CAI International, Inc. Wells Fargo Industrial and Construction Conference May 2013

Transcription

1 CAI International, Inc. Wells Fargo Industrial and Construction Conference May 2013

2 Safe Harbor Statement This presentation contains forward-looking statements including, but not limited to: statements regarding our future financial performance, our plans for capital investment, our proposed acquisition of container assets, our proposed private placement of notes, demand for our services, our ability to maintain current freight rates, and our ability to purchase and sell containers at favorable prices. All statements contained in this presentation other than statements of historical fact are forward-looking statements. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties which could include, but are not limited to: world trade and economic growth, growth and profitability of the shipping industry, availability of credit on commercially favorable terms, the price of steel and other commodity prices, our ability to attract and maintain contracts to manage container portfolios, our ability to attract and maintain lessors, competition, volatility in exchange rates and other factors described in the Risk Factors section of our periodic reports filed with the Securities and Exchange Commission. Actual events or results may differ materially from those discussed in the forward-looking statements as a result of these and other factors. These forward-looking statements reflect our view only as of the date of this presentation. Except as required by law, we undertake no obligation to update any forward-looking statements. 2

3 CAI At a Glance Business Intermodal container leasing ~ 96% of revenue earning assets Mid life railcar leasing~ 4% of revenue earning assets Container Fleet Total fleet of ~1.1 million TEUs as of March 31, 20 ~$1.7 billion of revenue-earning container assets (1) $1.3 billion owned assets / ~$0.4 billion managed assets (1) 72% owned by CAI / 28% managed for 3 rd party investors (3) Market Share 5 th largest container leasing company in the world (2) 7% market share (2) ~75% increase from 4% market share in 1998 Customers Diversified base ~300 customers Serve each of the top 10 shipping lines Average relationship of 15 years with top 20 clients Market Capitalization / Ownership Publicly traded on the NYSE (Ticker: CAP) ~$580 million market cap as of May 6, 2013 Insider ownership ~ 24% TEU = Twenty-foot Equivalent Unit; CEU= Cost Equivalent Unit (1) CAI management estimate (2) Harrison Consulting Report, March 2013 (3) As measured by TEU 3

4 CAI Highlights Well Positioned Among Industry Peers Highly profitable, predictable, and scalable business model Highest percentage lease revenue, operating income and earnings growth among public container lessors (1) Highest operating income percentage margin among public container lessors (2) Among highest return on average equity among public container lessors (2) One of the lowest levered among public container lessors (3) 20+ year history as a third party asset manager Compelling Container Industry Fundamentals Strong Platform for Delivering on Growth (1) 20 vs 2011 (2) Q4 20 (3) /31/20 Expect full year market demand for new containers similar to last year General market conditions still favor container lessors Container supply/demand balance remains relatively tight Strong secondary sale market Attractive mix of owned and managed assets provides flexibility Scalable management systems allow for substantial management fleet growth without significant infrastructure or personnel investment Asset management business and high percentage of long-term lease contracts lead to stable EBITDA 4

5 CAI Highlights Latest Quarterly Statistics Adjusted net income for the first quarter of 2013 was $17.0 million, a 18% increase compared to $14.4 million for the first quarter of 20, and an increase of 25% excluding a $1 million gain on the sale of a portfolio in Q1 of 20 Lease related revenue (1) for the first quarter of 2013 increased 44% compared to the first quarter of 20 and 4% compared to the fourth quarter of 20 Strong operating metrics in first quarter of 2013 with operating margin of 55%, adjusted net income after tax margin of 33%, Adjusted EBITDA margin of 90% Strong cash flow with $47 million Adjusted EBITDA in Q TTM $172 million Q run rate $189 million Modest leverage of 2.9x funded debt / equity as of March 31, 20 Recent Update on CAI s Operations $684 million undrawn capacity available under credit facilities as of March 31, 20. On December 5, CAI raised approximately $52 million in net proceeds to CAI in a public market secondary share offering In mid Q CAI closed the purchase two portfolios it managed for third party investors of approximately 53,000 TEU for $68 million average cost per TEU ~ $1,280 (1) Rental revenue + finance lease income 5

