SeaCube Container Leasing Ltd. Reports Third Quarter 2012 Results

SeaCube Container Leasing Ltd. Reports Third Quarter 2012 Results

Third Quarter 2012 and Year-to-Date Highlights

  • For the third quarter, adjusted net income increased 15% year-over-year to $12.8 million, or $0.63 per diluted common share. Third quarter net income increased 30% year-over-year to $11.4 million.

  • Declared a dividend of $0.30 per share, an increase of 3.4% from the prior quarter.

  • Total revenue increased 9% year-over-year to $49.5 million for the third quarter.

  • Average utilization was 97.9% for the third quarter.

  • Committed to purchase approximately $318.8 million in equipment for delivery through January 2013; 85% has been committed to long-term leases.

PARK RIDGE, N.J.--(BUSINESS WIRE)-- SeaCube Container Leasing Ltd (SeaCube) (NYSE: BOX) , one of the world's largest lessors of intermodal freight containers, today reported results for the third quarter ended September 30, 2012.


Adjusted net income(1) was $12.8 million for the third quarter of 2012 compared to $11.1 million in the third quarter of 2011, an increase of 15%. For the third quarter of 2012, adjusted net income per diluted common share was $0.63. The Company focuses on adjusted net income because it excludes the impact of non-cash interest expense and non-recurring items that are unrelated to the operating performance of the business.

Total revenue was $49.5 million for the third quarter of 2012 compared to $45.2 million for the third quarter of 2011, an increase of 9%. Utilization continued to be strong with average third quarter utilization of 97.9%. Adjusted EBITDA(1) was $74.2 million for the third quarter of 2012 compared to $61.6 million in the third quarter of 2011.

The Company reported net income of $11.4 million for the third quarter of 2012 compared to $8.8 million for the third quarter of 2011. Net income per diluted common share was $0.56 for the third quarter of 2012 compared to $0.44 for the third quarter of 2011.

Joseph Kwok, Chief Executive Officer of SeaCube, commented, "During the third quarter, SeaCube once again generated strong revenue, earnings, and cash flow. We also continued to grow our container fleet in manner that meets our investment criteria. Year to date, we have committed to purchase approximately $318.8 million in containers, of which 85% are already committed to long-term lease. We expect our investments in 2012 to continue to positively impact results."

Mr. Kwok concluded, "The Board's decision to increase the dividend for the seventh time since going public highlights SeaCube's strong and stable cash flows. SeaCube has now increased its dividend 50% since the IPO in October 2010 for a cumulative payout of $2.25 per share. With significant capital available to invest, we will continue to pursue attractive opportunities to further grow revenues, earnings and cash flow in an effort to provide good returns for SeaCube shareholders."

Adjusted net income(1) was $38.6 million for the nine months ended September 30, 2012 compared to $30.8 million for the nine months ended September 30, 2011, an increase of 26%. For the nine months ended September 30, 2012, adjusted net income per diluted common share was $1.91.

Total revenue was $148.0 million for the nine months ended September 30, 2012 compared to $122.8 million for the nine months ended September 30, 2011, an increase of 20%. Adjusted EBITDA(1) was $215.7 million for the nine months ended September 30, 2012 compared to $175.2 million for the nine months ended September 30, 2011.

The Company reported net income of $34.6 million for the nine months ended September 30, 2012 compared to $27.2 million for the nine months ended September 30, 2011. Net income per diluted common share was $1.71 for the nine months ended September 30, 2012 compared to $1.35 for the nine months ended September 30, 2011.

Dividend

On November 5, 2012, the Company's Board of Directors approved and declared a $0.30 per share cash dividend on its issued and outstanding common shares, payable on December 14, 2012 to shareholders of record at the close of business on December 7, 2012.

Investors' Conference Call

In connection with this earnings release, management will host an earnings conference call and webcast on Tuesday, November 6, 2012 at 10:00 a.m. Eastern time. The live conference call may be accessed by dialing 1-866-347-8894 (from within the U.S.) or 1-706-643-5328 (from outside of the U.S.) ten minutes prior to the scheduled start of the call; please reference "SeaCube Third Quarter Earnings Call." A simultaneous webcast of the conference call with an accompanying slide presentation will be available to the public at www.seacubecontainers.com. A telephonic replay of the conference call will also be available until 11:59 p.m. on Friday, November 16, 2012 by dialing 1-855-859-2056 (from within the U.S.) or 1-404-537-3406 (from outside of the U.S.); please reference access code "43448253."

About SeaCube Container Leasing Ltd.

