CAI International
Apr 29,2021

CAI International, Inc. Reports Results for the First Quarter of 2021

SAN FRANCISCO--(BUSINESS WIRE)--Apr. 29, 2021-- CAI International, Inc. (“CAI” or the “Company”) (NYSE: CAI), one of the world’s leading transportation finance companies, today reported results for the first quarter of 2021.

Highlights

  • Net income from continuing operations attributable to CAI common stockholders for the first quarter of 2021 was $32.5 million, or $1.85 per fully diluted share.
  • Return on common equity on adjusted net income from continuing operations1 was 21.3% in the first quarter of 2021.
  • Total leasing revenue for the first quarter of 2021 was $80.8 million, compared to $69.1 million in the first quarter of 2020.
  • CAI’s Board of Directors declared a cash dividend of $0.30 per common share payable on June 25, 2021 to shareholders of record as of June 10, 2021.
  • CAI leased out $129 million of new containers on long-term or finance leases in the first quarter of 2021 and has leased, or has commitments to lease, an additional $350 million in the second and third quarters.
  • Average CEU utilization for CAI’s owned container fleet during the first quarter of 2021 was 99.7%, compared to 99.3% for the fourth quarter of 2020. Current CEU utilization is 99.7%.
 

Financial and Operating Highlights

 
     
  Three Months Ended  
  March 31,
2021
December 31,
2020
March 31,
2020
 
     
  Total leasing revenue

$

80,800

 

$

81,567

 

$

69,113

 

 
     
  Continuing operations GAAP  
  Net income attributable to common stockholders

$

32,470

 

$

32,511

 

$

10,462

 

 
  Net income per share - diluted

$

1.85

 

$

1.81

 

$

0.59

 

 
     
  Continuing operations non-GAAP 1  
  Adjusted net income attributable to common stockholders

$

32,470

 

$

31,622

 

$

10,462

 

 
  Adjusted net income per share - diluted

$

1.85

 

$

1.76

 

$

0.59

 

 
     
  Return on common equity (continuing operations) 2

 

21.3

%

 

21.2

%

 

7.1

%

 
     
  Total container fleet size in CEUs at end of period

 

1,837,560

 

 

1,798,520

 

 

1,705,059

 

 
  Container fleet utilization at end of period

 

99.7

%

 

99.6

%

 

98.2

%

 

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

Timothy Page, Interim President and Chief Executive Officer of CAI, commented, “We are very pleased with our results for the quarter. Adjusted net income from continuing operations attributable to CAI common stockholders was a record $32.5 million, 3% greater than the fourth quarter of 2020, and 210% greater than the first quarter of 2020. Total leasing revenue was $81 million in the quarter, an increase of 17% as compared to the first quarter of last year.

“Our strong results for the quarter were driven by a number of positive factors. During the quarter utilization remained strong at an average of 99.7%, and we leased out $129 million of new containers with an average lease tenor of 9.7 years. The resale market continued to be strong during the quarter and we realized $6.7 million in gains on sale, as we saw a significant increase in average sale prices. Additionally, we continue to benefit from low financing costs, ending the quarter with an average cash interest rate cost of 2.10%. The result of these positive factors was an ROE in the quarter of 21.3%.”

Mr. Page continued, “The global container market continues to benefit from an exceptional level of customer demand and we don’t expect to see any softening in market conditions through at least the remainder of the year. As mentioned earlier, we leased out $129 million of equipment in the first quarter, a quarter which is traditionally the weakest in the global container shipping market. Global container traffic is only expected to increase as the global economy slowly recovers from the pandemic. Additionally, the global logistics supply chain continues to be stressed as evidenced by the disruptions that were created by the grounding of the Ever Given in the Suez Canal, and the growing congestion impacting the Port of Long Beach. All of these factors point towards continued strong demand for shipping containers.

“We currently have $350 million of commitments from our customers for delivery of containers in the second and third quarters and are confident that demand will accelerate as we enter the traditionally strongest time of the year for containerized shipping. We continue to maintain historically high levels of liquidity and are well positioned to take advantage of the expected increase in demand.

“Given our expectation that our container fleet will be effectively fully utilized, we don’t expect that we will be able to realize the same level of gains on sale that we achieved in the first quarter. Nonetheless, driven by our strong order book, we expect Q2 net income to be at or slightly exceed that of Q1 and will provide the basis for continued growth in the coming quarters.”

