TGH - Earnings call transcript Q4 2021 | Textainer Group Holdings Limited

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Operator

Thank you for standing by. And welcome to Textainer’s Fourth Quarter and Full Year 2021 Earnings conference calls. 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. the for to Textainer turn of Bakarian, now Relations Investor Group will call Tamara over Director I Holdings Limited.

Tamara Bakarian

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

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. to 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

Olivier Ghesquiere

for will the today some Michael the then provided finish I'll year financial quarter to go by the fantastic I'll strong very results perspective Good of will detail, quarter, our for us open you, in Textainer's and question. and the call our over XXXX We're quarter then call. tremendous provide reviewing greater we results, everyone, year. for fourth a with and joining for full industry. begin your fourth earnings results which thank after you highlights Thank Tamara. which, afternoon a our on pleased

of ongoing than For the million, to EBITDA XX% income a strong fleet a our profitability reflecting by environment. in and lease million, completing XXXX, full-year with our Adjusted $XXX income $X.XX rental increase $XXX XX% to growth million, driven return to turnaround on increased net demand almost organic by tripled equity or share, for Adjusted XX% the more per diluted year. focus. $XXX

growth achieved fourth the continued in quarter, For rental income. we lease

and sales adjusted of income on containers. high inventory net was container the older $XX continued gain of million available lease to lack due somewhat Our for demand reduced as

sheet, we quarter, half additional while in the million million the further purchased This organic balance $XXX first secured continuing this During worth operational the container to profitability efficiencies. and customer commitment has us $XXX excess driving demand enabled deployed in that of overall performance to an strengthen sustain be further reflects very since and strong year. of and growth demonstrate durable to our have environment of

lease from and tenor of achieving next years long fixed the over rate favorable risk fixed continue several as reduced debt. benefit to expect results cyclicality We by the we and provided our stability rate

and ending the fleet at improved year, of we age the yield and maximized the year our XX.X%. During utilization

XX years new terms. CEU tenor with attractive an rate attractive an importantly, debt at of lease portfolio lengthened tenor rate containers. today out remain to and containers than These the In lease years. of very we for fixed of Just as maturity average leased six lease of new XXX,XXX remaining favorable average more our total, mostly in we terms excess almost

We XXX,XXX through future flows. containers, maturing remaining further useful with of the long-term cash locking leases extending thereby also extended tenor about the life in CEU average

the containers by XX not our while yield. while Over we by past close growing our to captured all our purchased our grow best only of months, average fleet XX% but our lessors, improving major its estimate profitability. have and This ability also to improving XX% that demonstrates customers agility serve we business

player the reached available TEUs, fleet our billion a basis at firmly achieve As disciplined the million establishing we second close and industry. result, at inventory lease CapEx remain Textainer confirmed mostly only when We focused of $X.X the the keeping opportunities, returns and on year largest total on $X in ended the as investing to right level.

and sustained the elevated above the CEU, prices looked and per retail approximately continues $X,XXX lines level to traditional low factory up anticipated manufacturers the to season was utilization, and high are as This $X,XXX prices. remains opportunities, support recently activity closures. Year, about well to in Lunar container moderated of production CEU prior their very per fill New favorable renewal historical to build Although lease new to

attractive term performance into we we the our market objectives. optimistic we're very look As remain on new focused and and fundamentals, about year, improved our long

port will demand. remain expect XXXX on container the the and further continue strained full to year We inland to spending consumer strong thereby due of supporting level restocking worldwide high infrastructure, logistic low through inventories. already put volume to and cargo continued This pressure

well expect their remain that new costs container We ensure our direct level, will hours demand. above high market adjust remain This prices low. to with operating as production utilization to historical manufacturers

share strong purchase normalized in lines containers when demand a We expect continue new XXXX, bigger more expect of lessor ships until And These containers delivered. organization, helping for operating outstanding for a from as will shipping reduced very we of new much be inverting across our net to moderates container secure high for shipping XXXX flow purchase. achieved to lines of will also Textainer, the of ensure year high as summary, new across historically from to level. performance cash tremendous with CapEx and expect majority term, generation and as the contract trend profitability And benefit our our to continue rent In favorable the risk finally, factors years historic accounting we many key flow near all the credit we for performance proud rates demand. was cash performance metrics. I'm come.

beyond, share the be shareholder capital will over fourth strategic the financial us continued give reinstated about I look color ongoing repurchase XXXX now results out will little strong the Michael significant year. financial a for call position turn dividend our in enable shareholder we who to cash at to more create our CapEx to and program. the will the to will strategic industry, As flow further value. and full quarter and and This you and achieved return through stability

