holdings Limited shareholders’ equity

1,235,479

1,206,813

Noncontrolling interests

25,859

29,178

Total equity

1,261,338

1,235,991

Total liabilities and equity

$

5,132,293

$

4,768,769

(a) Certain amounts for the year ended December 31, 2018 have been reclassified to report the gross amounts of accounts receivable, prepaid expenses, accounts payable and accrued expenses arising from the managed fleet instead of the net presentation previously reported within “due to container investors, net”.

2019

2018

Cash flows from operating activities:

Net income

$

27,367

$

41,462

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation expense (a)

194,243

184,699

Container write-down from lessee default, net (b)

7,154

8,426

Bad debt expense, net

2,650

1,058

Unrealized loss (gain) on interest rate swaps, collars and caps, net

18,315

(2,248

)

Amortization and write-off of unamortized deferred debt issuance costs and

    accretion of bond discounts

5,922

7,616

Amortization of intangible assets

1,576

3,219

Gain on sale of owned fleet containers, net

(18,263

)

(26,480

)

Gain on insurance recovery and legal settlement

(841

)

—

Share-based compensation expense

3,213

6,334

Changes in operating assets and liabilities

80,875

44,469

Total adjustments

294,844

227,093

Net cash provided by operating activities

322,211

268,555

Cash flows from investing activities:

Purchase of containers and fixed assets

(449,105

)

(572,948

)

Payments on container leaseback financing receivable

(271,976

)

—

Receipt of principal payments on container leaseback financing receivable

2,083

—

Proceeds from sale of containers and fixed assets

111,523

106,504

Net cash used in investing activities

(607,475

)

(466,444

)

Cash flows from financing activities:

Proceeds from debt

995,134

1,688,026

Principal payments on debt

(654,723

)

(1,476,401

)

Purchase of treasury shares

(2,558

)

—

Debt issuance costs

(7,368

)

(10,017

)

Dividends paid to noncontrolling interest

(2,744

)

(1,996

)

Issuance of common shares upon exercise of share options

121

52

Net cash provided by financing activities

327,862

199,664

Effect of exchange rate changes

(52

)

(82

)

Net increase in cash, cash equivalents and restricted cash

42,546

1,693

Cash, cash equivalents and restricted cash, beginning of the year

224,928

237,569

Cash, cash equivalents and restricted cash, end of the period

$

267,474

$

239,262

(a)

Amount to write-down the carrying value of containers held for sale to their estimated fair value less costs to sell for the period ended September 30, 2018 has been reclassified out of the previously reported line item “container impairment” and included within “depreciation expense” to conform with the 2019 presentation.  

(b)

Amounts for container write-down and container recovery costs from lessee default for the period ended September 30, 2018 have been reclassified out of the previously reported line item “container impairment” and “direct container expense – owned fleet” and included within “container lessee default (recovery) expense, net” to conform with the 2019 presentation.  

(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 expense, write-off of unamortized deferred debt issuance costs and bond discounts, realized gain on interest rate swaps, collars and caps, net, unrealized loss (gain) on interest rate swaps, collars and caps, net, costs associated with departing senior executives, gain on insurance recovery and legal settlement, income tax expense, net income attributable to the noncontrolling interests (“NCI”), depreciation expense, container impairment, amortization expense and the related impact of reconciling items on net income attributable to the NCI);

(b)

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 the write-off of unamortized deferred debt issuance costs and bond discounts, unrealized loss (gain) on interest rate swaps, collars and caps, net, costs associated with departing senior executives, gain on insurance recovery and legal settlement, the related impact of reconciling items on income tax expense and net income attributable to the NCI); and

(c)

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 the write-off of unamortized deferred debt issuance costs and bond discounts, unrealized loss (gain) on interest rate swaps, collars and caps, net, costs associated with departing senior executives, gain on insurance recovery and legal settlement, the related impact of reconciling items on income tax expense and net income attributable to the NCI).