6 Financial Highlights Rental Revenue (1) Total Revenue ($ in millions) ($ in millions) $200 $161 consecutive quarterly increases $200 $150 $110 $150 $6 $174 consecutive quarterly increases $100 $50 $56 $67 $29 $33 $34 $37 $42 $48 $49 $100 $50 $65 $78 $33 $36 $39 $40 $45 $50 $51 $ Q3' 11 Q4' 11 Q1' Q2' Q3' Q4' Q1' 13 $ Q3' 11 Q4' 11 Q1' Q2' Q3' Q4' Q1' 13 Adjusted EBITDA (2) and Margin Adjusted Net Income and Margin ($ in millions) ($ in millions) $70 $180 93% $159 95% 93% 94% 93% 90% 100% 36% $160 83% 90% $60 92% 87% 91% $140 80% $117 $50 $0 Q1 13 up 33% YOY 70% 70% 60% $100 $40 50% $28 $80 $64 40% $30 21% $60 $46 $31 $34 $34 $37 $41 $47 $46 30% $20 $14 $40 20% $20 10% $10 $0 0% Q3' 11 Q4' 11 Q1' Q2' Q3' Q4' Q1' 13 $0 40% $50 $64 37% Q3' 11 41% 36% 37% 38% 37% 35% 33% $14 $13 $14 $15 $17 $17 $17 Q4' 11 Q1 13 up 25% YOY Q1' Q2' Q3' Q4' Q1' 13 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% (1) Rental revenue + finance lease income (2) Adjusted EBITDA defined as earnings before interest, taxes, depreciation and amortization plus principal payments from direct finance leases 6

7 CAI Total Fleet Overview Owned Fleet Managed Fleet Containers owned by CAI $1.3 billion of revenue-earning assets as of March 31, 2013 CAI manages fleet for its own portfolio Recurring rental income Depreciation Interest expense Characteristics Assets on CAI s balance sheet Provides 3x the net income potential as management with stable, contractual, predictable revenue from long term leases Pools of containers owned by independent investors ~$400 million revenue-earning containers CAI manages fleet for investors One-time gain on sales of portfolio to investors Recurring management fee income (average of approximately 9% of net cash flow) Characteristics Provides cash flow without significant long term capital investment Growing portfolio management through CAI s Asian subsidiary 1,200,000 1,000, , , , , ,653 24% CAI Owned Vs. Managed Fleet 470, , , , ,082 51% 185,645 42% 34% 28% 31% 32% 66% 704,417 72% 790,095 80% 70% 60% 50% 40% 30% 20% 10% Owned Managed % Owned Q % 7

8 CAI Total Fleet Overview Total Fleet by Container Type - CAI Focus is Standard Dry Containers Approximately 90% of the world s container fleet in TEUs is dry van Dry van containers provide the widest breadth of customers Specialized 2.1% TEU Reefer 2.9% Specialized 3.7% Reefer.6% CEU Dry vans have the most stable performance history in the secondary resale market Dry 95.0% Dry 83.7% Total On-Lease Fleet by Lease Type - >76% of CAI On Lease Fleet is on Long Term Leases (TEUs) TEU CEU Fleet is primarily under multi-year leases Short-Term 23.4% Short-Term 21.7% Long-term leases provide utilization and cash flow stability Company is focused on growing of existing contractual lease base DFL 6.1% Long-Term 70.5% DFL 6.8% Long-Term 71.5% 8

9 Leading Lessor with Disciplined Growth Strategy Container Lessor Market Share by TEU, Dec. 31 st, 20 (1) Serve all the major shipping lines 5 th largest container lessor with 7% market share Florens 11.6% TAL.5% CAI 7.1% Triton 13.6% SeaCube 7.1% Seaco 6.5% Textainer 18.0% Cronos 5.7% Other 4.5% Gold 3.4% DFIC 3.1% UES 1.8% CARU 0.6% Waterfront 0.4% Blue Sky 1.4% Beacon 2.7% (1) Source: Harrison Consulting March

