Earnings call transcript Q1 2023

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Operator

Thank you, and welcome to Textainer's First Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference call is being recorded.

I will now turn the call over to Tamara Bakarian, Director of Investor Relations with Textainer Group Holdings Limited. begin. may you Thank

Tamara Bakarian

may statements and in this laws. accordance and call company's after predictions involve Certain events change actual contain results. may as or These call described forward-looking risks The and only are statements with estimates, uncertainties, discussion. materially made you. from conference future plans during views, may statements differ outlook Thank this U.S. this securities within

results made. or under the is modify obligation see all report statements annual and no Exchange are those in XX, differ forward-looking subsequent year for any Form materially XXXX, for any statements. Commission forward, company the The filed Securities X-K or on that with on actual February to Please additional December information and XX-F that to company's going the filings factors the update Form on ended XXXX, from quarterly concerning XX, cause could

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

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

investor.textainer.com. the comments release call provided have today, release to accompany be found the slides can presentation Relations our with we at and Investor along on Finally, website Both earnings call. earnings today's also earnings the Textainer's on

and Chief for to now like Officer turn the Textainer's call Executive would President Olivier opening I to comments. over his Ghesquiere,

Olivier Ghesquiere

industry. for go our financial by greater additional first after with begin earnings will Thank quarter followed our reviewing on which of you, happy We're call in joining your the the first the you for us today. Tamara. morning, very by results Michael, I over XXXX will thank open quarter Good detail, everyone, results. then questions. and results, we our will perspective highlight

industry. being the consolidation year taking place despite slower and remain the continues the strong in phase this utilization Our healthy the to traditional very season of

adjusted share. start quarter, income has or per million lower diluted through the the the For cargo of $X.XX despite market overall stable net The year $XX was remained volumes.

remain production be New investment strong. mentioned, and fleet container continues but muted, to utilization as

Container at and QX in markets. the and a of mostly cash fleet was that secondary leases. lease level The container income spite resilience historical focused to generation renewal our quarter strong, delever. slightly in of relationships. prices continues billing capital in-turn [turn-ins] age to continues exceptional be our sales attributed disposing rental can an to profitable stability stands longstanding customer of This testament on in ability two strong were drive remain fewer shareholders to to return demonstrate to our of the $XXX days the billion XX.X%. above which Thanks and maturing the rate, remain to proactive utilization successful

for remain We to elevated expect continue to this of the duration year. utilization

QX decrease by quarter lower last gain and sales on was average driven from lower $XX prices. million, a volume

impact or attributed strategically rates This X.X% implemented previous policy, quarter. the outcome since mitigate quarter. pleased versus interest still of A deleveraging, While were normalized average expense interest hedging volatility. a helping largely down can that has they Further, incrementally resale we're been last drive XXXX, and which interest or rate on offset total increase be at gradually increased sustainable favorable more interest a by to only report to the with long-term effective even have remained attractive X% to to prices stable throughout margins. rising

of or of with efficient driving value. optimize return investment the generating flow the Our attention opportunities opportunities cash whenever allocation and the present strong aim shareholder towards where strategy value capitalizing investment arise in involves free limited to they creation on climate profitable our remains remain

total common of shares million To year. that X% of the we of report beginning shares quarter, to outstanding end, we're X.X as repurchase pleased representing this the this

We has of intrinsic beneficial cyclical as continue shareholder. performance to positioned to and value enhance value long-term to industry a program for itself long-term for extremely the Textainer shipping consistent our view the to business, strategically nature navigating our deliver as long-term accretive buyback specialty finance shareholders.

to fluctuation, we needed favorable provide financially capitalize also adapting customers. demonstrating and This slower we're responsive opportunistic understanding the approach us and during enables nimble on By to arrives, opportunity resilience by trends market market ensuring when able our markets. liquidity that to much remain to

for of second continued of size half current year. market Our stability optimism the the outlooks reflects and

industry rates increase lowered we're first now While experience more and months, ocean rates recent a continued normalization with the than shipping freight in in in the witnessing cargo ocean year. freight

containers approaches, summer in or stocking are preparation leasing. containers as time shipping up to rate lines that positioning that Utilization of retain occurs season the in As are inventory increase cargo. sufficient during as year. lines expired supported hold in the turn to expected onto for accommodate themselves also liners returning to the opting containers are this shipping traditional Further

present ones alternatives. more expensive New

As a old returning sales containers. are result, lines age shipping primarily

remain the Meanwhile, has market, for levels. which Chinese following to demand essential in production. opportunity $X,XXX attractiveness lease from our XX% outs the of our recon above elevated closed as resilience depot existing for new for readjust of per second stability offering the CEU reinforcing by very for two absence a comparison the resides of and container helps Inventory, further supply new the fleet. added available orders possible of resale to Container pricing, welcome mostly support level of resurgence This maintain of economy provides and production This Asia. container the reinforces well years discipline given prices factories as at container sufficient

quarter world inventory remained represents which and of the owned last shipping about by the has lines X majority at are stable X% factory million about of from Current TEU, fleet.

