Hilliard C. Terry, III - Executive Vice President and Chief Financial Officer Philip K. Brewer - President and Chief Executive Officer

Josh Katzeff – Deutsche Bank Securities John R. Mims – FBR Capital Markets Donald D. McLee – Wells Fargo Securities Sal Vitale – Sterne, Agee & Leach, Inc. Doug R. Mewhirter – SunTrust Robinson Humphrey, Inc.

Welcome to the Textainer Group Holdings Limited Second Quarter 2013 Earnings Conference Call. My name is Ellen, and I will be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. I will now turn the call over to Hilliard Terry, Executive Vice President and Chief Financial Officer. Mr. Terry, you may begin? Hilliard C. Terry: Thank you, Ellen, and welcome to our 2013 second quarter earnings conference call. Joining me on this morning’s call are Philip Brewer, TGH President and Chief Executive Officer; and at the end of our prepared remarks, Robert Pedersen, TEM President and Chief Executive Officer will join us for the Q&A. Before I turn the call over to Phil, I would like to point out that this conference call contains forward-looking statements in accordance with U.S. Securities Laws. These statements involve risk and uncertainties are only predictions and may differ materially from the actual future events or results. 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. Please see the company’s annual report on Form 20-F for the year ended December 31, 2012 filed with the Securities and Exchange Commission on March 15, 2013, and 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. Also I would like to point out that 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 measure to the most directly comparable GAAP measure will be provided either on this conference call or can be found in today’s earnings press release. At this point, I would like to now turn the call over to Phil for any comments. Philip K. Brewer: Thank you, Hilliard. Welcome to Textainer’s second quarter 2013 earnings conference call. We are pleased with our second quarter performance. We had solid revenue growth, which resulted in a new quarterly record for Textainer. Net income growth was in line with revenue growth, and we saw double digit increase in adjusted EBITDA demonstrating strong cash flow. These increases are a direct result of the significant investments we’ve made in new containers, purchase leaseback transactions and purchases of managed containers. One year ago, we owned 60% of our fleet, today we own 74%. At 2.9 million TEU, our fleet is approximately 35% larger than the next largest lessor. We have benefited from the refinancing of our debt. Although, total debt was higher quarter-over-quarter, our interest expense declined due to our 34 basis point reduction in our average interest cost compared to the last quarter. Bad debt expense increased primarily due to a $1.8 million provision for the receivable of the regional shipping line, which declared bankruptcy. We are in the process of recovering our containers and expect us to fastly recover most units. The rapid deterioration of this shipping line caught most in the industry by surprise. Nevertheless, we are confident in our internal credit diligence, and on the whole we’ve seen improvements in DSO over the past year. We’ve also seen a significant decline in sales of trading containers. Both shipping lines now just hold the containers and purchase leaseback transactions instead of buying trading deals. Purchase-leaseback containers are considered in-fleet containers, and the sales are reflected in gain lost on sale of containers. We increased our dividend for the 14th consecutive quarter, continuing our record of having maintained or increased our dividend every quarter since going public. Utilization averaged 95.1% year-to-date, and is 94.3% currently. Utilization has remained relatively steady changing no more than 2% all year, and trending within 1% of its current level for the last 4.5 months. We saw an increase in container demand during June and July. In fact, during 10 of the 13 weeks of the seven quarter, we leased out more containers, and were turned in. Utilization did not change significantly, however, because during that same time we added more containers to our fleets than we disposed offsetting the increase in lease out. We expect a muted peak season, and that utilization will remain around its current level for the next quarter. Total CapEx for delivery in 2013 was $692 million year-to-date. Our fleet size has grown by almost 10% over the last year, approximately 90% of this amount was for our owned fleet, more than 80% of this new production is either already unleased or booked for pick-up mostly prior to the end of the third quarter. We continue to see compression of returns due to the high level of liquidity among container lessors, and the ease with which containers can be purchased at factories. The competition for every lease out opportunity is very strong. We are selective in the deals that we pursue, but are focused on growing in line with our market share. We expect these highly competitive market conditions to continue for the near-term. New container prices continue to decline, and today are approximately $2100 per CEU. Containers order per day can be delivered in less than one month. Used container prices have also declined and are approximately 10% below where they were one year ago. We do not expect either new or used container prices to strengthen over the near-term, and further declines are possible. We expect total container production in 2013 to be 15% to 20% below 2012. Containers lessors will likely purchase 50% or slightly more of this amount. The fourth quarter 2012 purchases by lessors intended for 2013 lease outs are included, purchases by lessors would exceed 50% of total production. Looking at the broader shipping industry, three factors which we see affecting container lessors are, one: excessive shipping line capacity increases. New container ship deliveries totaled 1.3 million TEU during the last 12 months, far offsetting the 427,000 TEU that was scrapped. Assuming a worldwide capacity of 16.8 million TEU today, the net capacity increase over the last 12 months was 5.3%. Newly revised figures for projected growth and trade are in the region of 4%, much less than the capacity increase. The ideal fleet today totaled 2.7% of total capacity. Second factor, falling freight rate. The average container freight rate at the PRC has fallen 18% year-to-year. Second quarter 2013 (inaudible) 55% below their level of second quarter 2012. The Yara has implemented earlier this year, has been largely unsuccessful raising rates for only short periods of time. The only positive news offsetting the decline in freight rates is that bunker prices are 9% year-to-year. Number three, slower than expected growth in the PRC. Economic growth in the PRC posted 7.7% during the first quarter and 7.4% is projected for 2013. June data indicates that PRC exports and imports have declined