Pacer International Reports 2nd Quarter 2006 Diluted Earnings Per Share of $0.38
SECOND QUARTER RESULTS
For the quarter ended June 30, 2006, net income increased by $9.9 million to $14.5 million, compared to $4.6 million in the same quarter of 2005. Income from operations increased by $15.4 million to $25.2 million for the 2006 quarter, compared to $9.8 million in the same quarter of 2005 and diluted earnings per share for the quarter increased to $0.38 from $0.12 a year earlier. During the second quarter of 2006, the company paid down $3.0 million of debt, paid $13.6 million in estimated taxes, repurchased and retired $1.1 million of common stock and paid its first quarter 2006 dividend to shareholders of $5.6 million.
On an as adjusted basis, net income for the 2006 quarter increased $3.2 million, or 28.3 percent; income from operations increased $4.1 million; and diluted earnings per share increased $0.08 per share. These figures are in comparison to the 2005 quarter adjusted to exclude the $11.3 million pre-tax charge ($6.7 million after-tax) for the write-off of software development costs.
Note: A tabular reconciliation of the differences between the adjusted financial results set forth immediately above and elsewhere in this press release and financial results determined in accordance with accounting principles generally accepted in the United States of America ("GAAP") is contained in the financial summary statements attached to this press release.
"The second quarter of 2006 was a strong quarter for Pacer with both operating segments showing improvement in operating income over last year," said Don Orris, chairman and chief executive officer. "Our retail segment showed solid quarter-over-quarter growth in operating income that we feel will continue in the future, and while that segment recorded reduced rail incentives, it succeeded in driving increased volumes to our Stacktrain unit. Our wholesale segment continues to be a strong growth engine for the company," added Orris.
YEAR-TO-DATE RESULTS
For the six months ended June 30, 2006, net income increased by $12.5 million to $28.4 million, compared to $15.9 million in the same period of 2005. Income from operations increased by $18.7 million to $49.6 million for the 2006 period, compared to $30.9 million in the same period of 2005 and diluted earnings per share for the 2006 period increased to $0.74 from $0.42 a year earlier. During the first half of 2006, the company paid down $10.0 million of debt, paid $22.2 million in estimated taxes, repurchased and retired $1.1 million of common stock and paid dividends to shareholders of $11.3 million.
On an as adjusted basis, net income for the first half of 2006 increased $5.7 million, or 25.1 percent; income from operations increased $7.4 million; and diluted earnings per share increased $0.14 per share. These figures are in comparison to the 2005 first half adjusted to exclude the $11.3 million pre-tax charge ($6.8 million after-tax) for the write-off of software development costs.
CONFERENCE CALL TODAY -- Pacer International will hold a conference call for investors, analysts, business and trade media, and other interested parties at 5:00 p.m. Eastern Time today (Tuesday, August 1). To participate, please call five minutes early by dialing (800) 230-1092 (in USA) and ask for "Pacer Second Quarter 2006 Earnings Call." International callers can dial (612) 288-0318.
Alternatively, an audio-only, simultaneous Web cast of the live conference call can be accessed through the Investor Relations link on the company's Web site at www.pacer-international.com. For persons unable to participate in either the conference call or the Web cast, a digitized replay will be available from August 1 at 10:15 p.m. Eastern Time to September 1 at 11:59 p.m. Eastern Time. For the replay, dial (800) 475-6701 (USA) or (320) 365-3844 (international), using access code 836171. Alternatively, a replay can be accessed through the Investor Relations link on the company's Web site at www.pacer-international.com.
ABOUT PACER INTERNATIONAL -- Pacer International, a leading non-asset based North America third-party logistics and freight transportation provider, offers a broad array of logistics and other services through its subsidiaries and divisions to facilitate the movement of freight from origin to destination. Its wholesale services include Stacktrain (cost-efficient, two-tiered rail transportation for containerized shipments) and cartage (local trucking) services, and its retail services include intermodal marketing, truck brokerage, truck services, warehousing and distribution, international freight forwarding, and supply-chain management services. Pacer International is headquartered in Concord, California. Its business units Pacer Stacktrain and Pacer Global Logistics are headquartered in Concord, California, and in Dublin, Ohio, respectively. Web sites: www.pacer-international.com, www.pacerstack.com, and www.pacerglobal.com.
