TAL International Group, Inc. (NYSE:TAL), one of the
world’s largest lessors of intermodal freight containers and
chassis, today reported results for the fourth quarter and full
year ended December 31, 2015.
Highlights:
- TAL reported Adjusted pre-tax income of
$4.40 per fully diluted common share for the year ended
December 31, 2015, a decrease of 24.3% from 2014. TAL reported
leasing revenues of $608.0 million for the year ending
December 31, 2015, an increase of 2.4% from 2014.
- TAL reported Adjusted pre-tax income of
$0.79 per fully diluted common share for the fourth quarter of
2015, a decrease of 46.6% from the fourth quarter of 2014. TAL
reported leasing revenues of $153.8 million for the fourth quarter
of 2015, a decrease of 0.1% from the fourth quarter of 2014.
- TAL continued to achieve solid
operational performance. Utilization averaged 93.7% for the fourth
quarter of 2015 and averaged 96.0% for the full year.
- TAL announced a quarterly dividend of
$0.45 per share payable on March 24, 2016 to shareholders of
record as of March 10, 2016.
- TAL continues to make progress on its
announced merger with Triton Container International Limited. All
required anti-trust approvals have been received and the SEC review
process of the S-4 registration statement filed by Triton
International Limited is progressing. Detailed integration planning
is well underway, and the merger is expected to close in the first
half of 2016.
Financial Results
The following table depicts TAL’s selected key financial
information for the fourth quarter and full year ended
December 31, 2015 and 2014 (dollars in millions, except per
share data):
Three Months Ended
December 31, Twelve Months Ended
December 31,
2015
2014
%
Change
2015
2014
%
Change
Adjusted pre-tax income(1) $ 25.9 $ 49.5 (47.7 %) $ 145.0 $
195.5 (25.8 %)
Adjusted pre-tax income per share(1) $ 0.79 $
1.48 (46.6 %) $ 4.40 $ 5.81 (24.3 %)
Leasing revenues $
153.8 $ 154.0 (0.1 %) $ 608.0 $ 594.0 2.4 %
Adjusted
EBITDA(1) $
128.1
$ 148.4
(13.7
%) $
548.7
$
577.1
(4.9
%)
Adjusted net income(1) $ 16.7 $ 32.4 (48.5 %) $ 93.8 $
128.0 (26.7 %)
Adjusted net income per share(1) $ 0.51 $
0.97 (47.4 %) $ 2.84 $ 3.80 (25.3 %)
Net income $ 13.3 $
32.1 (58.6 %) $ 88.2 $ 124.0 (28.9 %)
Net income per share $
0.40 $ 0.96 (58.3 %) $
2.67 $ 3.68 (27.4 %) Note: All per
share data is per fully diluted common share.
TAL considers Adjusted pre-tax results as the best measure of
its operating performance since it considers gains and losses on
interest rate swaps, the write-off of deferred financing costs, and
transaction costs related to the pending merger with Triton
Container International Limited ("Triton") to be unrelated to
operating performance and since it does not expect to pay any
significant income taxes for a number of years due to the
availability of accelerated tax depreciation on its existing
container fleet and anticipated future equipment purchases.
Operating Performance
“TAL achieved solid results in 2015, while facing very difficult
market conditions,” commented Brian M. Sondey, President and CEO of
TAL International. “We generated Adjusted pre-tax income of $145.0
million in 2015, representing $4.40 per share. TAL also grew
leasing revenue 2.4% from 2014, and continued to achieve a high
level of returns. In 2015, we generated an Adjusted pre-tax return
on tangible equity(1) of 14.0%.”
“While our results for the full year of 2015 were solid,
pressure on our earnings increased throughout the year as the
operating impacts of the difficult market conditions accumulated.
In the fourth quarter of 2015, TAL generated $25.9 million of
Adjusted pre-tax income, which represents a decrease of 48% from
the fourth quarter of 2014 and a decrease of 29% from the third
quarter of 2015.”
