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Textainer Group (NYSE:TGH)
Q3 2018 Earnings Conference Call
Nov. 2, 2018 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Hello and welcome to the Q3 2018 Textainer Group Holdings Limited earnings conference call. My name is Danera, and I'll be the operator for today's call. [Operator instructions] Please note that this conference is being recorded. I will now turn the call over to Executive Vice President and Chief Financial Officer Michael Chan.

Mr. Chan, you may begin.

Michael Chan -- Executive Vice President and Chief Financial Officer

Thank you and welcome to Textainer's 2018 third-quarter conference call. Before I turn the call over to Olivier Ghesquiere, president and chief executive officer of Textainer Group Holdings Limited, I would 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 actual future events or results.

Finally, the company's views, estimates, plans and outlook, as described within this call, may change after 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, 2017, filed with the Securities and Exchange Commission on March 14, 2018, 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 this call, we will discuss non-GAAP financial measures.

As such measures are not prepared in accordance with generally accepted accounting principles, a reconciliation of the non-GAAP financial 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. For this quarter, we have also included slides to accompany our comments on today's call. The Q3 earnings call presentation can be found on our IR website next to the link for this webcast. At this point, I would now like to turn the call over to Olivier for his opening comments.

Olivier Ghesquiere -- President and Chief Executive Officer

Thank you, Michael. Good morning, everyone, and thank you for joining us today for Textainer's third-quarter 2018 earnings call. I'll begin by reviewing the highlights of our third quarter, and then I'll provide you some perspective on the industry. Michael will then go over our financial results in greater details, after which we will go over the questions.

Let me start by saying that I'm honored to be leading Textainer as CEO. As many of you know, I joined Textainer in January 2016 and was until recently responsible for marketing and operations based here in the San Francisco. Before this, I was CEO of Ermewa Group, which operates the second-largest railcar leasing fleet in Europe as well as a leasing business for locomotive and tank containers. I've pretty much been in equipment leasing all my career during which I spent 10 years in Asia and then the last 13 before joining Textainer in Paris.

I would also like to take the opportunity to welcome Michael as Textainer's new CFO. As most of you probably know, Michael has significant prior experience with Textainer, previously serving as the company's corporate controller before spending some time with Chronos as well as several other businesses, where he served as CFO. Since Michael rejoined Textainer 18 months ago, he has been instrumental in helping us reorganize our treasury and finance platforms. I'm delighted to have him as our CFO, and I look forward to working side by side with Michael to continue Textainer long history of delivering value to our investors, our customers, and our employees.

Turning now to our results for the third quarter, there's good news and bad news. So, let's start with the good news first. The quarter was positive from an operational perspective, as we saw record on-hire activity, resulting in a net 165,000 TEU leased out, of which 137,000 TEU of new equipment leased out under operating leases with average maturities above six years and mostly Asian return schedules. These drove solid top-line improvement with lease revenue up 6.8% sequentially to the second quarter of this year and even more significantly, an increase in lease revenue of 15.7% over the prior year period.

Since the start of the year, we have leased up over 350,000 TEU of new production equipment as we have been able to utilize our strong financing platform and take advantage of attractive market opportunities. We are focused on quality revenue with average cash-on-cash yield above 11%, and we intend to continue our focus on improving our fleet yields through organic growth and optimizing repricing of existing leases. This has been a very positive year for leasing activity with continued container shipment up above 4% and demand for leased equipment growing at slightly faster pace still, as shipping lines continue to increase their reliance on container-leasing companies. At the end of September, total dry van production reached 3.4 million TEU with over 60% of purchases going to leasing companies.

As I mentioned earlier, our priority is to improve our bottom line and yields, and favorable market conditions have helped us achieve positive results in that direction. Just as importantly, we remain intensely focused on the relationship we maintain with our key customers to whom we strive to provide the highest possible quality of service to ensure that we remain their first call, be it for depo containers or new production. While we are pleased with our solid operational performance during the third quarter, we did have three specific events which impacted our earnings. Firstly, we incurred $10.6 million related to two defaulting customers in Asia, which increased our container impairment and direct container expenses.

