October 29, 2013

CAI International, Inc. Reports Results for the Third Quarter of 2013

SAN FRANCISCO--(BUSINESS WIRE)-- CAI International, Inc. (CAI) (NYSE:CAP), one of the world's leading lessors of intermodal freight containers, today reported results for the third quarter of 2013.

Highlights

  • CAI reported rental revenue for the third quarter of 2013 of $50.7 million, an increase of 25% compared to the third quarter of 2012 and 5% compared to the second quarter of 2013, the 14th consecutive quarter of record rental revenue.
  • CAI reported net income attributable to CAI common stockholders for the third quarter of 2013 of $15.3 million, compared to $16.5 million for the third quarter of 2012. CAI reported net income attributable to CAI common stockholders for the third quarter of 2013 of $0.68 per fully diluted share, compared to $0.84 for the third quarter of 2012. The average number of fully diluted shares in the quarter increased by 15% compared to the third quarter of 2012.
  • During the quarter CAI entered into a sale and lease back transaction with a shipping customer for approximately 9,000 TEUs of containers. The company also acquired approximately 13,000 TEUs of new containers during the quarter.

Net income attributable to CAI common stockholders for the third quarter of 2013 was $15.3 million, compared to $16.5 million for the third quarter of 2012. Net income per fully diluted share attributable to CAI common stockholders for the third quarter of 2013 was $0.68, compared to $0.84 for the third quarter of 2012. Net income per share was impacted by a 15% increase in the number of fully diluted shares outstanding during the quarter, compared to the third quarter of 2012.

Total revenue for the third quarter of 2013 was a record $53.9 million, compared to $44.9 million for the third quarter of 2012, an increase of 20%. Rental revenue for the third quarter of 2013 was $50.7 million, compared to $40.5 million for the third quarter of 2012. The increase in rental revenue was primarily due to an increase in the average number of TEUs of owned containers on lease. Management fee revenue for the third quarter of 2013 was $1.5 million, compared to $2.5 million for the third quarter of 2012, reflecting the reduction in the size of the managed fleet as CAI has acquired a number of its previously managed portfolios during the last twelve months. Finance lease income for the third quarter of 2013 was $1.7 million, compared to $2.0 million in the third quarter of 2012, as a result of the reclassification of certain leases during the second quarter of 2013. Average fleet utilization was flat at 92.0% in the third quarter of 2013, compared to 92.1% in the second quarter.

Victor Garcia, Chief Executive Officer of CAI, commented, "We reported 25% rental revenue growth this past quarter as compared to the same period in 2012. We are pleased that we have continued to gain support from our customers by leasing more containers this quarter, however, we did not experience the peak season demand normally expected during the third quarter. Our overall utilization remained essentially flat with the prior quarter at 92%, reflecting the moderate demand for containers that we experienced during the third quarter, which historically has been when demand has been strongest. Per diem pricing throughout the industry has been aggressive during the quarter reflecting the more limited container demand this year and our belief that leasing companies have tried to reduce their available inventory. According to industry sources, inventory of new containers at the factories has decreased significantly during the third quarter, and we will be focusing on whether the lower inventory levels at the factories will result in a firming of per diem rates over the coming months."

Mr. Garcia continued, "Our net income this quarter was negatively affected by higher storage costs and lower gains on sale of equipment. Higher storage costs reflect a 43% increase in the size of our owned fleet compared to the prior year, a lower overall fleet utilization compared to the same quarter last year and our purchase of some managed portfolios over the course of the past 12 months that had a lower utilization than our overall fleet. Gain on sale of equipment was also lower this quarter compared to the same period last year due to slightly lower sale prices in some regions, and a decrease in the average age of sold containers which led to an increase in the average book values of equipment sold. We are implementing several initiatives that are expected to increase our sales volume over the coming quarters which we expect will reduce our depot inventory in low demand areas and improve our overall utilization."

Mr. Garcia concluded, "As I stated, demand for containers has been softer this past quarter than had been expected, which we believe reflects both the slow economic growth in the United States and Europe, as well as the recent moderation of growth in China. However, since the end of the quarter we have witnessed more requests for equipment, which we view as a positive development of improved container demand. We also remain optimistic about the demand for equipment in 2014 since many recent economic forecasts predict an improving outlook for most of the global economy. This improved outlook includes stabilizing and potentially improving economies in Europe, the U.S. economy showing signs of continued improvement and of particular importance to our business, an improved outlook for trade growth in China and the rest of Asia. With even modest growth in world trade, we would expect demand for containers to significantly improve from what we are seeing so far this year."