“Market conditions in 2015 were extremely challenging. Market
lease rates reached all-time low levels due to a large drop in
steel and new container prices, and lease re-pricing pressures
accelerated. We also faced unusually low leasing demand in 2015 as
containerized trade growth fell well below expectations. The gap
between expected and actual growth led to an over-supply of
containers in 2015 since leasing companies and shipping lines
placed large orders for new containers at the beginning of the year
in anticipation of solid growth. The combination of low demand and
excess supply led to reduced pick-up volumes, increased drop-off
volumes and a substantial decrease in TAL's utilization. Lower new
container prices and reduced leasing demand has also led to an
increase in disposal volumes and a roughly 20% decrease in sale
prices for used containers.”
“The large decrease in used container sale prices in 2015 turned
our historical gains on container disposals into disposal losses,
and TAL recognized an $8.7 million loss on disposals in the fourth
quarter of 2015. Roughly half of TAL’s disposal losses in the
fourth quarter were caused by marking-to-market TAL’s inventory of
containers waiting for sale. The negative mark-to-market will
shrink when used container sale prices stabilize.”
“While down, our utilization remains at a high level and
continues to support our profitability. Our utilization averaged
93.7% in the fourth quarter of 2015, and finished the quarter at
93.0%. Our utilization currently stands at 92.1%. The resiliency of
our utilization during these extreme market conditions reflects the
underlying strength of our lease portfolio. As of December 31,
2015, 76.4% of our containers on-hire were covered by long-term or
finance leases, and these leases have an average remaining duration
of 42 months assuming no leases are renewed. Our containers are
also supported by our lease structuring discipline, especially in
ensuring the vast majority of our containers on lease must be
returned to traditionally strong export locations. Over 95% of our
dry container leasing inventory is located in Asia, which should
allow us to push the containers back on-hire when leasing demand
improves.”
“We purchased approximately $625 million of new and
sale-leaseback containers for delivery in 2015. Most of our new
container investment in 2015 was placed early in the year, while we
invested in sale leaseback transactions throughout the year. This
solid level of investment in a challenging year reflects TAL’s
strong supply capability and close customer relationships.”
Outlook
Mr. Sondey continued, “The first quarter is typically our
weakest quarter of the year since it represents the slow season for
dry containers, and market conditions are unlikely to improve
during this seasonally weak period. We expect our utilization and
other key operating metrics will continue to deteriorate, and
expect our negative earnings trend will continue through the first
quarter of 2016.”
“We expect that the supply / demand balance for containers will
improve after the first quarter if trade growth is at least
moderately positive. New container production has been limited
since the middle of 2015, and leasing companies and shipping lines
are generally accelerating their disposals of older containers. As
a result, positive trade growth should create demand for our
existing containers and allow us to recapture some of our lost
utilization. On the other hand, lease pricing pressure will
continue as long as steel and new container prices remain low. We
expect our Adjusted pre-tax income will decrease from 2015 to 2016,
though our quarterly earnings in 2016 may improve sequentially
after the first quarter if TAL is successful in pushing utilization
back up.”
Dividend
TAL’s Board of Directors has approved and declared a $0.45 per
share quarterly cash dividend on its issued and outstanding common
stock, payable on March 24, 2016 to shareholders of record at
the close of business on March 10, 2016. Based on the
information available today, we believe this distribution will
qualify as a return of capital rather than a taxable dividend for
U.S. tax purposes. Investors should consult with a tax adviser to
determine the proper tax treatment of this distribution.
Announced Merger with Triton Container
International Limited
Mr. Sondey concluded, “We are making good progress on our
announced merger with Triton Container International to create the
world's largest, most efficient and most capable container leasing
company. We have received all required anti-trust approvals and the
SEC review process of the S-4 registration statement filed by
Triton International Limited is progressing. We are also making
good progress with integration planning. Much of the commercial
leadership for the combined company has been identified, and we
expect our systems integration plan will be developed well ahead of
the merger closing. We believe we will be able to achieve roughly
$40 million of administrative cost reductions which should be fully
implemented by the end of 2016. We continue to expect the
transaction will generate more than 30% earnings per share
accretion for TAL’s shareholders once the anticipated merger
benefits are fully realized.”
Investors’ Webcast
TAL will hold a Webcast at 9 a.m. (New York time) on Thursday,
February 25, 2016 to discuss its fourth quarter and full year
results. An archive of the Webcast will be available one hour after
the live call through Friday, April 8, 2016. To access the
live Webcast or archive, please visit TAL’s website at
http://www.talinternational.com.
About TAL International Group, Inc.
