The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and related notes thereto, included in our Annual Report on Form 10-K for the year endedDecember 31, 2020 filed with theSEC onMarch 1, 2021 . In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results may differ materially from those contained in or implied by any forward-looking statements. The financial information included in this discussion and in our consolidated financial statements may not be indicative of our consolidated financial position, operating results, changes in equity and cash flows in the future. See "Special Note Regarding Forward-Looking Statements" included earlier in this Quarterly Report on Form 10-Q. Unless the context requires otherwise, references to "CAI," the "Company," "we," "us" or "our" in this Quarterly Report on Form 10-Q refer toCAI International, Inc. and its subsidiaries. Overview We are one of the world's leading transportation finance companies. We lease equipment, primarily intermodal shipping containers, to our customers. We also manage equipment for third-party investors. In operating our fleet, we lease, re-lease and dispose of equipment and contract for the repair, repositioning and storage of equipment. The following tables show the composition of our fleet as ofJune 30, 2021 and 2020, and our average utilization for the three and six months endedJune 30, 2021 and 2020: As of June 30, 2021 2020 Owned container fleet in TEUs 1,806,375 1,597,898 Managed container fleet in TEUs 55,230 63,757 Total container fleet in TEUs 1,861,605 1,661,655 Owned container fleet in CEUs 1,868,606 1,630,054 Managed container fleet in CEUs 72,304 79,643 Total container fleet in CEUs 1,940,910 1,709,697 Three Months Ended June Six Months Ended June 30, 30, 2021 2020 2021 2020 Average container fleet utilization in CEUs 99.6% 98.0% 99.6% 98.1% Average owned container fleet utilization in CEUs 99.7% 98.0% 99.7% 98.2% The intermodal marine container industry-standard measurement unit is the 20-foot equivalent unit (TEU), which compares the size of a container to a standard 20-foot container. For example, a 20-foot container is equivalent to one TEU and a 40-foot container is equivalent to two TEUs. Containers can also be measured in cost equivalent units (CEUs), whereby the cost of each type of container is expressed as a ratio relative to the cost of a standard 20-foot dry van container. For example, the CEU ratio for a standard 40-foot dry van container is 1.6, and a 40-foot high cube container is 1.7. Utilization of containers is computed by dividing the average total units on lease during the period in CEUs, by the average total CEUs in our container fleet during the period. The total fleet excludes new units not yet leased and off-hire units designated for sale. 24
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Merger Agreement with Mitsubishi HC Capital Inc.
OnJune 17, 2021 , the Company entered into an Agreement and Plan of Merger (the Merger Agreement) with Mitsubishi HC Capital Inc., a Japanese corporation (Parent), andCattleya Acquisition Corp. , aDelaware corporation and wholly-owned subsidiary of Parent (Merger Sub), relating to the proposed acquisition of the Company by Parent. Pursuant to the terms of the Merger Agreement, Merger Sub will merge with and into the Company (the Merger), with the Company continuing as the surviving corporation in the Merger as a wholly-owned subsidiary of Parent. Upon completion of the Merger, the Company will cease to be a publicly traded company and at the effective time of the Merger (the Effective Time): (i) each share of the Company's common stock that is issued and outstanding immediately prior to the Effective Time (other than Excluded Shares (as defined in the Merger Agreement)) will cease to be outstanding and will be converted into the right to receive$56.00 , in cash, without interest, subject to deductions of any applicable withholding taxes; (ii) each share of the Company's 8.50% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Stock (Series A Preferred Stock) that is issued and outstanding immediately prior to the Effective Time, other than Excluded Shares, will be converted into the right to receive an amount equal to the sum of: (a) the liquidation preference of$25.00 per share, plus (b) the aggregate amount of all accrued and unpaid dividends on such Series A Preferred Stock as of the Effective Time, in cash, without interest, subject to deductions of any applicable withholding taxes; and (iii) each share of the Company's 8.50% Series B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Stock (Series B Preferred Stock) that is issued and outstanding immediately prior to the Effective