News Column

CAI International, Inc. Reports Results for the Fourth Quarter and Full Year of 2013

February 10, 2014

SAN FRANCISCO--(BUSINESS WIRE)-- CAI International, Inc. (CAI) (NYSE: CAP), one of the world’s leading lessors of intermodal freight containers, today reported results for the fourth quarter and full year of 2013.

Highlights

  • CAI reported net income attributable to CAI common stockholders for the year ended December 31, 2013 of $63.9 million, an increase of 1% compared to 2012.
  • CAI reported net income attributable to CAI common stockholders for the fourth quarter of 2013 of $15.6 million, a decrease of 10% compared to $17.4 million for the fourth quarter of 2012.
  • CAI reported rental revenue for the fourth quarter of 2013 of $50.9 million, an increase of $5.9 million, or 13%, compared to the fourth quarter of 2012, and $0.2 million compared to the third quarter of 2013, the 15th consecutive quarter of record rental revenue.
  • During the quarter CAI entered into a sale and lease back transaction with a customer for approximately 6,000 TEUs of containers.

    Net income attributable to CAI common stockholders for the fourth quarter of 2013 decreased by 10% to $15.6 million (or $0.69 per fully diluted share), from $17.4 million (or $0.85 per fully diluted share) for the fourth quarter of 2012. Net income per share was impacted by a 10% increase in the number of fully diluted shares outstanding during the quarter, compared to the fourth quarter of 2012.

    Net income attributable to CAI common stockholders for the year ended December 31, 2013 increased by 1% to $63.9 million (or $2.82 per fully diluted share) from $63.5 million (or $3.18 per fully diluted share) for the year ended December 31, 2012.

    Total revenue for the fourth quarter of 2013 was $54.6 million, compared to $49.9 million for the fourth quarter of 2012, an increase of 9%. Rental revenue for the fourth quarter of 2013 was $50.9 million, compared to $44.9 million for the fourth quarter of 2012. The increase in rental revenue was primarily due to an increase in the average number of TEUs of owned containers on lease. Management fee revenue for the fourth quarter of 2013 was $1.8 million, compared to $2.4 million for the fourth quarter of 2012, reflecting the reduction in the size of the managed fleet as CAI has acquired a number of its previously managed portfolios during the last twelve months. Finance lease income for the fourth quarter of 2013 was $1.9 million, compared to $2.5 million in the fourth quarter of 2012, as a result of the reclassification of certain leases during the second quarter of 2013.

    Total revenue for the year ended December 31, 2013 was $212.4 million, compared to $173.9 million for the year ended December 31, 2012, an increase of 22%. Rental revenue for the year ended December 31, 2013 was $196.6 million, compared to $153.0 million for the prior year, an increase of 29%. The increase in rental revenue was primarily due to an increase in the average number of TEUs of owned containers on lease. Management fee revenue for 2013 was $7.9 million, compared to $12.1 million for 2012, reflecting the continued reduction in the size of the managed fleet. There were no sales of container portfolios, and therefore no gain on sale, during 2013, compared to a gain on sale of $1.3 million in 2012. Finance lease income for 2013 was $7.9 million, compared to $7.6 million in the prior year.

    Victor Garcia, Chief Executive Officer of CAI, commented, “We are pleased with the results of our company during 2013, particularly given the challenging market conditions. We continue to see growth in rental revenue, however this growth was impacted in the second half of the year when we did not experience the traditional peak season demand normally seen during the third quarter. Our overall utilization (on a CEU basis) decreased slightly, from 93% in the third quarter to 92% in the fourth quarter, reflecting the normal seasonal slowdown in demand towards the end of the year. The decline in utilization, however, was less than we would typically expect, which we believe reflects the continued relatively tight supply and demand for containers. Utilization during the month of January was effectively unchanged from December at 91.3%. The units being returned are largely older units that are eligible and targeted for sale. Pricing during the quarter remained aggressive but inventory levels at the factories have declined significantly from approximately 1 million TEUs during April and May of last year to approximately 600,000 TEUs at the end of the year. We believe that the current lower level of inventory has resulted in some recent increases in per diem rates. We have also experienced significantly stronger demand for new equipment in January of this year as compared to January of last year, which we view very positively. In January 2013, customers booked equipment but did not pick up units for several months. This January, however, customers have booked equipment and picked up the units in the same month. Demand was particularly strong in the southern China ports, which we believe tend to be more driven by export cargoes.”