back-to-back container to optimally our Our orders, avoid managed. focusing opportunistic of and minimal strategy remains remains containers ensuring inventory on speculative new purchases, and

continue and summer In shipping prospect meantime, on resilience model, we business ahead, generation cash rate we our containers shareholders the in including opportunistic the will stability during committed confident hiring market deleveraging. the for our gradual onto intend volumes Looking durable In potential anticipate strong fixed our we're by return and of the followed financing. months. conclusion, to additional revenue showcase quarter, rise maintain and will that XXXX second focusing in the

We making value performance driven intrinsic transition past And the our a even condition to for market robust anticipate as primary pandemic stable operating delivering capital our and continue at cycle. maintaining allocation, on aimed balance shareholders. be sheet long-term prudent growth investment focus,

the turn over financial color now who'll Michael, a little quarter. give our to will I for the about you more call results

Michael Chan

quarter, million, income expected everyone. included profitable by on is as Hello in focus decrease will CapEx two Thank QX QX was our financial QX. This and mostly a strategy limited gain from on from result impact now a $XX opportunities. you, attrition sales the our due disciplined results. normalizing driven Olivier. days fleet of adjusted I net to fewer current and

diluted long highlight Having QX a gain is anticipated the million that durations fleet compared as XXXX. record and QX. was rental that, $X.XX million said a income on reliable well much that performance $XXX lease in has very quarter contract adjusted lease about today's and while XXXX, from by our to rental in stream common per of years. been decline leases important of averaging is of in recent our earnings six supported attractive of on first sales. normalizing XX% a share driven an It of was supported fixed to showed performance $XXX QX levels rate durable by by resilient income

last from two attrition only last X% levels the control at for quarter over fleet highlighted XX.X%. and ins of the currently our average quarters adjusting deployment long-term rental turn CapEx from stable several stability When during which income QX fewer days XX.X% of of due quarter revenue mostly consisting to limited age first firm with by contracts these lease Even containers. is in decreased and sales the levels by of utilization,

last XX QX decrease a levels. It's at gain million, attractive historically the sale on still quarter. XX% was from

quarter As mentioned prices have but secondary reduced XXXX of last the from levels peak at since stabilized. start have container

to sold America. slightly construction in were there winter season North in fewer QX impacting due demand Europe the and Additionally, containers

quarter relatively the X maintenance expense, stable in of expense. due for on an Looking forward, spends the remainder expect previous partially year. to to of million lower increase we dark QX inhaling the storage by gain by sale offset container from $XX decrease million remain

QX due to quarter direct slightly current to through expect expense $XX last increased the fear quarter. in container was expense million, from year. days depreciation the We two million decrease $X a

due Depreciation benefits G&A to generally XXXX. expense fleet higher of expense QX is remain QX each and with attrition million inflationary in start of expected line while to through which low. decrease compensation slightly the expenses relatively from at of increases, to occur increase the year. impact expected including costs, $XX flat remains CapEx G&A

and partially deleveraging offset interest QX decreased QX. of by $XXX our QX Average The reduced QX of two outstanding days. on from portion from the increased to million, during debt rates X by average lower due fewer million interest debt. the debt unhedged of was market million benefit $XX by expense

effective rate tender to fixed tenure coverage fixed XX% average is an consistent long-term or leases. QX hedged with rate increase debt Our the of interest X% during X.X%, a was average minor from of average QX, fixed with our

million repurchase September of $XX.XX commitment The share commencing common enhance to remaining under our million share. repurchase the XX.X and of demonstrating approximately existing repurchased share million repurchase per of repurchase have we program authority returns. program totaled we $XX XX% Turning average to XXXX, shares QX our QX. our shares now in of at as X.X program, end share our or effectively price shareholder manage an Since during

and common record June on June board payable declared per pleased announce of Xnd. We're share cash holders approved to our XXth dividend has as $X.XX of to that a of

perpetual a and on dividend also of preferred payable board our to Series June addition, has series B cash holders In XXth record declared Xnd. for as preferred both of our quarterly shares June and A approved

value and our share Our further be to allocation our of dividend significant policy to in continue component drive shareholder focus key repurchase investors. to a capital programs

comes We active as remain our consistent it to share common repurchase share expect our to programs. and dividend and

