CAI - Earnings call transcript Q3 2017 | CAI International, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Q3 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to introduce your host for today’s conference Timothy Page, CFO. begin. may you Sir,

Timothy Page

and Act XXE from thank uncertainties this joining and materially conference that the of risks pursuant and statements Exchange are today. conditions, demand, expectations current including, made actual to and increased cause on others. Section provisions X-K. CAI Harbor during its on from additional limited involve its call to expected to, customer its and Exchange cause the economic results and differ Safe the We you competition XXXX of XX-K, afternoon differ documents our the refer Securities forward-looking us filed and for Certain including documents current would expectations International made reports of XX-Q but Good Securities not maybe and you results, that Form contained call. Form Annual Commission, results with conference actual in from Form this Reports to Report to on has that These filed could statements contain Quarterly important factors and forward-looking

plans, remind results, company’s this subsequent this the to obligation If you the Officer, under strategies modify the this the is and might no views, over regarding made outlook, company turn that and discussion future. to to discussion. detailed update expected or change plans, happens, any we of call our the statements Garcia. views, as call Executive Finally, its the Chief in now company Victor I’ll estimates, during outlook this or for President strategies

Victor Garcia

our our of of our have results with to presentation Tim. investor quarter Good call. third and also website earnings our view Along and section the today, you industry. our and a release state welcome we on under the company CAI’s Thank afternoon posted on conference

specific the the through call. address questions can any on in remarks, will presentation related slides going to prepared but be this not We

increased quarter increase lease-related of own For and XX% result of investments third in the our revenue from revenue XXXX. XX% the quarter, as we Container fleet of utilization. reported a higher a

reported fully income $XX.X we quarter per of the or $X.XX million, share. During net diluted

loan. repair pre-tax partially recorded of costs with an the from and net acquisitions containers, by Euro settlement income quarter is used liability the intercompany insurance periods. higher prior previously in increased the this the million. These and pretax our of $X.X a a were $X.X revenue net foreign Hanjin, of expiring increased income of the in net the due of and has renegotiation Our the rates, for from gain of million $X.X leases benefit in approximately to third recognition by as the million new business benefitted the denominated offset a also compared of total, sale associated earn-out XXXX. Net bankruptcy $X.X was at to $XX.X The from second logistics XXXX on our income related equipment. of of quarter in fleet, utilization income there caused investment reported of of XX%, exchange million improvement loss quarter from completed In of to release items million proceeds of these

year all Our and our cash has focus been on return net flow, equity. improve income to

fully revenue of entry investment through high done into higher attractive fundamentals of remain container this have of a currently fleet business utilization improvement year. The core cost leasing strong to our seen our lease effectively quarter lower each utilized. of in and as XX.X%, combination The leases, which by can combination be rate. utilization We led has is a results this at and renewals new higher

their lessors at for expect there these to months for supply ability is believe new by those in at capital. keep lows remain historic steady to be for utilization will remain expect tight – returned containers demand around and we available deploy as coming areas continued in equipment investment lease limited to which in returned. constrained constraints containerized the high a Most containers it inventory is Our new enable equipment the for China assuming levels redeploy or demand We months demand elevated over the will sale us cargo and coming we have that is our who to globe. leases if demand required of the

average of year-to-date, have eight Of of over million, $XXX are during in the leases investment all For third with was investment $XXX we to this made which container containers years. delivered of quarter. the an the lease long-term subject year, million committed duration

additional delivered fully are $XX long-term fourth quarter, an leases. attractive be all have containers million in booked under which the to of We of