    Mr. Garcia continued, “Our net income this quarter was $15.6 million, an increase from the prior quarter, but a reduction of 10% compared to last year. Storage costs were higher compared to the same quarter a year ago, reflecting the larger fleet we operate and the lower utilization rate. Gain on sale of equipment was also lower this quarter compared to the same period last year, due largely to an increase in the average book value of equipment sold. We have already begun implementing several initiatives, including hiring additional marketing staff, that over the coming quarters are expected to further increase our sales volume, reduce our depot inventory in low demand areas, and improve our overall utilization. In the fourth quarter we increased sales of equipment from our owned fleet by 79% on a TEU basis as compared to the third quarter of 2013. Our results this quarter were also impacted by the inclusion of the minority interest associated with our Japanese subsidiary, CAIJ, but benefited from lower employee related costs.”

    Mr. Garcia concluded, “This coming year will mark our 25th anniversary as a company. When our company was formed in 1989, it had a belief that strong relationships and attention to customer needs would drive growth and opportunity. That belief holds true today. As we look forward into 2014, we are optimistic about the prospects for our company. We believe that demand for containers will increase this year as world economies improve their rate of economic and trade growth. Factory inventories are lower than at the beginning of the last two years and we believe shipping companies will continue to look at leasing for a significant percentage of their needs. Factories, which we expect to be on an extended Chinese New Year holiday for the entire month of February, are currently quoting some higher container prices compared to the fourth quarter of 2013. We believe this will encourage some shipping lines to consider leasing before equipment prices increase further. The month of January has seen an improvement in factory lease out activity and we will be focused on whether that increased demand will follow through to the rest of the year. As I mentioned, we are also very focused on maximizing the return on the assets we currently own by among other things, adding key marketing staff, optimizing the repositioning of equipment, and increasing the volume of sales to improve overall utilization.”

               
    CAI International, Inc.
    Consolidated Balance Sheets
    (In thousands, except share information)
    (UNAUDITED)
     
    December 31,December 31,
      2013     2012  
    Assets
    Current assets
    Cash $ 45,741 $ 17,671
    Accounts receivable (owned fleet), net of allowance for doubtful accounts
    of $503 and $794 at December 31, 2013 and 2012, respectively 41,226 32,627
    Accounts receivable (managed fleet) 10,646 19,131
    Current portion of direct finance leases 12,998 10,625
    Prepaid expenses 14,803 11,952
    Deferred tax assets 311 2,189
    Other current assets   5,242     919  
    Total current assets 130,967 95,114
    Restricted cash 9,253 4,376
    Rental equipment, net of accumulated depreciation of $210,165 and
    $147,654 at December 31, 2013 and 2012, respectively 1,465,092 1,210,234
    Net investment in direct finance leases 68,210 74,929
    Furniture, fixtures and equipment, net of accumulated depreciation of
    $1,697 and $1,254 at December 31, 2013 and 2012, respectively 1,390 1,847
    Intangible assets, net of accumulated amortization of $8,288 and $7,447
    at December 31, 2013 and 2012, respectively   677     1,441  
    Total assets $ 1,675,589   $ 1,387,941  
     
    Liabilities and Stockholders' Equity
    Current liabilities
    Accounts payable $ 8,002 $ 5,985
    Accrued expenses and other current liabilities 6,082 8,465
    Due to container investors 14,815 18,589
    Unearned revenue 6,862 7,893
    Current portion of debt 74,080 61,044
    Current portion of capital lease obligations 1,921 2,242
    Rental equipment payable   45,181     2,561  
    Total current liabilities 156,943 106,779
    Debt 1,058,628 888,990
    Deferred income tax liability 41,378 40,051
    Capital lease obligations 3,366 5,084
    Income taxes payable   148     192  
    Total liabilities   1,260,463     1,041,096  
     
    Stockholders' equity
    Common stock: par value $.0001 per share; authorized 84,000,000 shares; issued and outstanding
    22,240,673 and 22,052,529 shares at December 31, 2013 and 2012, respectively 2 2
    Additional paid-in capital 184,263 181,063
    Accumulated other comprehensive loss (2,356 ) (2,917 )
    Retained earnings   232,623     168,697  
    Total CAI stockholders' equity 414,532 346,845
    Non-controlling interest   594     -  
    Total stockholders' equity   415,126     346,845  
    Total liabilities and stockholders' equity $ 1,675,589   $ 1,387,941  


