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TAL International Group, Inc. Reports Third Quarter 2012 Results And Declares $0.62 Quarterly Dividend

“While our performance remains strong, our adjusted pretax income decreased 5% this quarter from the third quarter of 2011 despite the 12% increase in our leasing revenue. Utilization and used container sale prices remain high relative to long-term average levels, but they have both decreased from the exceptional levels reached last year. Average utilization dropped by about 1% from the third quarter of last year and used container sales prices are down roughly 20% from the record level reached in the summer of 2011. This decrease in our utilization and disposal gains reduced our adjusted pretax income by about $5 million from the third quarter of 2011. Changing fleet demographics also negatively impacted our income this quarter. Our depreciation expense has been increasing as a portion of our leasing revenue since 2010 as the portion of fully depreciated units in our fleet has dropped from over 20% of our containers at the beginning of 2010 to 6.5% of our container fleet today. Mainly because of this, our depreciation expense in the third quarter of 2012 increased by $5 million more than it would have if the ratio of our depreciation expense to leasing revenue remained constant at the level experienced in the third quarter of 2011. It is important to note, however, that this increase in depreciation expense does not impact our operating cash flow.”

“Our adjusted pretax income also decreased 4.4% from the second quarter of 2012. Our results in the second quarter included over $3 million of one-time fees associated with a negotiated early lease termination. We had anticipated that container pick-ups and higher used container disposal volumes during the third quarter would more than off-set the impact of the absence of these fees. But while we had a strong third quarter for pick-ups and disposals, they were both slightly below our expectations and we were unable to fully make up for the absence of the fee income this quarter. Still, TAL generated $1.48 per share of adjusted pretax income in the third quarter of 2012, we continued to earn attractive returns on our assets and equity, and our market environment remains favorable.”

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