Pacer International Reports 4th Quarter Net Income Up 49.1 Percent, Full-Year Up 50.8 Percent
For the quarter ended December 31, 2004, net income increased to $17.0 million from $11.4 million earned in the same quarter of 2003, a gain of 49.1 percent. Diluted earnings per share increased to $0.44 from $0.30, up 46.7 percent. The company generated $7.5 million of cash flow from operations in the fourth quarter of 2004 and paid down $15.0 million of debt.
Pacer International's interest expense in the 2004 quarter decreased 16.2 percent to $2.5 million from $3.0 million in the same quarter of 2003. This was due to reduced debt levels and to lower interest rates that resulted from the repricing of its senior credit facility during the fourth quarter of 2003.
"Our strong fourth quarter performance demonstrated Pacer International's ability to overcome challenges in the external environment while also resolving some legacy issues that confronted us," said Don Orris, Chairman and Chief Executive Officer. "This reflects both our flexibility in adapting to difficult market conditions and our ability to continue to reduce operating costs. The stronger performance came in the face of a difficult rail service environment that affected a significant portion of our revenue and reduced the rail volume incentives we receive. Improved operating performance was clearly evident in both our retail and wholesale units. In addition, the fourth quarter of 2004 saw the confluence of some unusual legal expenses from legacy proceedings and increased Sarbanes-Oxley compliance costs. These two items alone added expenses of nearly $3.0 million in the quarter." Orris concluded: "Even in the face of these challenges, Pacer was able to deliver our strongest quarterly performance of the year and show major improvement over the same period in 2003."
YEAR-TO-DATE RESULTS
For the fiscal year ended December 31, 2004, Pacer International's net income increased to $47.2 million from $31.3 million for 2003, a gain of 50.8 percent. Diluted earnings per share increased to $1.24 from $0.82 in 2003, up 51.2 percent. The company had $44.4 million of cash flow from operations during 2004 and paid down $60.0 million of debt.
On an as-adjusted basis, net income for 2004 increased by $7.9 million, or 20.1 percent, to $47.2 million from an adjusted $39.3 million for 2003. This adjustment excluded $13.3 million of pre-tax costs ($8.0 million after-tax) related to the company's debt refinancing and secondary offering of common stock in 2003. (See the reconciliations between the adjusted financial results and the company's results determined in accordance with GAAP included in the summary financial statements.)
Note: Tabular reconciliations of the differences between the adjusted
financial results for the fiscal year ended December 26, 2003 and the
company's financial results determined in accordance with accounting
principles generally accepted in the United States of America ("GAAP")
are contained in the summary financial statements attached to this
press release.
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, February 1). To participate, please call five minutes early by dialing (888) 423-3281 (in USA) and ask for "Pacer Fourth Quarter Earnings Call." International callers can dial (612) 288-0340.
Alternatively, an audio-only, simultaneous Web cast of the 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 February 1 at 10:15 p.m. Eastern Time to February 16 at 11:59 p.m. Eastern Time. For the replay, dial (800) 475-6701(USA) or (320) 365-3844 (international), using access code 765266. 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 American 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. Pacer International was named in January to the "Forbes Platinum" list for 2005, a compilation of the "Best Big Companies in America." Pacer's Web site: www.pacer-international.com.
USE OF NON-GAAP FINANCIAL MEASURES: This press release contains financial information determined by methods other than in accordance with GAAP, including adjusted diluted earnings per share, adjusted interest expense, adjusted net income and adjusted income from operations. These non-GAAP measures exclude the costs of the company's debt refinancing, senior subordinated note redemption and secondary offering in 2003. Management uses these non-GAAP measures in its analysis of the company's performance. Management believes that presentations of financial measures excluding the impact of these items provide useful supplemental information that is essential to a proper understanding of the operating results of the company's core businesses and allows investors to more easily compare operating results from period to period. A tabular reconciliation of the differences between the non-GAAP financial information discussed in this release and the most directly comparable financial information calculated and presented in accordance with GAAP is contained in the financial summary statements attached to this press release.
