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 2014.
Highlights
- CAI reported total revenue for the
third quarter of 2014 of $59.2 million, an increase of 10% compared
to the third quarter of 2013, and 7% compared to the second quarter
of 2014.
- Net income attributable to CAI common
stockholders for the third quarter of 2014 was $16.4 million, or
$0.77 per fully diluted share. During the quarter the Company
recognized net income of $1.7 million from a non-recurring
settlement received from one of its customers, related to lease
obligations from prior years. Excluding this settlement, non-GAAP1
earnings were $14.7 million, or $0.69 per fully diluted share.
- At the end of the third quarter of
2014, total container fleet utilization increased to 94.1% on a CEU
basis, compared to 92.1% at the end of the second quarter of
2014.
- CAI purchased approximately 46,000 CEU
of containers at a cost of $87 million during the third quarter of
2014. CAI has purchased approximately 109,000 CEU of containers at
a total cost of $215 million in the first nine months of 2014.
- CAI ordered an additional 500 new rail
cars for delivery in 2015 and the first half of 2016 for
approximately $42 million. The Company has ordered a total of 1,250
new rail cars this year at a cost of approximately $106 million, of
which 920 are scheduled to be delivered by the end of 2015. Of the
rail cars being delivered in 2015, more than 90% are subject to
letters of intent with customers with an average lease term of 7
years.
- Under CAI’s share repurchase program
announced in February 2014, CAI has purchased approximately 1.5
million shares of common stock (approximately 7% of CAI’s fully
diluted shares), of which approximately 0.6 million shares were
purchased during the third quarter of 2014.
Net income attributable to CAI common stockholders for the third
quarter of 2014 increased by 7% to $16.4 million (or $0.77 per
fully diluted share), from $15.3 million (or $0.68 per fully
diluted share) for the third quarter of 2013. During the quarter,
CAI recognized net income of $1.7 million from a non-recurring
settlement received from one of its customers, related to lease
obligations from prior years. Excluding this settlement, non-GAAP1
net income per fully diluted share attributable to CAI common
stockholders for the third quarter of 2014 was $0.69, compared to
$0.63 per fully diluted share in the second quarter of 2014.
Total revenue for the third quarter of 2014 was $59.2 million,
which included $2.0 million from the settlement referred to
earlier. Excluding this settlement, total non-GAAP1 revenue for the
quarter was $57.2 million, compared to $53.9 million for the third
quarter of 2013, an increase of 6%. Non-GAAP1 rental revenue for
the third quarter of 2014, excluding the settlement, was $53.4
million, an increase of 5% compared to $50.7 million for the third
quarter of 2013, reflecting the increase in the average number of
owned containers on lease. Management fee revenue for the third
quarter of 2014 was $1.6 million, consistent with the third quarter
of 2013. Finance lease income for the third quarter of 2014 was
$2.3 million, compared to $1.7 million for the third quarter of
2013, reflecting additional finance leases entered into by CAI in
the last 12 months.
Victor Garcia, Chief Executive Officer of CAI, commented, “We
are very pleased with our results for this past quarter. Our total
revenue increased 9.8% from the third quarter of 2013 to $59.2
million, a record revenue quarter for the Company. Net income
increased to $16.4 million for the quarter, or $0.77 per share,
compared to $13.4 million, or $0.60 per share, in the second
quarter of 2014.”
Mr. Garcia continued, “We had a number of positive developments
this quarter in both our container and rail businesses. During the
quarter we leased out approximately 35,000 CEU of new container
equipment, which contributed to our revenue and earnings this
quarter. During the quarter we were also able to increase our
overall container utilization to 94.1% on a CEU basis at the end of
the quarter, from 92.1% at the beginning of the quarter, which has
increased our revenue contribution from our depot equipment and
reduced some of our overall storage costs during the quarter. We
also successfully settled with a customer this quarter,
contributing an additional $1.7 million to net income. Market
pricing on new equipment transactions remains very aggressive and
thus we intend to continue to manage the level of our investments
in containers with what we believe to be acceptable returns on
those investments.
“In September, Alphaliner estimated container trade growth of
5.2% for 2014. If world economic growth increases in 2015, then it
is expected that containerized trade growth should also increase
next year. We are watchful, however, for any changes in
expectations for global economic growth as this is likely to impact
demand for our equipment. Recent economic indicators have shown
some global economic weakness, particularly in Europe. However,
during the past quarter we have seen increased demand for equipment
in both Asia and Europe, and we continue to get inquiries for
equipment in these regions. We are pleased with that trend but will
continue to monitor for any changes in demand.