•

They do not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;

•

They do not reflect changes in, or cash requirements for, our working capital needs;

•

Adjusted EBITDA does not reflect interest expense or cash requirements necessary to service interest or principal payments on our debt;

•

Although depreciation expense and container impairment are a noncash 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 noncash 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

Nine Months Ended

September 30,

September 30,

2019

2018

2019

2018

(Dollars in thousands)

(Dollars in thousands)

(Unaudited)

(Unaudited)

Reconciliation of adjusted net income:

Net income attributable to Textainer Group Holdings

   Limited common shareholders

$

10,578

$

1,913

$

27,942

$

38,137

Adjustments:

Write-off of unamortized deferred debt issuance costs and bond discounts

—

881

—

881

Unrealized loss (gain) on interest rate swaps, collars and caps, net

2,478

(22

)

18,315

(2,248

)

Costs associated with departing senior executives

—

2,368

—

2,368

Gain on insurance recovery and legal settlement

—

—

(841

)

—

Impact of reconciling items on income tax expense (benefit)

(27

)

(506

)

(173

)

(484

)

Impact of reconciling items on net (loss) income attributable to

   the noncontrolling interests

(79

)

181

(845

)

900

Adjusted net income

$

12,950

$

4,815

$

44,398

$

39,554

Reconciliation of adjusted net income per diluted common share:

Net income attributable to Textainer Group Holdings

   Limited common shareholders per diluted common share

$

0.18

$

0.03

$

0.49

$

0.66

Adjustments:

Write-off of unamortized deferred debt issuance costs and bond discounts

—

0.02

—

0.02

Unrealized loss (gain) on interest rate swaps, collars and caps, net

0.04

—

0.32

(0.04

)

Costs associated with departing senior executives

—

0.04

—

0.04

Gain on insurance recovery and legal settlement

—

—

(0.02

)

—

Impact of reconciling items on income tax expense (benefit)

—

(0.01

)

—

(0.01

)

Impact of reconciling items on net (loss) income attributable to

   the noncontrolling interests

—

—

(0.02

)

0.02

Adjusted net income per diluted common share

$

0.22

$

0.08

$

0.77

$

0.69

Three Months Ended

Nine Months Ended

September 30,

September 30,

2019

2018

2019

2018

(Dollars in thousands)

(Dollars in thousands)

(Unaudited)

(Unaudited)

Reconciliation of adjusted EBITDA:

Net income attributable to Textainer Group Holdings

   Limited common shareholders

$

10,578

$

1,913

$

27,942

$

38,137

Adjustments:

Interest income

(680

)

(446

)

(2,047

)

(1,153

)

Interest expense

39,970

35,706

115,699

101,838

Write-off of unamortized deferred debt issuance costs and bond discounts

—

881

—

881

Realized gain on interest rate swaps, collars and caps, net

(170

)

(1,268

)

(2,709

)

(3,951

)

Unrealized loss (gain) on interest rate swaps, collars and caps, net

2,478

(22

)

18,315

(2,248

)

Costs associated with departing senior executives

—

2,368

—

2,368

Gain on insurance recovery and legal settlement

—

—

(841

)

—

Income tax expense (benefit)

1,318

(224

)

1,470

1,262

Net (loss) income attributable to the noncontrolling interests

(17

)

615

(575

)

3,325

Depreciation expense

67,644

68,821

194,243

184,699

Container write-down from lessee default, net

(576

)

8,407

7,154

8,426

Amortization expense

481

439

1,576

3,219

Impact of reconciling items on net (loss) income attributable to

   the noncontrolling interests

(2,772

)

(3,493

)

(9,099

)

(8,713

)

Adjusted EBITDA

$

118,254

$

113,697

$

351,128

$

328,090

Textainer Group Holdings Limited

/s/ OLIVIER GHESQUIERE

Olivier Ghesquiere

President and Chief Executive Officer