PURCHASE, N.Y.--(BUSINESS WIRE)--Feb. 13, 2013--
TAL International Group, Inc. (NYSE: TAL), one of the world’s
largest lessors of intermodal freight containers and chassis, today
reported results for the fourth quarter and full year ended December 31,
2012.
Highlights:
-
TAL reported Adjusted pre-tax income of $1.60 per fully diluted common
share for the fourth quarter of 2012, an increase of 2% from the
fourth quarter of 2011. An increase in the residual value estimates
used in TAL’s depreciation calculations contributed $0.15 to Adjusted
pre-tax income per fully diluted common share in the fourth quarter of
2012.
-
TAL reported leasing revenues of $138.8 million for the fourth quarter
of 2012, an increase of 11.8% from the fourth quarter of 2011.
-
TAL reported Adjusted EBITDA of $141.7 million for the fourth quarter
of 2012, an increase of 7.2% from the fourth quarter of 2011.
-
TAL continued to grow its business aggressively during 2012, investing
nearly $875 million in new container purchases and sale-leaseback
transactions.
-
TAL announced a quarterly dividend of $0.64 per share payable on March
28, 2013 to shareholders of record as of March 7, 2013.
Adjusted pre-tax income (1) was $53.7 million for the fourth quarter of
2012, compared to $52.5 million for the fourth quarter of 2011. Adjusted
pre-tax income per fully diluted common share was $1.60 for the fourth
quarter of 2012, compared to $1.57 for the fourth quarter of 2011. The
Company focuses on adjusted pre-tax results since it considers gains and
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 anticipated future equipment
purchases.
Leasing revenues for the fourth quarter of 2012 were $138.8 million,
compared to $124.1 million for the fourth quarter of 2011. Adjusted
EBITDA (1), including principal payments on finance leases, was $141.7
million for the fourth quarter of 2012, compared to $132.2 million for
the fourth quarter of 2011.
Adjusted net income (1) was $35.1 million for the fourth quarter of
2012, compared to $34.0 million for the fourth quarter of 2011. Adjusted
net income per fully diluted common share was $1.04 for the fourth
quarter of 2012, compared to $1.02 for the fourth quarter of 2011.
After conducting its regular depreciation policy review, TAL decided to
increase the estimated residual values used in its equipment
depreciation calculations effective October 1, 2012 (see the residual
value table after the consolidated financial statements herein). The
increase in estimated residual values resulted in a decrease in
depreciation expense of $5.2 million ($3.4 million after tax or $0.10
per fully diluted common share) for the quarter and year ended December
31, 2012. Going forward, TAL expects this change in residual values to
have a similar quarterly effect on depreciation expense.
Over time, the higher residual estimates will lead to a decrease in
disposal gains that should offset the decrease in depreciation expense.
However, for the next several years, the change in residual estimates
may not have a meaningful impact on disposal gains since a large portion
of the containers that will likely be sold over the next few years have
already been fully depreciated. As a result, for the next several years,
the change in residual value estimates will lead to an increase in TAL's
profitability compared to what would have been reported using the
previous residual estimates.
Reported net income for the fourth quarter of 2012 was $36.8 million
compared to $35.9 million for the fourth quarter of 2011. Net income per
fully diluted common share was $1.09 for the fourth quarter of 2012,
compared to $1.07 for the fourth quarter of 2011. The difference between
Adjusted net income and reported net income in the fourth quarter of
2012 was due to net gains on interest rate swaps. TAL uses interest rate
swaps to synthetically fix the interest rates for most of its floating
rate debt so that the duration of the fixed interest rates match the
expected duration of TAL’s lease portfolio. TAL does not use hedge
accounting for the majority of its swaps, so most of the change in the
market value of TAL’s interest rate swap portfolio is reflected in
reported net income. During the fourth quarter of 2012, long-term
interest rates increased resulting in a $2.6 million increase in the
market value of TAL’s swap contracts.