CERTAIN FORWARD-LOOKING STATEMENTS -- This press release contains or may contain forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). These forward-looking statements are based on the company's current expectations and beliefs and are subject to a number of risks, uncertainties and assumptions. Among the important factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements are general economic and business conditions; congestion, work stoppages, equipment and capacity shortages, weather related issues and service disruptions affecting our rail and motor transportation providers; industry trends, including changes in the costs of services from rail and motor transportation providers; the loss of one or more of our major customers; the impact of competitive pressures in the marketplace; the frequency and severity of accidents, particularly involving our trucking operations; changes in our business strategy, development plans or cost savings plans; our ability to integrate acquired businesses; availability of qualified personnel; changes in, or the failure to comply with, government regulation; increases in interest rates; difficulties in maintaining or enhancing our information technology systems; terrorism and acts of war; and increases in our leverage. Additional information about these and other factors that could affect the company's business is set forth in the company's various filings with the Securities and Exchange Commission, including those set forth in the company's annual report on Form 10-K for the year ended December 30, 2005 filed with the SEC on March 2, 2006. Should one or more of these risks or uncertainties materialize, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described herein as anticipated, believed, expected or intended. Except as otherwise required by federal securities laws, the company does not undertake any obligation to update such forward-looking statements whether as a result of new information, future events or otherwise.
Note to editors: Issued by Steve Potash and Company, tel. 510/865-0800, or steve@potashco.com
Pacer International, Inc.
Consolidated Balance Sheet
($ millions)
June 30, 2006
----------------------------------------------------------------------
(Unaudited)
Assets
Current assets
Cash and cash equivalents $ -
Accounts receivable, net 224.8
Prepaid expenses and other 12.2
Deferred income taxes 4.0
---------------
Total current assets 241.0
Property and equipment
Property, plant & equipment at cost 96.7
Accumulated depreciation (62.0)
---------------
Property and equipment, net 34.7
Other assets
Intangible assets, net 288.3
Deferred income taxes 7.1
Other assets 18.0
---------------
Total other assets 313.4
---------------
Total assets $ 589.1
===============
Liabilities & Equity
Current liabilities
Current maturities of long-term debt and capital
leases $ -
Accounts payable and accrued liabilities 175.5
---------------
Total current liabilities 175.5
Long-term liabilities
Long-term debt and capital leases 80.0
Other 5.2
---------------
Total long-term liabilities 85.2
Stockholders' equity
Common stock 0.4
Paid In capital 283.5
Retained earnings 44.7
Accumulated other comprehensive loss (0.2)
---------------
Total stockholders' equity 328.4
---------------
Total liabilities and equity $ 589.1
===============
Pacer International, Inc.
Unaudited Consolidated Statement of Cash Flows
------------------------------------------------------ ---------------
Six Months
($ in millions) 2006
------------------------------------------------------ ---------------
Cash Flows from Operating Activities
Net income $ 28.4
Adjustments to net income
Depreciation and amortization 3.5
Gain on sale of property and equipment (0.1)
Deferred income taxes 2.0
Stock based compensation expense 0.8
Excess tax benefit from exercise of stock options (2.1)
Change in receivables (5.5)
Change in other current assets (1.4)
Change in current liabilities (10.9)
Other (4.6)
------------------------------------------------------ ---------------
Net cash provided by operating activities 10.1
------------------------------------------------------ ---------------
Cash Flows from Investing Activities
Capital expenditures (2.2)
Proceeds from sales of property and equipment 0.2
------------------------------------------------------ ---------------
Net cash used for investing activities (2.0)
------------------------------------------------------ ---------------
Cash Flows from Financing Activities
Book overdraft 0.3
Proceeds from issuance of common stock 2.1
Excess tax benefit from exercise of stock options 2.1
Dividends paid to shareholders (11.3)
Purchase and retirement of Pacer common stock (1.1)
Debt, revolver, net and capital lease payments (10.0)
------------------------------------------------------ ---------------
Net cash used for financing activities (17.9)
------------------------------------------------------ ---------------
Effect of exchange rate changes on cash 0.7
------------------------------------------------------ ---------------
Net change in cash and cash equivalents (9.1)
Cash at beginning of period 9.1
------------------------------------------------------ ---------------
Cash at end of period $ -
====================================================== ===============
Pacer International, Inc.
