CAI International, Inc. Reports Results for the Second Quarter of 2010
SAN FRANCISCO--CAI International, Inc. (CAI) , one of the world’s leading lessors of intermodal freight containers, today reported results for the second quarter of 2010.
Highlights for the second quarter of 2010 and Outlook
- CAI reported net income for the second quarter of 2010 of $0.31 per fully diluted share, a 63.2% increase compared to $0.19 during the second quarter of 2009 and an 82.4% increase as compared the $0.17 per fully diluted share in the first quarter of 2010.
- Container rental revenue increased 13.2% during the second quarter of 2010 as compared to the first quarter of 2010.
- Average utilization for the second quarter of 2010 improved by 8.8% to 95.1% from the 86.3% reported in the first quarter of 2010.
- Container demand has remained strong in the third quarter of 2010 and as of July 30, 2010 utilization increased to 97.5%.
- During June, 2010 CAI sold approximately 10,700 TEUs of containers to two container investor groups and entered into management agreements with the same investors.
- During July, 2010 CAI purchased approximately 21,300 TEUs from a container investor.
- On August 2, 2010, CAI submitted to the Securities and Exchange Commission on Form S-3 a universal shelf registration statement for $30 million of securities as part of normal corporate practice to provide the company financing flexibility.
CAI today reported net income of $5.7 million in the second quarter of 2010 as compared to net income of $3.3 million in the second quarter of 2009. Fully diluted earnings per share in the second quarter of 2010 were $0.31 on 18.1 million average shares outstanding, as compared to fully diluted earnings per share of $0.19 on 17.9 million average shares outstanding during the second quarter of 2009.
Total revenue for the second quarter of 2010 was $17.4 million as compared to $16.7 million for the second quarter of 2009. Container rental revenue was $14.0 million as compared to $13.5 million in the second quarter of 2009. Management fee revenue was $2.5 million as compared to $2.1 million of management fee revenue reported in the second quarter of 2009. There was a gain on sale of container portfolios of $0.3 million in the second quarter of 2010 as compared to a gain of $0.5 million recorded in the second quarter of 2009. Finance lease income in the second quarter of 2010 was $0.5 million as compared to finance lease income of $0.6 million reported in the second quarter of 2009.
Masaaki (John) Nishibori, CEO of CAI, commented, “We are very pleased with our performance in the second quarter of 2010. Our fleet today is effectively fully utilized and because of the strong demand we are expecting to further invest in new and used containers during the second half of 2010. Demand for containers is being driven primarily by increased trade activity. Clarkson Research, a shipping industry research firm, is forecasting world containerized trade growth of 10.9% in 2010 and 10.7% in 2011. Per diem rates on new leases have materially increased because of the strong demand and the increase in new container prices. We expect that the higher utilization and improving per diem trend to benefit us over the remainder of 2010.
In this quarter, we took delivery of 18,800 TEUs of new containers and in July 2010 purchased 21,300 TEUs of older units from one of our container investors. The used units we purchased were managed by CAI and are principally all on lease. During the quarter, we also sold approximately 10,700 TEUs of older containers to two investor groups in Asia. Along with the sale, we entered into new management agreements with the investors for those assets purchased by them. We believe container investors in Asia and Europe are becoming more interested in investing in containers as a result of the improved utilization of containers and the outlook for the container shipping industry.
We remain optimistic about the prospects in 2010 and beyond. We expect demand to remain strong this year and we will continue to invest in new containers to meet our customers’ demand. With the increased demand for containers we have increased our investment expectations for containers to approximately $200 million in 2010 from an expectation of approximately $100 million at the beginning of this year. We expect to fund this investment level as we have in the past with additional debt financing.�??
