TRAC Intermodal Earnings Call Quarter Ended March 31, 2014

Transcription

1 TRAC Intermodal Earnings Call Quarter Ended March 31, 2014 May 9, 2014

2 Forward Looking Statements and Use of Non-GAAP Information FORWARD LOOKING STATEMENTS This Presentation contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which reflect our current views with respect to, among other things, future events (including, but not limited to, import container growth, chassis supply trends and the shift to the motor carrier model) and financial performance. Readers can identify these forward-looking statements by the use of forward-looking words such as outlook, believes, expects, potential, continues, may, will, should, seeks, approximately, predicts, intends, plans, estimates, anticipates or the negative version of those words or other comparable words. Any forward-looking statements contained in the Presentation are based upon our historical performance and on our current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Such forward-looking statements are subject to various risks, uncertainties and assumptions relating to our operations, financial results, financial condition, business prospects, growth strategy and liquidity. If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, our actual results may vary materially from those indicated in these statements. Accordingly, you should not place undue reliance on any forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, without limitation, the following: the volume of world trade due to economic, political, or other factors; increased operating costs; increased regulatory costs; defaults by our customers; and, the demand for chassis. More information about potential factors that could affect our business and financial results is included in our filings with the SEC, including the Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. The Company undertakes no obligation to update the forward-looking information or any of the information contained in this Presentation. USE OF NON-GAAP INFORMATION There are non-gaap measures used in this Presentation, including Adjusted EBITDA, Adjusted net income (loss) and free cash flow. The Company believes that such non-gaap measures are appropriate measures of the operating performance of the Company. Additionally, certain of the Company s debt covenant calculations use Adjusted EBITDA. The Company s calculation of these measures may differ from the methodology used by other companies and, accordingly, may not be comparable to other companies. Adjusted EBITDA is defined as income (loss) before income taxes, interest expenses (net of interest income), depreciation and amortization expense, impairment of assets and leasing equipment, other expense (income) mainly related to loss (gain) from sale of equipment, and loss on retirement of debt, remanufacturing expenses, non-cash stock compensation and principal collections on direct finance leases. Adjusted net income (loss) is defined as net income (loss) before non-cash interest expense related to deferred financing fees, non-cash stock compensation, loss on retirement of debt, and terminations, modification, and fair value adjustments of derivative instruments. Free cash flow is defined as Adjusted EBITDA less Cash Interest Accrued. Adjusted EBITDA, Adjusted net income (loss) and free cash flow are not measures recognized under GAAP and are therefore unlikely to be comparable to similar measures presented by other companies and do not have a standardized meaning prescribed by GAAP. Management uses Adjusted EBITDA, Adjusted net income (loss) and free cash flow to provide comparative information about performance. A reconciliation of Adjusted EBITDA, Adjusted net income (loss) and free cash flow to net income (loss) is provided on slide 15. 2

3 Executive Summary Q Revenue increased to $139.7 million or 18% higher in Q vs. Q Financial Performance Adjusted EBITDA¹ was at an all time high of $52.2 million or 21% higher in Q vs. Q Free cash flow¹ increased to $36 million in Q vs. $27 million in Q Improved leverage ratio to 6.7x at 3/31/2014 from 7.1x at 12/31/2013 Chassis Fleet Average on-hire fleet increased by approximately 10,900 chassis or 5% from Q to Q Active fleet utilization increased to 92.7% at March 31, 2014 from 92.3% at March 31, 2013 Facilitating steamship line s conversion to the motor carrier model for chassis provisioning Key Initiatives Executing cost controls while maintaining service levels In-sourcing select operational activities 1 See slide 15 for a reconciliation of Adjusted EBITDA and free cash flow to net income (loss) 3 K

4 Summary of Financial Performance Q Revenues grew $21.8 million in Q vs. Q Marine Market segment revenues grew 27% in Q vs. Q Domestic Market segment revenues grew 15% in Q vs. Q Adjusted EBITDA¹ increased $9.2 million in Q vs. Q Marine segment adjusted EBITDA grew by 29% Domestic segment adjusted EBITDA grew by 38% Summary Income Statement for the Quarter ended March 31 st $ millions B / (W) vs $ % Revenue $ $ $ % Direct operating expenses (5.8) -10% All other expenses (5.9) -10% Net income (loss) before tax (0.8) NM Net income (loss) $ (0.4) $ 5.5 $ 5.9 NM Adjusted EBITDA¹ $ 43.0 $ 52.2 $ % Adjusted net income¹ $ 4.2 $ 9.3 $ % 1 See slide 15 for a reconciliation of Adjusted EBITDA and Adjusted Net Income to net income (loss) NM not meaningful 4 K

