Value Investor's Edge Live #44: Textainer Group: Updates On Container Leasing Markets

Marketplace Roundtable

The Textainer Group (TGH) management team joined Value Investor's Edge Live on January 10, 2022, to discuss the container box leasing markets and prospects for 2022. TGH spent most of the past 18-months prioritizing growth capex, but they have also been actively repurchasing shares, and they re-launched their dividend last quarter. As we shift into 2022, higher shareholder returns appear likely as growth capex will eventually slow down. TGH has signed most of their recent growth on 12-year to 14-year contracts, so once the forward growth slows, TGH will have enormous resources available to either pay large dividends or repurchase more shares.
This interview and discussion of the underlying LNG global markets is relevant for anyone with container shipping interests or investments, including firms such as Atlas Corp (ATCO), Costamare (CMRE), Danaos Corp (DAC), Euroseas (ESEA), Global Ship Lease (GSL), Matson (MATX), Navios Partners (NMM), Triton Intl (TRTN), and Zim Integrated Shipping (ZIM).
Topics Covered
(2:00) How are box leasing prospects shaping up for 2022?
(4:45) Is capex slowing in 2022, or might volumes be similar to last year?
(6:45) Current economics in growth projects? Still near record levels?
(9:00) When will free cash flow shift towards higher shareholder returns?
(11:00) Balance sheet update? Still targeting 75-80% leverage?
(16:00) Preferred equity discussion- potential for more?
(17:30) When will lower legacy contracts roll to new deals at higher rates?
(21:00) Penalty rate on old contracts vs. current market rates?
(26:00) Potential for dividend raises going forward?
(29:30) Timeline for shifting into heavier shareholder returns?
(33:30) How should investors value a business like Textainer Group?
(37:00) What else can TGH do to close the massive stock valuation gap?
(38:30) What are the key risks and concerns for 2022 and beyond?
(42:30) Counterparty risk and contract strength/structure?
(48:45) What is the risk if we have huge inflation in the coming years?
(51:45) Why should investors choose TGH as an investment vs. peers?