Second, we incurred $6.9 million in impairment cost to write down unleasable containers to their estimated resale value, as we made the determination that it was more economical to dispose of these units rather than to continue to incur storage cost. Most of these impairments are related to refill containers, the bulk of which were recovered from Hanjin. Finally, we had costs associated with the departing senior executive as well as the write-off of an amortized financing costs associated with the recent renewal of our revolving credit facility. We believe the bulk of the costs associated with this defaulting customers are now mostly behind us.

In addition, we believe that after this action to reduce storage, the level of depo container inventory is low, positioned in good location, and leasable at attractive rates. We expect an improvement in our result over the next quarter as most of the other metrics of our business remain positives. First, resale activity remained strong. Volumes are up, and while our average price is slightly down compared to the last quarter, this was mostly due to damage recovered equipment put to disposal.

We intend to continue to take advantage of the current positive market and dispose of assets whenever we feel profit can be realized and the equity redeployed to buy new containers. Second, our utilization rate continues to increase, as we lease out units in high-demand location and dispose or reposition units from low-demand locations. Third, turning booking at a very low level, which is an indication that our customer continue to experience stable freight volume and need containers. And finally, average rental rates continue to increase incrementally as we lease out containers at higher rate than the current average fleet.

As we look at the industry through the global perspective, we are cautiously optimistic about the market outlook. The main area of concern remains the trade frictions and the uncertainty this brings for economic players. While short-term disruptions are usually positive for container lessors, the longer-term impact is much harder to predict. As I mentioned earlier, the impact has been positive so far with shippers rushing to beat the tariff deadlines and causing a surge in demand on the transpacific trade while Europe-bound cargo remains low.

In addition, many of our customers now expect an increase in regional cargo as production shifts toward alternative countries less affected by the current trade disputes. Whether this is sustainable remains to be seen, and we continue to monitor the longer-term impact of this developing situation. I think it is important to put things into perspective, and remember that slower growth does not mean no trade and that transpacific only represents about 17% of the containerized trade in the world. With a seasonal activity prior to the Lunar New Year about to pick up, demand for container leasing is expected to strengthen in December and January.

Current new container inventory at factories stand at about 600,000 TEU. This level is slightly above historical average, but we do not feel that there is excess supply in the market, given the current very low depo unit availability across the industry. More significantly, manufacturing prices have recently declined to about $1,900 per CEU, the result of which is a combination of low demand following the transpacific peak season and a depreciating renminbi. This reduction in order does not come as a major surprise, given the high volume of 3.4 million TEU of dry container manufacturers so far this year.

Even if production volume reduces substantially, as we are now observing, the total production will reach close to 4 million TEU, which will be one of the best year in the history of container manufacturing. We expect demand for lease equipment to pick up again toward December as we enter the seasonal buildup to Lunar New Year.To summarize the market situation. New container inventory is reasonable. Depo container availability is low.

New factory orders are being reduced. Utilization is at a virtual maximum for all major lessors. Shipping lines are relying more on lessors, given the higher economic uncertainty and weak financial performance in the first part of the year. And finally, lessors are purchasing 60% of the container being produced.

I will now turn over the call to Michael, who will give you a little more color about our financial results for the last quarter.

Michael Chan -- Executive Vice President and Chief Financial Officer

Thank you, Olivier. I will now focus on the key drivers of our financial results. Q3 lease rental income was $129.8 million, a $17.6 million increase or up 15.7% compared to the same quarter a year ago and a $8.3 million increase or up 6.8% compared to Q2. These increases were driven by higher utilization, an increase in the size of our own fleet and an increase in our average per diem rates.

Q3 net gains on trading container sales were $1.8 million, a $1.4 million increase compared to the same quarter a year ago due primarily to greater trading container volume. Q3 gains on sales containers was $8.5 million, exhibiting continued relatively strong resale container prices. Q3 direct container expense was $16.5 million, up $5.5 million compared to the same quarter a year ago. The year-over-year increase was primarily due to $2.5 million in container recovery costs associated with two insolvent Asian regional lessees, some high repositioning expense partially offset by lower storage expense resulting from higher utilization.