Michael Chan

focus you, Thank will of I now Olivier. the our financial key results. drivers on

was $XX year-over-year, million an or as to million million income $XXX compared net XX% adjusted year million, XXX% $XX the an increase XXXX. or QX. QX to increase $XX million was $XXX of this income of adjusted For in net compares

for Our QX annualized adjusted ROE nearly was XXXX. just and over XX% XX%,

common QX. For of prior EPS EPS an compares XXXX. $X.XX $X.XX from per increase to a XXX% diluted in in QX. of $X.XX share from diluted the adjusted increase This an $X.XX share year common per XX% adjusted was $X.XX was in year a a QX

our the attractive positive from levels and of Our EPS strong the are purchase performance program. share impact result continued

and rental QX and driven $XX we reduction of fleet million, Partially $XXX income recognize XX% million expect to size a lease was lease from $XXX the fleet for-sale in million the net our $XXX result resale an prior benefits XX% million to an attractive $XXX Despite in rental $XXX QX days million compares still For million $XXX container owned million, by in number QX increase of decrease utilization This EBITDA year due by million, QX of QX given of container on high an largely was their a adjusted an the continue in increase adjusted QX. we inventory prior offset million quarter, from increase rates. limited renewals sale income QX. year to an of a EBITDA slight rates. in fewer increase from in QX. from from average to in containers next sold prices. was a as increase year. was investment extensions. was $X and increase containers the $X of as This rental of gain in lease

environment off hires. We limited QX levels with strong the QX expense available in expected minimal resale price own sales and direct $X for strong utilization million. continue container was with inventory consisted fleet

is expense to QX direct slightly forward. lower million million higher was the at utilization primarily approximate balance a continued This QX going debt container expense costs quarter to funding $XX driven inventory. higher increase maintenance interest remain We from million and QX and fleet driven growth. lower very attractive resulting was and $X remain was $XX handling of and expect remaining these of QX stable is QX, partially from interest offset primarily from these remained to depreciation to in debt in CapEx million, by to of expense, attractive by QX. $XX lower G&A at by flat expected expense expected effective for levels, due QX. expense opportunities, levels due rate limited resulting average to is an storage relatively increase compared

several of well pricing, the reliable optimized improved We terms, platform, debt attractive through financing of continue be positioned the course flexible very sourcing to and our and and over last years. the

on loan key reprise, $X.X as to completed amendment our investing warehouse a an is containers in vehicle facility, we find the continue term billion supports extend attractive opportunity. financing review During QX, and which our ability to and we

average during near effective X.X% debt our of expect QX. current interest remain to We level rate approximately of its

with coverage very a tenor an our begun or of environment interest address long-term XX% XXXX positioned have consistent average increase to also leases. rate our average with fixed tenor hedged fix We with in well of to debt the possible

in $XX.XX market to an of and price now purchased our purchase QX during share open respectively. XXX,XXX and share shares XXXX average were shares we stock per $XX.XX common and X.X the of full-year program, Turning Textainer million at

U.S. $XX As from as of our forward section XXXX and authorized advised taxpayers, share of XXXX. by Board page. dividends, distributions shares holders had on a XX% repurchased the Relations per tax for advisers dividend common declared with remaining announce on We're March that common as to of Please review the their may our approved return and of March dividend $X.XX of share with and our prior outstanding shareholders note, payable consistent end X, our to with million to pleased year, we of treated to our XX, but record common has Investor repurchases. program are available textainer.com be our consult the capital web currently a dividend the

as cash B cumulative Series a X.XX% preferred of A March our March has dividend addition, payable and on our also and record XX, XXXX. redeemable Board holders In on declared X, quarterly approved XXXX, X% to perpetual of Series preferred shares,

cash now Looking reserves. QX liquidity, inclusive of at and of customers with well-structured our and balance position and a cash rate the ended $XXX a bank million. with our yields, restricted our through attractive both improved standing. very We're quality on remain tenors balance of with we maintaining focused lease liquidity portfolio dramatically and enhanced healthy cash credit pleased sheet also longer sheet fixed much adequate facilities We with

to Our continue accretive capital to sheet share to buybacks. through dividends strong balance while returns increasing CapEx, growth provides shareholders flexibility organic through the and us with support

all prepared for of We very Operator, for are tremendous remarks. QX, Textainer. during with questions. our relentlessly your pleased line capital. the you creating allocation This concludes performance efficient shareholder through a open are strong we please Thank year In on time concluded today. closing, which our for focused value

