CAI International, Inc. Keefe, Bruyette & Woods 2011 Investment Management & Specialty Finance Conference June 2011
Safe Harbor Statement This presentation 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 (including utilization rates) to differ materially from current expectations including, but not limited to, expected economic conditions, availability of credit on commercially favorable terms, customer demand, 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, its interim reports 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 presentation. 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 presentation whether as a result of new information, future events or otherwise, unless required by law. 2
Introduction to CAI
CAI Snapshot Listing New York Stock Exchange under the symbol CAP Business Leasing and management of intermodal marine containers Headquarters San Francisco, California Employees Shares Outstanding Market Cap @ 6/1/11 87 employees as of June 1, 2011 19.3 million shares outstanding $431 million Insider Ownership 39% 4
CAI at a Glance One of the worlds largest lessors of intermodal freight containers Fleet of approximately 863,000 TEUs 6th largest container leasing company 6.7% market share A market leader in container leasing for over 20 years Founded in 1989 by our Chairman of the Board of Directors, Hiromitsu Ogawa More than 280 customers Average relationship of 14 years with top 20 clients Our advantages: Leading scale, extensive global operating infrastructure, strong customer relationships and deep management experience 5
What We Do Procure Purchase containers from manufacturers in Asia Lease Lease to over 280 shipping companies around the world Leased containers are either retained by us as owned units or are sold to third-party investors for whom we continue to manage the units (managed units) Manage Manage both the owned and managed units: leasing, releasing, logistics and disposal Logistics management: pick-up, drop-off, storage, repair and repositioning of containers through 248 independent container depots in 42 countries Constant interaction with shipping lines through our customer service and marketing personnel in 19 countries (1) (1) Including independent agents 6
Recent Performance and Expectations for 2011 2010 Overview Average Utilization increased from 86.3% for the quarter ended March 2010 to 98% for the quarter ended March 2011 First six months of 2010 profitability came through increases in utilization Revenue, Operating Income and Net Income increased 39%, 102% and 125% respectively, in the six months ended December 2010 vs. the six months ended June 2010 Second half Revenue and Net Income improvement came from fleet growth Invested $390 million during the twelve months ended March 2011 (equivalent to 125% of NBV of equipment as of March 2010) Expectations for 2011 Continued strong momentum in the business as a result of tighter supply/demand for containers Expansion of fleet with additional investment in the remaining quarters of 2011 Focus on marketing new container investment programs to container investors First quarter in 2011 was the most profitable quarter in our history resulting from continued high utilization along with the impact of container investment over the last 12 months 7
Strong Growth Profile CAI Owned Fleet (in thousands) TEU ($ in thousands) NBV Q111 vs. Q110 Growth (1) Leasing Revenue Operating Income (1) Based on Company SEC filings 8
CAI has a Global Infrastructure CAI is headquartered in San Francisco, and maintains worldwide marketing offices, including: Antwerp, Germany, Charleston, Hong Kong, Kuala Lumpur, London, New York, Seoul, Singapore, Taipei, Shanghai, and Tokyo The Company has representatives in Cochin, Colombo, Durban, Bremen, Genoa, Ho Chi Minh City, Manila, São Paulo, and Sydney Main Office Marketing Office 9