year-to-year, and the outlook for third quarter performance is uncertain. These factors point for the challenges faced by our customers, and the need for prudent investing by container lessors. After significant leasing company investment in new containers during the fourth quarter of last year, and the first quarter of this year, recent company CapEx declined during the second quarter. This decline partly explains the drop in new container prices, and the limited production of factories. Even assuming reduced CapEx, and a subdued peak season, we are well positioned with 82% of our fleet subject to long-term and financed leases, and continued opportunities to pursue purchase lease by transactions. Furthermore, we are excited about our new relationship with Trifleet and the opportunity it provides through expanding to the tank market. We are already working on several deals together. We expect third quarter performance to be similar to the second quarter with our strong liquidity and cash flow, Textainer is well prepared to take advantage of market developments in 2013. I will now turn the call over to Hilliard. Hilliard C. Terry: Thank you, Phil. Turning to the financials, we recorded a $130 million of total revenue, revenue grew 8% compared to the year ago period. The primary driver of our revenue growth was a 26% increase in lease rental income as a result of the increase in the size of our owned fleet when compared to last year. The increase in lease rental income was partially offset by a decrease in utilization of our owned fleet. This quarter’s revenues was also dampened by a lower management fees due to decrease in the size of our managed fleet given a number of managed fleet acquisitions in the past year, as well as a smaller level of acquisition fees and sales commissions. We also saw a large decrease in the sales of trading containers due to a smaller number of containers we were able to source and sell. The decrease was partially offset by an increase in the average sales proceeds. Gains on sales of containers decreased 6% due to a decrease in the average sales proceeds and offset by an increase in the volume of containers sold versus last year. Operating expenses were up 14% year-over-year, however a 3.5 percentage points of this increase was due to the increase in our provision for bad debt resulting from a customer declaring bankruptcy during the quarter. Excluding this one-time, operating expenses were up approximately 10%, and roughly in line with revenue growth. The primary driver of our OpEx growth was increased depreciation expenses, which is the largest component of total operating expenses. Also direct container expenses increased, the storage cost increased due to lower utilization rates in the quarter, coupled with the fact that we own a larger percentage of our total fleet versus the year go quarter. Depreciation expense was $34 million for the quarter, up $11 million or 48% year-over-year as a result of our larger owned fleet. During the first quarter, we increased the useful life of our non-refrigerated containers from 12 years to 13 years based on the shipping lines leasing containers for longer periods, and internal data showing the average age of containers at the time of disposal. This change resulted in approximately $7 million of lower deprecation expense for the quarter. A few additional points about deprecation expense, and as previously noted, our PLBs are becoming a source of trading containers for us, and in most cases we depreciate these containers over a short depreciation period, which results in higher depreciation expense initially. Additionally, older in-fleet units we sell are often fully depreciated, while they’re replaced by hard cost units with higher deprecation. Lastly, when compared to dry containers, higher percentage of our refrigerated container’s prices depreciated annually. As the percentage of refrigerated containers in our fleet increases, so does deprecation expense. If you look our quarterly deprecation expense as a percent of gross container asset value, it was approximately 3.8% this quarter. Over the past two years, our annualized quarterly depreciation has ranged between 3.5% to 4.5% of growth in container value. As we’ve stated previous quarters, depending on the mix of dry and reefer business going forward, and our new container prices, we expect depreciation to trend within this range. Our bad debt expense was $3 million, of which $1.8 million was related to a single customer as Bill mentioned earlier. In spite of the provision we recorded this quarter, we continue to believe the normalized run rate should remain within 0.5% to 1% of revenue on a longer term basis. Below the operating line, our interest expense line item $21 million for the quarter versus $19 million in the year ago quarter. The $2 million increase was primarily due to almost $800 million of additional debt used to fund the expansion of our fleet. Our debt balance increased 43% from Q2 of last year. However, our interest expense if you exclude the one-time write-off of unamortized debt costs as a result of recent refinancings was up only by 13% due to our ability to lower our company’s funding costs. Last quarter, I mentioned that we should be able to reduce our funding costs by 20 basis points to 30 basis points. In fact, our average effective interest rate, which include swaps is currently 3.84%, down 34 basis points compared to the first quarter while 145 basis points when compared to the year ago quarter. Rates have backed up a bit over the past few months, however we will continue to look for opportunities to further reduce our funding costs. The income taxes for the quarter were little over $2 million or roughly half that of the year ago quarter. Our effective tax rate varies from quarter to quarter due to discreet one-time items as a result, the effective tax rate recognized in the single quarter is not necessarily indicative of the effective tax rate for the full year. We do not expect our annual effective tax rate for 2013 to differ significantly from historical effective tax rate. Adjusted EBITDA of $106 million was up 15% year-over-year. This is a clear indication of our strong cash generation. Adjusted net income which excludes unrealized gains on interest rate swaps for the quarter was $46 million resulting in EPS of $0.80 per quarter. Adjusted EPS I should say of $0.80 for the quarter. We have increased our dividend $0.47 per share, while we continue to target a dividend level approximately 50% of adjusted net income. This payout is slightly higher at 59% and in line with the dividend level as a percentage of EBITDA over the past few quarters. Turning to the balance sheet as of June 30, our cash position was $93 million, total assets were $3.6 billion and our leverage ratio was 2.2:1. Thank you for you attention. And now I’d like to open the call up for questions. Ellen, can you inform the participants of the procedures for the Q&A?

