Hilliard Terry – EVP and CFO Philip Brewer – President and CEO Robert Pedersen – President and CEO, Textainer Equipment Management Limited

Christopher Carey – FBR Capital Markets & Co. Amit Mehrotra – Deutsche Bank Doug Mewhirter – SunTrust Sal Vitale – Sterne Agee Art Hatfield – Raymond James

Good morning and welcome to the Textainer Group Holdings Third Quarter 2014 Earnings Call. My name is Brandon and I’ll be your operator for today. 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 it over to Executive Vice President and Chief Financial Officer, Hilliard Terry. Mr. Terry, you may begin.

Thank you and welcome to Textainer’s 2014 third quarter earnings conference call. Joining me on this morning’s call are Phil Brewer, TGH’s President and Chief Executive Officer. 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’d like to point out that this conference call contains forward-looking statements in accordance with U.S. Securities laws. These statements involve risks 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 statements that are made. Please see the company’s Annual Report on Form 20-F for the year ended December 31, 2013, filed with the Securities and Exchange Commission on March 19, 2014, 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. I would also like to point out that during the 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 now like to turn the call over to Phil for his opening comments.

Good morning and welcome to Textainer’s third quarter 2014 earnings conference call. Last quarter we stated that we expected to see an improvement in revenue and an uptick in utilization during the third quarter, as you can see both occurred. Revenue for the quarter totaled $143.8 million the highest in our history. Revenue increased 8.4% compared to the third quarter of 2013 and 3.1% compared to the second quarter of this year. Additionally our leasing revenue of a $129.8 million was also the highest in our history, an increase of 10.3% compared to the year ago quarter and 5% sequentially. Utilization now stands at 97.4%, which is almost 4 percentage points higher than it was in March and the highest it has been since 2012. Adjusted net income was $50.2 million for the quarter or $0.88 per diluted common share, an increase of 26% compared to the prior year third quarter. This amount includes $7.9 million attributable to a settlement of previously expensed bad debt and related cost with the lessee in bankruptcy proceedings. Excluding this recovery, our adjusted net income would be $42.4 million, an increase of 6.5%. We are very pleased with our third quarter results. The strong increase in container demand we saw during the second quarter continued into the third quarter, representing a return to the traditional peak season demand that we have not seen in recent years. 75% of year-to-date bookings occurred during the second and third quarters. The ratio of dry container lease-outs turn-ins during the third quarter was 2.6 to 1. Our depot container inventory has declined by more than 110,000 TEU since its highpoint in March and is currently at its lowest level in two years. After experiencing a strong third quarter peak season, we are now seeing a traditional fourth quarter slowdown in the demand for dry containers. Our 2014 CapEx exceeds $820 million including $130 million invested in purchase leaseback transactions and $44 million to purchase previously managed containers. We have acquired more than 430,000 TEU of new and used containers this year, virtually all of this CapEx is for our own fleet, we now own 78% of our fleets. Rental rates continue to remain under pressure for the same reasons we and our competitors have mentioned in the past, easy access to financing by all lessors, low new container prices and low interest rates. It is worth noting that so far in 2014 five lessors have raised more than $2.1 billion in the asset backed in term-note markets. Notwithstanding the decline in rental rates our margins have remained relatively stable due to declines in our funding cost and opportunistic purchasing of containers. We declared a dividend of $0.47 per share, which represents a dividend yield of more than 5.5%. New container prices are around $1,950 currently, per TEU currently. We do not expect prices to increase over the near-term. We estimate that current new build inventory factories to be approximately 500,000 TEU. We believe container lessors will purchase at least 55% of total 2014 container production. Indeed this number likely underestimates the true expense of lessor investment as containers ordered by shipping lines are often sold to or financed by container lessors, but still listed as shipping line purchases. Used container prices continue to decline, they are down approximately 25% from the year ago quarter and have resulted in reduced gains on sales and minimal trading container profits. While the rate of decline has slowed down, we believe further declines are possible as we ended the fourth quarter when demand for used containers traditionally weakened. We do not expect used container prices to increase materially from the current level over the near-term. We expect revenue utilization to remain relatively steady. Furthermore we believe the return earned on containers purchased at today’s prices will increase overtime as the containers depreciate and especially if interest rates and/or container prices rise. Containers purchased to-date also have reduced repricing and residual value risk, compared to the higher cost containers purchased during 2010 and 2011. Compared to our public competitors, we are the least levered and have the lowest overhead cost per TEU per day. We have a long history of consistent new container investments in strong and weak markets, that itself buffer the impact on our results of any one year’s lease renewal. Consistent purchasing not only validates our reputation as the most reliable container supplier, but also means that only 7% of our fleet is subject to leases that expire next year. We remain financially and operationally flexible and believe we are well positioned to take advantage of the future growth of our industry. I would now like to turn the call over to Hilliard.

