Textainer Group Holdings Limited Common Shares

Thank you and welcome to Texaner's third quarter 2020 earnings conference call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question and answer session, and instructions will be provided at the time. As a reminder, today's conference call is being recorded. I'll now turn the call over to Ed Yoon, Investor Relations for Texaner Group Holdings Limited.

Thank you. Certain statements made during this conference call may contain forward-looking statements in accordance with U.S. securities law's These statements involve risks and uncertainties, are only predictions, and may differ materially from actual future events or results. The company's views, estimates, plans, and outlook as described within this call may change after this discussion, and the company is under no obligation to modify or update any or all statements that are made. Please see the company's annual report on Form 20F for the year ended December 31, 2019, filed with the Securities and Exchange Commission on March 30, 2020, and going forward, any subsequent quarterly filings on Form 6K for additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements. During this call, we will discuss non-GAAP financial measures. As such measures are not prepared in accordance with generally accepted accounting principles, a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures will be provided either on this conference call or can be found in today's earnings release. Finally, along with our earnings release today, we have also provided slides to accompany your comments on today's call. Both the earnings release and the earnings call presentation can be found on Stainer's Investor Relations website at Investor.TechStainer.com. I would now like to turn the call over to Olivier Giscard, TechStainer's President and Chief Executive Officer for his opening remarks.

Olivier Giscard Thank you, Ed. Good afternoon, everyone, and thank you for joining us today. I'll begin by reviewing the highlights of our third quarter results, and then I'll provide some perspective on the industry, Michael will then go over our financial results in greater detail, after which we will open the call for your questions. We're pleased with our solid performance in the third quarter, delivering improved lease rental income of $149 million, adjusted EBITDA of $119 million, and adjusted net income of $22 million. These results reflect the expected turnaround from the disciplined execution against a long-term strategic plan and a favorable market environment. We had a very active quarter that saw our customer pick up almost 400,000 TU of factory and depot containers, helping drive our utilization up to 97.7% as of today. These lease-outs were achieved at attractive terms, including improved lease rates, longer and staggered tenure, and Asia-focused returns. The full financial benefit of this activity will be reflected in our fourth quarter results. This positive performance is due to our preparedness and ability to execute rapidly and decisively in order to capitalize upon market opportunities that presented themselves in this past quarter. Not only did we activate a record number of containers, but we were also able to quickly secure additional production at attractive prices and with prompt delivery. We expect additional on-hires of depot and new units in the fourth quarter that will translate into further long-term growth and profitability improvements. The favorable market conditions stem from an increase in trade volume, notably in export from Asia into the U.S. and Europe. This has been driven by traditional holiday seasons spent on merchandise, personal protective equipment, furniture, home improvement goods, and computer equipment. In fact, trade growth has been amplified by a shift in consumer spending away from travel and services and into physical goods. The surge in imports contributed to port congestion and trucking capacity shortages, which in turn created a shortfall in containers returning to China, particularly for 40-foot high cubes. Since the beginning of the year, we've added $610 million of containers into our fleet, and project over $350 million of additional delivery during the fourth quarter, which will bring our total CAPEX for the year very close to $1 billion. All these containers are on leave or pre-committed under attractive leave terms. New container prices increased during the past few months from $2,100 per CU for orders placed in August to about $2,600 per CU for orders placed today. The price increase is primarily driven by demand, coupled with production capacity management from manufacturers. Resale container prices have also increased, benefiting from the overall market shortage and increase in new container prices, and remain high today. We are also pleased with the continued strong financial results reported by our customers. Shipping lines have indeed been capitalizing on the recent surge in volumes, strong freight rates, and lower operating costs. This strong financial performance has allowed carrier to shore up their balance sheet, and we continue to see timely collection against our receivables as demonstrated by our reserve reduction this quarter. Looking ahead, we expect steady earnings momentum and favorable market conditions to continue into the Lunar New Year, leading to continued improvement in our container utilization rate, revenues, and profits. While we remain cautiously optimistic with the outlook for 2021, significant uncertainties remain due to the unpredictable impact of a resurgence of COVID-19. Yet, our optimism is also based on the fact that even with the current surge in container on-hires, the overall container market is not oversupplied as shipping lines started this cycle with limited inventory and continue to show a strong preference for leasing over purchasing in order to renew containers reaching their normal retirement age. In closing, we're pleased with the direction of the business and ongoing execution of our strategic turnaround plan. We're seeing tangible results on a number of actions taken this year to strengthen our business, financial resources, and long-term outlook. In particular, since the beginning of the year, We lowered our borrowing costs with the successful issuance of nearly $1.3 billion in asset-backed financing. We invested over $56 million in share buybacks, and we invested over $610 million in containers delivered through the third quarter. We continue to be committed to delivering long-term value to our shareholders while maintaining a strong financial position to support the current and future growth of our customers. I will now turn the call over to Michael, who will give you a little more color about our financial results over the past quarter.