Textainer Group Holdings Limited (TGH)

TGH 
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Textainer Group Holdings Limited (TGH)

Q1 2010 Earnings Call

May 5, 2010 11:00 a.m. ET

Executives

Phil Brewer - EVP

John Maccarone - President & CEO

Ernest Furtado - SVP & CFO

Analysts

Bob Napoli - Piper Jaffray

Rich Shane - Jefferies & Company

James Ellman - Seacliff

Jordan Heimowitz - Philadelphia Financial

Presentation

Operator

Hello and welcome to the Textainer Group Holdings Limited First Quarter 2010 Earnings Call. There will be an opportunity for you to ask questions at the end of today's presentation. (Operator Instructions). For your information, this conference call is being recorded. I would now like to turn the conference over to Phil Brewer, Executive Vice President. Please go ahead.

Phil Brewer

Thank you, and welcome to our first quarter 2010 earnings conference call. Joining me on this morning's call are John Maccarone, President and Chief Executive Officer, Ernie Furtado, Senior Vice President and Chief Financial Officer, and Robert Pederson, Executive Vice President.

Before I turn the call over to John and Ernie, I would like to point out that this conference call contains forward-looking statements within the meaning of U.S. securities laws. These statements involve risks and uncertainties, are only predictions, and may differ materially from actual future results, events or results. It is possible that the Company's future financial performance may differ from expectations due to a variety of factors.

Any forward-looking statements made during this call are based on certain current assumptions and analysis made by the Company in light of its experience and current perception of historical trends, conditions, expected future developments, and other factors it currently believes are appropriate. Any such statements are not a guarantee of future performance and actual results or developments may differ from those projected.

Finally, the Company's views, estimates, plans, and outlook as described within this call may change subsequent to this discussion. The Company is under no obligation to modify or update any or all of the statements that are made herein despite any subsequent changes the Company may make in its views, estimates, plans or outlook for the future. For a discussion of such risks and uncertainties, see the Risk Factors included in the Company's quarterly reports on Form 20-F for the year ended December 31st, 2009 filed with the Securities and Exchange Commission on March 19th, March 17th, 2009.

I would also like to point out that during this call we will discuss non-GAAP financial measures. These non-GAAP 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 the Company's May 5th, 2010 press release.

I would now like to turn the call over to John.

John Maccarone

Thank you. I'd like to turn your attention to slide number three, and welcome to our first quarter 2010 earnings conference call. I'll begin today's call by reviewing Textainer's first quarter 2010 highlights. The current marketing environment and our strategic focus, and then turn the call over to Ernie to discuss our financials and quarterly dividend and finally Phil will give summary of our recent transactions as well as information on the container sale market, and we'll then open it up for questions.

Turning to slide 4, after capitalizing on several accretive market transactions last year combined with improving industry fundamentals, Textainer achieved solid results in the first quarter of 2010. Specifically included in our highlights from the first quarter, we generated net income attributable common shareholders of $24.2 million or $0.50 per diluted common share for the first quarter.

Recorded net income attributable to common shareholders excluding unrealized losses or gains on interest rates loss net of $25.5 million or $0.52 per common diluted share. We declared first quarter dividend of $0.24 per share representing an increase of 4.3% from our previous quarter re pay up, and the fourth increase declared by Textainer's are IPO in October of 2007.

During this time, Textainer's has declared cumulative of dividends of $2.48 per common share since our IPO in October of '07. Increased fleet utilization to an average of 90.1% for the first quarter versus an average of 86.4% for the fourth quarter of last year.

Current utilization as of the 30th of April was 94.9% which is an improvement of 6.1% from the weekend in December 31st, 2009. And finally we strengthened our future growth prospects by ordering more than 70,000 TEU of new containers for delivery in the first half of 2010 representing over $150 million of capital expenditures.

Next week, we're finalizing our high end production which looks to be about 20,000 TEU. So through July, we will have close to 90,000 TEU of new production being delivered.

Turning to slide five, some comments about the market outlook. Market conditions continue to improve following a decline in container trade of nearly 10% in 2009. [Clargens], the consultancy has recently revised this projected increase in container volumes for 2010 from a gain of 5.5% to the gain of 8.8% while Alphaliner, another consultancy is even more optimistic with expected volume growth in excess of 10% for the current year as demand for Asian exports picks up.

In addition to this positive forecast, Lloyd' list has reported that idle vessel capacity at 7.5% of the fleet dropped below 9% for the first time since February of 2009. Additionally, the use of super slow steaming has becoming increasingly common on longer trade routes, which requires 5% to 7% more containers carrying the same amount of cargo. And while container manufacturers have resumed production, they are only operating more shift as they continue to experience difficulties in restoring capacity after losing the majority of their skilled laborers during the long shutdown period from the end of 2009 that ended in 2009.

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