Thank you. We will now begin the question-and-answer session. (Operator Instructions) Our first question comes from Justin Yagerman with Deutsche Bank. Please go ahead. Josh Katzeff – Deutsche Bank Securities: Hi, good morning. It’s actually Josh on for Justin. Philip K. Brewer: Good morning, Josh. How are you? Josh Katzeff – Deutsche Bank Securities: Good. I just want to jump right in to CapEx for the year and for the quarter. I guess with that $692 million, can you give us a sense of how much or I guess, maybe just the incremental since Q1. How much was sale leasebacks versus new containers? Hilliard C. Terry: Well, when I stated the number earlier, I mentioned that $692 million includes investments made in the fourth quarter towards a lift about last year for delivery in 2013. $198 million in new containers in 2012 for 2013 calls that with us, $494 million invested in new and used containers year-to-date. We don’t break it down further than that. Josh Katzeff – Deutsche Bank Securities: Okay. And I guess maybe, if you can give us the breakdown over the past quarter of drivers versus reefer, I assume that was dry. Hilliard C. Terry: We’re still maintaining the same we are buying about 20% reefer containers in the rest and dry and dry specials. Josh Katzeff – Deutsche Bank Securities: Okay. And I guess maybe, going forward for the rest of the year. I guess how should we think about your new tank JV and whether you expect to deploy some meaningful capital there or you make some dry versus reefer heading into kind of Q3 and Q4? Hilliard C. Terry: Well, with respect to the opportunity to invest in tanks with Trifleet while we’re very excited about the opportunity, I don’t think you’re going to see a meaningful amount of capital invested in tanks over this year relative to the amount of money that we’re investing in reefers and dry freight containers. We’re just getting started in that business, but we do think that that the opportunities going forward, after this year are going to be quite attractive. Josh Katzeff – Deutsche Bank Securities: And I guess maybe dry versus reefer mix later this year, are you guys still expecting to see decent reefer demand for new boxes? Hilliard C. Terry: Yes we are. Generally, the reefer season peaks in the fourth quarter and first quarter. So we should be in the build-up to the peak season. Josh Katzeff – Deutsche Bank Securities: Okay. And then, I guess, maybe switching basis a little bit. The $1.8 million charge to the bankrupt of lenders, should we expect you guys to be able to get any of that back, is that just a preliminary estimate or how should we think about that as maybe a permanent loss? Philip K. Brewer: Well, first I’ve noted that we’ve tried to be very conservative in the actions we take when we have a credit problem. When we notice that there was a problem here, clearly this company is still filed for bankruptcy, we reserved for the outstanding AR. With respect to the assets and you’re talking about getting it back, we do expect to recover most of the assets. In fact, we are already in the process of recovering our assets and are able to do so. But the amount that we’ve reserved is related to the accounts receivable. At this point, it’s uncertain whether we are going to be able to recover any or all of that. We have filed a claim with the court and we’ll just have to wait the outcome. Josh Katzeff – Deutsche Bank Securities: Okay, so you haven’t taken any write-down on the actual consumers. Philip K. Brewer: At the moment, no. Josh Katzeff – Deutsche Bank Securities: : Philip K. Brewer: As we’ve noted for the past couple of earnings calls, we have absolutely seen an increase in the sale leaseback activity among shipping lines and that continues. As I’ve said, when I get my opening remarks, we don’t see much in terms of trading business anymore, very limited supply of containers are simply being sold outright by the shipping lines. Generally, when they look to dispose the older containers in their fleet, they’ll enter into a purchase leaseback transaction and keep the containers for the next year or so, and then dispose the containers. We continue to see quite a bit of that activity. Philip K. Brewer: Maybe I could just add that, typically, we see fourth quarter being stronger for sale leasebacks than third quarter. Josh Katzeff – Deutsche Bank Securities: Got it, and just one more question before I turn it over. The pay out ratio, I guess, how do you guys think about that going forward, it’s now nearing 60% and I know you guys have talked about, I guess, historical payout ratios are bit below that, so maybe if you can provide some kind of guidance going forward, and would you expect that’s a trend? Robert D. Pedersen: Sure. We haven’t necessarily changed our target around the payout. It’s just as we kind of look longer term, while this is above the – in this particular quarter, above that target. Longer term, we think it’ll fall in line. Josh Katzeff – Deutsche Bank Securities: Okay. I appreciate it. Thank you.

Thank you.

The next question comes from the John Mims with FBR Capital Markets. Please go ahead John R. Mims – FBR Capital Markets: Thank you. Good morning, everybody.