We expect on sale to quarter effect decrease see on of the our Because during some to we our limited for full expect equipment fourth the placed equipment third sale, the available gain benefit from have quarter. the quarter. we quarter coming lease results in

result, rise a However, as expect average secondary the the per supply due the and, to price increase. limited gain unit containers to to of market the we continues in

opportunity Our market shipping will being line expect in into continued about we XXXX of provider existing of and returns containers primary remained per a be consistent companies to and we If investment procurement leasing and expect the needs attractive due continue continue with demand constraints, to the we to XXXX to for disciplined demand container looking equipment. calling fleet. optimistic are utilization at customers that demand, their the lease higher be capital

overall to than priced rates. on work be Our new units market lease continue believe difficult lease are equipment a continues other environment. to through rental having as Leases we lessors prioritizing aggressively rather segment on rail on

we and customers continue of our place try reach delivered to However, to we equipment. market being broad and diversified a have equipment

segment and invest in improves. rail segment to to market capital do the place not equipment where the intend as short-term equipment market delay We leases rail incremental possible to Our much on the focus future. a is deliveries in on better uncommitted, bridge potentially until opportunity to our

demand investment our capital returns currently incremental focused uncommitted, is to be higher stronger. where segment all container expect clearly We on and are

in our due for in leases, quarters momentum with and coming equipment the and revenue great year. growth maintain expect our committed utilization have be results, operating remainder in to to delivered the We of we the on

We to by the to overall increasing capital will returns our greater opportunities now results turn in Tim and over the on for call to look Page, our the utilization increase to our continue I’ll Financial financial the return for quarter detail. equipment. review on Chief Officer,

Timothy Page

for approximately quarter, was $XX.X QX, Net XX%. primarily expect The in $XX.X of factors. million coming Thanks as QX several income an container in remaining significant quarter most of million in to container by net compared Victor. million million, growth in we an the was comments on quarter to in results increase increase annualized to as compared X%. increase Container as to average million, related business. XX% of return an in lease Total the strength the revenue QX, the quarter I’m in the revenue QX. and based Consistent quarters. what XX%. the the $X.XX, this year for was second an quarter run incurred QX, of on to income $X.XX rate container going for increase Net income The in incremental quarter $XX.X per the result compared in QX in the fully driven and in of with diluted in the increase QX was revenue share in equity my the the focus compared XX.X%. of was $XX.X equity the as an of our business was container $XX.X quarter on

in our First, from QX. fleet XX.X% XX.X% increased to of the container average own utilization

utilization average the that at XX.X%. exceed XX.X% in utilization expect We as in the QX QX, today stands will

full a we out revenue new course worth from benefited quarter's approximately XX,XXX the the second of per diem TEU leased from the we Second, factory of of quarter. equipment over

a X, formally one managed third-party containers of portfolio $XX from investors. million August effective used that we acquired of our Third, we

the most Lastly, and leased $XXX value new third approximately we of factory TEU approximately quarter a of XXX,XXX million. out book in with importantly, containers

Looking QX, continued revenue. are to number we in container growth will forward a expect drive of factors there

I mentioned further expect earlier, growth. we First, utilization as

$XXX at to all generating million the revenue we quarter. having that in take we’re the fourth the also for significant in benefit QX, were leases years. we growth get lease new entire of lease revenue out QX, experienced contributors tenor expect of of XX Besides significant other twelve approximately attractive the of line second Second, an at going – in in container committed QX containers factors have several leased which equipment delivery of the average of to million bottom the we Last, the rates to quarter, third results.

currently on in disposition gain given significant QX again utilization QX we of QX used the of the have the of operating limited through so realized remain modest prices realized than strong we We disposition remain equipment Average them see the in QX slightly quarter. sell. million, result containers to of a relatively in are of but less in and gain may the to of X.X at. decrease – we level because a we high expect we available First, used in equipment fourth sale the levels overall

costs cost QX, as improvement million as we utilization, in earlier, over XX% to only I to result in storage compared Second, a container of seen million, mentioned of the are drop as have of storage $X.X a $X.X QX XXXX. decrease