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 general economic and business conditions; congestion, work stoppages or service disruptions affecting our rail and motor transportation providers; industry trends; changes in our business strategy, development plans or cost savings plans; the loss of one or more of our major customers; competition; availability of qualified personnel; changes in, or the failure to comply with, government regulations; our ability to integrate acquired businesses; terrorism and acts of war; and increases in our leverage. 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 annual report on Form 10-K/A dated March 11, 2004, and the company's prospectus dated January 21, 2004 and prospectus supplement dated November 9, 2004. 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)
December 31, 2004
-----------------
(Unaudited)
Assets
Current assets
Cash and cash equivalents $-
Accounts receivable,net 232.1
Prepaid expenses and other 10.2
Deferred income
taxes 4.1
-----------------
Total current assets 246.4
Property and equipment
Property, plant & equipment at cost 101.2
Accumulated depreciation (52.1)
-----------------
Property and equipment,
net 49.1
Other assets
Intangible assets, net 288.3
Deferred income taxes 11.5
Other assets 10.2
-----------------
Total other assets 310.0
-----------------
Total assets $605.5
=================
Liabilities & Equity
Current liabilities
Current maturities of long-term debt
and capital leases $0.1
Accounts payable and accrued
expenses 184.6
-----------------
Total current liabilities 184.7
Long-term liabilities
Long-term debt and capital leases 154.0
Other 2.3
-----------------
Total long-term liabilities 156.3
Stockholders' equity
Common stock 0.4
Paid In capital 275.4
Other (0.1)
Accumulated deficit (11.0)
Accumulated other comprehensive loss (0.2)
-----------------
Total stockholders' equity 264.5
-----------------
Total liabilities and equity $605.5
=================
Pacer International, Inc.
Unaudited Consolidated Statement of Cash Flows
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter YTD
($ in millions) 2004 2004 2004 2004 2004
----------------------------------------------------------------------
Cash Flows from Operating
Activities
Net income $9.4 $9.5 $11.3 $17.0 $47.2
Adjustments to net income
Depreciation 1.9 1.7 1.8 1.8 7.2
Deferred income taxes 1.8 6.0 1.0 3.6 12.4
Change in receivables 2.3 (7.8) (11.7) (11.9) (29.1)
Change in other current
assets (0.8) - 2.1 0.2 1.5
Change in current
liabilities (3.1) 11.1 1.2 (4.5) 4.7
Other 0.1 (4.4) 3.5 1.3 0.5
----------------------------------------------------------------------
Net cash provided by
operating activities 11.6 16.1 9.2 7.5 44.4
----------------------------------------------------------------------
Cash Flows from Investing
Activities
Capital expenditures (0.6) (1.1) (1.6) (1.3) (4.6)
Proceeds from sales of
property and equipment 0.1 0.1 0.1 - 0.3
----------------------------------------------------------------------
Net cash used for
investing activities (0.5) (1.0) (1.5) (1.3) (4.3)
----------------------------------------------------------------------
Cash Flows from Financing
Activities
Book overdraft 2.7 1.0 5.7 9.2 18.6
Proceeds from issuance of
common stock 0.4 - 0.2 0.1 0.7
Debt, revolver, net and
capital lease payments (15.0) (16.0) (14.0) (15.0) (60.0)
----------------------------------------------------------------------
Net cash used for
financing activities (11.9) (15.0) (8.1) (5.7) (40.7)
----------------------------------------------------------------------
Effect of exchange rate
changes on cash - (0.1) 0.4 (0.5) (0.2)
----------------------------------------------------------------------
Net change in cash and
cash equivalents (0.8) - - - (0.8)
Cash at beginning of
period 0.8 - - - 0.8
----------------------------------------------------------------------
Cash at end of period $- $- $- $- $-
======================================================================
Pacer International, Inc.
Unaudited Consolidated Statements of Operations
($ millions)
4th Quarter 2004
------------------------------------------------
Wholesale Retail Corp./Elim. Consolidated
------------------------------------------------
GAAP
Revenues $303.4 $261.0 $(33.6) $530.8
Cost of purchased
transportation 214.8 230.7 (33.6) 411.9
Direct operating
expenses 30.9 - - 30.9
Selling, general &
admin. expenses 19.5 28.8 7.6 55.9
Depreciation expense 0.9 0.9 - 1.8
----------------------------------------------------------------------
Income from
operations 37.3 0.6 (7.6) 30.3
Interest expense 2.5
----------------------------------------------------------------------
Income before income
taxes 27.8
Income tax 10.8
----------------------------------------------------------------------
Net income $17.0
======================================================================
Diluted Earnings Per
Share $0.44
2004
------------------------------------------------
Wholesale Retail Corp./Elim. Consolidated
------------------------------------------------
GAAP
Revenues $999.2 $930.4 $(121.5) $1,808.1
Cost of purchased
transportation 719.8 814.8 (121.5) 1,413.1
Direct operating
expenses 110.7 - - 110.7
Selling, general &
admin. expenses 65.8 106.4 18.4 190.6
Depreciation expense 3.8 3.4 - 7.2
----------------------------------------------------------------------
Income from
operations 99.1 5.8 (18.4) 86.5
Interest expense 9.6
----------------------------------------------------------------------
Income before income
taxes 76.9
Income tax 29.7
----------------------------------------------------------------------
Net income $47.2
======================================================================
Diluted Earnings Per
Share $1.24
Pacer International, Inc.
