Q4 2021 Textainer Group Holdings Ltd Earnings Call
Speaker 1: Thank you for standing by and welcome to text standards, 4th quarter and full year 2021 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 Tamara. Dr. Karian director of investor relations for a text standard group holdings limited.
Thank you for standing by and welcome to <unk> fourth quarter and full year 2021 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.
Being recorded.
I'll now turn the call over to Tamara Carryanne director of Investor Relations for <unk> Group Holdings limited.
Thank you.
Speaker 2: 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 actual future events or results.
Certain statements made during this conference call may contain forward looking statements in accordance with U S Securities.
These statements involve risks and uncertainties are only predictions and may differ materially from actual future events or results. The company's views estimates plans and outlook as described within this call may change after this discussion.
Speaker 2: The company's views, estimates, plans, and outlook as described within this column may change after this discussion. The company is under no obligation to modify or update any or all statements that are made.
Company is under no obligation to modify or update any or all statements that are made.
Speaker 2: Please see the company's annual report on Form 20F for the year ended December 31, 2020, filed with the Securities and Exchange Commission on March 18, 2021. And going forward, any subsequent quarterly filings on Form 6K for additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statement.
Please see the company's annual report on form 20-F for the year ended December 31st 2020 filed with the Securities and Exchange Commission on March 18th 'twenty, 'twenty, one and going forward any subsequent quarterly filings on form 6K for additional information concerning factors that could cause actual results to differ much.
Really from those in the forward looking statements.
During this call we will discuss non-GAAP financial measures.
Speaker 2: During this call, we will discuss non-GAAP financial measures.
Speaker 2: As such measures are not prepared in accordance with generally accepted accounting principles, a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures will be provided either on this conference call or can be found in today's earnings press release.
As such measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures will be provided either on this conference call or can be found in today's earnings press release.
Speaker 2: Finally, along with our earnings release today, we have also provided slides to accompany our comments on today's call. Both the earnings release and the earnings call presentation can be found on Tech
Finally, along with our earnings release today, we have also provided slides to accompany our comments on today's call.
Earnings release, and the earnings call presentation can be found on <unk> Investor Relations website at investors that 16 or dotcom.
Speaker 2: I would now like to turn the call over to Olivier Daskar, Texas President and Chief Executive Officer for his opening comments.
I would now like to turn the call over to Olivier get scared.
President and Chief Executive Officer for his opening comments.
Speaker 3: Thank you, Tamara. Good afternoon, everyone. And thank you for joining us today for Tech State's fourth quarter 2021 earnings call.
Thank you Tamara good afternoon, everyone and thank you for joining us today for <unk> fourth quarter 2021 earnings call.
Speaker 3: I'll begin by reviewing the highlights of our fourth quarter and full year results. And then I'll provide some perspective on the industry.
I'll begin by reviewing the highlights of our fourth quarter and full year results and then I'll provide some perspective on the industry.
Speaker 3: Michael will then go over a financial result in greater detail, after which we will open the call for your questions.
Michael will then go over our financial results in greater detail after which we will open the call for your questions.
Speaker 3: We're very pleased with our strong results for the quarter, which provided a fantastic finish to a tremendous year.
We're very pleased with our strong results for the quarter, which provided a fantastic finish to a tremendous year.
Speaker 3: For the full year 2021, Leed's rental income increased 25% to $751 million driven by organic fleet growth in a strong demand environment.
For the full year 2021 lease rental income increased 25% to $751 million driven by organic fleet growth and a strong demand environment.
Speaker 3: Adjusted EBITDA increased by 47% to $698 million, completing our turnaround and reflecting on our ongoing profitability focus.
Adjusted EBITDA increased by 47% to 698 million.
<unk> altered around and reflecting on our ongoing profitability focus.
Speaker 3: Adjusted net income more than tripled to $284 million or $5.62 per diluted share with a return on equity of almost 21% for the year.
Adjusted net income more than tripled to $284 million or $5.62 per diluted share with a return on equity of almost 21% for the year.
For the fourth quarter, which is continued growth in lease rental income.
Speaker 3: For the fourth quarter, we achieved continued growth in lead rental income.
Speaker 3: Our adjusted net income was $73 million as gain on sales of older containers reduced somewhat due to the lack of available inventory and continued high demand for leased containers.
Our adjusted net income was $73 million as gain on sales of older container reduced somewhat due to the lack of available inventory and continued high demand for leased containers.
Speaker 3: During the quarter, we purchased an additional $251 million worth of container and have since secured further customer commitment in excess of $500 million to be deployed in the first half of this year.
During the quarter, we purchased an additional $251 million with container and have since secured further customer commitments in excess of $500 million to be deployed in the first half of this year.
Speaker 3: His very strong overall performance reflects the durable demand environment that has enabled us to sustain organic growth and strengthen our balance sheet while driving profitability and continuing to demonstrate further operational efficiency.
He's very strong overall performance reflects the durable demand environment that does enable us to sustain organic growth and strengthened our balance sheet, while driving profitability and continuing to demonstrate HUD or operational efficiencies.
Speaker 3: We expect to continue achieving favorable results over the next several years as we benefit from stability and reduce cyclicality risk provided by the long tenor of our fixed rate leads and fixed rate depth.
We expect to continue achieving favorable results over the next several years as we benefit from stability and reduced cyclicality risk provided by the long tenor of our fixed rate lease and fixed rate debt.
During the year, we improved the age and the whole sleep and maximize utilization ending the year at 99, 7%.
Speaker 3: During the year, we improved the age and yield of our fleet and maximized utilization, ending the year at 99.7%.
Speaker 3: Just as importantly, we lengthened the maturity of our lease portfolio and fixed rate debt to an average remaining tenor of more than six years.
Just as importantly, we lengthened the maturity of our lease portfolio and fixed rate debt to an average remaining tenor of more than six years.
Speaker 3: In total, we leased out almost 700,000 cu of mostly new containers at very attractive lease terms.
In total we leased out almost 700000 teu of mostly new containers at very attractive lease terms.
Speaker 3: These terms remain attractive today with favorable rate and average lease tenure in excess of 12 years for new containers.
These terms remained attractive today with favorable rates and average lease tenure in excess of 12 years for new containers.
Speaker 3: We also extended about 300,000 CU of maturing long-term leases, with average tenure extending through the remaining useful life of the containers, thereby further locking in future cash flows.