Time, other than Excluded Shares, will be converted into the right to receive an amount equal to the sum of: (a) the liquidation preference of$25.00 per share, plus (b) the aggregate amount of all accrued and unpaid dividends on such Series B Preferred Stock as of the Effective Time, in cash, without interest, subject to deductions of any applicable withholding taxes. The closing of the Merger is subject to various closing conditions, each of which is more fully described in the Company's Current Report on Form 8-K, filed with theSEC onJune 21, 2021 , the Company's preliminary proxy statement on Schedule 14A relating to the Merger, filed with theSEC onJuly 12, 2021 (the Preliminary Proxy Statement), and the Company's definitive proxy statement on Schedule 14A relating to the Merger to be filed with theSEC . The closing of the Merger is subject to, among other things, adoption of the Merger Agreement by the affirmative vote of the holders of at least a majority of the outstanding shares of common stock entitled to vote at a special meeting of the common stockholders of the Company to be held on a date to be announced, the completion of the Migration (as defined the Preliminary Proxy Statement) and receipt of regulatory approval. The Merger is expected to be completed in the late third quarter or early fourth quarter of 2021. However, the exact timing of completion of the Merger cannot be predicted because the Merger is subject to the satisfaction or (to the extent permitted by applicable law) waiver of the conditions to the completion of the Merger more fully described in the Preliminary Proxy Statement.
We have incurred Merger-related costs of approximately
See also Item 1A. Risk Factors--"Risks Related to the Merger."
COVID-19 Pandemic
The COVID-19 pandemic continues to have a meaningful impact on global trade and our business. The pandemic and related work, travel, and social restrictions resulted in a sharp decrease in global economic and trade activity during the first half of 2020, resulting in weak container leasing demand. However, we have seen a significant increase in leasing demand since the second half of 2020, which we expect to continue through 2021. However, it remains difficult to predict the future impact that COVID-19, including the emergence of new variants of the virus, will have on our business, and whether the rebound in demand will be sustained into 2022 and beyond. We were initially concerned that the sharp decrease in global container volumes early in 2020 would increase the financial challenges facing our customers and lead to increased credit risk. While we are not yet through the pandemic, container freight rates and the financial performance of our customers have generally held up better than anticipated, with freight rates reaching record levels. As the impact of the pandemic grew, all the major shipping lines have taken aggressive actions to reduce their deployed vessel capacity, decreasing their network expenses and mitigating rate pressure from reduced freight volumes. The large decrease in bunker fuel prices has also been very helpful to their financial performance. We continue to closely monitor our customers' payment performance and expect the potential for elevated credit risk as long as economic and trade disruptions persist. For additional information regarding the risk and uncertainties that we could encounter as a result of the COVID-19 pandemic and related global conditions, see "Business Risk - The continued spread of the COVID-19 pandemic may have a material adverse impact on our business, financial condition and results of operations" in Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year endedDecember 31, 2020 filed with theSEC onMarch 1, 2021 . ? 25
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Disposal of Logistics and Rail Businesses
OnAugust 14, 2020 , we sold substantially all the assets of our logistics business to NFI, a North American logistics provider, for cash proceeds of$6.2 million . OnDecember 29, 2020 , we sold all our remaining railcar fleet to affiliates of Infinity Transportation for cash proceeds of$228.1 million . As a result, the operating results of the logistics and rail leasing businesses have been classified as discontinued operations in the unaudited consolidated financial statements in this Quarterly Report on Form 10-Q. All prior periods presented in the unaudited consolidated financial statements have been restated to reflect the reclassification of the logistics and railcar leasing businesses as discontinued operations. See Note 2 - Discontinued Operations to the consolidated financial statements in this Quarterly Report on Form 10-Q for more information.