QX utilization. basis, expect the monthly expect decrease because approaching are in will storage rate just container QX, modestly to costs of decrease full but than We a less we on – related be we

been majority generated is the decreased our year internationally because tax of was of Third, tax year-to-date has by rate a sourced subject to X.X% QX in X.X% has consolidated container non-US for rate pretax that to book full rate which income QX. as year-to-date low estimated an vast tax rate operations, our from

for QX. in the $X around as increase are as There Overall in related the G&A bad it offset consolidated in $XX.X QX. was of as other Adjusting QX to level. million is in million – G&A debt QX, million We the overall compared G&A incentive expense, related The and $XX.X in QX credit million, million to $XX.X an some will somewhat expense $XX.X year $X.X compared G&A compensation remainder QX. expecting the items. G&A related credit to this expense contingent was decrease in expense considerations increase earnout to was compared incremental an million, to rate quarter-to-quarter this be tax by for

the $XX expect increases quarter from QX, QX on million the level their in the we the container be expense G&A levels debt to total rate coming made this as our during expense million quarters of Interest and which function year. containers of the we for million. in in increase floating our $XX.X a rate new QX. $XX.X in investments in expense new portion impact debt Interest increase of result a a funded as the in the increase of made of the was debt increase the as $XXX we will and million have run year in for range investments pay rate Fed to impact We primarily in

had XX%, of $X.X billion We our that of quarter containers. was XX% us was attractive by at $XXX earning generate to was we QX, a XX which million the very capacity of of container rail an of containers fixed range $XXX we and it backed what to million of XX%. revolving the an had XXX,XXX invested ROEs the end variable the XXX,XXX priced increased container assets rates debt in On third have which our to of credit and undrawn $XXX interest XX% $XXX approximately credit out revolving $XXX XX of has net We and Year-to-date X.X%. was a entities approximately in CEU, rate facility. of the of the available of approximately QX. total own end of railcars. commitments of consisting leased facilities our in $XXX We have July September QX, million approximately QX of own currently with under for container lease X delivery as of QX. in end held million undrawn increased At the increase years. At cash funded or all securitization. the amount have at fleet facility our During fleet cash asset million $X.X from purchases CEU, incremental secured end million million. billion, million the in close at average container compared restricted rate $X.XX of revenue tenure end approximately we XX-year $XXX This quarter billion is of At

to of XX%. our ratio floating debt our As comments. the fixed call XX% was to of QX for end concludes of questions. please open approximately the rate That Operator,

Operator

One Hogan Instructions] And our [Operator question. Blair. comes for line question our moment from first first William of from the Brian

open. now is line You

Brian Hogan

afternoon. Good

Victor Garcia

Brian. Hi

Brian Hogan

I the in describe with to want How change. mean It's guess, expectations generally the I are few from, given off buyers? year. competition. you a seeing elevated with quarter. from is level like just substantial historically. attract of of competition, And mean buyers a understand your I can just the the – What Great more that there, returns presentation is still there’s level versus I you a of returns earlier fast improvement wouldn't I things can start handful

Victor Garcia

there are kept in to be of that think need I couple factors perspective.

from very aggressive companies had First, we additional three There competing competition since that had that time time. for consolidations period been the business. that we have three

organizations that are long-term there now. players are other So And that's big three factor. part a major effectively of

any to of The the a invest other only amongst to new is players of subset with in players, containers. factor there's able be really kind capital

been there of three of because number has are I think was to for low in outside, of out that period make be out market considerable only on of where for prior to an we that kind we the fleet, in the environment in time constrained that I the consistent up you demand would utilization the this as some marketplace And that of elevated of there So expect really say would the the well prior to returns mark players are returns, players fairly as the in at four an years. done that being have industry active. aggressiveness there, if were investment

Brian Hogan

a discipline seeing competitors? of you the fair basically Are statement? Is level improved amongst that

Victor Garcia

them. customers rather And to position that where to many – where with customer players. in other more would with of we're been who a of consolidation have point do the customer we with us customers, do history we're strong ways out they reaching a has support of in because they're occurred, because finding unique because company our And saying are business some our certain these has that overexposed

some So consolidation that’s the of because occurred. of

opportunities demand steady assuming investment. for we have think So would we than more ample

Brian Hogan

to you do I raise leverage you we I obvious reasonably the the went you considering capital just to mean ample levels? I work? you guess Would returns the would through could capital. below attractive to you mean, equity if mean, still the enough? available wanted your opportunities, covenant is grow – raise need if but more I were your But put equity

Victor Garcia

we've year significant need invested We to will, in. digest we've invested was year this some quite of what It a we bit a already for us.

not and or relative makes whether capital us we see at market what raise sense look will for We to the it to opportunities.

it's say wouldn't I that evaluating. of out So it's the realm we're but something possibility, always

Brian Hogan

Alright.

investments, that think, they're are locked is twelve are or I So XX your has think, XX% been nine that the new above what I which currently, these I'm imagine, I ROEs they, guess to in I XX%, leases presentation. years, I comfortably so. get getting is years average, on on Is years would long-term fair?

