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The rebound in Textainer Group Holdings Limited (TGH +0.00%) took a giant leap forward in the third quarter as revenue kept rising and the company started making money again. However, that appears only to be the beginning since the company expects a continuation of the improvement in the container leasing market to drive results much higher in the coming years.
Metric |
Q3 2017 |
Q3 2016 |
Year-Over-Year Change |
---|---|---|---|
Revenue |
$125.6 million |
$120.4 million |
4.3% |
Adjusted net income |
$18.6 million |
($53.1 million) |
N/A |
Adjusted EPS |
$0.33 |
($0.94) |
N/A |
Data source: Textainer Group Holdings Limited. EPS = earnings per share.
Image source: Getty Images.
The turnaround has started taking hold:
CEO Philip Brewer commented on the quarter by saying:
We are excited about the significant improvements in our financial performance and favorable overall market conditions. The positive trends reported previously continued with sequential improvements in lease revenue, gain on container sales, and direct container expense. Our third quarter results mark a return to profitability which we expect to continue going forward. With Hanjin behind us and our refinancings completed, we are well positioned to take advantage of the attractive market environment.
One other thing Brewer noted about the current market conditions was that rental rates and container prices are "at their highest levels in many years." The company can thus earn strong returns on new leases while selling older containers for a good value.
Textainer's CEO said he was "very optimistic about the outlook for both Textainer and our industry," noting that the supply of new containers would remain tight, which should keep prices up. The company has several leases expiring in the coming years that are well below current rates, which leads Brewer to believe the company will benefit as these agreements come up for renewal. He pointed out that "if current market conditions continue, as these leases reprice any increase in rental revenue will flow straight to our bottom line."