Results of Operations - Three Months Ended
The following table summarizes our results of operations for the three months
ended
Three Months Ended June 30, Change 2021 2020 Amount Percent Total leasing revenue$ 85,695 $ 69,443 $ 16,252 23 % Operating expenses 34,856 36,950 (2,094) (6) % Total other expenses 11,040 16,037 (4,997) (31) % Net income (loss) attributable to CAI common stockholders 35,736 (2,833)
38,569 (1,361) %
The increase in total revenue for the three months endedJune 30, 2021 compared to the three months endedJune 30, 2020 , was attributable to an$11.1 million , or 20%, increase in operating lease revenue, a$3.0 million , or 27%, increase in finance lease revenue, and a$2.2 million , or 64%, increase in other lease revenue. The decrease in operating expenses for the three months endedJune 30, 2021 compared to the three months endedJune 30, 2020 , was the result of a$5.2 million , or 293%, increase in gain on sale of rental equipment and a$2.7 million , or 53%, decrease in storage, handling and other expenses, partially offset by a$2.5 million , or 9%, increase in depreciation expense and a$3.3 million , or 49%, increase in administrative expenses. Total other expenses for the three months endedJune 30, 2021 decreased compared with the three months endedJune 30, 2020 , primarily due to a$4.6 million , or 29%, decrease in net interest expense. The increase in revenue together with the decrease in operating expenses, total other expense and net loss from discontinued operations resulted in an increase in net income attributable to CAI common stockholders for the three months endedJune 30, 2021 of$38.6 million compared to the three months endedJune 30, 2020 . Total leasing revenue Three Months Ended June 30, Change ($ in thousand) 2021 2020 Amount Percent Total leasing revenue$ 85,695 $ 69,443 $ 16,252 23 % The increase in total leasing revenue for the three months endedJune 30, 2021 compared to the three months endedJune 30, 2020 was mainly attributable to an$8.9 million increase in rental revenue resulting from a 16% increase in the average number of CEUs of on-lease owned containers, a$3.4 million increase in rental revenue arising from payments made by a cash-based customer, a$3.0 million increase in interest income on finance leases resulting from an increase in the average number of CEUs on finance leases, and a$0.9 million increase in rental revenue resulting from a 2% increase in average owned container per diem rental rates.
Depreciation of rental equipment
Three Months EndedJune 30 ,
Change
($ in thousand) 2021 2020
Amount Percent
Depreciation of rental equipment
The increase in depreciation expense for the three months ended
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Storage, handling and other expenses
Three Months EndedJune 30 ,
Change
($ in thousand) 2021 2020
Amount Percent
Storage, handling and other expenses
The decrease in storage, handling and other expenses for the three months endedJune 30, 2021 compared to the three months endedJune 30, 2020 was primarily attributable to a$1.9 million decrease in storage and handlings costs and a$0.9 million decrease in repair expenses due to a decrease in the average size of the off-lease fleet.
Gain on sale of rental equipment
Three Months EndedJune 30 ,
Change
($ in thousand) 2021 2020
Amount Percent
Gain on sale of rental equipment
While there was a decrease of 43% in the number of CEUs of containers sold during the three months endedJune 30, 2021 compared to the three months endedJune 30, 2020 , there was a 50% increase in the average sale price per CEU, resulting in a 541% increase in gain per CEU, due to an increase in demand for equipment. Administrative expenses Three Months Ended June 30, Change ($ in thousand) 2021 2020 Amount Percent Administrative expenses$ 10,168 $ 6,825 $ 3,343 49 % The increase in administrative expenses for the three months endedJune 30, 2021 compared to the three months endedJune 30, 2020 was primarily attributable to a$1.4 million increase in payroll-related costs, largely due to increased incentive-based compensation, a$2.3 million increase in bad debt expense due to cash receipts from a previously reserved customer during the second quarter of 2020, and a$1.4 million increase in legal expense mainly due to the Merger Agreement with MHC, partially offset by a$1.5 million decrease in severance costs associated with the change in our Chief Executive Officer during the second quarter of 2020. Other expense Three Months Ended June 30, Change ($ in thousand) 2021 2020 Amount Percent Net interest expense$ 11,114 $ 16,134 $ (5,020) (31) % Other income (74) (97) 23 24 %$ 11,040 $ 16,037 $ (4,997) (31) % Net interest expense The decrease in net interest expense for the three months endedJune 30, 2021 compared to the three months endedJune 30, 2020 was due primarily to a decrease in the average interest rate on our outstanding debt from approximately 2.9% as ofJune 30, 2020 to 2.2% as ofJune 30, 2021 , caused primarily by a decrease in LIBOR, as well as a decrease in our average loan principal balance between the two periods, mainly due to the paydown of debt with proceeds from the sale of our railcar portfolio in 2020.
