CAI International
Feb 14,2018

CAI International, Inc. Reports Results for the Fourth Quarter and Full Year of 2017

SAN FRANCISCO--(BUSINESS WIRE)--Feb. 14, 2018-- CAI International, Inc. (CAI) (NYSE: CAI), one of the world’s leading transportation finance and logistics companies, today reported results for the fourth quarter and full year of 2017.

Highlights

  • Net income for the fourth quarter of 2017 was $36.6 million, or $1.81 per fully diluted share, compared to $0.6 million, or $0.03 per fully diluted share, in the fourth quarter of 2016.
  • Net income for the fourth quarter of 2017 included a tax benefit of $16.9 million associated with the recently enacted Tax Cuts and Jobs Act (the Act), and a non-recurring, non-cash tax charge of $1.1 million. Excluding the net tax benefit of $15.8 million, adjusted net income for the fourth quarter of 2017 was $20.7 million, or $1.03 per fully diluted share1.
  • Net income for the year ended December 31, 2017 was $72.1 million, or $3.68 per fully diluted share, compared to $6.0 million, or $0.31 per fully diluted share, in the year ended December 31, 2016.
  • Lease-related revenue for the fourth quarter of 2017 was $74.6 million, an increase of 30% compared to the fourth quarter of 2016, and 8% compared to the third quarter of 2017.
  • Lease-related revenue for the year ended December 31, 2017 was $267.8 million, an increase of 15% compared to the year ended December 31, 2016.
  • Average utilization for our owned container fleet during the fourth quarter of 2017 was 99.0% (on a CEU basis) compared to 94.3% for the fourth quarter of 2016, and 98.2% for the third quarter of 2017. Current utilization is 99.2%.
  • During the fourth quarter of 2017 we leased out 243 new railcars and have commitments to lease out a further 564 new cars in the first half of 2018.
  • Average railcar utilization during the fourth quarter of 2017, excluding new railcars not yet leased, was 87.1% compared to 94.1% for the fourth quarter of 2016, and 89.3% for the third quarter of 2017.
  • During the fourth quarter of 2017, CAI issued approximately 890,000 shares of its common stock through an at-the-market offering for net proceeds of $29.1 million, or $32.81 per average share issued.

Additional information on CAI's results, as well as the state of the industry, is available in a presentation posted today on the "Investors" section of CAI's website, www.capps.com.

Victor Garcia, President and Chief Executive Officer of CAI, commented, “We are very pleased with the exceptional performance of our company during the fourth quarter and the fundamentals of the business remain strong. Excluding the tax benefit from the recently enacted Tax Cuts and Jobs Act and the non-recurring, non-cash tax charge, we reported net income per fully diluted share of $20.7 million, or $1.03 per share. Our results were driven by the ongoing momentum in our container leasing business, which reported average utilization of 99% during the quarter. We benefited from continued investment during the quarter at lease rates that remained attractive, and also from gains on the sale of containers as we looked to maximize the sale price of our available idle equipment. For the full year we invested $569 million on equipment, of which $487 million was related to containers.

“Our rail segment continues to work through a difficult market environment. However, during the fourth quarter we experienced increased momentum in leasing our railcars. During the quarter we leased out 243 new railcars and have commitments to lease out a further 564 new cars in the first half of 2018. We continue to see increased inquiry for railcars across various equipment categories, although lease rates remain below our targeted levels due to continued aggressive pricing from competitors. We believe rail velocity amongst Class 1 railroads has decreased and that customers are looking for additional equipment due to economic growth in the United States and the slowing of rail velocity in the United States rail network. We are becoming more optimistic about the opportunities for our rail segment due to the expected increased economic growth in the United States in 2018. We also believe that our rail segment will benefit if there is increased level of manufacturing and distribution activity as a result of companies increasing their investment in the United States due to the regulatory and tax changes that have been enacted.

“Our logistics business continued to work through the integration of our intermodal and truck brokerage operation. The segment as a whole reported a loss for the quarter due to lost productivity as a result of the hurricane disruptions in the southeastern United States during the quarter and reduced activity with some of our truck brokerage customers. Nonetheless, our international NVOCC and freight forwarding business had growing profitability in the quarter and full year as compared to the same periods in 2016. We are proceeding with the integration of our domestic logistics operations and are seeing increased momentum as we gain new customers and increase volumes with existing customers. Trucking capacity remains very tight in the United States as a result of the implementation of electronic logging and the continued strength of the United States economy. We think that tightness in capacity will continue in 2018 and are focused on working with customers to meet their transportation needs. Beyond individual segment results, we continue to see opportunities to cross-market assets and customers between our container leasing, rail and logistics segments.”