5 Market Review Q Total U.S. intermodal volumes grew 2.5% in Q vs. Q comprised of 1.0% growth in international volumes and 4.2% growth in domestic volumes, according to FTR. U.S. containerized imports were up 3.8% in Q vs. Q1 2013, according to figures from PIERS / Journal Of Commerce For 2014, U.S. international volume growth is expected to be 1.5% and domestic volume growth is projected at 6.4%, according to FTR - Rest of year domestic growth rate is expected to increase as rail intermodal service levels return to normal U.S. Intermodal Load Growth 1 International Domestic Total 2013 Q1 3.0% 10.4% 6.6% % 8.9% 5.7% U.S. Containerized Imports 2013 Annual Growth 3.0%; Q % 2014 Q1 1.0% 4.2% 2.5% % 6.4% 3.7% % 6.2% 3.7% 1 Domestic container loads, excludes intermodal trailer loads Source FTR (Intermodal volume in loads, May 2014) Sources: PIERS / JOC February K

6 Revenue Drivers Marine and Domestic Market Segments Revenue growth is primarily driven by our Marine and Domestic neutral chassis pools In Q1 2014, Marine Pool per diem revenue grew by 42% and the Domestic Pool per diem revenue grew by 12% Marine chassis customers have continued to shift from term leases to pool rentals Key Metrics Q Variance % Change Marine Market segment Pool Statistics Per Diem Revenue ¹ $ 57,019 $ 80,778 $ 23,759 42% Average Total Fleet ² 98, ,103 33,923 35% Average Daily Revenue per Chassis $6.45 $6.79 $0.34 5% Term Lease Statistics Per Diem Revenue $ 14,593 $ 10,149 $ (4,444) -30% Average Total Fleet 65,382 43,277 (22,105) -34% Average Daily Revenue per Chassis $2.48 $2.61 $0.13 5% Domestic Market segment Pool Statistics Per Diem Revenue ¹ $ 31,412 $ 35,288 $ 3,876 12% Average Total Fleet ² 59,779 60, % Average Daily Revenue per Chassis $5.84 $6.50 $ % Term Lease Statistics Per Diem Revenue $ 4,523 $ 5,154 $ % Average Total Fleet 14,285 12,849 (1,436) -10% Average Daily Revenue per Chassis $3.52 $ ($0.03) -1% ¹ Per Diem Revenue in $ thousands - represents revenues billed under operating leases and excludes amounts billed to lessees for maintenance and repair, positioning and handling, and other ancillary charges ² Average Total Fleet in units - based upon the total fleet at each month end ³ Adjusted for $1.1 million non-recurring lease termination fee received in Q C

7 Quarterly Revenue and Adjusted EBITDA Trends Strong chassis leasing revenue growth driven by both rate, mix and volume contributions in Q % revenue growth in Q vs.q Adjusted EBITDA¹ for Q increased 21% vs. Q % increase in costs driven primarily from increased size of pool fleet Quarterly Revenue Quarterly Adjusted EBITDA¹ ($ millions) ($ millions) $93.2 $ $134.2 $136.1 $139.7 $127.0 $115.8 $117.9 $ $55 $50 $45 $40 $35 $30 $38.5 $43.0 $52.2 $35.5 $39.2 $40.5 $36.4 $2.2M nonrecurring revenue $45.4 $ Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 $25 Q1 12 Q1 13 Q1 14 Q2 12 Q2 13 Q3 12 Q3 13 Q4 12 Q4 13 Other Revenue and Financing Revenue Equipment Leasing Revenue 1 See slide 15 for a reconciliation of Adjusted EBITDA to net income (loss) 7 C