TAL is one of the world’s largest lessors of intermodal freight
containers and chassis with 17 offices in 11 countries and
approximately 230 third-party container depot facilities in 40
countries. TAL’s global operations include the acquisition,
leasing, re-leasing and subsequent sale of multiple types of
intermodal containers and chassis. TAL’s fleet consists of
approximately 1,531,000 containers and related equipment
representing approximately 2,513,000 twenty-foot equivalent units
(TEUs). This places TAL among the world’s largest independent
lessors of intermodal containers and chassis as measured by fleet
size.
Important Cautionary Information Regarding Forward-Looking
Statements
Certain statements included in this communication are not
historical facts but are forward-looking statements for purposes of
the safe harbor provisions under The Private Securities Litigation
Reform Act of 1995. Forward-looking statements generally are
accompanied by words such as “may”, “should”, “would”, “plan”,
“intend”, “anticipate”, “believe”, “estimate”, “predict”,
“potential”, “seem”, “seek”, “continue”, “future”, “will”,
“expect”, “outlook” or other similar words, phrases or expressions.
These forward-looking statements include statements regarding our
views, estimates, plans and outlook, industry, future events, the
proposed transaction between Triton Container International Limited
(“Triton”) and TAL International Group, Inc. (“TAL International”)
, the estimated or anticipated future results and benefits of
Triton and TAL International following the transaction, including
estimated synergies, the likelihood and ability of the parties to
successfully close the proposed transaction, future opportunities
for the combined company, and other statements that are not
historical facts. These statements are based on the current
expectations of Triton and TAL International management and are not
predictions of actual performance. These statements are subject to
a number of risks and uncertainties regarding Triton’s and TAL
International’s respective businesses and the transaction, and
actual results may differ materially. These risks and uncertainties
include, but are not limited to, changes in the business
environment in which Triton and TAL International operate,
including inflation and interest rates, and general financial,
economic, regulatory and political conditions affecting the
industry in which Triton and TAL International operate; changes in
taxes, governmental laws, and regulations; competitive product and
pricing activity; difficulties of managing growth profitably; the
loss of one or more members of Triton’s or TAL International’s
management team; the ability of the parties to successfully close
the proposed transaction; failure to realize the anticipated
benefits of the transaction, including as a result of a delay in
completing the transaction or a delay or difficulty in integrating
the businesses of Triton and TAL International; uncertainty as to
the long-term value of Triton International Limited (“Holdco”)
common shares; the expected amount and timing of cost savings and
operating synergies; failure to receive the approval of the
stockholders of TAL International for the transaction, and those
discussed in TAL International’s Annual Report on Form 10-K for the
year ended December 31, 2014 under the heading “Risk Factors,” as
updated from time to time by TAL International’s Quarterly Reports
on Form 10-Q and other documents of TAL International on file with
the Securities and Exchange Commission ("SEC") and in the
registration statement on Form S-4 that was filed with the SEC by
Holdco. There may be additional risks that neither Triton nor TAL
International presently know or that Triton and TAL International
currently believe are immaterial which could also cause actual
results to differ from those contained in the forward-looking
statements. In addition, forward-looking statements provide
Triton’s and TAL International’s expectations, plans or forecasts
of future events and views as of the date of this communication.
Triton and TAL International anticipate that subsequent events and
developments will cause Triton’s and TAL International’s
assessments to change. However, while Triton and TAL International
may elect to update these forward-looking statements at some point
in the future, Triton and TAL International specifically disclaim
any obligation to do so. These forward-looking statements should
not be relied upon as representing Triton’s and TAL International’s
assessments as of any date subsequent to the date of this
communication.
No Offer or Solicitation
This communication shall not constitute an offer to sell or the
solicitation of an offer to sell or the solicitation of an offer to
buy any securities, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as
amended.
Additional Information
This communication is not a solicitation of a proxy from any
stockholder of TAL International. In connection with the proposed
transaction, Holdco has filed with the SEC a registration statement
on Form S-4 that includes a preliminary prospectus of Holdco and
also includes a preliminary proxy statement of TAL International.
The SEC has not yet declared the registration statement effective.
After it is declared effective, TAL International will mail the
proxy statement/prospectus to its stockholders. INVESTORS ARE URGED
TO READ THE PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS
AND SUPPLEMENTS THERETO) BECAUSE IT CONTAINS IMPORTANT INFORMATION.