Adjusted pre-tax income (1) was $203.3 million for the year ended
December 31, 2012 compared to $198.2 million in 2011. Adjusted pre-tax
income per fully diluted common share was $6.05 for the year ended
December 31, 2012 compared to $6.04 in 2011.
Leasing revenues were $525.0 million for the year ended December 31,
2012 compared to $451.1 million in 2011. Adjusted EBITDA (1), including
principal payments on finance leases, was $546.8 million for the year
ended December 31, 2012 compared to $492.2 million in 2011.
Adjusted net income (1) was $131.7 million for the year ended December
31, 2012 compared to $128.1 million in 2011. Adjusted net income per
fully diluted common share was $3.92 for the year ended December 31,
2012 compared to $3.90 in 2011.
Reported net income for the year ended December 31, 2012 was $130.1
million compared to $109.7 million in 2011. Net income per fully diluted
common share was $3.87 for the year ended December 31, 2012 compared to
$3.34 in 2011.
“TAL achieved outstanding operational and financial performance in
2012,” commented Brian M. Sondey, President and CEO of TAL
International. “We generated over $6.00 per share in Adjusted pre-tax
income, grew our revenue earning assets by nearly 20%, and paid $2.35 in
dividends per share. Our equipment utilization averaged almost 98% for
the year.”
“While TAL achieved record profitability in 2012 and continued to
generate very attractive returns, our profitability increased at a lower
rate than our assets or leasing revenue. For the first part of the year,
depreciation expense increased more rapidly than our assets due to a
drop in the portion of our containers that are older and fully
depreciated. In addition, used container sale prices decreased from peak
2011 levels, causing our disposal gains and trading margins to decrease
from the record levels achieved in 2011. We expect used container sale
prices and our disposal gains to continue to moderate over time.
However, the aggressive investments we made in our fleet have led to
strong growth in our recurring leasing revenues, providing a solid
foundation for future profitability, cash flow and dividends.”
“Our strong performance in 2012 continued to be supported by attractive
market fundamentals. Demand for containers continued to be sustained by
moderate growth in containerized trade. Economic challenges in many
developed countries led to little or no growth in the major East-West
trade lanes in 2012, but strong growth in intra-Asia, North-South and
other regional trades led to moderately positive global container trade
growth overall. Demand for leased containers was further supported by
our customers’ increased reliance on leasing. We estimate that leasing
companies purchased almost two-thirds of new containers in 2012, and we
have also seen increased opportunities to purchase our customers’
existing equipment through sale-leaseback transactions. Limited direct
container purchases by our customers in 2012 also helped maintain a
tight global supply and demand balance for containers, allowing TAL to
operate at very high levels of utilization.”
Outlook
Mr. Sondey continued, “Looking forward, we expect 2013 to begin in much
the same way that we finished 2012. The vast majority of the containers
we purchased over the last few years are locked-in on multi-year leases,
providing a strong and predictable base of revenue. Utilization remains
high at 97.7% as of February 13, 2013. Our customers are generally
expecting trade growth to remain moderately positive. We also expect
leasing companies to continue to purchase a majority of new containers
in 2013, though we have seen some shipping lines purchase containers
during the last few months to take advantage of reduced new container
prices. Market leasing rates are currently aggressive, perhaps due to
the widespread availability of attractively priced financing for the
container leasing sector, but overall, we expect that TAL will continue
to benefit in 2013 from an attractive combination of tight container
supply coupled with significant growth opportunities.”
“The first quarter is typically our weakest quarter of the year since it
is traditionally the slow season for dry containers, and we usually
experience net container off-hires from our leasing customers and low
sale volumes for used equipment. In 2013, we will likely face additional
pressure in the first quarter as used container prices continue to
slowly moderate toward historical levels. However, one of our customers
has recently declared a sizeable batch of containers as lost, and the
one-time gain associated with this declaration will offset much of the
seasonal weakness we expect for the first quarter. As a result, we
expect our Adjusted pre-tax income to hold relatively steady from the
fourth quarter of 2012 to the first quarter of 2013. After the first
quarter, we expect ongoing fleet growth, continued high utilization and
increased disposal volumes to offset the impact of further sale price
moderation, and we expect our profitability and returns to remain at a
high level throughout 2013.”