of levels life the addition term very cycle fixed benefited at from long Looking years. well the lease extensions the over of on X.X equipment significant now quality leases, last sheet, our we attractive balance have and asset rate strong of

life lease young fleet. the remaining flows, XX% Our portfolio cash high provides X.X-year-old long-term of covering fixed depreciable our nearly of

flow with driving well normalization. the performance generation sale, cash volatility expected first financial the our on some progress and cycle we shipping current value of this mark demonstrates remain closing, our of resale in the quarter In with insulated attributed that our margins predictability through strategic and despite again contracts, these exception ongoing Impressively, with discipline provide platform, fluctuating financing market lease the from the protect resilience profit fixed which hedge associated risks long-term be market can or and focus cyclicality. conditions. durability interest rate on along primary This financial to our quarter

new for potential We for are the the summer investment optimistic opportunities. approaching attractive and months

to However, intend we in while certainly in optimize interest best continuing remain our cap shareholders. by allocation of to the CapEx executing disciplined long-term

please your This prepared you all questions. Operator concludes our for time remarks. for line open Thank today.

Operator

question comes [Operator Instructions] KBW. from the Our Mike line first Brown of with

Mike Brown

when the of crystal once such a just about the growth the of I could for think So demand to your again? with healthy Olivia, you growth to could really level if path containers I fleet re-engagement here. see to the attrition the to to some thoughts that wanted of hear market break with would Like demand love ball start start you had in market we met in of out here. be how high equilibrium

Olivier Ghesquiere

mentioned. high-level as No, you question very that's

fact at now probably where inventories. of uneconomical the were phase with Remember, of the produce huge the like we've the it's to to them because into factories containers. don't like efficiently two and that the supply, were essentially cycle there's the almost think, million to we're the downsizing came and Chinese same And very, quantities have first their were the up two time, lines essentially and in years fleet we US And with very we import very production very of it's XX with then factory. I they I fantastic years at closed tariff go little those absolutely from low numbers that into to had shipping cycle COVID in a back the very, TU enough small orders. actually about for years. a space And XXXX

healthy those the of and here helps of coming very shipping as the profitably a combination redelivering, are a very are rebalancing we new then containers kind really have place old supply of containers. selling on back, container new that we lines taking still the and the And to industry, market secondary no like market. So it's which consolidation old

to I when think part I bit back? question the gas. a demand And trickier come little your is second think of really that's does

I we explain lot rationally for industry quarters. not can supplied think terms the of of containers past the supply four that the and have demand realistically very to a container, in we and it

So at last increase season may we're The we history But resume a question. guide, the in kind may point. not demand it We for cargo it's expect to the if cargo still summer any are could be pattern. a ourselves we of and some this like growth seeing that itself year quarter, another think you demand, different probably kind expect we huge to is it demand. year all a increased going are for back show to likely be some the of will coming where demand major know, XXXX see given that there. uncertainties But that start is

Mike Brown

about slide XX, bit wanted the there. for Thanks those Great. ask all little we, thoughts, dynamics at Okay. Olivier. looking a I to If just of

containers you roughly seen that, up of are particular leases a they, so are ins? essentially or So to rates it generally rates your look are Those rate. like turn Why rental those XXXX, looks not in so, to it attractive XXX,XXX know, pick Is closer those because expired when still portfolio their, about leases. you know, leases? expired And XXX,XXX maybe set that it I like or the are looks at then expire. have on

from turn start do on or should if actually how that's up? your rate rise? to to ins to any sales So, about utilization should And think anticipate the your vintage the start that we you those turn volumes ins case, thoughts pick

Olivier Ghesquiere

coming at the because you, moment. have rightly, that chart containers are look a we sales you to lifecycle are that that on actually the age as interesting are few it's container back out those listen, point No, and quite at leads, containers

selling However, not mentioning levels market, we're rates. secondary profitable impacting still them utilization at because on they're as the I was

opportunities you this we're for not there profitable you have top replacing we CapEx know, investing small not to, us know, why know, containers containers. to CapEx, the new is aren't in that because, with or attrition new they're revenue those our So very line because you dedicate, sufficiently and

why revenue. continue containers that is those you we to come that back. So small see in fully will attrition And expect that

And not going control. that They're for the under back significantly we expect or that They an at them past few rate. very accelerated know, back disposal It remainder not They're sell coming fleet much year. very of come stable. over hasn't is you the pending up and, change months. we the gone is to

done been younger fleet, you not we that, know, demonstrates those as terms. utilization coming next into you first forward all, the containers that their fewer so maturing year, that renewing end life. sales really our of making far. at of Looking containers see the can are, are effective well, we normal you we've have at on have think that of acceptable I age the And at very we that those renew rate or also And can sure focused those sales age to know, we're containers

cheaper an still that was that's container you in at re-deliver be as as lines leases new containers prices comments, to level, is remaining going on above the fleet. extend earlier old shipping mentioning position to are And we know, a are we for as have ideal and alternative, continue to long prepared level take a those I their which containers new in than to historical my much

