TAL INTERNATIONAL GROUP, INC. REPORTS SECOND QUARTER 2014 RESULTS
Purchase, New York, July 23, 2014 – TAL International Group, Inc. (NYSE: TAL), one of the world’s largest lessors of intermodal freight containers and chassis, today reported results for the second quarter ended June 30, 2014.
Highlights:
| |
| • | TAL reported Adjusted pre-tax income of $1.45 per fully diluted common share for the second quarter of 2014, a decrease of 12.7% from the second quarter of 2013. |
| |
| • | TAL reported leasing revenues of $144.7 million for the second quarter of 2014, an increase of 3.2% from the second quarter of 2013. |
| |
| • | TAL continues to achieve strong operational performance. Utilization increased 0.8% during the quarter and averaged 97.3% for the second quarter of 2014. |
| |
| • | TAL announced a quarterly dividend of $0.72 per share payable on September 24, 2014 to shareholders of record as of September 3, 2014. |
Financial Results
The following table depicts TAL’s selected key financial information for the three and six months ended June 30, 2014 and 2013 (dollars in millions, except per share data):
|
| | | | | | | | | | | | | | |
| | Three Months Ended
June 30, | Six Months Ended
June 30, |
| | 2014 | 2013 | % Change | 2014 | 2013 | % Change |
| Adjusted pre-tax income(1) |
| $48.9 |
|
| $55.9 |
| (12.5%) |
| $96.4 |
|
| $110.7 |
| (12.9%) |
| Adjusted pre-tax income(1) per share |
| $1.45 |
|
| $1.66 |
| (12.7%) |
| $2.85 |
|
| $3.29 |
| (13.4%) |
| Leasing revenues |
| $144.7 |
|
| $140.2 |
| 3.2% |
| $289.5 |
|
| $278.0 |
| 4.1% |
| Adjusted EBITDA(1) |
| $142.1 |
|
| $144.6 |
| (1.7%) |
| $283.1 |
|
| $286.5 |
| (1.2%) |
| Adjusted net income(1) |
| $32.2 |
|
| $36.1 |
| (10.8%) |
| $63.2 |
|
| $71.6 |
| (11.7%) |
| Adjusted net income(1) per share |
| $0.95 |
|
| $1.07 |
| (11.2%) |
| $1.87 |
|
| $2.13 |
| (12.2%) |
| Net income |
| $29.4 |
|
| $37.9 |
| (22.4%) |
| $59.4 |
|
| $75.4 |
| (21.2%) |
| Net income per share |
| $0.87 |
|
| $1.12 |
| (22.3%) |
| $1.76 |
|
| $2.24 |
| (21.4%) |
| Note: All per share data is per fully diluted common share. |
The Company focuses on adjusted pre-tax results since it considers gains and losses on interest rate swaps and the write-off of deferred financing costs 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.
Operating Performance
“TAL achieved solid operational and financial results in the second quarter of 2014,” commented Brian M. Sondey, President and CEO of TAL International. “We generated Adjusted pre-tax income of $1.45 per share, an increase of 2.8% from the first quarter of 2014. We also continued to generate a high level of returns, and we achieved an Adjusted pre-tax return on tangible equity(1) of 19.9% in the second quarter of 2014.”
“While our Adjusted pre-tax income increased sequentially from the first to the second quarter of 2014, it was down 12.7% from the second quarter of last year, mainly due to a large decrease in our disposal gains. Our average used container selling prices were down nearly 20% compared to the second quarter of last year, reflecting the ongoing moderation of used container sale prices from the extreme peak levels reached in 2011. Our disposal gains also continue to be constrained by the low number of original TAL containers reaching sale age due to our low level of procurement in the late 1990’s and early 2000’s.”
“Demand for leased containers was quite strong in the second quarter. Trade volumes this year have so far outperformed our customers’ expectations, and the market share shift from owned to leased containers continues. Net container pick-up activity in the second quarter for TAL was the highest it has been since the second quarter of 2010. Our utilization increased 0.8% during the quarter to reach 97.7% as of June 30, 2014, and our utilization also currently stands at 97.7%.”
