CAI International, Inc. (CAI) (NYSE: CAP), one of the world’s
leading transportation finance and logistics companies, today
reported results for the first quarter of 2015.
Highlights
- CAI reported rental revenue for the
first quarter of 2015 of $54.9 million, an increase of $4.2
million, or 8%, compared to the first quarter of 2014.
- CAI reported net income attributable to
CAI common stockholders for the first quarter of 2015 of $13.5
million, a decrease of $0.7 million, or 5%, compared to the first
quarter of 2014.
- Net income attributable to CAI common
stockholders per fully diluted share was $0.64 for the first
quarter of 2015, an increase of $0.01 compared to the first quarter
of 2014.
- Adjusted EBITDA1 for the first quarter
of 2015 was $50.2 million, an increase of 8% compared to the first
quarter of 2014.
- Average utilization during the first
quarter of 2015 was 93.5% (on a CEU basis) compared to 91.0% for
the first quarter of 2014.
- CAI acquired approximately 58,000 CEU
of containers at a cost of $118 million, and 288 railcars at a cost
of $13 million, during the first quarter of 2015.
Total revenue for the first quarter of 2015 was $58.5 million,
compared to $54.3 million for the first quarter of 2014, an
increase of 8%. Rental revenue for the first quarter of 2015 was
$54.9 million, compared to $50.7 million for the first quarter of
2014. The increase in rental revenue was primarily due to an
increase in the average number of owned containers on lease and the
growth in our railcar business. Management fee revenue for the
first quarter of 2015 was $1.3 million, compared to $1.5 million
for the first quarter of 2014, reflecting the reduction in the size
of CAI’s managed fleet. Finance lease income for the first quarter
of 2015 was $2.4 million, compared to $2.1 million for the first
quarter of 2014, reflecting additional finance leases entered into
by CAI in the last 12 months.
Victor Garcia, Chief Executive Officer of CAI commented, “The
first quarter is traditionally the weakest quarter of the year as a
result of seasonal global shipping patterns. Prior to the Lunar New
Year holiday period that commenced on February 19th, we saw strong
incremental demand for equipment. After the holiday period, we
experienced a normal increase in equipment returns, resulting in a
slight decline in utilization. Average utilization for the quarter
was 93.5%, compared to 91.0% and 93.8% for the first and fourth
quarters of 2014, respectively.”
Mr. Garcia continued, “Our net income for the quarter was $13.5
million, a reduction of 5% compared to the first quarter last year.
A couple of factors negatively impacted net income during the
quarter. First, we reserved $0.3 million of receivables related to
a small regional customer in Asia that ceased operations during the
quarter. Second, and the primary factor impacting net income, was
the reduction in the gain on sale of used equipment. While the
overall demand for secondary containers has remained relatively
stable, we have seen downward pressure on sales proceeds as a
result of the strong U.S. dollar, particularly relative to the
Euro. Since the containers are valued on our books in dollars, we
realize lower proceeds from non-dollar denominated sales as the
dollar strengthens. Fortunately, this same issue does not impact
our rental income, as virtually all of our leases are dollar
denominated. Furthermore, in spite of the pressure the strong
dollar places on secondary container prices, we believe the
appreciation of the dollar will ultimately benefit our business
this year by stimulating export trade overseas, particularly from
Europe. We’ve already begun to see this, as lease-out activity in
Europe has increased in April.”
Mr. Garcia concluded, “We expect demand for containers to be
strong over the coming two quarters as lower oil prices and
financial stimulus implemented by European and Asian central banks
increases the likelihood of improved economic activity in the
second half of the year. We expect that this will result in
improved trade growth and increase the volume of container demand.
We expect equipment per diem rates to remain very competitive, and
thus our primary focus is to continue to improve the utilization of
our existing fleet to increase revenue and reduce costs.
“Our strategic focus continues to be to enhance our logistics
efforts in order to increase the return on our assets, expand our
customer base, add new revenue streams and maintain the high
utilization of our fleet. We are pleased with the progress we are
making as we continue to add logistics customers and are excited
about the future opportunity this area presents for our company. We
have added personnel to this business and expect to continue to add
resources over time.