Operator

[Operator Instructions].

is The Michael first KBW. from from Brown question

Michael Brown

really always of about I the and versus right, inflationary environment? fleet think Can defensively or diem inflationary business steel And other elements a and the is values. being things with through Street. with business positioned higher your could large an I've of rate in be risks higher how like in just walk the inflation relatively market. of thought And environment per mind a Main Street Wall lie, resale the some positive inflation to your top of you as it So when do of sectors boxes, for where a more

Olivier Ghesquiere

very say must fairly Mike. I And about it. indeed It's really question, relaxed current a we're

lease asset very base. always is the a on good there, more benefit kind is contracts earlier our As because of And we repriced fully case, a economic those for or won't very we rates. of on detail will from you or from companies leasing Michael matching high that portfolio long-term go of speak And bit financing our in our a that of interest looking hedged our it's we that a But cycle. want really real to meaning hedging explain point inflated of being financing. a in little depreciated closely a through very to trying inflation on, portfolio. lease that let trying definitely have disposing these benefit movement to gain in bit we little revalues at potential containers. and view, against But are maybe rate to for as equipment maybe the match about later I'll terms more comes clear it mentioned on. immediately the interest maturity And when probably inflation protect Michael, ourselves are well in as we're how of there sudden be sales we substantial and in

Michael Chan

Mike. Olivier. Thanks, Yes. Hi,

that them match towards into of our fixed always rates we've also look rate rates, well portfolio. know, lease fixing our as and debt and to you fixed locking locking As floating

I'm locked that fixed -- increasing rates. We've XX% against report that. got to the our potentially road. coming in So saw We probably about happy buffered debt down of environment

So with rates debt locking derivatives, and as of tenured locked in as part well. longer fixed-rate these it we

report long-term fixed the over portfolio that X of years, tenors leases too. that to average our go in happy well linked rate on this with the of for fixed really So

year, So done. what largely potentially changes rates as this buffered we've changes, these be upward start by will those those fluctuating impact the of increasing

we're in protection to So very have happy place. that

Michael Brown

a here. Yes. well higher rate Great. Well, positioned certainly environment for

for shipping interested what to quite of us But -- return decline? it So from customers And end do your demand the be And goods. there. expected seeming a the ultimately environment gets I expect you comments to hearing XXXX. to tight to it's remain hear have ball. what what demand is normal? causes through a mean, of When fact I'd Olivier, outside really crystal I on ultimately you're you the don't to obviously, then strong this recession, heard like and a that

Olivier Ghesquiere

that answer Yes. No, but ball, Mike, I to crystal I'll try anyway. had question wish I the

is cargo all think the was it demand moment the speak it tremendously of what a compared but the historically, continuation at is is to causing any high. to at customers in running incremental of general. the level the this demand disruption. they're will the from from I infrastructure such Essentially, demand see XX%. environment. ensure That's to we increase remains that under And kind of estimate further forecasting pressure. will kind we the anywhere continue a addition not range cargo that certainly It's high that X% year, hear that customers all current to to range And

So environment capacity with adding my is ships really are the we there. fully And year. it's not is will view problem really can an problem most The congestion where because fully containers tremendously be are utilized, And that easily in to present logistics inland add short capacity notice. it's are that remain for coming this solved by difficult a utilized. much very of on

could story have workforce the all stage consumption in moderate latest from this numbers. up by are the more that And consumers soon. was that all joining But on. the consumption short, you long I so come and at it's would think buying will warehouses. new are more really if containers. ever, potentially only shipped seen And being moderates. build Yes, that we've can't signs that drivers goods ever driven normalization our not You Inflation today truck

of a emerge for the there worldwide. inflation, congestion Suez of like the with ever are at I present we've adding around lots the can't from have that other bigger It's mean asking normalize COVID keep of further events of labor. to variant picture increases. supply. no world secret a where that with on We're completely here movement not only at really not to mind have starting elements disruption. pay the labor the potential Those that mentioning We're situation we congestion risk disruption. kind causing new and was think I Canal to I is by and do the seen also more in look we sheltered

