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Sunday, July 10, 2011

SeaCube Container Leasing (BOX)

Continuing again with container leasing companies, SeaCube Container Leasing (sec)

Quarter Ending March 31, 2011

BOX 10-Q

Bermuda corporation.

$500 million (net) leasing equipment, a 47% increase from last year.  All the leasing companies have grown.  A lot.  This is ominous, although it may be OK after the downturn, making up for lost time.  I worry that margins could drop if this turns into a slugfest.  However, given where margins have been historically, the industry seems far from airlines-level of competitiveness.

Looking at net margins over the years,
TAL's has been 14%, 11%, 8%, 20%, 16%, med loss, small loss, 6%, and earlier lackluster results.
CAI's net margins: 36%, 21%, negative 32% (big loss), 29%, 26%
TGH net margins: 44%, 46%, 33%, 34%, 35%
SeaCube's net margins: 22%, negative 11% (big loss due to derivatives), 12%, 15%, 3%

Here's a question: Does it make sense to value the top two container companies at roughly 4x projected revenues?

So in addition to the leasing equipment, they also have another half billion dollars in "Net investment in direct finance leases", which actually shrank a bit.  So the growth rate isn't as high as it looked.

Leasing equipment was nearly 30% depreciated last year.

Very highly leveraged. Debt-to-equity ratio of around 4.6.

Interest expense is approaching 1/3 of revenues.

25% net margin this quarter.  Earned 45 cents per diluted share.  Shares are selling for $16.65.  (37x this quarter's earnings vs TAL=34, CAI=32, TGH=40).

BOX does both leasing and financing of presumably containers, plus some small misc income.

Cash Flow:
Same hefty depreciation level, purchasing of leasing equipment, and finance churn.

Company went IPO in Oct 2010.

Value-wise, they have more reefer equipment than dry containers.

553K containers.  871K TEUs including generators for reefers.

98.5% utilization.

As of April 2011, they've ordered $316 million in new equipment for delivery through June.  85% is already committed to long-term leases.

(Need to continue with 10-K)

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Container Leasing
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