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CAI International Inc. Reports Operating Results (10-Q)

November 05, 2010 | About:
10qk

10qk

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CAI International Inc. (CAP) filed Quarterly Report for the period ended 2010-09-30.

Cai International Inc. has a market cap of $307.7 million; its shares were traded at around $17.35 with a P/E ratio of 19.8 and P/S ratio of 4.8. CAP is in the portfolios of Columbia Wanger of Columbia Wanger Asset Management.

Highlight of Business Operations:

Total revenue of $20.1 million for the three months ended September 30, 2010 increased $4.4 million, or 28.1%, from $15.7 million for the three months ended September 30, 2009, due primarily to the increase in container rental and management fees revenue resulting from the higher average utilization of both our owned and managed containers, higher per diem rates on short-term leases and increasing fleet size. Operating expenses of $10.0 million for the quarter ended September 30, 2010 were 7.2% lower than the $10.8 million recorded during the same three-month period in 2009, mainly as a result of higher gains on sale of used container equipment and lower storage, handling and other expenses, partly offset by higher depreciation expense and a loss on foreign exchange. Income tax expense decreased $1.3 million mainly as a result of a $2.1 million reduction of an accrued tax liability. The increase in revenue and reductions in operating expenses and income tax expense, were partly offset by the increase in interest expense, resulting in a $6.0 million, or 186.8%, increase in our net income to $9.2 million for the three months ended September 30, 2010, compared to $3.2 million for the same three-month period in 2009.

Income Tax Expense. Income tax expense for the three months ended September 30, 2010 was negative $519,000, a $1.3 million decrease when compared to $763,000 for the three months ended September 30, 2009. The decrease was due primarily to the reduction of an accrued tax liability of $2.1 million resulting from an uncertain tax position. Without this reduction, income tax expense for the three months ended September 30, 2010 would have been $1.6 million and the effective tax rate would have been 18.3% compared to 19.3% for the three months ended September 30, 2009. The lower effective tax rate for the three months ended September 30, 2010 as compared to the three months ended September 30, 2009 is mainly attributable to a higher proportion of overall pretax income coming from our foreign operations where statutory rates are lower than the U.S. income tax rates.

Container Leasing. Total revenue from our container leasing segment increased $4.0 million, or 28.7%, to $17.9 million for the three months ended September 30, 2010 from $13.9 million during the three months ended September 30, 2009. Container rental revenue and finance lease income increased by $3.8 million and $203,000, respectively. The increase in container rental revenue was primarily driven by the higher utilization of our owned containers, increase in the average number of owned containers on lease and higher average per diem rate on short-term leases. Finance lease income increased from the same period last year due primarily to the impact of new DFL contracts signed in the prior quarter.

Total operating expenses for the container leasing segment for the three months ended September 30, 2010 decreased $733,000 or 7.9%, to $8.6 million from $9.3 million for the three months ended September 30, 2009. The decrease was primarily due to higher gain on disposition of used container equipment and decrease in storage, handling and other expenses, partly offset by the increase in depreciation and higher loss on foreign exchange. We had previously reported operating expenses of $7.8 million and a pre-tax income of $5.1 million allocated to the container leasing segment for the three months ended September 30, 2009 using a methodology of allocating MG&A expense based solely on the ratio of our owned containers in TEUs to our total fleet TEUs.

Total revenue of $52.7 million for the nine months ended September 30, 2010 increased $2.7 million, or 5.5%, from the nine months ended September 30, 2009, due primarily to the increase in container rental and management fee revenues resulting from the higher average utilization of both our owned and managed containers, offset in part by lower gains on sale of container portfolios and a decrease in finance lease income. Operating expenses for the nine months ended September 30, 2010 decreased $2.3 million, or 7.2%, from the same nine-month period in 2009, mainly as a result of higher gain on disposition of used container equipment and decreases in storage, handling and repairs expenses, amortization of intangible assets and impairment charges, partly offset by increases in MG&A expense, foreign exchange loss and depreciation expense. Our net income increased $7.4 million, or 70.6%, to $17.9 million for the nine months ended September 30, 2010, from $10.5 million for the comparable period in 2009. The increase in net income resulted primarily from higher revenue, lower operating expenses, interest expense and income taxes.

Income Tax Expense. Income tax expense for the nine months ended September 30, 2010 was $1.3 million, a $2.2 million, or 63.0%, decrease from $3.5 million for the nine months ended September 30, 2009. The decrease was due primarily to the reduction of an accrued tax liability of $2.1 million resulting from an uncertain tax position. Without this reduction, income tax expense for the nine months ended September 30, 2010 would have been $3.4 million and the effective tax rate would have been 17.7% compared to 24.9% for the same period in 2009. The lower effective tax rate for the nine months ended September 30, 2010 as compared to the nine months ended September 30, 2009 is mainly attributable to a higher proportion of overall pretax income coming from our foreign operations where statutory rates are lower than the U.S. income tax rates.

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