Dividend
TAL’s Board of Directors has approved and declared a $0.64 per share
quarterly cash dividend on its issued and outstanding common stock,
payable on March 28, 2013 to shareholders of record at the close of
business on March 7, 2013. Based on the information available today, we
believe this distribution will qualify as a return of capital rather
than a taxable dividend for U.S. tax purposes. Investors should consult
with a tax advisor to determine the proper tax treatment of this
distribution.
Mr. Sondey concluded, “We are very pleased to announce an increase to
our dividend again this quarter. The increase reflects our continued
strong performance, the growth in our recurring leasing revenues and our
general expectations that our market environment will remain favorable
for the foreseeable future.”
Investors’ Webcast
TAL will hold a Webcast at 9 a.m. (New York time) on Thursday, February
14, 2013 to discuss its fourth quarter and full year results. An archive
of the Webcast will be available one hour after the live call through
Friday, March 22, 2013. To access the live Webcast or archive, please
visit the Company’s Web site at http://www.talinternational.com.
About TAL International Group, Inc.
TAL is one of the world's largest lessors of intermodal freight
containers and chassis with 17 offices in 11 countries and approximately
230 third-party container depot facilities in 40 countries. The
Company's global operations include the acquisition, leasing, re-leasing
and subsequent sale of multiple types of intermodal containers and
chassis. TAL's fleet consists of approximately 1,202,000 containers and
related equipment representing approximately 1,958,000 twenty-foot
equivalent units (TEU). This places TAL among the world's largest
independent lessors of intermodal containers and chassis as measured by
fleet size.
Important Cautionary Information Regarding Forward-Looking Statements
Statements in this press release regarding TAL International Group,
Inc.'s business that are not historical facts are "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. Readers are cautioned that these statements involve
risks and uncertainties, are only predictions and may differ materially
from actual future events or results. For a discussion of such risks and
uncertainties, see "Risk Factors" in the Company's Annual Report on Form
10-K filed with the Securities and Exchange Commission on February 22,
2012.
The Company’s views, estimates, plans and outlook as described within
this document may change subsequent to the release of this statement.
The Company is under no obligation to modify or update any or all of
the statements it has made herein despite any subsequent changes the
Company may make in its views, estimates, plans or outlook for the
future.
______________________
(1) Adjusted pre-tax income, Adjusted EBITDA and Adjusted net income are
non-GAAP measurements we believe are useful in evaluating our operating
performance. The Company’s definition and calculation of Adjusted
pre-tax income, Adjusted EBITDA and Adjusted net income are outlined in
the attached schedules.
Please see page 9 for a detailed reconciliation of these financial
measurements.
|
|
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TAL INTERNATIONAL GROUP, INC.