put also view take also system service bit maximum And point that little would this a delivery when fleet, will But in And sell view. potentially is additional market. into opinion normalize, that going up. will the We of take is will if we I bit environmental that of very time from ships those shipping they lines which lines those So optimize The get of reduce will will come fleet that it to ships try for also kind being at ships. are sell pressure high entire the fuel possibly where and meaning don't capacity and for kind that of And will a coming is additional quite slower. XXXX. on in that ships their will that environment And those costs main ships their to requirement and of and their very XXXX an flood of force, favorable shipping say a are seeing shipping we're and to can much running emission. they to reasons a is The probably normalize. demand that the regulation picks remain think put additional containers. inflation mean really in really our will to lines when new ships secondly, we

mean short-term so And their slower. those have ships sailing is emissions bit little far, have essentially to they only the reduce a to

we potentially continued normalization we disruption we for enter then demand year, additional lot into those in an the a picture, service. have but a have resumption environment containers ships And of big year. think as for So with coming a next starting

Michael Brown

That's question. right. color lot That more for in here. of Sneak complicated was one a a helpful

picked your fourth in nicely. up as CapEx moderated So share quarter, activity your repurchase the

about normalize the and look of it you As into talked CapEx. bit in a for of expectation to you just terms 'XX, kind

we then share So how have pace should off rise repurchases much you And the the year-to-date shares if and quarter have level? you of expect so, to of buying been fourth bought?

Olivier Ghesquiere

As we program in repurchase stated, a have we share place.

you So been logically can that assume has interrupted. not that,

we're to very on But as that on normalized commitments continue will a is growth, in your give positive to current concerned, like that as definitely but wider market, already which have far However, growth on quarter. we very, operations continue don't the we see situation I the to we signaled hand. that the And current to very monitor we it's closely. detail question, think we

priority But provided buybacks. situation. we an to are was us As price the achieve that our exceptional what environment. will we that return we truly allocation depending stated think our fair high dividend the more last can be And through definitely deploy always picture and environment CapEx then year. which year, our and will seen maturity big previously, we give capital in yields And on will our optimize potentially normal moderates where to have capital that shareholders means from would into CapEx we an to return this

Operator

Next Liam question is Riley. Burke B. from from

Liam Burke

discussion, of correct? half million investing that in the Is prepared year, that your would CapEx. you the first you said be $XXX about During

Michael Chan

more be said we specific, deals To amount. Yes. locked for that we've that already in

Liam Burke

and So Is CapEx. your maintenance normal that right? be would over above that

Olivier Ghesquiere

CapEx amount. That's didn't No. or differentiate between our total our We CapEx maintenance growth.

Liam Burke

a lot have in XXXX? old as on you've run And the front, amount had Is of a of activity significant your anticipated recharter contracts there off. recharter success

Olivier Ghesquiere

definitely. Yes,

definitely this a important and this discussed focus an we've and think past calls, very is I on ongoing focus.

trying leases to to environment feet of of extension. extend that can obviously to them repricing. repricing to will to have them we period, And those we their as maturing not delayed lease getting to have have that lease have through positive have front delay or those agree be yes, but until they we only containers, again environment. do the because As leases And at essentially we a rushing to potentially of contracts We're But extension rate rates you to as that know, shipping we a an a and but a deliver positive bit shipping choice means life remain are have continue time those this we lines on can renegotiate deadline, kind that position have current half sell of agree really then build-out the strong achieve we're they lines high it, until we certainly achieve they the few are to no to a ourselves lines we're that containers. in as year. little conclusion are are and continue where to come of shipping not some to to out trying closer the end a drag those them -- leases to knowing where that or have on and new are high, are we essentially that and more. pay passes expect forced been during in resale current and we prices And more

Liam Burke

market much since Okay. And have ago? very the the you X about a change seen competitor sale or quarter your of

Olivier Ghesquiere

to transaction? Are you the CAI referring

Liam Burke

Yes. Yes.

Olivier Ghesquiere

or responsibly. with hasn't And working But in market don't market the large understand their a we off merging are so the X that players change sense. on far. a strategy which Beacon, owner tremendously. No, new been X consolidated there think has remain CAI acting very the I can with of to now We Yes. players. any changed note is lot We that makes that approach is

trying hasn't in because sign continue to seen before, any market environment of most a seen grab already leases a anybody new mentioned are bit filled. haven't containers on ship But share, stable demand we've a very maturity reduced. new as though we for We little there. actually, normalization essentially lots even to The have of

of We in continue leases years. new to see concluded excess XX

view other slightly. the eased container of that much situation that pretty than stable off that's prices from So have a new point

Operator

The Value J. [Operator next is Mintzmyer question from from Edge. Instructions]. Investor's