Victor Garcia

containers on those at terms. the up of returns that are other for that considerations. off for to to because haven't extended And had We leasing life who focus to expect of continue look through hold customers they point customers the We with release to update right And we environment. in And of over we group lease the to containers year. high where initial time lease, utilization looking trade from this believe on tender constrained last cycle a have a the as factory fortunately return. it's part outweigh

Brian Hogan

one that in your turn driven then last back strong and over the from item, items that the is me in efforts month, some mean, onetime I for appreciate for your rate item? I’ll of in by costs, perspective per one focused I the X.X in utilization area guess at line years. And Storage called Great. I Tim, on couple last and queue. commentary, improvement of on quarter line handling moment, appropriate in The that a out? is net that dollar what the you the X.X the run obviously,

Timothy Page

in maintenance really plus there, Well repair, the there's is million. and is there's rail number number the repairs run that X.X also but storage handling charges, and maintenance rate so that costs,

Brian Hogan

forward? more million So like five going

Timothy Page

Yes.

Brian Hogan

thank you. Alright

Operator

And from the our of from line next question SunTrust. Mewhirter Doug comes

now open. is Your line

Doug Mewhirter

been and A is netted good handling sounds I did that, correctly? couple Yes, to questions the clarify of it Could settlement evening. that costs insurance hear actually you hi, like is Tim have storage answered. just against

Timothy Page

category, It's yes. that in

Victor Garcia

Yes.

Doug Mewhirter

guess me And Okay. committed forward, could your your date schedule Thank or amount. this you. rail from you, for remind of I XXXX capital and the

Timothy Page

million in expected of it have vast of $XXX to second over remaining. year year. of We next majority But The course the that's and next half come remainder the year. of the this

Doug Mewhirter

earning which the paying The now aren't results, – for talked actually if credit buying from share Okay. to bit the that’s taking the good they high the they Thanks, one But on me good one I sort to your on them have obviously what the thing of lines gotten better their puzzled some seems market last be risk. back why had is shipping of that's are more boxes that people why haven't lessors question for picture. and profits and little they rates in is helpful. actually very be have bigger actually and than margin? back buying May rather of and releasing more, a

Timothy Page

terminals. capital the can to their leasing many I priority. been utilize the the companies against the kinds And go at through looking of a and be think accessed capital looking appears our have whether at and their be prioritization land providers of you something of of all Containers and be customers viewed were that ask not shipped many they're side other to shipping banking if to to invest community, operations. it's to leasing or

they're for their expensively large for less it containers. needs, percentage although So could a they looking finance of

the on to having the them. of when key a containers have that is aspect aspect value ground And is brings other inventory this is available they industry need The success.

the based ground they a their real needs. sector risk need to that. who on to is that's educated what this of we customers container send they number very for We the customers value who think shipments So to need risks their we And are but the take equipment that when on need, going outgoing we with they players have shipments only balance inventory and limited our to with take – it. need have now

we so real to the marketplace. And provide value

Doug Mewhirter

in of very the question, And wanting Thanks, a lot that's about instincts productivity and this maybe also help talk guess was slower anyway the the by more their industry-related of their I As in And about process? the there's support bugs paint little terms impacted the last the answer. then a owners helpful go online, still in support capacity factories also question water-based ability prices. paint What's and they and willingness year factory been of of of factories a their out my how commercial to ironed to to produce maybe bets come just their again state produce? trying prices? hedging are kind maybe to the the the to they have

Timothy Page

the capacity as much by winter previously. northern paint. manufacturers, Their prices of some And was with there so actually production. because The months the prices. that of there into container you if been been coldness they're to has that some closure is prices ability currently not to far less paint a below prices. look had And it the there as affect general by the And will in not and on current what increase we've factories that their is expecting waterborne at asking when is pressure before. we steel there's desire Overlay is to for also created profitable cost the so a upside regain Well, prices. up of have that they paid produce margin we’re get some container pressure the

a it to but it market say alive. be. help that it's to much than So more more couldn't used keep Not and to it demand constrained expanded, does be supply

Doug Mewhirter

Ok thanks.

my Another that’s all And helpful answer. questions.