Q3 container impairment was $16.8 million and primarily contained $8.1 million in estimated unrecoverable containers with the same two insolvent lessees. While the majority of these containers were located by Textainer, the containers were either too damaged or too expensive to recover. Q3 container impairment also contains $6.9 million in impairments for specific, mostly niche containers, which include mostly reefers with limited commercial marketability. The current favorable container resale environment is probably the best time to maximize the value of these containers while also saving storage expense.

Depreciation expense for the quarter was $60.4 million, up $5.1 million or approximately 9% compared to the same quarter a year ago due primarily to a larger fleet size. During the quarter, we also increased our residual value for our 40-foot high-cube containers by $50 to $1,400 while reducing our residual value on 40-foot high-cube reefer containers by $500 to $4,000. The net impact of these changes is negligible with average annualized depreciation expense for the quarter remaining at approximately 4.5% of container cost. We continue to expect the run rate to remain close to this level as our recent CAPEX comes online.

Q3 general and administrative expense was $8.5 million, up $1.2 million compared to the same quarter a year ago. The year-over-year increase was due primarily to costs associated with departing senior executive personnel as well as higher headcount. Our long-term incentive compensation expense was impacted by $1.9 million in accelerated stock compensation expense associated with departing senior executive personnel. Interest expense increased year over year, primarily due to higher borrowing cost as we increased the fixed-rate portion of our debt, higher debt balances due to CAPEX and higher LIBOR rates.

Q3 interest expense, including realized hedging gains, was $34.4 million, a $4.5 million increase from the same quarter a year ago with effective interest rate at 4.24%, a 13 basis point increase when compared to last year. We have not yet seen a reciprocal increase in lease rental rates as this typically lags behind increases in market borrowing rates. However, our ratio of fixed rate and hedged debt to total debt stands at 78%, limiting the borderline impact of interest rate increases. Q3 net income was $1.9 million or $0.03 per diluted common share.

Our adjusted net income was $4.8 million for the quarter or $0.08 per diluted common share. As Olivier mentioned, this performance is the result of top-line improvement but offset by unusual costs and impairments affecting the quarter. Adjusted net income excluded $2.5 million of costs mostly associated with departing senior executives and a $900,000 write-off of unamortized debt issuance cost from refinancing certain debt in connection with the renewal of our revolving credit facility. Q3 adjusted EBITDA was $111.3 million, up $10.7 million when compared to the same quarter a year ago.Turning now to our balance sheet, we ended the third quarter with a cash position inclusive of restricted cash of $239.2 million, an increase of $33.8 million when compared to the same quarter a year ago.

Moreover, our financing platform is well-positioned and well priced to adequately fund our future CAPEX plans. We were pleased to have executed, on September 26, an amendment to expand our revolving credit facility from $700 million to $1.5 billion. The facility, which is important to our financing platform, was also extended to a five-year term and repriced lower by 50 basis points. In connection with the amendment, we used proceeds from the facility to pay in full and terminate a separate $190 million revolving credit facility and a $332 million term loan, further streamlining our capital structure.

Finally, subsequent to the end of the third quarter, on October 31, 2018, we purchased the remaining noncontrolling interest in TW Container Leasing. This was a joint venture used for our finance leases, which was already fully included in our consolidated financials. The purchase provides us with sole ownership of a portfolio of mostly seasoned finance leases with an asset book value of approximately $110 million. We expect to pay off the existing financing on these assets and position them in our core credit facilities where leverage can be increased and financing costs lowered.

This transaction will be included in our fourth quarter results and we expect accretive returns from this portfolio.This concludes our prepared remarks. Thank you all for your time today. Operator, please open the line for questions. 

Questions and Answers:

Operator

[Operator instructions] And our first question comes from Michael Brown from KBW. Please go ahead. Your line is open.

Michael Brown -- KBW -- Analyst

Hi, guys. Good morning.

Olivier Ghesquiere -- President and Chief Executive Officer

Good morning, Michael. How are you?

Michael Brown -- KBW -- Analyst

Good. Good. Yes, just first question here. So with the reefer containers that you wrote down and sold this quarter, what were you seeing there that you weren't able to deploy the containers, given the overall strength in the market and the high utilization rates?