J. Mintzmyer

XXX,XXX strong liners But to That break out volumes wanted keep container makes their in the containers. at resale The XX, age volumes. CEUs, look your in have market sense, and XXXX, you when age mean, expired bottom right? start And X, -- the I sales looking I'm resale see sold? right Slide the getting When on the we really record. sales massive in here was those a you when plummeted, clearly lowest I XXXX, that XXX,XXX another have So can up to down is that expect right? which at coming I Slide XXX,XXX

Olivier Ghesquiere

the can Well, potentially with value customers containers. situation containers for in holding noticed that's delay as in very to we very, the on are they those of that and have their they as these hidden really, those where containers and you something kind them. long forces fleet mentioned, contract because to them want cheap And important, returning are return we J. them until we're a essentially as to

So I packaged containers and We're those of think doing would all get back. we to get and can doing back. everything we're we containers love incentive sorts try and deals, to those

essentially that to high the in XX to time congestion will take and continue And spread containers with to around continuation world, fair face utilization XX months. it's the going of they probably a back we're volumes. little think I in the to substantial getting say rate over difficulty those

the I our the unless positive -- market that the very the estimate think also prices remains that that's changes. that remain is But high. it undersupplied resale and means the of that market market

those just about we possible, of gains. as get So containers time not those we're can some concerned, too but realize until question We fast it's having believe we're we could that. of redelivered as wish those and then as as worried realize a we far gains

very recent lines substantial. sell that older is are they to been there them, mentioned the means already sales shipping on the have when value, sale the they a on than portion we whole more a a of that years months should is element XX been a potential which that have I that why maybe is those means but returned containers year we're think other really of containers all that X essentially probably are is And a XXX,XXX, gain that old. that the certainly, potentially lot And ago, gain I I actually residual or containers. have lower containers sell containers. the because is important delaying. about even I not mean mean higher we talking X that and

J. Mintzmyer

lot be CapEx was on X why new those definitely legacy billion $X closely, of a contracts. selling both normalized basically at year, able you'll or -- to in CapEx, we're a the It's it Yes. watching rolling and looks years' do I'm Last you potential. That's like guys. for hoping which of ones worth great and you also X had job

You this mentioned year. May How or the that far that $XXX or you so like far committed does $XXX be million? like through far would year? that take million how into that Is out June

Olivier Ghesquiere

year? to first Yes. of it it's take It's the say any stage, to It's event I May kind deliveries half. we trend the here reason in of is trend believe and continue containers -- those that on said of the that the full yes, this at there's would not the at that probably the fair for and But pickup will through us depending containers. happen your say, delivery may does terms those question of I pace. think same trying the next that to continues guess no

J. Mintzmyer

made next me it easy for it still question. my Yes,

-- you and arbitrage? on in any share one recently and potential shares just really a preferred something but play in low as like issued But X% there at market that range, trade final accelerated is free cash flow share whatever do as really do your attractive equity, $XXX want your a same multiples, the return preferred use. to at for Now time, equity the you've you repurchase preferred million or million, to any XX%. say, $XXX appetite an around the Is another common low

Olivier Ghesquiere

we're in Michael, preferred. But I and maybe point immediate I'll you to in say to Yes. At this our this. let We would structured. time, see the at J, the -- on is way on chime looking Michael with this. more sheet happy we want very an balance opportunities. don't on keep I raise speak need think maybe

Michael Chan

of it. CapEx we we we which needs And trading probably take certainly plan, you're flow how fact still it amount have, And buyback our have understand the Yes. that free that, at that see to the as J, And you're care right healthy Having like. that now, also the to at -- the a in of really leading works. we can looking ourselves. preferred we execute shares portion of said are math the equity cash certainly on then tremendous value where do invest we of where

have use that flows well we do just cash we are from with cash enough -- handle buyback Especially to as as towards we levels like lot. can in shareholders, a returning dividends capital generate a where that at So to do lot excess have CapEx do now, more program that we operations we we that in.

Operator

the question-and-answer conference over like Olivier session. would This remarks. to for to closing any back I turn concludes the

Olivier Ghesquiere

much us today. again. to Well, progress next forward I to thank the everyone our call. for time Thanks listen you And, updating yes, during look the on very taking to

Operator

today's This concludes conference call.

You and participating, for you pleasant day. may have disconnect your lines. a Thank

Textainer Group Holdings Limited (TGH+A) 11 Feb 222021 Q4 Earnings call transcript