Exhibit 99.1
TAL International Group, Inc. Reports
Fourth Quarter 2006 and Full Year Results
PURCHASE, N.Y.--(BUSINESS WIRE)--March. 6, 2007--TAL International Group,
Inc. (NYSE: TAL), one of the world's largest lessors of intermodal freight
containers and chassis, reported results for the fourth quarter and
twelve months ended December 31, 2006.
Pre-tax income for the fourth quarter of 2006 was $23.1 million
compared to $4.6 million in the prior year quarter. Adjusted pre-tax
income (1) for the quarter, excluding unrealized (gains) losses on
interest rate swaps and other non-operational items, was $22.8 million
compared to $18.5 million in the fourth quarter of 2005. Please see
page 9 for a detailed reconciliation of adjusted pre-tax income. The
company focuses on pre-tax results as it does not expect to pay any
significant income taxes for a number of years due to the availability
of accelerated tax depreciation on the existing container fleet and
planned future equipment purchases.
Total revenues for the fourth quarter of 2006 were $78.1 million
compared to $79.4 million in the fourth quarter of 2005. EBITDA (3)
was $61.5 million for the quarter versus $59.4 million in the prior
year period. Adjusted EBITDA (3) was $61.2 million for the quarter
versus $59.6 million in last year's fourth quarter. Please see page 8
for a detailed reconciliation of EBITDA and adjusted EBITDA.
Net income for the fourth quarter of 2006 was $14.9 million, or
$0.45 per fully diluted common share, versus $1.7 million in the prior
year quarter. Adjusted net income (2) for the quarter, excluding
unrealized (gains) losses on interest rate swaps and other
non-operational items was $14.7 million, or $0.44 per fully diluted
common share, compared to $11.9 million in the fourth quarter of 2005.
Please see page 9 for a detailed reconciliation of adjusted net
income.
"We are very pleased with our fourth quarter operating results"
commented Brian M. Sondey, President and CEO of TAL. "Strong
peak-season demand for refrigerated containers along with resilient
dry container utilization contributed to a 2% increase from the third
quarter in our fleet-wide utilization to 93%, and supported higher
leasing revenue. Additionally, an increase in new container prices
helped facilitate strong selling prices for our used containers, and
we generated solid gains on the sale of our older equipment."
Mr. Sondey continued, "While our results for the fourth quarter
primarily reflect the strong performance of our major business
drivers, our reported results were also positively impacted by certain
items that are part of the normal course of our business but tend not
to occur within a predictable pattern. These items include a gain
related to a finance lease transaction for certain of our older
containers as well as a gain resulting from an unusually large number
of containers reported lost by several customers. We estimate that, in
total, these items had a favorable impact on our fourth quarter
operating results in the range of $0.03 to $0.04 per fully diluted
share."
Pre-tax income for the year ended December 31, 2006 was $65.5
million compared to $17.1 million for the prior year. Adjusted pre-tax
income (1) for the full twelve months of 2006 was $76.2 million
compared to $56.9 million in the comparable period of 2005.
Total revenues for the twelve months ended December 31, 2006 were
$303.4 million as compared to $318.5 million in the 2005 period.
EBITDA (3) for the twelve month period ended December 31, 2006 was
$219.3 million versus $248.1 million for the same period of 2005.
Adjusted EBITDA (3) for the full year of 2006 was $227.6 million
compared to $244.4 million for the same period last year.
Net income for the full year of 2006 was $42.1 million, or $1.26
per fully diluted common share, as compared to net income of $9.7
million for the prior year. Adjusted net income (2) for the twelve
months ended December 31, 2006 was $49.0 million, or $1.47 per fully
diluted common share, compared to $36.8 million in the prior year
period.