“While demand and pick-up volumes for leased containers have been stronger than expected, lease rates remain weak. New container prices and long-term interest rates remain at low levels, and low-cost financing for leasing companies remains widely available and continues to fuel aggressive competition for every deal. We have passed on an unusually large number of lease opportunities this year due to pricing and lease structuring concerns, but we also continue to actively invest in our fleet to ensure we remain our core customers’ supplier of choice. Year to date, we have purchased $460 million of containers for delivery in 2014. We expect our returns on this investment to be lower than normal due to the aggressive price competition in our market, but we believe our lease structuring discipline together with our market-leading sales and operational capabilities will allow us to generate solid profitability and continue to deliver investment returns that are at the upper end of our industry.”
Outlook
Mr. Sondey concluded, “We currently expect leasing demand and our pick-up activity to remain strong through the third quarter. We will also benefit from a full quarter of leasing revenue from the large number of containers picked-up during the second quarter of this year. However, we expect some further reduction in our disposal gains, and we expect our trading margin to decrease in the third quarter from the second quarter level due to a lower volume of trading activity. Overall, we expect our Adjusted pre-tax income to increase slightly from the second to the third quarter.”
Dividend
TAL’s Board of Directors has approved and declared a $0.72 per share quarterly cash dividend on its issued and outstanding common stock, payable on September 24, 2014 to shareholders of record at the close of business on September 3, 2014. 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 adviser to determine the proper tax treatment of this distribution.
Investors’ Webcast
TAL will hold a Webcast at 9 a.m. (New York time) on Thursday, July 24, 2014 to discuss its second quarter results. An archive of the Webcast will be available one hour after the live call through Friday, September 5, 2014. 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 1,298,000 containers and related equipment representing approximately 2,131,000 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.
Contact
John Burns
Senior Vice President and Chief Financial Officer
Investor Relations
(914) 697-2900
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 20, 2014.
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, Adjusted net income, and Adjusted pre-tax return on tangible equity 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, Adjusted net income, and Adjusted pre-tax return on tangible equity are outlined in the attached schedules.
Please see below for a detailed reconciliation of these financial measurements.
-Financial Tables Follow-
TAL INTERNATIONAL GROUP, INC.
Consolidated Balance Sheets
(Dollars in thousands, except share data)
(Unaudited)
|
| | | | | | |
| | June 30,
2014 | December 31,
2013 |
| ASSETS: | | |
| Leasing equipment, net of accumulated depreciation and allowances of $977,884 and $910,713 | $ | 3,474,259 |
| $ | 3,414,904 |
|
| Net investment in finance leases, net of allowances of $1,057 and $1,057 | 239,915 |
| 257,176 |
|
| Equipment held for sale | 50,314 |
| 58,042 |
|
| Revenue earning assets | 3,764,488 |
| 3,730,122 |
|
| Unrestricted cash and cash equivalents | 57,802 |
| 68,875 |
|
| Restricted cash | 29,516 |
| 29,126 |
|
| Accounts receivable, net of allowances of $863 and $948 | 83,838 |
| 74,174 |
|
| Goodwill | 74,523 |
| 74,523 |
|
| Deferred financing costs | 28,642 |
| 29,087 |
|
| Other assets | 11,567 |
| 11,898 |
|
| Fair value of derivative instruments | 12,189 |
| 27,491 |
|
| Total assets | $ | 4,062,565 |
| $ | 4,045,296 |
|
| LIABILITIES AND STOCKHOLDERS' EQUITY: | | |
| Equipment purchases payable | $ | 61,579 |
| $ | 112,268 |
|
| Fair value of derivative instruments | 3,616 |
| 1,900 |
|
| Accounts payable and other accrued expenses | 50,331 |
| 63,022 |
|
| Net deferred income tax liability | 383,727 |
| 358,255 |
|
| Debt | 2,868,075 |
| 2,817,933 |
|
| Total liabilities | 3,367,328 |
| 3,353,378 |
|
| Stockholders' equity: | | |
| Preferred stock, $0.001 par value, 500,000 shares authorized, none issued | — |
| — |
|
| Common stock, $0.001 par value, 100,000,000 shares authorized, 37,006,283 and 36,858,778 shares issued respectively | 37 |
| 37 |
|
| Treasury stock, at cost, 3,011,843 shares | (37,535 | ) | (37,535 | ) |
| Additional paid-in capital | 502,327 |
| 498,854 |
|
| Accumulated earnings | 230,625 |
| 220,492 |
|
| Accumulated other comprehensive (loss) income | (217 | ) | 10,070 |
|
| Total stockholders' equity | 695,237 |
| 691,918 |
|
| Total liabilities and stockholders' equity | $ | 4,062,565 |
| $ | 4,045,296 |
|
TAL INTERNATIONAL GROUP, INC.