Other income
Other income for the three months ended
Income tax expense Three Months Ended June 30, Change ($ in thousand) 2021 2020 Amount Percent Income tax expense $ 1,856$ 904 $ 952 105 % The increase in income tax expense for the three months endedJune 30, 2021 compared to three months endedJune 30, 2020 was mainly attributable to an increase in income before tax, partially offset by a decrease in the estimated effective tax rate. The full-year estimated effective tax rate before discrete items was 5.7% atJune 30, 2021 , compared to an effective tax rate of 8.2% atJune 30, 2020 . The decrease in the estimated full-year effective tax rate was primarily due to an increase in the proportion of pretax income generated in lower tax jurisdictions. ? 27
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Preferred stock dividends
Three Months EndedJune 30 ,
Change
($ in thousand) 2021 2020 Amount
Percent
Preferred stock dividends$ 2,207 $ 2,207 $ -
- %
Preferred stock dividends for the three months ended
Loss from discontinued operations
Three Months Ended June 30, Change 2021 2020 Amount Percent ($ in thousand) Total revenue $ -$ 28,930 $ (28,930) (100) % Operating expenses - 46,325 (46,325) (100) % Interest expense - 1,458 (1,458) (100) % Income tax benefit - (2,675)
2,675 (100) %
Net loss from discontinued operations $ -
There was no income or expense arising from discontinued operations for the
three months ended
Results of Operations - Six Months Ended
The following table summarizes our results of operations for the six months
ended
Six Months Ended June 30, Change 2021 2020 Amount Percent Total leasing revenue$ 166,495 $ 138,556 $ 27,939 20 % Operating expenses 66,893 73,675 (6,782) (9) % Total other expenses 22,622 34,557 (11,935) (35) % Net income (loss) attributable to CAI common stockholders 69,269 (6,370)
75,639 (1,187) %
The increase in total revenue for the six months endedJune 30, 2021 compared to the six months endedJune 30, 2020 , was attributable to a$20.3 million , or 19%, increase in operating lease revenue, a$4.7 million , or 20%, increase in finance lease revenue, and a$3.0 million , or 47%, increase in other lease revenue. The decrease in operating expenses for the six months endedJune 30, 2021 compared to the six months endedJune 30, 2020 , was the result of a$10.3 million , or 301%, increase in gain on sale of rental equipment and a$4.7 million , or 49%, decrease in storage, handling and other expenses, partially offset by a$4.0 million , or 7%, increase in depreciation expense and a$4.2 million , or 31%, increase in administrative expenses. Total other expenses for the six months endedJune 30, 2021 decreased compared with the six months endedJune 30, 2020 , primarily due to a$12.1 million , or 39%, decrease in net interest expense. The increase in revenue together with the decrease in operating expenses, total other expense and net loss from discontinued operations resulted in an increase in net income attributable to CAI common stockholders for the six months endedJune 30, 2021 of$75.6 million compared to the six months endedJune 30, 2020 . Total leasing revenue Six Months Ended June 30, Change ($ in thousand) 2021 2020 Amount Percent Total leasing revenue$ 166,495 $ 138,556 $ 27,939 20 % The increase in total leasing revenue for the six months endedJune 30, 2021 compared to the six months endedJune 30, 2020 was mainly attributable to a$15.1 million increase in rental revenue resulting from a 14% increase in the average number of CEUs of on-lease owned containers, an$8.7 million increase in rental revenue arising from payments made by a cash-based customer, and a$5.5 million increase in interest income on finance leases and financing receivable resulting from an increase in the average number of CEUs on finance leases and financing receivable, partially offset by a$1.4 million decrease in rental revenue resulting from a 1% decrease in the average owned container per diem rental rates. ? 28
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Depreciation of rental equipment
Six Months EndedJune 30 ,
Change
($ in thousand) 2021 2020 Amount Percent Depreciation of rental equipment$ 57,821 $ 53,798 $
4,023 7 %
The increase in depreciation expense for the six months ended
Storage, handling and other expenses
Six Months EndedJune 30 ,
Change
($ in thousand) 2021 2020
Amount Percent
Storage, handling and other expenses
The decrease in storage, handling and other expenses for the six months endedJune 30, 2021 compared to the six months endedJune 30, 2020 was primarily attributable to a$3.4 million decrease in storage and handling costs and a$1.3 million decrease in repair expenses due to a decrease in the average size of the off-lease fleet.