10 Market and Industry Overview Lessors remain profitable despite pressures facing container shipping operators There is an 7% - 9% excess container ship supply at the same time supply/demand for containers is in balance with utilization rates in the mid-90% range Ship deliveries are far exceeding the production of boxes which is causing significant overcapacity for shipping lines, not a slowdown in container demand Historically, there were ~3 boxes for each container slot (2.99 in 2000), however, recently that ratio has dropped (to 1.99 in 20) due to the increase in megaships being delivered to shipping lines (1). Container supply has remained largely in balance during this time. Comparison of Public Lessors and Selected Shipping Line Cumulative Net Income, (2) Comparative Growth in Container Trade, Container-Box Fleet and Container-Ship Fleet, (2) 900% 800% 700% 600% 500% 400% Lines Lessors 774% 350% 325% 300% 275% Container trade (TEU) Container ship fleet (TEU) Container box fleet (TEU) 300% 200% 100% 250% 225% 0% -100% -200% -300% -400% -500% -151% % 175% 150% 5% 100% (1) Source: Clarkson Container Intelligence Monthly (2) Source: Harrison Consulting, March

11 2013 Outlook Growth in International Container Trade Continues Expect 2013 new container demand similar to % 1400% 1300% 00% 1100% 1000% 900% 800% 700% 600% 500% 400% 300% 200% 100% 0% World GDP, Trade, Container Trade and Container Fleet Growth ( ) (1)(2) Cumula>ve Container Fleet Growth Cumula>ve GDP Crowth Cumula>veTrade Growth (f) New Container Production World GDP Growth (1) 4.1% 3.2% 3.3% Emerging Markets GDP Growth 6.4% 5.1% 5.3% Estimated World Trade Growth (1) 6.3% 2.4% 3.5% Estimated Total Container Fleet Growth (2) (3) 8.0% 5.4% 4.7% Estimated new TEU produced (2) (3) 3.4MM 2.9MM 2.8MM Estimated dollar value of new production (3) $8.3BN $6.7BN $6.4BN Estimated lessor share of new production (2,3) 60% 60% 65% 55% - 60% $30,000 $28,000 $26,000 $24,000 $22,000 $2,700 $25,500 $27,500 New Container Price Trends $2,383 $2,625 $2,430 $2,200 $3,250 $2,750 $2,250 $20,000 $18,000 $16,000 $14,000 40ft High-Cube Reefer (LH Axis) $1,340 $1,945 $16,650 $17,792 $16,500 $1,750 $1,250 $,000 $750 (1) Source: Harrison Consulting Feb, March, April 2013 (2) Source: IMF World Economic Update; April

12 Capital Structure Philosophy Maintain a conservative Debt/Equity Leverage ratio ~ 3.0 Leverage can be managed by CAI. Decrease investment equipment lead time is only 6-8wks we can stop investment at our discretion. Manage exposure to interest rate volatility Maintain an approximate ratio of 50/50 Fixed vs. Floating rate debt -- Current ratio is 56%/44% Stagger Debt Facility Maturities >as of Q1 2013, WAL debt maturities is 49 months Maintain comfortable levels of capital liquidity Currently ~ $680 million available under revolving credit facilities

13 Access to multiple sources of capital CAI Debt Capital Structure 03/31/2013 Cap Leases and Collateral Loan Obligations 9% ABS Term 38% Senior Notes 9% Revolver Containers 11% Revolver Rail 4% Term Loans 29% Credit Facility Commitment Drawn Available Revolver Containers $760 $0 $640 Revolver Rail $44 Term Loans Senior Notes ABS Term Cap Leases and Collateral Loan Obligations Total Debt $1,730 $1,046 $684 Debt Maturities by year $200,000 $180,000 $160,000 $140,000 $0,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 $188,987 $179,013 $176,524 $147,814 $87,453 $54,795 Leverage March 2013 ~ 2.9 TTM Adj. EBITDA ~ $190 million Average interest rate ~2.95% WAL all debt ~ 48 months $68,359 $45,974 $45,974 $45,974 $5, % 18% 16% 14% % 10% 8% 6% 4% 2% 0%