“In our rail business, we have begun taking delivery of our new
production and deliveries are expected to increase over the course
of the second and third quarters, with most of the contribution
from those investments occurring in the second half of this year.
All of our new production scheduled for 2015 delivery has already
been placed on long term leases.”
1 Refer to the Reconciliation of GAAP Amounts to Non GAAP
Amounts set forth below.
CAI International, Inc. Consolidated Balance
Sheets (In thousands, except share information)
(UNAUDITED) March 31, December
31, 2015 2014
Assets Current assets Cash $ 23,078 $ 27,810 Cash held by
variable interest entities 33,582 26,011
Accounts receivable (owned fleet), net of
allowance for doubtful accounts of $902 and $680 at March 31, 2015
and December 31, 2014, respectively
43,053 49,524 Accounts receivable (managed fleet) 8,482 8,498
Current portion of direct finance leases 19,064 18,150 Prepaid
expenses 15,335 14,396 Other current assets 407
410 Total current assets 143,001 144,799 Restricted
cash 7,978 8,232
Rental equipment, net of accumulated
depreciation of $292,356 and $274,333 at March 31, 2015 and
December 31, 2014, respectively
1,654,834 1,564,777 Net investment in direct finance leases 76,104
76,814
Furniture, fixtures and equipment, net of
accumulated depreciation of $2,115 and $2,019 at March 31, 2015 and
December 31, 2014, respectively
852 945
Intangible assets, net of accumulated
amortization of $4,726 and $4,817 at March 31, 2015 and December
31, 2014, respectively
183 273
Total assets $ 1,882,952
$ 1,795,840
Liabilities and Stockholders'
Equity Current liabilities Accounts payable $ 6,235 $ 8,414
Accrued expenses and other current liabilities 5,320 9,029 Due to
container investors 10,031 12,984 Unearned revenue 7,596 7,172
Current portion of debt 224,088 203,199 Current portion of capital
lease obligations 239 1,015 Rental equipment payable 51,286
7,381 Total current liabilities 304,795
249,194 Debt 1,074,661 1,058,754 Deferred income tax liability
43,744 43,419 Capital lease obligations -
1,568
Total liabilities 1,423,200
1,352,935
Stockholders' equity
Common stock: par value $.0001 per share;
authorized 84,000,000 shares; issued and outstanding 21,142,521 and
20,788,277 shares at March 31, 2015 and December 31, 2014,
respectively
2 2 Additional paid-in capital 160,589 154,894 Accumulated other
comprehensive loss (8,096 ) (5,677 ) Retained earnings
306,439 292,897
Total CAI stockholders'
equity 458,934 442,116 Non-controlling interest 818
789
Total stockholders' equity
459,752 442,905
Total liabilities and
stockholders' equity $ 1,882,952 $ 1,795,840
CAI International, Inc. Consolidated Statements of
Income (In thousands, except per share data)
(UNAUDITED) Three Months Ended March
31, 2015 2014
Revenue Rental revenue $ 54,883 $ 50,684 Management fee
revenue 1,257 1,525 Finance lease income 2,352
2,055
Total revenue 58,492
54,264
Operating expenses Depreciation of
rental equipment 21,223 18,663 Amortization of intangible assets 84
99 Gain on disposition of used rental equipment (357 ) (1,790 )
Storage, handling and other expenses 6,765 5,993 Marketing, general
and administrative expenses 7,127 6,706 (Gain) loss on foreign
exchange (41 ) 164
Total operating
expenses 34,801 29,835
Operating income 23,691 24,429
Interest expense 8,781 8,795 Interest income (3 )
(4 ) Net interest expense 8,778 8,791
Net income before income taxes and non-controlling
interest 14,913 15,638 Income tax expense 1,342
1,407
Net income 13,571 14,231 Net
(income) loss attributable to non-controlling interest (29 )
40
Net income attributable to CAI common
stockholders $ 13,542 $ 14,271
Net income per share attributable to CAI common stockholders
Basic $ 0.65 $ 0.64 Diluted $ 0.64 $ 0.63
Weighted
average shares outstanding Basic 20,903 22,213 Diluted 21,295
22,658
CAI International, Inc. Consolidated
Statements of Cash Flows (In thousands)
(UNAUDITED) Three Months Ended March
31, 2015 2014
