Textainer Group Holdings Limited (TGH+A) 8 Aug 212021 Q2 Earnings call transcript

Thank you. And welcome to Textainer's Second Quarter 2021 Earnings Conference Call. At this time all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session and instructions will be provided at that time.

As a reminder, today’s conference call is being recorded. call Holdings Ankit Limited. the for Investor turn Group Textainer now over Hira, to Relations I'll

made. U.S. statements update Form filings any The modify March events is after plans this or Please could The XX, Thank conference only ended forward-looking with in views, on company and with call Certain factors predictions all see or information may actual for laws. call cause the Commission you. the for outlook XXXX. statements materially materially from that actual contain concerning and company's additional company's statements statements made December this forward-looking and on that may in And X-K uncertainties, on risks going from quarterly and report Securities XXXX, filed involve during change are future differ the as this securities are to annual no year may XX, to These obligation subsequent Form under or differ results. results estimates, described those within accordance the XX-F statements. forward, Exchange any discussion.

During will financial discuss measures. this non-GAAP we call,

be are of in most measures accepted with in prepared principles, a found today's provided either to accounting be will earnings release. call reconciliation As accordance can directly conference measures the such or measures not financial GAAP press non-GAAP generally the comparable this on

the and Investor Textainer's to and Executive have earnings Relations today, Textainer's over I provided call. our release Ghesquiere, along comments. that his be we the on Chief also opening Olivier President to now Both like investor.textainer.com. can at found Officer, call with the earnings our for turn would release Finally, today's call comments website slides presentation on earnings accompany

for today on some then quarter by I'll the Good of us you, for go Textainer's and We're will the we XXXX then quarter to greater provide performance call. metrics. results another results perspective of reviewing I operating after everyone, deliver second will your outstanding key results, joining our for and questions. our begin second over financial earnings strong in detail, thank call you highlights Thank pleased with Ankit. of all afternoon, across our which Michael the open will quarter industry.

the to first increased XX% $XXX lease XX% For in rental very organic quarter, strong second which driven million, compared EBITDA to demand fleet Adjusted quarter the by environment. income a to million, $XXX growth well which $X.XX reflects XX%. XX% net our environment. as represents as share, Adjusted ongoing increased cost and annualized per optimization income diluted ROE an or lease million $XX initiatives resale of favorable the increased to

continue to strong benefit QX volume very We remained environment Trade despite market from current historically seasonal slower favorable. a remains being period. which the

logistical levels demand participant CEU for favorable challenge continued the market such the over very rate of second we of container around lessors to and quarter Textainer. terms as during the bring average out to active under containers of utilization our as XX.X% congestion factory quarter. container, benefit port support depot leased of XXX,XXX ongoing addition, have and In elevated we to repatriation Consequently, to a remained

securing continue We useful remaining lease through remains of and container level as containers, to renewal life priority redelivery, the leaders extending the secure minimal flows. of thereby our experience maturity, future to to lifecycle further cash structure stable

during XXXX. for million second all $XXX the During on top to of approximately half the year, a half coming total $XXX million we deployed this the second the CapEx quarter, billion of of of in first amounted that $X.X the of

attractive leases, a tenure focus we on longer have orders continued for quarter, and the returns. of million $XXX more demand, during placed the third additional than container delivery committed Given for with

container tenure of fleet of including has term an and our short portfolio, quarter, leases, average X.X average lease X As now the has young second years. of a entire range remaining of the years, end our almost

New primarily in production. weeks capacity driven very equivalent the sustained from $X,XXX CEU management low year, demand, $X,XXX two CEU earlier current container level factory per at of prices material by costs. about per modestly remained Total and inventory increased to increases in

our year, through the we During the financing. our also have debt further of financial strengthened position optimization

average rate in have As X long of term. quarter, economic remaining tenure of our is our gains attractive effective lease the rate into of the end XX% with almost at debt the fixed with extended Combined of portfolio, effectively years. we interest locked X.X%, and stands our tenure the of an remaining