     
     
    CAI International, Inc.
    Consolidated Statements of Income
    (In thousands, except per share data)
    (UNAUDITED)
                       
    Three Months EndedYear Ended
    December 31,December 31,
      2013     2012     2013     2012  
    Revenue
    Rental revenue $ 50,870 $ 44,921 $ 196,591 $ 152,982
    Management fee revenue 1,839 2,395 7,866 12,094
    Gain on sale of container portfolios - - - 1,256
    Finance lease income   1,852     2,538     7,948     7,593  
    Total revenue   54,561     49,854     212,405     173,925  
     
    Operating expenses
    Depreciation of rental equipment 18,102 14,146 67,109 48,352
    Amortization of intangible assets 99 226 780 902
    Gain on disposition of used rental equipment (1,534 ) (3,634 ) (7,356 ) (12,445 )
    Storage, handling and other expenses 5,646 3,437 19,257 9,402
    Marketing, general and administrative expenses 5,574 6,048 23,848 24,658
    (Gain) loss on foreign exchange   (117 )   45     82     170  
    Total operating expenses   27,770     20,268     103,720     71,039  
     
    Operating income   26,791     29,586     108,685     102,886  
     
    Interest expense 9,100 9,361 36,005 28,796
    Write-off of deferred financing costs - - 1,108 -
    Interest income   (1 )   (1 )   (5 )   (9 )
    Net interest expense   9,099     9,360     37,108     28,787  
     
    Net income before income taxes and non-controlling interest 17,692 20,226 71,577 74,099
    Income tax expense   1,507     2,815     7,057     9,818  
     
    Net income 16,185 17,411 64,520 64,281
    Net income attributable to non-controlling interest   (594 )   -     (594 )   (816 )
    Net income attributable to CAI common stockholders $ 15,591   $ 17,411   $ 63,926   $ 63,465  
     
     
    Net income per share attributable to
    CAI common stockholders
    Basic $ 0.70 $ 0.87 $ 2.89 $ 3.26
    Diluted $ 0.69 $ 0.85 $ 2.82 $ 3.18
     
    Weighted average shares outstanding
    Basic 22,212 20,090 22,157 19,495
    Diluted 22,664 20,581 22,672 19,945


     
     
    CAI International, Inc.
    Fleet Data
    (UNAUDITED)
                             
    As of December 31,
    20132012
     
    Owned container fleet in TEUs 860,729 704,417
    Managed container fleet in TEUs 283,725 359,133
    Total container fleet in TEUs 1,144,454 1,063,550
     
    Owned container fleet in CEUs 903,713 745,966
    Managed container fleet in CEUs 262,071 331,017
    Total container fleet in CEUs 1,165,784 1,076,983
     
    Owned railcar fleet in units 1,804 1,456
     
     
     
    Three Months EndedThree Months EndedYear Ended
    September 30,December 31,December 31,
    201320122013201220132012
    Average Utilization
    Container Fleet Utilization in TEUs 92.0% 94.8% 90.8% 93.4% 91.8% 94.2%
    Container Fleet Utilization in CEUs 92.8% 95.4% 91.7% 94.0% 92.7% 94.7%
     
     
    As of December 31,
    20132012
    Period Ending Utilization
    Container Fleet Utilization in TEUs 90.3% 92.7%
    Container Fleet Utilization in CEUs 91.3% 93.4%
     
    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.
     



    Conference Call

    A conference call to discuss the financial results for the fourth quarter of 2013 will be held on Monday, February 10, 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 “Q4 2013 Earnings Conference Call.” A webcast replay will be available for 30 days on the “Investors” tab of our website.

    About CAI International, Inc.

    CAI is one of the world’s leading managers and lessors of intermodal freight containers. As of December 31, 2013, the company operated a worldwide fleet of approximately 1,144,000 TEUs of containers through 16 offices located in 12 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, 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, 2012 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, 415-788-0100

    Chief Financial Officer

    tpage@capps.com

    Source: CAI International, Inc.


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