Timothy Page

you. Thank

Operator

Becker Cowen. line comes next from Helane from our And question the of

line now is open. Your

Helane Becker

for hi thanks – time. guys, the for Thank Hi.

are that of years So in this divesting with would leasing be and they are they lower cars time there fact given – returns that you respect the consider than would you the than rail selling to or railcar business point were thought actually it couple a at ago.

Victor Garcia

always to capital and we We’re a business. cyclical or we need like back. cyclical capital, capital is looking deploy at get business Rail a where containers is have where

We’re in down a cycle.

we best continuing during opportunity put kind into shareholders that decisions for the we're our is is capital our in overall at shorter these make view and operations. we have on better for those by created it Our way market in weakness purchases, to term some looking a us that of market limiting value downturns. put try in equipment of We've delayed to the leases, to equipment the

ongoing would this of out get of be of thinking state that this our rail the to market. based is business current decision – on Our state is market the

If would you a is ask that other they downturn. say this industry players,

So of in true of the rail – are is market there franchise diversification the because value there true the and community. shipper

So future, better we but be consider in point. opportunities this at that not the think there'll to

Helane Becker

slide that's Page maturity of XXXX, deck, smooth mid-XXs. push $XXX announcing looming big debt million time Okay, or And XXXX, But the should debt out out guys question you this to to the fair. a away. XXXX recently know maturity XX I that’s and think that my that in you. about long Thank it we in there's is other then on

Victor Garcia

of think that is of The corporate inception our we lion the over the credit one support banks up company. facilities rolled from revolving facility, timeframe XXXX, we lines been make I strongest right this that almost that's the XXXX the share timeframe. credit long time. that facility since the have a have a of It who that is is our have with of that

through it. with get out allows same We’ll can to at of bridge effective During to usually term take those term a it It's we out extremely And long-term also banks. five-year of vehicle that be us. the proven finances. securitize warehousing we’ll of a look period and it’s some for we’ll of cycle some us them outstandings market time because

maturity with make it So certainly in extend date before the looms. sure will is we that really where that and coming positioned maturity well we feel well

Helane Becker

leases, with your like on do then the for to your you Okay. who to answer And XX-year leased. thank client respect before long-term

acquisition So mean, the your so say can cost XX when length? you you containers, wrong for funding lease know that years do that your lease? to I in lease? about to your debt that think actually but you That's borrow can I What sending want match the matches what you

Victor Garcia

In some cases yes.

of have maturity of we securitized the vast are makes new has and opportunities. rates have we XX think on a the longer that year to more. Clearly lease the of maturities. more final Some dates portfolio of to sense financing approaching that it years But And majority been we've leases. expire some they the much to as done this business hedge

better we've of match And so funding financing this earlier another to out try maturities, year lot for it's source a we’ll securitized that done pushed us. a that

hedge rate trying to So interest trying And perfect and not we match, rates. fixed form keep of a the try floating just with but do we're it's match, mix maturity both to of a lease policy. to combined average some

Helane Becker

Okay.

so say And this the probably in about pretty is right I would think market you when obviously one I mean, leases mid-XXs. are good the now. long-term lease,

do or for leases the are So term? you they up, but interest leases, these if go fixed reprice rate would entire you, rates

Victor Garcia

over They fixed the a entire term. it’s for The of lease diem fixed the per lease. are the leases life the rate works, the way

are leases the new capitals because that. increases turned were that leases, on mid-life more the than So brand the profitable as of And over just yield lease time.

funding flexibility us gives it on the So side. some

Helane Becker

oaky. Perfect,

all Thank was you. question. my that think I

Victor Garcia

Thank you.