Olivier Ghesquiere -- President and Chief Executive Officer

Well, there are several issues, as I mentioned earlier on. The vast majority of those containers are actually former Hanjin containers. These are, for a large part, containers that we acquired through fleet repurchases. So in other words, these were financed leases that we took over and we never assumed that we would have to deal with remarketing that equipment and that equipment wasn't really built to what we regard as the optimized specifications, so that's the first part.

The second element is that a lot of those containers were of a machinery type and with certain specific design to Hanjin that made them pretty difficult to remarket for other players. And although we did recover them and repaired them and had them standing on the depo, we found that it was very difficult to lease them out. And one issue with reefer is that if a machinery doesn't run for a little while, it causes all sorts of other concerns than even if you are then able to lease them out, you risk having a lot of incidents, so you have to spend money on repairing them, upgrading them and making sure they perform. So at the end of the day, we calculated that disposing off those containers was probably the right thing to do.

We think it's going to save us close to $1 million in storage cost overall. And from an economic standpoint, that's really the best thing we could do.

Michael Chan -- Executive Vice President and Chief Financial Officer

Hi, Mike. It's Michael. On top of that -- on top of what Olivier mentioned, it is going to save ongoing storage expense by over $1 million per year, which is about 10% of our overall storage expense annually. On top of that, it's going to also have immediate accretive effect on our utilization computation.

So, we're going to have a pickup in utilization of about 60 basis points as well, part of it really clearing this portion of the fleet out of the depos actually once we sell them.

Olivier Ghesquiere -- President and Chief Executive Officer

Yes. And perhaps, the last point I would like to add is that we also estimate that the current market is positive. We feel the opportunities to dispose of those containers at reasonable prices and we feel that now is probably the time to take that action.

Michael Brown -- KBW -- Analyst

OK. Just two follow-ups on that. So one, I understand you guys are still relatively new in the seat. But as you kind of look through the portfolio, do you still see other areas where you may need to do a little bit of cleanup and dispose of some other container assets? And then the second part being, utilization rate has already ticked up, I think you had noted it's already up to 98.6%.

So does that already reflect the disposal of those containers? Or should we expect that to increase an additional 60 basis points from there?

Olivier Ghesquiere -- President and Chief Executive Officer

OK. Well, on the first part of your question, Michael, we do not expect any further cleanup. As you pointed out yourself, with utilization at the level it is, it means that our fleet is now pretty close to full utilization, and we don't see any further need for cleaning up. That was really a very specific case associated to those reefer containers.

And I think I'll let Michael answer the second part of your question on utilization.

Michael Chan -- Executive Vice President and Chief Financial Officer

Yes, the utilization impact is notable, where you might have noted that we somewhat lag behind some of our public peers with this relieving of this portion of the fleet that was really dragging us, if you will. That utilization is going to get to close to 99% whereby, I think we'll see a smaller bridge, if you will, between us and our peers, so we're happy to do that. But really, aside from that metric, the saving of storage is quite notable and we're happy to take action to get that out of there and to redeploy our cash to something else.

Michael Brown -- KBW -- Analyst

OK. And then you guys identified that you're really seeing a lot of strength in the resale market. So, how should we think about, really, the gain-on-sale revenues as we look forward to the fourth quarter and then out to 2019? Obviously, that's maybe a little bit further than you can say what the market will look like at that time, but how should we kind of think about how active you'll be in selling younger boxes going forward?

Olivier Ghesquiere -- President and Chief Executive Officer

Thank you, Michael. I think we stated that, yes, we were going to probably be a little bit more proactive in disposing off certain containers a little bit younger in their life cycle. It doesn't mean that the volume will increase tremendously. What we see right now is that volume -- or certainly supply still is limited in terms of secondhand resale containers.

Although we have seen a slight decrease in our average resale price, it's primarily due to the fact that we recovered some of those badly damaged container from defaulting customer and we couldn't get a very high value on those, so that impacted our average resale price. But by and large, resale prices remain quite strong. They're still actually going up in certain parts of the world. Supply is limited.

So looking ahead, we don't anticipate any issue. We actually think that it is the right time to sell containers and we expect that certainly for the foreseeable two quarter, resale prices will remain fairly strong.

