Thank you. And welcome to Textainer’s Third Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be provided at that time. As a reminder, today’s conference call is being recorded. I will now turn the call over to Ed Yuen, Investor Relations for Textainer Group Holdings Limited.

Thank you. Certain statements made during this conference call may contain forward-looking statements in accordance with U.S. securities laws. These statements involve risks and uncertainties, are only predictions and may differ materially from the actual future events or results. The company’s views, estimates, plans and outlook, as described within this call, may change after this discussion and the company is under no obligation to modify or update any or all statements that are made.

Thank you, Ed. Good afternoon, everyone, and thank you for joining us today. I will begin by reviewing the highlights of our third quarter results and then I will provide some perspective on the industry. Michael will then go over our financial results in greater detail. After which we will open the call for your questions. We are pleased with our solid performance in the third quarter, delivering improved lease rental income of $149 million, adjusted EBITDA of $119 million and adjusted net income of $22 million. These results reflect the expected turnaround from the disciplined execution against our long-term strategic plan and a favorable market environment. We had a very active quarter that saw our customers pick up almost 400,000 TEU of factory and depot containers, helping drive our utilization up to 97.7% as of today. These lease-outs were achieved at attractive terms, including improved lease rate, longer and staggered tenure and Asia-focused returns. The full financial benefit of this activity will be reflected in our fourth quarter results. This positive performance is due to our preparedness and ability to execute rapidly and decisively in order to capitalize upon market opportunity that presented themselves in this past quarter. Not only did we activate a record number of containers, but we were also able to quickly secure additional production at attractive prices and with cost delivery. We expect additional on-hire of depot a new unit in the fourth quarter that will translate into further long-term growth and profitability improvements.

Thank you, Olivier. I will now focus on the key drivers of our financial results. Q3 adjusted net income was $20 million or $0.41 per diluted common share, a significant improvement versus prior quarters and the second highest level of adjusted net income within the last five years. Q3 adjusted EBITDA was $119 million, an increase of $9 million as compared to Q2, illustrating our strong cash generation ability. Q3 lease rental income was $149 million, an increase of $4 million as compared to Q2, due to an increase in utilization and fleet size. While market activity continues to improve, we were very pleased with the increase in our utilization rate, which currently stands at 97.7%. This improvement is sourced from both new production and depot lease-out at attractive terms. Our topline continues to be supported by reliable revenue stream from our lease portfolio, which includes an 86% composition of long-term fixed rate leases. As Olivier commented, the recent increase in lease-out activities expected to further improve our utilization and lease rental income through Q4. We have also been able to secure more of our future revenue stream and protect ourselves against risk from a possible future lull in demand next year, by already renewing a large portion of our expiring leases at attractive terms. Q3 gains on sale of owned fleet containers net was $8 million, an increase of $2 million compared to Q2. We are pleased that the container resale price environment remained favorable today. Q3 direct container expense for the old fleet was $16 million, an increase of $1 million compared to Q2. This increase was mostly due to higher handling and maintenance to prepare depot units for lease-out, partially offset by lower storage costs resulting from an increase in utilization. We expect to see lower direct container expense for the old fleet in Q4, as utilization continues to improve through the end of the year.

Thank you. Thank you. And our first question is from the line of Mike Brown with KBW. Please proceed with your question.

Hi. Good afternoon, Michael and Olivier. How are you guys?

Good. How are you Mike?

Well, Mike. Thank you. Hope you are doing well.

Good. Good. Thanks for asking. So, Michael, one comment that you made in your prepared remarks was that you have seen some success in the -- and I don’t want to put words in your mouth, but it sounded like you have seen some success in the re-pricing of leases towards the current market rate, some of those legacy low ROE leases have certainly kind of saddled the profitability of Textainer historically? So, I wanted to just hear a little bit more about the trends there, what you have seen, if I recall correctly, 2021 is where the larger portion of those contracts roll over or when the builddown period kind of works itself out. So, I wanted to just hear a little bit more about what you have seen so far, your confidence and your ability to continue to re-price those contracts? And then, could you potentially size what the ROE improvement could be, if you are able to complete that endeavor successfully with the current ROE rate that you are seeing in the market?

