CAI International, Inc. (“CAI” or the “Company”) (NYSE: CAI),
one of the world’s leading transportation finance companies, today
reported results for the first quarter of 2021.
Highlights
- Net income from continuing operations attributable to CAI
common stockholders for the first quarter of 2021 was $32.5
million, or $1.85 per fully diluted share.
- Return on common equity on adjusted net income from continuing
operations1 was 21.3% in the first quarter of 2021.
- Total leasing revenue for the first quarter of 2021 was $80.8
million, compared to $69.1 million in the first quarter of
2020.
- CAI’s Board of Directors declared a cash dividend of $0.30 per
common share payable on June 25, 2021 to shareholders of record as
of June 10, 2021.
- CAI leased out $129 million of new containers on long-term or
finance leases in the first quarter of 2021 and has leased, or has
commitments to lease, an additional $350 million in the second and
third quarters.
- Average CEU utilization for CAI’s owned container fleet during
the first quarter of 2021 was 99.7%, compared to 99.3% for the
fourth quarter of 2020. Current CEU utilization is 99.7%.
Financial and Operating
Highlights
Three Months Ended
March 31,2021 December 31,2020 March
31,2020 Total leasing
revenue
$
80,800
$
81,567
$
69,113
Continuing operations
GAAP Net income attributable to common
stockholders
$
32,470
$
32,511
$
10,462
Net income per share - diluted
$
1.85
$
1.81
$
0.59
Continuing operations
non-GAAP 1 Adjusted net income attributable to
common stockholders
$
32,470
$
31,622
$
10,462
Adjusted net income per share - diluted
$
1.85
$
1.76
$
0.59
Return on common equity
(continuing operations) 2
21.3
%
21.2
%
7.1
%
Total container fleet size in
CEUs at end of period
1,837,560
1,798,520
1,705,059
Container fleet utilization at end of period
99.7
%
99.6
%
98.2
%
1 Refer to the “Reconciliation of GAAP Amounts to Non-GAAP
Amounts” and “Use of Non-GAAP Financial Measures” set forth below.
2 Refer to the “Calculation of Return on Equity” set forth
below.
Timothy Page, Interim President and Chief Executive Officer of
CAI, commented, “We are very pleased with our results for the
quarter. Adjusted net income from continuing operations
attributable to CAI common stockholders was a record $32.5 million,
3% greater than the fourth quarter of 2020, and 210% greater than
the first quarter of 2020. Total leasing revenue was $81 million in
the quarter, an increase of 17% as compared to the first quarter of
last year.
“Our strong results for the quarter were driven by a number of
positive factors. During the quarter utilization remained strong at
an average of 99.7%, and we leased out $129 million of new
containers with an average lease tenor of 9.7 years. The resale
market continued to be strong during the quarter and we realized
$6.7 million in gains on sale, as we saw a significant increase in
average sale prices. Additionally, we continue to benefit from low
financing costs, ending the quarter with an average cash interest
rate cost of 2.10%. The result of these positive factors was an ROE
in the quarter of 21.3%.”
Mr. Page continued, “The global container market continues to
benefit from an exceptional level of customer demand and we don’t
expect to see any softening in market conditions through at least
the remainder of the year. As mentioned earlier, we leased out $129
million of equipment in the first quarter, a quarter which is
traditionally the weakest in the global container shipping market.
Global container traffic is only expected to increase as the global
economy slowly recovers from the pandemic. Additionally, the global
logistics supply chain continues to be stressed as evidenced by the
disruptions that were created by the grounding of the Ever Given in
the Suez Canal, and the growing congestion impacting the Port of
Long Beach. All of these factors point towards continued strong
demand for shipping containers.
“We currently have $350 million of commitments from our
customers for delivery of containers in the second and third
quarters and are confident that demand will accelerate as we enter
the traditionally strongest time of the year for containerized
shipping. We continue to maintain historically high levels of
liquidity and are well positioned to take advantage of the expected
increase in demand.
“Given our expectation that our container fleet will be
effectively fully utilized, we don’t expect that we will be able to
realize the same level of gains on sale that we achieved in the
first quarter. Nonetheless, driven by our strong order book, we
expect Q2 net income to be at or slightly exceed that of Q1 and
will provide the basis for continued growth in the coming
quarters.”
Mr. Page concluded, “We continue to be very optimistic about our
business for the remainder of 2021 and well into next year. We have
strong and increasing cash flows from a robust forward customer
order book that we expect will generate attractive long-term
returns. We have virtually no off-lease equipment and see nothing
on the horizon that would impact utilization. On the cost side of
the equation, we have almost 80% of our funding costs locked in at
very low rates for multiple years. As a result of these favorable
factors, we expect to continue to deliver exceptional high teen or
greater ROE’s for our shareholders.”
Additional information on CAI’s results, as well as comments on
market trends, is available in a presentation posted today on the
“Investors” section of CAI's website, www.capps.com.
