SEC Filing | CAI International

View:

Download DOC

Download PDF

Download XLS

Download XBRL

cai-20210331x10q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-33388

CAI International, Inc.

(Exact name of registrant as specified in its charter)


Delaware		94-3109229
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Steuart Tower, 1 Market Plaza, Suite 2400
San Francisco, California		94105
(Address of principal executive offices)		(Zip Code)

415-788-0100

(Registrant’s telephone number, including area code)

None

(Former name, former address and former fiscal year, if changed since last report)

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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	o	Accelerated filer	x
Non-accelerated filer	o	Smaller reporting company	o
		Emerging growth company	o

If an emerging growth company, indicate by check mark of 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. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock		April 28, 2021
Common Stock, $0.0001 par value per share		17, 304,111 shares

Table of Contents

CAI INTERNATIONAL, INC.

INDEX


		Page No.
Part I — Financial Information		4
Item 1.	Financial Statements (Unaudited)	4
	Consolidated Balance Sheets at March 31, 2021 and December 31, 2020	4
	Consolidated Statements of Operations for the three months ended March 31, 2021 and 2020	6
	Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2021 and 2020	7
	Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2021 and 2020	8
	Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020	9
	Notes to Unaudited Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27
Part II — Other Information		28
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3.	Defaults Upon Senior Securities	28
Item 4.	Mine Safety Disclosures	28
Item 5.	Other Information	28
Item 6.	Exhibits	29
Signatures		30

‎

Table of Contents

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains certain forward-looking statements, including, without limitation, statements concerning the conditions in our industry, our operations, our economic performance and financial condition, including, but not limited to, statements relating to our business, operations, growth strategy, service development efforts and the impact of the novel coronavirus (COVID-19) on our business, financial condition, liquidity and results of operations. The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for certain forward-looking statements so long as such information is identified as forward-looking and is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those projected in the information. When used in this Quarterly Report on Form 10-Q, the words “may,” “might,” “should,” “estimate,” “project,” “plan,” “anticipate,” “expect,” “intend,” “outlook,” “believe” and other similar expressions are intended to identify forward-looking statements and information. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. These forward-looking statements are based on estimates and assumptions by our management that, although we believe to be reasonable, are inherently uncertain and subject to a number of risks and uncertainties. These risks and uncertainties include, without limitation, those in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission (SEC) on March 1, 2021, our Quarterly Reports on Form 10-Q and our other reports filed with the SEC. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. Reference is also made to such risks and uncertainties detailed from time to time in our other filings with the SEC.

‎

Table of Contents

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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 (1)	$	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 (2)		1,950,398		1,910,392

Stockholders' equity
Preferred stock, par value $0.0001 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 $0.0001 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

‎

Table of Contents

(1)Total assets at March 31, 2021 and December 31, 2020 include the following assets of certain variable interest entities (VIEs) that can only be used to settle the liabilities of those VIEs: Cash, $23,942 and $26,856; Net investment in finance leases, $2,150 and $2,683; and Rental equipment, net of accumulated depreciation, $73,212, and $77,907, respectively.

(2)Total liabilities at March 31, 2021 and December 31, 2020 include the following VIE liabilities for which the VIE creditors do not have recourse to CAI International, Inc.: Current portion of debt, $43,392 and $41,344; Debt, $48,120 and $59,519, respectively.

See accompanying notes to unaudited consolidated financial statements.

‎

Table of Contents

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

See accompanying notes to unaudited consolidated financial statements.

‎

Table of Contents

CAI INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(UNAUDITED)



	Three Months Ended March 31,
	2021		2020

Net income (loss)	$	35,740	$	(1,330)
Other comprehensive income (loss), net of tax:
Change in fair value of derivative instruments designated as cash flow hedges		9,509		-
Reclassification of realized loss on derivative instruments designated as cash flow hedges		157		-
Foreign currency translation adjustments		(522)		(137)
Comprehensive income (loss) before tax		44,884		(1,467)
Income tax expense related to items of other comprehensive income (loss)		(2,031)		-
Comprehensive income (loss) before preferred stock dividends, net of tax		42,853		(1,467)
Dividends on preferred stock		(2,207)		(2,207)
Comprehensive income (loss) available to CAI common stockholders	$	40,646	$	(3,674)

See accompanying notes to unaudited consolidated financial statements.

‎

Table of Contents

CAI INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(UNAUDITED)


									Accumulated
							Additional		Other
	Preferred Stock			Common Stock			Paid-In		Comprehensive		Retained		Total
	Shares		Amount	Shares		Amount	Capital		Loss		Earnings		Equity
Balances as of December 31, 2020	4,155	$	103,865	17,563	$	2	$	100,795	$	(5,743)	$	503,321	$