Textainer Group Holdings Limited (TGH)

TGH 
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Textainer Group Holdings Limited (TGH)

Q1 2008 Earnings Call

May 07, 2008 2:00 pm ET

Management

John Maccarone - President and Chief Executive Officer

Ernie Furtado - Senior Vice President and Chief Financial Officer

Philip Brewer - Executive Vice President

Analysts

Justin Yagerman - Wachovia Services

Bob Napoli – Piper Jaffray

Greg Lewis – Credit Suisse

Richard Shane - Jefferies & Co

Presentation

Operator

Welcome to the Textainer Group Holdings Limited’s first quarter results conference call. (Operator Instructions) I would now like to turn the conference over to Philip Brewer, Executive Vice President.

Philip Brewer

We are here to discuss Textainer’s first quarter 2008 results that we reported on May 5, 2008. Joining us on this morning’s call are John Maccarone, President and Chief Executive Officer and Ernie Furtado Senior Vice President and Chief Financial Officer.

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 US securities laws. These statements involve risks and uncertainties that are only predictions and may differ materially from actual future events of 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 that currently believed 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 with 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 discussion of such risks and uncertainties, see the risk factors included in the company’s annual report form 20-F filed with SEC on March 28, 2008.

In addition during this conference call we will refer to EBITDA, net income excluding unrealized losses on interest rate swaps net and net income per diluted common share excluding unrealized losses on interest rates swap net which are not financial measures calculated in accordance with GAAP.

We believe that EBITDA may be a useful performance measure that is widely used within our industry. We also believe that net income excluding unrealized losses on interest rate swaps net and net income per diluted common share excluding unrealized losses on interest rates swaps net are useful in evaluating our operating performance because both are non cash, non operating items.

EBITDA, net income excluding unrealized losses on interest rates loss net and net income per diluted common share excluding unrealized losses on interest rates swaps net however should not be considered as alternatives to net income, income from operations or any other GAAP performance measures or as alternatives to cash flows from operating activities as measures of liquidity.

Reconciliations of net income to EBITDA, net income to net income excluding unrealized losses on interest rate swaps net and net income per diluted common share excluding unrealized losses on interest rate swaps net can be found in the company’s May 5, 2008 press release and the company’s form 6-K filed with the SEC on May 5 2008.

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

John Maccarone

Thank you for participating in Textainer’s first quarter 2008 earnings call. We had an excellent first quarter in all phases of our business; resale, new container long term leases and finance lease originations and depot container lease outs, especially in Asia but also in the USA. Utilization averaged 93%, capital expenditures 52,500 TEU of new productions for the owned and managed fleets was ordered for delivery through May comprising about $105 million of CapEx. Additionally, 1,900 refrigerated containers comprising about $32 million of CapEx for the owned and managed fleets was ordered for delivery through July.

Our total budget for 2008 was $267 million. This $137 million committed to date is about 50% of the total in less than half of the year, so we are ahead of plan so far. Originations of long-term leases were more than 41,000 TEU, more than 10,000 TEU of finance leases. We sold 9,000 trading units and 15,000 units from our fleet. Our resale segments earned more than $5 million in the first quarter, which is more than it has earned in any entire year except for 2007. For our military business, we received the NDTA quality award for 2007. We’ve also had a very good demand for containers out of the USA.

We are especially pleased about our financing and Phil Brewer will give us an update on that in a few minutes. First-quarter net income of $22.50 million, excluding unrealized losses on interest rate swaps net, is a 29% increase over the first quarter of 2007 and net income per diluted common share, excluding unrealized losses on interest rate swaps net, is $0.47 a share. The dividend paid in the first quarter of 2008 was $0.21 a share, an increase of $0.01 or 5% over the prior quarter. Our next dividend will be $0.22 a share, another 5% increase.

Our goal is to pay out about 50% of net income in dividends, which we believe profitably rewards our shareholders and still, enables us to achieve our capital expenditure and acquisition goals.

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