Cronos (NASDAQ:CRNS)
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From May 2019 to May 2024
The Cronos Group (Nasdaq:CRNS) ("Cronos" or the
"Company") today reported net income of $3.5 million, or $0.44 per
diluted share, for the quarter ended June 30, 2005, compared to $2.1
million, or $0.27 per diluted share, for the corresponding period in
2004. In addition, the Board of Directors declared a dividend of $0.07
per common share for the third quarter of 2005, payable October 14,
2005 to shareholders of record as of the close of business on
September 23, 2005.
Total revenues for the second quarter of 2005 were $38.2 million,
compared to $34.0 million for the same period in the prior year. This
increase reflects continued strong demand for leased containers as
well as an increase in the size of the Company's container fleet
during the period. Utilization of the Company's combined container
fleet was 93% at June 30, 2005, compared to 92% for the comparable
period in 2004. Net income for the second quarter of 2005 was
strengthened by a $0.5 million gain recorded on the disposition of
fixed assets, compared to $0.1 million for the second quarter of 2004.
Net income for the six months ended June 30, 2005 was $7.1
million, or $0.90 per diluted share, compared to $2.9 million, or
$0.37 per diluted share for the comparable period in the prior year.
The increase in profitability can be attributed to strong demand for
leased containers reflecting the continued high volume of global
container trade; an increase in the Company's fleet size and the
growth and profitability of the Company's Joint Venture Program. Total
revenues for the first six months of 2005 were $74.7 million, compared
to $68.1 million for the corresponding period in 2004. Total expenses
for the six months ended June 30, 2005 were $68.1 million, compared to
$65.8 million for the six months ended June 30, 2004.
Net income for the first six months of 2005 included $2.1 million,
or $0.27 per diluted share, of non-operating items comprising a gain
of $1.3 million that was recorded on the receipt of amounts owed by a
former chairman and CEO of the Company, and $0.8 million that was
recognized on the recovery of an amount payable to a managed container
program.
On August 1, 2005, the Company completed the first phase of a
funding restructuring program. This involved a series of transactions
including the expansion of the maximum debt commitment to the
Company's Joint Venture Program from $150 million to $300 million
(reported by the Company in its 8-K report of June 15, 2005), the sale
of approximately $74 million of Company owned assets to the Joint
Venture Program and the reduction of the maximum debt commitment under
the Company's revolving credit facility from $70 million to $45
million (reported by the Company in its 8-K report of August 1, 2005).
The interest rate for the Company's revolving credit facility was
reduced as a result of the restructuring by 25 basis points. The
ultimate objective of the funding restructuring program is to
securitize the indebtedness of the Joint Venture Program within one
year. This should result in a further reduction in the cost of debt
and allow the Company to be more competitive in bidding for leasing
transactions. The sale of the container assets to the Joint Venture
Program will allow the Program to achieve the minimum level of
indebtedness required for a securitization within the target timeframe
and has generated sufficient cash to allow the Company to fund the
increased equity contributions required from the Company for the
expansion of the Program. Although the Company will earn a fee for
managing the equipment owned by the Joint Venture Program and is
entitled to 50% of the net income generated by the Joint Venture
Program, the sale of container assets to the Program will reduce the
Company's net income in the short-term. It is estimated that the
Company's net income for the third quarter of 2005 will decline by
$0.3 million as a result of the sale. Over the longer-term, the
securitization of the indebtedness of the Joint Venture Program should
result in increased growth and profitability for the Company. While
the Company expects the indebtedness of the Joint Venture Program to
be securitized within one year, there can be no assurance that the
Program's debt can be securitized or that the Program will achieve the
expected interest cost savings.
The Company's third quarter dividend of seven cents a share
represents the Company's 12th consecutive quarterly dividend, and is
one cent greater than the $0.06 dividend declared for the second
quarter of 2005 and two cents greater than the $0.05 dividend declared
for the fourth quarter of 2004 and first quarter of 2005.
Cronos is one of the world's leading lessors of intermodal
containers, owning and managing a fleet of over 443,000 TEU
(twenty-foot equivalent units). The diversified Cronos fleet of dry
cargo, refrigerated and other specialized containers is leased to a
customer base of over 450 ocean carriers and transport operators
around the world. Cronos provides container-leasing services through
an integrated network of offices using state-of-the-art information
technology.