We also extend it about 300000 Teu maturing long term leases with average tenure extending through the remaining useful life of the containers, thereby further locking in future cash flows.
Speaker 3: Over the past 12 months, we estimate that we have captured close to 25% of all containers purchased by major lessors, growing off-leap by 15% while improving its average yield.
Over the past 12 months, we estimate that we have captured close to 25% of all containers purchased by major lessors growing our fleet by 15%, while improving its average yields.
Speaker 3: This demonstrates not only our agility, but also our ability to best serve our customers and grow our business while improving profitability.
This demonstrates not only our agility, but also our ability to best serve our customers and grow our business, while improving profitability.
Speaker 3: As a result, Total Capex reached close to $2 billion and our fleet ended the year at 4.3 million TU, firmly establishing TechStator as the second largest player in the industry.
As a result total capex reached close to $2 billion and Rohit ended the year at $4 3 million Teus firmly establishing takes theater as the second largest player in the industry.
We remain focused on investing only when we achieved a wide returns and on the base yourself, mostly confirmed lease opportunities keeping available inventory discipline level.
Speaker 3: We remain focused on investing only when we achieve the right returns and on the basis of mostly confirmed lead opportunities, keeping available inventory at discipline level.
Speaker 3: Although activity was sustained in the build up to the Lunar New Year, new container prices have recently moderated to approximately $3400 per CU as manufacturers looked to fill their production lines prior to the traditional low season and anticipated factory closure.
Although activity was sustained in the buildup to the lunar new year, new container prices and recently moderated to approximately $3400 for C U E.
As manufacturers look to fill their production lines prior to the traditional low season and anticipated factory closures.
Speaker 3: This remains well above historical level of about $2,000 per C.U. and continues to support very favorable lease renewal opportunities, high utilization and elevated retail price.
This remains well above historical level of about $2000 per C. U and continues to support a very favorable lease renewal opportunities.
Nation and elevated retail prices.
As we look into the new year, we're very optimistic about our improved performance and attractive market fundamentals and we remain focused on our long term objectives.
Speaker 3: As we look into the new year, we're very optimistic about our improved performance and attractive market fundamentals, and we remain focused on a long-term objective.
Speaker 3: We expect cargo volume to remain strong through the full year 2022 due to continued worldwide high consumer spending and restocking of low-level inventory.
We expect cargo volume to remain strong for the full year 2022, due to continued worldwide high consumer spending and restocking of low level in batteries.
Speaker 3: This will continue to put pressure on the already strained inland logistic and port infrastructure, thereby further supporting container demand.
This will continue to put pressure on the already strained inland logistics and port infrastructure, thereby further supporting container demand.
We expect utilization to remain high with new container prices well above their historical level as manufacturers adjust production hours to market demand.
Speaker 3: We expect utilization to remain high with new container prices well above their historical level, as manufacturers adjust production hours to market demand.
Speaker 3: This will ensure that our direct operating costs remain low.
This will ensure that all direct operating costs remained low.
Speaker 3: We continue to expect more normalized demand for new containers until 2023, when new ships will be delivered. And we also expect shipping lines to purchase a bigger share of new containers in the near term, inverting recent trend of lessor accounting for the majority of purchase.
We continue to expect more normalized demand for new containers until 'twenty 'twenty tree. When you ships will be delivered and we also expect shipping lines to port. She has a bigger share of new containers in the near term inverting recent trend of lessor accounting for the majority of approaches.
Speaker 3: These factors will ensure net cash flow generation as our container capex moderates from historic levels.
These factors will ensure net cash flow generation as a container capex moderates from historic level.
Speaker 3: And finally, we expect much reduced credit risk as shipping lines continue to benefit from historically favorable performance with high contract rates and high demand.
And finally, we expect much reduced credit risk as shipping lines continue to benefit from historically favorable performance with high contract rates and high demand.
Speaker 3: In summary, 2021 was a tremendous year for TechStainer as we achieved outstanding performance across all four key operating metrics.
In summary.
2020 , one was a tremendous year for texting or as we achieved outstanding performance across all our key operating metrics.
Speaker 3: I'm very proud of the strong performance across the organization, helping secure our profitability and cash flow for many years to come.
I'm very proud of the strong performance across the organization, helping secure our profitability and cash flow for many years to come.
Speaker 3: As we look out at 2022 and beyond, our strategic position in the industry, strong cash flow and financial stability will enable us to create significant shareholder value.
As we look out at 'twenty, 'twenty, two and beyond our strategic position in the industry strong cash flow and financial stability will enable us to create significant shareholder value.
Speaker 3: This will be achieved through further strategic CAPEX and continued capital return to shareholder to the reinstated dividend and ongoing share repurchase program.
This will be achieved through further strategic Capex and continued capital return to shareholder to the reinstated dividend and ongoing share repurchase program.
Speaker 3: I will now turn the call over to Michael, who will give you a little more color about our financial results for the fourth quarter and the full year.
I will now turn the call over to Michael who will give you a little more color about our financial results for the fourth quarter and the full year.
Speaker 4: Thank you, Olivier. I will now focus on the key drivers of our financial resources.
Thank you Olivier I will now focus on the key drivers of our financial results for the year. Adjusted net income was $284 million, an increase of $197 million or 226% as compared to 2020 Q.
Speaker 4: For the year adjusted net income was $284 million.
Speaker 4: an increase of $197 million or 226% as compared to 2020. Q4 adjustment income was.
Q4, adjusted net income was $73 million, an increase of $33 million or 78% year over year.
Speaker 4: an increase of $32 million or 78% year-over-year. This compares to...
Compares to $77 million in Q3.
Speaker 4: Our Q4 annualized adjusted ROE was just over 20% and nearly 21% for 2021.
Our Q4 annualized adjusted ROE was just over 20%.
And nearly 21% for 2021 .
For the year adjusted EPS was $5.63 per diluted common share.
Speaker 4: For the year, adjusted EPS was $5.62 per diluted common
Speaker 4: an increase of 245% from $1.63 in 2020.
An increase of 245% from $1 63 in 2020.
Q4, adjusted EPS was $1 46 per diluted common share an increase of 80% from 81 cents in prior year Q4.
Speaker 4: Q4 adjusted EPS was $1.46 per diluted common share, an increase of 80% from 81 cents in prior year Q4. This compares.