14 Investment Philosophy Focus on the costs of assets being acquired Look for container transactions where we can over 60% - 65% of asset cost with the initial lease Model IRR s with conservative assumptions Always assume lower 2 nd lease per diem rates Assume no gain on disposition of asset at end of life Seek IRR s with 400bps 500bps spread over CAI s long term debt cost Focus on long term contracts trade yield for term Seek alternative investments when new equipment spreads are competitive Sale-leasebacks (20 ~ $5 million Q ~ $15 million) Acquisition of managed portfolios (20 ~$5 million Q ~ $68 million) Manage portfolios for 3 rd party investors Often the best deal is the deal you pass on 14

15 Appendix

16 Summary Historical Income Statement Year Ended December 31, (in thousands) YOY Growth Q1 '13 Container rental revenue $53,747 $64,892 $106,694 $152,982 $46,623 Management fee revenue 8,546 10,348,957,094 $2,230 Gain on sale of container portfolios ,345 1,256 $0 Finance lease income 2,218 2,045 3,710 7,593 $2,106 Total Revenue $65,264 $77,899 $5,706 $173, % $50,959 Depreciation of container rental equipment 17,226 20,807 33,633 48,352 15,333 Amortization of intangible assets 1,566 1,377 1, Gain on disposition of used container equipment (3,626) (9,1) (13,374) (,445) (2,636) Storage, handling, and other expenses 8,717 6,170 5,513 9,402 4,299 Marketing, general, and administrative expenses 19,605 21,731 20,655 24,828 5,888 Total operating expenses 43,488 40,973 47,681 71, % 23,111 Operating income $21,776 $36,926 $78,025 $102, % $27,848 Write off of deferred financing costs 1,108 Net interest expense 4,301 5,169 16,7 28,787 8,401 Net income before income taxes and non-controlling interest 17,475 31,757 61,898 74,099 18,339 Income tax expense 3,919 3,555 11,084 9,818 2,272 Net Income 13,556 28,202 50,814 64, % 16,067 Less: (Net income) Loss attributable to non-controlling interest (625) (816) 0 Net Income attributable to CAI Stockholders $13,556 $28,383 $50,189 $63, % $16,067 16

17 Reconciliation of Net Income to Adjusted Net Income and Adjusted EBITDA (In thousands) Year Ended December 31, Quarter Ended Q1 Q2 Q3 Q4 Q1 13 Net income (loss) $13,556 $28,383 $50,189 $63,465 $14,391 $15,135 $16,528 $17,411 $16,071 Add: Write off of deferred financing costs (tax effected) 971 Less: Gain on sale of portfolios to 3rd party investors (tax effected) (554) (506) (1,930) (1,070) (1,070) Adjusted net income (loss) $13,002 $27,877 $48,259 $62,395 $13,321 $15,135 $16,528 $17,411 $17,042 Net income (loss) Add: Net interest expense Depreciation Amortization of intangible assets and impairment of container Income tax expense EBITDA $13,556 $28,383 $50,189 $63,465 $14,391 $15,135 $16,528 $17,411 $16,067 4,301 5,169 16,7 28,787 5,931 6,318 7,178 9,360 8,401 17,366 21,024 34,078 48,849 10,773 11,170,627 14,279 15,465 1,652 1,417 1, ,919 3,555 11,084 9,733 2,505 2,396 2,102 2,730 2,272 40,794 59,548 1, ,736 33,827 35,244 38,659 44,006 42,432 Add: Write off of deferred financing costs (tax effected) 971 Principal payments from direct finance leases 5,532 5,333 6,080 8,758 1,685 2,194 2,347 2,532 2,6 Less: Gain on sale of portfolios to 3rd party investors (tax effected) (554) (506) (1,930) (1,070) (1,070) Adjusted EBITDA $45,772 $64,375 $116,882 $159,424 $34,442 $37,438 $41,006 $46,538 $46,015 17

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