Pacer International, Inc. Reports Third Quarter Results; Net Revenues Up 9.2 Percent for the Quarter
For the third quarter ending September 20, 2002, net revenues increased 9.2 percent to $87.7 million from $80.3 million in the same quarter of 2001. Income from operations increased 79.8 percent to $20.5 million from $11.4 million in 2001. Net income increased to $8.2 million from $1.0 million in the third quarter of last year. Diluted earnings per share increased to $0.22 from $0.04 in 2001. In addition, operating cash flows were $34.5 million for the quarter. The results for 2001 included a one-time charge of $6.9 million ($0.09 per diluted share).
Net revenues for Pacer's Wholesale segment, which provides double-stack rail transportation services, increased by $8.3 million or 18.7 percent to $52.8 million for the quarter. This strong year-over-year improvement resulted primarily from increased shipments in its core third-party domestic operations due to increased cross-selling from Pacer's Retail segment and increased overall third-party volumes. Net revenues for the Retail segment, which provides logistics and supply-chain management services directly to manufacturers and retailers, decreased by $0.9 million, principally as a result of decreased business in the truck-brokerage unit, and reduced volumes in both international, and freight consolidation and handling. Selling, general, and administrative expenses were up 7.2 percent overall but were reduced by 2.7 percent or $0.7 million in the Retail segment as a result of reduced payroll and other expenses due to the consolidation of operations.
Interest expense in 2002 decreased 22.1 percent to $6.7 million from $8.6 million in 2001 due to reduced debt levels as a result of the June 2002 initial public offering.
Don Orris, chairman and chief executive officer, said, "We are pleased with both our financial performance and our strong cash flow for the quarter and are encouraged by the momentum of our core operations. We continue to review the impact of the port work stoppage on Pacer. So far, in part due to our flexible business model, we have not seen any significant impact on Pacer's results."
For the nine months ended September 20, 2002, net revenues increased 5.5 percent to $255.3 million from $242.0 million in the same period last year. Income from operations increased 45.9 percent to $54.0 million from $37.0 million in 2001. Net income increased to $17.0 million from $3.0 million in 2001. Diluted earnings per share increased to $0.53 from $0.13 in 2001. As noted above, the results for 2001 included a one-time charge of $6.9 million ($0.12 per diluted share).
ABOUT PACER -- Pacer International, a leading non-asset based North American third-party logistics and freight transportation provider, offers a broad array of logistics and other services to facilitate the movement of freight from origin to destination. Its services include wholesale stacktrain services (cost-efficient, two-tiered rail transportation for containerized shipments), and retail trucking, intermodal marketing, freight consolidation and handling, 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 site: www.pacer-international.com
CONFERENCE CALL -- Pacer International will hold a conference call for investors, analysts, business and trade media, and other interested parties at 11:30 AM Eastern Time today (October 29). To participate, please call five minutes early by dialing (888) 276-0007 (in USA) and ask for "Pacer 3rd Quarter Earnings Call." International callers can dial (612) 332-0345. A digitized replay will be available from October 30 at 4:45 PM Eastern Time to November 6 at 11:59 PM Eastern Time. For the replay, dial (800) 475-6701 (USA) or (320) 365-3844 (international), access code #653381.
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 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 the Company's leverage; its dependence upon third parties for equipment and services essential to operate its business; regulatory changes affecting the Company's industry, operations, products and services; competitive or technological factors affecting the Company's markets, operations, products and services; shifts in market demand and general economic conditions. In addition, the Company has acquired businesses in the past and may consider acquiring businesses in the future that provide complementary services. There can be no assurance that the businesses that the Company has acquired in the past and may acquire in the future can be successfully integrated. Additional information about 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 prospectus dated June 12, 2002 relating to its initial public offering. 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.
Pacer International, Inc.
Consolidated Balance Sheet
($ millions)
September 20, 2002
(unaudited)
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Assets
Current assets
Cash and cash equivalents $ 1.1
Accounts receivable,net 201.3
Prepaid expenses and other 6.7
Deferred income taxes -
-------------------
Total current assets 209.1
Property and equipment
Property, plant & equipment at cost 93.3
Accumulated depreciation (34.4)
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Property and equipment, net 58.9
Other assets
Intangible assets, net 281.5
Deferred income taxes 47.3
Other assets 8.3
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Total other assets 337.1
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Total assets $ 605.1
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Liabilities & Equity
Current liabilities
Current maturities of long-term debt and
capital leases $ 6.1
Accounts payable and accrued expenses 167.8
-------------------
Total current liabilities 173.9
Long-term liabilities
Long-term debt and capital leases 256.1
Other 2.4
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Total long-term liabilities 258.5
Minority interest - exchangeable preferred stock -
Stockholders' equity
Common stock 0.4
Paid In capital 269.9
Other (0.2)
Retained earnings (deficit) (97.3)
Other accumulated comprehensive income (0.1)
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Total stockholders' equity 172.7
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Total liabilities and equity $ 605.1
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Pacer International, Inc.