You are able to obtain the proxy statement/prospectus, as well as
other filings containing information about TAL free of charge, at
the website maintained by the SEC at www.sec.gov. Copies of the
proxy statement/prospectus and the filings with the SEC that are
incorporated by reference in the proxy statement/prospectus can
also be obtained, free of charge, by directing a request to TAL
International Group, Inc., 100 Manhattanville Road, Purchase, New
York 10577, Attention: Secretary.
The respective directors and executive officers of Triton, TAL
International and Triton International Limited (“Holdco”) and other
persons may be deemed to be participants in the solicitation of
proxies in respect of the proposed transaction. Information
regarding TAL International’s directors and executive officers is
available in its proxy statement filed with the SEC on March 19,
2015. Other information regarding the participants in the proxy
solicitation and their respective interests are included in the
proxy statement/prospectus and will be contained in other relevant
materials to be filed with the SEC when they become available.
These documents can be obtained free of charge from the sources
indicated above.
(1) Adjusted pre-tax income, Adjusted EBITDA, Adjusted net
income, and Adjusted pre-tax return on tangible equity are non-GAAP
measurements we believe are useful in evaluating our operating
performance. TAL’s definition and calculation of Adjusted pre-tax
income, Adjusted EBITDA, Adjusted net income, and Adjusted pre-tax
return on tangible equity are outlined in the attached
schedules.
Please see Financial Tables below for a detailed reconciliation
of these financial measurements.
-Financial Tables Follow-
TAL INTERNATIONAL
GROUP, INC.
Consolidated Balance Sheets
(Dollars in thousands, except share
data)
December 31, 2015
December 31, 2014 ASSETS:
Leasing equipment, net of accumulated
depreciation and allowances of $1,218,826 and$1,055,864
$ 3,908,292 $ 3,674,031 Net investment in finance leases, net of
allowances of $805 and $1,056 177,737 219,872 Equipment held for
sale 74,899 59,861
Revenue earning assets
4,160,928
3,953,764
Unrestricted cash and cash equivalents 58,907 79,132 Restricted
cash 30,302 35,649 Accounts receivable, net of allowances of $1,314
and $978 95,709 85,681 Goodwill 74,523 74,523 Other assets 13,620
11,400 Fair value of derivative instruments 87
1,898
Total assets $ 4,434,076 $
4,242,047
LIABILITIES AND STOCKHOLDERS' EQUITY:
Equipment purchases payable $ 20,009 $ 88,336 Fair value of
derivative instruments 20,348 10,394 Accounts payable and other
accrued expenses 56,096 57,877 Net deferred income tax liability
456,123 411,007 Debt, net of unamortized deferred financing costs
of $25,245 and $32,937 3,216,488 3,007,905
Total liabilities
3,769,064
3,575,519
Stockholders' equity: Preferred stock, $0.001 par value,
500,000 shares authorized, none issued — —
Common stock, $0.001 par value,
100,000,000 shares authorized, 37,167,134 and 37,006,283shares
issued respectively
37 37 Treasury stock, at cost, 3,911,843 and 3,829,928 shares
(75,310 ) (71,917 ) Additional paid-in capital 511,297 504,891
Accumulated earnings 248,183 246,766 Accumulated other
comprehensive (loss) (19,195 ) (13,249 )
Total
stockholders' equity 665,012 666,528
Total liabilities and stockholders' equity $
4,434,076 $ 4,242,047
TAL INTERNATIONAL
GROUP, INC.