CAI International, Inc. Consolidated Balance Sheets
(In thousands, except share information) (UNAUDITED)
March 31, December 31,
2021
2020
Assets Current assets Cash
$
23,971
$
26,691
Cash held by variable interest entities
23,942
26,856
Current portion of restricted cash
600
600
Accounts receivable, net of allowance for doubtful accounts of $400
and $393 at March 31, 2021 and December 31, 2020, respectively
61,843
65,310
Current portion of net investment in finance leases
80,308
78,992
Current portion of financing receivable
10,615
9,550
Prepaid expenses and other current assets
5,788
6,663
Total current assets
207,067
214,662
Restricted cash
12,087
12,355
Rental equipment, net of accumulated depreciation of $691,842 and
$669,360 at March 31, 2021 and December 31, 2020, respectively
1,808,001
1,781,321
Net investment in finance leases
585,016
550,573
Financing receivable
50,568
48,888
Derivative instruments
9,586
-
Other non-current assets
4,280
4,833
Total assets
$
2,676,605
$
2,612,632
Liabilities and Stockholders' Equity Current
liabilities Accounts payable
$
3,231
$
3,666
Accrued expenses and other current liabilities
26,569
29,598
Unearned revenue
3,260
3,029
Current portion of debt
183,878
183,448
Rental equipment payable
61,582
100,509
Total current liabilities
278,520
320,250
Debt
1,642,879
1,562,283
Derivative instruments
-
80
Net deferred income tax liability
25,532
24,442
Other non-current liabilities
3,467
3,337
Total liabilities
1,950,398
1,910,392
Stockholders' equity Preferred stock, par value
$.0001 per share; authorized 10,000,000 8.50% Series A
fixed-to-floating rate cumulative redeemable perpetual preferred
stock, issued and outstanding 2,199,610 shares, at liquidation
preference
54,990
54,990
8.50% Series B fixed-to-floating rate cumulative redeemable
perpetual preferred stock, issued and outstanding 1,955,000 shares,
at liquidation preference
48,875
48,875
Common stock: par value $.0001 per share; authorized 84,000,000
shares; issued and outstanding 17,304,111 and 17,562,779 shares at
March 31, 2021 and December 31, 2020, respectively
2
2
Additional paid-in capital
89,308
100,795
Accumulated other comprehensive loss
1,370
(5,743
)
Retained earnings
531,662
503,321
Total stockholders' equity
726,207
702,240
Total liabilities and stockholders' equity
$
2,676,605
$
2,612,632
CAI International, Inc. Consolidated Statements of
Operations (In thousands, except per share data)
(UNAUDITED) Three Months Ended March
31,
2021
2020
Leasing revenue Operating leases
$
63,867
$
54,629
Finance leases
13,245
11,590
Other
3,688
2,894
Total leasing revenue
80,800
69,113
Operating expenses Depreciation of rental equipment
28,551
27,048
Storage, handling and other expenses
2,489
4,429
Gain on sale of rental equipment
(6,743
)
(1,647
)
Administrative expenses
7,740
6,895
Total operating expenses
32,037
36,725
Operating income
48,763
32,388
Other expenses Net interest expense
11,172
18,274
Other expense
410
246
Total other expenses
11,582
18,520
Income before income taxes
37,181
13,868
Income tax expense
2,504
1,199
Income from continuing operations
34,677
12,669
Income (loss) from discontinued operations, net of income
taxes
1,063
(13,999
)
Net income (loss)
35,740
(1,330
)
Preferred stock dividends
2,207
2,207
Net income (loss) attributable to CAI common stockholders
$
33,533
$
(3,537
)
Amounts attributable to CAI common stockholders Net
income from continuing operations
$
32,470
$
10,462
Net income (loss) from discontinued operations
1,063
(13,999
)
Net income (loss) attributable to CAI common stockholders
$
33,533
$
(3,537
)
Net income (loss) per share attributable to CAI
common stockholders Basic Continuing operations
$
1.88
$
0.60
Discontinued operations
0.06
(0.80
)
Total basic
$
1.94
$
(0.20
)
Diluted Continuing operations
$
1.85
$
0.59
Discontinued operations
0.06
(0.79
)
Total diluted
$
1.91
$
(0.20
)
Weighted average shares outstanding Basic
17,271
17,433
Diluted
17,518
17,715
CAI International, Inc. Consolidated Statements of Cash
Flows (In thousands, except per share data)
(UNAUDITED) Three Months EndedMarch 31,
2021
2020
Cash flows from operating activities Net income (loss)
$
35,740
$
(1,330
)
Income (loss) from discontinued operations, net of income taxes
1,063
(13,999
)
Income from continuing operations
34,677
12,669
Adjustments to reconcile income from continuing operations to net
cash provided by operating activities: Depreciation
28,766
27,259
Amortization of debt issuance costs
815
893
Stock-based compensation expense
540
725
Unrealized loss on foreign exchange
400
220
Gain on sale of rental equipment
(6,743
)
(1,647
)
Deferred income taxes
(940
)
(3,504
)
Bad debt recovery
(30
)
(1,287
)
Changes in other operating assets and liabilities: Accounts
receivable
488
3,849
Prepaid expenses and other assets
1,218
723
Net investment in finance leases
21,605
17,102
Accounts payable, accrued expenses and other liabilities
(2,823
)
130
Unearned revenue
(7
)
(591
)
Net cash provided by operating activities of continuing operations
77,966
56,541
