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Pacer International Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: August 4, 2011 07:11AM
Pacer International Inc. (PACR) filed Quarterly Report for the period ended 2011-06-30. Pacer International Inc. has a market cap of $177.8 million; its shares were traded at around $5.08 with a P/E ratio of 19.5 and P/S ratio of 0.1.
Highlight of Business Operations:
Our intermodal segment recorded operating income of $13.2 million in the second quarter of 2011 compared to $6.7 million in the second quarter of 2010. We have continued to expand our customer base and replace revenues from the transitioned wholesale domestic east-west big box business in our intermodal segment. The significant improvement in income from operations is a reflection of the improvements we have made in shedding unprofitable business during the customer contract renegotiation season, improving capacity allocation decisions and controlling costs. We are positioned to benefit from favorable trends in the intermodal market.
Our logistics segment recorded an operating loss of $0.2 million for the second quarter of 2011 compared to operating income of $1.7 million in the second quarter of 2010. The operating loss is primarily due to the loss of a customer in our warehousing and distribution business and the continued expansion costs associated with our international business. We believe the expansion of our international operations will allow us to capture more freight at origin points in order to take full advantage of our ability to provide integrated global door-to-door transportation and logistics solutions for our customers.
Our debt level remains low at $24.5 million outstanding at June 30, 2011 as the amount includes $17.7 million used for the purchase of railcars at the beginning of the second quarter. The credit facility we entered into in December 2010 has lowered our interest rates and increased our flexibility by eliminating capital expenditure limitations and easing other restrictions. Interest expense incurred during the second quarter of 2011 has decreased over 40% in comparison to the second quarter of 2010.
Revenues. Revenues decreased $14.7 million, or 3.7%, for the three months ended June 30, 2011 compared to the three months ended June 30, 2010. Excluding 2010 revenues from the transitioned east-west big box IMC business, revenues decreased $11.0 million or 2.8%. The following table sets forth the change in revenue by reportable segment and the change in intermodal volumes during the 2011 period compared to the 2010 period (in millions).
Gross Margin. Overall gross margin increased $1.5 million, or 3.3%, and our gross margin percentage (revenues less the cost of purchased transportation and services and direct operating expense divided by revenues) increased from 11.2% in the 2010 period to 12.0% in the 2011 period. The gross margin for our intermodal segment increased by $3.1 million or 10.3%. The gross margin percentage for our intermodal segment increased to 11.0% during the 2011 period compared to 10.8% in the 2010 period. The increase in the intermodal segment gross margin and gross margin percentage primarily reflected the results of our strategic growth plan to shed unprofitable business and negotiate new higher margin customer contracts. The gross margin increases also resulted from improved network balance reflecting better economic conditions in the 2011 period as compared to the corresponding 2010 period. Logistics segment gross margin decreased $1.6 million, or 11.0%, and the gross margin percentage for our logistics segment increased from 12.1% in the 2010 period to 15.8% in the 2011 period. The decrease in the gross margin was due to a decrease in our warehousing and distribution business due to the loss of a customer. The gross margin
Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased $3.2 million, or 8.0%, in the 2011 period compared to the 2010 period. The decrease was due primarily to the impact of cost reduction efforts taken in prior periods and continuing in 2011. A total of $0.6 million in severance costs were incurred during the 2011 period, $0.4 million in the intermodal segment, $0.1 million in the logistics segment and $0.1 million in corporate. A total of $1.4 million of severance costs were incurred during the 2010 period, $1.0 million i
Stocks Discussed: PACR,