TGH - Earnings call transcript Q1 2021 | Textainer Group Holdings Limited

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Operator

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

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

Ankit Hira

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

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

accordance reconciliation most Principles, in or As conference Generally press with will can such, GAAP measures of release. this found non-GAAP the to Accepted provided a are directly measures comparable be call be financial measures in prepared on the earnings Accounting either today’s not

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

Olivier Ghesquiere

which, over reviewing open your results I’ll and perspective by will for greater today results go the our for us provide begin some to joining highlights Textainer’s first Good will after you questions. XXXX in industry. Ankit. on thank you, call quarter earnings and financial Michael, I’ll details, Thank call everyone afternoon of then we then first the quarter the our

past results optimized entire organic effort record growth, confirms improved the our on pleased two first thanks team growth, through This and turnaround. utilization to financing Textainer and extremely of which We’re base fleet the has years. been structure, achieved the our revenue with over dramatic business our quarter

For XX% income and of adjusted coming growth fewer also momentum, was augurs lease a ours year. long-term the normal rental for like months. compounded billing leases for X% higher future represents effect business a days our positive for XX% last current the the up of This the given quarter for leases. our well continued increase more substantial the quarter than when of number than consisting delivered and containers be for already It the in long-term fleet very to secured corresponding

we adjusted ROE us growth, and performance. full to This driven and a us Similarly report revenue. heavily represents a track year a reduce build share increased of sets elevated demand, to prolonged adjusted great $XX we record increased income Container $X.XX an world quality In which as XX% on net in adjusted in to QX demand million, a In have invested high accretive strong XXX to XX%. we response last has by to addition trades. surge EBITDA costs and net sales record million. diluted per XX% enjoyed to on continue well which allowing revenue income gains as to summer, remained organic up annualized growth achieved since

respectively. we of $XXX XXXX, first and During of and totaling $XXX second added containers million XXXX the quarter million half

leases profit. means back-to-back these the well extended or Virtually and with age, these containers to on our into already into total years the containers they the of depreciated billion tenures. delivery will can Putting $X.X and At to through that Furthermore, cash be As has at market we've utilized while will perspective future come. This further we high reach containers revenue all million beginning representing July new strong that guarantee is period lease XX years. of successfully which remains fully period our value on the renewing longer greatly provide have long-term in contribute container leases since future for be July rate IRR tenure their year XXXX to average a that of of attractive that attractive support we for our stable July through for potentially will of historically of beginning will concluded flows will to leases significant volume strong, remain guarantee and arrangement securing until and containers until returns. continue invested levered value increased flows. for reach of all XXXX, things the cash a most [ph] investment their mid-teens time, of the asset substantially expiring Asia profitability. sales same under additional a by on the a utilization or many long-term orders this containers This placed $XXX committed to focusing the leases further our sold are XX% they as

season new demand, have of substantially volumes inventory to of approach peak as production levels low meet year. the a containers very remained of factories traditional at While, we increased especially

X,XXX prices this earlier container stable year. CEU remained at While have per about X,XXX to since

$X rates the XX.X% end of fleet million during TU XX.X% averaged the quarter utilization that breach important and at another Our milestone April. at stands currently on at the

a or are recent life. containers to extra-long needs renewals cash generated experience And renew locking to duration continue extend focus And on of to we're opportunity stream our come. many the we growth. minimal the and disposal will importantly reach more most that they years environment. renewal campaign contributed favorable structured to and economic by portion on contribute leases will and significant our long-terms all stable for fleet a both to strong until under new brand have lease provide The level its in leases to remaining our revenue expiring delivery. a These revenue of on and continue of age. This continue very will being guarantee re of arrangement We to remain leaves containers

to to further addition also In operating our position. financial we our strengthen strong continue performance

this million April. in rate year ABS two at issued fixed The in interest very another $XXX combined for we average million closed this far closed have that that was ABS, one rate for X.XX%. attractive of February and So $XXX

resources also a the issuance the blended issuance shares in or This We XXX and potential announced debt funding of to dividend quarterly new provides preference in of optimizing of of leverage exceptional attractive with costs perpetual Combined continue while a our additional facility these low X%. existing million with capital. diversified price. recently we a successful participate ensure market can an cumulative that source current will at of

our of quarter and first pleased on during our of XXX,XXX announce authorized Finally, the program. we May common that to stock million a we're repurchased our $XX board that to Xst buyback increase total shares a