8 Capital Expenditures and Free Cash Flow Invested $15.8 million of capital for chassis in Q Marine chassis purchases from steamship lines Domestic chassis capital primarily to refurbish axles in advance of Q3 / Q remanufacture program $36.2 million of free cash flow¹ generated in Q Ahead of 2013 cash generation pace Fleet maintenance spending is captured in the income statement ($ millions) Capital Expenditures Q1 '13 Q1 '14 ($ millions) Free Cash Flow² Year ended Q1 '13 Q1 ' Domestic Chassis $ 26.5 $ 0.9 Adjusted EBITDA¹ $ 43.0 $ 52.2 $ Marine Chassis Cash Interest Expense² (15.9) (16.0) (64.8) Purchase of Leasing Assets $ 33.5 $ 15.8 Free Cash Flow¹ $ 27.1 $ 36.2 $ See slide 15 for a reconciliation of Adjusted EBITDA and Free Cash Flow to net income (loss) 2 Cash Interest Expense excludes non-cash interest expense items, including deferred financing fees and interest rate swap termination deferred charges. Bond interest which is paid Q1 and Q3 is accrued in Cash Interest Expense. 8 C

9 Capital Structure Leverage ratio decreased from 12/31/2013 to 3/31/2014 due to increased LTM Adjusted EBITDA³ and $18.6 million lower debt levels On April 15, 2014 closed on an increased commitment level of $1.03 billion under the ABL Facility and reduced the drawn margin by 50 bps. On a pro forma basis availability is $323 million In compliance with all covenants across the ABL Facility, Capital Leases and Notes ($ millions) Capital Structure Pro Forma 12/31/2013 3/31/2014 3/31/2014 ABL Facility Size $ $ $ 1,030.0 Available Cash $ 11.8 $ 6.1 $ 6.1 Cash Rate Maturity ABL Facility Libor Aug ' Capital Leases 5.0% Various nd Lien Notes 11.0% Aug ' Total Debt 5.4% ¹ $ 1,164.1 $ 1,145.5 $ 1,145.5 Member's Interest ² $ $ $ Total Debt and Equity $ 1,687.8 $ 1,676.7 $ 1,676.7 LTM Adjusted EBITDA³ Total Debt / LTM Adj. EBITDA 7.1x 6.7x 9.0x ¹ Weighted cash interest rate at 3/31/2014 includes cash impact of interest rate swap ² Member s interest is the equivalent of shareholder s equity for LLC entities ³ See slide 15 for a reconciliation of Adjusted EBITDA to net income (loss) 9 C

10 For More Information Investor Relations: Blake Morris TRAC Intermodal LLC, 211 College Rd East, Princeton, NJ, TRAC Intermodal is the world s largest provider of marine and domestic chassis, measured by total assets, operating throughout the United States, Canada and Mexico. TRAC Intermodal provides long term chassis leasing and short term rentals through extensive chassis pool programs and pool/fleet management through the utilization of its proprietary PoolStat system. TRAC Intermodal s fleet consists of approximately 309,000 chassis. TRAC Intermodal has a broad operating footprint with 563 marine, 152 domestic and 61 depot locations across North America and is the leader in providing chassis solutions to the intermodal industry. Contact us to learn how our chassis products can help customers increase supply chain efficiency, control costs, and promote safety. 10

11 Appendix 11

12 Income Statement ($ thousands) Consolidated Income Statement Three months ended March 31, Variance Revenues: Equipment leasing revenue $ 107,547 $ 131,369 22% Finance revenue 1, % Other revenue 9,342 7,687-18% Total Revenues $ 117,899 $ 139,651 18% Expenses: Direct operating expense $ 61,003 $ 66,833-10% Selling, general and administrative expenses 13,514 18,569-37% Depreciation expense 17,274 18,504-7% Other expense, net 3,491 4,201-20% Interest expense, net 22,720 22,192 2% Loss on modification and extinquishment of debt and capital lease obligatiions % Income (loss) before benefit for income taxes $ (750) $ 9,330 NM Provision / (benefit) for income taxes (315) 3,856 NM Net income (loss) $ (435) $ 5,474 NM Adjusted EBITDA¹ EBITDA $ 41,226 $ 50,792 23% Plus: DFL collections 1,460 1,187-19% Plus: Non-cash stock compensation % Adjusted EBITDA¹ $ 42,967 $ 52,197 21% Adjusted Net Income¹ $ 4,203 $ 9, % Unaudited Quarter ended March 31 st numbers for 2013 and 2014 ¹ See slide 15 for a reconciliation of Adjusted EBITDA and Adjusted Net Income to net income (loss) NM not meaningful 12