Consolidated Balance Sheets
(Dollars in thousands, except share data)
|
|
|
|
|
|
|
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|
|
December 31,
|
|
|
|
|
|
2012
|
|
|
|
|
2011
|
|
|
ASSETS:
|
|
|
|
|
|
|
|
Leasing equipment, net of accumulated depreciation and allowances of
$766,898 and $626,965
|
|
|
$
|
3,249,374
|
|
|
|
$
|
2,663,443
|
|
|
Net investment in finance leases, net of allowances of $897 and
$1,073
|
|
|
|
121,933
|
|
|
|
|
146,742
|
|
|
Equipment held for sale
|
|
|
|
47,139
|
|
|
|
|
47,048
|
|
|
Revenue earning assets
|
|
|
|
3,418,446
|
|
|
|
|
2,857,233
|
|
|
Unrestricted cash and cash equivalents
|
|
|
|
65,843
|
|
|
|
|
140,877
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|
|
Restricted cash
|
|
|
|
35,837
|
|
|
|
|
34,466
|
|
|
Accounts receivable, net of allowances of $692 and $667
|
|
|
|
71,363
|
|
|
|
|
56,491
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|
|
Goodwill
|
|
|
|
71,898
|
|
|
|
|
71,898
|
|
|
Deferred financing costs
|
|
|
|
26,450
|
|
|
|
|
24,028
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|
|
Other assets
|
|
|
|
9,453
|
|
|
|
|
11,539
|
|
|
Fair value of derivative instruments
|
|
|
|
1,904
|
|
|
|
|
771
|
|
|
Total assets
|
|
|
$
|
3,701,194
|
|
|
|
$
|
3,197,303
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|
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LIABILITIES AND STOCKHOLDERS’ EQUITY:
|
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|
|
|
|
|
|
Equipment purchases payable
|
|
|
$
|
111,176
|
|
|
|
$
|
55,320
|
|
|
Fair value of derivative instruments
|
|
|
|
34,633
|
|
|
|
|
78,122
|
|
|
Accounts payable and other accrued expenses
|
|
|
|
64,936
|
|
|
|
|
66,607
|
|
|
Net deferred income tax liability
|
|
|
|
270,459
|
|
|
|
|
198,867
|
|
|
Debt
|
|
|
|
2,604,015
|
|
|
|
|
2,235,585
|
|
|
Total liabilities
|
|
|
|
3,085,219
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|
|
|
|
2,634,501
|
|
|
Stockholders’ equity:
|
|
|
|
|
|
|
|
Preferred stock, $.001 par value, 500,000 shares authorized, none
issued
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|
|
|
—
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|
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|
|
—
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|
Common stock, $.001 par value, 100,000,000 shares authorized,
36,697,366 and 36,412,659 shares issued respectively
|
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|
37
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|
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|
|
36
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|
|
Treasury stock, at cost, 3,011,843 shares
|
|
|
|
(37,535
|
)
|
|
|
|
(37,535
|
)
|
|
Additional paid-in capital
|
|
|
|
493,456
|
|
|
|
|
489,468
|
|
|
Accumulated earnings
|
|
|
|
168,447
|
|
|
|
|
120,449
|
|
|
Accumulated other comprehensive (loss)
|
|
|
|
(8,430
|
)
|
|
|
|
(9,616
|
)
|
|
Total stockholders’ equity
|
|
|
|
615,975
|
|
|
|
|
562,802
|
|
|
Total liabilities and stockholders’ equity
|
|
|
$
|
3,701,194
|
|
|
|
$
|
3,197,303
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TAL INTERNATIONAL GROUP, INC.
Consolidated Statements of Operations