Consolidated Statements of Income
(Dollars and shares in thousands, except earnings per share)
(Unaudited)
|
| | | | | | | | | | | | | | | |
| | Three Months Ended
June 30, | | Six Months Ended
June 30, |
| | 2014 | | 2013 | | 2014 | | 2013 |
| Leasing revenues: | | | | | | | |
| Operating leases | $ | 139,489 |
| | $ | 136,304 |
| | $ | 278,819 |
| | $ | 270,358 |
|
| Finance leases | 4,724 |
| | 3,152 |
| | 9,677 |
| | 6,250 |
|
| Other revenues | 510 |
| | 725 |
| | 994 |
| | 1,362 |
|
| Total leasing revenues | 144,723 |
| | 140,181 |
| | 289,490 |
| | 277,970 |
|
| | | | | | | | |
| Equipment trading revenues | 18,794 |
| | 31,781 |
| | 31,281 |
| | 50,067 |
|
| Equipment trading expenses | 16,579 |
| | 27,494 |
| | 27,418 |
| | 43,105 |
|
| Trading margin | 2,215 |
| | 4,287 |
| | 3,863 |
| | 6,962 |
|
| | | | | | | | |
| Net gain on sale of leasing equipment | 2,461 |
| | 8,026 |
| | 5,557 |
| | 18,287 |
|
| | | | | | | | |
| Operating expenses: | | | | | | | |
| Depreciation and amortization | 54,237 |
| | 49,832 |
| | 108,040 |
| | 99,149 |
|
| Direct operating expenses | 8,267 |
| | 6,218 |
| | 16,949 |
| | 12,180 |
|
| Administrative expenses | 11,128 |
| | 10,614 |
| | 22,960 |
| | 22,518 |
|
| Provision for doubtful accounts | 5 |
| | 1,585 |
| | 36 |
| | 1,503 |
|
| Total operating expenses | 73,637 |
| | 68,249 |
| | 147,985 |
| | 135,350 |
|
| Operating income | 75,762 |
| | 84,245 |
| | 150,925 |
| | 167,869 |
|
| Other expenses: | | | | | | | |
| Interest and debt expense | 26,888 |
| | 28,303 |
| | 54,507 |
| | 57,186 |
|
| Write-off of deferred financing costs | 3,729 |
| | 2,578 |
| | 4,899 |
| | 2,578 |
|
| Net loss (gain) on interest rate swaps | 582 |
| | (5,268 | ) | | 955 |
| | (8,420 | ) |
| Total other expenses | 31,199 |
| | 25,613 |
| | 60,361 |
| | 51,344 |
|
| Income before income taxes | 44,563 |
| | 58,632 |
| | 90,564 |
| | 116,525 |
|
| Income tax expense | 15,201 |
| | 20,756 |
| | 31,191 |
| | 41,129 |
|
| Net income | $ | 29,362 |
| | $ | 37,876 |
| | $ | 59,373 |
| | $ | 75,396 |
|
| Net income per common share—Basic | $ | 0.87 |
| | $ | 1.13 |
| | $ | 1.77 |
| | $ | 2.25 |
|
| Net income per common share—Diluted | $ | 0.87 |
| | $ | 1.12 |
| | $ | 1.76 |
| | $ | 2.24 |
|
| Cash dividends paid per common share | $ | 0.72 |
| | $ | 0.66 |
| | $ | 1.44 |
| | $ | 1.30 |
|
| Weighted average number of common shares outstanding—Basic | 33,619 |
| | 33,484 |
| | 33,614 |
| | 33,477 |
|
| Dilutive stock options and restricted stock | 178 |
| | 196 |
| | 168 |
| | 181 |
|
| Weighted average number of common shares outstanding—Diluted | 33,797 |
| | 33,680 |
| | 33,782 |
| | 33,658 |
|
TAL INTERNATIONAL GROUP, INC.
