Earnings call transcript Q2 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Thank you, and welcome to Textainer's Second Quarter 2023 Earnings Conference Call. [Operator Instructions].

I now turn the conference over to Tamara Bakarian Investor Relations of Textainer Group Holdings Limited.

Tamara Bakarian

Thank you. Certain statements made during this conference call may contain forward-looking statements in accordance with U.S. laws. securities risks actual only future involve differ and uncertainties from materially events and statements predictions are may These or results. estimates, change views, this company's plans as outlook The described call may after discussion. this and within under is statements all made. any are company modify or no The that update or to obligation

Form Please company's and quarterly Commission Exchange on in on XX, XXXX, annual for Form year subsequent for the X-K and see December the XX, concerning forward-looking the to on could Securities forward, information the going filings any actual ended statements. cause those XXXX, differ report factors XX-F filed additional with February from materially that results

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

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

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

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

Olivier Ghesquiere

on for in thank financial open will your industry. Thank highlights our begin perspective after us by followed Michael call Tamara. of results, over you reviewing will detail, go results our morning, you, the questions. everyone, today. which Good additional the and by the joining then for I will greater second we quarter

contracted levels. the to to revenue benefits long-term XXXX our We earnings are results, demonstrate our utilization very and strong continue happy of with which

at with rental income million $X.XX For or the per income share $XX resilient and was million. quarter, net second lease $XXX adjusted

as XX%. relationships strong has rate well actions. both, results and from container continued nearly maturing leases, to reduction This very Our our success customer top testament at a turn-ins renewing support of remaining as our our in continued a our firm line, utilization to proactive

the policy despite current our interest active financing to well landscape, long-term a costs hedges of rate and remain thanks strategy. Additionally, interest under control, deleveraging

for but on Gain the slightly the disposed. sale on continued nicely to higher remain volumes back profitable quarter being of normalize,

in increase disparities demand The secondhand with and far demand price was in by but China, which by an marked level geographical slower our contrainers. for outlet Europe, in market is older largest

firming There of been recently stable where the profit For the observed on ocean million a and ongoing as now as on that our freight shipping the activity much rate ocean especially Transpacific cash second have size quarter, Overall, stronger. generated of generation. remained ship rates well the with quarter, through freight resale major optimism we significant higher hikes, routes. container ship utilization shipping August $X.X the routes initial up see loading the market is will growing further has

Our customers the need to inventory end cycle paving the of the holiday expect ahead the come in an for replenish also inventory destocking to to U.S. way season. winter to

anticipate As of year. up the volume in pick shipping line second half customers such, our the cargo to

build to XXX,XXX as industry for orders same the more situation fleet containers for market this positive containers COVID of provide likely to recent renewal For utilization minimal cycle. new the lows. shipping industry super from year. this situation parts, production view the all is recovering support at absorb as fleet demand elevated continues slightly the remain and the as so time, containers In $X,XXX for global remain stable this is for even as to We the this expect or its about lease new At CEU. effect, cargo we decrease volumes only of year far high per expensive remain TEUs

on production at of see for the XXX,XXX declined is TEU expected year and small above X the precommitted about some stage. has substantial of were million the orders the do TEU the which level quarter, We the but equipment special not to muted. third to CapEx and of year. quarter this remain of rest did long-term follow-up deployment well we start inventory from year the at leases end anticipate towards focused Factory in due the start to

long-term minimum. In container this ongoing report X.X% long-term opportunity our remain at flow present keeping To approach to limited, of common remains Our when climate, the attention year. new new to to of where strategy back-to-back allowing to we cash new shares this end, uncommitted our a to since for ensures to share profitable repurchased our focus opportunity investment in arise inventory readiness free securing shareholder remains container pivots levers, pleased reach value disciplined drive of have creation. investment our quarter, a CapEx common million beginning of outstanding the the us optimize that repurchased the value. total we're to This allocation efficient X.X

Board buyback view shareholders. million authorized our additional and has in We accretive $XXX long-term and our to buyback to as for are our that value continues program pleased an increase program very beneficial also to our report

future, very and recover the rates Container cargo and U.S. production X.X% and prices the over minimize stable Our weeks revised likewise manufacturing growth to have costs. has elevated started and X% $X,XXX at with which ocean upwards is per disciplined firm GDP stable The appears players utilization freight quarter stability to industry current and be will have projection moderating X.X%, starting to limited Fleet past volume is expected few shipping container to remained storage from for firm CEU. foreseeable optimism. up. spending was the remain the The for world see remains continued and its in industry market outlook the consumer inflation up to recently IMF second has

in to corresponding costs rental are on profits generate protected be of have firm well sale X of but continue containers all years' Our financing lease continues XX% Gain excess contracts. lease due of rate of revenue under worth NBV. Likewise, debt. to fixed normalized, controlled to the our with income

of calling large greenhouse issued will further gas have This in Looking and the order book be drive emission growth opportunities. targets, delivered Also, to quarters. fleet container coming require additional container out, recently shipping IMO for usage lines eventually will ships to ships a requiring to down XXXX a to upgrade fleets the to shipping amount slowing consumption, of require reduction larger their in container continue same reduce lines thereby transport emissions rotation fleet fuel by while cargo. XX%

