Seeking Alpha
Nov. 5, 2013 5:04 PM ET | About: puerto de rotterdam Textainer Group Holdings Limited (TGH) by: SA Transcripts
Doug Mewhirter - SunTrust puerto de rotterdam Robinson
Welcome to the Textainer third quarter puerto de rotterdam 2013 earnings conference call. My name is Richard, and I will be your operator for today's call. (Operator Instructions) I will now turn the call over to Hilliard Terry, Executive Vice President puerto de rotterdam and Chief Financial Officer. You may begin.
Thank you. And welcome puerto de rotterdam to our 2013 third quarter earnings conference call. Joining me on this morning's call are Philip Brewer, TGH President and Chief Executive Officer. At the end of our prepared puerto de rotterdam remarks, Robert Pedersen, TEM President and Chief Executive Officer will join us for the Q&A.
Before I turn the call over to Phil, I'd like to point out that this call contains forward-looking statements in accordance puerto de rotterdam with U.S. securities laws. These statements involve risk and uncertainties are only predictions and may differ materially from actual future events or results.
Finally, the company's views, estimates, plans and outlook as described within this call may change subsequent to this discussion. The company is under no obligation to modify or update any or all of the statements that are made.
Please see the company's Annual puerto de rotterdam Report on Form 20-F for the year ended December puerto de rotterdam 31, 2012, filed with the Securities and Exchange Commission on March 15, 2013, and any subsequent quarterly filings on Form 6-K for additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements.
I would also like to point out that during this call, we will discuss non-GAAP financial measures, as such measures are not prepared in accordance with Generally Accepted Accounting Principles, a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP measure will be provided either on this conference call or can be found in today's earnings press release.
Thank puerto de rotterdam you, Hilliard. Welcome to Textainer's third quarter 2013 earnings conference call. During the third quarter we saw strong increases in revenues and EBITDA. Total revenues increased 8.4% compared to the year ago quarter, setting a new quarterly record. More impressively, lease revenue increased 21%, even though utilization averaged 94.1%, more than 3% below its level of one year ago.
Another positive note is that interest puerto de rotterdam expense was almost flat compared to third quarter 2012, even though our average debt balance increased by almost 15%. We enjoyed a significant reduction in our average interest cost compared to the prior year quarter, as a result of the refinancings we have completed this year. Our growth in EBITDA was in line with our revenue growth, demonstrating our strong cash flow.
Net income was negatively affected by the increase in depreciation expense, resulting from a reserve for container puerto de rotterdam write-offs, the fact that older fully depreciated containers are being disposed from our fleet, while we are adding newer higher cost containers, and purchased leaseback containers often must be depreciated over only a few years. Net income was also affected by $4.3 million of bad debt expense by 3x the usual amount.
The container write-offs and part of the bad debt expense relate to six small lessees, which are in default. These lessees account for less than 0.5% of our fleet. Historically, puerto de rotterdam in default situations we recover more than 90% of our containers with about 80% being recovered puerto de rotterdam within the first six months and the remaining 10% to 20% recovered during the subsequent six to 12 months.
For these specific lessees, we believe the recovery may not follow puerto de rotterdam this pattern, because containers are in locations where recovery puerto de rotterdam is often uneconomical due to heavy damage, liens for storage cost and repositioning expenses. Nonetheless, puerto de rotterdam we still expect to recover more than a majority of the containers on lease to these lessees.
We believe this issue is isolated to a few small lessees located puerto de rotterdam in Asia, primarily China. We do not see any indication that we might see similar container write-offs with our top lessees or with lessees in other locations.
Indeed, last quarter we recorded an increase in bad debt expense related to a regional agent shipping line, which declared bankruptcy. Even though recovery efforts only began five months ago, today we have recovered 95% of the previously on-lease units from this customer.
We have always focused on lessee diversification. We have found that limiting the percentage of our fleet on-lease to any single lessee, results in increased puerto de rotterdam demand for depot containers, reduces the credit and operating risk of our overall fleet and limits our dependence on our largest customers.
