CAI International, Inc. (CAI) (NYSE: CAI), one of the world’s
leading transportation finance and logistics companies, today
reported results for the fourth quarter and full year of 2017.
Highlights
- Net income for the fourth quarter of
2017 was $36.6 million, or $1.81 per fully diluted share, compared
to $0.6 million, or $0.03 per fully diluted share, in the fourth
quarter of 2016.
- Net income for the fourth quarter of
2017 included a tax benefit of $16.9 million associated with the
recently enacted Tax Cuts and Jobs Act (the Act), and a
non-recurring, non-cash tax charge of $1.1 million. Excluding the
net tax benefit of $15.8 million, adjusted net income for the
fourth quarter of 2017 was $20.7 million, or $1.03 per fully
diluted share1.
- Net income for the year ended December
31, 2017 was $72.1 million, or $3.68 per fully diluted share,
compared to $6.0 million, or $0.31 per fully diluted share, in the
year ended December 31, 2016.
- Lease-related revenue for the fourth
quarter of 2017 was $74.6 million, an increase of 30% compared to
the fourth quarter of 2016, and 8% compared to the third quarter of
2017.
- Lease-related revenue for the year
ended December 31, 2017 was $267.8 million, an increase of 15%
compared to the year ended December 31, 2016.
- Average utilization for our owned
container fleet during the fourth quarter of 2017 was 99.0% (on a
CEU basis) compared to 94.3% for the fourth quarter of 2016, and
98.2% for the third quarter of 2017. Current utilization is
99.2%.
- During the fourth quarter of 2017 we
leased out 243 new railcars and have commitments to lease out a
further 564 new cars in the first half of 2018.
- Average railcar utilization during the
fourth quarter of 2017, excluding new railcars not yet leased, was
87.1% compared to 94.1% for the fourth quarter of 2016, and 89.3%
for the third quarter of 2017.
- During the fourth quarter of 2017, CAI
issued approximately 890,000 shares of its common stock through an
at-the-market offering for net proceeds of $29.1 million, or $32.81
per average share issued.
Additional information on CAI's results, as well as the state of
the industry, is available in a presentation posted today on the
"Investors" section of CAI's website, www.capps.com.
Victor Garcia, President and Chief Executive Officer of CAI,
commented, “We are very pleased with the exceptional performance of
our company during the fourth quarter and the fundamentals of the
business remain strong. Excluding the tax benefit from the recently
enacted Tax Cuts and Jobs Act and the non-recurring, non-cash tax
charge, we reported net income per fully diluted share of $20.7
million, or $1.03 per share. Our results were driven by the ongoing
momentum in our container leasing business, which reported average
utilization of 99% during the quarter. We benefited from continued
investment during the quarter at lease rates that remained
attractive, and also from gains on the sale of containers as we
looked to maximize the sale price of our available idle equipment.
For the full year we invested $569 million on equipment, of which
$487 million was related to containers.
“Our rail segment continues to work through a difficult market
environment. However, during the fourth quarter we experienced
increased momentum in leasing our railcars. During the quarter we
leased out 243 new railcars and have commitments to lease out a
further 564 new cars in the first half of 2018. We continue to see
increased inquiry for railcars across various equipment categories,
although lease rates remain below our targeted levels due to
continued aggressive pricing from competitors. We believe rail
velocity amongst Class 1 railroads has decreased and that customers
are looking for additional equipment due to economic growth in the
United States and the slowing of rail velocity in the United States
rail network. We are becoming more optimistic about the
opportunities for our rail segment due to the expected increased
economic growth in the United States in 2018. We also believe that
our rail segment will benefit if there is increased level of
manufacturing and distribution activity as a result of companies
increasing their investment in the United States due to the
regulatory and tax changes that have been enacted.
“Our logistics business continued to work through the
integration of our intermodal and truck brokerage operation. The
segment as a whole reported a loss for the quarter due to lost
productivity as a result of the hurricane disruptions in the
southeastern United States during the quarter and reduced activity
with some of our truck brokerage customers. Nonetheless, our
international NVOCC and freight forwarding business had growing
profitability in the quarter and full year as compared to the same
periods in 2016. We are proceeding with the integration of our
domestic logistics operations and are seeing increased momentum as
we gain new customers and increase volumes with existing customers.
Trucking capacity remains very tight in the United States as a
result of the implementation of electronic logging and the
continued strength of the United States economy. We think that
tightness in capacity will continue in 2018 and are focused on
working with customers to meet their transportation needs. Beyond
individual segment results, we continue to see opportunities to
cross-market assets and customers between our container leasing,
rail and logistics segments.”