Finally, cargo with financially be current robust to environment freight strong profitable rates. shipping volumes and sheet line remained despite and continue balance low mostly and

remaining the We operational anticipate future. of we objective exhibited are in strong continue the of performance value proud year, half effectively of landscape throughout focusing conclude, in our continued and creation. to To very the strategic demand share first the steadfast on the navigate we resilience

regular Our flow to portion to to dividends. rate focus allows allocation our higher interest strong share debt. generation the while optimize returns robust deleveraging cash us unhedged capital on through of buyback shareholders and our

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

Michael Chan

prior lease cash our supported rate Hello, very per Olivier. strength associated were which common you, relatively the well with everyone. We adjusted reliable that diluted of now share pleased financial QX was business line Thank fixed-rate focus financing. will I $X.XX, portfolio by model driven earnings our on fixed by illustrates that is long-tenured flows from QX the quarter. our This results. was in

net now was which and from $XXX rental a both QX steady QX. our currently $XXX slight was and to turn-ins, containers. average quarter. income The QX, a XX.X% which stands solid in was very of result at for is sales million, efforts remaining container our a control remains limit relatively for utilization ongoing rate QX still million QX of income decrease at level consist strong EPS older to and $XX pleased by share lease mostly This QX the XX.X%. level, enhanced age successful further only buyback million adjusted the compared program. We're

second We have see half to move our also year. further as in levels into a reduction of container the customers we begun off-hired from the

limited opportunities QX $X the to CapEx which end QX, lease large amount CapEx years, at income. recent will investment While of benefit compared new million the rental million in we of gain $XX able been QX. on was given sale been nominal some to QX have in deploy have

container [indiscernible]. provide well and in secondary reduced stable remained margin still relatively attractive above have slightly While QX, price they an

containers sales component be as such We $XX direct remains a million, remainder expected year. $XX the China. expense redelivered last container container $X expect with fleet to attrition of minimal. QX was expense million as The over line as direct to line in decrease result within rate gain quarter deployment quarter. to expense little through utilization will depreciation Depreciation logically follow decrease volumes a storage CapEx slightly last being markets XX.X% QX of expense stable lucrative from driven of is more rate. of available continue a the our the by with million on our was in utilization

QX. was expense, of through is We remained in QX manage the continuously flat expense $XX of relatively G&A with interest QX. expense to level XXXX. million G&A million of QX $XX which versus remain line remainder expected

debt was and building powder borrowing QX capacity. our dry Our of balance deleveraging and than QX lower average from continued the

fixed only with effective of average debt our was our long-term In margin, an rate slight during QX of coverage to an average lease Our decrease tender XX% interest flow average is rate fixed a or consistent X.XX% QX. X.XX%, conjunction our cash attractive protecting with tenor fixed the hedged from with leases.

[indiscernible] the average over long and reliability risk. representing of basis have exceptional rates Textainer's points short-term rate term, involves the increased interest nearly basis flows only about increased time model softer resilience the interest management by while XXX cash protecting points effective market same months. business XX and last Textainer's over interest the has rate its XX over by of

million our repurchase million at program XX.X X.X% during commencing share the of September common of Turning and of year. shares, Since end totaled enhance beginning as returns, to approximately outstanding shares million recently the the buyback through effectively manage of XXXX, $XXX Board, repurchased repurchased of shares we our now the commitment have million shares QX our authority repurchase program common of our of XX% We or the to X.X in approximately shareholder the QX $XXX year-to-date program. share demonstrating increase share and outstanding QX. available repurchase including announced by our end under authorization the common

common to on declared XX of $X.XX to of are our of has that September and Board announce September We pleased share, also cash a per payable approved as X. holders dividend

for B quarterly both as X. also Board a on addition, holders of September and Series preferred declared cash dividend Series In our shares perpetual our to September of XX and payable preferred A record approved

our Our serve program is cash by for capital business and progressive our exceptional Both shareholder value which returns from share repurchase important methods dividend. common as investors. funded our focused and sustainable to enhancing includes building allocation our and flows strategy, and

Moving to and common dividend forward, repurchase both we our share expect committed to programs. remain

flows cash strong nearly our high-quality our covering rate the life at portfolio Looking our fleet. depreciable asset the long-term sheet, balance X.X-year-old provides of of young quality XX% of lease fixed remaining

In of second closing, to continued durability the our quarter business. the and strength demonstrate

disciplined We months those sheet remain positioned continue to well investment shareholder long-term time remain to investment your the optimize today. remarks. as to our the focused opportunities available. potential CapEx balance This as all through creation for improve you committed allocation and of the quality approach, for when some maintaining well summer further We while concludes our for strategy. continuing a prepared a capital Thank become value

please line questions. open Operator, the for

Operator

[Operator Instructions].