Mr. Sondey commented, "We finished 2006 with positive operating
momentum as our quarterly performance improved steadily throughout the
year. The slow leasing market in 2005 for dry and refrigerated
containers carried over into the early parts of 2006, but by the
fourth quarter of 2006 all of our major product lines were performing
well. Our ending fleet utilization increased by 4.3% during 2006 to
finish at 93.5%, and our revenue-earning assets increased by 10.5%
during the year. Our average lease rates decreased throughout 2006 due
to volatile container prices and the completion of several large lease
extension transactions, but we are already seeing the benefits of
these lease extension transactions in the resilience of our
utilization after the summer peak season for dry containers. We
believe that our high current utilization and expanded fleet of
equipment will provide support for continued profitability going
forward."
Outlook
Mr. Sondey added, "We typically experience a decrease in our
performance during the first quarter since it usually represents the
seasonal low-point for dry container demand and used container sales.
However, we expect that our positive operating momentum will mitigate
some of the typical first quarter seasonal weakness this year, and we
expect that we will likely experience less seasonal variance in 2007
than we did last year."
For the full year of 2007, we expect to benefit from the expansion
of our revenue earning assets and improved starting utilization
compared to last year, though our starting average lease rates are
lower. Industry analysts continue to forecast that containerized trade
growth will remain in the 10% range, and we will seek to capitalize on
the strong forecasted growth and our high current utilization to make
significant investments in our fleet during the coming year. New
container prices finished 2006 at relatively high levels, and we hope
that current prices will create a favorable environment for rental
rates and used container selling prices in 2007. Our investment level
and lease rates may face increased pressure from aggressive pricing by
an array of smaller competitors, but we are confident that we have
significant operational, financial and relationship advantages
compared to these smaller companies."
Dividend
On December 19, 2006, TAL issued a press release announcing a
$0.30 per share cash dividend on its issued and outstanding common
stock payable on March 9, 2007 to shareholders of record as of the
close of business on February 23, 2007. As stated in the December 19,
2006 announcement, we believe the dividend will qualify as a return of
capital rather than a taxable dividend for our shareholders based on
current projections. However, investors should consult with a tax
advisor to determine the proper tax treatment of this distribution.
Mr. Sondey commented, "We are pleased that the cash flow
fundamentals of our business continue to provide us with the ability
to return a significant amount of the cash generated by the company to
our shareholders. We will continue to evaluate the size of our
quarterly dividend on an ongoing basis."
Investors' Webcast
TAL will hold a Webcast at 9 a.m. (New York time) on Wednesday,
March 7th to discuss its fiscal fourth quarter and twelve month
results. An archive of the Webcast will be available one hour after
the live call through Friday, March 16, 2007. 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 19 offices in 11 countries and
approximately 180 third party container depot facilities in 37
countries. The Company's global operations include the acquisition,
leasing, re-leasing and subsequent sale of multiple types of
intermodal containers. TAL's fleet consists of approximately 640,000
containers and chassis representing approximately 1,037,000
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 March 20, 2006.
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 is a non-GAAP measurement we believe
is useful in evaluating our operating performance. The Company's
definition and calculation of adjusted pre-tax income is outlined in
the attached schedules.
(2) Adjusted net income is a non-GAAP measurement we believe is
useful in evaluating our operating performance. The Company's
definition and calculation of adjusted net income is outlined in the
attached schedules.
(3) EBITDA and Adjusted EBITDA are non-GAAP measurements we
believe are useful in evaluating our operating and liquidity
performance. The Company's definitions and calculations of EBITDA and
Adjusted EBITDA are outlined in the attached schedules.
TAL INTERNATIONAL GROUP, INC.