13 Balance Sheet ($ thousands) Consolidated Balance Sheet December 31, March 31, Assets Cash and cash equivalents $ 11,843 $ 6,115 Accounts receivable, net 113, ,076 Net investment in direct finance leases 25,026 21,668 Leasing equipment, net 1,394,088 1,387,038 Goodwill 251, ,907 Other assets 45,908 46,483 Total assets $ 1,841,910 $ 1,828,287 Liabilities and member's interest Accounts payable and accrued expenses $ 54,784 $ 46,886 Deferred income taxes, net 99, ,713 Debt and capital lease obligations: Current portion 34,029 37,743 Non-current portion 1,130,108 1,107,728 Total debt and capital lease obligations 1,164,137 1,145,471 Total liabilities 1,318,252 1,297,070 Member's interest Member's interest 562, ,116 Accumulated other comprehensive loss (38,348) (35,899) Total member's interest 523, ,217 Total liabilities and member's interest $ 1,841,910 $ 1,828,287 Unaudited March 31,

14 Cash Flow Statement ($ thousands) Cash flows from operating activities Cash Flows Three months ended March 31, Net Income (Loss) $ (435) $ 5,474 Depreciation and amortization 17,339 18,560 Other adjustments to reconcile net loss to net cash provided by operating activities 11,412 13,755 Changes in assets and liabilities (23,901) (14,838) Net cash provided by operating activities $ 4,415 $ 22,951 Cash flows from investing activities Collections on net investment in direct finance leases, net of interest earned $ 1,460 $ 1,187 Purchase of leasing equipment (33,478) (15,777) Other investing activities 52 5,411 Net cash used in investing activities $ (31,966) $ (9,179) Cash flows from financing activities Proceeds from long-term debt $ 56,000 $ 22,000 Repayments of long-term debt (31,908) (40,744) Cash paid for debt issuance fees (749) - Other financing activities (470) (585) Net cash provided (used in) by financing activities $ 22,873 $ (19,329) Effects of changes in exchange rates on cash and cash equivalents (131) (171) Net decrease in cash and cash equivalents $ (4,809) $ (5,728) Cash and cash equivalents, beginning of period $ 26,556 $ 11,843 Cash and cash equivalents, end of period $ 21,747 $ 6,115 Unaudited Quarter ended March 31 st numbers for 2013 and

15 Reconciliation of Non GAAP Measures ($ thousands) Adjusted EBITDA, Adjusted Net Income and Free Cash Flow Reconciliation Q Q Q Q Q Net income (loss) $ (435) $ (1,233) $ (6,324) $ (21,361) $ 5,474 Income tax (benefit) expense (315) (821) (1,273) 20,563 3,856 Interest expense 22,722 22,688 22,926 22,749 22,216 Depreciation expense 17,274 17,689 18,161 18,667 18,504 Impairment of leasing equipment 2, ,065 2,228 1,126 Loss on retirement of debt Other income, net (798) (1,192) 94 (178) (382) Interest income (2) (269) (15) (1) (24) Non-cash share-based compensation Principal collections on direct finance leases, net of interest earned 1,460 1,401 1,401 1,444 1,187 Adjusted EBITDA $ 42,967 $ 39,194 $ 36,381 $ 44,422 $ 52,197 Cash interest accrued (15,986) (16,181) (16,437) (16,158) (16,000) Free cash flows $ 26,981 $ 23,013 $ 19,944 $ 28,264 $ 36,197 Net income (loss) $ (435) $ (1,233) $ (6,324) $ (21,361) $ 5,474 Non-cash interest expense, net of tax Non-cash stock compensation, net of tax Loss on modification and extinguishment of debt and capital leases, net of tax 3,518 3,144 2,951 2,868 2,765 Non-cash tax expense - capital gain on related party stock distribution ,105 - Adjusted Net Income (loss) $ 4,203 $ 3,005 $ (2,189) $ 4,779 $ 9,348 Unaudited Quarter ending numbers Note - Adjusted EBITDA, Free cash flows and Adjusted Net Income are not U.S. GAAP measures, see note on page 2 15

16 Fleet Composition Total Fleet by Lease Type At March 31, 2014 Units NBV of owned fleet % of on- Total fleet by lease type # of units % of total $ millions % of total hire fleet Term lease 57,070 18% $ % 22% Direct finance lease 6,373 2% 22 1% 3% Marine neutral chassis pool 130,985 42% % 51% Domestic neutral chassis pool 60,422 20% % 24% On-hire fleet 254,850 82% 1,234 88% 100% Available fleet 20,039 7% 84 6% Active fleet 274,889 89% 1,318 94% Units available for remac 34,541 11% 91 6% Total fleet 309, % $ 1, % 16