Good morning.

Thanks, John. John R. Mims – FBR Capital Markets: So let me just start maybe just with the overall outlook in the next couple of quarters have been somewhat subdued. Looking longer term, is there anything other than just rebound in global trade trends that kind of hits the storing again or particularly if you look at the supply side are you starting to see some rationalization from container manufacturers that may kind of backstop the trends we’re seeing right now?

Well, if you look at what’s happening on the manufacturing side, manufacturing is down significantly this year. So one characteristic about our industry that’s remained true and continuous to remain true and continues to remain true is that the supply of container tends to regulate itself quite efficiently. We are at around 95% utilization and sometimes we lose fact of 95% utilization being a very attractive level of utilization only, because we went through a few years reutilization was in the 98%, 99% range. I don’t think anyone in the industry felt that that was sustainable forever that we would remain at that level of utilization. And you could certainly argue that, in fact, that was a problem, because it meant that at times we weren’t satisfying our customers’ needs providing containers. So what we see happening now is that the supply coming out of the factories has declined pretty significantly. Right now we are looking at expected production this year is probably $2 million to you to maybe $2.1 million utmost 2.2 million TEU, down significantly from last year’s production. And the industry is regulating itself again making sure that the supply of containers worldwide is appropriate for the demand. And I think that continues to be one of the most positive factors that we see in our industry and we certainly see no change in that. John R. Mims – FBR Capital Markets: Right. But if you – your comment that pickups your lead time was less than a month, it seems to be cutting at a little close for kind of what’s the comfortable range for the manufacturer or so. I mean, how much can they scale back from current levels without completely shutting down or are there some plants that are shutting down for the season, just kind of given where that 2100 level or below and in such short lead times? Philip K. Brewer: We have not seen any of our manufacturers shutdown yet, but I would venture to say that if there are not significant orders being placed in the next month by other shipping lines or leasing companies, I think it’s likely that some of the companies will shutdown some of the locations. John R. Mims – FBR Capital Markets: And is that a fairly permanent shutdown, I mean, is that a big decision or can they bring these things often online fairly easily if there is a pickup next year? Anthony C. Sowry: Yeah, it’s pretty easy. I mean they can shutdown, still keep some labor there that they can get going less than a ship, it is possible. I think that the bigger picture is there is really no global surplus of containers. We’re seeing a lot of new production activity right now, if there was a surplus of containers, we wouldn’t have been so busy the last two to three months. I think when you look at macroeconomic picture the trade needs Europe to improve and until that happens, we will be kind of in this more or less segment position, but when Europe does improve and the trade between Asia and Europe picks up with all those big vessels, there is going to be a huge fight in our business. And the question marks is, when is that going to happen? But we don’t know for sure, it’s certainly not going to happen in the next one or two quarters, but it is going to happen at some stage. And if we can kind of keep going at this pace here, we’re pretty satisfied. John R. Mims – FBR Capital Markets: Sure. But again on the manufacturing, are you seeing any evidence that people are still, I mean, they are still kind of a normal level of replacement and growth has slowed, or is the box fleet generally still getting older right now where there is still, to some degree that’s pent-up replacement demand that’s underneath kind of the bigger thing. Anthony C. Sowry: There is definitely a need for replacement going forward. But I think, Phil referred to the growth rate of 4% is just not enough to make a huge peak demand. There is one more issue, the vessel capacity that’s being added and only 2.7% vessel capacity laid off out of which none of these vessels are actually the larger vessel. Slight utilization is not as high as the shipping lines would like, but the lower slot utilization let’s say around 90% or maybe low 90%s will allow the shipping lines to move their empties back to the demand locations in a much more efficient manner. They’ve suddenly they were sailing 98%, 99% or even rolling cargo, then you’ve got to leave some empties behind and it creates an inefficiency where we have not seen quite frankly in more than a year. John R. Mims – FBR Capital Markets: Yeah, that’s helpful. So then, do you have a sense of kind of where that, the box slot ratio, is that shifted given this kind of load factor on the ships? I mean, is there…. Philip K. Brewer: I actually don’t know what it is right now, but it would definitely be lower than what we have seen in the past. And I would think it’s probably 1.7% and 1.8% right now, but I don’t have the exact number at this stage here. But it would have to be lower than what we have seen in the past. John R. Mims – FBR Capital Markets: Okay. That’s really helpful. And one last one maybe for Hilliard, then I’ll turn it back. When you look at the direct container expense and maybe, if you could remind me what all is in that, I know that’s in and I think that’s where the storage is but, up when you look at kind of a direct container expense per TEU, it’s up fairly significantly up as a percentage of revenue versus first quarter and last year. Can you make comments on storage of where you are in terms of having enough depot capacity for the fleet now, and how we should be modelling that over the next couple of quarters given kind of where we are in this environment? Hilliard C. Terry: Well, John, I think obviously, as utilization is down year-over-year or as it comes down, you will see higher storage and expenses of that’s what included in there. Obviously, to the extent that, I don’t think we are at a point now, where there is a concern, broadly speaking, in certain areas, there could be concerns around sort of depot space and things of that sort, but broadly speaking, we think we have a footprint in the depots necessary to handle the storage of containers for a temporary period of time. John R. Mims – FBR Capital Markets: Thank you. That’s helpful. But yeah, use this quarter kind of as the benchmark and go forward, but also on the utilization, that’s one of the question I had, if you are to slow the pace at which you grow the fleet in this environment, would you expect utilization to start to tick back up or do you think it will still continue to settle down kind of north of or south of 95%? I guess, it’s kind of running that trend now, but should we model 93%, 94% for the next couple of quarters?