Net cash (used in) provided by operating activities of discontinued
operations
(2,177
)
3,584
Net cash provided by operating activities
75,789
60,125
Cash flows from investing activities Purchase of rental
equipment
(171,625
)
(27,500
)
Purchase of financing receivable
(5,174
)
-
Proceeds from sale of rental equipment
28,783
24,534
Receipt of principal payments from financing receivable
2,645
325
Purchase of furniture, fixtures and equipment
(22
)
(310
)
Net cash used in investing activities of continuing operations
(145,393
)
(2,951
)
Net cash provided by investing activities of discontinued
operations
1,285
42
Net cash used in investing activities
(144,108
)
(2,909
)
Cash flows from financing activities Proceeds from debt
141,000
110,000
Principal payments on debt
(59,887
)
(102,681
)
Repurchase of common stock
(12,788
)
-
Dividends paid to common stockholders
(5,192
)
-
Dividends paid to preferred stockholders
(2,207
)
(2,207
)
Exercise of stock options
1,499
113
Net cash provided by financing activities of continuing operations
62,425
5,225
Net cash used in financing activities of discontinued operations
-
(1,061
)
Net cash provided by financing activities
62,425
4,164
Effect on cash of foreign currency translation
(8
)
(77
)
Net (decrease) increase in cash and cash equivalents
(5,902
)
61,303
Cash and restricted cash at beginning of the period
66,502
73,239
Cash and restricted cash at end of the period
$
60,600
$
134,542
CAI International, Inc. Fleet Data (UNAUDITED)
As of March 31,
2021
2020
Owned container fleet in TEUs
1,714,552
1,590,880
Managed container fleet in TEUs
55,226
66,721
Total container fleet in TEUs
1,769,778
1,657,601
Owned container fleet in CEUs
1,767,305
1,622,354
Managed container fleet in CEUs
70,255
82,705
Total container fleet in CEUs
1,837,560
1,705,059
Three Months Ended March 31,
2021
2020
Average Utilization Container fleet utilization in CEUs
99.6
%
98.2
%
Owned container fleet utilization in CEUs
99.7
%
98.4
%
As of March 31,
2021
2020
Period Ending Utilization
Container fleet utilization in CEUs
99.7
%
98.2
%
Owned container fleet utilization in CEUs
99.7
%
98.3
%
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.
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 March
31, December 31, March 31,
2021
2020
2020
Amounts attributable to CAI common stockholders
Net income from continuing operations
$
32,470
$
32,511
$
10,462
Write-off of debt issuance costs
-
2,297
-
Revaluation of deferred tax liability as a result of a change in
future state apportionment caused by the sale of the logistics and
rail businesses
-
(3,186
)
-
Adjusted net income from continuing operations
$
32,470
$
31,622
$
10,462
Diluted net income per share from continuing
operations
$
1.85
$
1.81
$
0.59
Diluted adjusted net income per share from continuing
operations
$
1.85
$
1.76
$
0.59
Weighted average diluted common shares outstanding
17,518
17,949
17,715
CAI International, Inc. Calculation
of Return on Equity (In thousands) (UNAUDITED)
Three Months Ended March 31, December
31, March 31,
2021
2020
2020
Adjusted net income from continuing operations
$
32,470
$
31,622
$
10,462
Annualized adjusted net income from continuing operations
129,882
126,488
41,848
Average shareholders' equity 1
$
610,359
$
596,770
$
587,829
Return on equity
21.3
%
21.2
%
7.1
%
1 Average shareholders' equity was calculated using the
quarter's beginning and ending shareholders' equity, excluding
preferred stock.
Conference Call
A conference call to discuss the financial results for the first
quarter of 2021 will be held on Thursday, April 29, 2021 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
“Q1 2021 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 first quarter 2021 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 write-off of debt issuance costs and a
non-recurring revaluation of deferred tax liability. This press
release also refers to return on equity, which is calculated using
the non-GAAP financial measure, adjusted net income. 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. Management utilizes return on equity in
evaluating how much profit the Company generates on the
shareholders’ equity in the Company and believes it is useful for
comparing the profitability of companies in the same industry.
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
companies. As of March 31, 2021, CAI operated a worldwide fleet of
approximately 1.8 million CEUs of containers. CAI operates through
13 offices located in 12 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: management’s business outlook for the container leasing
business, management’s decision to divest of CAI’s non-core
businesses and management's outlook for growth of CAI’s leasing
investments. 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, as amended, 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, 2020, 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210429006069/en/
David Morris, Chief Accounting Officer (415) 788-0100
dmorris@capps.com
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