Thank you, Phil. Turning to the results, this quarter we had strong growth in lease rental income due to a 13% increase in the size and a 2.7 percentage point increase in the utilization of our owned fleet. However, lower resale prices reduced gains on sale in trading container margins. Core operating expenses were up 13% year-over-year, direct container expenses increased by only 3% in spite of a 13% increase in the size of our own fleet. The increased utilization of our owned fleet resulted in lower associated storage and handling expenses. Depreciation expense was $48 million for the quarter, up $5 million year-over-year largely as a result of our larger owned fleet. Annualized depreciation expense increased from 4.1% to 4.4% of average gross container asset value. During the quarter as Phil mentioned, we successfully settled a claim with the bankrupt lessee. We had recovered over 99% of our containers subsequent to their filing for bankruptcy. As a result of this settlement, we received $7.9 million which increased lease rental income by $2.6 million and added 2 percentage points of year-over-year growth to lease rental income. This settlement reduced bad debt expenses by $5.2 million contributing to a net bad debt recovery of $4 million during the quarter. Excluding the impact of this settlement, our bad debt expense would have been around 1% of revenue. We continue to believe the normalized run rate for bad debt expense should trend around a 0.5% to 1% of revenue on a longer-term basis. We saw a 10 day improvement in DSO versus last year, reflecting continued diligence over our ongoing credit and collection processes and expect the positive direction of our DSO improvement to continue. Our interest expense including realized hedging losses, but excluding write off of unamortized bank fees was $21 million for the quarter, down 5% versus the year ago quarter, in spite of a 10% increase in our average debt balance. We are reaping the benefits of the refinancing activity completed earlier this year, as our average effective interest rate which includes hedging cost is currently 3.08%, a decline of 48 basis points when compared to the year ago quarter. Early in the quarter, we refinanced our $1.2 billion warehouse facility, lowering the borrowing cost by 25 basis points to LIBOR plus 1.7%. We were the first container leasing company to establish a three year revolving period versus the two year industry norm for container ABS warehouse facility. We also recently issued 301 million of 10 year fixed rate ABS debt at 3.27%, which enabled us to extend the term of our debt and lock-in a very attractive rate. The benefits of these financing is coupled with the refinancing of our older ABS notes completed in Q2 will continue into Q4. Currently the duration of our debt is aligned with the duration of our lease portfolio, about 80% of our debt is fixed or hedge, consistent with the percentage of our total fleet subject to long-term and finance leases. The weighted average remaining term of our fixed or hedged debt is 42-months. The weighted average remaining term of our long-term and finance leases is 40-months. Income taxes for the quarter were approximately $800,000 resulting in a 1% effective tax rate for the quarter. Our effective tax rate varies from quarter-to-quarter due to discreet one-time items, as we’ve stated previously we expect our annual effective tax rate to be in the low to mid-single digits. Adjusted EBITDA was $120 million in Q3 up 13% from last year, a clear indication of our continued strong cash generation. Adjusted net income which excludes unrealized gains and losses on interest rate swaps and the write-off of unamortized financing fees for the quarter was $50 million, resulting in an adjusted EPS of $0.88 per share. The previously mentioned settlements contributed $0.14 per share. As Phil mentioned earlier, our dividend was $0.47 per share. As a reminder, some or all of such distributions maybe treated by U.S. tax holders as a return of capital rather than dividends. Finally, turning to the balance sheet as of September 30, 2014 our cash position was $87 million, total assets were $4 billion and our leverage ratio was 2.3 to 1. Thank you for your attention and I would now like to open the call up for questions. Operator, can you inform the participants of the procedures for the Q&A.

Yes sir, thank you. We will now begin the question and answer session. (Operator Instructions) And from FBR Capital Markets we have John Mints on the line. Please go ahead. Christopher Carey – FBR Capital Markets & Co.: Hi guys, this is Chris Carey on for John, thanks for taking my question. I was wondering did you mention where year-to-date box production was at.