Utilization, as I think I’ve noted in my opening remarks, has been very surprisingly stable over the course of this year. Yes, we are down slightly since the beginning of the year. But over the last almost five months, utilization has trended within a very narrow range. In fact, our utilization would be up or not for the fact that we are buying new containers. We happen to believe that today, container prices in the level where they are, run $2,100 or in the low $2,000 is going to be a price that looking back several years from now, we are going to say that was an attractive price to buy containers. So we are comfortable buying containers right now and if our utilization dropped slightly because of the new containers coming through our fleet, we are quite comfortable with that. We really don’t manage our fleet to obtain the highest utilization. I mean, if we did, we could give away the stock every time there was a rollover term lease and just to make sure the containers stay on lease. We don’t do that, while we manage our fleet to maximize the cash flow that we generate off the fleet. Right now we think it’s smart to continue to buy new containers, we think utilization is going to stay more or less around this level for the immediate near-term. Philip K. Brewer: And John just to add to my kind answer earlier. In addition when you have utilization come down, you have more handling expenses and more peer expenses also along with that. John R. Mims – FBR Capital Markets: Okay. That makes perfect sense. Thank you for all the color, and I’ll get back in the queue. Thanks. Philip K. Brewer: Thank you, John.

The next question comes from Michael Webber with Wells Fargo. Please go ahead. Donald D. McLee – Wells Fargo Securities: Hey, guys. This is Don McLee on for Michael Webber. Philip K. Brewer: Hi, Don. How are you? Good morning. Donald D. McLee – Wells Fargo Securities: Pretty good. Just to go back to Trifleet I guess what’s the attraction for tanks? Is it a less competitive market or you guys just want to diversify your assets? Philip K. Brewer: Well, certainly the diversification is part of the attraction that’s one of the container classes that we hadn’t been in. And we felt that it was a part of the industry that we wanted to get into, but as you may well be aware, it’s not quite same as directly you marketed to different lessees. And you also need to have some level of technical and operating expertise that we simply didn’t have in-house. And so for that reason we felt the best way to proceed would be to do it in conjunction with an experienced operator in the industry. And wondered also to share our views on investing and managing your fleet, and that’s where we found Trifleet. So it’s was a very attractive opportunity for us to gain exposer to new equipment side and to deploy additional capital in that area. Donald D. McLee – Wells Fargo Securities: Got it. That’s definitely. My second question is actually in reference to your CapEx. It looks like year-over-year your H1 CapEx has ticked up a bit despite the immediate outlook following the strong 2012. Is there any particular reason behind this higher CapEx? Philip K. Brewer: Well, keep in mind please; a part of the number does include investments that are made in the fourth quarter last year for 2013. We’ve invested quite heavily in the fourth quarter of the last three years. We certainly did it last year and in retrospect, we bought more equipment than it was required during the first quarter. We’re all aware that the demand for containers in the early part of this was not quite like that anybody had expected. We have seen an improvement in demand over the second quarter. But that coupled with the fact that as I’ve just said earlier, containers at this point is, we feel are very attractive investments and we’re interested buyer of containers at these levels. We think they’re going to generate strong cash flows for quite a long period of time. Donald D. McLee – Wells Fargo Securities: All right, thanks. That’s helpful. I’ll turn it over. Philip K. Brewer: Thank you.