This compares to $1 52 in Q3.
Speaker 4: Our attractive EPS levels are the result of continued strong performance and a positive impact from our share of purchase program.
Our attractive EPS levels are the result of continued strong performance and the positive impact from our share repurchase program.
For the year adjusted EBITDA was $698 million, an increase of 47% from 476 million in the prior year.
Speaker 4: an increase of 47% from 476 million in the prior year. Q4 adjusted EBITDA was $182 million.
Q4, adjusted EBITDA was $182 million, an increase of 33% from $137 million in prior year Q4. This compares to $184 million in Q3.
Speaker 4: from $137 million in prior Q4. This compares to $184 million in Q3. Q4 lease rental income.
Q4 lease rental income was $198 million, an increase of 2 million from Q3.
This was largely due to an increase in fleet size and average rental rates.
Speaker 4: This was largely due to an increase in fleet size and average...
Speaker 4: Despite fewer days in the next quarter, we still expect a slight increase to lease rental income in Q1, as we continue to recognize the benefits from attractive container investment and lease renewals and expansion.
Despite fewer days in the next quarter, we still expect a slight increase to lease rental income in Q1 as.
As we continue to recognize the benefits from attractive container investment and lease renewals and extensions.
Speaker 4: Q4 gain on sales of old fleet containers net was 16%.
Q4 gain on sale of owned fleet compares net was $16 million a decrease of 4 million from Q3, driven by a reduction in the number of concur sold given limited for sale inventory as a result of our high utilization rates.
Speaker 4: A decrease of 4 million from Q3 driven by a reduction in the number of containers sold given limited for sale inventory as a result of our high utilization rates. Partially offset by an increase
Partially offset by an increase in resale container prices.
Speaker 4: expect a continuous strong resale price environment in Q1 with minimal available sales inventory consistent with strong utilization.
We expect to continue strong resell price environment in Q1 with minimal available sales inventory consistent with strong utilization levels and limited off hires.
Speaker 4: Q4 direct contrary expense for the old fleet was $6 million. We expect direct contrary expense to remain relatively stable at these attractive levels.
Q4 direct tariffs that's for the old fleet was $6 million, we expect direct container expense to remain relatively stable at these attractive levels.
Speaker 4: driven primarily by lower storage costs, resulting from higher utilization and lower maintenance and handling expense, resulting from very limited remaining depth inventory.
Driven primarily by lower storage costs, resulting from higher utilization.
And lower maintenance and hail expense, resulting from very limited remaining depo inventory.
Q4, depreciation expense was $73 million for the quarter and is expected to increase in Q1 due to continued fleet growth.
Speaker 4: and is expected to increase in Q1 due to continued fleet growth.
Q4, G&A expense of $12 million.
Speaker 4: remain flat as compared to key three and is expected to remain at these approximate levels.
<unk> flat as compared to Q3 and is expected to remain at these approximate levels going forward.
Q4 interest expense was $35 million, an increase of 2 million from Q3.
Speaker 4: Q4 interest expense was $35 million, an increase of $2 million.
Speaker 4: This was primarily driven by higher average debt balance due to funding of attractive capex.
This was primarily driven by higher average debt balance due to funding of attractive capex opportunities, partially offset by slightly lower effective interest rate in Q4.
Speaker 4: Partially upset by slightly lower effective interest rate in Q4.
We continue to be very well positioned through the attractive and flexible terms pricing and reliable sourcing of our debt financing platform.
Speaker 4: We continue to be very well positioned through the attractive and flexible terms, pricing and reliable sourcing of our debt financing plan.
Speaker 4: improved and optimized over the course of the last several.
Prove it and optimized over the course over the last several years.
Speaker 4: During Q4, we completed an amendment to reprice, review, and extend the term on our $1.5 billion warehouse facility.
During Q4, we completed an amendment to reprice review and extend the term on our 1.5 billion dollar warehouses silly.
Speaker 4: which is a key financing vehicle and supports our ability to continue investing in containers as we find attractive opportunities.
Which is a key financing vehicle and supports our ability to continue investing in containers as we find attractive opportunities.
We expect the average effective interest rate of our debt to remain near its current level of approximately two 6% during Q1.
Speaker 4: We expect the average effective interest rate of our debt to remain near its current level, or possibly.
Speaker 4: We also begin 2022 very well positioned to address a possible increase in interest rate.
We also begin 2022, very well positioned to address a possible increase in the interest rate environment with 92% of our debt fixed or hedged to fixed with an average coverage tender consistent with the average tenor of our long term leases.
Speaker 4: with 92% of our debt fixed or hedged to.
Speaker 4: an average coverage tenor consistent with the average tenor of our long-term
Speaker 4: Turning now to our share purchase program, we have purchased 741,000 shares.
Turning now to our share repurchase program, we repurchased 741000 shares.
Speaker 4: 2.4 million shares of Texair common stock in the open market at an average price of $35.
$2 4 billion shares of taxpayer common stock in the open market at an average price of $35.60.
Speaker 4: and $29.70 per share during Q4 and full year 2021.
And $29 70 per share during Q4 and full year 2021, respectively.
Speaker 4: As of the end of the year, we had repurchased 17% of our outstaying shares.
As of the end of the year, we had repurchased 17% of all saying shares.
Speaker 4: $51 million remaining and available from our board authorized program.
With $51 million remaining and available from our board authorized program for repurchases.
Speaker 4: We're pleased to announce that our board has approved and declared a 25 cent per share common share dividend.
We're pleased to announce that our board has approved and declared a 25 cent per share common share dividend.
Speaker 4: payable on March 15, 2022 to holders of record as of March 4.
Payable on March 15th 2022 to holders of record as of March 4th 2022.
Speaker 4: Please note, consistent with our prior common dividends, our common dividend distributions may be currently treated as a return of capital by U.S. taxpayers, but our shareholders are advised to consult with their tax advisors and to review the dividend section.
Please note consistent with our prior common dividends, our common dividend distributions, maybe currently treated as a return of capital by U S taxpayers, but our shareholders are advised to consult with their tax advisers and to review the dividend section on the texting or dot Com Investor Relations webpage.
In addition, our board has also approved and declared a quarterly preferred cash dividend on our 7% series E and $6 two 5% series B cumulative redeemable perpetual preferred shares.