Gain on sale of rental equipment
Six Months EndedJune 30 ,
Change
($ in thousand) 2021 2020 Amount Percent Gain on sale of rental equipment$ 13,769 $ 3,435 $
10,334 301 %
While there was a decrease of 31% in the number of CEUs of containers sold during the six months endedJune 30, 2021 compared to the six months endedJune 30, 2020 , there was a 39% increase in the average sale price per CEU, resulting in a 453% increase in gain per CEU, due to an increase in demand for equipment. Administrative expenses Six Months Ended June 30, Change ($ in thousand) 2021 2020 Amount Percent Administrative expenses$ 17,908 $ 13,720 $ 4,188 31 % The increase in administrative expenses for the six months endedJune 30, 2021 compared to the six months endedJune 30, 2020 was primarily attributable to a$2.1 million increase in payroll-related costs, largely due to increased incentive-based compensation, and a$3.5 million increase in bad debt expense due to cash receipts from a previously reserved customer during the second quarter of 2020, partially offset by a$1.5 million decrease in severance costs associated with the change in our Chief Executive Officer during the second quarter of 2020. Other expense Six Months Ended June 30, Change ($ in thousand) 2021 2020 Amount Percent Net interest expense$ 22,286 $ 34,408 $ (12,122) (35) % Other expense 336 149 187 126 %$ 22,622 $ 34,557 $ (11,935) (35) % Net interest expense The decrease in net interest expense for the six months endedJune 30, 2021 compared to the six months endedJune 30, 2020 was due primarily to a decrease in the average interest rate on our outstanding debt from approximately 2.9% as ofJune 30, 2020 to 2.2% as ofJune 30, 2021 , caused primarily by a decrease in LIBOR, as well as a decrease in our average loan principal balance between the two periods, mainly due to the paydown of debt with proceeds from the sale of our railcar portfolio in 2020.
Other expense
Other expense, representing a loss on foreign exchange of$0.3 million for the six months endedJune 30, 2021 , increased from a loss of$0.1 million for the six months endedJune 30, 2020 , primarily as a result of movements in theU.S. Dollar exchange rate against the Euro. ? 29
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Table of Contents Income tax expense Six Months Ended June 30, Change ($ in thousand) 2021 2020 Amount Percent Income tax expense$ 4,360 $ 2,103 $ 2,257 107 % The increase in income tax expense for the six months endedJune 30, 2021 compared to six months endedJune 30, 2020 was mainly attributable to an increase in income before tax, partially offset by a decrease in the estimated effective tax rate. The full-year estimated effective tax rate before discrete items was 5.7% atJune 30, 2021 , compared to an effective tax rate of 8.2% atJune 30, 2020 . The decrease in the estimated full-year effective tax rate was primarily due to an increase in the proportion of pretax income generated in lower tax jurisdictions.
Preferred stock dividends
Six Months EndedJune 30 ,
Change
($ in thousand) 2021 2020 Amount
Percent
Preferred stock dividends$ 4,414 $ 4,414 $ -
- %
Preferred stock dividends for the six months ended
Income (loss) from discontinued operations
Six Months Ended June 30, Change 2021 2020 Amount Percent Total revenue$ 293 $ 64,839 $ (64,546) (100) % Operating (income) expenses (324) 98,590 (98,914) (100) % Interest expense - 3,560 (3,560) (100) % Income tax benefit (446) (7,134) 6,688 (94) % Net income (loss) from discontinued operations$ 1,063 $ (30,177) $
31,240 (104) %
Total revenue and operating expenses from discontinued operations for the six months endedJune 30, 2021 were a result of immaterial differences in the actual transactions from the amounts accrued prior to the sale of the logistics and railcar businesses in 2020.