year about As strong the we're we momentum market business and remainder into our this of look the fundamentals. optimistic of

and and expect incentive of American We economy the continue full the economies. the to to North programs the strongly government reopening to perform European thanks

plan now through performance term extremely our and the We attractive I the more restocking give likely of We current financial I'm demand remain over to term disciplined amplified in financial to about year of first financial to turn summary, continue to the remain will the long of the expect committed summer inventories We'll container and to fleet opportunities delivering value results in investing most our our approach color for be high performance to peak very the our further and Michael. trade months. elevated growth rest shareholders. strategic low by a proud volumes season you and business. to call of long both In traditional boosted by enhancing selectively our and the little the quarter.

Michael Chan

focus QX. now of for was our everyone. Thank when QX over $XX an testing a will record $XX net XXX%. prior you of all. to compared compared QX million Hello as adjusted to financial XX% And of increase QX increase have year an results. on we I the of million, income

thereby QX We much of expect another and results. basis foundation strong improved our solid confirming the performance in

and Lastly able we QX cash translates $XXX strong the EBITDA expect $XX improvement QX million an increase or in million, showing of generation quarter. was A QX a per share XX% as report to a $X.XX texting, average income the due increase year. XX%. a to at increase compared record for annualized million, QX prior rate. the XX% $XXX strong adjusted for This another in from QX results. from than per to in This an from an P&L. record of and QX common to A for with to the was QX. see adjusted And a to year. gratifying extremely $XX ROE high-teens are of largely very greater rental adjusted size, or flow the also our rest diluted from key line million in in fleet items QX increase XX% contribution valuable utilization achieved $X while dramatic of earnings adjust substantial performance share, of ROE achieve pleased is be area QX was indicator to this lease was prior the level It million offering is rental we an

as growth. is containers container to owned to an resulting rental million by fleet the sale prices our driven compared income This on in QX increase show Lease resale improvement offset reduction containers QX. a $X number attractive continued expect more substantial in Gain We from sold. increase by of fleet million, with of partially $XX

[indiscernible] limited compared handling strong and prices high very maintenance QX inventory. utilization as and stock. resale This given very direct decrease continued expense $X expect demand lower primarily due from the remain We QX. and you to amount is to to million, to resale resulting million and $X debt of of continued a low costs is re-deliveries storage, high container the

pleased control results and disciplined efforts our We with manage are the to of costs.

primarily level QX costs and growth. down defaulted was $XX is had improved benefit compared at G&A the second result XXXX. was from to rate largely remain increase recovery but million capacity due borrowing QX. of million the this latest the April offset which Dash expected written as depreciation This with investment. to due an forward. QX quarter proceeds is at levels relatively variable normalized is flat rate expected including the down and our one closed to future to driven QX increase QX remain a from am facilities, hidden our expense create interest that stable QX costs in fleet effective by of XXth effective were to ABS in $XX which QX. pleased attractive restructuring fleet were an included million ABS $X to growth, attractive the lower for continued if our expense at on substantial lowered attractive pay bank shutdowns and $XX of used fixed by of I and of default price and realized average higher not expect container recovery insolvent QX. interest million, these and rate in pay quarter higher to QX rate these slightly off our in see and raised going for positive let’s prices was additional remain $XXX our terms. and previously container and expense interest relatively XXXX million The notes issuance We customer further

We which be the provides to long-term it our and a flexible charges. performance fixed valuable program with pleased financing very continue has of ABS of rate source financing attractive

Our effective in to of QX. drop a continue interest X% rate level

fall We expect rate below to X% QX. this in

during XXX,XXX program, average $XX our under of shares million $XX.XX At to available our now Turning the share approximately we end QX, at had price purchased we current repurchase an plan. QX.