 
CAI International, Inc.
Consolidated Balance Sheets
(In thousands, except share information)
(UNAUDITED)
   
September 30, December 31,
  2013     2012  
Assets
Current assets
Cash $ 35,618 $ 17,671

Accounts receivable (owned fleet), net of allowance for doubtful accounts of $1,060 and $794 at September 30, 2013 and December 31, 2012, respectively

40,464 32,627
Accounts receivable (managed fleet) 10,611 19,131
Current portion of direct finance leases 12,349 10,625
Prepaid expenses 15,435 11,952
Deferred tax assets 2,189 2,189
Other current assets   246     919  
Total current assets 116,912 95,114
Restricted cash 9,508 4,376

Rental equipment, net of accumulated depreciation of $193,826 and $147,654 at September 30, 2013 and December 31, 2012, respectively

1,436,911 1,210,234
Net investment in direct finance leases 63,088 74,929

Furniture, fixtures and equipment, net of accumulated depreciation of $1,578 and $1,254 at September 30, 2013 and December 31, 2012, respectively

1,535 1,847

Intangible assets, net of accumulated amortization of $8,162 and $7,447 at September 30, 2013 and December 31, 2012, respectively

  769     1,441  
Total assets $ 1,628,723   $ 1,387,941  
 
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 6,317 $ 5,985
Accrued expenses and other current liabilities 8,631 8,465
Due to container investors 13,215 18,589
Unearned revenue 6,656 7,893
Current portion of debt 74,280 61,044
Current portion of capital lease obligations 1,944 2,242
Rental equipment payable   5,522     2,561  
Total current liabilities 116,565 106,779
Debt 1,072,630 888,990
Deferred income tax liability 37,759 40,051
Capital lease obligations 3,723 5,084
Income taxes payable   192     192  
Total liabilities   1,230,869     1,041,096  
 
Stockholders' equity

Common stock: par value $.0001 per share; authorized 84,000,000 shares; issued and outstanding 22,239,340 and 22,052,529 shares at September 30, 2013 and December 31, 2012, respectively

2 2
Additional paid-in capital 183,519 181,063
Accumulated other comprehensive loss (2,699 ) (2,917 )
Retained earnings   217,032     168,697  
Total stockholders' equity   397,854     346,845  
Total liabilities and stockholders' equity $ 1,628,723   $ 1,387,941  
 

 
CAI International, Inc.
Consolidated Statements of Income
(In thousands, except per share data)
(UNAUDITED)
       
Three Months Ended Nine Months Ended
September 30, September 30,
  2013     2012     2013     2012  
Revenue
Rental revenue $ 50,711 $ 40,473 $ 145,721 $ 108,061
Management fee revenue 1,503 2,492 6,027 9,699
Gain on sale of container portfolios - - - 1,256
Finance lease income   1,684     1,974     6,096     5,055  
Total revenue   53,898     44,939     157,844     124,071  
 
Operating expenses
Depreciation of rental equipment 17,389 12,495 49,007 34,206
Amortization of intangible assets 227 224 681 676
Gain on disposition of used rental equipment (1,329 ) (2,491 ) (5,822 ) (8,811 )
Storage, handling and other expenses 4,979 2,197 13,611 5,965
Marketing, general and administrative expenses 6,055 6,275 18,274 18,610
Loss on foreign exchange   374     193     199     125  
Total operating expenses   27,695     18,893     75,950     50,771  
 
Operating income   26,203     26,046     81,894     73,300  
 
Interest expense 9,546 7,179 26,905 19,435
Write-off of deferred financing costs - - 1,108 -
Interest income   -     (1 )   (4 )   (8 )
Net interest expense   9,546     7,178     28,009     19,427  
 
Net income before income taxes and non-controlling interest 16,657 18,868 53,885 53,873
Income tax expense   1,320     2,102     5,550     7,003  
 
Net income 15,337 16,766 48,335 46,870
Net income attributable to non-controlling interest   -     (238 )   -     (816 )
Net income attributable to CAI common stockholders $ 15,337   $ 16,528   $ 48,335   $ 46,054  
 
 

Net income per share attributable to CAI common stockholders

Basic $ 0.69 $ 0.86 $ 2.18 $ 2.39
Diluted $ 0.68 $ 0.84 $ 2.13 $ 2.33
 
Weighted average shares outstanding
Basic 22,186 19,295 22,139 19,295
Diluted 22,645 19,764 22,674 19,730
 

 
CAI International, Inc.
Fleet Data
(UNAUDITED)
   
As of September 30,
2013 2012
 
Owned container fleet in TEUs 856,121 616,257
Managed container fleet in TEUs 289,846 444,906
Total container fleet in TEUs 1,145,967 1,061,163
 
 
Owned railcar fleet in units 1,572 1,393
 

Conference Call

A conference call to discuss the financial results for the third quarter of 2013 will be held on Tuesday, October 29, 2013 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" tab of CAI's website, www.capps.com, by selecting "Q3 2013 Earnings Conference Call." A webcast replay will be available for 30 days on the "Investors" tab of our website.

About CAI International, Inc.

CAI is one of the world's leading managers and lessors of intermodal freight containers. As of September 30, 2013, the company operated a worldwide fleet of approximately 1,146,000 TEUs of containers through 16 offices located in 12 countries including the United States. CAI also owns a fleet of railcars, which it leases within North America.

This press release contains forward-looking statements regarding future events and the future performance of CAI International, Inc. These statements 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, 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, 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, 2012 and its interim reports on Form 10-Q and its 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.

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

Source: CAI International, Inc.

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