Operator

Sam And our Wells comes next the of question Fargo. Cho [ph] from of line

now Your line open. is

Mike Webber

This guys. Cho are Mike on doing? [ph]. How for Sam actually [Indiscernible] is you Webber

Victor Garcia

Hey Mike, how are you?

Mike Webber

Good.

kind with it about seems One leases. describe we been tenor has impact Does a curious European went you think mid-tier just proportion the about it’s looking are – a up talking when maybe incremental or that new like we are at metrics the top or Are kind actively talk your bump and the Hanjin? for fixed credit Helane of the bigger ones? or your in just my and through of that customers looking answered lifecycle about Can your already large it these you Asian about have through bit questions making five leases of business. lifecycle I'm think certainly leases? of on lines lines what you

Victor Garcia

are top-tier We been who who have the on ones the last years of the best focusing share, can infrastructure, we the determine the the the the as survivors have going the shipping have to be global market The for more several ones lines. business. who ones

we're lease following specifics. had So lease, is we're the schedule. lease schedules. for with up leaders. I lease, tighter we profitably the the But manage to five-year our lease, into eight-year won’t increase an one ten-year a that significantly priorities a go a a of signing or returns, or redelivery whether Because redelivery ability the is

mention, where just repositioning we've about been three gives last us terms our look And if utilization, And now to three effort focus it's the in environment in provide and to continue last able of quarters But can us a say years better Not lot be longstanding us gives success we we a logistics it. been greater that's market leading utilization. market that over In we this those we've much than had being assets they're So had around at more to utilization of expected the to lot is things with ago, that what given for with assets that. something confidence the delivered. we've a worked you faster turn for last in it of the our with where returns confidence like several are. the because years.

Mike Webber

Right.

Victor Garcia

continue of to at the be expect the We end the to top at range.

Mike Webber

across customer the really concentrated wrinkle No under or going after And kind is one the leases, look evenly area on just that’s at the interesting maybe helpful. I’m just give it color. is some base portfolio. us spread an the thinking you of as just of life were to customer more base It's if cycle it specifically? your –

Victor Garcia

mainstay. a seen have But with customers exclusive looking now been But are at life lease customers we lessors. get. that's Some with which returns a years. being are of has units extended customers that some clearly cycle. of seven our the there's can that always some maintain, the five-year That's set because higher we like the that through with full five-year been lines And to we we over life an preference get the better evolution utilization customers, the keeping more can

Mike Webber

shift maybe kind your you concentration? that the and seeing portfolio of same do say you of think at or is we're level industry within it's kind more that concentrated something same wide Would

Victor Garcia

It's been the I can't of a but industry. focus speak for ours, whole

Mike Webber

fair enough. Right, right

share just hundred your now? we chasing look too. gains a reasonable the terms do what for how second and chart you tailwind market like you just of I around in are about continue points? to we first were which – a just kind the a could couple think in deals two new basis think much and reasonable the share question share gain? competitors years, you competitor, market many been it's were people way expectation a look If you curious, I'm terms of right is of things talking a helpful was constrained your at market What's in seems on how Just how of and bit a even then for talked

Victor Garcia

it's ability and market is provide. estimation, the share to our market major us, have but not for how capital our share to to we much my driver In more ability gain gain

all with relationships players. great have We major the of

We have service. of an outstanding reputation

outstanding an have do. We reputation what we doing of

have commit dividends trust what level failed we with not terms customers customers we have any of that that could our And time. telling all in to. We of the them pays

also to is at acceptance. year if just times. many it, this we've customer And much invest, have said capital do you but look many, how this clearly, and – really the it to we have been I've able the we So

to increase market to our given our it easier share. position, because go of starting uniquely X%, point. our And can it's We positioned size for do market us up. are Around we

If cost you're major higher have business, you at that. to the win the difficult times five major say we all components, components, level same look it's you very same the components. would have And that level, cost all or of and I a times cost when at much to do four major have we

we invest, efficiency gain market major X-plus leases of we to equipment. continue have don't kind also TEU, in cycle. the we that we're So when share, think cost have and Those in that manage life as costs that drivers. its so at gain looking we as per over we we particularly slope an upward to and efficiency full of year it's interest terms are of And cost