Yes. Mike, you did ask the question to Michael, but allow me to just step in here from a market perspective a little bit. We are certainly been very happy with the market and you rightly point out that we had a lot of legacy leases, as we like to call them, that were coming for re-pricing this year and next year. And in which you have a combination of all the leases that were re-priced down in 2016, as well as a very cheap container that we purchased in 2015 and that were on lease at fairly low rates.

Okay. I appreciate the color on that. So, just to put a finer point on it, I guess, it would be helpful to know, what do you think is, like, what inning are you in for that re-pricing of those legacy leases and when do you think is a reasonable time to expect to reach something like a 10% ROE? Is it 2022 or are you kind of talking a little bit longer than that?

So, Mike, just to rephrase that question, are you referring to -- are there other lease renewal opportunities?

I was specifically focusing on those legacy leases from the 2015, 2016.

Yeah. Well, there is a substantial portion that still have to be renewed that are maturing in 2021. The vast majority of them are actually maturing towards the end of 2021. So I think that the re-pricing of those will be felt most likely in 2022. But certainly all those that were maturing this year will be in 2021.

Okay.

Did that answer your question Mike or...

Yeah. Yeah. I believe so. Yeah. I was just trying to kind of get the timing of those various pieces. So that is helpful. Thank you, Olivier. I want to talk about the fourth quarter here, so your adjusted net income this quarter was up about 46% quarter-over-quarter and I liked your commentary about how the benefits that started to come through in the third quarter really have a larger impact or full quarter impact in the fourth quarter and that also includes obviously the benefits on the interest expense. Any ability to put some guidance around that for where you are expecting the adjusted net income could come out for the fourth quarter, obviously, there could be some surprises. But just, generally, we are about halfway through the quarter just any color on that?

Well, I would say, we don’t expect surprises, or certainly, we don’t expect bad surprises at this point in time. I think it’s one of the few times in my short career in the container leasing business that, I would say, I see no clouds on the horizon. So, to answer your question, we don’t like to give specific guidance. But it’s fair to say from our commentary and from the situation that we expect a continuous improvement and continuous improvement in Q4, but also towards the next year as we continue to benefit from all the additional CapEx that we have generated and also from the full revenue generation from those on the hires and the strong sort of like a incremental effect that those containers will continue to contribute.

Okay. Great. And then just to shift gears to capital return, I saw the commentary in the press release about the share buybacks, it sounds like you have about $35 million left on the recent authorization increase. So, you repurchased, I guess, $50 million since the middle of September was that heavily weighted to the third quarter or were you actually using like a 10b5-1 and buying a lot during the fourth quarter? Just trying to kind of model out how that played out between the two quarters?

Yeah. So, Mike, I think, we had about $35 million of capacities still available at the end of the third quarter. So we continue to buy opportunistically during the fourth quarter, of course, since as part of our capital allocation plans, you should expect that that’s certainly one of our choices and options within that choice of using our capital. Having said that, we certainly are attracted to CapEx, given the yields that they are providing to us, we are certainly going to be looking at that for fourth quarter as well. But think of it as we are going to do both definitely in the fourth quarter.

Okay. Great. And just one last one for me on the bad debt recovery or is a reserve recovery. Could you just provide me a little more color about that? Was that -- what drove that item this quarter, I just think I may have missed your comment on it in your prepared remarks?

No. No worries, Mike. So, if you think back in prior quarters, second quarter, perhaps, you might recall we were entering into the throes of COVID, where we decided to set up some prune reserves, just to be proactive and conservative. We certainly were proven wrong in that that customers were certainly in very good position for performance on liquidity standpoint where they certainly paid in accordance with terms they paid well and performed well as well. So, we are essentially reversing some of these earlier reserves as they are no longer needed. But having said that, we still definitely want to maintain a conservative level of reserves associated receivables when it makes sense. But that recovery is essentially reversing those excess reserves that are no longer needed.

Okay. Perfect. I appreciate that color and that makes a ton of sense. Okay, guys. I will leave it there. Thank you for taking my questions.

You are welcome, Michael.

Thanks, Mike.

Thank you. At this time I will turn the call over to Olivier for closing remarks.

Well, thank you everyone for listening into our third quarter earnings call and looking forward to update you on hopefully further positive news for the fourth quarter. Thank you very much.

Thank you everyone. This does conclude today’s conference. You may disconnect your lines at this time. Thank you for your participation.