Trimac Announces Improved Third Quarter Results
CALGARY, Nov. 12 /CNW/ - Trimac Income Fund (TSX Symbol TMA.UN) (the "Fund") today released its strong financial results of the Fund and Trimac Transportation Services Limited Partnership ("Trimac" or the "Partnership") for the third quarter ended September 30, 2010.
Trimac's consolidated revenue, including fuel surcharges, for the three-month period ended September 30, 2010 ("current period") increased by $9.0 million or 13.2 percent as compared to the three month period September 30, 2009 ("prior period"). This increase was the result of increased volumes in all product lines from new and existing customers, a $1.1 million increase in fuel surcharge revenue and incremental revenue of $1.3 million from the March 29, 2010 purchase of the assets of GH Trucking.
EBITDA for the current period increased by $1.7 million or 18.7 percent over the prior period to $10.8 million and as a percentage of revenue, EBITDA was 14.0 percent. Net earnings for the current period increased to $5.2 million from the prior period amount of $3.8 million. This was as a result of higher revenue volumes referred to above, improved pricing, strong cost controls, improved utility and reduced depreciation due to a change in the estimated useful life of certain rolling stock. Excluding a one-time income tax recovery due to a corporate reorganization in the prior period of $0.8 million, net earnings increased by $2.2 million as compared to the prior period.
Trimac generated operating earnings for the current period of $6.5 million, an increase of $2.6 million from the prior period. In commenting on the results for the third quarter, Edward V. Malysa, Executive Vice President & Chief Operating Officer of Trimac, said, "We are pleased to see that Trimac continues to recover from the economic downturn experienced in 2009. Our revenue volumes are returning to levels experienced prior to the 2009 downturn and our EBITDA has increased for the third consecutive quarter due to our strong cost controls and improved utility in all our product lines. As demonstrated with our increased EBITDA, Trimac continues to balance capacity and costs with current and pending business activity."
For the nine months ended September 30, 2010 ("current year"), consolidated revenue increased by 9.5 percent to $216.1 million from $197.2 million for the nine months ended September 30, 2009 ("prior year"). Operating earnings increased to $12.3 million in the current year from the $6.6 million in the prior year.
Trimac Receives Customer Quality Award
Trimac is pleased to announce that it was the recipient of the "Quest for Quality" award for North America in the Bulk category (top tier) for the Logistics Management magazine. "We are very pleased to receive this award and appreciate being recognized for our customer centric focus. Our focus is to provide service levels to customers that exceed their expectations," stated Mr. Jeffrey J. McCaig, Chairman and CEO of Trimac.
Financial Highlights for the Partnership
Three months ended Nine months ended
September 30 September 30
(millions of dollars) 2010 2009 2010 2009
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Revenues
Transportation revenue 71.5 63.6 198.9 184.1
Fuel surcharges 5.8 4.7 17.2 13.1
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77.3 68.3 216.1 197.2
Direct costs 55.3 49.3 159.3 144.1
Selling and administrative 11.2 9.9 32.0 31.3
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EBITDA(1) 10.8 9.1 24.8 21.8
Depreciation net of
gains on disposal(2) 4.3 5.2 12.5 15.2
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Operating earnings(1) 6.5 3.9 12.3 6.6
Interest expense, net(4) 1.2 0.9 3.2 2.9
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Earnings before taxes 5.3 3.0 9.1 3.7
Income tax expense 0.1 (0.8) 0.2 (0.5)
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Net earnings 5.2 3.8 8.9 4.2
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As a percentage of revenue
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Direct costs 71.5% 72.2% 73.7% 73.1%
Selling and administrative 14.5% 14.5% 14.8% 15.9%
EBITDA(1) 14.0% 13.3% 11.5% 11.1%
Depreciation(2) 5.6% 7.6% 5.8% 7.7%
Operating earnings(1) 8.4% 5.7% 5.7% 3.3%
As at As at
September December
(millions of dollars) 30, 2010 31, 2009
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Total assets 149.0 140.1
Total long-term liabilities(3) 76.2 45.3
(1) EBITDA is defined as earnings before interest, taxes, depreciation
and amortization and operating earnings are not recognized measures
under GAAP, do not have a standardized meaning prescribed by GAAP
and, therefore, may not be comparable to similar measures presented
by other issuers.
(2) Effective January 1, 2010, the Partnership has revised its estimate
of useful life on certain of its trailers. The change was adopted
prospectively and has resulted in lower depreciation expense of
$0.6 million during the current period and $1.8 million during the
current year.
(3) The increase is due mainly to the repayment of the Partnership's
current debt maturities through the revolving credit facility which
is shown as long-term debt.
(4) Net of market value gain on derivative.
Conversion to a Corporation
On October 7, 2010, the Fund announced a plan to reorganize its current trust structure into a corporate structure by way of a plan of arrangement under the Business Corporations Act (Alberta) and certain related transactions (the "Conversion"). The new corporation will be named Trimac Transportation Ltd. ("TTL") and will carry on the same business as previously conducted by the Fund through its investment in the Partnership. Following the Conversion, proposed to become effective on or about January 1, 2011, it is expected that TTL will pay an annual dividend of $0.25, payable on a quarterly basis. Unitholders and holders of exchangeable security voting rights of the Fund will be asked to approve the Conversion at a special meeting of the Fund to be held on or about December 10, 2010 (the "Special Meeting"). Full details of the proposed Conversion will be contained in the Information Circular of the Fund prepared in connection with the Special Meeting, which the Fund expects to circulate on or about November 16, 2010.
New Terms for Credit Facility
In the fourth quarter, Trimac negotiated new terms for the $85 million syndicated revolving credit facility. The new terms will include a reduction in interest rate spreads of 100 basis points.
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. The Fund 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 the Fund or the transportation industry to be materially different from the outlook or any future results or performance implied by such statements. Please see "Forward-Looking Statements" in the Management's Discussion and Analysis of the Fund and the Partnership for the period ended September 30, 2010 for a discussion on 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.
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 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. Trust units of Trimac Income Fund are traded on the Toronto Stock Exchange under the symbol TMA.UN.
You are invited to join us on a conference call at 11:00 a.m. Eastern Time on Monday, November 15, 2010. For North American participants, please dial 1-866-321-8231 or for international participants, please dial ++1-416-642-5213 at least 10 minutes prior to the start time of the call. A playback of the call will be available starting at 3:00 p.m. Eastern Time on Monday, November 15, 2010 until midnight November 22, 2010. To hear the playback dial 1-888-203-1112 or for international participants, please dial ++1-647-436-0148 and give the conference ID number: 1757414.
For further information: Edward V. Malysa, Executive Vice President & Chief Operating Officer, Trimac Transportation Services Inc., Telephone: 403-298-5100, Facsimile: 403-298-5258; Scott D. Calver, Vice President & Chief Financial Officer, Trimac Transportation Services Inc., Telephone: 403-298-5100, Facsimile: 403-298-5146, Investor Relations: [email protected]
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