CAI International Reports In-Line

In line with earnings guidance provided on February 9, CAI International, Inc. (CAP - Snapshot Report) posted 4th quarter diluted EPS of $0.33 before a $50.2 million goodwill impairment charge, down 8% year over year, but above the consensus and our estimate of $0.30, largely reflecting higher-than-expected revenues.

Total operating revenue for 4th quarter 2008 was $22.7 million, up 20% year over year, largely reflecting increased container rental revenues. Container rental revenue rose $3.0 million, or 25%, to $14.8 million due to a gain in the average number of TEUs (20' equivalent units) on lease in the company's owned fleet, partly offset by a decline in average utilization during the 3 months ended December 31, 2008 -- 91.9% from 96.0% a year ago.

We are reducing our 2009 diluted EPS estimates to $0.75 from $1.35, as we now expect a greater impact from the global economic slowdown. Results will reflect weaker container utilization and per diem rates amid the growing recession as roughly one-fourth of the company's equipment base is on short-term hire (a portion of which might not be re-leased) and lower equipment gains due to reduced sales.

On the positive side, CAP should be able to handily meet $12 million in 2009 debt service payments with cash on hand.

We are maintaining our Hold on CAI International. The current Zacks rank for CAP is 2, indicating upward bias on the share price over the near term. In afternoon trading, CAP shares are up over 2% from Friday's closing price of $3.61.