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
|
| | | | | | | |
| | Six Months Ended
June 30, |
| | 2014 | | 2013 |
| Cash flows from operating activities: | | | |
| Net income | $ | 59,373 |
| | $ | 75,396 |
|
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation and amortization | 108,040 |
| | 99,149 |
|
| Amortization of deferred financing costs | 3,861 |
| | 3,563 |
|
| Amortization of net loss on terminated derivative instruments designated as cash flow hedges | 1,463 |
| | 1,548 |
|
| Net (gain) on sale of leasing equipment | (5,557 | ) | | (18,287 | ) |
| Net loss (gain) on interest rate swaps | 955 |
| | (8,420 | ) |
| Write-off of deferred financing costs | 4,899 |
| | 2,578 |
|
| Deferred income taxes | 31,191 |
| | 40,989 |
|
| Stock compensation charge | 3,419 |
| | 2,977 |
|
| Changes in operating assets and liabilities: | | | |
| Net equipment purchased for resale activity | (4,627 | ) | | (6,760 | ) |
| Net realized loss on interest rate swaps terminated prior to their contractual maturities | (1,700 | ) | | (24,235 | ) |
| Other changes in operating assets and liabilities | (23,109 | ) | | (26,274 | ) |
| Net cash provided by operating activities | 178,208 |
| | 142,224 |
|
| Cash flows from investing activities: | | | |
| Purchases of leasing equipment and investments in finance leases | (289,766 | ) | | (372,576 | ) |
| Proceeds from sale of equipment, net of selling costs | 83,503 |
| | 71,983 |
|
| Cash collections on finance lease receivables, net of income earned | 24,100 |
| | 19,446 |
|
| Other | 97 |
| | (268 | ) |
| Net cash (used in) investing activities | (182,066 | ) | | (281,415 | ) |
| Cash flows from financing activities: | | | |
| Stock options exercised and stock related activity | (234 | ) | | (304 | ) |
| Financing fees paid under debt facilities | (8,246 | ) | | (7,871 | ) |
| Borrowings under debt facilities | 912,935 |
| | 868,207 |
|
| Payments under debt facilities and capital lease obligations | (862,871 | ) | | (682,140 | ) |
| (Increase) decrease in restricted cash | (390 | ) | | 7,277 |
|
| Common stock dividends paid | (48,409 | ) | | (43,528 | ) |
| Net cash (used in) provided by financing activities | (7,215 | ) | | 141,641 |
|
| Net (decrease) increase in unrestricted cash and cash equivalents | $ | (11,073 | ) | | $ | 2,450 |
|
| Unrestricted cash and cash equivalents, beginning of period | 68,875 |
| | 65,843 |
|
| Unrestricted cash and cash equivalents, end of period | $ | 57,802 |
| | $ | 68,293 |
|
| Supplemental non-cash investing activities: | | | |
| Equipment purchases payable | $ | 61,579 |
| | $ | 39,193 |
|
The following table sets forth TAL’s equipment fleet utilization(2) as of and for the quarter ended June 30, 2014:
|
| | | | |
| Average and Ending Utilization for the Quarter Ended June 30, 2014 |
| Average Utilization | | Ending Utilization |
| 97.3 | % | | 97.7 | % |