Consolidated Statements of
Income
(Dollars and shares in thousands,
except earnings per share)
Three Months Ended December
31, Twelve Months Ended December
31, 2015 2014
2015 2014 Leasing revenues:
Operating leases $ 150,057 $ 149,346 $ 591,665
$ 573,778 Finance leases 3,474 4,237 15,192 18,355 Other revenues
234 409 1,147
1,873
Total leasing revenues 153,765
153,992 608,004
594,006 Equipment trading revenues
13,512 11,410 62,195 56,436 Equipment trading expenses (13,444 )
(9,796 ) (58,001 )
(49,246 )
Trading margin 68 1,614
4,194 7,190
Net (loss) gain on sale of leasing equipment (8,683 ) 560 (13,646 )
6,987
Operating expenses: Depreciation and
amortization 62,422 59,515 242,538 224,753 Direct operating
expenses 17,067 7,840 48,902 33,076 Administrative expenses 16,843
11,122 51,154 45,399 Provision for doubtful accounts 65
154 133 212
Total operating expenses 96,397 78,631
342,727 303,440
Operating income 48,753 77,535 255,825 304,743
Other
expenses: Interest and debt expense 28,958 28,063 118,280
109,265 Write-off of deferred financing costs — 120 895 5,192 Net
(gain) loss on interest rate swaps (809 ) 370
205 780
Total other
expenses 28,149 28,553
119,380 115,237 Income before
income taxes 20,604 48,982 136,445 189,506 Income tax expense 7,330
16,927 48,233
65,461
Net income $ 13,274
$ 32,055 $ 88,212
$ 124,045 Net income per common share—Basic $ 0.40
$ 0.97 $ 2.68
$ 3.70 Net income per common share—Diluted $
0.40 $ 0.96 $ 2.67
$ 3.68 Cash dividends paid per common share $
0.45 $ 0.72 $ 2.61 $ 2.88 Weighted average number of common shares
outstanding—Basic 32,865 33,110 32,861 33,482 Dilutive stock
options and restricted stock 109 228
118 182 Weighted average
number of common shares outstanding—Diluted 32,974
33,338 32,979
33,664
TAL INTERNATIONAL
GROUP, INC.
Consolidated Statements of Cash
Flows
(Dollars in thousands)
Year Ended December 31, 2015
2014 2013 Cash flows from operating
activities: Net income $ 88,212 $ 124,045 $ 143,166
Adjustments to reconcile net income to net
cash provided by operatingactivities:
Depreciation and amortization 242,538 224,753 205,073 Amortization
of deferred financing costs 7,602 7,729 7,260
Amortization of net loss on terminated
derivative instruments designated ascash flow hedges
2,618 2,479 3,020 Amortization of lease intangibles 3,713 130 — Net
loss (gain) on sale of leasing equipment 13,646 (6,987 ) (26,751 )
Net loss (gain) on interest rate swaps 205 780 (8,947 ) Write-off
of deferred financing costs 895 5,192 4,000 Deferred income taxes
48,233 65,461 77,699 Stock compensation charge 6,452 5,984 5,216
Changes in operating assets and liabilities: Net equipment
(purchased) sold for resale activity (4,878 ) (6,671 ) (11,186 )
Net realized loss on interest rate swaps
terminated prior to their contractualmaturities
— (4,953 ) (24,235 ) Accounts receivable (10,028 ) (11,507 ) (2,811
) Net (deferred revenue) (7,098 ) (5,696 ) (1,572 ) Accounts
payable and other accrued expenses 8,123 (720 ) (3,982 ) Income
taxes payable — 67 (220 ) Other assets 245 (1,279 ) 958
Net cash provided by operating activities 400,478
398,807 366,688
Cash flows from investing
activities: Purchases of leasing equipment and investments in
finance leases (704,178 ) (670,529 ) (660,492 ) Proceeds from sale
of equipment, net of selling costs 125,525 165,990 140,724 Cash
collections on finance lease receivables, net of income earned
42,860 47,607 39,470 Other (101 ) (253 ) 84
Net cash
(used in) investing activities (535,894 ) (457,185 ) (480,214 )
Cash flows from financing activities: Purchases of treasury
stock (4,446 ) (34,382 ) —
Stock options exercised, related activity,
and excess tax benefits from stockcompensation
38 (234 ) (235 ) Financing fees paid under debt facilities (805 )
(16,702 ) (13,897 ) Borrowings under debt facilities and proceeds
under capital lease obligations 665,000 1,828,545 1,206,735
Payments under debt facilities and capital lease obligations
(464,183 ) (1,605,666 ) (993,011 ) Decrease (increase) in
restricted cash 5,347 (6,523 ) 6,711 Common stock dividends paid
(85,760 ) (96,403 ) (89,745 )
Net cash provided by financing
activities 115,191 68,635 116,558
Net
(decrease) increase in unrestricted cash and cash equivalents $
(20,225 ) $ 10,257 $ 3,032 Unrestricted cash and cash equivalents,
beginning of period 79,132 68,875 65,843
Unrestricted cash and cash equivalents, end of period $
58,907 $ 79,132 $ 68,875
Supplemental
disclosures: Interest paid $ 108,488 $ 99,895 $ 101,535 Income
taxes (refunded) paid $ — $ (67 ) $ 225
Supplemental non-cash
investing activities: Accrued and unpaid purchases of equipment
$ 20,009 $ 88,336 $ 112,268
The following table sets forth TAL’s equipment fleet
utilization(2) as of and for the quarter and year ended
December 31, 2015:
Average and Ending Utilization for
theQuarter Ended December 31, 2015
Average Utilization Ending Utilization
93.7 % 93.0 %
(2) Utilization is computed by dividing TAL’s total units on
lease (in CEUs) by the total units in TAL’s fleet (in CEUs)
excluding new units not yet leased and off-hire units designated
for sale.