This is Robert here. Dry container production is about 2.6 million TEU plus probably 100,000 TEU of dry specials and we believe reefer production to be around 220,000 TEU. Christopher Carey – FBR Capital Markets & Co.: Okay, great.

That reefer production is about the same as 2013, while dry container production is up compared to last year. Christopher Carey – FBR Capital Markets & Co.: Okay, thanks. And then do you have any sense of kind of where that is relative to maximum zero whole production capacity in the year? Just trying to get a sense of kind of where the producers are versus where they could theoretically go if demand continued to accelerate?

Well yes, most of producers are still producing one shift, we believe that the theoretical production capacity is about 6 million to 6.5 million TEU. So production is still only about half of theoretical production. Christopher Carey – FBR Capital Markets & Co.: Okay thanks, that makes sense. And then I just have one quick modeling question I know you guys have been talking in last several quarters about kind of there is old fully depreciated containers being sold or replaced by more expensive containers and PLB is becoming a larger part of your resell business, is that trend continuing the D&A as a percentage of average gross container value is kind of very small, to a small degree it ticked up sequentially do you see that trend kind of continuing from here on the D&A line?

Yes it will continue directionally, but maybe not at the same velocity. So going from let’s say 4.4% maybe up to 4.6% might be reasonable. Christopher Carey – FBR Capital Markets & Co.: Okay yes, that make sense. And then I just have one last question and I’ll turn it back over, I’m not sure if you mentioned but and or if you’re willing disclose what’s kind of the percentage of the 430,000 TEU lease directionally that were kind of new versus PLB versus managed?

The bulk of it is new production and we prefer not being more specific than that. Christopher Carey – FBR Capital Markets & Co.: Okay, very much appreciate your time. Thank you.

From Deutsche Bank we have Amit Mehrotra on the line. Please go ahead. Amit Mehrotra – Deutsche Bank: Great, thanks. Good morning. My question is on the outlook for incremental margins and margin expansion in this environment. You guys have done a great job of improving the utilization levels, but at the end of the day type of operating leverage from higher utilization is less favorable than the leverage you get from the higher rates obviously. So the question is that the realities of the markets sort of cap the opportunity for incremental margins and margin expansion until the rate environment improves? Or is there really anything you can do proactively the sort of improve the underlying profitability of the business, despite the sort of I guess lack luster rate environment?

Well I think it’s important to keep in mind and if you look at not just Textainer but any other container leasing companies, the returns are well provided and actually quite attractive. So while we acknowledge the returns are down, there is little we can do about improving rental rate right at this moment, as I think we’ve said many times the best thing that can happen for us and other competitors in the industry would be to see new container prices and our interest rate rise. But in the meantime we’re also generating quiet attractive returns.

Just to add in it, I think we’ve done a lot just on the financing side to lower our funding cost, which I think has helped to counter balance some of that as well. Amit Mehrotra – Deutsche Bank: Yes, no I mean for sure the margins are very impressive already, but I am just thinking about maybe from over the next year, year and half, but I think you answered the question. My second question is on the actual rate environment, yields have sort of been under pressure for quite some time now and maybe the visibility is not that great, but maybe you can offer sort of some little bit more color on where you sort of think we may get a bottoming out here given the fact they’ve been under pressure for quite some time?

We actually think that yields in 2014 have been pretty stable, when we compare with funding cost and container prices we’re not too unhappy about where the situation is of course we would like higher rates, but as we have seen out in the market place most of the requirements from shipping lines have been relatively small maybe repetitive, which means you don’t have to be the largest or the second or the third largest provider to supply the containers, that means that there is a lot of competition for every transaction and that’s really what we have seen out there, every transaction there are five or six or seven providers that can actually supply 100% of the containers. So to get a stronger price environment I think you certainly need stronger container prices, but you also need more extreme demand at the same time for even the biggest buyer to get some pricing power. Amit Mehrotra – Deutsche Bank: Okay, that’s helpful. Thanks very much and nice job in the current environment. Thanks.

Thank you.

From SunTrust we have Doug Mewhirter on line. Please go ahead. Doug Mewhirter – SunTrust: Good morning. Actually just a question on CapEx, Phil you had mentioned, you had invested $821 million for new purchase-leaseback in previously managed containers year-to-date. I looked at the year-to-date cash flow statement and that line item year-to-date is actually only $492 million. So are you including both containers that you’ve maybe put orders in for delivery next quarter plus fourth quarter orders that you’ve delivered this year, how do you reconcile those two numbers?

