UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K

 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

April 29, 2021
Date of Report (Date of earliest event reported)
 
CAI International, Inc.
(Exact name of registrant as specified in its charter)



         
Delaware
 
001-33388
 
94-3109229
(State or other jurisdiction
of incorporation)
 
(Commission File Number)
 
(I. R. S. Employer
Identification No.)
 
Steuart Tower, 1 Market Plaza, Suite 2400, San Francisco, California 94105
(Address of principal executive offices, including ZIP Code)
 
Registrant’s telephone number, including area code: (415) 788-0100
 
N/A
(Former name or former address, if changed since last report)


 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
 
Le
   
Title of each class
Trading symbols
Name of exchange on which registered
Common Stock, par value $0.0001 per share
CAI
New York Stock Exchange
8.50% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Stock, par value $0.0001 per share
CAI-PA
New York Stock Exchange
8.50% Series B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Stock, par value $0.0001 per share
CAI-PB
New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Item 2.02.
Results of Operations and Financial Condition.

On April 29, 2021, CAI International, Inc. (the “Company”) issued a press release reporting its results of operations for the first quarter of 2021.  A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

Item 9.01.
Financial Statements and Exhibits.

(d)  Exhibits.

Exhibit No.
 
Description
     
 


SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

  CAI INTERNATIONAL, INC.  
       
       
Dated:  April 29, 2021
    By:
/s/ Timothy B. Page  
     Name: Timothy B. Page  
     Title: Interim President and Chief Executive Officer  

Exhibit 99.1


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

SAN FRANCISCO--(BUSINESS WIRE)--April 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.

Contacts

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