The following table provides the composition of TAL’s equipment
fleet as of December 31, 2015 (in units, TEUs and cost
equivalent units, or “CEUs”):
December 31, 2015 Equipment Fleet in Units
Equipment Fleet in TEUs Dry 1,351,170
2,190,940
Refrigerated 70,505 134,204
Special 56,118
102,081
Tank 11,243 11,243
Chassis 21,216
38,210
Equipment leasing fleet 1,510,252 2,476,678
Equipment trading fleet 21,135 35,989
Total
1,531,387 2,512,667
December 31, 2015
Equipment Fleet in CEUs Operating leases 2,801,607
Finance leases 197,225
Equipment trading fleet
107,079
Total 3,105,911
Non-GAAP Financial Measures
We use the terms "EBITDA", “Adjusted EBITDA”, "Adjusted pre-tax
income", "Adjusted net income", and "Adjusted pre-tax return on
tangible equity" throughout this press release.
EBITDA is defined as net income before interest and debt
expense, income tax expense, depreciation and amortization, and the
write-off of deferred financing costs. Adjusted EBITDA is defined
as EBITDA excluding gains and losses on interest rate swaps, plus
principal payments on finance leases, plus non-recurring
transaction costs related to the pending merger with Triton.
Adjusted pre-tax income is defined as income before income taxes
as further adjusted for certain items which are described in more
detail below, which management believes are not representative of
our operating performance. Adjusted pre-tax income excludes gains
and losses on interest rate swaps, the write-off of deferred
financing costs, and transaction costs related to the pending
merger with Triton. Adjusted net income is defined as net income
further adjusted for the items discussed above, net of income
tax.
Adjusted pre-tax return on tangible equity is defined as the
annual Adjusted pre-tax income divided by the Average adjusted
tangible equity. Adjusted tangible equity is defined as total
stockholders' equity plus net deferred income tax liability and the
net fair value of derivative instruments less goodwill.
EBITDA, Adjusted EBITDA, Adjusted pre-tax income, Adjusted net
income, and Adjusted pre-tax return on tangible equity are not
presentations made in accordance with U.S. GAAP. EBITDA, Adjusted
EBITDA, Adjusted pre-tax income, Adjusted net income, and Adjusted
pre-tax return on tangible equity should not be considered as
alternatives to, or more meaningful than, amounts determined in
accordance with U.S. GAAP, including net income, or net cash from
operating activities.
We believe that EBITDA, Adjusted EBITDA, Adjusted pre-tax
income, Adjusted net income, and Adjusted pre-tax return on
tangible equity are useful to an investor in evaluating our
operating performance because:
-- these measures are widely used by securities analysts and
investors to measure a company’s operating performance and
available liquidity to service debt and fund investments without
regard to debt or capital structure, income tax rates and
depreciation policy estimates, which can vary substantially from
company to company;
-- these measures help investors to more meaningfully evaluate
and compare the results of our operations from period to period by
removing the impact of our capital structure, our asset base and
certain non-routine events which we do not expect to occur in the
future; and
-- these measures are used by our management for various
purposes, including as measures of operating performance and
liquidity, to assist in comparing performance from period to period
on a consistent basis, in presentations to our board of directors
concerning our financial performance and as a basis for strategic
planning and forecasting.