Sure, Doug. You actually have to also look at container contracts payable, you will see there is a $170 million there, but I think you’re correct in that. This is the amount of containers that we’ve ordered year-to-date. So not all of the containers are flowing through our cash flow statement or on the balance sheet as of yet. Doug Mewhirter – SunTrust: Okay, great, thanks. And actually my second question maybe little bit in the weeds for Robert, I remember maybe a year or two ago Maersk was talking about outsourcing more of its reefer production, that previously they have been pretty protective of that piece of the business and with sort of the high season for reefers coming up has that made any kind of impact on the market dynamics? And in your opinion, what are the returns on new reefer boxes that are coming off the line right now?

I think I can answer that in two ways. Certainly the lines are still focused on increasing their reefer cargo loadings, that goes for most lines that also goes for most of the other global operators. We see that probably about 60% of all the reefers this year will be added by leasing companies and only 40% bought by shipping lines. The market is clearly very competitive, spreads are better than dry containers, but quite frankly not really acceptable compared to the additional technical additional risk you take and the added depreciation you have upfront. So I think we have certainly been pretty choosy about which deals we go for, we are selective we go for the deals that make our spreads if they don’t make our spreads we passed on them. For that reason our share in the reefer sector is less than what we have seen in the dry container sector. I don’t know if that answers your question. Doug Mewhirter – SunTrust: That’s very helpful and that’s all my questions. Thank you.

From Sterne Agee we have Sal Vitale online. Please go ahead. Sal Vitale – Sterne Agee: Good morning gentlemen, thanks for taking my question. Just I guess maybe we can just start off with how do you think about from the manufacture’s perspective what their margin is given current container prices?

Well there’s no doubt, it’s tight, it’s still there fortunately they have seen the reduction in steel prices that has helped, the oil concept and paint has also helped, floor prices are pretty steady. I think the issue is that they have produced more containers this year than they did last year, which will help in making their production cost more competitive, but I think there is no doubt that their spreads are pretty thin right now. By this year I think they made a conscious decision that they wanted to keep the lines going at least until the end of the year maybe through Chinese New Year next year, Chinese New Year is mid-February so it’s later than last year and it seems like they want to continue to keep the lines going at least through then. And then we can all guess what’s going to happen thereafter whether they are going to extend the shut down like they did this year or I think that will all depend on how the order situation looks when they get into the early next year. Sal Vitale – Sterne Agee: Okay thanks, that’s helpful. And the other question is big picture your strategy seems to be to continue to invest through the downturn in market lease rates, can you give us a sense for the long-term leases that you’re writing today? Are they different in term than what you wrote say last year or the year before that in terms of are they still say five years is that your standard or are you writing shorter leases at this point?

Yes most of the leases we calls the term of five to eight years, but I would say the bulk of them is still five years. And that goes for both our dry containers and reefers. Sal Vitale – Sterne Agee: Okay. And then just the last question, Hilliard can you just refresh my memory what percentage of the leases written say at peak levels say late 2010 early 2011 what percentage are expiring in 2014?

In 2014 the number is 4%, but I think that number doesn’t really go beyond #6% to 7% or 6% to 8% as the years progress. We got a pretty consistent buyer or sale so there isn’t sort of a big cliff or anything of that sort that we face it’s a pretty small amount that expires each year. Sal Vitale – Sterne Agee: And just following up on that, say whatever expires say in early next year or maybe can we just say full next year what is the GAAP between the rate on that and the market leased rate today?

There is a slide in our IR presentation that kind of walks through that and if you look at that slide, it shows that the rates for next year are kind of somewhere close to the $0.80 level. And I think if you look at sort of where today’s rates are that’s probably roughly about $0.30 or so higher than where today’s markets rates are. Sal Vitale – Sterne Agee: Okay, that’s helpful. Thank you very much.

From Bank of America Merrill Lynch we have [R.E. Rose] on line. Please go ahead.

Hey, guys congrats on the good quarter. Just wanted to ask in terms of kind of an outlook on the global economy what are customers saying when you talk to them and kind of curious to hear are there any other areas that you’re seeing any particular strength?