| CAI International, Inc. | ||||||||
| Consolidated Balance Sheets | ||||||||
| (In thousands, except share information) | ||||||||
| (UNAUDITED) | ||||||||
| Â | June 30, | Â | December 31, | |||||
| ASSETS | 2010 | 2009 | ||||||
| Â | ||||||||
| Cash | $ | 5,398 | $ | 14,492 | ||||
|
Accounts receivable (owned fleet), net of allowance for doubtful accounts of $1,643 and $1,420 at June 30, 2010 and December 31, 2009, respectively |
14,862 | 14,412 | ||||||
| Accounts receivable (managed fleet) | 20,965 | 18,953 | ||||||
| Current portion of direct finance leases | 4,827 | 6,776 | ||||||
| Prepaid expenses | 1,919 | 3,077 | ||||||
| Deferred tax assets | 1,668 | 1,669 | ||||||
| Other current assets | Â | 467 | Â | Â | 4,000 | Â | ||
| Total current assets | Â | 50,106 | Â | Â | 63,379 | Â | ||
|
Container rental equipment, net of accumulated depreciation of $75,851 and $80,627 at June 30, 2010 and December 31, 2009, respectively |
326,502 | 299,340 | ||||||
| Long-term portion of net investment in direct finance leases | 8,631 | 5,844 | ||||||
|
Furniture, fixtures and equipment, net of accumulated depreciation of $700 and $759 at June 30, 2010 and December 31, 2009, respectively |
369 | 435 | ||||||
|
Intangible assets, net of accumulated amortization of $5,240 and $4,656 at June 30, 2010 and December 31, 2009, respectively |
 | 4,174 |  |  | 5,085 |  | ||
| Total assets | $ | 389,782 | Â | $ | 374,083 | Â | ||
| Â | ||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Â | ||||||||
| Accounts payable | $ | 3,807 | $ | 8,030 | ||||
| Accrued expenses and other current liabilities | 2,743 | 3,638 | ||||||
| Due to container investors | 20,135 | 17,285 | ||||||
| Unearned revenue | 4,163 | 4,225 | ||||||
| Current portion of related party term loan | 800 | 800 | ||||||
| Current portion of capital lease obligation | 4,214 | 3,813 | ||||||
| Rental equipment payable | Â | 27,869 | Â | Â | 660 | Â | ||
| Total current liabilities | 63,731 | 38,451 | ||||||
| Revolving credit facility | 141,500 | 152,500 | ||||||
| Related party term loan | 8,600 | 9,000 | ||||||
| Deferred taxes | 26,653 | 26,606 | ||||||
| Capital lease obligation | 11,637 | 16,282 | ||||||
| Income taxes payable | Â | 2,145 | Â | Â | 2,146 | Â | ||
| Total liabilities | Â | 254,266 | Â | Â | 244,985 | Â | ||
| Â | ||||||||
| Stockholders' equity: | ||||||||
|
Common stock, par value $.0001 per share; authorized 84,000,000 shares; issued and outstanding, 17,914,235 shares at June 30, 2010 and 17,917,176 at December 31, 2009 |
2 | 2 | ||||||
| Additional paid-in capital | 104,181 | 103,684 | ||||||
| Accumulated other comprehensive loss | (4,052 | ) | (1,248 | ) | ||||
| Retained earnings | Â | 35,385 | Â | Â | 26,660 | Â | ||
| Total stockholders' equity | Â | 135,516 | Â | Â | 129,098 | Â | ||
| Total liabilities and stockholders' equity | $ | 389,782 | Â | $ | 374,083 | Â | ||
| Â | ||||||||
| CAI International, Inc. | ||||||||||||||||
| Consolidated Statements of Income | ||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||
| (UNAUDITED) | ||||||||||||||||
| Â | Â | Â | Â | |||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| Revenue: | ||||||||||||||||
| Container rental revenue | $ | 13,974 | $ | 13,457 | $ | 26,318 | $ | 27,576 | ||||||||
