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Pacer International Inc. Reports Operating Results (10-K)
Posted by: gurufocus (IP Logged)
Date: February 10, 2012 04:36PM
Pacer International Inc. (PACR) filed Annual Report for the period ended 2011-12-31. Pacer International Inc. has a market cap of $211.3 million; its shares were traded at around $5.38 with a P/E ratio of 14.4 and P/S ratio of 0.1.
Highlight of Business Operations:Gross Margin. Overall gross margin increased $7.6 million, or 4.5%, 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 11.9% in the 2011 period. The gross margin for our intermodal segment increased $12.5 million or 11.2%. The gross margin percentage for our intermodal segment increased to 10.5% during the 2011 period compared to 10.3% 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. A portion of the increases is also attributable to the disruption of rail service in the 2010 period caused by Hurricane Alex which was estimated to have reduced intermodal gross margin by $3.5 million to $4.0 million in the 2010 period.
Intermodal segment income from operations increased $24.4 million to income of $48.6 million in the 2011 period compared to income from operations of $24.2 million 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 $4.7 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 $2.5 million gain on the sale of container and chassis equipment.
Total intermodal revenue decreased $109.2 million, or 9.2%, from the prior year to $1,081.5 million. Volume declines decreased revenue by 15.2%, which was partially offset by the impact of price/mix changes and a higher fuel surcharge, which increased revenue by 2.6% and 3.4%, respectively. The average fuel surcharge in effect across all intermodal customers during the 2010 period was 23.1% compared to 16.7% during the 2009 period.
The transition of the east-west big box IMC business resulted in an overall intermodal volume decline of 17.2%. Revenues associated with the transitioned business were $248.6 million in the 2009 period as compared to revenues of $26.6 million in the 2010 period. Excluding the impact of the transitioned business, revenues grew $112.8 million, or 12.0%, and volumes increased 6.3%. The revenue and volume growth was adversely impacted by Hurricane Alexs disruption of the rail service in Mexico during the third quarter of 2010. In the absence of Hurricane Alex and excluding the transitioned business, we estimate our volumes would have increased between 7.4% and 7.6% in 2010. Despite the impact of Hurricane Alex, our big box equipment turns increased from 1.50x in 2009 to 1.65x in 2010, which reflects the right sizing of our equipment fleet, an improving balance of flows across the network, and reduced container dwell time at origin and destination.
Gross Margin. Overall gross margin increased $9.4 million, or 5.9%, and our gross margin percentage (revenues less the cost of purchased transportation and services and direct operating expense divided by revenues) increased from 10.1% to 11.2%. The gross margin for our intermodal segment increased $10.1 million, primarily as a result of reduced equipment cost and improved equipment turns as discussed above. The gross margin percentage for our intermodal segment increased to 10.3% in 2010 compared to 8.5% in 2009. The increases in the gross margin and gross margin percentage result primarily from the right-sizing of our equipment fleet, increased equipment turns and reductions to direct operating expenses resulting from the November 2009 Union Pacific arrangements.
Stocks Discussed: PACR,