$XX million, $XX million X. additional our to an In under this the May program board addition on authorized

repurchase we We move opportunistically capital continue forward. our we'll plan shares execute and allocation to as

conjunction represent shares costs the attractive opportunities capital Finally weighted priced contribute and cumulative our Textainer’s preference depositary the of XX $XXX million in in capital. public or $X X% shares preference perpetual source each offering we When April by another for greatly representing continue shares offering average interest XX, The WACC. investment of A company's price an successfully redeemable million. a attractively on public pricing, as used equity April perpetual of improving on of shares, preference of announced with Series cost completed an aggregate

paid of XX. May the as for on record dividend will quarterly preference of holders on shares The first June be XX

bank Looking a optimized and financing inclusive balance healthy a with sheet well-structured now reserves. sheet well position and and at our cash $XXX a to strictly our of liquidity, we cash and of We structure. balance million adequate ended continue cash liquidity maintain both facility through QX

while your our to experience improve for to all to organic our well This plan continue continuing time the with enhance significant Thank line continue questions. and in further our early Consistent confident for concludes profitability positioned ability you to value. support strategic improve and further remain Olivier’s CapEx Operator, today. accretive Textainer We metrics. shareholder growth is prepared comments, open financial to remarks. very to performance please

Operator

conducting session. this question proceed is Please [Operator will Thank Instructions] Brown with KBW. question. a with be we time, from first you. At Our question-and-answer Michael your

Michael Brown

Thank Olivier, you are you, operator. Good afternoon, How doing? Michael. Hi.

Olivier Ghesquiere

Doing How How good. you are Michael. We're are you? well, Michael? :

Michael Brown

Doing well, thank you.

So year. – you to long – wanted I is off your most, as the you know I strong see And you that get this the know probably Olivier know start last. environment question market how you just remarks just know prepared I in the being you with for this I really which heard this can

– for attractive perhaps be market think know what you this a that thoughts that. of you while. than – know here hear the we And for strong like normalize But but and stay you to the of about on for to would causes a longer somewhat not number potential stay be could know wanted to do elements a eventually. your as I as things I think is very and keep probably guess it'll know to you it landing just that for soft end You it follow to there think to the I XXXX that going

Olivier Ghesquiere

momentum. know is relevant Mike. we a of on a like and our fleet to of is meaning back a the accelerate. those back all I the to – quarter-on-quarter of element long growth business really as And business, trying that source is on continue to add that growth. with is going inertia to container to first first the leases business the that have the containers in containers and containers continues QX here of end will But leasing revenue tremendous to long-term XX% that lot the because understand essentially customer. in question that be to it leases this CapEx grow. probably lease a get assess enjoy the year really think of of that hired to And top The committed really all or last question, is means then the you're the quarter. to going revenue delivered And mentioned X% full to my of we that of of you going the with it’s had I've mentioned leads we the going actually if lot long-term those script quarter less contribution long-term somewhat revenue good Listen lot we've very a revenue we is we are enjoy has our in a those full we placed that in we've we've are to a quarter. second a Thanks, business have and to we and but whether business in except And in where a those containers already committed a less is that year

is long have that important. all is in committed industry. seen think very are I maturities. never And think important those that extremely even So maturities containers more been that what that I Actually is this

Now, lot this where this online. how growth a a Listen, very really mean only additional can people have are and we continue. I we, long actually of economy buying we moved not optimistic. COVID are things to momentum

and the more people of demand the we're where you going lot will you the and of continue new That months new that that leading to be more have by end of We'll jobs know did ready with extremely online are you summer by and the a coincide to those activities incentives revenue fact is will up which economy to level. people seasonal know now that but And to supported buy. a have shopping season Christmas of the open finding all probably to replenish inventory additional of for is moving we’ll at the not low government by get things year. a know boosted we're, potentially further inventories. additional buy the so fall, will buy We lot they to and

cargo stop no like this exceptional of which this the The happen utilized to down trade shift this slowing Europe absolutely to of to almost to by or the see one fundamentally kind causing Right. from the be driver here is causes very that that's element you in demand. driver is high that America a system the disruption is really incredible it container capacity we the other very, know It's the probably you're now. And high important strong North the when for be capacity Asia really is demand But really driven which well. are utilized. just here. and demand. demand like high, to limit be fully and fully disruptions causes it's to the world And growth really of demand bound in is that rest main are stretching moved to as not So

it’s X.X the we about this landing the projection million a when you see the million think had in towards and people And shortage are point like XXXX would probably and view, if long-term If from know to year extremely little and the a look lessors to we're the a anything of continue XXXX you to to we low million we that If volumes. a very, this year only will going it container are extremely year very TEU hard heading to for compared container to production So soft a the soft look full ease is be that TEU. I catch a year we at going to because million I somewhat reason and trend remind next end the between into of X.X It's TEU towards question will we years end? an very on leading we that timing the up vary new sustained very for but that to X.X have market. demand this landing closer shortage incredible sort in they believe good of that predict. production allow think us to does of like we two and off have just to and demand X the bit