Michael Chan -- Executive Vice President and Chief Financial Officer

And, Michael, as we mentioned earlier, what we would like is this current environment where there's little depot inventory out there. So, as we negotiate extensions or rate renewal talks, if you will, this puts us in a very strong negotiating position, whereby, we're not afraid to take the box back if we're not going to get a rate that is satisfactory to us. So with that in hand, if we don't get the rate where we want, we can get the box back, sell that very likely at a gain and redeploy that capital to different pieces of equipment that is high-yielding, and we can then lock that return over a longer term as well.

Michael Brown -- KBW -- Analyst

OK. Great. Thank you. That's all the questions for me.

Michael Chan -- Executive Vice President and Chief Financial Officer

Thank you, Michael.

Operator

[Operator instructions] Our next question comes from Helane Becker from Cowen and Company. Please go ahead. Your line is open.

Helane Becker -- Cowen -- Analyst

Thanks very much, operator. Hi, guys. Thank you for the time here. Just on the watch list now.

So one question. One, were you surprised at the one or the two lessees that defaulted? And two, as you think about other customers, is there anybody else about which you have to be concerned, and do you think you would consider being more aggressive in repossessing your equipment in the future?

Olivier Ghesquiere -- President and Chief Executive Officer

Hi, Helane. Thank you.

Helane Becker -- Cowen -- Analyst

Hi.

Olivier Ghesquiere -- President and Chief Executive Officer Analysts

It's a very good question. Did we expect those two customer to default? No. It's actually a bad surprise. To tell you the truth, we've actually had business with those two lessee for more than 10 years, and we had quite a stable relationship without pretty much -- no problem so far until about six, seven months ago, their payments started slipping.

And I think what -- although the two cases are very, very different in nature, they're essentially down to a high bunker cost, increasing competition, and some external currency effect that has impacted them. And the reality is that -- what is effectively happening is that competition intensifying in Asia than anywhere else and consolidation is taking place. Unfortunately, what's happening in the Chinese market is that the consolidation is a little bit more Darwinian than it has been for deep-sea carriers, meaning that there is no consolidation by a takeover of other players. And the weaker players just simply are left to die on the side.

And this is what's happening with those two players, whereas the larger players become stronger on the domestic Chinese market, which, it is really maturing. And if you look at the situation, we now have quite a few Chinese players that used to be small domestic players that now rank in the top 20 or top 15 in the world with very, very substantial fleet sizes. Now, do we expect other bankruptcy, is obviously the next question. We don't expect any.

We don't have any in our radar at the moment. And I think that essentially those two incidents trace back to earlier this year where currency fluctuated and bunker cost went up all of a sudden. I think if we're going to have more, they would've happened at the same time. So I'm reasonably confident that we should not see further default of similar lessees.

Helane Becker -- Cowen -- Analyst

OK. Have any of your lessees come to you or fallen behind on payments, at least after those two?

Olivier Ghesquiere -- President and Chief Executive Officer

No. Those were really the two that we were concerned about. And I think, if I may, I would like to answer the second part of your question earlier on, which is -- was about the repossessing the equipment a bit more aggressively. I don't think there's a fundamental change, but I think that if we see that a lessee is running late, we certainly are taking action as we always have actually.

Helane Becker -- Cowen -- Analyst

OK. OK. And then just on -- I asked one of your competitors this question earlier today. When you think about the demand for equipment, you kind of think about it being picking up and December, January ahead of the Chinese New Year. And then normally, in February, it would fall off, and then it would kind of pick up again mid-February to late February.

But given that the spring season in -- or Easter, no other that affects shopping or not retail. But given that Easter is so late, and Chinese New Year is so early, do you think there would be increase in demand in the beginning of March, or would it move to the latter part of March?

Olivier Ghesquiere -- President and Chief Executive Officer

That's a very good question, Halane. To be honest, as you stated, we expect an increase in demand toward the Lunar New Year. Certainly, traditionally, December and January have been very strong. I think we expect that this year, and everybody is expecting that as well.

As to your question as to whether the demand remain strong toward Q2, that is traditionally the low season. And I personally don't see that we will see a very high volume even though there is this gap, as you mentioned, with Easter. I think that very much will depend on the situation on the trade sanction side. I mean, if the problem goes away, I think we will very likely have a very strong first half of the year.