Unaudited Consolidated Statement of Operations
($ millions)
3rd Quarter 2002
---------------------------------------------
Wholesale Retail Corp./Elim. Consolidated
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Gross revenues $ 188.9 $ 229.4 $ (26.8) $ 391.5
Cost of purchased
transportation 136.1 194.5 (26.8) 303.8
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Net revenues 52.8 34.9 - 87.7
Margin 28.0% 15.2% 0.0% 22.4%
Direct operating expenses 24.7 - - 24.7
Selling, general & admin.
expenses 10.8 25.6 3.6 40.0
Depreciation expense 1.1 1.4 - 2.5
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Income from operations 16.2 7.9 (3.6) 20.5
Interest (income) expense 4.4 2.3 - 6.7
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Income before income taxes 11.8 5.6 (3.6) 13.8
Income tax 4.8 2.3 (1.5) 5.6
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Net income $ 7.0 $ 3.3 $ (2.1) $ 8.2
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EBITDA $ 17.3 $ 9.3 $ (3.6) $ 23.0
Nine Months Ended September 20, 2002
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Wholesale Retail Corp./Elim. Consolidated
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Gross revenues $ 589.2 $ 663.7 $ (77.9) $1,175.0
Cost of purchased
transportation 432.6 565.0 (77.9) 919.7
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Net revenues 156.6 98.7 - 255.3
Margin 26.6% 14.9% 0.0% 21.7%
Direct operating expenses 78.0 - - 78.0
Selling, general & admin.
expenses 34.4 75.5 5.9 115.8
Depreciation expense 3.5 4.0 - 7.5
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Income from operations 40.7 19.2 (5.9) 54.0
Interest (income) expense 15.9 9.7 - 25.6
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Income before income taxes 24.8 9.5 (5.9) 28.4
Income tax 9.9 3.9 (2.4) 11.4
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Net income $ 14.9 $ 5.6 $ (3.5) $ 17.0
======================================================================
EBITDA $ 44.2 $ 23.2 $ (5.9) $ 61.5
Pacer International, Inc.
Unaudited Consolidated Statements of Operations
3rd Quarter
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2002 2001 Variance %
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Segments
Revenue
Wholesale 188.9 191.5 (2.6) -1.4%
Retail 229.4 230.3 (0.9) -0.4%
Cons. Entries (26.8) (23.7) (3.1) -13.1%
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Total 391.5 398.1 (6.6) -1.7%
Net Revenue
Wholesale 52.8 44.5 8.3 18.7%
Retail 34.9 35.8 (0.9) -2.5%
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Total 87.7 80.3 7.4 9.2%
Operating Income
Wholesale 16.2 12.6 3.6 28.6%
Retail 7.9 6.8 1.1 16.2%
Corporate (3.6) (1.1) (2.5) 227.3%
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Operating Income Before
One-Time Charge 20.5 18.3 2.2 12.0%
One-Time Charge - (6.9) 6.9 -100.0%
----------------------------------------------------------------------
Total 20.5 11.4 9.1 79.8%
EBITDA
Wholesale 17.3 13.9 3.4 24.5%
Retail 9.3 9.8 (0.5) -5.1%
Corporate (3.6) (1.1) (2.5) 227.3%
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Operating Income Before
One-Time Charge 23.0 22.6 0.4 1.8%
One-Time Charge - (6.9) 6.9 -100.0%
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Total 23.0 15.7 7.3 46.5%
Nine Months
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2002 2001 Variance %
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Segments
Revenue
Wholesale 589.2 591.5 (2.3) -0.4%
Retail 663.7 741.5 (77.8) -10.5%
Cons. Entries (77.9) (63.1) (14.8) -23.5%
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Total 1,175.0 1,269.9 (94.9) -7.5%
Net Revenue
Wholesale 156.6 132.2 24.4 18.5%
Retail 98.7 109.8 (11.1) -10.1%
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Total 255.3 242.0 13.3 5.5%
Operating Income
Wholesale 40.7 27.5 13.2 48.0%
Retail 19.2 19.6 (0.4) -2.0%
Corporate (5.9) (3.2) (2.7) 84.4%
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Operating Income Before
One-Time Charge 54.0 43.9 10.1 23.0%
One-Time Charge - (6.9) 6.9 -100.0%
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Total 54.0 37.0 17.0 45.9%
EBITDA
Wholesale 44.2 31.6 12.6 39.9%
Retail 23.2 28.8 (5.6) -19.4%
Corporate (5.9) (3.2) (2.7) 84.4%
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Operating Income Before
One-Time Charge 61.5 57.2 4.3 7.5%
One-Time Charge - (6.9) 6.9 -100.0%
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Total 61.5 50.3 11.2 22.3%
Note to editors: Issued by Steve Potash and Company, tel. 510/865-0800, or steve@potashco.com
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