Mike Brown

just and the the, for could little quick wanted into provided. expense slip read I about in question Okay, sounds down just a maybe Michael, you to that's to about great. like over you up kind million expenses? the I direct the I going or, of Michael. Anything be ask at. quarter appreciate was And quarter. more continue on bit will a the G&A level it it that one about actually then your add quarter guidance quarter-over-quarter, to expense container was know, to It

So for the drove then just decrease G&A what curious operating increase and which -- direct for expenses.

Olivier Ghesquiere

normal much pretty changes That's there Mike.

that controlled are the affects affect changes, expense, you at If direct pretty components or what contain that turn-in. look that

mentioned level as pretty turn-ins, a area a the It a so bit up storage coming container direct agent Liam, have a quickly. sales that control get little boxes happy over we may very how a there it's those pretty turn-in, they in little expenses level, bit are are component But controlled be might boxes, we is but with will taper all expense sold so there, there. but in comments, gradually pretty as is our small changes So they'll earlier move up going. nominal directionally

have ongoing there's them, of QX, that out normal year. is many some employer comp G&A consistent QX typically whole for levels during think, costs smaller that typically happens pretty during happen cap maximize and things too are you These remainder G&A it's in the what but year, and during going payroll whereby in you'll and line, benefits ongoing for if increases and the Not the costs taxes be G&A pretty seasonal there the changes the level I look purposes. actually. your be to at our should stable,

Operator

next with line B. question the Riley comes Liam Our from of Burke Securities.

Liam Burke

there'll half or see how on probably beginning demand volume months? potential of and ‘XX the XX a in container, the Does more shipping Olivier, ships next a be online, physical coming effect container into that you have second meaningful ‘XX. container

Olivier Ghesquiere

to question, almost us, it up. major demand. it bringing be for I previous container a the I mentioned in for that's according thanks Yes, driver to going mean,

all If doing already ships. to of will bit ships and certain you those those slower. little on ways a they're coming way and And routes lines use ships essentially the in ships look we're definitely find those by adding seeing utilize is the shipping at optimize it

need more to the And efficient containers just service. you mathematically, ships if slower, those to you same going are operate sail

that in being life may containers, make demand capacity the it result harder, nothing it's competition shipping that less container intensify because in much towards the coming to and view but demand may very not line they ships all shipping their we're the for when have for of than able to lines So more additional there's and ship going for there. customers satisfy hate those is

those containers make going is when they're they enough to cargo on ship So available. have to sure that cargo move to the

Liam Burke

or Michael, Great. your not cost either debt the that And is you was it's debt fixed debt? higher paid presuming I'm the hedged,

Michael Chan

is higher that. delivering some debt, target some is Liam, but are It's regular component cost definitely. a that we which advertising we that combination, of fixed that, Yes, yes, our certainly unheeded,

a two. combination the So of

Liam Burke

you stock how that repurchases? Now, balance versus the do

Michael Chan

look unhedged our allocation de-leveraging is way repurchases to also key the we from that definitely anticipation we want the want will that a keep if you is it's method of that approach, as capital know. And future look certain of and we But portion to one our appear. standpoints, want two capital to at available. always do. we opportunities We at we really Liam, debt, the certainly retain returning So are dry beneficial said which important eventually portion, of price power that, a maintain control shareholders. in CapEx level Having of what higher and to a that it's resources

but yield down, for at best debt time do do lever is them or capacity very them we to we'd down, always The deliver evolving expense terms that as draw that the line, best minimize that we company. quickly, in is interest keep them way we the to buying these in them form which we the if available down in Where power of lever back facilities. same the of

free it and in CapEx, buyback profitable three all opportunity. to and keep to the in a things balance that dividend to important share going or debt load, if addition lower so then way cash in our of a terms we're that So it's speak,

Operator

to remarks. time, [Operator I'd call Ghesquiere Instructions] the no back to like further for over Mr. questions. closing are turn this There At

Olivier Ghesquiere

and forward you Yeah. update everyone to you And us for thank today, the joining continue to on looking story. taxpayer

Operator

concludes today's teleconference. This you. Thank

have You may at Thank time. your this lines disconnect your day. participation and wonderful you for a

Textainer Group Holdings Limited (TGH+A) 2 May 232023 Q1 Earnings call transcript