Mr. Garcia, concluded, “We enjoyed record earnings in 2017 and expect 2018 to be a very strong demand year for containers as the world economy continues to expand and lessors continue to operate with high utilization. Offsetting the impact of strong demand in the coming year is the expectation of increased competition from container equipment lessors who are active in the market, lower expected gain on sale of equipment due to a lack of equipment availability and higher expected interest costs. We expect interest costs to increase due to ongoing equipment investment in 2018 and, more importantly, due to the expected higher floating and fixed interest rates in 2018.”

1 Refer to the “Reconciliation of GAAP Amounts to Non-GAAP Amounts” and “Use of Non-GAAP Financial Measures” set forth below.

 
CAI International, Inc.
Consolidated Balance Sheets
(In thousands, except share information)
(UNAUDITED)
 
    December 31,   December 31,
      2017       2016  
Assets        
Current assets        
Cash   $ 14,735     $ 15,685  
Cash held by variable interest entities     20,685       30,449  

Accounts receivable, net of allowance for doubtful accounts of $1,440 and $1,340 at December 31, 2017 and 2016, respectively

    70,598       63,745  
Current portion of net investment in direct finance leases     30,063       19,959  
Prepaid expenses and other current assets     4,258       5,315  
Total current assets     140,339       135,153  
Restricted cash     11,789       6,192  

Rental equipment, net of accumulated depreciation of $505,546 and $421,153 at December 31, 2017 and 2016, respectively

    2,004,961       1,807,010  
Net investment in direct finance leases     246,450       80,582  
Goodwill     15,794       15,794  

Intangible assets, net of accumulated amortization of $3,407 and $2,681 at December 31, 2017 and 2016, respectively

    7,723       9,691  

Furniture, fixtures and equipment, net of accumulated depreciation of $3,201 and $2,833 at December 31, 2017 and 2016, respectively

    338       550  
Other non-current assets     3,008       962  
Total assets   $ 2,430,402     $ 2,055,934  
         
Liabilities and Stockholders' Equity        
Current liabilities        
Accounts payable   $ 7,831     $ 13,804  
Accrued expenses and other current liabilities     15,706       11,778  
Due to container investors     4,119       7,077  
Unearned revenue     7,811       10,613  
Current portion of debt     132,049       95,527  
Rental equipment payable     92,415       25,207  
Total current liabilities     259,931       164,006  
Debt     1,570,773       1,380,499  
Deferred income tax liability     35,853       51,804  
Other long term liabilities     -       2,121  
Total liabilities     1,866,557       1,598,430  
         
Stockholders' equity        

Common stock: par value $.0001 per share; authorized 84,000,000 shares; issued and outstanding 20,390,622 and 19,057,217 shares at December 31, 2017 and 2016, respectively

    2       2  
Additional paid-in capital     172,325       141,058  
Accumulated other comprehensive loss     (6,122 )     (8,132 )
Retained earnings     397,640       324,576  
Total stockholders' equity     563,845       457,504  
Total liabilities and stockholders' equity   $ 2,430,402     $ 2,055,934  

 

 
CAI International, Inc.
Consolidated Statements of Income
(In thousands, except per share data)
(UNAUDITED)
 
    Three Months Ended   Year Ended
    December 31,   December 31,
      2017       2016     2017       2016
Revenue                
Container lease revenue   $ 65,581     $ 49,453   $ 235,365     $ 202,328
Rail lease revenue     9,017       8,028     32,476       30,490
Logistics revenue     19,436       19,793     80,552       61,536
Total revenue     94,034       77,274     348,393       294,354
                 
Operating expenses                
Depreciation of rental equipment     28,138       27,476     110,952       104,877
Storage, handling and other expenses     4,267       8,686     20,918       35,862
Logistics transportation costs     16,547       16,853     68,155       51,980
(Gain) loss on sale of used rental equipment     (2,808 )     4,721     (5,347 )     12,671
Administrative expenses     11,487       6,928     42,699       35,678
Total operating expenses     57,631       64,664     237,377       241,068
                 
Operating income     36,403       12,610     111,016       53,286
                 
Other expenses                
Net interest expense     15,136       11,219     53,052       42,754
Other expense     114       247     765       654
Total other expenses     15,250       11,466     53,817       43,408
                 
Income before income taxes and non-controlling interest     21,153       1,144     57,199       9,878
Income tax (benefit) expense     (15,410 )     524     (14,861 )     3,844
                 