CapEx half cash the ongoing of XXX,XXX flow second as attractive in strong well where we our or first the shares investment to X.X program the capital we repurchase Our and as generation repurchased as over have this year quarter an see accretive investment. share continue as our approximately in facilitated initiatives optimization million shares

the rest current As The we to our well-positioned half of remains positive very believe our in the strength fundamentals, of the favorable, to expect of underlying we the confident out in we elevated sustain the container year. market look remain and we are the business. second momentum year, remain and through we environment to business demand

retail We in building U.S., low Europe. of into we the levels traditional are the and heading see in a wave demand peak inventory season, with similar still

and Lunar travel expect spending and reopening in strong potential related Year, We to COVID to despite New volumes the cargo services remain to recovery. through shift

high remain maintain We discipline. as their to prices expect container new manufacturers

to leases. all and of fleet execution near and very associated forward net the be optimization second We you organically benefit across $XXX who little the from very committed our color enhancing and value constraint, retail will current the growth on-hire on financial now our organization a We we and give continue quarter. remain about financial our ongoing containers to more this profitability with further committed to proud call turn will to disciplined favorable our XX%, strong on-hire environment. long-term is capital customers of continued generated market I'm delivering CapEx, over our improve grow very our CapEx for to by the overall, as to of prices performance remain elevated to due and cost returns continue supply I to Year-on-year, shareholders. expect continued results expect to we for the to Michael, control our and focus structure. million

Thank per which you, during financial years undertaken now enterprise I market Olivier. the income performance common actions of increase or QX Textainer XX% has strong over position underlying guide environment. a diluted few the outstanding reflects this and QX, focus an XX% was share, on $X.XX per across $XX and of on our past increase favorable business million, this the to earnings compared year-over-year. QX. We results. will QX strategic to increase to management capitalize was an everyone. Hello, adjusted team XXX% and delivered over from QX, $XX million of QX very as the share fundamentals our adjusted

was pleased QX. of and increase a income line leases continued was supported in long million rental $XX very our growth, $XXX This are adjusted EBITDA We utilization good cash QX strong this lease driven million, an to adjusted increase in rates. results tenure largely QX. XX% increase top million from illustrating very QX in generation million, ROE XX%, compared of in by attractive QX fixed a ability. average rental QX, ROE yields annualized that organic the by reliable fleet as strong or $XX and very from or adjusted an builds at upon which $XXX our of XX% favorable rate was of showing XX%

rental with improve lease are averaged in related to increase rental further rate, of gain customer, We QX, QX. income was as attractive an $X received resulting which rental income insolvent driven fleet by pleased prior Having very this, expect of QX, resale continued of million, that $X includes Note increase previously very benefit our fleet unrecognized million containers to mostly QX periods. to compared lease on growth. during utilization said sale a income container QX settlement million XX.X% prices. an we in the lease from a from owned $XX from

and We resale container QX, utilization $X to levels. decrease consistent direct primarily resulting to QX handling strong, to container and million inventory. to cost availability, $X from million, QX expense continued We due QX. with as levels million low higher expense decrease attractive at is expected to attractive storage, fleet these very QX $XX was expect of lower remain remain expense to growth. QX efficiencies, strong in compared container depreciation direct somewhat focused stable was expect limited utilization relatively and costs, due depot due to with to volumes we in prices and remain on maintenance driving a increase

flat grow. while relatively pleased QX income continue G&A to QX and lease to Textainer's $XX expense as remained of are compared We rental million that fleet

costs primarily QX. by of funding fleet the of this interest balance which our realized by lower our to growth, expense G&A QX driven a $X options largely was $XX including expect to expense, We from remain average higher was level reflected debt interest was CapEx going This in hedging million, an rate offset increase forward. million in QX. substantial due effective at attractive