Consolidated Balance Sheets
(Dollars in thousands, except share data)
December 31, December 31,
2006 2005
------------ ------------
Assets:
Cash and cash equivalents (including
restricted cash of $14,526 in 2006) $58,167 $27,259
Accounts receivable, net of allowances of
$266 and $820 39,318 36,470
Net investment in finance leases 152,586 73,819
Leasing equipment, net of accumulated
depreciation and allowances of $208,756 and
$124,543 1,080,523 1,036,363
Leasehold improvements and other fixed
assets, net of accumulated depreciation and
amortization of $2,132 and $1,312 2,855 3,771
Equipment held for sale 20,768 24,844
Goodwill 71,898 71,898
Deferred financing costs 6,957 3,540
Other assets (including fair value of
derivative instruments) 22,591 26,304
------------ ------------
Total assets $1,455,663 $1,304,268
============ ============
Liabilities and stockholders' equity:
Accounts payable $13,273 $12,256
Accrued expenses (including fair value of
derivative instruments) 50,453 30,063
Income taxes payable 219 116
Deferred income tax liability 34,651 9,239
Debt 958,317 872,627
------------ ------------
Total liabilities 1,056,913 924,301
Stockholders' equity:
Preferred stock, $.001 par value, 500,000
shares authorized, none issued -- --
Common stock, $.001 par value, 100,000,000
shares authorized, 33,303,031 and 32,882,208
shares issued and outstanding, respectively 33 33
Treasury stock, at cost, 136,250 shares in
2006 (2,862) --
Additional paid-in capital 394,440 394,389
Accumulated earnings (deficit) 3,476 (13,737)
Accumulated other comprehensive income (loss) 3,663 (718)
------------ ------------
Total stockholders' equity 398,750 379,967
------------ ------------
Total liabilities and stockholders' equity $1,455,663 $1,304,268
============ ============
TAL INTERNATIONAL GROUP, INC.
Consolidated Statements of Operations
(Dollars and shares in thousands, except earnings per share)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------ -------------------
2006 2005 2006 2005
--------- -------- --------- ---------
Revenues:
Leasing revenues, including
income recognized on finance
leases of $3,905, $2,031,
$12,422 and $5,387 respectively $69,505 $70,322 $271,028 $285,406
Equipment trading revenue 5,992 7,071 23,665 24,244
Management fee income 1,767 1,504 6,454 6,482
Other revenues 848 474 2,301 2,383
--------- -------- --------- ---------
Total revenues 78,112 79,371 303,448 318,515
--------- -------- --------- ---------
Expenses:
Equipment trading expenses 4,799 5,970 19,344 19,227
Direct operating expenses 5,461 6,479 25,114 26,907
Administrative expenses 10,003 12,309 38,012 40,671
Depreciation and amortization 26,067 27,062 103,849 115,138
Equipment rental expense 68 20 149 299
(Reversal) provision for
doubtful accounts (26) (8) (526) 559
Net (gain) on sale of leasing
equipment (3,383) (1,532) (6,242) (9,665)
Write-off of deferred financing
costs - 19,190 2,367 43,503
Interest and debt expense 12,312 8,530 47,578 72,379
Unrealized (gain) loss on
interest rate swaps (302) (3,524) 8,282 (12,499)
Management fees - 280 - 4,878
--------- -------- --------- ---------
Total expenses 54,999 74,776 237,927 301,397
--------- -------- --------- ---------
Income before income taxes 23,113 4,595 65,521 17,118
Income tax expense 8,255 2,869 23,388 7,446
--------- -------- --------- ---------
Net income 14,858 1,726 42,133 9,672
Preferred stock dividends - (1,141) - (19,868)
--------- -------- --------- ---------
Net income (loss) applicable to
common stockholders $14,858 $585 $42,133 $(10,196)
========= ======== ========= =========
Net income (loss) per common
share -- Basic $0.45 $0.02 $1.28 $(0.68)
========= ======== ========= =========
Net income (loss) per common
share -- Diluted $0.45 $0.02 $1.26 $(0.68)
========= ======== ========= =========
Weighted average number of
common shares outstanding --
Basic 33,167 28,938 32,987 14,913
Weighted average number of
common shares outstanding --
Diluted 33,354 29,427 33,430 14,913
Cash dividends paid per common
share $0.25 - $0.45 -
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 (loss) before interest and debt
expense, write-off of deferred financing costs, income tax expense
(benefit) and depreciation and amortization. Adjusted EBITDA is
defined as EBITDA as further adjusted for certain items which are
described in more detail below, which management believes are not
representative of our operating performance. Adjusted EBITDA excludes
unrealized (gain) loss on interest rate swaps, management fees, and
write-off of unearned compensation.