Reconciliation of As Reported Financial Results to As Adjusted
Financial Results
For the Three Months Ended June 30, 2006 and July 1, 2005
In millions, except share and per share amounts
Unaudited
2nd Quarter 2nd Quarter 2005
2006 ---------------------------------------
As Reported As Reported As Adjusted
Item Results Results Adjustments Results
------------------ ----------- ----------- ----------- -----------
Income from
operations -
wholesale segment $ 25.4 $ 12.3 $ 11.3 1/ $ 23.6
Income from
operations -
retail segment 3.5 3.0 - 3.0
Income from
operations -
corporate (3.7) (5.5) - (5.5)
----------- ----------- ----------- -----------
Total income
from
operations 25.2 9.8 11.3 21.1
Interest expense 1.6 2.0 - 2.0
----------- ----------- ----------- -----------
Income before
income taxes 23.6 7.8 11.3 19.1
Income taxes 9.1 3.2 4.6 2/ 7.8
----------- ----------- ----------- -----------
Net income 14.5 4.6 6.7 11.3
=========== =========== =========== ===========
Diluted earnings
per share $ 0.38 $ 0.12 $ 0.18 $ 0.30
=========== =========== =========== ===========
Weighted average
shares
outstanding 38,351,877 37,993,025 37,993,025 37,993,025
=========== =========== =========== ===========
------------------
Variance
2006 vs
Adjusted
Item 2005 %
------------------ ----------- -----------
Income from
operations -
wholesale segment $ 1.8 7.6%
Income from
operations -
retail segment 0.5 16.7%
Income from
operations -
corporate 1.8 -32.7%
----------- -----------
Total income
from operations 4.1 19.4%
Interest expense (0.4) -20.0%
----------- -----------
Income before
income taxes 4.5 23.6%
Income taxes 1.3 16.7%
----------- -----------
Net income 3.2 28.3%
=========== ===========
Diluted earnings
per share $ 0.08 26.7%
=========== ===========
Weighted average
shares
outstanding 358,852 0.9%
=========== ===========
------------------
1/ Write-off of costs related to the development of Stacktrain
computer software.
2/ Income tax effect of the write-off at the effective rate.
For additional information, see "Use of Non-GAAP Financial Measures"
in "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations" in the Company's Annual Report
on Form 10-K for the fiscal year ended December 30, 2005.
Pacer International, Inc.
Reconciliation of As Reported Financial Results to As Adjusted
Financial Results
For the Six Months Ended June 30, 2006 and July 1, 2005
In millions, except share and per share amounts
Unaudited
Six Months Six Months 2005
2006 ---------------------------------------
As Reported As Reported As Adjusted
Item Results Results Adjustments Results
------------------ ----------- ----------- ----------- -----------
Income from
operations -
wholesale segment $ 54.1 $ 35.1 $ 11.3 1/ $46.4
Income from
operations -
retail segment 3.5 5.4 - 5.4
Income from
operations -
corporate (8.0) (9.6) - (9.6)
----------- ----------- ----------- -----------
Total income
from operations 49.6 30.9 11.3 42.2
Interest expense 3.3 4.4 - 4.4
----------- ----------- ----------- -----------
Income before
income taxes 46.3 26.5 11.3 37.8
Income taxes 17.9 10.6 4.5 2/ 15.1
----------- ----------- ----------- -----------
Net income 28.4 15.9 6.8 22.7
=========== =========== =========== ===========
Diluted earnings
per share $ 0.74 $ 0.42 $ 0.18 $ 0.60
=========== =========== =========== ===========
Weighted average
shares
outstanding 38,320,876 37,990,773 37,990,773 37,990,773
=========== =========== =========== ===========
------------------
Variance
2006 vs
Adjusted
Item 2005 %
------------------ ----------- -----------
Income from
operations -
wholesale segment $ 7.7 16.6%
Income from
operations -
retail segment (1.9) -35.2%
Income from
operations -
corporate 1.6 -16.7%
----------- -----------
Total income
from operations 7.4 17.5%
Interest expense (1.1) -25.0%
----------- -----------
Income before
income taxes 8.5 22.5%
Income taxes 2.8 18.5%
----------- -----------
Net income 5.7 25.1%
=========== ===========
Diluted earnings
per share $ 0.14 23.3%
=========== ===========
Weighted average
shares
outstanding 330,103 0.9%
=========== ===========
------------------
1/ Write-off of costs related to the development of Stacktrain
computer software.