Speaker 4: In addition, our board has also approved and declared a quarterly preferred cash dividend on our 7% Series A.
Speaker 4: 6.25% Series B cumulative redeemable perpetual preferred shares payable on March 15, 2022 to holders of record.
On March 15th 2022 to.
To holders of record as of March 4th 2022.
Speaker 4: Looking now at our balance sheet and liquidity, we are really focused on maintaining a healthy balance sheet and adequate liquidity. Through both our wall structured bank.
Looking now at our balance sheet and liquidity, we remain focused on maintaining a healthy balance sheet and adequate liquidity.
Through both our well structured bank facilities and cash reserves.
Speaker 4: We ended Q4 with a cash position, inclusive of restricted cash of $283 million.
We ended Q4 with a cash position inclusive of restricted cash of $283 million.
Speaker 4: We're also very pleased with the much enhanced quality of our lease portfolio.
We're also very pleased with a much enhanced quality of our lease portfolio with attractive fixed rate yields longer tenors and customers with dramatically improved credit standing.
Speaker 4: attractive fixed rate yields, longer tenors, and customers with dramatically improved credit
Our strong balance sheet provides us with a flexibility to continue to support accretive organic growth through capex.
Speaker 4: Our strong balance sheet provides us with the flexibility to continue to support accretive organic growth through Capex while increasing capital returns to shareholders through dividends and shareholders.
Kris and cowboy returns to shareholders through dividends and share buybacks.
Speaker 4: We are relentlessly focused on creating shareholder value through efficient allocation.
We are relentlessly focused on creating shareholder value through efficient allocation of capital.
Speaker 4: In closing, we are very pleased with our strong performance during Q4, which concludes.
In closing we are very pleased with our strong performance during Q4, which concluded a tremendous year for tech data.
Speaker 4: That concludes the prepared remarks. Thank you all for your time today. Operator, please open the line.
This concludes our prepared remarks. Thank you all for your time today operator, please open the line for questions.
Thank you we will now begin the question and answer session.
Speaker 5: Thank you. We will now begin the question and answer session to join the question queue. You may press star than 1 on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speaker phone, please pick up your handset before pressing any keys to withdraw your question. Please press star than 2. we will pause for a moment as callers during the queue.
Joining the question queue you May Press Star then one on your telephone keypad, you will hear a tone acknowledging your request if.
If youre using a speakerphone please pick up your handset before pressing any keys.
Australia. Your question. Please press Star then two.
We will pause for a moment as callers join the queue.
Yeah.
Speaker 1: The 1st question is from Michael Brown from KBW. Please go ahead. Hi, good afternoon, Olivier Michael. How are you guys?
The first question is from Michael Brown from K B W. Please go ahead.
Yeah.
Hi, Good afternoon Olivier Michael how are you guys.
Good good afternoon, Mike.
Well, Mike. Thank you for your time so.
Speaker 4: So I think, you know, inflation is really top of mind for Wall Street and Main Street, and when I think about your business with a large fleet of steel boxes, I've always thought of it as.
So as you know inflation is really top of mind for Wall Street and main street and.
Think about your business with a large fleet of the steel boxes, I've always thought of it as being.
You know relatively more defensively positioned in an inflationary environment versus versus other.
Speaker 4: relatively more defensively positioned in an inflationary environment versus other sectors in the market.
Sectors in the market.
Speaker 4: Can you just walk through some of the elements of your business and how higher inflation could be a positive to things like the per diem rate or resale values and where do the risks lie, right, with the higher inflationary?
Could you just walk through some of the elements of your business and how higher inflation.
It could be a positive to two things like the per diem rate or resale values.
And where what are the risks lie right, but with a higher inflationary environment.
Speaker 3: It's indeed a very current question, Mike, and you know...
It's it's indeed, a very current question, Mike and and you know.
Speaker 6: I must say we're really fairly relaxed about it, as we mentioned earlier on.
I must say, we were really a fairly relaxed about our it as we'd mentioned.
And Oh in Iran.
We really are trying to very closely match the maturity of our lease portfolio in terms of our aura hedged financing and I'll, let Pat maybe Michael speak a little bit more about that later on but you know from a very high point of view. It inflation is always good for leasing.
Speaker 3: on. But, you know, from a very high point of view, inflation is always good for leasing companies because it kind of revalues or asset base. And, you know, in our case, we definitely have very long term lease contracts, meaning that we probably won't benefit immediately from inflation on that portfolio. And but the real benefit comes when we will be looking at disposing of those containers.
Companies, because it kinds of we values or our asset base and you know in all case, we definitely have a very long term lease.
These contracts, meaning that we probably wont benefit immediately from inflation on that portfolio and but the real benefit comes when we will be looking at disposing of those containers and there you know, it's it's clear that.
Speaker 3: meaning that we probably won't benefit immediately from inflation on that portfolio. But the real benefit comes when we will be looking at disposing of those containers. And there, you know, it's clear that there is the potential for a substantial gain on sales of fully depreciated equipment as
There is the potential for a substantial gain on sales of our fully depreciated equipment.
Speaker 3: These are being repriced and inflated through the economic cycle.
And these are being we price than an inflated that truly in the economic cycle.
Speaker 3: Michael, maybe you want to go a little bit more in detail in trying to explain how we're matching our financing and hedging as well our interest rate to protect ourselves against sudden movement in interest rates.
Michael maybe you want to go a little bit boring in detail and in trying to explain how we're matching all financing and and and and and the hedging as well all of our interest rate to protect ourselves against a sudden movement in interest rates.
Yeah, Thanks, Olivia Hi, Mike, Yeah, where as you know, we've always Oh look towards fixing our debt and also oh locking in floating rates, so locking them into fixed rates as Walter matched that of our fixed rate lease portfolio. So I'm happy to report that we've got probably about 92% of R. R.
Speaker 7: Yeah, thanks Olivia. Hi Mike. Yeah, we're as you know, we've always looked towards fixing our debt and also locking and floating rates, locking them into fixed rates as well to match that of our fixed rate lease portfolio.
Speaker 7: So I'm happy to report that we've got probably about 92% of our debt locked in, fixed, buffered against increasing rates. We saw that environment potentially coming down the road, so.
Locked in fixed are buffered against increasing rates, we saw that environment potentially coming down the road. So as part of a lock in these rates.