continue financing our structure opportunistically to secure is to long-term to rate fixed that We financing optimize our business. valuable

we as discussed and million notes totaling as QX million pricing April, call, our terms. $XXX at shares, in preferred issued ABS I As perpetual during well $XXX in both attractive

create with to the very went fixed and refinance very ABS pricing proceeds priced will August container I'm terms. additional capacity of at our future on debt issuance we pleased be to The which raise priced the attractive borrowing QX, Following result and investment. and $XXX market, higher of rate million end and again X will used for latest

the Our effective drop, averaging interest X.XX% quarter. rate second continues to during

in rate the to end QX, which as of We X.X% at decrease QX. expect of further this stood

average $XX.XX under had during million program. to still program. an the now $XX We Board share authorized our shares QX, share XXX,XXX repurchase of of our available QX. price approximately repurchase repurchased Turning at At approximately we end

move shares forward, as with repurchase to capital opportunistically continue plan. will allocation we our We consistent

healthy position and at and facilities both through bank to balance a sheet cash restricted of well-structured a of cash maintain million. We liquidity, QX with adequate and inclusive out our ended sheet balance $XXX continue cash we liquidity Looking reserves.

Operator, to market for prepared further to capitalize CapEx, to remain is continue strategic significant through plan favorable We continue to questions. In performance concludes its further positioned continuing time to while line our Textainer very profitability the remarks. today. organic metrics. in closing, support improve and accretive you our and financial value. to open please environment executing shareholder This well on improve growth our for all enhance your confident very Thank ability the

today Thank our question And you. first with Instructions] we'll KBW. Michael Brown [Operator from take

Olivier Michael, you you, guys? Great. Thank how are operator. and

Mike? How Good. are you

Mike. Well,

year-over-year. by So your fleet has XX% grown

investment achieve can period? You lot double-digit Can here. the for growth XX What more quarter months a for expectations we been the fleet? you're the third doing similar environment, assume your over same a you and that growth a next have clearly lot investing over in are

since of million imagine can growth. $XXX definitely has growth stated that The CapEx. fleet already environment the utilization of second coming We improvement sort current half we XX% favorable. of like Obviously, half on-hire component $XXX But to see to been think the the have dates consistently million $X.X which committed close a beginning last very from rate, we I the back continued first of the billion can remains year, that of the over we've another then, you investing year. over this the of to very of cycle.

$XXX have committed. We million

point continuing the a time, this So at forward trend to look we growth be and double-digit certainly certainly seems continuation. to in

But the investment a running jump my it then, payables little case, extra that's double Great. -- over like levels, coming of the But cash in the lot CapEx - least historical you with that's of where ultimately the you're this it's down. time? by that it's looks cash is container than touched if And work is why kind that third large the here, your Michael, on it are this a quarter. estimation sitting Is how will all currently. that I just are here level, And you facing on quarter? Okay. that just down at guess clearly, and more

just Yes, pretty need and amount At we million, carry a them. of it's on always actually. but the it of levels, where matter $XXX Mike. in we cash much at end, a year We lower draw timing, form debt we keep of healthy hand, delevered,

we on of down [indiscernible] some drew So payables. our pay we're our - to facilities

in probably So so it's speak, difference we to but capabilities credit too right the our a borrowing powder, much lower within don't level and a pay facility usually we timing interest. there, keeping keep dry so

integrated, a strong industry. equity I to funds hedge One, in Is There's any if could landscape. here. recently of bear into is once kind Two, the acquisition in let's obviously, a environment, check competitive that new or kind and competitors, maybe And the question, very private finally, any seeing to be in that that's you're the see space? a player sale. and so to wanted there one really new then I any me. there's to what announced just reports the competitor comments may sneak the talk of say, on now wanted anything for more part the into here? Great. This just entrants looking and is market? so three move about this I'm And just with space that for mean curious private there's Textainer some up larger Okay.