(2) Utilization is computed by dividing TAL’s total units on lease (in cost equivalent units, or "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 June 30, 2014 (in units, TEUs and CEUs):
|
| | | | | | | | | | | | |
| | June 30, 2014 |
| | Equipment Fleet in Units | Equipment Fleet in TEUs |
| | Owned | Managed | Total | Owned | Managed | Total |
Dry | 1,104,005 |
| 16,818 |
| 1,120,823 |
| 1,785,811 |
| 29,629 |
| 1,815,440 |
|
Refrigerated | 66,293 |
| 51 |
| 66,344 |
| 126,725 |
| 89 |
| 126,814 |
|
Special | 54,396 |
| 1,264 |
| 55,660 |
| 98,440 |
| 2,153 |
| 100,593 |
|
Tank | 8,940 |
| — |
| 8,940 |
| 8,940 |
| — |
| 8,940 |
|
Chassis | 13,495 |
| — |
| 13,495 |
| 24,056 |
| — |
| 24,056 |
|
Equipment leasing fleet | 1,247,129 |
| 18,133 |
| 1,265,262 |
| 2,043,972 |
| 31,871 |
| 2,075,843 |
|
| Equipment trading fleet | 32,939 |
| — |
| 32,939 |
| 54,807 |
| — |
| 54,807 |
|
Total | 1,280,068 |
| 18,133 |
| 1,298,201 |
| 2,098,779 |
| 31,871 |
| 2,130,650 |
|
Percentage | 98.6 | % | 1.4 | % | 100.0 | % | 98.5 | % | 1.5 | % | 100.0 | % |
| |
|
| | | | | |
| | June 30, 2014 | | | |
| | Equipment Fleet in CEUs | | | |
| | Owned | Managed | Total | | | |
| Operating Leases | 2,318,769 |
| 27,808 |
| 2,346,577 |
| | | |
| Finance Leases | 210,017 |
| 831 |
| 210,848 |
| | | |
| Equipment trading fleet | 121,308 |
| — |
| 121,308 |
| | | |
Total | 2,650,094 |
| 28,639 |
| 2,678,733 |
| | | |
Percentage | 98.9 | % | 1.1 | % | 100.0 | % | | | |
| | | | | | | |
Non-GAAP Financial Measures
We use the terms "EBITDA", “Adjusted EBITDA”, "Adjusted pre-tax income", "Adjusted net income", and "Adjusted pre-tax return on tangible equity" throughout this press release.
EBITDA is defined as net income before interest and debt expense, 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.
Adjusted pre-tax return on tangible equity is defined as the current quarter's Annualized adjusted pre-tax income divided by an average adjusted tangible equity. Adjusted tangible equity is defined as total stockholders' equity plus net deferred income tax liability and the net fair value of derivative instruments less goodwill.
EBITDA, Adjusted EBITDA, Adjusted pre-tax income, Adjusted net income, and Adjusted pre-tax return on tangible equity are not presentations made in accordance with U.S. GAAP. EBITDA, Adjusted EBITDA, Adjusted pre-tax income, Adjusted net income, and Adjusted pre-tax return on tangible equity 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, Adjusted net income, and Adjusted pre-tax return on tangible equity 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 six months ended June 30, 2014 and 2013. We have 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 six months ended June 30, 2014 and 2013.
We have also provided a reconciliation of Adjusted pre-tax return on tangible equity in the tables below for the current quarter.