(Dollars and shares in thousands, except per share data)
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|
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Three Months Ended December 31,
|
|
|
Twelve Months Ended December 31,
|
|
|
|
|
2012
|
|
|
|
|
2011
|
|
|
|
|
2012
|
|
|
|
|
2011
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Leasing revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating leases
|
|
|
$
|
135,566
|
|
|
|
$
|
120,200
|
|
|
|
$
|
511,189
|
|
|
|
$
|
434,668
|
|
Finance leases
|
|
|
|
3,192
|
|
|
|
|
3,863
|
|
|
|
|
13,781
|
|
|
|
|
16,394
|
|
Total leasing revenues
|
|
|
|
138,758
|
|
|
|
|
124,063
|
|
|
|
|
524,970
|
|
|
|
|
451,062
|
|
Equipment trading revenues
|
|
|
|
12,225
|
|
|
|
|
9,110
|
|
|
|
|
60,975
|
|
|
|
|
62,324
|
|
Management fee income
|
|
|
|
773
|
|
|
|
|
676
|
|
|
|
|
3,076
|
|
|
|
|
2,798
|
|
Other revenues
|
|
|
|
40
|
|
|
|
|
337
|
|
|
|
|
151
|
|
|
|
|
503
|
|
Total revenues
|
|
|
|
151,796
|
|
|
|
|
134,186
|
|
|
|
|
589,172
|
|
|
|
|
516,687
|
|
Operating expenses (income):
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment trading expenses
|
|
|
|
10,564
|
|
|
|
|
8,047
|
|
|
|
|
53,431
|
|
|
|
|
51,330
|
|
Direct operating expenses
|
|
|
|
7,237
|
|
|
|
|
4,582
|
|
|
|
|
25,039
|
|
|
|
|
18,157
|
|
Administrative expenses
|
|
|
|
11,083
|
|
|
|
|
10,588
|
|
|
|
|
43,991
|
|
|
|
|
42,727
|
|
Depreciation and amortization
|
|
|
|
48,937
|
|
|
|
|
43,290
|
|
|
|
|
193,466
|
|
|
|
|
152,576
|
|
(Reversal) provision for doubtful accounts
|
|
|
|
(31
|
)
|
|
|
|
4
|
|
|
|
|
(208
|
)
|
|
|
|
162
|
|
Net (gain) on sale of leasing equipment
|
|
|
|
(9,280
|
)
|
|
|
|
(12,310
|
)
|
|
|
|
(44,509
|
)
|
|
|
|
(51,969
|
)
|
Total operating expenses
|
|
|
|
68,510
|
|
|
|
|
54,201
|
|
|
|
|
271,210
|
|
|
|
|
212,983
|
|
Operating income
|
|
|
|
83,286
|
|
|
|
|
79,985
|
|
|
|
|
317,962
|
|
|
|
|
303,704
|
|
Other expenses (income):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and debt expense
|
|
|
|
29,541
|
|
|
|
|
27,485
|
|
|
|
|
114,629
|
|
|
|
|
105,470
|
|
Write-off of deferred financing costs
|
|
|
|
—
|
|
|
|
|
100
|
|
|
|
|
—
|
|
|
|
|
1,143
|
|
Net (gain) loss on interest rate swaps
|
|
|
|
(2,573
|
)
|
|
|
|
(3,007
|
)
|
|
|
|
2,469
|
|
|
|
|
27,354
|
|
Total other expenses
|
|
|
|
26,968
|
|
|
|
|
24,578
|
|
|
|
|
117,098
|
|
|
|
|
133,967
|
|
Income before income taxes
|
|
|
|
56,318
|
|
|
|
|
55,407
|
|
|
|
|
200,864
|
|
|
|
|
169,737
|
|
Income tax expense
|
|
|
|
19,563
|
|
|
|
|
19,540
|
|
|
|
|
70,732
|
|
|
|
|
60,013
|
|
Net income
|
|
|
$
|
36,755
|
|
|
|
$
|
35,867
|
|
|
|
$
|
130,132
|
|
|
|
$
|
109,724
|
|
Net income per common share—Basic
|
|
|
$
|
1.11
|
|
|
|
$
|
1.08
|
|
|
|
$
|
3.92
|
|
|
|
$
|
3.39
|
|
Net income per common share—Diluted
|
|
|
$
|
1.09
|
|
|
|
$
|
1.07
|
|
|
|
$
|
3.87
|
|
|
|
$
|
3.34
|
|
Cash dividends paid per common share
|
|
|
$
|
0.62
|
|
|
|
$
|
0.52
|
|
|
|
$
|
2.35
|
|
|
|
$
|
1.99
|
|
Weighted average number of common shares outstanding—Basic
|
|
|
|
33,256
|
|
|
|
|
33,086
|
|
|
|
|
33,224
|
|
|
|
|
32,414
|
|
Dilutive stock options and restricted stock
|
|
|
|
393
|
|
|
|
|
361
|
|
|
|
|
399
|
|
|
|
|
407
|
|