Unaudited Consolidated Statements of Operations
($ millions, except per share amounts)
4th Quarter
-----------------------------------------------
2004 2003 Variance %
----------------------------------------------------------------------
GAAP
Segments
Revenues
Wholesale 303.4 259.2 44.2 17.1%
Retail 261.0 231.1 29.9 12.9%
Cons. Entries (33.6) (34.0) 0.4 -1.2%
----------------------------------------------------------------------
Total 530.8 456.3 74.5 16.3%
Income from Operations
Wholesale 37.3 25.2 12.1 48.0%
Retail 0.6 0.3 0.3 100.0%
Corporate (7.6) (3.8) (3.8) -100.0%
----------------------------------------------------------------------
Total 30.3 21.7 8.6 39.6%
Net Income 17.0 11.4 5.6 49.1%
Diluted Earnings per
Share $0.44 $0.30 $0.14 46.7%
Year
----------------------------------------------
2004 2003 Variance %
----------------------------------------------------------------------
GAAP
Segments
Revenues
Wholesale 999.2 923.1 76.1 8.2%
Retail 930.4 872.3 58.1 6.7%
Cons. Entries (121.5) (126.8) 5.3 -4.2%
----------------------------------------------------------------------
Total 1,808.1 1,668.6 139.5 8.4%
Income from Operations
Wholesale 99.1 79.4 19.7 24.8%
Retail 5.8 13.3 (7.5) -56.4%
Corporate (18.4) (13.5) (4.9) 36.3%
----------------------------------------------------------------------
Total 86.5 79.2 7.3 9.2%
Net Income 47.2 31.3 15.9 50.8%
Diluted Earnings per
Share $1.24 $0.82 $0.42 51.2%
Pacer International, Inc.
Reconciliation of GAAP Financial Results to Adjusted Financial Results
For the Fiscal Year Ended December 31, 2004 and December 26, 2003
In millions, except share and per share amounts
Unaudited
2003
2004 -----------------------------------------
GAAP GAAP Adjusted
Item Results Results Adjustments Results
--------------- ------------ ------------ ------------- ------------
Income from
operations $86.5 $79.2 $1.2 1/ $80.4
Interest
expense 9.6 18.0 - 18.0
Loss on
extinguishment
of debt - 12.1 (12.1) 2/ -
------------ ------------ ------------ ------------
Income before
income taxes 76.9 49.1 13.3 62.4
Income taxes 29.7 17.8 5.3 3/ 23.1
------------ ------------ ------------ ------------
Net income 47.2 31.3 8.0 39.3
============ ============ ============ ============
Diluted
earnings per
share $1.24 $0.82 $0.21 $1.03
============ ============ ============ ============
Weighted
average shares
outstanding 38,140,409 37,988,697 37,988,697 37,988,697
============ ============ ============ ============
Adjusted
Variance
2004 vs
Item 2003 %
--------------- ------------ ------------
Income from
operations $6.1 7.6%
Interest
expense (8.4) -46.7%
Loss on
extinguishment
of debt - -
------------- -------------
Income before
income taxes 14.5 23.2%
Income taxes 6.6 28.6%
------------- -------------
Net income 7.9 20.1%
============= =============
Diluted
earnings per
share $0.21 20.4%
============= =============
Weighted
average shares
outstanding 151,712 0.4%
============= =============
1/ Fees and expenses associated with the secondary offering of common
stock paid by the Company.
2/ Fees and expenses related to our long-term debt refinancing:
A) $3.1 million for the write-off of existing loan fees.
B) $0.2 million for loan breakage and commitment fees.
C) $8.8 million premium on redemption of senior subordinated
notes.
3/ Income taxes estimated at 40.0%.
Email