Long-Standing Lessee Relationships We leverage many touch points with our lessees to ensure inventory availability and provide superior service Serve each of the top 10 shipping lines We have maintained business with our top 20 lessees for 14 years on average Our personnel have deep relationships within these companies, are familiar with their operations and try to anticipate potential inventory shortages 10
Flexible Business Model Two Key Segments 1. Container Leasing Containers owned by CAI Put on long- and short-term leases to shipping lines Container rental revenue, finance lease income, depreciation, interest expense, capital expenditures 2. Container Management Containers sold to container investors Managed by CAI over 8-12 year period Management fee revenue, gain on sale of container portfolios Provides cash flow without significant long term capital investment Owned, Managed & Total Fleet, 2002 2011 (1) 58% 42% Owned Fleet Managed Fleet (1) 2002 2010, measured as of December 31 11
Lease Types CAI maintains one of the largest leased container fleets Flexibility in structuring short-term, long-term and direct finance leases to meet lessee needs and our return hurdles Fleet today consists primarily of dry van containers Expanding into refrigerated containers Acquisition of CAI Consent Sweden AB (Consent) in 2008 provided expansion into European specialized containers and roll trailers Fleet by Lease Type (1) Fleet by Container Type (1) (1) As of March 31, 2011; based on TEU 12
Business Review
Slow US Recovery Not Expected to Change Demand in 2011 Asia is a more significant region for container demand than the US North America represents 8% of global TEU container lifts, fewer than the TEU lifts in Northern Europe (12%), China (30%) and the rest of Asia (27%) Container demand in 2011 should benefit from underinvestment in 2009 and 2010 Container production levels in 2009 and 2010 were below 2003 2008 average level 2011 production is expected to return to over 3 million TEU Worldwide Fleet Production by Year Average 3.1 mm TEU (2003 to 2008) Sources: Clarkson Container Intelligence Monthly February, 2011 Containerization International: World Container Census 2010, Container Leasing Market 2010 Andrew Foxcroft Container Data UK - Drewry Research 14
Leading Lessor with Disciplined Growth Strategy Container Lessor Market Share, Mid-2010 CAI Market Share, 1998 2010 Textainer, 20.5% Florens, 14.4% Triton Container, 12.8% TAL International, 9.4% GE SeaCo, 8.6% 7.0% 6.5% 6.0% 6.7% Gold Container, 4.5% 5.5% 5.0% Other, 14.8% SeaCube 3.8% UES, 4.4% 6.7% 4.5% 4.3% Total TEUs: 11.1 million 4.0% '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 Source: Containerization International Market Analysis 2010; market share measured as of mid-year 15
600 Growth in International Trade Returns in 2010 Container shipping demand as measured by TEU lifts 500 ( in millions) 400 300 200 100 0 N. America Europe Asia Others Source: Clarkson Research Services Limited; Figures for 2010 and 2011 are projected 16
Favorable Supply / Demand Dynamics Worldwide Container Fleet and Global Trade Volume (1) 30 25 Worldwide Fleet (TEUs in MM) 20 15 10 5 47% 46% 46% 46% 46% 44% 42% 41% 38% 39% 40% 43% 0 Global Trade Volume 00 01 02 03 04 05 06 07 08 09 10E 11E 226 238 275 303 343 381 426 472 498 451 503 555 Container Lessor Fleet Shipping Companies & Other (1) 2010E and 2011E based on Containerisation International estimates 17
Expansion Opportunities CAI will continue to look for product expansion and consolidation opportunities in 2011 Fleet Expansion Organic growth Portfolio sales from shipping lines Corporate acquisitions Maintain balance sheet strength to realize on these opportunities Product Expansion Specialty containers (flat racks, open tops etc.) Refrigerated containers Roll trailer equipment European specials 18
Financial Review
Ample Capital Resources Capitalization as of March 31, 2011 Significant financial resources for growth Capacity under existing facilities Strong cash flow Manageable leverage levels 1.7x Debt / Equity Ability to increase leverage for accretive opportunities Additional funding provides upside Recent primary proceeds strengthened capital base New term loan of up to $300 million adds flexibility Opportunity to transform the Company and take market share 20