“During the third quarter, we ordered an additional 500 rail
cars for delivery in 2015 and 2016. We now have 920 rail cars being
delivered by the end of 2015 and are pleased that over 90% are
already under letters of intent with customers for attractive long
term leases. We believe the US rail market remains very strong
because of the increased traffic the railroads are experiencing, as
well as congestion that is expected to persist with some of the
railroads. Our rail cars available for lease are fully utilized and
we expect rail car demand for all types of rail cars to remain
strong for the remainder of this year and into 2015. We continue to
look for opportunities to make further investments in used and new
rail cars as we focus on expansion and diversification of our
overall business. We expect a growing contribution to net income
from our rail business in 2015.
“During the third quarter, we purchased an additional 0.6
million shares of our company, completing the 1.5 million share
repurchase program that the Board of Directors had approved earlier
in the year. The Board of Directors continues to evaluate the best
opportunities to increase long term shareholder value and will
consider further share repurchases in conjunction with economic
market conditions and investment opportunities.”
Mr. Garcia concluded, “As we have said previously, the focus in
our Company is to enhance long term shareholder value. We intend to
continue to work towards achieving this goal by remaining
disciplined with our pricing/return strategy, by reducing costs and
improving asset utilization, by continuing to expand the mix of our
investments to take advantage of the long term growth opportunities
in different market segments, and through a disciplined, reasoned
capital return strategy.”
_____________________________________
1 Refer to the Reconciliation of GAAP Amounts to Non-GAAP
Amounts set out below
CAI International, Inc. Consolidated Balance Sheets
(In thousands, except share information) (UNAUDITED)
September 30, December 31, 2014
2013 Assets Current assets Cash
$ 19,048 $ 31,141 Cash held by variable interest entities 31,402
14,600 Accounts receivable (owned fleet), net of allowance for
doubtful accounts of $504 and $503 at September 30, 2014 and
December 31, 2013, respectively 46,220 41,226 Accounts receivable
(managed fleet) 8,619 10,646 Current portion of direct finance
leases 17,466 12,998 Prepaid expenses 14,712 14,803 Other current
assets 555 5,553 Total current assets
138,022 130,967 Restricted cash 8,488 9,253 Rental equipment, net
of accumulated depreciation of $260,290 and $210,165 at September
30, 2014 and December 31, 2013, respectively 1,565,149 1,465,092
Net investment in direct finance leases 79,890 68,210 Furniture,
fixtures and equipment, net of accumulated depreciation of $1,987
and $1,697 at September 30, 2014 and December 31, 2013,
respectively 1,058 1,390 Intangible assets, net of accumulated
amortization of $4,797 and $4,638 at September 30, 2014 and
December 31, 2013, respectively 368 677
Total assets $ 1,792,975 $ 1,675,589
Liabilities and Stockholders' Equity Current liabilities
Accounts payable $ 6,785 $ 8,002 Accrued expenses and other current
liabilities 8,641 6,230 Due to container investors 13,815 14,815
Unearned revenue 8,199 6,862 Short term line of credit 75,000 -
Current portion of debt 108,216 74,080 Current portion of capital
lease obligations 1,215 1,921 Rental equipment payable
44,792 45,181 Total current liabilities
266,663 157,091 Debt 1,055,335 1,058,628 Deferred income tax
liability 41,751 41,378 Capital lease obligations 1,817
3,366
Total liabilities
1,365,566 1,260,463
Stockholders'
equity Common stock: par value $.0001 per share; authorized
84,000,000 shares; issued and outstanding 20,782,776 and 22,240,673
shares at September 30, 2014 and December 31, 2013, respectively 2
2 Additional paid-in capital 154,265 184,263 Accumulated other
comprehensive loss (4,317 ) (2,356 ) Retained earnings
276,735 232,623
Total CAI stockholders'
equity 426,685 414,532 Non-controlling interest 724
594
Total stockholders' equity
427,409 415,126
Total liabilities and
stockholders' equity $ 1,792,975 $ 1,675,589
CAI
International, Inc. Consolidated Statements of Income
(In thousands, except per share data) (UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30, 2014
2013 2014
2013 Revenue Rental revenue $ 55,380 $ 50,711
$ 157,557 $ 145,721 Management fee revenue 1,561 1,503 4,681 6,027
Finance lease income 2,262 1,684
6,541 6,096
Total revenue 59,203
53,898 168,779 157,844
Operating expenses Depreciation of rental
equipment 19,888 17,389 57,607 49,007 Amortization of intangible
assets 95 227 293 681 Gain on disposition of used rental equipment
(1,237 ) (1,329 ) (4,561 ) (5,822 ) Storage, handling and other
expenses 6,532 4,979 19,322 13,611 Marketing, general and
