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TAL International Group CEO Discusses Q2 Results - Earnings Call Transcript

Our shipping line customers continued to be very cautious about purchasing new containers directly and they remained interested in pursuing sale-leaseback transactions for their existing owned containers.

We estimate that leasing companies have purchased roughly two-thirds of new production so far this year, which is an even larger share than in 2010 or 2011, and we have completed several sizable sale-leaseback transactions with our customers this year.

This combination of moderate trade growth, tight container inventories and a market share shift from owned to leased containers remains the basic formula allowing us to achieve high utilization strong profitability and aggressive growth at a time when global economic conditions seem challenging.

As I mentioned, we will have another strong investment year in 2012. Through July 25 th, we have ordered about $750 million of new or sale-leaseback containers for delivery in 2010. Roughly 75% of containers are committed to leases with a number of the world's largest shipping lines.

Pick-ups for lease commitments have been slower than expected as renewed global instability has taken some of the momentum out of the traditional summer peak season. Because of this, we expect that our pace of investment in new containers to slow in the second half of the year. Though the risk potential for further sale-leaseback transactions, and due to our strong start this year, we will achieve asset growth over 15% in 2012, just based on our existing orders. The large number of new and sale-leaseback containers that remained committed to go on hire will support strong pick-up activity and growth in our leasing revenue in the third quarter.

As mentioned in the press release, we are increasing our dividend this quarter to $0.60 per share. This increase reflects our continued strong performance and expectations that market conditions will remain favorable. The increased dividend also reflects the strong growth of our long-term lease portfolio and the resulting increasing in our recurring leasing revenues.

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