So on we'll our put able grow to be to and more equipment continue this operating leverage. platform

Mike Webber

Okay that’s turn over. helpful. One more I’ll it

or are on can of XX XX, of make the which level, growth rate a box-to-slot detriment, rate the I'm kind really more fleet curious, of kind their of a complex but among on the could measured just you outpaced lessor actually being perspective, now sense. and if of opportunity point Just we a just set. growth Victor, you your do as at kind healthy about consolidation efficient. the to the minimum, work, high of kind if number a has lower the containers, TEU like just just at it, narrow where think base? basis about been of that fleet complex we but structural at we move at more continues real of ratio see customer of the years number containership as see everyone actually it’s when It's global the think to you container a you look kind your think kind box-to-slot we're it container They're makes

Victor Garcia

viewpoints. different have I customers think different

seen between to – and of time order look we've balance And container market. that I assets. of shipping the these equipment supply there's it some on think the what But to containers are be the put shorter-lived effect on if just amongst takes lines, the and is major it their had that ship of back the consolidation equipment some of the you needs. side difference at going the between we've realignment

So same. we can adjust quickly, to demand the and pretty do the our peers market

and maintain active we we a So market. secondary very have

grow So grow. sale it we've equipment of more. Every for more. a the lot market and to year, more seems Certainly, to continues sold

varying say hard little a bit. the – have itself, demand demand XXXX, a have year a I slumber. We year's some grow impact really continue some a those out had of period. opinions haven't know bounces It's as the ships years as their far a on could to of world good demand year. was one stronger customers As number are to is economies And equipment but while. in that. we the around expecting what But we slots had as that we If this have that demand new strong would an in among on bigger

Mike Webber

boxes. baseline okay. side, That’s where point Alright, gains on what are more to the we I at need out was at what efficiency absolutely they getting the a liner of

over. I’ll helpful. that's turn So Thanks guys. it

Victor Garcia

say thing to one that. just other I’ll related

when has of on left put to has terms to piece days. from time of when Our lease in the a – measured it factory been we equipment

in for where supply strongest to able our difference equipment customers and of your needs as So we've your been the demand versus as it as returns to – level almost sure at a that – of that's equipment the for the made has capital in it as managed needs that days your factory. we the each this customers all also effect has well demand holding weeks of team put lease on And had what being has making assets. but how as on year, equipment most part attributable soon a – they based our available we've have been has are customer is. matter that on it's on And significant the a equipment

Mike Webber

guys. Alright, Great. the for thanks time

Victor Garcia

Sure.

Operator

line Instructions] question a the Brian of follow-up Then Hogan. have [Operator we from

now is line open. Your

Brian Hogan

follow-ups. quick couple a just Yes

for mean, guess outlook of the containers, rate and logistics be rail, going rate? tax I going market similar looking said mix around to – tax out your what's the right level is be that is and the environment I into You X.X. for given the business? that to XXXX XXXX, Is for a the

Timothy Page

be balance it and sheet containers, profitably keep at low-single-digits container towards will how that the given side to expect the tax capital continue quickly and of rate the We're We how more low. put to going to growing. is

Brian Hogan

some just things? a up there? the you there, about player to they integrating staff. Can the maybe of business beefed guess, then logistics a overall talk learned the And have you strategy those? made What changes Obviously, management then providing And Alright. little your logistics your, transportation actually being you bit. benefits global kind I are of from through go

Victor Garcia

that of as by efforts in the tell it's some utilization of been could had, our fleet we’ve of we've as the part, you logistics So made. a result container

So of it our able had the being a in has effect to well positive assets. keep repositioning high cost as utilization as