Financial Highlights Container Rental Revenue Total Revenue ($ in thousands) ($ in thousands) Adjusted EBITDA and Margin Net Income and Margin ($ in thousands) * ($ in thousands) * * * Note: 2008 Adjusted EBITDA and Net Income excludes the effect of a non-cash impairment of goodwill of $50.2 million. *Q3 10 excludes a one-time tax benefit of $2.1m 21
Summary Historical Income Statement Three Months Ended ($ in thousands) Year Ended December 31, March 31, 2007 2008* 2009 2010 2010 2011 Revenue: Container rental revenue $38,148 $56,436 $53,747 $64,892 $12,344 $22,385 Management fee revenue 12,663 11,969 8,546 10,348 2,181 3,515 Gain on sale of container portfolios 12,855 12,443 753 614 266 1,410 Finance lease income 1,206 2,297 2,218 2,045 402 432 Total Revenue $64,872 $83,145 $65,264 $77,899 $15,193 $27,742 Operating expenses: Depreciation of container rental equipment 8,805 15,824 17,140 20,767 4,207 6,736 Amortization of intangible assets 1,241 1,534 1,566 1,377 354 343 Impairment of container rental equipment 365 331 86 40 17 5 Gain on disposition of used container equipment (4,400) (4,155) (3,626) (9,112) (1,420) (3,615) Storage, handling, and other expenses 4,038 4,874 8,717 6,170 2,191 1,095 Marketing, general, and administrative expenses 14,888 20,779 19,605 21,731 5,130 4,662 Total operating expenses 24,937 39,187 43,488 40,973 10,479 9,226 Operating income 39,935 43,958 21,776 36,926 4,714 18,516 Net interest expense 9,599 9,117 4,301 5,169 825 2,971 Net income before income taxes and non-controlling interest 30,336 34,841 17,475 31,757 3,889 15,545 Income tax expense 11,102 11,547 3,919 3,555 840 2,550 Net Income 19,234 23,294 13,556 28,202 3,049 12,995 Less: (Net income) Loss attributable to noncontrolling interest - - - 181 - (199) Net Income attributable to CAI Stockholders $19,234 $23,294 $13,556 $28,383 $3,049 $12,796 * Excludes the effect of a non-cash impairment of goodwill of $50.2 million recorded in Q4 2008. 22
Investment Highlights CAI is one of the worlds leading leasing and management companies Well positioned for future industry expansion Market conditions present significant growth opportunities at attractive returns Industry is in the early stages of strong container demand Disciplined growth strategy leading up to a consistent market share gain Long-standing customer relationships with track record of strong asset quality Highly profitable, predictable and scalable business model 23
Appendix
Reconciliation of Net Income to Adjusted EBITDA CAI International, Inc. Adjusted EBITDA Year Ended December 31, 2006 2007 2008 2009 2010 Q1 11 Net income (loss) $15,784 $19,047 ($26,953) $13,556 $28,383 Add: Net interest expense 7,542 9,898 9,117 4,301 5,169 Depreciation 12,120 8,932 16,001 17,366 21,024 Amortization of intangible assets and impairment of container rental equipment 658 1,606 1,865 1,652 1,417 Impairment of goodwill - - 50,247 - - Income tax expense 9,087 10,990 11,547 3,919 3,555 EBITDA 45,191 50,473 61,824 40,794 59,548 $12,796 2,971 6,846 343-2,550 25,506 Add- principal payments from direct finance leases 3,753 3,991 6,563 5,532 5,333 Adjusted EBITDA $48,944 $54,464 $68,387 $46,326 $64,881 1,398 $26,904 25
Reconciliation of 2008 Results Without Impairment Charge Adjustment for Impairment of Goodwill Adjusted Actual 2008 Actual 2008 Revenue: Container rental revenue $56,436 $56,436 Management fee revenue 11,969 11,969 Gain on sale of container portfolios 12,443 12,443 Finance lease income 2,297 2,297 Total revenue 83,145 83,145 Operating expenses: Depreciation of container rental equipment 15,824 15,824 Amortization of Intangible Assets 1,534 1,534 Impairment of goodwill 50,247 (50,247) - Other Operating Expenses 21,829 21,829 Total operating expenses 89,434 (50,247) 39,187 Operating income (loss) (6,289) 50,247 43,958 Net interest expense 9,117-9,117 Income (loss) before income taxes (15,406) 50,247 34,841 Income tax expense 11,547 11,547 Net income (loss) ($26,953) $50,247 $23,294 26