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Pacer International Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 2, 2011 05:36PM

Pacer International Inc. (PACR) filed Quarterly Report for the period ended 2011-09-30. Pacer International Inc. has a market cap of $160.6 million; its shares were traded at around $4.59 with a P/E ratio of 10.9 and P/S ratio of 0.1.



Highlight of Business Operations:

Our intermodal segment recorded income from operations of $17.2 million in the third quarter of 2011 compared to $7.1 million in the third 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 in the first half of 2011, improving capacity allocation decisions and controlling costs. We also benefited in the third quarter from a $4.8 million gain we recorded on the sale of railcar assets which were purchased during the second and third quarter of 2011. The 2010 period included a $2.2 million gain recorded on the sale of container and chassis equipment. The 2010 period was also impacted by Hurricane Alex which disrupted rail service in the third quarter of that year. We have estimated the Hurricane Alex impact reduced intermodal operating income by $3.5 million to $4.0 million in the 2010 period. Beginning in the fourth quarter of 2011, we anticipate a reduction in revenue of $50 million to $75 million annually from one of our large ocean carrier customers. We expect revenue growth in 2012 despite this customer reduction. We are positioned to continue to benefit from favorable trends in the intermodal market.

Gross Margin. Overall gross margin increased $6.0 million, or 15.0%, and our gross margin percentage (revenues less the cost of purchased transportation and services and direct operating expense divided by revenues) increased from 11.0% in the 2010 period to 12.2% in the 2011 period. The gross margin for our intermodal segment increased by $7.3 million or 28.2%. The gross margin percentage for our intermodal segment increased to 11.0% during the 2011 period compared to 10.1% in the 2010 period. The increase in the intermodal segment gross margin

Intermodal segment income from operations increased $10.1 million to $17.2 million in the 2011 period compared to income from operations of $7.1 million in the 2010 period. The primary drivers of the improvement were the increased revenues and gross margin as well as the $4.8 million gain on the sale of railcar assets. A portion of the increase is attributable to the disruption of rail service caused by Hurricane Alex which was estimated to have reduced intermodal operating income by $3.5 million to $4.0 million in the 2010 period. In addition, the 2010 period benefited from a $2.2 million gain on the sale of container and chassis equipment.

Gross Margin. Overall gross margin increased $8.8 million, or 7.0%, and our gross margin percentage (revenues less the cost of purchased transportation and services and direct operating expense divided by revenues) increased from 11.1% to 12.0%. The gross margin for our intermodal segment increased by $10.5 million. The gross margin percentage for our intermodal segment increased to 10.7% during the 2011 period compared to 10.6% in the 2010 period. The increase in the intermodal segment gross margin percentage is primarily driven by changes in the customer mix and fuel costs and was partially offset by $1.1 million of additional lease termination costs incurred in the 2011 period to terminate leases on certain containers and chassis as described above. Logistics segment gross margin decreased $1.7 million, or 4.2%, and the gross margin percentage for our logistics segment increased from

Intermodal segment income from operations increased $19.3 million to $38.8 million in the 2011 period compared to income from operations of $19.5 in the 2010 period. The primary drivers of the improvement were the increased revenues and gross margin, our cost reduction activities taken in 2010 and continuing into 2011 as well as the $4.8 million gain on the sale of railcar assets. A portion of the increase can also be attributable to the disruption of rail service caused by Hurricane Alex which was estimated to have reduced intermodal operating income by $3.5 million to $4.0 million in the 2010 period. In addition, the 2010 period benefited from a $2.4 million gain on the sale of container and chassis equipment.

Read the The complete Report



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