Trimac Announces its Second Quarter Results

Highlights for the second quarter compared to the prior year:

  • Revenue before fuel surcharges increased 5.3%
  • EBITDA increased 12.7%
  • Operating ratio improved from 95.9% to 94.2%
  • Net income increased 60%
  • Adjusted free cash flow increased $3.8 million

CALGARY, July 30, 2014 /CNW/ - Trimac Transportation Ltd. (TSX: TMA) ("Trimac" or the "Company"), Canada's leader in bulk trucking, announces the release of its financial results for the three and six months ended June 30, 2014 ("current quarter" and "current year").

For the current quarter revenue before fuel surcharges increased $4.8 million from the $90.4 million reported for the three months ended June 30, 2013 ("prior quarter").  These improvements were primarily in the bulk trucking and National Tank Services segments.  Higher volumes with existing customers in petroleum hauling, dry bulk and pressure commodities contributed to the bulk trucking segment's revenue growth, as well as rate increases with various customers.  In addition, new business and some campaign hauling in pressure and dry bulk commodities and in Northern Resource Trucking also contributed to the revenue improvements while a business loss in resource commodities partially reduced the revenue gains.  National Tank Services' third party revenue increased $0.8 million during the current quarter primarily due to higher volumes with existing customers while Bulk Plus Logistics' revenue decreased $0.2 million during the current quarter primarily due to lower volumes in its freight management operations.     

For the current year revenue before fuel surcharges improved $7.5 million to $191.1 million compared to the $183.6 million reported for the six months ended June 30, 2013 ("prior year").  Revenue growth was experienced in the bulk trucking and National Tank Services segments.  The bulk trucking segment experienced revenue growth from new business, higher volumes from existing customers and some campaign hauls, as well as rate increases with various customers.  These improvements were partially offset by some business losses in pressure and resource commodities.  National Tank Services' third party revenue growth was attributable to higher volumes from existing customers and some new business while Bulk Plus Logistics' revenue decreased $0.1 million primarily due to lower revenue volumes.    

Operating expenses, which includes direct costs net of fuel surcharge revenue (net direct costs) and selling and administrative costs, for the current quarter increased, as a result of the revenue growth, 4.4 percent over the prior quarter to $83.7 million.  As a percentage of revenue before fuel surcharges operating expenses decreased to 87.9 percent compared to the prior quarter of 88.7 percent primarily due to reduced selling and administrative costs in the current quarter.  In the bulk trucking segment revenue growth resulted in increased driver and leased operator remuneration, higher permits and toll costs, and higher maintenance costs.  Additional maintenance costs also contributed to the rise in operating expenses while reduced training and insurance costs partially mitigated the increase as well as lower salary, office, management incentive and rental costs.  These reductions relate to administration streamlining and non-recurring expenses relating to the corporate office move in May, 2013.  National Tank Services' operating expenses increased $1.9 million primarily due to higher wage costs from additional mechanics, while Bulk Plus Logistics' operating expenses decreased $0.1 million due to organizational restructuring. 

For the current year, operating expenses as a percentage of revenue before fuel surcharges decreased slightly from 88.5 percent to 88.3 percent.  Operating inefficiencies from severe winter weather in the first quarter drove operating expenses up in the bulk trucking segment causing unscheduled maintenance requirements, escalating fuel costs and higher accident costs.  Revenue growth and start up costs for the new business awarded in the bulk trucking segment also contributed to the increase in operating expenses, which included increased driver and leased operator remuneration and higher maintenance, permits and tolls and facility costs.  Reduced training and cleaning costs partially offset this increase as well as lower selling and administrative costs resulting from our administration restructuring that was previously mentioned.  National Tank Services' operating expenses were higher due to higher revenue volumes and increased wage costs and Bulk Plus Logistics' operating expenses were higher primarily due to a change in their business mix.

EBITDA increased 12.7 percent in the current quarter to $11.5 million, while operating earnings grew 45.7 percent to $5.1 million.  These increases were primarily due to the revenue growth and reduced selling and administrative costs and lower depreciation expense. For the year EBITDA increased 5.7 percent to $22.3 million and operating earnings increased 20.0 percent to $9.6 million.    

Earnings per share for the current quarter increased to 11 cents from 7 cents in the prior quarter.  For the current year earnings per share increased to 22 cents from 18 cents in the prior year.

"Trimac is focused on operational excellence to lower our operating costs, improve asset utilization and increase both market share and profitability.  We expect revenue growth in the back half of 2014 to be similar to the first half of the year," commented Edward V. Malysa, President and Chief Operating Officer.