And or be resale then definitely yes a off what demand is when smaller know which normal lines will when, very, start and demand market very that that container. holding the four element market start happen with maybe slows second down older containers oversupplied that container. to been been slightly hit back which, be here containers. comes you has a the is really not to the appetite the So those has market there for resale some big shipping returning and supply new they've will But will will will of the on for

and landing per we So certainly prices very at going final probably to to be a that is know leased you think soft going extremely on Mike a that remaining very very, there's with stable the CU. $X,XXX, for, new demand here $X,XXX the that limited be impact And for container it's element container.

We also expect will that this renew. contract have strong maturing that for that will continue we to provide a and support very are to

Michael Brown

Thank Yeah in that guess you [indiscernible] a that that lot I was of that. great was important, address. important is. thanks Yeah points it you for that

I high commentary about kind in to recall longer I the be heard follow I XQ expecting quarter sounds that that ROE a I adjusted you're on As if teens think maybe correctly. if question of was Last it like term. in the to it

you're is then premium because fundamental basically that high ROE you're about the the book still about is that of And You you here and despite and know thinking down kind at you cycle. value you return your at outlook trading spot so, the book so through And is modest is know were disconnect XX% what right words mid-teens most even a in outlook. driving last trading month. in stock you're business you're at to in the think know you that the how B, A, that's like the

you So take that hear I just you. know on your wanted Thank to dynamic?

Olivier Ghesquiere

ROE. on just Yeah

high our are full On that one that view were at possible is stronger and from anticipated times the our trading market forward changed I we future. question question year but awfully so when lot like see even think last has we were - now high the around that second at teen I we container to ourselves further your going and that and can the ourselves quarter a saying a step earnings and are ROE the and business it we're positive. performance morning mid-teen this everybody reality lessors everything careful the stay is that this momentum ask from being certainly got of essentially when expect ROE peers the we into teens for to foreseeable than Mike. up myself wake of we've I is a commentary that multiples is and that's X every How the that

only multiple that that of market are the people not kind imagine low rest know is to you can of So go but up. the going compared to the earnings

for me So difficult question it's very very, to answer. a

I or we think lot has hope believe why continue buyback that we to is is it be completely That's honest Why see was gem only that is that of could we that the - overall puzzling certainly would our And the market market that that a that with if me Mike. being is program. probably in value. share ignored. segment a Textainer, the

Michael Brown

fair. that's thanks the Thanks Yeah for thoughts for there. the -

management quick little just philosophy one evolved that's kind here Maybe last for from how a me, bit. one and Okay. capital on of just update the a in looking maybe

any things each there. as levers? a some between changed get You're you had board business toggling that But have and here interest mix an anything been CapEx think to you about I the in those and discussions investing some – which see update still of having of the about sheet had there that balance quite guys doing quarter, you last action the with and I stock that you or obviously expressed optimization think think those back of looking actively a buying just lot to There's back if quarter took see. about is busy in buying great you've stock, dividend,

Olivier Ghesquiere

that pretty the continue No we've under continue we see think that capital put as in to a the light. it's momentum opportunities favorable leases and a will as market see stated that very work long we much essentially at always continued same market I positive certainly and Mike we to would

So our first back allow CapEx the is capital those to priority to to to continue and generate cash will future that eventually deploy shareholders. investments that us flow will allocate CapEx

stock continue you to we or is Textainer as went and of a that's that public the to we increase discussed dividend. and in stable see I dividend say the to dividend, in just a We a we that resume to a know would the is stop value price certainly terms that of ideal steady Textainer our that is we as capital just the paying from our us. dividend. definitely day because our it intention for paying why discussed business Textainer allocation soon it's of capital why paid front it's pay dividend like most only had yeah and But that's to in in first price as had see buybacks. board allocation an as best a And stock little accident

Michael Brown

for time Okay Olivier. the great. Thanks

Operator

Thank you.

question. Please with is Our proceed Riley with final your Securities. from B. question Dan Day

Dan Day

for Thanks question. my Yeah. guys. afternoon Good taking

CapEx growth any all XQ, for X% we with should guidance the on give about quarter how you by fleet thinking those just XQ So coming be on. in grew basis. a the in Can us fleet around TEU you

similar So should quarter commentary around great? can moderate it increase or from around there would XQ be and to be the you then any X% provide just first in that