I so size your And that, do is and you. to Textainer's increase what wanted and desire Thank an thoughts and scale? hear appetite just on acquisition to and

you, interesting Mark. very Thank has certainly market way. evolved The in a

very container with concentration tremendously lessors. the lines to of by the XX% kind amongst manufacturers. our container was that has X that one market player industry. concentration an has we essentially deck concentration up We page increased In line, for manufacturer. shipping to and we shipping there represent container on of kind And for mentioned, strategic controlled the in you end compare acquisition IR As another even container further existing lessors. of interesting market of but the see player it XX, increased amongst by it's The

and terms talk now seen. our And the the have very and the a it And that's your growth. the that answer improvement been then strategy part really market, question, another focusing with over we is for which to with organic situation think what we and players we to organically four second to player. all we We makes continue and in very players, we want on leading intend is profitability have essentially really we market other larger that consolidation today, the are of welcome fleet we and certainly very In better but have in think of And improve the best, who successfully most that continue we to another demonstrated larger past is Triton positive. be tremendous what growth on and business the a that our market, XX profitability. done disciplined metrics who months. focusing And very, you which it our have players about where has have that I on XX months our do or our to doing to focus metrics our we've grow than

questions, taking for Great. my Thanks Olivier.

Thank you, Mike.

Thanks, Mike.

Burke with Riley. Next we'll hear from Liam B.

Hi, Thank Michael. Hi, Olivier. you.

Hi, Liam.

Hi, Liam.

significant do, Olivier, next your of you months? amounts about do have any that years? assets from re-lease of extend up to average are for do the you over XX the And what is you durations if X anticipate

maturity, economic historically. why definitely. a renewal a on a strategy lifecycle are what number reached basis, to we leases And would what of and their leases much close of the has coming of leases say That's assets average and to that tend very we're on be those right the extended point that end we this most life, try do is that will on successful much announce have recently. been lease. We renewals very carry to maturity do longer I we regular to overall for time. at until close than at And Yes, the fleet we now X focus in essentially used where we years the pleased be that call

years age. those so on old renewing XX which XX of leases, average CapEx, existing X renewal they will lifecycle years. new or probably on of lease for they're combination So those on until a the achieved or X containers -- on more that that stay XX we that probably than it's lease we're are those at years have new And

So our the great high it's profitability we combination, been but sustain a focus see can has that a as flow sure clearly opportunity to we lock forward. that going make in levels really cash to of and continue

players. in lowering players limited your With mentioned return is discussion, number and of danger, still on Great. is or consolidation, any among any the a or non-concentrated part of but concern has coming in sacrificing of earlier there or a the getting there smaller And you the either prices? in low the healthy ROE ROE consolidated XX% your XXs, industry

to always role to play think never certainly ignore important the get players five an new barrier in continue will wanting say is that possibility would the terms I I the in reality exists, to that But think, certain also I large substantial market. that Well, that are there we competitors access it. should there all and are market. are, to that entry of players good

comes the to also the important think time. can prevents in new that's to limit grow. and ability customer. coming role where as sustainable be the it have the that there's aggressively a barrier position very very long and to of I and all, comes take to to But but of is our because kind to in, kind right And a at when occupying come market. larger important fleet. select definitely will They in, First to from the scale a industry reach we time the enjoy fleet, place very, up that credible with them having fleet that but said, and size no build of it today targets, have big their with a player very small you need a of they And can it's will a right in size financial availability it their plays come the players kind denying I at when very there's and

Thank Great. Olivier. you,

much, very you Liam. Thank

turn today's or conference I'll to and any Officer, President Executive Ghesquiere, now remarks. session. question-and-answer Chief conclude over will Olivier That closing the additional for

we earnings better our results. very this attending to third quarter release you for everybody look thank Thank results, to even with much. forward like and I'd with And great

participation. you Thank conclude today's That conference. your for will

You disconnect. now may