News Column

CAI International, Inc. Reports Results for the First Quarter of 2014

April 29, 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 first quarter of 2014.

Highlights

  • CAI reported rental revenue for the first quarter of 2014 of $50.7 million, an increase of $4.1 million, or 9%, compared to the first quarter of 2013.
  • CAI reported net income attributable to CAI common stockholders for the first quarter of 2014 of $14.3 million, a decrease of 11% compared to $16.1 million for the first quarter of 2013.
  • During the quarter CAI purchased a portfolio of approximately 4,200 TEUs of containers from its managed fleet and entered into a sale and lease back transaction with a customer for approximately 9,300 TEUs of containers.
  • On April 29, 2014 CAI filed with the SEC a universal shelf registration statement to register $300 million of new securities that CAI may sell from time to time, and three million shares of common stock for resale by certain selling stockholders that such selling stockholders may sell from time to time. The purpose of this registration is routine and has been made to update and replace the unused portion of CAI’s currently effective universal shelf registration statement that is expiring at the end of May. The registration statement has not yet been declared effective by the SEC and CAI may not sell any securities under such registration statement until it has been declared effective by the SEC.

    Net income attributable to CAI common stockholders for the first quarter of 2014 decreased by 11% to $14.3 million (or $0.63 per fully diluted share), from $16.1 million (or $0.71 per fully diluted share) for the first quarter of 2013.

    Total revenue for the first quarter of 2014 was $54.3 million, compared to $51.0 million for the first quarter of 2013, an increase of 6%. Rental revenue for the first quarter of 2014 was $50.7 million, compared to $46.6 million for the first quarter of 2013. 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 first quarter of 2014 was $1.5 million, compared to $2.2 million for the first quarter of 2013, 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 first quarter of 2014 was $2.1 million, consistent with the first quarter of 2013.

    Victor Garcia, Chief Executive Officer of CAI, commented, “We reported solid results for our first quarter, which traditionally is the weakest quarter of the year for us. Our net income was $14.3 million, a reduction of 11% compared to the first quarter last year. Storage costs were higher compared to the same quarter a year ago, reflecting the larger fleet we operate and a 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.”

    Mr. Garcia, continued, “After a strong month of lease out activity in January, the rest of the quarter returned to a more normalized level of activity after the Lunar New Year holiday. Our overall utilization (on a CEU basis) decreased slightly, from 92% in the fourth quarter of 2013, to 91% in the first quarter of 2014, reflecting the normal seasonal slowdown in demand at this time of the year. Inquiries for newly manufactured equipment have picked up during the course of April, but lease rates remain under pressure due to aggressive competition among leasing companies.

    “We continue to focus on improving our results in the coming quarters through repositioning equipment to high demand locations, and selling equipment in low demand areas to improve utilization and reduce operating costs. To that end, we are making steady progress. We have increased our equipment sales, in CEU terms, by 66% this quarter as compared to the first quarter of 2013 and by 75% as compared to the third quarter of 2013, the period at which we started aggressively focusing on implementing the actions I described above.”

    Mr. Garcia, continued, “We remain pleased with our investments in rail cars. We currently have $77 million invested in rail cars and our fleet has a utilization of close to 100%. Our recent renewals of expiring rail car leases have been accomplished with rates at or above the prior lease rates, and the outlook for rail car demand across many car types remains attractive. We expect to add personnel focused on rail cars and to look for additional investments.”

    Mr. Garcia concluded, “We expect overall demand for leased containers to improve in 2014 due to increased trade growth. According to Clarkson Research, trade growth is expected to increase to 5.8% in 2014 as compared to 4.7% in 2013. We expect this overall trade growth to be supported by improved economic activity in the United States and Europe. Moreover we believe inventory levels at the manufacturers remain relatively low as compared to the prior two years, both for leasing companies and shipping lines, which we view as a positive factor for the outlook this coming year.”

    CAI International, Inc.
    Consolidated Balance Sheets
    (In thousands, except share information)
    (UNAUDITED)
       

        March 31,    

    December 31,
      2014     2013  
    Assets
    Current assets
    Cash $ 20,071 $ 31,141
    Cash held by variable interest entities 19,984 14,600

    Accounts receivable (owned fleet), net of allowance for doubtful accounts of $499 and $503 at March 31, 2014 and December 31, 2013, respectively

    44,342 41,226
    Accounts receivable (managed fleet) 11,109 10,646
    Current portion of direct finance leases 15,515 12,998
    Prepaid expenses 14,141 14,803
    Other current assets   5,557     5,553  
    Total current assets 130,719 130,967
    Restricted cash 8,998 9,253

