Textainer Group Holdings Limited Common Shares

Thank you for standing by and welcome to Textainer's fourth quarter and full year 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 Tamara Bakarian, Director of 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. security laws. 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. 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 20-F 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 6-K 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 press release. Finally, along with our earnings release today, we have also provided slides to accompany our comments on today's call. Both the earnings release and the earnings call presentation can be found on TechSinger's Investor Relations website at investor.textainer.com. I would now like to turn the call over to Olivier Descaires, Textainer's President and Chief Executive Officer, for his opening comments.

Thank you, Tamara. Good afternoon, everyone, and thank you for joining us today for Textainer's fourth quarter 2021 earnings call. I'll begin by reviewing the highlights of our fourth quarter and full year 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 very pleased with our strong results for the quarter, which provided a fantastic finish to a tremendous year. For the full year 2021, Leeds' rental income increased 25% to $751 million, driven by organic fleet growth in a strong demand environment. Adjusted EBITDA increased by 47% to $698 million, completing our turnaround and reflecting on our ongoing profitability focus. Adjusted net income more than tripled to $284 million, or $5.62 per diluted share, with a return on equity of almost 21% for the year. For the fourth quarter, we achieved continued growth in leased rental income. Our adjusted net income was $73 million as gain on sales of older containers reduced somewhat due to the lack of available inventory and continued high demand for leased containers. During the quarter, we purchased an additional $251 million worth of containers and have since secured further customer commitment in excess of $500 million to be deployed in the first half of this year. This very strong overall performance reflects the durable demand environment that has enabled us to sustain organic growth and strengthen our balance sheet while driving profitability and continuing to demonstrate further operational efficiencies. We expect to continue achieving favorable results over the next several years as we benefit from stability and reduce cyclicality risk provided by the long tenure of our fixed-rate lease and fixed-rate debt. During the year, we improved the age and yield of our fleet and maximized utilization, ending the year at 99.7%. Just as importantly, we lengthened the maturity of our lease portfolio and fixed-rate debt to an average remaining tenure of more than six years. In total, we leased out almost 700,000 CU of mostly new containers at very attractive lease terms. These terms remain attractive today with favorable rate and average lease tenure in excess of 12 years for new containers. We also extended about 300,000 CU of maturing long-term leases with average tenure extending through the remaining useful life of the containers, thereby further locking in future cash flows. Over the past 12 months, we estimate that we have captured close to 25% of all containers purchased by major lessors, growing our fleet by 15% while improving its average yield. This demonstrates not only our agility, but also our ability to best serve our customers and grow our business while improving profitability. As a result, Total CAPEX reached close to $2 billion and our fleet ended the year at 4.3 million TU, firmly establishing Textainer as the second largest player in the industry. We remain focused on investing only when we achieve the right returns and on the basis of mostly confirmed lead opportunities, keeping available inventory at discipline level. Although activity was sustained in the buildup to the Lunar New Year, new container prices have recently moderated to approximately $3,400 per CU as manufacturers looked to fill their production lines prior to the traditional low season and anticipated factory closures. This remains well above historical level of about $2,000 per CU and continues to support very favorable lease renewal opportunities, high utilization, and elevated retail prices. As we look into the new year, we're very optimistic about our improved performance and attractive market fundamentals, and we've remained focused on our long-term objectives. We expect cargo volume to remain strong through the full year 2022 due to continued worldwide high consumer spending and restocking of low-level inventories. This will continue to put pressure on the already strained inland logistic and port infrastructure thereby further supporting container demand. We expect utilization to remain high with new container prices well above the historical level as manufacturers adjust production hours to market demand. This will ensure that our direct operating costs remain low. We continue to expect more normalized demand for new containers until 2023 when new ships will be delivered and we also expect shipping lines to purchase a bigger share of new containers in the near term, inverting recent trend of lesser accounting for the majority of purchase. These factors will ensure net cash flow generation as our container CAPEX moderates from historic level. And finally, we expect much reduced credit risk as shipping lines continue to benefit from historically favorable performance with high contract rates and high demand. In summary, 2021 was a tremendous year for Textainer as we achieved outstanding performance across all our key operating metrics. I'm very proud of the strong performance across the organization, helping secure our profitability and cash flow for many years to come. As we look out at 2022 and beyond, our strategic position in the industry, strong cash flow, and financial stability will enable us to create significant shareholder value. This will be achieved through further strategic CAPEX and continued capital return to shareholder to the reinstated dividend and ongoing share repurchase program. I will now turn the call over to Michael, who will give you a little more color about our financial results for the fourth quarter and the full year. Thank you, Olivier.