2/ Income tax effect of the write-off at the effective rate.
For additional information, see "Use of Non-GAAP Financial Measures"
in "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations" in the Company's Annual Report
on Form 10-K for the fiscal year ended December 30, 2005.
Pacer International, Inc.
Unaudited Consolidated Statements of Operations
($ millions)
2nd Quarter 2006
---------------------------------------------
Wholesale Retail Corp./Elim. Consolidated
------------------------ ---------- ------- ------------ -------------
Revenues $ 292.8 $209.9 $ (44.5) $ 458.2
Cost of purchased
transportation 220.0 179.8 (44.5) 355.3
Direct operating
expenses 28.6 - - 28.6
Selling, general &
admin. expenses 18.0 25.7 3.7 47.4
Depreciation expense 0.8 0.9 - 1.7
------------------------ ---------- ------- ------------ -------------
Income from operations 25.4 3.5 (3.7) 25.2
Interest expense, net 1.6
------------------------ ---------- ------- ------------ -------------
Income before income
taxes 23.6
Income taxes 9.1
------------------------ ---------- ------- ------------ -------------
Net income $ 14.5
======================== ========== ======= ============ =============
Diluted Earnings Per
Share $ 0.38
Year-to-Date
---------------------------------------------
Wholesale Retail Corp./Elim. Consolidated
------------------------ ---------- ------- ------------ -------------
Revenues $ 606.1 $412.8 $ (91.3) $ 927.6
Cost of purchased
transportation 454.1 354.6 (91.3) 717.4
Direct operating
expenses 60.9 - - 60.9
Selling, general &
admin. expenses 35.3 52.9 8.0 96.2
Depreciation expense 1.7 1.8 - 3.5
------------------------ ---------- ------- ------------ -------------
Income from operations 54.1 3.5 (8.0) 49.6
Interest expense, net 3.3
------------------------ ---------- ------- ------------ -------------
Income before income
taxes 46.3
Income taxes 17.9
------------------------ ---------- ------- ------------ -------------
Net income $ 28.4
======================== ========== ======= ============ =============
Diluted Earnings Per
Share $ 0.74
Pacer International, Inc.
Unaudited Consolidated Statements of Operations
($ millions, except per share amounts)
2nd Quarter
-------------------------------------------
2006 2005 Variance %
-------------------------- ---------- ---------- ----------- ---------
Segments
Revenues
Wholesale 292.8 261.9 30.9 11.8%
Retail 209.9 234.8 (24.9) -10.6%
Cons. Entries (44.5) (42.1) (2.4) 5.7%
-------------------------- -------------------------------------------
Total 458.2 454.6 3.6 0.8%
Income from Operations
Wholesale 25.4 12.3 13.1 106.5%
Retail 3.5 3.0 0.5 16.7%
Corporate (3.7) (5.5) 1.8 32.7%
-------------------------- -------------------------------------------
Total 25.2 9.8 15.4 157.1%
Net Income 14.5 4.6 9.9 215.2%
Diluted Earnings per Share $ 0.38 $ 0.12 $ 0.26 216.7%
Year-to-Date
-------------------------------------------
2006 2005 Variance %
-------------------------- ---------- ---------- ----------- ---------
Segments
Revenues
Wholesale 606.1 525.1 81.0 15.4%
Retail 412.8 470.1 (57.3) -12.2%
Cons. Entries (91.3) (80.5) (10.8) 13.4%
-------------------------- -------------------------------------------
Total 927.6 914.7 12.9 1.4%
Income from Operations
Wholesale 54.1 35.1 19.0 54.1%
Retail 3.5 5.4 (1.9) -35.2%
Corporate (8.0) (9.6) 1.6 16.7%
-------------------------- -------------------------------------------
Total 49.6 30.9 18.7 60.5%
Net Income 28.4 15.9 12.5 78.6%
Diluted Earnings per Share $ 0.74 $ 0.42 $ 0.32 76.2%
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