Liquidity and Capital Resources
As ofJune 30, 2021 , we had cash and cash equivalents of$51.2 million , including$12.4 million of restricted cash, and$21.3 million of cash held by variable interest entities (VIEs). Our principal sources of liquidity are cash in-flows provided by operating activities, proceeds from the sale of rental equipment, borrowings from financial institutions, and equity and debt offerings. Our cash in-flows are used to finance capital expenditures and meet debt service requirements.
As of
Current Current Amount Maximum Outstanding Borrowing Level Revolving credit facilities$ 904,026 $ 1,204,698 Term loans 108,100 108,100 Senior secured notes 43,610 43,610 Asset-backed notes 695,353 695,353 Collateralized financing obligations 54,427 54,427 Term loans held by VIE 28,522 28,522 1,834,038 2,134,710 Debt discount and debt issuance costs (10,874) - Total$ 1,823,164 $ 2,134,710 As ofMarch 31, 2021 , we had$300.6 million in availability under our revolving credit facilities (net of$0.1 million in letters of credit), subject to our ability to meet the collateral requirements under the agreements governing the facilities. Based on the borrowing base and collateral requirements atJune 30, 2021 , the borrowing availability under our revolving credit facilities was$276.0 million , assuming no additional contributions of assets. As ofJune 30, 2021 , we had a total of$1,405.4 million of debt in facilities with fixed interest rates or floating interest rates that have been synthetically fixed through interest rate swap agreements, which accounts for 77% of our total outstanding debt. 30
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For further information on our debt instruments, see Note 6 to the consolidated financial statements in this Quarterly Report on Form 10-Q and Note 7 to the consolidated financial statements in our Annual Report on Form 10-K for the year endedDecember 31, 2020 , filed with theSEC onMarch 1, 2021 . We continue to monitor the COVID-19 pandemic and its impact on our overall liquidity position and outlook. The ultimate impact that COVID-19 may have on our operational and financial performance over the next 12 months is currently uncertain and will depend on certain developments, including, among others, the impact of COVID-19 on our customers, the magnitude and duration of the pandemic, and the rollout and efficacy of vaccines. Assuming that our customers continue to meet their contractual commitments, we currently believe that cash provided by operating activities and existing cash, proceeds from the sale of rental equipment, and borrowing availability under our debt facilities are sufficient to meet our liquidity needs for at least the next twelve months. In addition to customary events of default, the agreements governing our indebtedness contain restrictive covenants, including limitations on certain liens, indebtedness and investments. In addition, the agreements governing our indebtedness contain various restrictive financial and other covenants. The financial covenants in the agreements governing our indebtedness require us to maintain: (1) a consolidated funded debt to consolidated tangible net worth ratio, in the case of our debt facilities, of no more than 3.75:1.00, and in the case of our asset-backed notes, of no more than 4.50:1.00; and (2) a fixed charge coverage ratio, in the case of our debt facilities, of at least 1.20:1.00, and in the case of our asset-backed notes, of at least 2.50:1.00. As ofJune 30, 2021 , we were in compliance with all of our financial and other covenants and we expect to remain in compliance for at least the next twelve months. Cash Flows
The following table sets forth certain cash flow information for the six months
ended
Six Months Ended June 30, 2021 2020 Net income (loss)$ 73,683 $ (1,956)
Net income from continuing operations adjusted for non-cash items
116,924
79,509
Changes in working capital 48,452
38,719
Net cash provided by operating activities of continuing operations
165,376
118,228
Net cash used in investing activities of continuing operations
(228,823)
(13,265)
Net cash provided by (used in) financing activities of continuing operations