Mr. Garcia, concluded, “We enjoyed record earnings in 2017 and
expect 2018 to be a very strong demand year for containers as the
world economy continues to expand and lessors continue to operate
with high utilization. Offsetting the impact of strong demand in
the coming year is the expectation of increased competition from
container equipment lessors who are active in the market, lower
expected gain on sale of equipment due to a lack of equipment
availability and higher expected interest costs. We expect interest
costs to increase due to ongoing equipment investment in 2018 and,
more importantly, due to the expected higher floating and fixed
interest rates in 2018.”
1 Refer to the “Reconciliation of GAAP Amounts to Non-GAAP
Amounts” and “Use of Non-GAAP Financial Measures” set forth
below.
CAI International, Inc. Consolidated Balance
Sheets (In thousands, except share information)
(UNAUDITED) December 31,
December 31, 2017 2016
Assets Current assets Cash $ 14,735 $ 15,685 Cash
held by variable interest entities 20,685 30,449
Accounts receivable, net of allowance for
doubtful accounts of $1,440 and $1,340 at December 31, 2017 and
2016, respectively
70,598 63,745 Current portion of net investment in direct finance
leases 30,063 19,959 Prepaid expenses and other current assets
4,258 5,315 Total current assets
140,339 135,153 Restricted cash 11,789 6,192
Rental equipment, net of accumulated
depreciation of $505,546 and $421,153 at December 31, 2017 and
2016, respectively
2,004,961 1,807,010 Net investment in direct finance leases 246,450
80,582 Goodwill 15,794 15,794
Intangible assets, net of accumulated
amortization of $3,407 and $2,681 at December 31, 2017 and 2016,
respectively
7,723 9,691
Furniture, fixtures and equipment, net of
accumulated depreciation of $3,201 and $2,833 at December 31, 2017
and 2016, respectively
338 550 Other non-current assets 3,008 962
Total assets $ 2,430,402 $ 2,055,934
Liabilities and Stockholders' Equity Current
liabilities Accounts payable $ 7,831 $ 13,804 Accrued expenses and
other current liabilities 15,706 11,778 Due to container investors
4,119 7,077 Unearned revenue 7,811 10,613 Current portion of debt
132,049 95,527 Rental equipment payable 92,415
25,207 Total current liabilities 259,931 164,006 Debt
1,570,773 1,380,499 Deferred income tax liability 35,853 51,804
Other long term liabilities - 2,121
Total liabilities 1,866,557 1,598,430
Stockholders' equity
Common stock: par value $.0001 per share;
authorized 84,000,000 shares; issued and outstanding 20,390,622 and
19,057,217 shares at December 31, 2017 and 2016, respectively
2 2 Additional paid-in capital 172,325 141,058 Accumulated other
comprehensive loss (6,122 ) (8,132 ) Retained earnings
397,640 324,576
Total stockholders'
equity 563,845 457,504
Total
liabilities and stockholders' equity $ 2,430,402 $
2,055,934
CAI International, Inc.
Consolidated Statements of Income (In thousands, except
per share data) (UNAUDITED) Three
Months Ended Year Ended December 31,
December 31, 2017
2016 2017 2016
Revenue Container lease revenue $ 65,581 $ 49,453 $ 235,365
$ 202,328 Rail lease revenue 9,017 8,028 32,476 30,490 Logistics
revenue 19,436 19,793 80,552
61,536
Total revenue 94,034
77,274 348,393 294,354
Operating
expenses Depreciation of rental equipment 28,138 27,476 110,952
104,877 Storage, handling and other expenses 4,267 8,686 20,918
35,862 Logistics transportation costs 16,547 16,853 68,155 51,980
(Gain) loss on sale of used rental equipment (2,808 ) 4,721 (5,347
) 12,671 Administrative expenses 11,487 6,928
42,699 35,678
Total operating expenses
57,631 64,664 237,377
241,068
Operating income 36,403
12,610 111,016 53,286
Other
expenses Net interest expense 15,136 11,219 53,052 42,754 Other
expense 114 247 765 654
Total other expenses 15,250 11,466
53,817 43,408
Income before income
taxes and non-controlling interest 21,153 1,144 57,199 9,878
Income tax (benefit) expense (15,410 ) 524
(14,861 ) 3,844
Net income 36,563 620 72,060
6,034 Net income attributable to non-controlling interest -
- - 37
Net income
attributable to CAI common stockholders $ 36,563
$ 620 $ 72,060 $ 5,997
Net income per share
attributable to CAI common stockholders Basic $ 1.86 $
0.03 $ 3.74 $ 0.31 Diluted $ 1.81 $ 0.03 $ 3.68 $ 0.31
Weighted average shares outstanding Basic 19,682 18,992
19,253 19,318 Diluted 20,154 19,081 19,607 19,393
CAI
International, Inc. Consolidated Statements of Cash
Flows (In thousands, except per share data)
(UNAUDITED) Year Ended December
31, 2017 2016
Cash flows from operating activities Net income $ 72,060 $
6,034 Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation 111,294 105,236 Amortization of
debt issuance costs 3,306 2,975 Amortization of intangible assets
1,969 1,443 Stock-based compensation expense 2,087 1,732 Reduction
in contingent consideration (2,211 ) (3,789 ) Unrealized loss on
foreign exchange 106 276 (Gain) loss on sale of used rental