Speaker 7: as part of allotting these rates with fixed-rate dead-end derivatives. We've locked it in longer-tenured as well, so.
With fixed rate debt and derivatives, you talked it in longer tenured as well so I'm.
Speaker 7: Happy to report that the tenors of this fixing go on average for the portfolio over six years.
Happy to report that the tenders of this fixing go on average for the portfolio over six years are really linked well with that of our long term fixed rate leases to so.
Speaker 7: really linked well with that of our long-term fixed-rate leases, too.
Speaker 7: As these rates start fluctuating potentially this year, you know, the impact of those changes, of those upward increasing changes, will largely be buffered by what we've done. So, you know, we're very happy to have that protection in place.
As these rates start fluctuating a potentially this year Oh, you know that the impact of those changes those upward increasing changes will largely be buffered by what we've done so well.
Very happy to have that protection in place.
Speaker 4: Great, yes, well, certainly well positioned for higher rate environment.
Great, Yes, well, certainly well positioned for higher rate environment here.
Speaker 4: So, Olivia, here's your comments on the environment and the fact that it's expected to remain, you know, seemingly quite tight through 2022.
So Olivia I heard your comments on the environment and the fact that it's expected to remain.
Do you mean like quite tight through 2022.
Speaker 4: When do you expect shipping demand to decline? I mean, obviously you don't have a crystal ball, but I'd be interested to hear what you're hearing from customers there, and then what ultimately causes the end of this really strong demand for goods?
When when do you expect shipping demand to decline I mean, obviously, you don't have a crystal ball and but are.
I'd be interested to hear what you're hearing from customers. There and then you know.
What what ultimately causes the end of this really strong.
Strong a strong demand for you know for goods and and.
Ultimately.
Outside of a recession, you know what like what gets us to a return to normal.
Yeah no.
Speaker 8: Mike, I wish I had that crystal ball, but I'll try to answer the question anyway.
Mike I wish I wish I had that crystal ball, but I'll I'll try to answer the question that it anyway, I think all the customer who we speak to at the moment.
Speaker 9: I think all the customers we speak to at the moment certainly see a continuation of the current environment.
Certainly see a continuation of the current environment.
Speaker 3: Essentially, you know, cargo demand is running high.
Essentially you know cargo demand it is running high it's not tremendously high compared to what it was historically, but it is at such a level that you know any incremental addition to the demand is causing further disruption and they're all forecasting that the cargo.
Speaker 3: It's not tremendously high compared to what it was historically, but it is at such a level that, you know, any incremental addition to the demand is causing further disruption. And they're all forecasting that the cargo demand will continue to increase this year, estimate range at anywhere from, you know, 4 to 10 percent. That's kind of the range we hear from customers in general.
Demand will continue to increase this year estimates range anywhere from you know four 4% to 10% that's kind of the range, we hear from customers in general and and that's what kind of ensure that you know the infrastructure remains under pressure.
Speaker 3: And that will kind of ensure that.
Speaker 10: you know, the infrastructure remains under pressure.
Speaker 3: So my view is very much that.
So my view is very much that the congestion will be will remain present for most of this coming year.
Speaker 3: The congestion will remain present for most of this coming year.
Speaker 3: And, you know, it's not really a problem that can be solved easily by adding capacity, because we really are in an environment where ships are fully utilized, containers are fully utilized.
And you know, it's not really a problem that can be solved easily by adding capacity because we really are in an environment, where our ships are fully utilized containers are fully utilized.
Speaker 3: The problem with inland logistics is there and it's tremendously difficult to add capacity on short notice. You can't build new warehouses.
The problem with inland logistics. It is there and it's it's tremendously difficult to add capacity on short notice you called the new warehouses.
Speaker 3: Yes, you could potentially have more truck drivers joining the workforce and so on. But I think that long story short.
Yes, you could potentially have more truck drivers joining the workforce and so on but I think that long story short the normalization would only come if a consumption moderates and all signs are at this stage that consumption will not.
Speaker 3: The normalization would only come if consumption moderates. And all signs are at this stage that consumption will not.
Speaker 3: moderate all that soon. You know inflation was up we've seen today from the latest numbers and and and it's really driven by consumers buying ever ever more goods that are being shipped in our in our containers.
Modulate all that soon you know our inflation was up we've seen today from the latest numbers are.
And and and it's it's really driven by consumers buying ever ever more groups that are being shipped in our in our containers I think that the other elements here to to kind of look at the bigger picture and to keep in mind is that.
Speaker 3: I think that the other elements here to kind of look at the bigger picture and to keep in mind is that
Speaker 3: Not only do we have a situation where we can't really normalize the present congestion by adding supply, we're also at risk of further disruption. I mean, I was mentioning labor, it's no secret that with inflation, there are lots of labor movement starting to emerge around the world asking for pay increases.
Not only do we have a situation, where we can't really normalize the that that that the present congestion by adding supply. We're also at risk of further disruption I mean that I was mentioning labor Ah, It's no secret that our wood inflation there are lots of them.
Labor movement, starting to emerge around the world asking for pay increases and those have the potential of causing ever more congestion worldwide are where.
Speaker 3: those have the potential of causing ever more congestion worldwide.
Speaker 3: We're not completely sheltered from a new variant on COVID and events like we've seen with the Suez Canal disruption. So, you know, we're in an environment where...
We're not completely sheltered from a new variant.
Covid, then and and events like we've seen with D. S switched canal disruption. So you know we're in an environment, where demand and the system is really running at maximum capacity and it will take quite a bit of time in our opinion for that too to normalize and that can pass.
Speaker 3: demand and the system is really running at maximum capacity and it will take quite a bit of time in our opinion for that to normalize.
Speaker 3: And that can possibly normalize, I would say, in 2023. And that is also when shipping lines will get delivery of additional ships.
The bleeding normalize I would say in 2023.
And that is also when shipping lines will get delivery of additional ships.
Speaker 3: But we kind of are also seeing this from a very favorable point of view. We think that additional ships will mean a requirement for additional containers. And, you know, we don't really think that those ships will come and flood the market. The view is very much that.
But we kind of are also seeing this from us very favorable point of view, we take that additional ships will mean a requirement for additional containers and you know we don't really think that those ships will come and flood the market and the view is very much that.