50,361
(123,410)
Net cash (used in) provided by discontinued operations (2,060)
15,447
Effect on cash of foreign currency translation (127) (189) Net decrease in cash and restricted cash (15,273)
(3,189)
Cash and restricted cash at beginning of period 66,502
73,239
Cash and restricted cash at end of period$ 51,229
Cash Flows from Continuing Operations
Operating Activities
Net cash provided by operating activities of continuing operations was$165.4 million for the six months endedJune 30, 2021 , an increase of$47.1 million compared to$118.2 million for the six months endedJune 30, 2020 . The increase was due to a$37.4 million increase in income from continuing operations as adjusted for depreciation, impairment and other non-cash items, and a$9.7 million increase in our net working capital adjustments. The increase of$37.4 million in income from continuing operations as adjusted for non-cash items was primarily attributable to an increase of$44.4 million in income from continuing operations, a decrease of$3.5 million in bad debt recovery due to cash receipts from a cash-based customer in the prior year, and an increase of$4.0 million in depreciation expense, partially offset by an increase of$10.3 million in gain on sale of rental equipment, mainly due to an increase in container prices as a result of high demand, and a decrease of$4.4 million in deferred income taxes. Net working capital provided by operating activities of$48.5 million in the six months endedJune 30, 2021 , was due to a$46.9 million decrease in net investment in finance leases, representing the receipt of principal payments, a$2.4 million increase in accounts payable, accrued expenses and other liabilities, primarily caused by the timing of cash payments, and a$1.8 million decrease in prepaid expenses and other assets, partially offset by a$2.4 million increase in accounts receivable, primarily caused by the timing of cash receipts from customers. Net working capital provided by operating activities of$38.7 million in the six months endedJune 30, 2020 was due to a$35.7 million decrease in net investment in finance leases, representing the receipt of principal payments and a$4.1 million decrease in accounts receivable, primarily caused by the timing of cash receipts from customers, partially offset by a$1.0 million decrease in accounts payable, accrued expenses and other liabilities, primarily caused by the timing of cash payments. ? 31
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Table of Contents Investing Activities Net cash used in investing activities of continuing operations was$228.8 million for the six months endedJune 30, 2021 , an increase of$215.6 million compared to net cash used in investing activities of$13.3 million for the six months endedJune 30, 2020 . The increase in cash used was attributable to a$244.0 million increase in purchase of rental equipment, partially offset by a$22.1 million decrease in purchase of financing receivable, a$3.1 million increase in proceeds from sale of rental equipment and a$3.1 million increase in receipt of principal payments from financing receivable.
Financing Activities
Net cash provided by financing activities of continuing operations was$50.4 million for the six months endedJune 30, 2021 , an increase of$173.8 million compared to net cash used in financing activities of$123.4 million for the six months endedJune 30, 2020 . During the six months endedJune 30, 2021 , our net cash inflow from borrowings was$76.3 million compared to net cash outflow of$119.2 million for the six months endedJune 30, 2020 . The increase in net cash inflow from borrowings was partially offset by an increase of$12.8 million for the repurchase of common stock and an increase of$10.4 million in dividends paid to common stockholders.
Cash Flows from Discontinued Operations
Net cash used in discontinued operations was$2.1 million for the six months endedJune 30, 2021 , a decrease of$17.5 million compared to net cash provided by discontinued operations of$15.4 million for the six months endedJune 30, 2020 . The change between the two periods was primarily due to the sale of the logistics and railcar businesses in 2020.