The next question comes from Ken Hoexter with Bank of America. Please go ahead. Ken Scott Hoexter – Bank of America: Hi, great, good morning. So maybe, you can just talk about with utilization following you. Do you have steps that you can take to, I know you said it’s within 1%, but are there steps you can take the curtail cost here. I know these, you did say they were approximately in line, but it still is outpacing revenues and particularly given the increased storage and other costs, so on the direct container expenses. So other moves that you can make to maybe bring down that cost growth line? Philip K. Brewer: Well, no I think it really can kind of goes along sort of if you’re well, it’s a function of what goes on with utilization. So I wouldn’t say there is anything specifically on the direct container expense side that we can do. We are looking to sell more containers and you’ve seen sort of volumes pick up there, which sort of moves containers out and reduces storage expense from that standpoint. Anthony C. Sowry: They said just they always had this type of operating leverage where when utilization falls, some of your direct costs increase, it’s inevitable. Likewise, when you utilization increases, those some direct costs decrease, it’s always been a factors of this industry. As Hilliard mentioned, some of the things we are doing, we have a model that determines when we’d sell containers and the inputs to that model changed based on lease out opportunities, container sales prices et cetera et cetera and conditions like this we maybe selling more containers than we would otherwise and not incur the storage expense on those assets. Ken Scott Hoexter – Bank of America: And then just to clarify that for one step. When you say sell, is it to the liner company that they would then increase their ownership percentage or is this to third-party either less source or even just other usage and went as they move in with? Anthony C. Sowry: No. It’s generally not to other led source, nor to shipping, I agree it, generally sell our containers to third-party users outside of industry. Ken Scott Hoexter – Bank of America: Okay. And then just thinking back to the Analyst Day, I guess this has been a pretty – you ran over those with me kind of issues at the beginning of the call. A pretty quick change, I guess in maybe 2.5 months, what are your thoughts on the market now as you see it, do you continue to see this degradation in kind of that on the demand side or how are you looking at the market right now? Philip K. Brewer: Well, I think it’s important to keep in mind, that we know that, that the second quarter indeed has been stronger than the first quarter. Maybe we aren’t emphasizing that point enough, but it’s certainly been the case, as I noted it hasn’t been reflected in utilization per se, simply because we’ve been buying a lot of new containers that are coming into our fleet. We expect going into the third quarter, that we’ll continue to see demand for containers but we don’t expect to see a peak, the strong peak season as we might have seen in years past, we noted it will be more of a muted peak season. Anthony C. Sowry: So if, maybe I can just add I mean when we look at the new container sector, that has actually been a nice peak in demand and there have been while each individual deal has not been the size, we would like to see there have been many transactions out there. But the low container prices and relatively low spreads have facilitated to solve one of the questions we had earlier today about fleet renewal, the lines are seeing it very cheap to pick up a new container today. And it’s a window of opportunity while rates are at the level they are right now, get a brand new box and start a new cycle and that’s what we have seen. Clearly that has put a little bit pressure on the depot unit movement where we have not had has many lease outs there, as we have like and we have had an increase in redeliveries simply due to the fact that the lines are using this opportunity to get some fleet renewal. Ken Scott Hoexter – Bank of America: So just to understand your comment on inventory levels, you’re saying that the manufacturers do not have a lot of stored up inventory left to distribute or are you seeing because it seemed a couple of months ago, they were at record levels… Anthony C. Sowry: That’s correct … Ken Scott Hoexter – Bank of America: So what are you seeing… Anthony C. Sowry: That’s correct. And inventory and factories is up to about 1.2 million TEU and we believe it’s around 800,000 TEU now. So it has dropped considerably in the last month and a half. Ken Scott Hoexter – Bank of America: Okay. And what is that normally need to be to get on to normal buying distribution cycle?

Well, we think 800,000 TEU is probably two to three months consumption. So I mean, we would like to see it below 500,000, but doubt it’s going to come there as we enter the later part of the year. Ken Scott Hoexter – Bank of America: Okay. And last from me on the bankrupt customer, I mean, typically, you’ve recaptured the assets and let them out into the market. So your effective impact to your accounts receivable is presumably a lot less than what you have written off that was under the contract, am I understanding that process correctly? And then, when do you go ahead and make the move through this bankruptcy process to go ahead and recapture those assets and then begin that process of releasing them to the market? Philip K. Brewer: Well, the reserve was taken for the account for an outstanding AR balance with the lessee that declared bankruptcy, so we’ll make that clear. Second, we have already been recovering the assets. We’ve started that process sometime ago. Generally, that’s – we don’t wait, for example, the bankruptcy process to play its way out in court. Once we’ve determined that the lessee has defaulted, we aggressively seek to recover our assets. Ken Scott Hoexter – Bank of America: Right. So just to follow that, Phil, am I reading that right that you can then go ahead and release them and your effective AR deficiency is not as great as what just was under contract with that customer?

I’m not quite sure what you mean by that comment. Ken Scott Hoexter – Bank of America: Will you recapture the revenues, right?

Well, no because those are revenues that were already – we’d already reported those revenues because the containers were on lease to their shipping lines in the pervious month. That was the AR balance with that shipping line. Ken Scott Hoexter – Bank of America: That was the cash balance. Philip K. Brewer: Yes, yes. So we can’t recover that. You are correct though that once we recover the assets we can immediately put them back out on lease and start generating revenue on those assets, so that is correct. But with respect to the amount that we reserved again that’s a historical AR balance. Now I will note as I think I said earlier that we have made a claim to the court that is hearing the bankruptcy proceedings. I have no idea at this point how much we maybe able to recover as a result of that claim. Our claim is quite have been an excess of the amount of the reserve because of the other things that we’ve also claimed as cost, associated costs. Ken Scott Hoexter – Bank of America: Now I fully understand. I that you were – that was the future contract if they were on a, let’s say a, term contract that provider overdue. But thanks for the color. I appreciate the time. Philip K. Brewer: No, I’ m sorry. Yeah okay, now I see. I think we are on the same page now we both understand but it was not a future expected payment.

Yep. Thank you sir. Philip K. Brewer: Thank you.

The next question comes from Art Hatfield with Raymond James. Please go ahead.

Good morning this is (inaudible) for Art.

:

Good. You’ve been quite active in the credit market and rightly so, but as we look at your debt profile, as it stands today what further opportunities do you see that are available for you to effectively lower your interest rate even further and then as a follow on to that, did we see the full effective of these transactions fit in the second quarter or should we see a flow-through in the third quarter?