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 the unrealized
(gain) loss on interest rate swaps, write-off of deferred financing
costs, excess accrued interest prior to maturity, write-off of
unearned compensation, and management fees. Adjusted Net Income is
defined as net income further adjusted for the items discussed above,
net of tax.
EBITDA, Adjusted EBITDA, Adjusted Pre-tax Income, and Adjusted Net
Income are not presentations made in accordance with GAAP, and should
not be considered as alternatives to, or more meaningful than, amounts
determined in accordance with 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 unrealized (gains)
losses on interest rate swaps, which can vary substantially
from company to company depending upon accounting methods and
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 (such as expenses related to
management agreements which terminated upon the closing of our
IPO on October 17, 2005); 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 GAAP measure, to EBITDA and EBITDA to Adjusted EBITDA in
the tables below for the three and twelve months ended December 31,
2006 and 2005.
Additionally, we have provided reconciliations of income before
income taxes and net income, the most directly comparable GAAP
measures to Adjusted Pre-tax Income and Adjusted Net Income in the
tables below for the three and twelve months ended December 31, 2006
and 2005.
TAL INTERNATIONAL GROUP, INC.
Non-GAAP Reconciliations of EBITDA and Adjusted EBITDA
(Dollars in Thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Net income $14,858 $1,726 $42,133 $9,672
Add (subtract):
Depreciation and
amortization 26,067 27,062 103,849 115,138
Write-off of deferred
financing costs - 19,190 2,367 43,503
Interest and debt expense 12,312 8,530 47,578 72,379
Income tax expense 8,255 2,869 23,388 7,446
--------- --------- --------- ---------
EBITDA 61,492 59,377 219,315 248,138
--------- --------- --------- ---------
Add (subtract):
Unrealized (gain) loss on
interest rate swaps(a) (302) (3,524) 8,282 (12,499)
Management fees(b) - 280 - 4,878
Write-off of unearned
compensation(c) - 3,427 - 3,917
---------------------------------------
Adjusted EBITDA $61,190 $59,560 $227,597 $244,434
========= ========= ========= =========
(a) Reflects the reversal of unrealized (gains) losses on interest
rate swap contracts that we entered into on December 14, 2004,
October 28, 2005, July 13, 2006, July 19, 2006 and November 29, 2006.
(b) Reflects the reversal of management fees of $0.3 million and $4.9
million in the three and twelve months ended December 31, 2005
payable to our affiliates pursuant to certain management agreements
which terminated immediately prior to the consummation of our IPO.
(c) Reflects the write-off of unearned compensation related to the
vesting of stock options granted to certain employees in April 2005,
which became fully vested upon completion of the IPO.
TAL INTERNATIONAL GROUP, INC.
Non-GAAP Reconciliation of Adjusted Income Before Income Taxes and
Adjusted Net Income
(Dollars in Thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------ --------------------
2006 2005 2006 2005
--------- -------- --------- ----------
Income before income taxes $23,113 $4,595 $65,521 $17,118
Add (subtract):
Unrealized (gain) loss
on interest rate swaps (302) (3,524) 8,282 (12,499)
Write-off of deferred
financing costs - 19,190 2,367 43,503
Excess accrued interest
expense prior to
maturity - (5,419) - -
Write-off of unearned
compensation - 3,427 - 3,917
Management fees - 280 - 4,878
---------------------------------------
Adjusted income before
income taxes $22,811 $18,549 $76,170 $56,917
=======================================
Net income (a) $14,858 $1,726 $42,133 $9,672
Add (subtract):
Unrealized (gain) loss
on interest rate swaps (194) (2,263) 5,326 (8,073)
Write-off of deferred
financing costs - 12,322 1,522 28,100
Excess accrued interest
expense prior to
maturity - (3,480) - -
Write-off of unearned
compensation(b) - 3,427 - 3,917
Management fees 180 - 3,151
---------------------------------------
Adjusted net income $14,664 $11,912 $48,981 $36,767
=======================================
(a) Net income adjustments are reflected net of income taxes.
(b) Not a tax-deductible item.
CONTACT: TAL International Group, Inc.
Jeffrey Casucci, 914-697-2900
Vice President, Treasury and Investor Relations