Weighted average number of common shares outstanding—Diluted
|
|
|
|
33,649
|
|
|
|
|
33,447
|
|
|
|
|
33,623
|
|
|
|
|
32,821
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TAL’s current and previous residual value estimates for its major
equipment types are as follows:
|
|
|
|
|
|
|
|
|
|
Useful Lives (Years)
|
|
|
Residual Values ($)
|
|
|
|
|
|
Effective
October 1, 2012
|
|
|
Previous
|
Dry containers
|
|
|
|
|
|
|
|
|
|
20 foot
|
|
|
13
|
|
|
$1,000
|
|
|
$900
|
40 foot
|
|
|
13
|
|
|
$1,200
|
|
|
$1,100
|
40 foot high cube
|
|
|
13
|
|
|
$1,400
|
|
|
$1,200
|
|
|
|
|
|
|
|
|
|
|
Refrigerated containers
|
|
|
|
|
|
|
|
|
|
20 foot
|
|
|
12
|
|
|
$2,500
|
|
|
$2,500
|
40 foot high cube
|
|
|
12
|
|
|
$3,500
|
|
|
$3,400
|
|
|
|
|
|
|
|
|
|
|
Special containers
|
|
|
|
|
|
|
|
|
|
40 foot flat rack
|
|
|
14
|
|
|
$1,500
|
|
|
$1,200
|
40 foot open top
|
|
|
14
|
|
|
$2,300
|
|
|
$2,100
|
|
|
|
|
|
|
|
|
|
|
Tank containers
|
|
|
20
|
|
|
$3,000
|
|
|
$3,000
|
Chassis
|
|
|
20
|
|
|
$1,200
|
|
|
$1,200
|
|
|
|
|
|
|
|
|
|
|
The following table sets forth TAL’s equipment fleet utilization(1) as
of and for the quarter and year ended December 31, 2012:
Average and Ending Utilization for the
Quarter and Year Ended December 31, 2012
|
Average Utilization
|
|
|
Average Utilization
|
|
|
Ending
|
(Quarter)
|
|
|
(Year)
|
|
|
Utilization
|
97.7%
|
|
|
97.9%
|
|
|
97.9%
|
_____________________
|
(1)
|
|
Utilization is computed by dividing TAL’s total units on lease (in
CEUs) by the total units in TAL’s fleet (in CEUs) excluding new
units not yet leased and off-hire units designated for sale.
|
|
|
|
The following table provides the composition of TAL’s equipment fleet as
of December 31, 2012 (in units, TEUs and cost equivalent units, or
“CEUs”):
|
|
|
|
|
|
|
December 31, 2012
|
|
|
|
Equipment Fleet in Units
|
|
|
Equipment Fleet in TEUs
|
|
|
|
Owned
|
|
|
Managed
|
|
|
Total
|
|
|
Owned
|
|
|
Managed
|
|
|
Total
|
Dry
|
|
|
1,000,612
|
|
|
21,030
|
|
|
1,021,642
|
|
|
1,607,232
|
|
|
37,796
|
|
|
1,645,028
|
Refrigerated
|
|
|
57,124
|
|
|
105
|
|
|
57,229
|
|
|
109,316
|
|
|
186
|
|
|
109,502
|
Special
|
|
|
55,485
|
|
|
1,713
|
|
|
57,198
|
|
|
98,888
|
|
|
2,883
|
|
|
101,771
|
Tank
|
|
|
6,608
|
|
|
—
|
|
|
6,608
|
|
|
6,608
|
|
|
—
|
|
|
6,608
|
Chassis
|
|
|
13,146
|
|
|
—
|
|
|
13,146
|
|
|
23,432
|
|
|
—
|
|
|
23,432
|
Equipment leasing fleet
|
|
|
1,132,975
|
|
|
22,848
|
|
|
1,155,823
|
|
|
1,845,476
|
|
|
40,865
|
|
|
1,886,341
|
Equipment trading fleet
|
|
|
45,860
|
|
|
—
|
|
|
45,860
|
|
|
71,435
|
|
|
—
|
|
|
71,435
|
Total
|
|
|
1,178,835
|
|
|
22,848
|
|
|
1,201,683
|
|
|
1,916,911
|
|
|
40,865
|
|
|
1,957,776
|
Percentage
|
|
|
98.1%
|
|
|
1.9%
|
|
|
100.0%
|
|
|
97.9%
|
|
|
2.1%
|
|
|
100.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment Fleet in CEUs
|
|
|
|
|
|
|
|
|
|
|
|
|
Owned
|
|
|
Managed
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,367,636
|
|
|
36,880
|
|
|
2,404,516
|
|
|
|
|
|
|
|
|
|
Percentage
|
|
|
98.5%
|
|
|
1.5%
|
|
|
100.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures
We use the terms "EBITDA", “Adjusted EBITDA”, "Adjusted pre-tax income"
and "Adjusted net income" throughout this press release.