Speaker 3: Shipping lines will put those ships into service and they will try to optimize their fleet, meaning that they will potentially sail those ships and sail their entire fleet of ships a little bit slower.
Shipping lines, we'll put those ships into service and they will try to optimize their fleet, meaning that they will potentially sell those ships and sell their entire fleet of ships a little bit slower. The main reasons being that our you know the fuel costs are probably going to remain high.
Speaker 3: The main reasons being that the fuel costs are probably going to remain high if inflation picks up.
Inflation picks up and secondly, a 'twenty 'twenty trees also when you environmental regulation coming to force, which will kind of a you know put pressure on shipping lines to reduce their emission and so far the only short term means they have to reduce their there.
Speaker 3: And secondly, 2023 is also when new environmental regulation coming to force.
Speaker 3: which will kind of, you know, put pressure on shipping lines to reduce their emission. And so far, the only short-term mean they have to reduce their emissions is essentially to have those ships that are sailing a little bit slower.
Missions is essentially to have those ships are sailing a little bit slower so.
Speaker 3: You know, big picture, we think we have an environment with a lot of continued disruption for the coming year. And then we have a normalization starting next year, but potentially, you know, a resumption in additional demand for containers as those ships enter into into service.
Big picture, we think we have an environment with a lot of continued a disruption for the coming year and then we have a normalization starting next year, but potentially a you know a resumption in additional demand for containers I said those ships entering two into service.
Yeah.
Okay.
Speaker 4: Thanks, Olivia. That was a lot of helpful color for a complicated question.
Yeah that was a lot of helpful color for a complicated question.
Speaker 11: Let me just try to speak in one more here. So as your CapEx moderated in the fourth quarter, your share purchase activity picked up nicely.
Let me try indeed.
Sneak in one more here.
Every capex moderated in the fourth quarter your share repurchase activity picked up nicely.
Speaker 4: as you look into 22 and you just kind of talked about the expectation for it to normalize a bit in terms of capex so should we expect the pace of share purchases to rise off of the fourth quarter level and then have you have you been buying shares year to date and if so how much have you
As you look into 'twenty, two and you can just kind of talked about the expectation for it to normalize a bit in terms of capex. So should we expect the pace of share repurchases to rise off into the fourth quarter level and then.
Have you have you been buying shares year to date and if so how much have you have you bought.
Speaker 3: As we stated, you know, we have a share repurchase program in place, you know,
As we state that you know we have a share repurchase program in place you know so you can logically assume that that has not been a interrupted however, we don't like to give the detail on the current operations or the current quarter, but.
Speaker 3: So you can logically assume that that has not been interrupted. However, we don't like to give detail on the current operations or the current quarter.
Speaker 12: But to your wider question, I think that, you know, we signal that we continue to see a growth in the market, which is very positive as far as we're concerned. It's a normalized growth.
Two to your wider question I think that you know we've signaled that we continue to see a growth in the market, which is very positive as far as we're concerned. It says it's a normalized growth, but we definitely have commitments already.
Speaker 3: but we definitely have commitments already on hand.
Speaker 3: And, you know, we will continue to monitor that situation very, very closely. As we've stated previously, our priority will always be to deploy CAPEX.
Hand, and and you know we will continue to monitor that situation very very closely as we've stated previously our priority will always be to deploy capex provided we can achieve the yields and the maturities that we think are fair in this high price environment.
Speaker 3: provided we can achieve the yields and the maturity that we think are fair in this high-price environment.
Speaker 13: And then we will, you know, optimize our capital return allocation depending on that situation. But big picture, we're definitely into an environment where our CAPEX moderates from what we have seen last year, which was truly an exceptional year. And that will give us potentially more means to return capital to shareholders through our normal dividend and buybacks.
And then we will you know.
Optimize our all capital returned allocation depending on the on that situation, but a big picture would definitely into an environment, where all our capex moderates from what we had seen last year, which was truly an exceptional year and that will give us potentially more means to.
Turn capital to shareholders, who are all normal dividend and buybacks.
Okay, Great I'll leave it there.
Thank you Mike.
And I think Moshe.
Speaker 1: The next question is from Liam Burke from B Riley. Please go ahead. Thank you. Hello, Olivier. Hello, Michael. How are you doing today?
The next question is from Liam Burke from B Riley. Please go ahead.
Thank you.
Olivier Hello, Michael how are you doing today.
Speaker 3: Hi, Liam, we're good, thank you. Hi, Liam. Olivia, hey, Michael. During your prepared discussion, you said that the first half of the year you would be investing about 500 million in CapEx. Is that correct?
Hi, Lee I'm all good thank you.
Olivia Hey, Michael.
During your prepared discussion you said that the first half of the year you would be investing about 500 million in Capex is that correct.
Yeah, we we put to be more specific we said that we've already locked in.
Speaker 3: Yeah, we put to be more specific, we said that we've already locked in, you know, deals for that.
Deals for that amount.
Speaker 14: So that would be over and above your normal maintenance capex, is that right?
So that would be over and above your normal maintenance capex.
Speaker 15: No, we didn't differentiate between our maintenance capex or our growth, that's our total capex amount. Okay. Perfect. That's the total number. Okay. Great. And on the recharter front, you've had a lot of success as your old contracts have run off. Is there a significant amount of recharter activity anticipated in 2022? Thank you.
No we didn't we didn't differentiate between or maintenance, Cape okay, or or Oh growth. That's that's our total capex amount. Okay. Perfect. That's the total number okay, great and on the re charter front, you've had a lot of success as your old contracts have run off.
Is there a significant amount of re charter activity.
The anticipated in 2022 .
Speaker 3: Yes, definitely. I think we've discussed this on past calls, and this is definitely an ongoing focus and a very important focus. You know, as we are really, we continue to be an environment where those maturing leases are at rates that are essentially half the rate of new containers.
Yes, definitely I think we've discussed this on past.
Kohls and and this is definitely an ongoing focus and a very important focus and we are really we continue to be an environment, where those maturing leases are at rates that are essentially half the rate of new containers. We are in a strong position and we are trying to.
Speaker 3: we're in a strong position and we are trying to not only achieve extension through the end of life of those containers, but we're trying to achieve a positive repricing.
To not only achieve extension through the end of life off of those containers, but we're trying to achieve the positive repricing and I. As you know we have this bill down period that means that shipping lines can kind of dragged their feet and delay a little bit until they have.