We have provided a reconciliation of net income, the most
directly comparable U.S. GAAP measure, to EBITDA in the tables
below for the three and twelve months ended December 31, 2015 and
2014. We have also provided reconciliations of income before income
taxes and net income, the most directly comparable U.S. GAAP
measures, to Adjusted pre-tax income and Adjusted net income in the
tables below for the three and twelve months ended December 31,
2015 and 2014.
We have also provided reconciliations of Operating cash flows to
Adjusted EBITDA and Adjusted pre-tax return on tangible equity in
the tables below for the current quarter.
TAL INTERNATIONAL GROUP, INC.
Non-GAAP Reconciliations of Adjusted
Pre-tax Income and Adjusted Net Income (Dollars and Shares
in Thousands, Except Per Share Data)
Three Months EndedDecember
31,
Twelve Months EndedDecember
31,
2015 2014 2015
2014 Income before income taxes $ 20,604
$ 48,982 $ 136,445 $
189,506 Add: Write-off of deferred financing costs — 120 895 5,192
Net (gain) loss on interest rate swaps (809 ) 370 205 780
Transaction costs related to pending merger 6,100
— 7,500 — Adjusted
pre-tax income $ 25,895 $ 49,472
$ 145,045 $ 195,478 Adjusted pre-tax
income per fully diluted common share $0.79
$1.48 $4.40 $5.81
Weighted average number of common shares outstanding—Diluted 32,974
33,338 32,979 33,664
Three Months EndedDecember
31,
Twelve Months EndedDecember
31,
2015 2014 2015
2014 Net income $ 13,274 $ 32,055 $ 88,212 $
124,045 Add:
Write-off of deferred financing costs, net
of tax
— 78 579 3,398
Net (gain) loss on interest rate swaps,
net of tax
(521 ) 242 133 511
Transaction costs related to pending
merger, net of tax
3,929 — 4,849
—
Adjusted net income
$ 16,682 $ 32,375 $
93,773 $ 127,954 Adjusted net income per fully
diluted common share $0.51 $0.97
$2.84 $3.80 Weighted average number of
common shares outstanding—Diluted 32,974 33,338 32,979 33,664
TAL INTERNATIONAL GROUP, INC. Non-GAAP
Reconciliations of EBITDA(Dollars in Thousands)
Three Months EndedDecember
31,
Twelve Months EndedDecember
31,
2015 2014 2015
2014 Net income $ 13,274 $
32,055 $ 88,212 $ 124,045 Add: Depreciation and
amortization 62,422 59,515 242,538 224,753 Interest and debt
expense 28,958 28,063 118,280 109,265 Write-off of deferred
financing costs — 120 895 5,192 Income tax expense 7,330
16,927 48,233
65,461 EBITDA $ 111,984 $ 136,680
$ 498,158 $ 528,716
TAL INTERNATIONAL GROUP, INC.Non-GAAP
Reconciliations of Operating Cash Flows to Adjusted EBITDA
(Dollars in Thousands)
Twelve Months Ended December
31,
2015 2014 Net cash provided by
operating activities $ 400,478 $ 398,807 Non-cash
expenses (20,385 ) (16,322 ) (Loss) gain on sale of equipment
(13,646 ) 6,987 Changes in operating assets & liabilities
13,636 30,759 Interest expense 118,280 109,265 Principal payments
on finance leases 42,860 47,607
Transaction costs related to pending
merger
7,500
—
Adjusted EBITDA $
548,723
$ 577,103
TAL
INTERNATIONAL GROUP, INC.
Non-GAAP Reconciliations of Adjusted
Pre-tax Return on Tangible Equity
(Dollars in Thousands)
Balance as ofDecember 31,
2015
Balance as ofDecember 31,
2014
Total stockholders' equity $ 665,012 $ 666,528 Net
deferred income tax liability 456,123 411,007 Net fair value of
derivative instruments liability 20,261 8,496 Goodwill (74,523 )
(74,523 ) Total adjusted tangible equity $ 1,066,873
$ 1,011,508 Average adjusted tangible
equity(a) $ 1,039,191 Adjusted pre-tax income $ 145,045 Adjusted
pre-tax return on tangible equity 14.0%
(a) Calculated by taking the average of
the current year's and the prior year's ending total Adjusted
tangible equity.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160224006648/en/
TAL International Group, Inc.Investor RelationsJohn
Burns, 914-697-2900Senior Vice President and Chief Financial
Officer
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