EBITDA is defined as net income before interest and debt expense, the
write-off of deferred financing costs, income tax expense, depreciation
and amortization. Adjusted EBITDA is defined as EBITDA excluding gains
and losses on interest rate swaps, plus principal payments on finance
leases.
Adjusted pre-tax income is defined as income before income taxes as
further adjusted for certain items which are described in more detail
below, which management believes are not representative of our operating
performance. Adjusted pre-tax income excludes gains and losses on
interest rate swaps and the write-off of deferred financing costs.
Adjusted net income is defined as net income further adjusted for the
items discussed above, net of income tax.
EBITDA, Adjusted EBITDA, Adjusted pre-tax income and Adjusted net income
are not presentations made in accordance with U.S. GAAP. EBITDA,
Adjusted EBITDA, Adjusted pre-tax income and Adjusted net income should
not be considered as alternatives to, or more meaningful than, amounts
determined in accordance with U.S. GAAP, including net income, or net
cash from operating activities.
We believe that EBITDA, Adjusted EBITDA, Adjusted pre-tax income and
Adjusted net income are useful to an investor in evaluating our
operating performance because:
-- these measures are widely used by securities analysts and investors
to measure a company's operating performance without regard to items
such as interest and debt expense, income tax expense, depreciation and
amortization, and gains and losses on interest rate swaps, which can
vary substantially from company to company depending upon accounting
methods and the book value of assets, capital structure and the method
by which assets were acquired;
-- these measures help investors to more meaningfully evaluate and
compare the results of our operations from period to period by removing
the impact of our capital structure, our asset base and certain
non-routine events which we do not expect to occur in the future; and
-- these measures are used by our management for various purposes,
including as measures of operating performance to assist in comparing
performance from period to period on a consistent basis, in
presentations to our board of directors concerning our financial
performance and as a basis for strategic planning and forecasting.
We have provided reconciliations of net income, the most directly
comparable U.S. GAAP measure, to EBITDA and Adjusted EBITDA in the
tables below for the three and twelve months ended December 31, 2012 and
2011.
We have also provided reconciliations of income before income taxes and
net income, the most directly comparable U.S. GAAP measures, to Adjusted
pre-tax income and Adjusted net income in the tables below for the three
and twelve months ended December 31, 2012 and 2011.
|
|
|
|
|
|
|
TAL INTERNATIONAL GROUP, INC.