Mr. Page concluded, “We continue to be very optimistic about our business for the remainder of 2021 and well into next year. We have strong and increasing cash flows from a robust forward customer order book that we expect will generate attractive long-term returns. We have virtually no off-lease equipment and see nothing on the horizon that would impact utilization. On the cost side of the equation, we have almost 80% of our funding costs locked in at very low rates for multiple years. As a result of these favorable factors, we expect to continue to deliver exceptional high teen or greater ROE’s for our shareholders.”

Additional information on CAI’s results, as well as comments on market trends, is available in a presentation posted today on the “Investors” section of CAI's website, www.capps.com.

CAI International, Inc.
Consolidated Balance Sheets
(In thousands, except share information)
(UNAUDITED)
 
March 31, December 31,

2021

2020

Assets
Current assets
Cash

$

23,971

$

26,691

 

Cash held by variable interest entities

 

23,942

 

26,856

 

Current portion of restricted cash

 

600

 

600

 

Accounts receivable, net of allowance for doubtful accounts of $400 and $393
at March 31, 2021 and December 31, 2020, respectively

 

61,843

 

65,310

 

Current portion of net investment in finance leases

 

80,308

 

78,992

 

Current portion of financing receivable

 

10,615

 

9,550

 

Prepaid expenses and other current assets

 

5,788

 

6,663

 

Total current assets

 

207,067

 

214,662

 

Restricted cash

 

12,087

 

12,355

 

Rental equipment, net of accumulated depreciation of $691,842 and $669,360
at March 31, 2021 and December 31, 2020, respectively

 

1,808,001

 

1,781,321

 

Net investment in finance leases

 

585,016

 

550,573

 

Financing receivable

 

50,568

 

48,888

 

Derivative instruments

 

9,586

 

-

 

Other non-current assets

 

4,280

 

4,833

 

Total assets

$

2,676,605

$

2,612,632

 

 
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable

$

3,231

$

3,666

 

Accrued expenses and other current liabilities

 

26,569

 

29,598

 

Unearned revenue

 

3,260

 

3,029

 

Current portion of debt

 

183,878

 

183,448

 

Rental equipment payable

 

61,582

 

100,509

 

Total current liabilities

 

278,520

 

320,250

 

Debt

 

1,642,879

 

1,562,283

 

Derivative instruments

 

-

 

80

 

Net deferred income tax liability

 

25,532

 

24,442

 

Other non-current liabilities

 

3,467

 

3,337

 

Total liabilities

 

1,950,398

 

1,910,392

 

 
Stockholders' equity
Preferred stock, par value $.0001 per share; authorized 10,000,000
8.50% Series A fixed-to-floating rate cumulative redeemable perpetual preferred
stock, issued and outstanding 2,199,610 shares, at liquidation preference

 

54,990

 

54,990

 

8.50% Series B fixed-to-floating rate cumulative redeemable perpetual preferred
stock, issued and outstanding 1,955,000 shares, at liquidation preference

 

48,875

 

48,875

 

Common stock: par value $.0001 per share; authorized 84,000,000 shares; issued and outstanding
17,304,111 and 17,562,779 shares at March 31, 2021 and December 31, 2020, respectively

 

2

 

2

 

Additional paid-in capital

 

89,308

 

100,795

 

Accumulated other comprehensive loss

 

1,370

 

(5,743

)

Retained earnings

 

531,662

 

503,321

 

Total stockholders' equity

 

726,207

 

702,240

 

Total liabilities and stockholders' equity

$

2,676,605

$

2,612,632

 

CAI International, Inc.
Consolidated Statements of Operations
(In thousands, except per share data)
(UNAUDITED)
 
Three Months Ended
March 31,

2021

2020

Leasing revenue
Operating leases

$

63,867

 

$

54,629

 

Finance leases

 

13,245

 

 

11,590

 

Other

 

3,688

 

 

2,894

 

Total leasing revenue

 

80,800

 

 

69,113

 

 
Operating expenses
Depreciation of rental equipment

 

28,551

 

 

27,048

 

Storage, handling and other expenses

 

2,489

 

 

4,429

 

Gain on sale of rental equipment

 