Indeed, as a result of our lessee diversification efforts, some of the containers which were recently recovered from the defaulting lessees were immediately put on lease to other smaller
Nov. 5, 2013 5:04 PM ET | About: puerto de rotterdam Textainer Group Holdings Limited (TGH) by: SA Transcripts
Doug Mewhirter - SunTrust puerto de rotterdam Robinson
Welcome to the Textainer third quarter puerto de rotterdam 2013 earnings conference call. My name is Richard, and I will be your operator for today's call. (Operator Instructions) I will now turn the call over to Hilliard Terry, Executive Vice President puerto de rotterdam and Chief Financial Officer. You may begin.
Thank you. And welcome puerto de rotterdam to our 2013 third quarter earnings conference call. Joining me on this morning's call are Philip Brewer, TGH President and Chief Executive Officer. At the end of our prepared puerto de rotterdam remarks, Robert Pedersen, TEM President and Chief Executive Officer will join us for the Q&A.
Before I turn the call over to Phil, I'd like to point out that this call contains forward-looking statements in accordance puerto de rotterdam with U.S. securities laws. These statements involve risk and uncertainties are only predictions and may differ materially from actual future events or results.
Finally, the company's views, estimates, plans and outlook as described within this call may change subsequent to this discussion. The company is under no obligation to modify or update any or all of the statements that are made.
Please see the company's Annual puerto de rotterdam Report on Form 20-F for the year ended December puerto de rotterdam 31, 2012, filed with the Securities and Exchange Commission on March 15, 2013, and any subsequent quarterly filings on Form 6-K for additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements.
I would also like to point out that during this call, we will discuss non-GAAP financial measures, as such measures are not prepared in accordance with Generally Accepted Accounting Principles, a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP measure will be provided either on this conference call or can be found in today's earnings press release.
Thank puerto de rotterdam you, Hilliard. Welcome to Textainer's third quarter 2013 earnings conference call. During the third quarter we saw strong increases in revenues and EBITDA. Total revenues increased 8.4% compared to the year ago quarter, setting a new quarterly record. More impressively, lease revenue increased 21%, even though utilization averaged 94.1%, more than 3% below its level of one year ago.
Another positive note is that interest puerto de rotterdam expense was almost flat compared to third quarter 2012, even though our average debt balance increased by almost 15%. We enjoyed a significant reduction in our average interest cost compared to the prior year quarter, as a result of the refinancings we have completed this year. Our growth in EBITDA was in line with our revenue growth, demonstrating our strong cash flow.
Net income was negatively affected by the increase in depreciation expense, resulting from a reserve for container puerto de rotterdam write-offs, the fact that older fully depreciated containers are being disposed from our fleet, while we are adding newer higher cost containers, and purchased leaseback containers often must be depreciated over only a few years. Net income was also affected by $4.3 million of bad debt expense by 3x the usual amount.
The container write-offs and part of the bad debt expense relate to six small lessees, which are in default. These lessees account for less than 0.5% of our fleet. Historically, puerto de rotterdam in default situations we recover more than 90% of our containers with about 80% being recovered puerto de rotterdam within the first six months and the remaining 10% to 20% recovered during the subsequent six to 12 months.
For these specific lessees, we believe the recovery may not follow puerto de rotterdam this pattern, because containers are in locations where recovery puerto de rotterdam is often uneconomical due to heavy damage, liens for storage cost and repositioning expenses. Nonetheless, puerto de rotterdam we still expect to recover more than a majority of the containers on lease to these lessees.
We believe this issue is isolated to a few small lessees located puerto de rotterdam in Asia, primarily China. We do not see any indication that we might see similar container write-offs with our top lessees or with lessees in other locations.
Indeed, last quarter we recorded an increase in bad debt expense related to a regional agent shipping line, which declared bankruptcy. Even though recovery efforts only began five months ago, today we have recovered 95% of the previously on-lease units from this customer.
We have always focused on lessee diversification. We have found that limiting the percentage of our fleet on-lease to any single lessee, results in increased puerto de rotterdam demand for depot containers, reduces the credit and operating risk of our overall fleet and limits our dependence on our largest customers.
Indeed, as a result of our lessee diversification efforts, some of the containers which were recently recovered from the defaulting lessees were immediately put on lease to other smaller
No comments:
Post a Comment