This release discusses certain forward-looking matters that
involve risks and uncertainties that could cause actual results to
vary materially from estimates. Risks and uncertainties include, among
other things, changes in international operations, exchange rate
risks, changes in market conditions for the Company's container lease
operations and the Company's ability to provide innovative and
cost-effective solutions. For further discussion of the risk factors
attendant to an investment in the Company's Common shares, see the
Business section in Part I of the Company's Annual Report on Form 10-K
for the year ended December 31, 2004, which was filed with the SEC on
March 22, 2005.
This press release and other information concerning Cronos can be
viewed on Cronos' website at www.cronos.com
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The Cronos Group
Condensed Unaudited Consolidated Statements of Income
(US dollar amounts in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
--------- -------- -------- --------
Gross lease revenue $34,469 $32,112 $68,473 $63,015
Equipment trading revenue 1,815 798 1,950 3,374
Commissions, fees and other
income:
- Related parties 218 227 405 450
- Unrelated parties 1,675 890 2,550 1,224
- Gain on settlement of
litigation - - 1,333 -
--------- -------- -------- --------
Total revenues 38,177 34,027 74,711 68,063
--------- -------- -------- --------
Direct operating expenses 4,688 4,951 9,240 11,959
Payments to Managed Container
Programs:
- Related parties 8,247 7,745 16,435 14,235
- Unrelated parties 9,035 8,965 18,104 16,917
Equipment trading expenses 1,624 503 1,751 2,799
Depreciation and amortization 4,578 4,671 9,170 8,965
Selling, general and
administrative expenses 4,909 4,336 10,702 8,578
Interest expense 1,854 1,194 3,375 2,348
Recovery of amount payable to
Managed Container Program - - (703) -
--------- -------- -------- --------
Total expenses 34,935 32,365 68,074 65,801
--------- -------- -------- --------
Income before income taxes and
equity in earnings of affiliate 3,242 1,662 6,637 2,262
Income taxes (476) (249) (985) (592)
Equity in earnings of
unconsolidated affiliate 711 657 1,454 1,189
--------- -------- -------- --------
Net income 3,477 2,070 7,106 2,859
========= ======== ======== ========
Basic net income per common share $0.47 $0.29 $0.97 $0.39
========= ======== ======== ========
Diluted net income per common
share $0.44 $0.27 $0.90 $0.37
========= ======== ======== ========
The Cronos Group
Condensed Unaudited Consolidated Balance Sheets
(US dollar amounts in thousands)
June 30, December 31,
2005 2004
Assets
Cash and cash equivalents $15,170 $17,579
Restricted cash 1,125 1,489
Amounts due from lessees, net 26,536 25,136
Amounts receivable from Managed Container
Programs 3,247 3,386
New container equipment for resale 11,917 17,116
Net investment in direct financing leases 11,271 7,382
Investments in unconsolidated affiliates 18,906 15,364
Container equipment, net 163,669 166,584
Other equipment, net 985 963
Goodwill, net 11,038 11,038
Other intangible assets, net 439 533
Related party loan receivable - 1,280
Other assets 3,914 3,899
----------- -------------
Total assets $268,217 $271,749
=========== =============
Liabilities and shareholders' equity
Amounts payable to Managed Container
Programs $24,042 $22,034
Amounts payable to container manufacturers 18,631 27,838
Direct operating expense payables and
accruals 4,828 5,592
Other amounts payable and accrued expenses 5,073 8,810
Debt and capital lease obligations 126,858 127,953
Current and deferred income taxes 3,657 3,238
Deferred income and unamortized acquisition
fees 7,372 5,925
----------- -------------
Total liabilities 190,461 201,390
----------- -------------
Shareholders' equity
Common shares issued (7,501,377; 7,381,349
shares) 15,003 14,763
Additional paid-in capital 45,223 45,358
Common shares held in treasury (112,000
shares) (297) (297)
Accumulated other comprehensive income 416 230
Restricted retained earnings 1,832 1,832
Retained earnings 15,579 8,473
----------- -------------
Total shareholders' equity 77,756 70,359
----------- -------------
Total liabilities and shareholders' equity $268,217 $271,749
=========== =============
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