Textainer Group Holdings Limited Common Shares

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 Heera, Investor Relations for Textainer Group Holdings Limited.

Thank you. Certain statements made during this conference call may contain forward-looking statements in accordance with U.S. securities laws. These statements involve risk 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. 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, 2020, filed with the Securities and Exchange Commission on March 18, 2021, 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 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 press release. Finally, along with our earnings release today, we have also provided slides that accompany our comments on today's call. Both the earnings release and the earnings call presentation can be found on Tech Senior's Investor Relations website at investor.techsenior.com. I would now like to turn the call over to Olivier Giscuier, Tech Senior's President and Chief Executive Officer, for his opening comments.

Olivier Giscuier Thank you, Ankit. Good afternoon, everyone, and thank you for joining us today for Tech Senior's first quarter 2021 earnings call. I'll begin by reviewing the highlights of our first 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 extremely pleased with our record first quarter results and revenue growth, which confirms our dramatic turnaround. This has been achieved through organic fleet growth, improved utilization on our base business, and optimized financing structure thanks to the effort of the entire TechSaner team over the past two years. For the quarter, our lease rental income was up 7% when adjusted for the fewer number of billing days and 16% higher than for the normal corresponding quarter last year. This represents a substantial increase for a business like ours consisting of more than 85% long-term leases. It also augurs well for continued positive momentum given the compounded effect of our current fleet growth and the future very long-term leases already secured for containers to be delivered in the coming months. In addition to revenue growth, we continue to reduce costs and enjoyed strong gains on sales, allowing us to report a record adjusted EBITDA, which increased 12% to $153 million. as well as a record adjusted net income, which increased 44% to $59 million. This adjusted net income represents $1.16 per diluted share and sets us on track to a great full year performance. Similarly, we achieved an annualized Q1 ROE of 18%. Container demand has remained elevated since last summer, driven by a prolonged surge in world trade. In response to high demand, we have invested heavily in organic growth and built up accretive quality revenue. During the second half of 2020 and first quarter of 2021, we added containers totaling $890 million and $580 million, respectively. As the market remained strong, we placed additional orders for $700 million of containers for delivery through July while focusing on back-to-back leases and longer tenures. This means that substantially all these containers are already on or committed to attractive long-term leases with levered IRR well into the mid-teens and Asia returns. Furthermore, the average tenure of leases concluded since the beginning of the year has further increased to 12 years. virtually guaranteeing that all these containers will be fully utilized until they reach their depreciated value and can potentially be extended or sold at a profit. Putting things into perspective, for the period of July 2020 through July 2021, we will have invested a total of $2.2 billion in new containers that will provide strong cash flows and attractive revenue for many years to come. This is a significant investment volume, representing 45% of our container asset value as of the beginning of this period, which will greatly contribute to our future profitability. At the same time, we continue to support our historically high utilization rate by successfully renewing expiring leases under long-term arrangements that guarantee most containers will remain on lease until they reach their sales age, further securing our stable future cash flows. While production volumes of new containers have increased substantially to meet demand, inventory levels at factories remain very low, especially as we approach a traditional peak season of the year, while container prices have remained stable at about $3,500 to $3,600 per CU since earlier this year. Our utilization rate averaged 99.6% during the quarter, and currently stands at 99.7% on a fleet that reached another important milestone at 4 million TU at the end of April. We continue to experience minimal level of container re-delivery and we continue to focus on opportunity to renew and extend expiring leases in a very favorable environment. These lease renewals have contributed and will continue to contribute to our revenue growth and more importantly, are being structured under long-term arrangements that guarantee the containers will remain on lease until they reach disposal age. The extra-long duration of our recent leases, both on brand-new containers and lease renewal, will lock in the cash generated by a significant portion of our fleet through most or all of its remaining economic life. This will provide a strong and stable revenue stream for many years to come. In addition to our strong operating performance, we also continue to further strengthen our financial position. So far this year, we have issued two fixed rate ABS, one for $550 million that closed in February and another for $651 million that closed in April. The combined average interest rate of these ABS was very attractive at 2.03%. We also recently announced a successful issuance of $150 million in perpetual preference shares with a cumulative quarterly dividend of 7%. This issuance provides a new and diversified source of funding at an attractive price. Combined with the leverage potential of our existing debt facilities, these additional resources will ensure that we can continue to participate in the current exceptional market while optimizing or low blended cost of capital. Finally, we're pleased to announce that we repurchased a total of 546,000 shares of our common stock during the first quarter and that on May 1st, our board authorized a 50 million increase to our buyback program. As we look into the remainder of this year, we're optimistic about the momentum of our business and strong market fundamentals. We expect the economy to continue to strongly perform thanks to the government incentive programs and the full reopening of the North American and European economies. We expect container demand to remain elevated through the rest of the year, boosted by high trade volumes and restocking of current very low inventories, and likely to be further amplified by the traditional peak season of the summer months. In summary, I'm extremely proud in both the financial and strategic performance of our business. We plan to continue our disciplined approach to our fleet growth, investing selectively in the most attractive long-term opportunities, and remain committed to enhancing our financial performance and delivering long-term value to our shareholders. I will now turn the call over to Michael, who will give you a little more color about our financial results for the first quarter.