administrative expenses 6,676 6,055 19,779 18,274 Loss on foreign
exchange 70 374 387
199
Total operating expenses 32,024
27,695 92,827 75,950
Operating income 27,179
26,203 75,952 81,894
Interest expense 9,265 9,546 26,943 26,905 Write-off of deferred
financing costs - - - 1,108 Interest income (1 ) -
(6 ) (4 ) Net interest expense 9,264
9,546 26,937 28,009
Net income before income taxes and non-controlling
interest 17,915 16,657 49,015 53,885 Income tax expense
1,482 1,320 4,857 5,550
Net income 16,433 15,337 44,158 48,335 Net
income attributable to non-controlling interest (38 )
- (46 ) -
Net income attributable to
CAI common stockholders $ 16,395 $ 15,337 $
44,112 $ 48,335
Net income per share
attributable to CAI common stockholders Basic $
0.78 $ 0.69 $ 2.08 $ 2.18 Diluted $ 0.77 $ 0.68 $ 2.04 $ 2.13
Weighted average shares outstanding Basic 20,936
22,186 21,193 22,139 Diluted 21,329 22,645 21,622 22,674
CAI International, Inc. Fleet
Data (UNAUDITED) As of September 30,
2014 2013 Owned container fleet in TEUs
935,365 856,121 Managed container fleet in TEUs 252,530 289,846
Total container fleet in TEUs 1,187,895 1,145,967 Owned
container fleet in CEUs 975,745 889,220 Managed container fleet in
CEUs 231,516 268,425 Total container fleet in CEUs 1,207,261
1,157,645 Owned railcar fleet in units 2,051 1,572
Three Months Ended Nine Months Ended
September 30, September 30, 2014 2013
2014 2013 Average Utilization Container Fleet
Utilization in TEUs 92.4% 92.0% 90.9% 92.1% Container Fleet
Utilization in CEUs 93.0% 92.8% 91.7% 93.0%
As of
September 30, 2014 2013 Period Ending
Utilization Container Fleet Utilization in TEUs 93.7% 91.6%
Container Fleet Utilization in CEUs 94.1% 92.5%
Utilization is computed by dividing total units on lease, in CEUs
(cost equivalent units) or TEUs (twenty foot equivalent units), by
the total units in our fleet, in CEUs or TEUs, excluding 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.
Reconciliation of GAAP Amounts to Non-GAAP Amounts (In
thousands, except per share data) (UNAUDITED)
Three Months Ended
Nine Months Ended September 30, September 30,
2014 2013
2014 2013 GAAP rental
revenue $ 55,380 $ 50,711 $ 157,557 $ 145,721 Non-recurring
settlement received from customer (2,017 ) -
(2,017 ) -
Non-GAAP rental revenue $
53,363 $ 50,711 $ 155,540 $ 145,721
GAAP total revenue $ 59,203 $ 53,898 $ 168,779 $
157,844 Non-recurring settlement received from customer
(2,017 ) - (2,017 ) -
Non-GAAP total revenue $ 57,186 $ 53,898 $
166,762 $ 157,844
GAAP net income
attributable to CAI common stockholders $ 16,395 $ 15,337 $
44,112 $ 48,335 Non-recurring net settlement received from customer
(1,856 ) - (1,856 ) - Tax effect of non-recurring net settlement
received from customer 184 - 184 - Write-off of deferred financing
costs - - - 1,108 Tax effect of write-off of deferred financing
costs - - - (137 ) Non-recurring tax charge -
(27 ) 626 (81 )
Non-GAAP net income
attributable to CAI common stockholders $ 14,723 $
15,310 $ 43,066 $ 49,225
Diluted net
income per share attributable to CAI common stockholders GAAP $
0.77 $ 0.68 $ 2.04 $ 2.13 Non-GAAP (excluding non-recurring tax
charge, non-recurring net settlement received from customer and the
write-off of deferred financing costs, and related tax effects) $
0.69 $ 0.68 $ 1.99 $ 2.17
Weighted average number of
common shares used to calculate (in thousands) GAAP and
non-GAAP diluted net income per share attributable to CAI common
stockholders 21,329 22,645 21,622 22,674
Conference Call
A conference call to discuss the financial results for the third
quarter of 2014 will be held on Tuesday, October 28, 2014 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
2014 Earnings Conference Call.” A webcast replay will be available
for 30 days on the “Investors” tab of our website.
Use of Non-GAAP Financial Measures
This press release contains non-GAAP financial measures, and
includes rental revenue, revenue, net income and earnings per share
adjusted to reflect the impact of a non-recurring settlement
received from a customer and related tax effects, the write-off of
certain deferred financing costs and related tax effects, 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 managers and lessors of
intermodal freight containers. As of September 30, 2014, the
company operated a worldwide fleet of approximately 1,188,000 TEUs
of containers through 17 offices located in 13 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, the ability of the
company to convert letters of intent with its customers to binding
contracts, potential to sell the company’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, 2013 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, 415-788-0100Chief Financial
Officertpage@capps.com
CAI (NYSE:CAI)
Historical Stock Chart
From Feb 2024 to Mar 2024
CAI (NYSE:CAI)
Historical Stock Chart
From Mar 2023 to Mar 2024