equipment (5,347 ) 12,671 Loss on disposal of subsidiary - 146
Deferred income taxes (14,947 ) 1,138 Excess tax benefit from
share-based compensation awards (1,858 ) - Bad debt expense 402
3,151 Changes in other operating assets and liabilities: Accounts
receivable (8,922 ) (1,799 ) Prepaid expenses and other assets 735
(2,691 ) Accounts payable, accrued expenses and other current
liabilities (348 ) 3,572 Due to container investors (2,958 ) 1,276
Unearned revenue (1,296 ) (2,115 )
Net cash
provided by operating activities 154,072
129,256
Cash flows from investing activities Purchase
of rental equipment (502,050 ) (251,165 ) Acquisitions, net of cash
acquired - (15,599 ) Net proceeds from sale of used rental
equipment 66,364 66,073 Disposal of subsidiary, net of cash
disposed of - (460 ) Purchase of furniture, fixtures and equipment
(126 ) (82 ) Receipt of principal payments from direct finance
leases 24,061 19,633
Net cash used
in investing activities (411,751 ) (181,600 )
Cash flows from financing activities Proceeds from debt
754,340 552,540 Principal payments on debt (527,850 ) (496,270 )
Debt issuance costs (3,441 ) (1,515 ) (Increase) decrease in
restricted cash (5,597 ) 1,020 Proceeds from issuance of stock
29,148 - Repurchase of stock - (9,176 ) Exercise of stock options
145 -
Net cash provided by financing
activities 246,745 46,599 Effect on
cash of foreign currency translation 220 (674
)
Net decrease in cash (10,714 ) (6,419 ) Cash at beginning
of the period 46,134 52,553
Cash at
end of the period $ 35,420 $ 46,134
CAI
International, Inc. Fleet Data (UNAUDITED)
As of December 31, 2017
2016 Owned container fleet in TEUs 1,146,268 921,694
Managed container fleet in TEUs 80,736 162,582 Total
container fleet in TEUs 1,227,004 1,084,276
Owned container fleet in CEUs 1,209,209 1,014,078 Managed container
fleet in CEUs 73,530 146,258 Total container fleet in
CEUs 1,282,739 1,160,336 Owned railcar fleet
in units 7,172 6,459
Three Months
Ended Year Ended December 31, December 31,
2017 2016 2017 2016 Average
Utilization Container fleet utilization in CEUs 98.9 % 93.8 %
97.4 % 92.8 % Owned container fleet utilization in CEUs 99.0 % 94.3
% 97.6 % 93.5 % Railcar fleet utilization in units - excluding new
units not yet leased 87.1 % 94.1 % 90.0 % 93.9 % Railcar fleet
utilization in units - including new units not yet leased 73.8 %
86.0 % 78.3 % 88.7 %
As of December 31, 2017
2016 Period Ending Utilization Container fleet
utilization in CEUs 99.2 % 94.9 % Owned container fleet utilization
in CEUs 99.2 % 95.2 % Railcar fleet utilization in units -
excluding new units not yet leased 87.9 % 93.1 % Railcar fleet
utilization in units - including new units not yet leased 73.4 %
82.9 % 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.
Utilization of railcars is computed by dividing the total number of
railcars on lease by the total number of railcars in our fleet. The
impact on utilization of including new units not yet leased in the
total railcar fleet has been included in the table above.
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 December 31, 2017
2016 Net income $ 36,563 $ 620
Non-recurring tax benefit (16,944 ) - Non-recurring tax charge
1,103 -
Adjusted net income $ 20,722
$ 620
Diluted net income per share $ 1.81 $
0.03
Diluted adjusted net income per share $ 1.03 $
0.03
Weighted average number of common shares used to
calculate (in thousands) Diluted net income per share and
diluted adjusted net income per share 20,154 19,081
Conference Call
A conference call to discuss the financial results for the
fourth quarter of 2017 will be held on Wednesday, February 14, 2018
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
“Q4 2017 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 fourth quarter and full year 2017
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 tax benefit 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 transportation finance and
logistics companies. As of December 31, 2017, CAI operated a
worldwide fleet of approximately 1.3 million CEUs of containers,
and owned a fleet of 7,172 railcars that it leases within North
America. CAI operates through 23 offices located in 14 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, the statements regarding management's business outlook
on the container leasing business, management's outlook for growth
of CAI’s railcar leasing investments and the outlook of our
logistics business. 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
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, 2016, 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.
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version on businesswire.com: http://www.businesswire.com/news/home/20180214006328/en/
CAI International, Inc.Tim Page, 415-788-0100Chief Financial
Officertpage@capps.com
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