Speaker 3: And as you know, we have this build out period that means that shipping lines can kind of
Speaker 3: drag their feet and delay a little bit until they have no choice but have to agree on a lease extension.
No choice, but to have to agree on a on a lease extension and we have a few of those leases that are you know or have been delayed because shipping lines are obviously not rushing to renegotiate our contracts until they are forced to do it knowing that they will have to pay more and that's tough.
Speaker 16: obviously not rushing to renegotiate contracts until they are forced to do it knowing that they will have to pay more. And as time passes and as prices remain high, we're getting closer to that deadline where, you know, we have to come to a conclusion and shipping lines have to agree to extend those leases or essentially re-deliver them to ourselves and then we can leave them out again or potentially sell them in the current high resale environment. But yeah, we certainly continue to expect some more positive, you know, repricing on that front.
<unk> passes and as prices remain high we're getting closer to that deadline, where you know we we have to come to a conclusion and and shipping lines have to agree to extend those leases or essentially we deliver them to ourselves and then we can lease them out again.
Or or potentially sell them in the current high resale environment, but yeah.
Speaker 3: Yeah, we certainly continue to expect some more positive repricing on that front during the current year.
Yeah, we certainly continue to expect some more positive you know repricing on on that front I do it during the current year.
Speaker 17: Okay, and have you seen the market change very much since the sale of your competitor about a quarter or two ago?
Okay and have you seen the market changed very much since the sale of your competitor about a quarter or two ago.
Yeah.
Are you are you referring to the Ci transaction, yes, yes.
Speaker 3: CAI transaction. Yes. Yes. Yeah. No, the market hasn't changed tremendously. You know, we understand.
Yeah, no the market hasn't changed tremendously well you know, we we understand that.
Speaker 3: that the new owner is working on merging CAI with Beacon, which makes a lot of sense.
That's the the the new owner is working on.
King see AI with with Beacon, which makes a lot of sense.
Speaker 18: But I don't think there has been any change in their approach or strategy that we can note of so far. We remain with a market that is...
But I I don't think there has been any change in their approach our strategy that we cannot know tough so far.
We remain with a market that is now consolidated two five large players are and and you know the five players are acting very very responsibly, we haven't seen any any sign of a you know anybody trying to grab market share.
Speaker 19: now consolidated to five large players.
Speaker 3: And you know, the five players are acting very responsibly. We haven't seen any sign of, you know, anybody trying to grab market share, even though we've actually, as mentioned before, seen a little bit of a normalization in demand for new containers, because most ship slots are essentially already filled. But we continue to have a...
Even though we've actually as mentioned before seeing a little bit of a normalization in demand for new containers, because most ships lazzara essentially already failed them, but we continue to have a very stable environment. There the maturity of our new lead this hasn't would use.
Speaker 3: very stable environment there. The maturity on new leases hasn't reduced. We continue to...
We continue to see a new need is concluded are in excess of half off 12 years. So that's a pretty much a stable situation from that point of view I'm older than the a new container prices that have eased off slightly.
Speaker 3: The new lease is concluded in excess of 12 years.
Speaker 20: So that's pretty much a stable situation from that point of view, other than the new container prices that have eased off slightly. Great, thank you, Olivier.
Great. Thank you Olivier.
Thank you Liam.
Thanks Liam.
As a reminder, it is star one to ask a question.
Speaker 1: As a reminder, it is star 1 to ask a question. The next question is from Jay Minsmeyer from Value Investors Edge. Please go ahead.
The next question is from Jane <unk> from value Investor's edge. Please go ahead.
Speaker 21: Good afternoon, Olivier, and good afternoon, Michael. Congrats on excellent results here.
Hey, good afternoon, Olivier and good afternoon, Michael Congrats on excellent results here.
Thank you good afternoon Jay.
Speaker 22: Thanks, Jay. Thank you very much. When I'm looking at slide 8, you know, you break out in the bottom right, your container resale volumes and clearly in 2021, the resale volumes plummeted the lowest really on record. That makes sense. Right? The market was strong.
Thanks, Jay Thank you very much when I'm looking at slide eight you break out in the bottom right your container resale volumes and clearly in 2021, the resale volumes plummeted lowest failure on record if that makes sense right. The market was strong.
Speaker 23: and the liners wanted to keep their containers. But when I look down at, you know, slide 10, I see that you have 300,000 sales aged that have expired, another 100,000 sales aged coming up here in 2022, which is a massive, I mean 400,000 CEUs, right? So, when can we expect those to start getting sold?
And the liners wanted to keep their containers, but when I look down at you know slide 10, I see that you have 300000 sales aid should have expired. Another 100000 sales age coming up here in 2022, which is a massive I mean 400000 Cpus right. So when can we expect those to start getting sold.
Oh, well you you would note there's something very very important that Jay and and that's the hidden value that we potentially have windows containers, and and and really we're in a situation where I as we mentioned customers are holding onto those compares for as long as they can.
Speaker 3: You noticed something very, very important, Jay, and that's the hidden value that we potentially have with those containers. And really, we're in a situation where, as we mentioned, customers are holding on to those containers for as long as they can, because these are cheap containers in their fleet, and they kind of want to delay returning them until essentially the contract forces them to return them. So.
Because these are cheap containers in their fleet and they kind of want to delay returning them until until essentially the contract forces them to return them. So I think you know we're doing everything we can to try and get those containers are back.
Speaker 24: I think, you know, we're doing everything we can to try and get those containers back.
Speaker 3: You know, we're doing all sorts of incentives and package deals and we would love to get those containers back. I think it's Transcribed by https://otter.ai
We're doing all sorts of the incentive package deals.
And and we would love to get those containers back I think it's fair to say that you know with the a continuation of the a high utilization rate congestion around the world are we going to continue to face difficulty in getting those containers back in in substantial volumes are and they will.
Speaker 25: You know, with the continuation of the high utilization rate congestion around the world, we're going to continue to face difficulty in getting those containers back in substantial volumes.
Speaker 26: And they will essentially take a little time and spread probably over 12 to 18 months. I think that's our estimate.
Yeah, they take a little time and spread probably over over 12 to 18 months I think that's our or estimate unless the market changes, but the positive of that is that it also means that the market are the resale market remains under supplied and that the prices remain very.