    Rental equipment, net of accumulated depreciation of $227,003 and $210,165 at March 31, 2014 and December 31, 2013, respectively

    1,471,493 1,465,092
    Net investment in direct finance leases 79,016 68,210

    Furniture, fixtures and equipment, net of accumulated depreciation of $1,759 and $1,697 at March 31, 2014 and December 31, 2013, respectively

    1,274 1,390

    Intangible assets, net of accumulated amortization of $4,737 and $4,638 at March 31, 2014 and December 31, 2013, respectively

      577     677  
    Total assets $ 1,692,077   $ 1,675,589  
     
    Liabilities and Stockholders' Equity
    Current liabilities
    Accounts payable $ 7,374 $ 8,002
    Accrued expenses and other current liabilities 4,866 6,230
    Due to container investors 13,357 14,815
    Unearned revenue 6,987 6,862
    Current portion of debt 73,880 74,080
    Current portion of capital lease obligations 1,815 1,921
    Rental equipment payable   23,043     45,181  
    Total current liabilities 131,322 157,091
    Debt 1,086,432 1,058,628
    Deferred income tax liability 41,376 41,378
    Capital lease obligations   3,004     3,366  
    Total liabilities   1,262,134     1,260,463  
     
    Stockholders' equity

    Common stock: par value $.0001 per share; authorized 84,000,000 shares; issued and outstanding 22,242,256 and 22,240,673 shares at March 31, 2014 and December 31, 2013, respectively

    2 2
    Additional paid-in capital 184,700 184,263
    Accumulated other comprehensive loss (2,291 ) (2,356 )
    Retained earnings   246,894     232,623  
    Total CAI stockholders' equity 429,305 414,532
    Non-controlling interest   638     594  
    Total stockholders' equity   429,943     415,126  
    Total liabilities and stockholders' equity $ 1,692,077   $ 1,675,589  

     

     



    CAI International, Inc.
    Consolidated Statements of Income
    (In thousands, except per share data)
    (UNAUDITED)
       
    Three Months Ended

    March 31,

      2014     2013  
    Revenue
    Rental revenue $ 50,684 $ 46,623
    Management fee revenue 1,525 2,230
    Finance lease income   2,055     2,106  
    Total revenue   54,264     50,959  
     
    Operating expenses
    Depreciation of rental equipment 18,663 15,333
    Amortization of intangible assets 99 227
    Gain on disposition of used rental equipment (1,790 ) (2,636 )
    Storage, handling and other expenses 5,993 4,299
    Marketing, general and administrative expenses 6,706 6,188
    Loss (gain) on foreign exchange   164     (300 )
    Total operating expenses   29,835     23,111  
     
    Operating income   24,429     27,848  
     
    Interest expense 8,795 8,404
    Write-off of deferred financing costs - 1,108
    Interest income   (4 )   (3 )
    Net interest expense   8,791     9,509  
     
    Net income before income taxes and non-controlling interest 15,638 18,339
    Income tax expense   1,407     2,272  
     
    Net income 14,231 16,067
    Net loss attributable to non-controlling interest   40     -  
     
    Net income attributable to CAI common stockholders $ 14,271   $ 16,067  
     
     
    Net income per share attributable to CAI common stockholders
    Basic $ 0.64 $ 0.73
    Diluted $ 0.63 $ 0.71
     
    Weighted average shares outstanding
    Basic 22,213 22,085
    Diluted 22,658 22,668
     


    CAI International, Inc.
    Fleet Data
    (UNAUDITED)
       
    As of March 31,
    20142013
     
    Owned container fleet in TEUs 882,665 790,095
    Managed container fleet in TEUs 275,102   301,022  
    Total container fleet in TEUs 1,157,767   1,091,117  
     
    Owned container fleet in CEUs 924,234 829,651
    Managed container fleet in CEUs 253,761   279,215  
    Total container fleet in CEUs 1,177,995   1,108,866  
     
    Owned railcar fleet in units 1,859   1,453  
     
     
     
    Three Months Ended
    March 31,
    20142013
    Average Utilization
    Container Fleet Utilization in TEUs 90.0 % 92.2 %
    Container Fleet Utilization in CEUs 91.0 % 93.2 %
     
    As of March 31,
    20142013
    Period Ending Utilization
    Container Fleet Utilization in TEUs 89.7 % 92.2 %
    Container Fleet Utilization in CEUs 90.7 % 93.8 %
     


    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 first quarter of 2014 will be held on Tuesday, April 29, 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 “Q1 2014 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 March 31, 2014, the company operated a worldwide fleet of approximately 1,158,000 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, 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, 415-788-0100

    Chief Financial Officer

    tpage@capps.com


    Source: CAI International, Inc.


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