(6,743

)

 

(1,647

)

Administrative expenses

 

7,740

 

 

6,895

 

Total operating expenses

 

32,037

 

 

36,725

 

 
Operating income

 

48,763

 

 

32,388

 

 
Other expenses
Net interest expense

 

11,172

 

 

18,274

 

Other expense

 

410

 

 

246

 

Total other expenses

 

11,582

 

 

18,520

 

 
Income before income taxes

 

37,181

 

 

13,868

 

Income tax expense

 

2,504

 

 

1,199

 

 
Income from continuing operations

 

34,677

 

 

12,669

 

Income (loss) from discontinued operations, net of income taxes

 

1,063

 

 

(13,999

)

Net income (loss)

 

35,740

 

 

(1,330

)

Preferred stock dividends

 

2,207

 

 

2,207

 

Net income (loss) attributable to CAI common stockholders

$

33,533

 

$

(3,537

)

 
Amounts attributable to CAI common stockholders
Net income from continuing operations

$

32,470

 

$

10,462

 

Net income (loss) from discontinued operations

 

1,063

 

 

(13,999

)

Net income (loss) attributable to CAI common stockholders

$

33,533

 

$

(3,537

)

 
Net income (loss) per share attributable to
CAI common stockholders
Basic
Continuing operations

$

1.88

 

$

0.60

 

Discontinued operations

 

0.06

 

 

(0.80

)

Total basic

$

1.94

 

$

(0.20

)

Diluted
Continuing operations

$

1.85

 

$

0.59

 

Discontinued operations

 

0.06

 

 

(0.79

)

Total diluted

$

1.91

 

$

(0.20

)

 
Weighted average shares outstanding
Basic

 

17,271

 

 

17,433

 

Diluted

 

17,518

 

 

17,715

 

CAI International, Inc.
Consolidated Statements of Cash Flows
(In thousands, except per share data)
(UNAUDITED)
 
Three Months Ended
March 31,

2021

2020

Cash flows from operating activities
Net income (loss)

$

35,740

 

$

(1,330

)

Income (loss) from discontinued operations, net of income taxes

 

1,063

 

 

(13,999

)

Income from continuing operations

 

34,677

 

 

12,669

 

Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
Depreciation

 

28,766

 

 

27,259

 

Amortization of debt issuance costs

 

815

 

 

893

 

Stock-based compensation expense

 

540

 

 

725

 

Unrealized loss on foreign exchange

 

400

 

 

220

 

Gain on sale of rental equipment

 

(6,743

)

 

(1,647

)

Deferred income taxes

 

(940

)

 

(3,504

)

Bad debt recovery

 

(30

)

 

(1,287

)

Changes in other operating assets and liabilities:
Accounts receivable

 

488

 

 

3,849

 

Prepaid expenses and other assets

 

1,218

 

 

723

 

Net investment in finance leases

 

21,605

 

 

17,102

 

Accounts payable, accrued expenses and other liabilities

 

(2,823

)

 

130

 

Unearned revenue

 

(7

)

 

(591

)

Net cash provided by operating activities of continuing operations

 

77,966

 

 

56,541

 

Net cash (used in) provided by operating activities of discontinued operations

 

(2,177

)

 

3,584

 

Net cash provided by operating activities

 

75,789

 

 

60,125

 

Cash flows from investing activities
Purchase of rental equipment

 

(171,625

)

 

(27,500

)

Purchase of financing receivable

 

(5,174

)

 

-

 

Proceeds from sale of rental equipment

 

28,783

 

 

24,534

 

Receipt of principal payments from financing receivable

 

2,645

 

 

325

 

Purchase of furniture, fixtures and equipment

 

(22

)

 

(310

)

Net cash used in investing activities of continuing operations

 

(145,393

)

 

(2,951

)

Net cash provided by investing activities of discontinued operations

 

1,285

 

 

42

 

Net cash used in investing activities

 

(144,108

)

 

(2,909

)

Cash flows from financing activities
Proceeds from debt

 

141,000

 

 

110,000

 

Principal payments on debt

 

(59,887

)

 

(102,681

)

Repurchase of common stock

 

(12,788

)

 

-

 

Dividends paid to common stockholders

 

(5,192

)

 

-

 

