Cai international, inc. reports results for the first quarter of 2019
San francisco--(business wire)--cai international, inc. (cai) (nyse: cai), one of the world’s leading transportation finance and logistics companies, today reported results for the first quarter of 2019. highlights net income attributable to cai common stockholders for the first quarter of 2019 was $16.4 million, or $0.87 per fully diluted share, compared to $17.1 million, or $0.83 per fully diluted share, in the first quarter of 2018. record first quarter lease-related revenue for the first quarter of 2019 was $83.4 million, an increase of 13% compared to the first quarter of 2018. record first quarter logistics revenue for the first quarter of 2019 was $27.7 million, an increase of 28% compared to the first quarter of 2018. average utilization for cai’s owned container fleet during the first quarter of 2019 was 98.9% compared to 99.2% for the first quarter of 2018, and 99.2% for the fourth quarter of 2018. cai sold 1,946 railcars in the first quarter of 2019 for $165.3 million, reporting a $7.0 million pre-tax gain on sale. average railcar utilization during the first quarter of 2019, excluding new railcars not yet leased, was 90.2% compared to 88.2% for the first quarter of 2018, and 90.0% for the fourth quarter of 2018. under the previously approved share repurchase program, cai repurchased approximately 0.6 million shares of common stock during the first quarter of 2019 at an average price of $23.39 per share. 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. victor garcia, president and chief executive officer of cai, commented, “the first quarter is typically our seasonally weakest quarter of the year when we expect our container utilization to decline. however, this quarter we were able to maintain an average utilization of 98.9% as compared to 99.2% in the fourth quarter, a lower decline than we usually experience. utilization today remains at 98.9%. during the first quarter, we reported a 13% increase in lease related revenue and a 28% increase in logistics revenue as compared to the first quarter of last year. we reported overall revenue of $111.1 million, an increase of 17% compared to the first quarter of last year. these revenue levels are records for cai in the first quarter. our net income for the first quarter was $16.4 million, or $0.87 per fully diluted share, compared to $17.1 million, or $0.83 per fully diluted share during the first quarter of 2018. “our performance for the first quarter is being driven by the container leasing segment and the stability we have experienced in our current utilization is encouraging for the remainder of the year because we are approaching the seasonally stronger months. clarkson research is projecting trade growth to be 3.8% in 2019 and so we expect utilization to increase as we invest and lease new and depot available equipment. we have seen in the first quarter, lower than expected equipment returns and the vast majority of those returns have been to china where we expect lease demand to be strongest. we have also observed new customer demand similar to what we experienced last year despite uncertainties around trade negotiations. we have invested or committed to invest so far this year approximately $280 million of containers. new container prices have rebounded from approximately $1,750 per 20’ container equivalent at the beginning of the quarter to approximately $1,900 currently due to rising chinese steel prices and ongoing demand by shipping lines and leasing companies. overall, secondary sales prices of containers remain strong due to the limited availability of equipment across the globe. and, while our average gain on sale on units sold in certain markets declined due to a slight increase in available equipment, particularly in china, we expect prices to firm over the coming quarters as available equipment is leased out to customers. during the quarter, strong winter weather in the united states resulted in fewer units being sold which negatively impacted the gain on sale reported this quarter. however, we are encouraged by the recent increase in container which we see as a catalyst for higher lease rates on depot equipment and higher resale values of equipment in the secondary market. “during the quarter, we entered into an agreement to sell 2,146 railcars, of which 1,946 railcars were sold during the first quarter for $165 million and 200 additional newly manufactured rail cars are to be sold in the second quarter. as part of the first quarter sale, we reported a pre-tax gain on sale of approximately $7.0 million. we are using the $50 million of equity capital released by the sale to reinvest in higher yielding investments and the repurchase of our shares. we are increasing our utilization of our railcar fleet and reported a utilization of 90% for the quarter. lease rates on railcars in general are higher today than compared to a year ago and we are looking for opportunities to increase lease rates on our rail fleet. we will continue to look for opportunities to increase returns on the rail segment. “growth in our logistics business is a priority, particularly as it relates to domestic intermodal and truck brokerage where we have had the most success in increasing our customer portfolio and volume. the first quarter for us logistics is usually the seasonally weakest. as a result, trucking freight rates have declined in the first quarter as the tight supply of truck capacity that was prevalent in the third quarter of 2018 has eased. many customers are using the current decline in trucking freight rates to contract in the spot market. we believe the outlook for trucking demand in the united states will be strong over the coming months and we have already added many new customers where we will have committed new business for this year. we expect continued double-digit revenue growth in our logistics business in 2019 as we continue to expand our overall operation and gain additional customers. “in september and october of 2018, we refinanced approximately $450 million of funded debt from lower floating interest rates to higher fixed rates. while the higher fixed rates have increased our ongoing interest expense levels, the greater percentage of fixed rate debt has reduced our exposure to potentially higher floating interest levels. during the quarter, we repurchased approximately 600,000 shares of our common stock at an average price per share of $23.39. we have approximately 1.9 million shares remaining under the 3 million share repurchase authorization we announced in the third quarter of 2018. we continue to view our common stock as an attractive investment for long term shareholder value creation and expect to continue repurchasing shares in 2019.” mr. garcia concluded, “we remain very focused on every part of our business in order to deploy or redeploy capital to maximize our shareholder returns. central to that strategy is balancing investment opportunities with the repurchase of our shares. all of our decisions are focused on the long-term development of our business and we believe 2019 will provide an attractive economic backdrop for the continued expansion of the company.” accounts receivable, net of allowance for doubtful accounts of $2,839 and $2,042 at march 31, 2019 and december 31, 2018, respectively rental equipment, net of accumulated depreciation of $613,838 and $599,443 at march 31, 2019 and december 31, 2018, respectively intangible assets, net of accumulated amortization of $5,799 and $5,397 at march 31, 2019 and december 31, 2018, respectively furniture, fixtures and equipment, net of accumulated depreciation of $2,657 and $2,635 at march 31, 2019 and december 31, 2018, respectively 8.50% series a fixed-to-floating rate cumulative redeemable perpetual preferred stock, issued and outstanding 2,199,610 shares, at liquidation preference 8.50% series b fixed-to-floating rate cumulative redeemable perpetual preferred stock, issued and outstanding 1,955,000 shares, at liquidation preference common stock: par value $.0001 per share; authorized 84,000,000 shares; issued and outstanding 18,207,676 and 18,764,459 shares at march 31, 2019 and december 31, 2018, respectively march 31, 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. conference call a conference call to discuss the financial results for the first quarter of 2019 will be held on tuesday, april 30, 2019 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 2019 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 2019 results is available on the “investors” section of our website, www.capps.com. about cai international, inc. cai is one of the world’s leading transportation finance and logistics companies. as of march 31, 2019, cai operated a worldwide fleet of approximately 1.6 million ceus of containers, and owned a fleet of 5,609 railcars that it leases within north america. cai operates through 22 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, the statements regarding management's business outlook on the container leasing business, management's outlook for growth of cai’s leasing investments and the expected sale of railcars in the future. 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, 2018, 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.