So we do have that fixed rate that is callable, and as although, the market has backed up a bit, if I look at sort of where we are able to finance it today, it’s still as lower than where those bonds are what we are paying currently. So assuming the market sort of calm down, there could be some more opportunities. But I think the refinancings that we’ve done has been reflected in the reduction in the average interest rate that I mentioned earlier. So from Q1 to Q2, you saw a 34 basis point decrease. I think back in Q1, if you’d look at that sequentially, there is probably about a 20 basis to 24 basis decrease in funding prospects. And then obviously, I stated that year-over-year, we are down a 145 basis points, so those numbers are already baked in.

Okay. I think recently, you had mentioned something that you could refinance for rates close to about 300 basis points, is that still the case?

Yeah, I feel the market has backed up from there. I think it’s probably in the high 3s at this point.

Okay. The other question is on the tank container market, if you could – first of all, congrats on the deal, but if you could, just kind of touch on some of the dynamics that play in that market, maybe talk about the returns relative to the other car type or other container types. And then also where new tank prices have been and where they are trending?

Derrick, I think it’s important we point out that we’re new participants in the tank container market. So if we would make general observations about the tank container market, I think they’ll have to be understood to be the point of view of somebody who is recently getting involved in the industry. I can see us investing in tanks and potentially between now and the end of the year, several million, perhaps $10 million or more dollars, but something in that order of magnitude into the level of CapEx that we have. You can see that that’s not at the movement a material amount of CapEx. So I just want to keep that in perspective. Now, moving to some of your more specific questions, tank prices at the moment as we understand it are at what are considered if not historical low prices relative to where tank prices have been over the past five years. So buying tanks today at today’s prices may consider to be very attractive prices.

Okay. And seasonally what are the stronger times of year for the tank market? Philip K. Brewer: Again, we’re just starting our investment in tanks. May be we could answer that question better a year from now when we’ve had a little bit more exposure to tanks. The whole purpose for this joint venture is to be doing business with people who understand the market far better then we do so that we can learn more about the tank container market.

Okay, fair enough. I was just trying to get if reefers are more heavy in 4Q and 1Q, will this kind of fill in the gap for other, may be weaker periods for dry containers or reefers. But I understood. My last question is at an Analyst Day, you had mentioned that you are seeing some cash on cash returns for dry containers, both in the single and double-digit levels. As that looks today or are you seeing more in the single-digit range or in the double-digit range? Anthony C. Sowry: That’s an easy question, the answer is yes.

Fair enough. All right. Thanks for the time, guys. Philip K. Brewer: Thank you. Thanks, sir.

The next question comes from Sal Vitale with Stern Agee. Please go ahead. Sal Vitale – Sterne, Agee & Leach, Inc.: Good morning, gentlemen. Philip K. Brewer: Hi, Sal. Sal Vitale – Sterne, Agee & Leach, Inc.: Just wanted to touch on one of the points you made earlier. So you said that your utilization would be higher, it’s not for the recent CapEx that you’ve done, which I guess implies that some of the CapEx that you’ve recently done is not generating revenue or it hasn’t been picked up I should say at this point. Can you give us a sense of what percentage or what portion or maybe in dollars, how much of your CapEx is uncommitted at this point? I should say uncommitted and/or not picked up yet? Philip K. Brewer: We have actually more than half of our CapEx is already on lease earning revenue. Our unallocated portion is not more than 18% and besides that, we have about 28% that are in the pipeline booked out the majority of that probably 75% going out during the third quarter. Sal Vitale – Sterne, Agee & Leach, Inc.: Okay. Now when you say the 18%, that’s the 18% of the 692, which includes the portion you did in 4Q or just of the first half amount? Philip K. Brewer: I have actually separated the new production in isolation. That amount equals about $100 million. Sal Vitale – Sterne, Agee & Leach, Inc.: Okay. That $100 million that’s the amount that’s not yet picked up? Philip K. Brewer: So that’s actually a pretty low number, compared to where we have been in the past and the reason for that is the short lead times it manufactures, we haven’t had to place as many speculative orders as we’ve done in the past, because the lead times in only three, four weeks. Sal Vitale – Sterne, Agee & Leach, Inc.: Okay. I’m sorry, go ahead. Philip K. Brewer: So as we close deals, we can replenish inventory pretty easily. So we have not been, typically I’ve mentioned in the past that we used to maintain between $150 million to $250 million of speculative inventory, we’re below those numbers now. Sal Vitale – Sterne, Agee & Leach, Inc.: Okay. So that makes sense. Statically you hold $150 million to $250 million and you’re below that, so if I ask you what your open inventory is now relative to say three months ago, does it pretty much mirror that decline in the overall industry inventory at the factories of $1.2 million that declined to about $800,000. The order of the magnitude pretty much behaved the same way? So I guess, I’m saying did your open inventory just generally come down at pretty at the same pace as overall industry? Philip K. Brewer: I would say yes to that question. Sal Vitale – Sterne, Agee & Leach, Inc.: Okay. And then, I guess based, on what your outlook is on the container demand growth for the rest of the year. It sounds to safe say that there probably won’t be too much more CapEx on the new container side or I should say new dry container side? Philip K. Brewer: Well, we’ve seen more CapEx in the third quarter this year than we’ve seen the last two years. The market is definitely slower in the beginning of the year than we had anticipated, but the period from, I would say, mid-May through July and probably into the beginning of this month, has actually been more hectic than we would have forecasted certainly at the beginning of the year. So it seems like due to the vessel capacity out there and the shipping lines’ relative in ability enforce GRIs early on, the shippers have more cargo right now than we have seen in the pervious two years. We’ve also seen a very significant spike (inaudible) high-q container demand, which is a good sign for the deep sea trades actually both to North America, but also to Europe. so we’re actually seeing a more traditional pattern right now where it looks like the late second quarter and the third quarter could be the peak for new production for sure.