Cash flows from operating activities Net income $ 13,571 $
14,231 Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation 21,330 18,790 Amortization of
debt issuance costs 692 687 Amortization of intangible assets 84 99
Stock-based compensation expense 512 409 Loss on foreign exchange
114 100 Gain on disposition of used rental equipment (357 ) (1,790
) Deferred income taxes 325 (2 ) Bad debt expense 104 - Changes in
other operating assets and liabilities: Accounts receivable 6,219
(3,418 ) Prepaid expenses and other assets 25 (29 ) Accounts
payable, accrued expenses and other current liabilities (5,928 )
(2,119 ) Due to container investors (2,953 ) (1,458 ) Unearned
revenue 466 125
Net cash provided by
operating activities 34,204 25,625
Cash flows from investing activities Purchase of rental
equipment (88,332 ) (73,202 ) Net proceeds from disposition of used
rental equipment 13,884 11,070 Purchase of furniture, fixtures and
equipment (15 ) (11 ) Receipt of principal payments from direct
financing leases 5,154 3,346
Net
cash used in investing activities (69,309 )
(58,797 )
Cash flows from financing activities Proceeds from
debt 94,364 66,700 Principal payments on debt (59,952 ) (39,592 )
Debt issuance costs (1,654 ) - Decrease in restricted cash 254 255
Exercise of stock options 4,374 28 Excess tax benefit from
share-based compensation awards 810 -
Net cash provided by financing activities 38,196
27,391 Effect on cash of foreign currency
translation (252 ) 95
Net increase
(decrease) in cash 2,839 (5,686 ) Cash at beginning of the
period 53,821 45,741
Cash at end of
the period $ 56,660 $ 40,055
CAI
International, Inc. Fleet Data (UNAUDITED)
As of March 31, 2015 2014
Owned container fleet in TEUs 967,649 882,665 Managed container
fleet in TEUs 229,575 275,102 Total container fleet
in TEUs 1,197,224 1,157,767 Owned container
fleet in CEUs 998,166 924,234 Managed container fleet in CEUs
208,326 253,761 Total container fleet in CEUs
1,206,492 1,177,995 Owned railcar fleet in
units 2,649 1,859
Three
Months Ended March 31, 2015 2014
Average Utilization Container Fleet Utilization in TEUs 92.9
% 90.0 % Container Fleet Utilization in CEUs 93.5 % 91.0 %
As of March 31, 2015 2014 Period Ending
Utilization Container Fleet Utilization in TEUs 92.8 % 89.7 %
Container Fleet Utilization in CEUs 93.5 % 90.7 %
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 March 31,
2015 2014 GAAP net income
attributable to CAI common stockholders $ 13,542 $ 14,271 Net
interest expense 8,778 8,791 Depreciation 21,330 18,790
Amortization of intangible assets 84 99 Income tax expense
1,342 1,407
Non-GAAP EBITDA 45,076 43,358 Principal
payments from direct finance leases 5,154 3,346
Non-GAAP adjusted EBITDA 50,230 46,704
EBITDA represents net income before interest, income taxes,
depreciation and amortization of intangible assets. Adjusted EBITDA
represents EBITDA plus principal payments from direct finance
leases, less a non-recurring net settlement received from a
customer.
Conference Call
A conference call to discuss the financial results for the first
quarter of 2015 will be held on Thursday, April 30, 2015 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 “Q1
2015 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 EBITDA and non-GAAP
adjusted EBITDA, both of which are defined in the tables above.
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 transportation finance and
logistics companies. As of March 31, 2015, CAI operated a worldwide
fleet of approximately 1,206,000 CEUs of containers through 16
offices located in 13 countries including the United States. CAI
also owns a fleet of railcars, which it leases within North
America.
Forward-Looking Statements
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,
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 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, 2014 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
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