Olivier Ghesquiere

Hi, as. Dan. Yeah,

our that and what same our the can than QX growth fleet along quarter you know quarter. that fast. the And already a it be fairly continue in in mentioned CapEx we second lease go expect you fleet substantial the As the committed will that we have on be in that will think added will first pattern, in to have slightly we probably to I seen overall that faster

to be. the of be end point still year less the that a think clear it’s expensive. there little will year. growth Towards are how a We I at now important in mind keep bit slower July the what compared growth. since there But bit be in containers little will estimate much is time other this experienced might last It thing more we've that to

ultimately it’s amount to because looking look in what that's could or TU of element it definitely. translates will some growth year. at most of So into But half second accurate We purely CapEx not EPS. contributions be the still there in expect at dollars deployed of terms or the probably now like the terms it you in being some of that Most measurement. of

Dan Day

leases Great. in kind to extended leases Thank with Or talked kind when helpful. in more of to same past sort would just kind up you of market be those leverage in a on of you. you coming taking place rates? That's the the value the Is And you have are of the do you XX put those discount? you know we've it of as XX market. this rate increase kind so renewals of – lease had market lot past guys then just in the are in and well below a

Olivier Ghesquiere

cash very importantly have be the, foreseeable But were certainly looking you to renew emphasize know positively. customary the in renew very, dreamt of earlier those rates. things as sort those and at a you leases opposite possibly situation future to the Right market Dan we're I really think of listen we’re I we got have some as for reprice cheap the, we for that looking long now the leases what and lease us for industry streams to those is perfect in Yeah. it's those storm comments leaders. very to for to and exactly difficult of lock like, of my, those even that replays our I forced we're to at and the term. duration we in against at had flow say in But lucky those it's the to leases my better to is for could more in environment or say not mature sometime XXXX

it's know repricing a until and maturity of lease assets you So those know also this you combination market favorably reached in keeping environment. them on really they

Dan Day

disclose Thank to of what sense what me is are for sense how business of you kind with to you just would your be be terms provide total have on or different Olivier. leases is past that Do have Do long gotten Got these think about least to it. questions I keep have talk backlog you that. compared and around it revenue kind was interesting. kind track know just detail is be to dramatically you would of of you it Lesson in where to I a or question of that just a seems willing the a some or maybe or of it at right. any this kind changing relative here. of

number have not that exact any commentary around you whether the thought? just or So

Olivier Ghesquiere

What What, committed exactly you have do going what backlog. by we revenue mean kind of forward?

Dan Day

effectively XX six common. leases so you you're know up if leases in added year five, talking comes past guess question we’re versus obviously more Yeah, year kind if I you because average the you of the

guess been on I contracted added that book number up. would contracts So just all in effectively you your have past. just revenue versus have if how much that the where you the

Olivier Ghesquiere

years’ on equivalent we point and that. utilization spread are comparing revenue from track revenue at higher those really and compare answer leases then that are is being leases. of to Obviously question would overtime, close stretching those are add six year equivalent committed up do six But apples and but roughly historically this sure worth We revenue. to that's have Okay. we if your making of time that But in back to that go apples. the we're specifically very

that think way wanted is at look I to one – it. you that

Dan Day

That's That's interesting. Yeah, No. yeah. fine.

be this Just way I thought it would you Yeah. how something the in and know you of was an interesting people maybe it's XXXX. think. and is helpful realize in kind than And to future different

Olivier Ghesquiere

the Sure. lease. for And and total it to revenue finances another look way this our at including

years. it you look years. used maturity Another above leases slightly be only way of it's now three definitely operating to remaining at four average that know to the And our around is

Dan Day

the all of turn Best appreciate I will I guys. Yeah. commentary luck, it it. over. Got

Operator

I have Ladies for end we session. the Ghesquiere of turn over call and the you. remarks. the now Olivier Thank reached to will closing question-and-answer gentlemen,

Olivier Ghesquiere

everyone in Thank forward together getting our again quarter. you we and listening look Thank yeah Yeah. you. to next for for

Operator

conference. disconnect this a And your may you day. time. today's at your Thank participation. concludes great Have for This lines you

Textainer Group Holdings Limited (TGH+A) 12 May 212021 Q1 Earnings call transcript