As the we our one progress We companies, making on we were integrate to disappointed side. bought logistics with brokerage into truck three itself, three independent them to expected with were platform. management we teams

intermodal, we've brokerage. leadership the I'm we leverage so very the to continue that carrier to domestic really focus in and attainment our place, is to that's penetration leadership processes And And in consolidated there. of charge technology, to have existing of there with the confident team truck customers. including all increase now that's leverage of with our

we As services. much to been us. expand want attain And can opportunity higher as new utilizing your into a much it's it's easier already we for margin to a customer other penetrate who's if customers, it areas

Brian Hogan

in of kind year-over-year of gross of mean, on growth I what I you to generate flat of it. logistics I business. profit Sure. it expect a the talk mean, little essentially bit aspects? touched you was just out the do growth you mean, long-term talked the of long-term kind can But about businesses? those you maybe

Victor Garcia

topline from lot in and our business, as double-digit cash that's flow more a our want the utilization business. to assets a of lot asset-light of business growth side time. higher to throws earnings, business be it over We – that business. utilization it's is as a generate flow. cash the that And really It's of much asset expecting excess our the service assets income the off more contributor we a it We’re a an

from those having by contribution actual it's than we time, over but results And flexibility access will from customers get a those it's so not that having to that services. access the overall that That's to logistics. and just that, bigger contributor probably, we to get the would our contribution the come

Brian Hogan

of environment most picture it mind, what What going In business Alright. And you is are bigger very obviously in signs improving the then I mean are watching container reversing. or about? guess, or question, concerned your I like not for one you even sideways attractive maybe the today.

Victor Garcia

equipment I would point, you What that utilization pace than to what is being And be can starting has continued this I at higher concerned about see returned signs would – a expect. be would increase. to we our our would be tell that to

declining. turning demand even utilization we be seeing this would we at are where we this expect continued a during quarter. so point, see point fourth And And don't to our

And Asian see is customers lot of in. us ahead we ahead amount come of a we're the us. that still those the is we have The equipment also And quarter have that nil. is some to of But difficulty so we us. almost around have for available the of starting Asia demand of

we which growth. have to equipment because a only just which utilization. we good supply idle of we're sitting where incremental have with for It's don't really is we're XX.X% need incremental about, around customers, So always But looking investment is those scattered to at factory looking long-term. to many problem be

Brian Hogan

Sure, have a great time.

Victor Garcia

you. Thank

Operator

Mewhirter. the follow-up from line also have question a Doug of We

Your is line open.

Doug Mewhirter

rates follow-up spot on a very Obviously just lease Yes rates. one they're on basis. I have thanks lease profitable

rates year and vintage still diem a this some for leases dollar vintage There’s there XXXX leases coming renewals, and or that basis are per off there? are Or trajectory coming next However, average, XXXX year. up leases? tough basis still the on your Are lease is accretive? for comps. renewal your positive you pretty off And renewing those

Victor Garcia

the remind some is XXXX had to of rates, – kind we've we've and it lower in at had done renew Obviously that people expensive XXXX. more higher – in. the We've were at higher we've leases I that us and rates. sense renewed Okay. we blended some made have leases What that also late would leases for

actually lot as If investment of year, our investment to lot related purchases you had look as at our new big made A from not a leasebacks. back elevated was on That our of investment investment of portfolio a equipment. those sale when in we we that fleet a lot year was well levels. that years

we've think XXXX, been significantly proportionately, headwinds already And significant a So will some have it's leases drawback X-year others. than into have it some I you in to I XXXX. at but what we as expiring be if it had taken compared of us of what those. to We we don't would going care category, look in if do have that less believe

Doug Mewhirter

very much. thanks Okay,

Victor Garcia

Thank you.

Operator

at President Victor no over back closing to will turn the Garcia, C.E.O. I’m showing like for And time this remarks. and questions. further call I to

Victor Garcia

appreciate on call being today. I the everybody

a had have We tremendous year. year strong We continued see momentum. this

quarter our the as fourth XXXX. industry We we look XXXX, we Thank optimistic our future you. forward in of the of to future go and the reporting very part results early about into of are company the and

Operator

Ladies may program. does And thank conference. a have day. This the great disconnect. you for today's all your you Everyone gentlemen, conclude in and participation

CAI International (CAI) 19 Oct 172017 Q3 Earnings call transcript