Financial Summary


Three months ended June 30

Six months ended June 30


(in millions of dollars, except per share data)

2014

2013


Variance

2014

2013


Variance

Financial Results










Revenue before fuel surcharges

95.2

90.4


5.3%

191.1

183.6


4.1%












Direct costs

83.2

76.5


8.8%

168.8

157.3


7.3%


Fuel surcharge revenue

(13.5)

(11.1)


21.6%

(28.3)

(23.8)


18.9%


Net direct costs (1)

69.7

65.4


6.6%

140.5

133.5


5.2%


Selling and administrative

14.0

14.8


-5.4%

28.3

29.0


-2.4%


Total operating expenses

83.7

80.2


4.4%

168.8

162.5


3.9%


Adjusted EBITDA (1)

11.5

10.2


12.7%

22.3

21.1


5.7%


Depreciation & amortization

6.4

6.7


-4.5%

12.7

13.1


-3.1%


Finance & other costs

0.8

0.7


14.3%

1.9

1.7


11.8%


Earnings before income tax expense

4.3

2.8


53.6%

7.7

6.3


22.2%


Income tax expense

1.1

0.8


37.5%

1.6

1.2


33.3%


Net income 

3.2

2.0


60.0%

6.1

5.1


19.6%


Operating earnings

5.1

3.5


45.7%

9.6

8.0


20.0%


Adjusted net income (1)

3.1

1.8


72.2%

6.0

5.0


20.0%


Cash generated from operations (1)

11.8

10.1


16.8%

22.5

21.3


5.6%


Operating ratio before interest & tax (1)

94.2%

95.9%


-1.8%

94.7%

95.5%


-0.8%


Adjusted free cash flow (1)

5.1

1.3


292.3%

13.4

6.3


112.7%


Share Information 











Cash generated from operations per share (1)

0.42

0.36



0.80

0.76





Cash dividends declared per share

0.07

0.07



0.14

0.14





Earnings per share - adjusted (1) 

0.11

0.06



0.21

0.18





Earnings per share (basic)

0.11

0.07



0.22

0.18





Share price - June 30

6.20

5.95



6.20

5.95




Other Information











Net property, plant and equipment additions

7.5

10.1



14.3

19.8





Acquisitions



-

-



0.7

-



(1) See "Reconciliation of Non-GAAP Financial Measures" section of management's discussion & analysis. 


 

Declaration of Quarterly Dividend
The Board of Directors today declared a dividend of $0.07 per share on the Class A shares, payable on October 15, 2014 to shareholders of record at the close of business on September 30, 2014.  This dividend is designated as an eligible dividend pursuant to subsection 89(14) of the Income Tax Act (Canada) and any provincial legislation pertaining to eligible dividends.    

Forward-Looking Statements
Certain information included in this news release constitutes "forward-looking statements".  Trimac cautions that, by their nature, these forward-looking statements are based on suppositions, risks, and uncertainties as well as on management's best possible evaluation of future events. Trimac cautions that its assumptions may not materialize and that current economic conditions render such assumptions, although reasonable at the time they were made, subject to greater uncertainty. Such forward-looking statements are not guarantees of future performance and the actual results or performance of Trimac or the transportation industry may be materially different from the outlook or any future results or performance implied by such statements.  Please see "Forward-Looking Statements" in Trimac's MD&A for the three and six months ended June 30, 2014 for a discussion of the material factors that could cause actual results to differ from the forward-looking information contained herein and the material factors and assumptions that were applied in preparing such forward-looking information.

Non-GAAP Financial Measures
Net direct costs, adjusted EBITDA, adjusted net income, cash generated from operations, operating ratio before interest and tax, adjusted free cash flow and earnings per share adjusted are financial measures not prescribed by IFRS and are not likely to be comparable to similar measures presented by other issuers.  Management considers these non-GAAP measures useful in evaluating the performance of Trimac's operations.  These measures should be considered in addition to, not a substitute for, the financial performance measures prepared in accordance with IFRS.

Profile
Trimac is Canada's largest provider of bulk trucking services with operations from coast to coast.  In addition, through its National Tank Services division, Trimac performs repairs, maintenance, trailer fabrication and tank-trailer cleaning services for both the Trimac fleet and for third party commercial customers. Trimac also provides third party transportation logistics services in Canada and the United States through its wholly owned subsidiary Bulk Plus Logistics.  Shares of Trimac Transportation Ltd. are traded on the Toronto Stock Exchange under the symbol TMA.

For more detailed information, please visit our website at www.trimac.com or SEDAR at www.sedar.com and review our MD&A and the unaudited condensed consolidated interim financial statements for the Company.

You are invited to join us on a conference call (conference ID number 8563981) at 4:00 p.m. Eastern Time on Thursday, July 31, 2014.  For North American participants, please dial 1-800-524-8950 or for international participants, please dial ++1-416-260-0113 at least 10 minutes prior to the start time of the call.  An audio playback of the call will be available starting Friday, August 1, 2014 on our website at http://www.trimac.com/page/eventscalendar.

SOURCE Trimac Transportation Ltd.

For further information: Edward V. Malysa, President & Chief Operating Officer, Trimac Transportation Ltd., Telephone: 403-298-5100, Facsimile: 403-298-5146; Scott D. Calver, Vice President & Chief Financial Officer, Trimac Transportation Ltd., Telephone: 403-298-5100, Facsimile: 403-298-5146