Net income     36,563       620     72,060       6,034
Net income attributable to non-controlling interest     -       -     -       37
Net income attributable to CAI                
common stockholders   $ 36,563     $ 620   $ 72,060     $ 5,997
                 
                 
Net income per share attributable to                
CAI common stockholders                
Basic   $ 1.86     $ 0.03   $ 3.74     $ 0.31
Diluted   $ 1.81     $ 0.03   $ 3.68     $ 0.31
                 
Weighted average shares outstanding                
Basic     19,682       18,992     19,253       19,318
Diluted     20,154       19,081     19,607       19,393

 

 
CAI International, Inc.
Consolidated Statements of Cash Flows
(In thousands, except per share data)
(UNAUDITED)
 
    Year Ended
    December 31,
      2017       2016  
Cash flows from operating activities        
Net income   $ 72,060     $ 6,034  
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation     111,294       105,236  
Amortization of debt issuance costs     3,306       2,975  
Amortization of intangible assets     1,969       1,443  
Stock-based compensation expense     2,087       1,732  
Reduction in contingent consideration     (2,211 )     (3,789 )
Unrealized loss on foreign exchange     106       276  
(Gain) loss on sale of used rental equipment     (5,347 )     12,671  
Loss on disposal of subsidiary     -       146  
Deferred income taxes     (14,947 )     1,138  
Excess tax benefit from share-based compensation awards     (1,858 )     -  
Bad debt expense     402       3,151  
Changes in other operating assets and liabilities:        
Accounts receivable     (8,922 )     (1,799 )
Prepaid expenses and other assets     735       (2,691 )
Accounts payable, accrued expenses and other current liabilities     (348 )     3,572  
Due to container investors     (2,958 )     1,276  
Unearned revenue     (1,296 )     (2,115 )
Net cash provided by operating activities     154,072       129,256  
Cash flows from investing activities        
Purchase of rental equipment     (502,050 )     (251,165 )
Acquisitions, net of cash acquired     -       (15,599 )
Net proceeds from sale of used rental equipment     66,364       66,073  
Disposal of subsidiary, net of cash disposed of     -       (460 )
Purchase of furniture, fixtures and equipment     (126 )     (82 )
Receipt of principal payments from direct finance leases     24,061       19,633  
Net cash used in investing activities     (411,751 )     (181,600 )
Cash flows from financing activities        
Proceeds from debt     754,340       552,540  
Principal payments on debt     (527,850 )     (496,270 )
Debt issuance costs     (3,441 )     (1,515 )
(Increase) decrease in restricted cash     (5,597 )     1,020  
Proceeds from issuance of stock     29,148       -  
Repurchase of stock     -       (9,176 )
Exercise of stock options     145       -  
Net cash provided by financing activities     246,745       46,599  
Effect on cash of foreign currency translation     220       (674 )
Net decrease in cash     (10,714 )     (6,419 )
Cash at beginning of the period     46,134       52,553  
Cash at end of the period   $ 35,420     $ 46,134  

 

 
CAI International, Inc.
Fleet Data
(UNAUDITED)
 
            As of December 31,
            2017   2016
                 
Owned container fleet in TEUs           1,146,268     921,694  
Managed container fleet in TEUs           80,736     162,582  
Total container fleet in TEUs           1,227,004     1,084,276  
                 
Owned container fleet in CEUs           1,209,209     1,014,078  
Managed container fleet in CEUs           73,530     146,258  
Total container fleet in CEUs           1,282,739     1,160,336  
                 
Owned railcar fleet in units           7,172     6,459  
                 
                 
    Three Months Ended   Year Ended
    December 31,   December 31,
    2017   2016   2017   2016
Average Utilization                
Container fleet utilization in CEUs   98.9 %   93.8 %   97.4 %   92.8 %
Owned container fleet utilization in CEUs   99.0 %   94.3 %   97.6 %   93.5 %
Railcar fleet utilization in units - excluding new units not yet leased   87.1 %   94.1 %   90.0 %   93.9 %
Railcar fleet utilization in units - including new units not yet leased   73.8 %   86.0 %   78.3 %   88.7 %
                 
            As of December 31,
            2017   2016
Period Ending Utilization                
Container fleet utilization in CEUs           99.2 %   94.9 %
Owned container fleet utilization in CEUs           99.2 %   95.2 %
Railcar fleet utilization in units - excluding new units not yet leased           87.9 %   93.1 %
Railcar fleet utilization in units - including new units not yet leased           73.4 %   82.9 %
                     
Utilization of containers is computed by dividing the total units on lease in CEUs (cost equivalent units), by the total units in our fleet in CEUs.
The total container fleet excludes new units not yet leased and off-hire units designated for sale.
Utilization of railcars is computed by dividing the total number of railcars on lease by the total number of railcars in our fleet.
The impact on utilization of including new units not yet leased in the total railcar fleet has been included in the table above.
 