Equity Transactions
Stock Repurchase Plan
InOctober 2018 , we announced that our Board of Directors approved the repurchase of up to three million shares of our outstanding common stock. InFebruary 2021 , our Board of Directors increased the share repurchase plan by an additional 2.0 million shares. The number, price, structure and timing of the repurchases, if any, will be at our sole discretion and will be evaluated by us depending on prevailing market conditions, corporate needs, and other factors. The stock repurchases may be made in the open market, block trades or privately negotiated transactions. This stock repurchase program replaces any available prior share repurchase authorization and may be discontinued at any time. During the six months endedJune 30, 2021 , we repurchased 0.4 million shares of our common stock under this repurchase plan, at a cost of approximately$12.8 million . As ofJune 30, 2021 , approximately 2.4 million shares remained available for repurchase under our share repurchase program. ? 32
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Contractual Obligations and Commercial Commitments
The following table sets forth our contractual obligations and commercial
commitments by due date as of
Payments Due by Period Less than 1-2 2-3 3-4 4-5 More than Total 1 year years years years years 5 years Total debt obligations: Revolving credit facilities$ 904,026 $ -$ 883,000 $ 21,026 $ - $ - $ - Term loans 108,100 7,800 28,800 71,500 - - - Senior secured notes 43,610 6,110 37,500 - - - - Asset-backed notes 695,353 63,130 63,130 63,130 64,522 64,986 376,455 Collateralized financing obligations 54,427 36,943 - - - 17,484 - Term loans held by VIE 28,522 5,599 5,841 6,097 6,356 4,629 - Interest on debt and capital lease obligations (1) 126,265 38,604 34,751 14,076 11,170 14,882 12,782 Rental equipment payable 311,871 311,871 - - - - - Rent, office facilities and equipment 3,329 2,430 581 257 61 - - Equipment purchase commitments 343,287 343,287 - - - - - Total contractual obligations$ 2,618,790 $ 815,774 $ 1,053,603 $ 176,086 $ 82,109 $ 101,981 $ 389,237 (1)Our estimate of interest expense commitment includes$13.2 million relating to our revolving credit facilities subject to variable interest rates,$17.8 million relating to our revolving credit facilities subject to fixed interest rates,$9.2 million relating to our term loans,$3.0 million relating to our senior secured notes,$73.9 million relating to our asset-back notes,$6.0 million relating to our collateralized financing obligations, and$3.1 million relating to our term loans held by VIE. The calculation of interest commitment related to our debt assumes the following weighted-average interest rates as ofJune 30, 2021 : variable-rate revolving credit facilities, 1.6%; fixed-rate revolving credit facilities, 1.8%; term loans, 4.0%; senior secured notes, 4.9%; asset-backed notes, 2.3%; collateralized financing obligations, 1.9%; and term loans held by VIE, 4.2%. These calculations assume that weighted-average interest rates will remain at the same level over the next five years. We expect that interest rates will vary over time based upon fluctuations in the underlying indexes upon which these rates are based, including the potential discontinuation of LIBOR after 2021.
Off-Balance Sheet Arrangements
As ofJune 30, 2021 , we had no material off-balance sheet arrangements or obligations that have or are reasonably likely to have a current or future effect on our financial condition, change in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to investors.
Critical Accounting Policies and Estimates
There have been no changes to our critical accounting policies during the three months endedJune 30, 2021 . See Critical Accounting Policies and Estimates in our Annual Report on Form 10-K for the year endedDecember 31, 2020 , filed with theSEC onMarch 1, 2021 .
Recent Accounting Pronouncements
InMarch 2020 , theFinancial Accounting Standards Board (FASB) issued Accounting Standards Update 2020-04 (ASU 2020-04), which adds ASC Topic 848, Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides temporary optional expedients and exceptions to ease financial reporting burdens related to applying current GAAP to modifications of contracts, hedging relationships and other transactions in connection with the transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. InJanuary 2021 , the FASB issued ASU 2021-01 to clarify that certain optional expedients and exceptions apply to modifications of derivative contracts and certain hedging relationships affected by changes in the interest rates used for discounting cash flows, computing variation margin settlements, and for calculating price alignment interest. ASU 2020-04 is effective beginning onMarch 12, 2020 and may be applied prospectively to such transactions throughDecember 31, 2022 and ASU 2021-01 is effective beginning onJanuary 7, 2021 and may be applied retrospectively or prospectively to such transactions throughDecember 31, 2022 . We will apply ASU 2020-04 and 2021-01 prospectively as and when we enter into transactions to which these updates apply.
Except as described above, there are no other recent accounting pronouncement that are relevant to our business.
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