Speaker 27: unless the market changes. But the positive of that is that it also means that the market, the resale market remains undersupplied.
Speaker 3: and that the prices remain very high. So, as far as we're concerned, you know, we're not too worried about having that. We wish we could realize some of those gains as fast as possible, but we believe it's just a question of time until those containers get redelivered and then we can realize those gains. I think the other very important element is that a lot of those.
Hi, so as far as we're concerned you know we were not too worried about having that we wish we could realize some of those gains are as fast as possible, but we believe it's just a just a question of time until those containers get get really delivered and then we can we can realize those gains I think they do.
The other very important element is that a lot of those containers you know should've been returned already maybe six months to a year ago.
Speaker 3: you know, should have been returned already maybe six months to a year ago.
Speaker 28: and they are older containers. And why I mentioned that is essentially because
And they are older containers and why I mentioned that is essentially because they have a probably a lower residual value, which means that when we sell them. The gain on sale is even higher than we sell a more recent containers I mean, we're talking about containers that are potentially.
Speaker 3: they have probably a lower residual value, which means that when we sell them, the gain on sale is even higher than we sell a more recent containers. I mean, we're talking about containers that are potentially 18 or nine years old. I mean, not the whole 300,000, but certainly a portion of that is older containers that shipping lines have been delaying. And that really means that the potential gain on sales there is actually substantial.
$18 nine years old I mean, not not the whole 300000, but certainly a portion of that is all the containers that shipping lines have been delaying.
And and that really means that the potential gain on sale there is actually substantial.
Yes, it's definitely definitely a lot of potential and that's why we're watching it closely and I'm, hoping you'll be able to do a great job, both selling and also rolling others legacy ones on the new contracts.
Speaker 29: Yeah, it's definitely a lot of potential. That's why we're watching it closely and hoping you'll be able to do a great job both selling and also rolling those legacy ones on the new contracts. You know, last year you had $2 billion basically in CapEx, which was looks like three or four years worth of normalized CapEx for you guys. You mentioned $500 million committed so far this year. How far does that take you into the year? Is that like through May or June or how far out would that be?
You know last year, you had 2 billion basically in Capex, which was it looks like three or four years worth of normalized Capex for you guys. You mentioned $500 million committed so far this year and how far does that take you ended the year or is that like through like may or June or how far out would that be that $500 million.
Yeah. It's it's you know, we we said they'd say, it's the first half, it's probably fair to say that it would take us true to me.
Speaker 30: Yeah, it's, you know, we said it's the first half, it's probably fair to say that it'll take us through May, you know, depending on the deliveries and, you know, any event that may happen in terms of, you know, the delivery of those containers and the pickup of those containers.
You know depending on the on the deliveries and that and that in and you know in E.
In the event that May have happened in terms of our you know the <unk>.
Delivery of those containers and the pickup of those containers are.
Speaker 3: But yeah, I think trying to guess your next question here is does that trend continue for the full year? I would say at this stage there's no reason not to believe that the trend kind of continues at the same pace.
But yeah I think trying to guess your next question here is does that trend continue.
For the full year I would say at this stage. There's no reason not to believe that the trend kind of continues at the at the same pace.
Speaker 31: Yeah, you made it easy for me. So my next question, final one for you, your shares traded.
It made it easy for me stole my next question then a final one for you [laughter].
Your shares trade at a really really attractive free cash flow multiples return on equity or whatever you want to use but at the same time, you've recently issued preferred equity as low as in the low 6% range, but your commentary is around 20% is there any appetite or any potential in the markets do another prefer to stay 100 150.
Speaker 21: really attractive free cash flow multiples, return on equity, whatever you want to use. But at the same time, you've recently issued preferred equity as low as in the low 6% range, but your common shares are around 20%. Is there any appetite or any potential in the market to do another preferred, say 100, 150 million preferred and do something like a accelerated share repurchase and really just play that arbitrage?
Prefer to do something like our accelerated share repurchase and it really just play that arbitrage.
Speaker 32: Yeah, Jay, we keep on looking at the opportunities. I would say, and maybe I'll let Michael speak on this, at this point in time, I think we're very happy with the way our balance sheet is structured. We don't see an immediate need to raise more preferred, but Michael, maybe you want to chime in on this.
Yeah, a J, we keep on looking at the opportunities are I would say and maybe I'll, let Michael speak on this at this point in time I think we're very happy with the way our balance sheet is structured we don't see any immediate need to raise more preferred but Michael maybe.
Do you want to chime in on this.
Speaker 7: Yeah, and Jay, we understand how how you're looking at that. That map of the preferred works. Having said that, we certainly have a healthy amount of free cash flow where we can take care of the capex needs that we do have the equity portion of it and then also execute on the buyback plan, which we really like and.
Yeah, Jay we understand how how youre looking at that and perhaps the preferred works now having said that we certainly have a healthy amount of free cash flow, where we can take care of the capex needs that we do have the equity portion of it and then also execute on that buyback plan, which we really like them.
Speaker 33: You're probably leaving the fact that, you know, where our shares are trading at right now, it's certainly still a, we see it as tremendous value to invest in ourselves.
You're probably being the fact that you know where our shares are trading at right now it's certainly still a we see it has tremendous value to invest in ourselves.
Speaker 34: So, you know, we do have enough cash from just operations to handle that. And especially with CapEx levels where we are at now, you know, we do have, we do generate a lot more cash flows in excess that we can use towards returning capital to shareholders, dividends, as well as that buyback program that we like a lot. Yeah, thank you.
So yeah, we do have enough cash from operations to handle that in.
But she was capex levels, where we are at now is we do have we do generate a lot more cash flows in excess that we can use towards returning capital to shareholders dividends as well as Oh that buyback program that we liked a lot.
Yes, Thank you Michael and thank you Olivier and then keep up the good work.
Thank you very much.
Thanks Jay.
Speaker 1: This concludes the question and answer session. I would like to turn the conference back over to Olivier for any closing remarks.
This concludes the question and answer session I would like to turn the conference back over to Olivier for any closing remarks.
Speaker 35: Well, thank you very much for taking the time to listen to us today. And yeah, I look forward to updating everyone on our progress during the next call. Thanks again.
Well. Thank you very much for taking the time to listen to us today and Yep I look forward to updating everyone on our progress during the next call. Thanks again.
Speaker 36: This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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