CEU is a ratio used to convert the actual number of containers in our fleet to a figure based on the relative purchase prices of our various equipment types to that of a standard 20 foot dry van container. For example, the CEU ratio for a standard 40 foot dry van container is 1.6, and a 40 foot high cube container is 1.7.

 

 
CAI International, Inc.
Reconciliation of GAAP Amounts to Non-GAAP Amounts
(In thousands, except per share data)
(UNAUDITED)
 
    Three Months Ended
    December 31,
      2017       2016
         
Net income   $ 36,563     $ 620
Non-recurring tax benefit     (16,944 )     -
Non-recurring tax charge     1,103       -
Adjusted net income   $ 20,722     $ 620
         
Diluted net income per share   $ 1.81     $ 0.03
         
Diluted adjusted net income per share   $ 1.03     $ 0.03
         
Weighted average number of common shares used to calculate (in thousands)        
Diluted net income per share and diluted adjusted net income per share     20,154       19,081

 

Conference Call

A conference call to discuss the financial results for the fourth quarter of 2017 will be held on Wednesday, February 14, 2018 at 5:00 p.m. ET. The dial-in number for the teleconference is 1-888-398-8098; outside of the U.S., call 1-707-287-9363. The call may be accessed live over the internet (listen only) under the “Investors” section of CAI’s website, www.capps.com, by selecting “Q4 2017 Earnings Conference Call.” A webcast replay will be available for 30 days on the “Investors” section of our website.

Earnings Presentation

A presentation summarizing our fourth quarter and full year 2017 results is available on the “Investors” section of our website, www.capps.com.

Use of Non-GAAP Financial Measures

This press release contains non-GAAP financial measures, and includes net income and earnings per share adjusted to reflect the impact of a non-recurring tax benefit and a non-recurring tax charge. These measures are not in accordance with, or an alternative for, generally accepted accounting principles, or GAAP, and may be different from non-GAAP financial measures used by other companies. We believe the presentation of non-GAAP financial measures provides useful information to management and investors regarding various financial and business trends relating to our financial condition and results of operations, and that when GAAP financial measures are viewed in conjunction with non-GAAP financial measures, investors are provided with a more meaningful understanding of our ongoing operating performance. Non-GAAP financial measures are not intended to be considered in isolation or as a substitute for GAAP financial measures. To the extent this release contains historical non-GAAP financial measures, we have also provided a reconciliation to the corresponding GAAP financial measures for comparative purposes.

About CAI International, Inc.

CAI is one of the world’s leading transportation finance and logistics companies. As of December 31, 2017, CAI operated a worldwide fleet of approximately 1.3 million CEUs of containers, and owned a fleet of 7,172 railcars that it leases within North America. CAI operates through 23 offices located in 14 countries including the United States.

Forward-Looking Statements

This press release contains forward-looking statements regarding future events and the future performance of CAI, including but not limited to, the statements regarding management's business outlook on the container leasing business, management's outlook for growth of CAI’s railcar leasing investments and the outlook of our logistics business. These statements and others herein are forward-looking statements within the meaning of the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934 and involve risks and uncertainties that could cause actual results of operations and other performance measures to differ materially from current expectations including, but not limited to, utilization rates, expected economic conditions, expected growth of international trade, availability of credit on commercially favorable terms or at all, customer demand, container investment levels, container prices, lease rates, increased competition, volatility in exchange rates, growth in world trade and world container trade, the ability of CAI to convert letters of intent with its customers to binding contracts, potential to sell CAI’s securities to the public and others.

CAI refers you to the documents that it has filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2016, its Quarterly Reports on Form 10-Q and its Current Reports on Form 8-K. These documents contain additional important factors that could cause actual results to differ from current expectations and from forward-looking statements contained in this press release. Furthermore, CAI is under no obligation to (and expressly disclaims any such obligation to) update or alter any of the forward-looking statements contained in this press release whether as a result of new information, future events or otherwise, unless required by law.

 

Source: CAI International, Inc.

CAI International, Inc.
Tim Page, 415-788-0100
Chief Financial Officer
tpage@capps.com

Stock Information

2018 Annual Report

2018 Annual Report