Non-GAAP Reconciliations of EBITDA and Adjusted EBITDA
(Dollars in Thousands)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
|
Twelve Months Ended December 31,
|
|
|
|
|
2012
|
|
|
|
|
2011
|
|
|
|
2012
|
|
|
2011
|
Net income
|
|
|
$
|
36,755
|
|
|
|
$
|
35,867
|
|
|
|
$
|
130,132
|
|
|
$
|
109,724
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
48,937
|
|
|
|
|
43,290
|
|
|
|
|
193,466
|
|
|
|
152,576
|
Interest and debt expense
|
|
|
|
29,541
|
|
|
|
|
27,485
|
|
|
|
|
114,629
|
|
|
|
105,470
|
Write-off of deferred financing costs
|
|
|
|
—
|
|
|
|
|
100
|
|
|
|
|
—
|
|
|
|
1,143
|
Income tax expense
|
|
|
|
19,563
|
|
|
|
|
19,540
|
|
|
|
|
70,732
|
|
|
|
60,013
|
EBITDA
|
|
|
|
134,796
|
|
|
|
|
126,282
|
|
|
|
|
508,959
|
|
|
|
428,926
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (gain) loss on interest rate swaps
|
|
|
|
(2,573
|
)
|
|
|
|
(3,007
|
)
|
|
|
|
2,469
|
|
|
|
27,354
|
Principal payments on finance lease
|
|
|
|
9,480
|
|
|
|
|
8,936
|
|
|
|
|
35,326
|
|
|
|
35,940
|
Adjusted EBITDA
|
|
|
$
|
141,703
|
|
|
|
$
|
132,211
|
|
|
|
$
|
546,754
|
|
|
$
|
492,220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Reconciliations of Adjusted Pre-tax Income and
Adjusted Net Income
(Dollars and Shares in Thousands, Except Per Share Data)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
|
Twelve Months Ended December 31,
|
|
|
|
|
2012
|
|
|
|
|
2011
|
|
|
|
2012
|
|
|
2011
|
Income before income taxes
|
|
|
|
56,318
|
|
|
|
$
|
55,407
|
|
|
|
$
|
200,864
|
|
|
$
|
169,737
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
Write-off of deferred financing costs
|
|
|
|
—
|
|
|
|
|
100
|
|
|
|
|
—
|
|
|
|
1,143
|
Net (gain) loss on interest rate swaps
|
|
|
|
(2,573
|
)
|
|
|
|
(3,007
|
)
|
|
|
|
2,469
|
|
|
|
27,354
|
Adjusted pre-tax income
|
|
|
$
|
53,745
|
|
|
|
$
|
52,500
|
|
|
|
$
|
203,333
|
|
|
$
|
198,234
|
Adjusted pre-tax income per fully diluted common share
|
|
|
$
|
1.60
|
|
|
|
$
|
1.57
|
|
|
|
$
|
6.05
|
|
|
$
|
6.04
|
Weighted average number of common shares outstanding—Diluted
|
|
|
|
33,649
|
|
|
|
|
33,447
|
|
|
|
|
33,623
|
|
|
|
32,821
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
|
Twelve Months Ended December 31,
|
|
|
|
|
2012
|
|
|
|
|
2011
|
|
|
|
|
2012
|
|
|
|
2011
|
Net income
|
|
|
$
|
36,755
|
|
|
|
$
|
35,867
|
|
|
|
$
|
130,132
|
|
|
$
|
109,724
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
Write-off of deferred financing costs, net of tax
|
|
|
|
—
|
|
|
|
|
65
|
|
|
|
|
—
|
|
|
|
739
|
Net (gain) loss on interest rate swaps, net of tax
|
|
|
|
(1,648
|
)
|
|
|
|
(1,936
|
)
|
|
|
|
1,610
|
|
|
|
17,675
|
Adjusted net income
|
|
|
$
|
35,107
|
|
|
|
$
|
33,996
|
|
|
|
$
|
131,742
|
|
|
$
|
128,138
|
Adjusted net income per fully diluted common share
|
|
|
$
|
1.04
|
|
|
|
$
|
1.02
|
|
|
|
$
|
3.92
|
|
|
$
|
3.90
|
Weighted average number of common shares outstanding—Diluted
|
|
|
|
33,649
|
|
|
|
|
33,447
|
|
|
|
|
33,623
|
|
|
|
32,821
|

Source: TAL International Group, Inc.
TAL International Group, Inc. Jeffrey Casucci, 914-697-2900 Vice
President Treasury and Investor Relations
|