| Management fee revenue | 2,536 | 2,101 | 4,717 | 4,594 | ||||||||||||
| Gain on sale of container portfolios | 348 | 497 | 614 | 753 | ||||||||||||
| Finance lease income | Â | 505 | Â | Â | 606 | Â | Â | 907 | Â | Â | 1,314 | Â | ||||
| Total revenue | Â | 17,363 | Â | Â | 16,661 | Â | Â | 32,556 | Â | Â | 34,237 | Â | ||||
| Â | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Depreciation of container rental equipment | 4,471 | 4,222 | 8,678 | 8,593 | ||||||||||||
| Amortization of intangible assets | 341 | 400 | 695 | 808 | ||||||||||||
| Impairment of container rental equipment | 11 | 25 | 28 | 61 | ||||||||||||
| Gain on disposition of used container equipment | (2,498 | ) | (611 | ) | (3,918 | ) | (1,401 | ) | ||||||||
| Storage, handling and other expenses | 1,763 | 2,426 | 3,954 | 4,136 | ||||||||||||
| Marketing, general and administrative expense | 5,527 | 4,777 | 10,476 | 9,692 | ||||||||||||
| Loss (gain) on foreign exchange | Â | 230 | Â | Â | (83 | ) | Â | 411 | Â | Â | (3 | ) | ||||
| Total operating expenses | Â | 9,845 | Â | Â | 11,156 | Â | Â | 20,324 | Â | Â | 21,886 | Â | ||||
| Â | ||||||||||||||||
| Operating income | Â | 7,518 | Â | Â | 5,505 | Â | Â | 12,232 | Â | Â | 12,351 | Â | ||||
| Â | ||||||||||||||||
| Interest expense | 963 | 1,050 | 1,820 | 2,352 | ||||||||||||
| Interest income | Â | (88 | ) | Â | (3 | ) | Â | (120 | ) | Â | (7 | ) | ||||
| Net interest expense | Â | 875 | Â | Â | 1,047 | Â | Â | 1,700 | Â | Â | 2,345 | Â | ||||
| Â | ||||||||||||||||
| Income before income taxes | 6,643 | 4,458 | 10,532 | 10,006 | ||||||||||||
| Â | ||||||||||||||||
| Income tax expense | Â | 967 | Â | Â | 1,125 | Â | Â | 1,807 | Â | Â | 2,718 | Â | ||||
| Â | ||||||||||||||||
| Net income | $ | 5,676 | Â | $ | 3,333 | Â | $ | 8,725 | Â | $ | 7,288 | Â | ||||
| Â | ||||||||||||||||
| Net income per share: | ||||||||||||||||
| Basic | $ | 0.32 | $ | 0.19 | $ | 0.49 | $ | 0.41 | ||||||||
| Diluted | $ | 0.31 | $ | 0.19 | $ | 0.48 | $ | 0.41 | ||||||||
| Â | ||||||||||||||||
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Weighted average shares outstanding: |
||||||||||||||||
| Basic | 17,910 | 17,901 | 17,908 | 17,899 | ||||||||||||
| Diluted | 18,141 | 17,901 | 18,098 | 17,899 | ||||||||||||
| Â | ||||||||||||||||
| Â | As of June 30, | Â | As of June 30, | |
| 2010 | 2009 | |||
| (unaudited) | ||||
| Managed fleet in TEUs | 512,836 | 533,145 | ||
| Owned fleet in TEUs | 263,632 | 235,548 | ||
| Â | ||||
| Total | 776,468 | 768,693 | ||
| Â | ||||
Conference Call
A conference call to discuss financial results for the second quarter of 2010 will be held on Tuesday, August 3, 2010 at 5:00 p.m. ET. The dial-in number for the teleconference is 1-877-303-9148; outside of the U.S., call 1-760-536-5211. The call may be accessed live over the internet (listen only) under the “Investors�?? tab of CAI’s website, www.caiintl.com, by selecting “Q2 2010 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 June 30, 2010, the company operated a worldwide fleet of approximately 776,000 TEUs of containers through 12 offices located in 10 countries including the United States.
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, 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, 2009 and its interim report 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.