Pacer International Q3 net income up six-fold year-over-year to US$6.6M as revenues increase 3% to US$375.8M; prior-year results negatively impacted by Hurricane Alex

DUBLIN, Ohio , October 27, 2011 (press release) – Pacer International, Inc. (Nasdaq:PACR - News), the asset-light North American freight transportation and logistics services provider, today reported financial results for the three and nine-month periods ended September 30, 2011.

THIRD QUARTER RESULTS

* Revenues increased by 3.0% to $375.8 million. Intermodal revenues improved by $46.5 million or 18.2%, while logistics revenues decreased by 32.6% to $73.7 million primarily due to the absence of the low-margin military shipments in our international operations in the 2011 period;
* Gross margin increased by 15% to $46.0 million;
* Selling, general and administrative expenses increased by a moderate $0.5 million or 1.4%;
* Other income improved by $2.6 million due to the sale of railcar assets in the 2011 period;
* Income from operations more than tripled, increasing by $8.1 million to $11.4 million. The 2010 period was negatively impacted by Hurricane Alex; and
* Earnings per share increased by $0.16 to earnings per share of $0.19 in 2011.
(In millions, except for per share data)

                             
        2011       2010
        Q1     Q2     Q3       Q3
Revenue     $ 358.4     $ 386.3     $ 375.8       $ 364.8  
Gross margin     $ 42.1     $ 46.3     $ 46.0       $ 40.0  
Gross margin %       11.7 %     12.0 %     12.2 %       11.0 %
SG&A     $ 36.5     $ 37.0     $ 37.5       $ 37.0  
Other income       -       -       (4.8 )       (2.2 )
Income from operations       3.9       7.5       11.4         3.3  
Earnings per share     $ 0.06     $ 0.12     $ 0.19       $ 0.03  

“We are very pleased with our third consecutive quarter of more than doubling our earnings per share year over year with this quarter increasing more than six fold. Our company continues to drive double digit earnings growth despite the turbulent economic environment. In addition to our significantly increased EPS, we continue to generate positive cash flow, are now debt-free for the first time in our history as a public company, and have cash to reinvest back into our business to drive future earnings,” said John J. Hafferty, CFO of Pacer.

YEAR-TO-DATE RESULTS

* Revenues were $1,120.5 million. Excluding revenues from the transitioned east-west big box business during 2010, intermodal revenues improved by $100.6 million or 12.8%;
* Gross margin increased by 7% to $134.4 million;
* Selling, general and administrative expenses decreased $5.2 million or 4.5%;
* Other income improved by $2.4 million due to the sale of railcar assets in the 2011 period;
* Income from operations more than tripled, increasing by $15.7 million to $22.8 million. The 2010 period was negatively impacted by Hurricane Alex; and
* Earnings per share increased by $0.31 to earnings per share of $0.37 in 2011.

“We continue to execute on our key strategic initiatives while delivering best-in-class service to our customers. Our year-over-year financial performance has delivered strong earnings growth in an uncertain environment. We continue to focus on enhancing our capabilities while reducing our cost structure in both our intermodal and logistics segments,” said Daniel W. Avramovich, chairman and CEO of Pacer.

A tabular reconciliation detailing the adjustments made to arrive at the adjusted financial results set forth above and elsewhere in this press release from financial results determined in accordance with accounting principles generally accepted in the United States of America (“GAAP”) is contained in the reconciliation schedules attached to this press release.

2011 GUIDANCE

Given our year-to-date results, we believe it is appropriate to provide updated guidance for the full year of 2011. We are increasing our 2011 earnings per share guidance and now expect earnings per share to range between $0.42 and $0.45. The impact of the gain on the sale of railcar assets in the third quarter of 2011 was approximately $0.08 per share, net of income tax expense. Without that gain, we expect earnings per share to range between $0.34 and $0.37 for the full year of 2011 up from our previous guidance of $0.30 to $0.35 excluding a then anticipated $0.02 railcar gain. We expect revenues in 2011 to range between $1.475 billion and $1.500 billion.

2012 GUIDANCE

As we continue to operate in an uncertain economic environment we are offering a cautious early look at 2012. We expect revenues in 2012 to range between $1.500 billion and $1.525 billion and earnings per share to range between $0.35 and $0.41.

 
Pacer International, Inc.
Unaudited Condensed Consolidated Statements of Operations
(in millions, except share and per share data)
                 
    Three Months Ended   Nine Months Ended
    September 30, 2011   September 30, 2010   September 30, 2011   September 30, 2010
                 
                 
Revenues   $ 375.8     $ 364.8     $ 1,120.5     $ 1,129.5  
                 
Operating Expenses:                
Cost of purchased transportation and services     306.7       301.2       914.5       932.8  
Direct operating expense (excluding depreciation)     23.1       23.6       71.6       71.1  
Selling, general and administrative expenses     37.5       37.0       111.0       116.2  
Other income     (4.8 )     (2.2 )     (4.8 )     (2.4 )
Depreciation and amortization     1.9       1.9       5.4       4.7  
Total operating expenses     364.4       361.5       1,097.7       1,122.4  
                 
Income from operations     11.4       3.3       22.8       7.1  
                 
Interest expense, net     (0.5 )     (1.2 )     (1.8 )     (3.7 )
                 
Income before income taxes     10.9       2.1       21.0       3.4  
                 
Income tax expense     4.3       1.0       8.2       1.4  
                 
Net income   $ 6.6     $ 1.1     $ 12.8     $ 2.0  
                 
                 
Earnings per share:                
                 
Basic:                
Earnings per share   $ 0.19     $ 0.03     $ 0.37     $ 0.06  
Weighted average shares outstanding     34,978,646       34,915,811       34,979,784       34,924,870  
                 
Diluted:                
Earnings per share   $ 0.19     $ 0.03     $ 0.37     $ 0.06  
Weighted average shares outstanding     35,019,152       34,928,329       35,010,005       34,931,080  

 

 
ABOUT PACER INTERNATIONAL (www.pacer.com)

Pacer International, a leading asset-light North American freight transportation and logistics services provider, offers a broad array of services to facilitate the movement of freight from origin to destination through its intermodal and logistics operating segments. The intermodal segment offers container capacity, integrated local transportation services, and door-to-door intermodal shipment management. The logistics segment provides truck brokerage, warehousing and distribution, international freight forwarding, and supply-chain management services.

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