Dividends paid to preferred stockholders

 

(2,207

)

 

(2,207

)

Exercise of stock options

 

1,499

 

 

113

 

Net cash provided by financing activities of continuing operations

 

62,425

 

 

5,225

 

Net cash used in financing activities of discontinued operations

 

-

 

 

(1,061

)

Net cash provided by financing activities

 

62,425

 

 

4,164

 

Effect on cash of foreign currency translation

 

(8

)

 

(77

)

Net (decrease) increase in cash and cash equivalents

 

(5,902

)

 

61,303

 

Cash and restricted cash at beginning of the period

 

66,502

 

 

73,239

 

Cash and restricted cash at end of the period

$

60,600

 

$

134,542

 

CAI International, Inc.
Fleet Data
(UNAUDITED)
 
As of March 31,

2021

2020

 
Owned container fleet in TEUs

1,714,552

 

1,590,880

 

Managed container fleet in TEUs

55,226

 

66,721

 

Total container fleet in TEUs

1,769,778

 

1,657,601

 

 
Owned container fleet in CEUs

1,767,305

 

1,622,354

 

Managed container fleet in CEUs

70,255

 

82,705

 

Total container fleet in CEUs

1,837,560

 

1,705,059

 

 
 
Three Months Ended
March 31,

2021

2020

Average Utilization
Container fleet utilization in CEUs

99.6

%

98.2

%

Owned container fleet utilization in CEUs

99.7

%

98.4

%

 
As of March 31,

2021

2020

Period Ending Utilization

 

Container fleet utilization in CEUs

99.7

%

98.2

%

Owned container fleet utilization in CEUs

99.7

%

98.3

%

 
 
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.
 
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
March 31, December 31, March 31,

2021

2020

2020

 
Amounts attributable to CAI common stockholders
 
Net income from continuing operations

$

32,470

 

$

32,511

 

$

10,462

 

Write-off of debt issuance costs

 

-

 

 

2,297

 

 

-

 

Revaluation of deferred tax liability as a result of a change in future state
apportionment caused by the sale of the logistics and rail businesses

 

-

 

 

(3,186

)

 

-

 

Adjusted net income from continuing operations

$

32,470

 

$

31,622

 

$

10,462

 

 
Diluted net income per share from continuing operations

$

1.85

 

$

1.81

 

$

0.59

 

 
Diluted adjusted net income per share from continuing operations

$

1.85

 

$

1.76

 

$

0.59

 

 
Weighted average diluted common shares outstanding

 

17,518

 

 

17,949

 

 

17,715

 

 
 
 
CAI International, Inc.
Calculation of Return on Equity
(In thousands)
(UNAUDITED)
 
Three Months Ended
March 31, December 31, March 31,

2021

2020

2020

 
Adjusted net income from continuing operations

$

32,470

 

$

31,622

 

$

10,462

 

Annualized adjusted net income from continuing operations

 

129,882

 

 

126,488

 

 

41,848

 

 
Average shareholders' equity 1

$

610,359

 

$

596,770

 

$

587,829

 

 
Return on equity

 

21.3

%

 

21.2

%

 

7.1

%

 
1 Average shareholders' equity was calculated using the quarter's beginning and ending shareholders' equity, excluding preferred stock.

Conference Call

A conference call to discuss the financial results for the first quarter of 2021 will be held on Thursday, April 29, 2021 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 “Q1 2021 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 first quarter 2021 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 write-off of debt issuance costs and a non-recurring revaluation of deferred tax liability. This press release also refers to return on equity, which is calculated using the non-GAAP financial measure, adjusted net income. 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. Management utilizes return on equity in evaluating how much profit the Company generates on the shareholders’ equity in the Company and believes it is useful for comparing the profitability of companies in the same industry. 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 companies. As of March 31, 2021, CAI operated a worldwide fleet of approximately 1.8 million CEUs of containers. CAI operates through 13 offices located in 12 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: management’s business outlook for the container leasing business, management’s decision to divest of CAI’s non-core businesses and management's outlook for growth of CAI’s leasing investments. 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, as amended, 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, 2020, 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.

David Morris, Chief Accounting Officer
(415) 788-0100
dmorris@capps.com

Source: CAI International, Inc.

Stock Information

2020 Annual Report

2020 Annual Report