Textainer Group Holdings Limited Common Shares

Thank you and welcome to TechStainer's fourth quarter 2022 earnings 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 with TechStainer.

Thank you. Certain statements made during this conference call may contain forward-looking statements in accordance with U.S. securities 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. We see the company's annual report on Form 20F for the year ended December 31st, 2021 filed with the Securities and Exchange Commission on March 17th, 2022, and going forward, any subsequent quarterly filing 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, and according to the 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 the 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 TechTainers' investor relations website, at investor.textainer.com. I would now like to turn the call over to Olivier Giscard, Textainer's President and Chief Executive Officer, for his opening comments.

Thank you, Tamara. Good morning, everyone, and thank you for joining us today. I will begin by reviewing the highlights of our fourth quarter and full year results, followed by additional 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. Our financial results for the full year 2022 reflects the tremendous growth achieved over the last two years. For the year, lease rental income increased by 8% to $810 million, driven by organic fleet growth from CAPEX deployed in the first half of the year and the full year impact from CAPEX investment in 2021. We additionally continue to benefit from an exceptional retail market, achieving gain on disposals of $77 million during the year, with adjusted EBITDA that increased by 7% to $746 million, and adjusted net income reaching $290 million, or $6.13 per diluted common share, all record level, resulting in an ROE of 18%. The last two years were a pivotal period for growth within the greater shipping industry, allowing us to expand our fleet and more importantly, improve the quality of our top line while greatly strengthening our balance sheet. In 2022, we added $786 billion of new containers assigned to very long-term leases at fair roll rates. As a result, the average remaining tenor across our entire lease portfolio reached 6.3 years at the end of the year, with 98% of those leases on fixed rate terms and financed lease contracts. As exceptional gain on disposal normalized to more sustainable levels, our long-term lease contracts will support high utilization and long-term profitability, keeping us in an ideal position to benefit from the next favorable market opportunities. In the meantime, the strong cash flow generation of the fleet continued to support our ability to return capital to shareholders. Through the full year, we repurchased 5.6 million common shares, representing just under 12% of total shares outstanding as at the beginning of the year, and we continue to view our share repurchase program as a key aspect of our capital allocation policy. In addition, I'm very pleased to announce that the Board has authorized a 20% increase to our quarterly cash dividends to common shareholders, increasing it from 25 cents per share to 30 cents per share. We continue to firmly believe in distributing a durable and consistent dividend for the foreseeable future, and this increase certainly reflects confidence in our business future. While the fourth quarter resulted in the much anticipated normalization of the retail market, several developments point to a return to greater predictability, and we feel optimistic that the container leasing market is now showing multiple positive signs of stabilization as we are entering into 2023. Cargo volumes and ocean freight rates on major trades are stabilizing and remain equal or higher than before COVID, as illustrated by the recent financial results announcement of major carriers. Boat congestion, which was a telltale indication of overheating shipping markets throughout the past two years, has now halved to about 7% of the world container ship fleet. Our container fleet utilization has remained very stable at an elevated level close to 99%. In fact, the net balance of container re-delivered has recently somewhat reduced as localized demand pre-Lunar New Year resulted in a mini cargo rush and depot pickup. Secondhand prices for older containers also appear to have stabilized and are further supported by the recent increase in new build asking prices. Indeed, major manufacturers faced with low order volumes, increase in material costs, and a stronger renminbi have placed several factories in extended shutdowns and have raised their asking price to $2,200 per CU. More generally, and while microeconomic concerns remain, the growth outlook appears to be improving with greater than expected resilience in Europe and North America, easing of inflationary pressure, and the anticipated recovery in China now that antivirus restrictions have been lifted. We expect CapEx opportunity will remain limited through the first half of the year, giving time for the market to absorb the current factory inventory that has remained stable at about 1.1 million teams. As previously emphasized, this represents an opportunity to shift our focus to cash flow allocations across capital return and deleveraging. We continue to keep our inventory at low level and plan to only deploy CAPEX when expected returns can be achieved, ultimately viewing CAPEX deployment as financial opportunity, not as an operational necessity. Container industry players continue to remain diligent as it pertains to capacity in the market. New orders placed at container factories have virtually stopped. Credit risk continues to be minimal as our customers continue to enjoy profitable results and strong balance sheets with low to low debt. Rising interest rates have continued to push up interest expense. However, market rate increases may be nearing their peak as inflation stagnates. In summary, 2022 was a tremendous record year for tech standards, achieving our highest ever level of revenue and income. Looking ahead to 2023, we expect stabilizing performance thanks to a core business model with contractual revenue and profitability protected by our long-term lease contracts and fixed-rate financing policy. While we wait for the market demand to turn, possibly with a return of the summer seasonality, we will continue to prioritize our capital allocation towards both strengthening our balance sheets and returning capital to our shareholders through ongoing share repurchase and dividend programs. 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.