|
| | | | | | | | | | | | |
TAL INTERNATIONAL GROUP, INC. Non-GAAP Reconciliations of EBITDA and Adjusted EBITDA
(Dollars in Thousands) |
| | Three Months Ended
June 30, | Six Months Ended
June 30, |
| | 2014 | 2013 | 2014 | 2013 |
| Net income | $ | 29,362 |
| $ | 37,876 |
| $ | 59,373 |
| $ | 75,396 |
|
| Add: | | | | |
| Depreciation and amortization | 54,237 |
| 49,832 |
| 108,040 |
| 99,149 |
|
| Interest and debt expense | 26,888 |
| 28,303 |
| 54,507 |
| 57,186 |
|
| Write-off of deferred financing costs | 3,729 |
| 2,578 |
| 4,899 |
| 2,578 |
|
| Income tax expense | 15,201 |
| 20,756 |
| 31,191 |
| 41,129 |
|
| EBITDA | 129,417 |
| 139,345 |
| 258,010 |
| 275,438 |
|
| Add: | | | | |
| Net loss (gain) on interest rate swaps | 582 |
| (5,268 | ) | 955 |
| (8,420 | ) |
| Principal payments on finance lease | 12,096 |
| 10,495 |
| 24,100 |
| 19,446 |
|
| Adjusted EBITDA | $ | 142,095 |
| $ | 144,572 |
| $ | 283,065 |
| $ | 286,464 |
|
| | | | | |
TAL INTERNATIONAL GROUP, INC. Non-GAAP Reconciliations of Adjusted Pre-tax Income and Adjusted Net Income
(Dollars and Shares in Thousands, Except Per Share Data) |
| | Three Months Ended
June 30, | Six Months Ended
June 30, |
| | 2014 | 2013 | 2014 | 2013 |
| Income before income taxes | $ | 44,563 |
| $ | 58,632 |
| $ | 90,564 |
| $ | 116,525 |
|
| Add: | | | | |
| Write-off of deferred financing costs | 3,729 |
| 2,578 |
| 4,899 |
| 2,578 |
|
| Net loss (gain) on interest rate swaps | 582 |
| (5,268 | ) | 955 |
| (8,420 | ) |
| Adjusted pre-tax income | $ | 48,874 |
| $ | 55,942 |
| $ | 96,418 |
| $ | 110,683 |
|
| Adjusted pre-tax income per fully diluted common share |
| $1.45 |
|
| $1.66 |
|
| $2.85 |
|
| $3.29 |
|
| Weighted average number of common shares outstanding—Diluted | 33,797 |
| 33,680 |
| 33,782 |
| 33,658 |
|
| | | | | |
| | Three Months Ended
June 30, | Six Months Ended
June 30, |
| | 2014 | 2013 | 2014 | 2013 |
| Net income | $ | 29,362 |
| $ | 37,876 |
| $ | 59,373 |
| $ | 75,396 |
|
| Add: | | | | |
| Write-off of deferred financing costs, net of tax(a) | 2,450 |
| 1,668 |
| 3,212 |
| 1,668 |
|
| Net loss (gain) on interest rate swaps, net of tax(a) | 382 |
| (3,405 | ) | 626 |
| (5,448 | ) |
| Adjusted net income(a) | $ | 32,194 |
| $ | 36,139 |
| $ | 63,211 |
| $ | 71,616 |
|
| Adjusted net income per fully diluted common share |
| $0.95 |
|
| $1.07 |
|
| $1.87 |
|
| $2.13 |
|
| Weighted average number of common shares outstanding—Diluted | 33,797 |
| 33,680 |
| 33,782 |
| 33,658 |
|
| | | | | |
| (a) The differences between Adjusted net income and reported net income in the three and six months ended June 30, 2014 and 2013 were due to net losses and gains on interest rate swaps and the write-off of deferred financing costs. 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 more closely matches the expected duration of TAL’s lease portfolio. |
|
| | | | | | |
TAL INTERNATIONAL GROUP, INC.
Non-GAAP Reconciliations of Adjusted Pre-tax Return on Tangible Equity
(Dollars and Shares in Thousands, Except Per Share Data)
|
| | Three Months Ended
June 30, 2014 | Three Months Ended
March 31, 2014 |
| Total stockholders' equity | $ | 695,237 |
| $ | 694,510 |
|
| Net deferred income tax liability | 383,727 |
| 371,644 |
|
| Net fair value of derivative instruments (asset) | (8,573 | ) | (18,725 | ) |
| Goodwill | (74,523 | ) | (74,523 | ) |
| Total adjusted tangible equity | $ | 995,868 |
| $ | 972,906 |
|
| Average adjusted tangible equity(a) | $ | 984,387 |
| |
| Adjusted pre-tax income | 48,874 |
| |
| Annualized adjusted pre-tax income (Adjusted pre-tax income * 4) | $ | 195,496 |
| |
| Adjusted pre-tax return on tangible equity | 19.9 | % | |
| | | |
| (a) Calculated by taking the average of the current quarter's and the prior quarter's ending total adjusted tangible equity. |