Okay. so based on that I guess it would be fair to say that you should see improved utilization maybe in 3Q. I mean we’re about a third of the way through 3Q at this point. But maybe, sort of the remaining portion of 3Q, you should see improved utilization, is that fair to say? Philip K. Brewer: On the new production side, there is no doubt about it. Our book to be picked up inventory is a lot less than what we have seen in previous years, which means the containers are being built and they are moving out. The issue as I mentioned before and the deferred unit side is because of the competitive nature of both pricing and yields on the new production side, it’s a little bit tougher to move big volume deferred unit transactions at this stage here and clearly, that’s having some impact on utilization.

Okay. understood and then just a last question just to switch gears for a minute. What percentage of your fleet is coming off of lease, I guess in the rest of the year and in 2014, not an exact number just ballpark? Philip K. Brewer: This year about 6% of our fleet was up for renewal. If you look out the next several years, the numbers generally are between 6% to 8% or 9% of our fleet on an annual basis.

Okay, great. That helps Philip K. Brewer: Actually, very low next year, it’s actually very low next year, because 2009 most term leases are five-year terms in 2009 was a very low production year. so we kind of get a break in long-term lease extensions next year.

That’s a good point, all right. so five-year leases written in 2009 would come up for renewal in 2014. So you’re saying it’s probably low single-digits next year? Philip K. Brewer: Definitely yes, so it’s clearly a year where we have a chance of catching up.

Right and then I guess in 2015 we’ll see something above that 6% to 8% may be, so something higher? Philip K. Brewer: :

Okay, thank you very much. Philip K. Brewer: Thank you John.

The next question comes from Doug Mewhirter with SunTrust Robinson Humphrey. Please go ahead. Doug R. Mewhirter – SunTrust Robinson Humphrey, Inc.: Hi good morning I just had two questions. First, give me an idea of just a rough size of the tank market, I’m pretty down at some background research, I mean, the benchmark that there’s $4 billion to $6 billion of dry boxes produced every year. Is there sort of a similar number you can apply to the tank market, or may be total dollar installed base size ? Philip K. Brewer: I’m surprised with so many questions being asked to us about the tank market. We’ve been investing in the tank market now for a few months. We’re working with Trifleet for a few months. We really are in a position to give an authoritative data about the industry. At this point we simply, I think, if we were to – it really wouldn’t be fair, because we are not as knowledgeable as other investors in the tank market.

Okay, it’s fair enough. All right, I understand, you are taking small steps. The second question may more relevant. You talked about imminent peak all of your competitors talk about the imminent peak. If I remember correctly, last year’s peak was actually front loaded. And so last year really didn’t have a huge third quarter peak either, which implies some easier comparison. So I assume you would still assume that there would be a positive year-over-year comparison with last year’s peak. But it might be similar in shapes to the pattern of last year is that my… Philip K. Brewer: Actually both 2011 and 2012 were totally different years than this year. The peak season in both the years was a three, four-month event, and it started really early. One year it ended in June and the other one it ended in early July. Here, we did not see that big second quarter spike that we saw in both 2011 and 2011, while definitely, they have the bigger demand happened at the end of the second quarter going into the third quarter with most of the pickup activity in the third quarter. So I would say, this year unlike the two last years is looking like a much more traditional year in terms of total container demand.

Now, I think, as Robert mentioned earlier too, part of the reason the peak season came earlier in 2011 and 2012 certainly in 2012, it was due to the GRIs. And as the freight rate started to move up, you saw a shippers shipped earlier, this year we haven’t seen the shipping lines have success in implementing GRIs, as a result the shippers appear to be more willing to follow with more traditional pattern of shipping later in the year because they’re not as concerned about freight rates moving up.

Okay, thanks. Thanks for the answers. That’s all my questions. Philip K. Brewer: Thank you very much.

The next questions is a follow-up from Justin Yagerman with Deutsche Bank. Please go ahead. Josh Katzeff – Deutsche Bank Securities: Hey, it’s actually Josh again. Actually it was already asked. So, thank you. Sorry about that. Philip K. Brewer: Okay. Thank you, Josh.

That’s all the time we have for questions today. I’ll now turn the call back to the company for closing remarks. Philip K. Brewer: Well, I’d like to thank everybody for joining Textainer for our second quarter 2013 earnings call. If you have any further questions, please feel to contact any of us, and we look forward to speaking to you at our third quarter earnings call. Thank you very much.

Thank you. Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.