I think so much of global trade is really through outbound trade to the U.S., but even also to Europe and I think what our shipping line customers saw this year, they saw pretty dramatic improvement in the trade between Asia and Europe and that has led to the additional demand we have seen this year. Will North America as well being acceptable. Going forward I think to later towards the end of this year the issues in Russia and Ebola had certainly had an influence on trade. But overall the lines are relatively optimistic about the trade growth next year. I think what they are more concerned about is there is a lot of very large vessels being added to their fleets and there is no doubt that the vessel additions will outpace the growth in trade. And therefore the environment is that they will try to go for general rate increases I don’t know to which extent they will be successful on achieving them certainly some shipping lines with their vessel additions will have to gain market share from other lines and that usually makes a very competitive rate environment. So we see that next year we think on the shipping line front will be a very competitive year, despite acceptable growth rate. Having said that for us, that means container demands with additional growth and with normal replacement that should be a healthy environment for us out there.

Great, that I accept. And then in terms of obviously you guys have been driving up utilization and just wanted to hear, is there any kind of sacrifice that you guys are taking in terms of rates? How do you think about that kind of balance between utilization and rates and certainly given that you guys seem to be expanding your fleet given kind of the difficult environment, what’s the logic there? Just wanted to understand a little bit better.

The logic is you can do both, you have many shipping lines who preferred new production and really want to focus all their pick-ups on China. Having said that there are lots of other locations where there is production and not new container production, which means depot containers are more in demand. And while for a container next to a brand new container an in fleet container next to a brand new container. Yes there is a rate differential, but if you go way from those new production areas that may disappear or maybe sometimes you can get a better rate for your depot unit than you can for the new production unit, especially in a high utilization environment. And we don’t think it’s an either or to both end.

Great, that’s helpful. Thank you guys.

Thank you.

(Operator Instructions). And from Raymond James we have Art Hatfield on line. Please go ahead. Art Hatfield – Raymond James: Good morning everyone. My questions have been pretty much answered, but I wanted to get your thoughts on how you see the shipping line alliances and how that may impact the lessor business model if at all over the next few years?

We read a lot about the alliances and clearly the lines they have to work together to avoid they all go out and add additional vessel capacity, which will put even more pressure on freight rate. So at the current freight rate environment and alliances make a lot of sense. We certainly support all the initiatives we don’t see them as a threat towards our industry at all, as a matter of fact the more efficient they are and the better well-tuned, the less we have to be concerned about credibility. So there is nothing new about all these alliances clearly they are getting bigger, clearly the vessels are getting bigger and there are new constellations out there. But there is really no dramatic change in how we see that working towards obviousness and for the shippers I think that they are dealing with individual shipping lines just like they did before. I don’t think the shippers really cares very much whether an MSE containers on a first line vessel or CME boxes on a China shipping container. I don’t think they care much about that, they want the service, they want the documentation, they want the accurate billing and that’s what the shipping lines will continue to compete and commercially they are still competing against each other, just like they did before. They just found the way where they could become more efficient and keep their slot cost per carry TEU down at the minimum level. Art Hatfield – Raymond James: Great, thank you for that insight. That’s all I’ve got today.

From FBR Capital Markets we have John Mims on line with a follow up. Please go ahead. Christopher Carey – FBR Capital Markets & Co.: Hi, guys, thanks for taking my follow-up, Chris Carey. Just one quick question with worsening port congestion on the West Coast, some boxes being laid for as much as a month, are you seeing any effect of that on available capacity? I guess specifically on that Asia Pacific shrink.

Yes. Well we have not really seen that yet, but if large container vessels are awaiting of terminal and there is a slow down at the terminal, meaning turnaround of the containers will be considerably slower meaning it will be slower to get the containers back towards Asia. If there is a peak season pre-Chinese New Year, there is a very good chance so that could stimulate container demand for us. Christopher Carey – FBR Capital Markets & Co.: And would that have any impact on near term pricing or is that just speculative at this point?

I don’t think it will have a lot of impact on pricing, I think most of the certainly larger leasing companies are preparing themselves for a busy next year and that’s why we are buying containers in the fourth quarter. So I think we’re pretty prepared for something like that will happen. Obviously the higher utilization on the in-fleet containers will remove that chances to supply the 10,000 of depot containers in the high demand locations, but I’m pretty sure the new production can make up for that gap. Christopher Carey – FBR Capital Markets & Co.: Okay, that makes sense. Thanks so much.

And we have no further questions at this time, I will now turn it back to Mr. Hilliard Terry for final remarks.

I’d just like to say thanks to everyone for joining us. We look forward to talking to you as we progress through the quarter. Thanks for joining us. Have a great day.

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