TAL International Group, Inc. Reports Third Quarter 2008 Results and Declares Quarterly Dividend
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PURCHASE, N.Y. November 5, 2008: TAL International Group, Inc., one of the world’s largest lessors of intermodal freight containers and chassis, today reported results for the third quarter and nine months ended September 30, 2008.
Adjusted pre-tax income (1), excluding unrealized gains / losses on interest rate swaps, was $29.9 million in the third quarter of 2008, compared to $21.9 million in the third quarter of 2007, an increase of approximately 37%. The Company focuses on adjusted pre-tax results since it considers unrealized gains / losses on interest rate swaps to be unrelated to operating performance and since it does not expect to pay any significant income taxes for a number of years due to the availability of accelerated tax depreciation on its existing container fleet and planned future equipment purchases.
Leasing revenues for the third quarter of 2008 were $80.4 million compared to $71.8 million in the third quarter of 2007. Adjusted EBITDA (2), including principal payments on finance leases, was $81.7 million for the quarter versus $67.5 million in the prior year period.
Adjusted Net Income (3), excluding unrealized gains / losses on interest rate swaps, was $19.3 million for the third quarter of 2008, compared to $14.1 million in the third quarter of 2007, an increase of approximately 37%. Adjusted Net Income per fully diluted common share was $0.59 in the third quarter of 2008, versus $0.42 per fully diluted common share in the third quarter of 2007.
Reported net income for the third quarter of 2008 was $14.5 million, versus net income of $3.5 million, in the third quarter of 2007. Net income per fully diluted common share was $0.44 for the third quarter of 2008, versus $0.11 per fully diluted common share in the third quarter of 2007.
“We continued to achieve outstanding operational and financial results in the third quarter of 2008”, commented Brian M. Sondey, President and CEO of TAL International. “High core utilization combined with our fleet growth to drive our leasing revenues up 12% from the third quarter of 2007. We benefited from consistently strong on-hire activity throughout the third quarter as customers picked-up containers they had committed to lease in the first and second quarters. We also achieved high used container sale prices and increased equipment trading volumes, which translated into exceptionally strong disposal gains and trading margins. Our financial results in the third-quarter were further supported by a $2.8 million gain from the sale of several container portfolios to outside investors. We undertook these sales primarily to expand our network of third-party container investors and diversify our funding sources. Overall, our strong operating performance in the third quarter led to a 37% increase in our Adjusted Pretax Income compared to the third quarter of last year, while our adjusted pretax results increased 12% from the second quarter of 2008. We are very pleased with these results.”
Adjusted pre-tax income(1), excluding unrealized gains / losses on interest rate swaps, was $82.4 million in the first nine months of 2008, compared to $63.5 million in the first nine months of 2007, an increase of approximately 30%.
Leasing revenues for the nine months of 2008 were $235.7 million compared to $208.8 million in the first nine months of 2007. Adjusted EBITDA (2), including principal payments on finance leases, was $231.7 million for the first nine months of 2008 versus $193.9 million in the prior year period.
Adjusted Net Income (3), excluding unrealized gains / losses on interest rate swaps, was $53.2 million for the first nine months of 2008, compared to $40.8 million in the prior year period, an increase of approximately 30%. Adjusted Net Income per fully diluted common share was $1.62 for the first nine months of 2008, compared to Adjusted Net Income per fully diluted common share of $1.22 in the prior year period.
Reported net income for the first nine months of 2008 was $51.1 million, versus net income of $35.4 million, in the prior year period. Earnings per fully diluted common share for the first nine months of 2008 were $1.56, versus $1.06 per fully diluted common share in the prior year period.
Mr. Sondey continued “Our operating and financial results have been supported so far this year by a favorable operating environment. For most of this year, global trade growth has remained solid despite the economic slowdown in the United States, and demand for leased containers has been further supported by a reduction in the number of containers directly purchased by our shipping line customers. We have also benefited from high steel and new container prices which have supported the lease rates and utilization of our existing container fleet and supported the disposal prices for our used containers.”
“However, the expectation that we may be heading into a global recession has lowered the level of projected containerized trade growth for 2009, and Clarkson’s Research Services has revised their January 2008 growth forecast for 2009 from 9.8% to 7.2%. In addition, steel prices in China have decreased substantially, and we expect that new container prices will decrease from their recent high level.”
“While our business environment may become more challenging as we move forward into the end of this year and 2009, we remain optimistic about the performance for TAL. As mentioned above, containerized trade growth is still expected to be positive in 2009, and we believe that direct container purchases by our shipping line customers will continue to be constrained, moving more container demand to leasing companies like TAL. Furthermore, while there is concern in the industry about a possible excess supply of vessel capacity due to large, multi-year vessel purchase commitments, containers are ordered only a few months in advance and we do not expect to face an excess supply of containers in the market. Also, up to 80% of our containers are currently on long-term leases, finance leases or other leases with significant drop-off protections, and our container utilization has remained strong despite the end of the summer peak season.”
“Overall, we expect our operating performance in the fourth quarter to remain quite strong. Our financial results will likely decrease from the third quarter level since we do not expect to repeat the gain on sale of container portfolios, and disposal and trading volumes typically drop in the fourth quarter. However, we will benefit from reduced depreciation as another vintage year of containers reaches the end of its depreciable life in November, and we expect our results to stay ahead of our fourth quarter results from last year.”
Dividend
TAL’s board of directors has approved and declared a $0.4125 per share quarterly cash dividend on its issued and outstanding common stock, payable on December 10, 2008 to shareholders of record at the close of business on November 19, 2008.
Investors’ Webcast
TAL will hold a Webcast at 9 a.m. (New York time) on Thursday, November 6th to discuss its fiscal third quarter and nine month results. An archive of the Webcast will be available one hour after the live call through Friday November 28, 2008. To access the live Webcast or archive, please visit the Company’s Web site at TAL INTERNATIONAL.
