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Saturday, July 09, 2011

Textainer Group Holdings (TGH)

Continuing with container leasing companies, I'm looking at Textainer Group (TGH) (sec) next.  This is a foreign issuer based in Bermuda.

Raised $400 million in fixed rate asset backed notes.  Not registered.  Cash to be used to pay off some debt plus unspecified "corporate purposes".

CEO is retiring.

Quarter ending March 31, 2011

6K form

First thing I notice is that while CAI's rental equipment assets are about 90% of total assets, TGH's rental equipment is only 80% of total assets.  Leverage looks about the same.

TGH's container assets grew 8% yoy.

Most of revenues is from lease rental with some mgmt fees and gain on sale of containers.

Revenue is $91 million, which is less than TAL's $125 million.  I'm surprised since TGH has the largest fleet size.  TGH revenues are 5.8% of net container assets compared to 5.1% for TAL and 4.2% for CAI.  (Note: this is for the quarter and only useful in comparing with other companies for the same seasonal quarter).

Gain on sale of containers was 7% of revenues, in between CAI and TAL.

TGH had a loss on interest rate swaps.  TAL had a gain.  Different sides.

58% operating margins.  Higher than TAL, lower than CAI.
46% net margin.  Fairly close to CAI (TAL was only 26%).

Watch out: A non-controlling interest owns part of the company, so converting between per-share numbers and overall numbers is not straight forward.

Shares are selling for about 40 times Q1 earnings (TAL and CAI are selling for less: what's the reason?)

Cash Flow:
Obviously expanding faster than depreciation.  Financing the cost with secured debt.
Like CAI, depreciation is big.

1.5 million containers.  2.4 million TEU.

98.2%utilization vs 90.1% a year ago.

2010 Year

20-F statement

Revnues: (millions of $)
2006: 226
2007: 266
2008: 281
2009: 238
2010: 303

Wow, their 2010 was a big jump.  Did they grab market share during the downturn?  If so, it would indicate a solid business and mgmt.

Net income (overall, including minority interest):
2006: 80 
2007: 91
2008: 93
2009: 109
2010: 138

Solid, compared to TAL and CAI.  Earned $2.43 per diluted share for the year.


Definitely needs more work, but this might be a better company than TAL and CAI.

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