But if the situation remains as it is now, I think that we are going to experience a typical, sort of, low cycle in the beginning of the year after Chinese New Year.

Helane Becker -- Cowen -- Analyst

OK. All right. Well, Thank you very much, Olivier. I appreciate your help.

Olivier Ghesquiere -- President and Chief Executive Officer

Thank you very much, Helane.

Michael Chan -- Executive Vice President and Chief Financial Officer

Thanks, Helane.

Helane Becker -- Cowen -- Analyst

Thanks, Michael.

Operator

[Operator instructions] Our next question comes from Scott Valentin from Compass Point. Please go ahead. Your line is open.

Scott Jean Valentin -- Compass Point Research & Trading, LLC -- Analyst

Good morning. Thanks for taking my question. Just with regard to capital management, I know not too long ago, Textainer paid a dividend. It was halted, part of the Hanjin, I guess, issue.

I'm just wondering how, maybe given your new role, how you guys think about capital management? Is it dividend a priority near term or given where the stock is trading at pretty discounted book value, does a buyback make sense? And how you weigh those two against CAPEX opportunities?

Olivier Ghesquiere -- President and Chief Executive Officer

Thank you, Scott. Just high level, I would like to say that this is something we always review on a constant basis. At this point in time, I think Michael and myself and the rest of the team, we're really focusing on getting the business right. And definitely, capital allocation is part of that discussion.

As you know, in the past, Textainer has paid a dividend. We even had a small share repurchase program. But I would like to say that that's very much a decision that has to be taken jointly with the board or probably more by the board than by the management. It's something we look at.

It's something we keep in mind. But as far as we're concerned, on a day-to-day basis, we're focusing on improving the business performance first.

Scott Jean Valentin -- Compass Point Research & Trading, LLC -- Analyst

OK. Fair enough. And then just a follow-up. Michael, I think you mentioned that with the $110 million in finance leases that you guys -- JV that you guys took over, you mentioned there's some accretion from that. Is it -- I mean, is it $0.05? Is it $0.10 a share annually? Is it in that range or...

Michael Chan -- Executive Vice President and Chief Financial Officer

I guess, if you look at -- Scott, if you look at the whole dollar amount, there probably as may be $3 million to about $1 million, if you will. We had 25% of it earlier. Now we've got the additional 75%. So probably -- from a whole dollar standpoint, about that much.

The good news, what we like seeing there is that as part of the $110 million you got the finance leases in there, but there are also some operating lease assets in there too near the end of their lives. We see a potential, nice sale opportunity whereby we may be able to reap a gain on those assets. So that's a nice portion of the fleet that is part of that.

Scott Jean Valentin -- Compass Point Research & Trading, LLC -- Analyst

OK. All right. Thanks very much.

Michael Chan -- Executive Vice President and Chief Financial Officer

Thank you.

Operator

Thank you. At this time, I'm showing we have no further questions. I would now like to turn the call back over to Olivier.

Olivier Ghesquiere -- President and Chief Executive Officer

Thank you. In closing, I'd like to say that I'm pleased with our performance in the third quarter, during which we did deliver some solid top-line growth, but we also took proactive steps to optimize our portfolio. Above all, I think we remain focused on maintaining this positive momentum, while also improving our bottom line. Textainer is and remains a formidable company with a global presence and a fantastic team of specialists dedicated to do their jobs.

We're also supported by our great and loyal customers, who have strong interest in our success, as a vibrant participant in the leasing industry. I'm excited to lead Textainer and believe our future is bright. I'm also fully committed to taking the necessary actions to strengthen our business and position Textainer to deliver strong long-term shareholder value. Thanks, again, for taking the time today to listen to the Textainer story.

I look forward to updating everyone on our progress during next call.

Operator

[Operator signoff]

Duration: 38 minutes

Call Participants:

Michael Chan -- Executive Vice President and Chief Financial Officer

Olivier Ghesquiere -- President and Chief Executive Officer

Michael Brown -- KBW -- Analyst

Helane Becker -- Cowen -- Analyst

Olivier Ghesquiere -- President and Chief Executive Officer Analysts

Scott Jean Valentin -- Compass Point Research & Trading, LLC -- Analyst

Michael Chan -- Executive Vice President and Chief Financial Officer

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