question B. Riley first with comes from Our Securities. Burke Liam

Liam Burke

same? past renewals Olivier, expired leases rate been the Have rates supported renewing has during vis-a-vis than renewal what been, these that on rate? the favorable on at better or you quarter obvious rates. past getting mentioned very has you're or you it's rate is utilization the and the the which Or your was

Olivier Ghesquiere

you probably renewed depends those quarter. actual XXX,XXX on the we for those but average It a happened over their high on you rate The previous which rate, renewed, was had contracts, so big a of was all we it remember on contracts. quite were We those little mentioned, and below bit CEU as leads chunk that very contracts, we have that rates. rate it to enjoying the that at

at a for enjoying on in supports chunk overall, So a I we're leases. we that maturity take exchange little on discount level very that the large rate that a of long still a to average lease we're the think have fleet. did But

Liam Burke

relatively are I towards we Great. past the And potential rates you they keep well these terms Utilization you during were move rates along in staying the next bumping anticipate down mean, cycles. that in what of Do above can here half we're up a quarters through utilization, as cycle few a utilization cycle. high?

Olivier Ghesquiere

you Well, know, to have were and the continuing to sometimes. we new the at during been renewing also in Liam, contracts That's as on that to the those maturities, We But put that able XX and we taking rest then from only fairly leases, leases have enjoy the years way We operating cycle, good back super time. on the in certainly of looks long equipment. super such to shipping not of incentive able that the it a COVID XX, point this holding in to away leases is leases. existing renew level CEU. excess prices renew we place and of container for our of market new see shift environment container customers little the for remaining very see them lease. lines $X,XXX per at maturing And

those shipping pick last the lines the So there still the containers. few started because get support incentive all new mentioned And the to and has have replace as for in is weeks. on we with cargo the containers other the to demand those no hand, containers up, I

very end of until will year most that year. optimistic into rates our highly the and next we're So utilization the likely elevated remain

Operator

The Michael next question Brown with comes KBW. from

Unidentified Analyst

Eden the CapEx, for the balance have year wanted seen of also Brown. what just saw how authorization. possibly do remained you and think is I This elevated second buybacks the just around to here. But of CapEx the see related, from you've in thinking on half and capital delevering compared this how to buybacks half? allocation in Mike about first Hall you're

Olivier Ghesquiere

lines containers. as have don't where in have essentially, as CapEx necessarily they incentive, but existing on I earlier their substantially. situation an hold and to -- I a we Well, containers volumes enough comment, in We're to are mentioned increasing, rising shipping see cargo we mentioned, my still

see So would be half going to our we second the in not CapEx of view that the are a year. lot of

part always will market next of deploy CapEx a coming a the we expect year, an opportunities very the see in is keeping year. see in situation until the opportunity supply and the think fact, to And surprises to for quarters the see containers, some more readjust production past of view fleet very oversupplied lead in and this probably overall part meaning of times wait we dynamic during shipping probably our -- moderated, we that mentioned we and probably an that there very, the where market. deliver lot that super so until will attractive back year manufacturing and to matter industry positive. we limited cycle that as quickly. of cycle year. COVID which continue fleet well, before where as we in is the world probably with significant have to we normal see of the now much container to that in It's have contracting so end a last overall could next to As before situation. year And been be course, short to said is increase our of the more store, we're very or a mean demand probably the industry But tend X this But slightly of the volumes

Unidentified Analyst

the then Appreciate order market? coming Olivier, how lines on some look Great. to of this? could ships the year, have book if Can just large shipping second how you we Maybe expect out mentioned in that And half color. the be additional you the you affect us to quarters. give the the of thoughts XXXX, delivered a

Olivier Ghesquiere

ships. a they XX Yes. shipping and they're good slowing with typically XX X lines the I adding down and arriving They ships round very or reduce mean and improved or X gives consume are already doing ships Essentially, those importantly, indication reliability they stops ships They those X ships fuel. less routes to I are were have or what emissions. existing and the route. then on trip so ships. actually They're along operating they their their think started X where adding one adding COX us of

that because ordering essentially, of get So and are I of the terms clearer a cycle. try more needed us cargo containers containers ships super to or longer the COVID from and we to new their to means move And there a actually demand time. over environment that current in volumes that very are big because for believe they're think becoming not the regulation. the visible takes as it the desire going and But that containers translate which coming ships right to in it's means highly cargo I that and capacity, of recover effect have of been increased that the lines the from additional shipping may for down more ahead bit clearer supportive cycle, is And the elevated is little and more it see to those of slower, through for to be sailing constraints is and around, going are it ship demand. lot cargo if benefit new into XXX% service the for now we we're

Operator

[Operator over questions, would no closing turn Ghesquiere to I the to like comments. floor back there Olivier further Instructions]. Since are for

Olivier Ghesquiere

thank you, update we and forward And our performance continued us next joining Yes. on to certainly today, everyone, look quarter. for you the for

Operator

The for Thank attending conference today's now has concluded. presentation. you

day. and now a may lines, You your great disconnect have Goodbye.

Textainer Group Holdings Limited (TGH+A) 1 Aug 232023 Q2 Earnings call transcript