SeaCube Container Leasing Ltd. is one of the world's largest container leasing companies based on total assets. Containers are the primary means by which products are shipped internationally because they facilitate the secure and efficient movement of goods via multiple transportation modes, including ships, rail and trucks. The principal activities of our business include the acquisition, leasing, re-leasing and subsequent sale of refrigerated and dry containers and generator sets. We lease our containers primarily under long-term contracts to a diverse group of the world's leading shipping lines. For more information regarding SeaCube Container Leasing Ltd. please visit www.seacubecontainers.com.

Safe Harbor

Certain items in this press release and other information we provide from time to time, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, but not necessarily limited to, statements relating to future events and financial performance. You can identify these forward-looking statements by the use of forward-looking words such as ''outlook,'' ''believes,'' ''expects,'' ''potential,'' ''continues,'' ''may,'' ''will,'' ''should,'' ''could,'' ''seeks,'' ''approximately,'' ''predicts,'' ''intends,'' ''plans,'' ''estimates,'' ''anticipates,'' ''target,'' ''projects,'' ''contemplates'' or the negative version of those words or other comparable words. Any forward-looking statements contained in this press release are based upon our historical performance and on our current plans, estimates and expectations in light of information currently available to us. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business, prospects, growth strategy and liquidity. For a discussion of such risks and uncertainties, see "Risk Factors" included in our Annual Report on Form 10-K for the year ended December 31, 2011. Furthermore, SeaCube is under no obligation to update or alter any of the forward-looking statements contained in this press release as a result of new information, future events or otherwise, unless required by law.

(1) Adjusted net income, adjusted net income per diluted common share, and adjusted EBITDA are non-GAAP measurements. The Company's definition and calculations are outlined in the attached schedules.

SeaCube Container Leasing Ltd.

Consolidated Balance Sheets

(Amounts in thousands, except share data)

(unaudited)

September 30, 2012

December 31, 2011

Assets

Cash and cash equivalents

$

18,085

$

15,006

Restricted cash

34,614

29,649

Accounts receivable, net of allowance of $1,506 and $3,290, respectively

40,832

41,570

Net investment in direct finance leases

652,606

639,248

Leasing equipment, net of accumulated depreciation of $166,319 and
$171,993, respectively

847,783

748,945

Goodwill

22,483

22,483

Shareholder note

8,691

8,498

Other assets

23,652

19,903

Total assets

$

1,648,746

$

1,525,302

Liabilities and shareholders' equity

Liabilities:

Equipment purchases payable

$

54,871

$

26,305

Accrued expenses and other liabilities

31,576

37,097

Fair value of derivative instruments

31,156

38,750

Deferred income

1,984

2,044

Deferred income taxes

913

1,532

Debt:

Due within one year

181,411

161,171

Due after one year

1,100,555

1,039,274

Total debt

1,281,966

1,200,445

Total liabilities

1,402,466

1,306,173

Commitments and contingencies

Shareholders' equity:

Preferred shares, $0.01 par value, 100,000,000 shares authorized

Common shares, $0.01 par value, 400,000,000 shares authorized;
20,288,359 shares issued and outstanding at September 30, 2012;
20,163,359 shares issued and outstanding at December 31, 2011

202

201

Additional paid in capital

220,199

218,879

Retained earnings

50,650

32,916

Accumulated other comprehensive income (loss)

(24,771

)

(32,867

)

Total shareholders' equity

246,280

219,129

Total liabilities and shareholders' equity

$

1,648,746

$

1,525,302

SeaCube Container Leasing Ltd.

Consolidated Statements of Operations

(Amounts in thousands, except per share amounts)

(unaudited)

Three months ended
September 30,

Nine months ended
September 30,

2012

2011

2012

2011

Revenues:

Equipment leasing revenue

$

30,754

$

28,726

$

90,707

$

75,444

Finance revenue

16,213

13,945

49,102

40,281

Other revenue

2,531

2,558

8,147

7,089

Total revenues

49,498

45,229

147,956

122,814

Expenses:

Direct operating expenses

1,306

2,092

4,134

4,341

Selling, general and administrative expenses

5,949

5,996

18,158

17,641

Depreciation expenses

13,328

12,242

39,485

33,159

Provision for doubtful accounts

224

180

894

220

Impairment of leasing equipment held for sale

536

539

1,946

904

Interest expense, including non-cash interest of $1,420,
$2,320, $4,031 and $3,559, respectively


17,763


15,424


51,370


39,283

Interest income

(71)

(68)

(209)

(211)

Other expenses (income), net

(949)

6

(2,268)

438

Total expenses

38,086

36,411

113,510

95,775

Income before provision for income taxes

11,412

8,818

34,446

27,039

Provision (benefit) for income taxes

35

(127)

(142)

Net income

$

11,412

$

8,783

$

34,573

$

27,181

Net income per common share

Basic

$

0.56

$

0.44

$

1.71

$

1.35

Diluted

$

0.56

$

0.44

$

1.71

$

1.35

Dividend per common share

$

0.29

$

0.24

$

0.83

$

0.68

Non-GAAP Financial Measure

Adjusted earnings before interest, taxes, depreciation and amortization ("adjusted EBITDA") is a measure of financial and operating performance that is not defined by U.S. GAAP and should not be considered a substitute for net income, income from operations or cash flow from operations, as determined in accordance with U.S. GAAP.

We define adjusted EBITDA as income (loss) from continuing operations before income taxes, interest expenses including loss on retirement of debt, depreciation and amortization, fair value adjustments on derivative instruments, loss on terminations and modification of derivative instruments, gain on sale of assets, and write-offs of goodwill plus principal collections on direct finance lease receivables. We use adjusted EBITDA in a number of ways to assess our consolidated financial and operating performance, and we believe this measure is helpful to management, the board of directors and investors in identifying trends in our performance. We use adjusted EBITDA as a measure of our consolidated operating performance exclusive of income and expenses that relate to the financing, income taxes, and capitalization of the business. Also, adjusted EBITDA assists us in comparing our operating performance on a consistent basis as it removes the impact of our capital structure (primarily interest charges on our outstanding debt) and asset base (primarily depreciation and amortization) from our operating results. In addition, adjusted EBITDA helps management identify controllable expenses and make decisions designed to help us meet our current financial goals and optimize our financial performance. Accordingly, we believe this metric measures our financial performance based on operational factors that management can impact in the short-term, namely the cost structure and expenses of the organization. Lastly, adjusted EBITDA is the basis for calculating selected financial ratios as required in the debt covenants of one of our credit facilities and one of our management agreements.

The following table shows the reconciliation of net income, the most directly comparable U.S. GAAP measure to adjusted EBITDA:

SeaCube Container Leasing Ltd.

Non-GAAP Reconciliation of Adjusted EBITDA

(Amounts in thousands)


(unaudited)

Three months ended September 30,

Nine months ended September 30,

2012

2011

2012

2011

Net income

$

11,412

$

8,783

$

34,573

$

27,181

Provision (benefit) for income taxes

35

(127

)

(142

)

Depreciation expenses

13,328

12,242

39,485

33,159

Interest expense, net of interest income

17,692

15,356

51,161

39,072

Collections on net investment in direct financing

leases, net of interest earned

31,740

25,173

90,601

75,936

Adjusted EBITDA

$

74,172

$

61,589

$

215,693

$

175,206

In addition, the Company has presented adjusted net income and adjusted net income per diluted common share as a measure of financial and operating performance. Adjusted net income is a measure that is not defined by U.S. GAAP and should not be considered a substitute for net income, income from operations or cash flow from operations, as determined in accordance with U.S. GAAP. Adjusted net income is a measure of our operating and financial performance used by management to focus on consolidated financial and operating performance exclusive of income and expenses that relate to non-routine or significant non-cash items of the business.

We define adjusted net income (loss) as net income before non-cash interest expense related to amortization of deferred financing fees, terminations and modifications of derivative instruments, losses on retirement of debt, fair value adjustments on derivative instruments, loss on swap terminations, and write-offs of goodwill. We use adjusted net income to assess our consolidated financial and operating performance, and we believe this non-GAAP measure is helpful to management and investors in identifying trends in our performance. This measure helps management make decisions which are expected to facilitate meeting current financial goals as well as achieve optimal financial performance. Adjusted net income provides us with a measure of financial performance of the business based on operational factors including the profitability of assets on an economic basis net of operating expenses and the capital costs of the business on a consistent basis as it removes the impact of certain non-routine and non-cash items from our operating results. Adjusted net income is a key metric used by senior management and our board of directors to review the consolidated financial performance of the business. Adjusted net income is a non-GAAP measure, and, as such, a reconciliation of adjusted net income to net income is provided below.

SeaCube Container Leasing Ltd.

Non-GAAP Reconciliation of Adjusted Net Income

(Amounts in thousands, except share and per share data)


(unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2012

2011

2012

2011

Net income

$

11,412

$

8,783

$

34,573

$

27,181

Non-cash interest expense, net of tax

1,420

2,328

4,046

3,579

Adjusted net income

$

12,832

$

11,111

$

38,619

$

30,760

Adjusted net income per diluted
common share

$

0.63

$

0.55

$

1.91

$

1.53

Common shares used in computing adjusted
net income per diluted common share

20,288,359

20,163,359

20,263,724

20,135,811



SeaCube Container Leasing Ltd
Investor:
David Doorley, 201-391-0800

KEYWORDS: United States North America New Jersey

INDUSTRY KEYWORDS:

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