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Pacer International Reports Annual and Fourth Quarter 2008 Results
Posted by: gurufocus (IP Logged)
Date: February 11, 2009 04:07PM
CONCORD, Calif.--(BUSINESS WIRE)--Pacer International, Inc. (Nasdaq: PACR), the asset-light North American freight transportation and logistics services provider, today reported financial results for the annual and
Press Release: Pacer International Reports Annual and Fourth Quarter 2008 Results
CONCORD, Calif.--(BUSINESS WIRE)--Pacer International, Inc. (Nasdaq: PACR), the asset-light North American freight transportation and logistics services provider, today reported financial results for the annual and three-month period ended December 26, 2008.
FOURTH QUARTER RESULTS
Revenues for the quarter ended December 26, 2008 decreased $36.5 million to $503.7 million compared to $540.2 million for the quarter ended December 28, 2007. Income from operations, which includes an $87.9 million pre-tax, non-cash goodwill impairment charge related to our logistics segment, was a loss of $75.0 million compared to an income of $35.2 million in the 2007 quarter. Net income declined from $20.6 million in the 2007 quarter to a net loss of $65.1 million, and diluted earnings per share declined $2.46 to a loss of $1.87 per share. Net income and diluted earnings per share both include the impact of the goodwill impairment charge ($73.3 million after-tax, or $2.11 per share). Intermodal segment income from operations decreased $27.3 million from the 2007 quarter on overall volume declines of 12.1 percent reflecting the U.S. and global economic downturn as well as the adverse developments relating to the automotive industry. Logistics segment income from operations decreased $87.9 million to a loss of $87.3 million compared to an income of $0.6 million in the 2007 quarter. Income from operations for the logistics segment includes the $87.9 million goodwill impairment charge in 2008 and was also negatively impacted by the economic downturn. Corporate costs for the 2008 quarter were $5.0 million less than the 2007 quarter principally due to a reduced performance incentive accrual coupled with the absence of severance expenses relating to our 2007 facility rationalization and severance program.
Net income, adjusted to exclude the $87.9 million pre-tax logistics segment goodwill impairment charge ($73.3 million after-tax), decreased to $8.2 million in the 2008 quarter from $20.6 million in the 2007 quarter. Adjusted diluted earnings per share declined to $0.24 from $0.59 in the 2007 quarter. Similarly, adjusted income from operations for the 2008 quarter declined $22.3 million to $12.9 million from $35.2 million a year earlier.
Note: 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 financial summary statements attached to this press release.
“While our cash-based results for the fourth quarter were positive, Pacer’s market capitalization, like that of many companies, was impacted by the sustained decline in the equity markets and overall economy. Both of these items were contributing factors to the non-cash impairment write-off of $87.9 million for our logistics segment. There was no impairment found in the intermodal segment. Our positive operating cash flow and low debt levels continue to provide Pacer with a sound financial foundation, a foundation that will help us weather the economic turbulence expected in 2009,” said Brian C. Kane, Executive Vice President and Chief Financial Officer of Pacer.
“Though none of us can predict the future or control the economy, we do have control over our actions and our priorities as a company. We are taking immediate steps to put our costs in line with current business levels by implementing strict spending controls on all non-customer related activities, and we recently completed a work force reduction,” added Michael E. Uremovich, Chairman and CEO of Pacer.
“While we understand there are challenging economic times ahead, we remain confident that our company will meet these challenges by remaining focused on our key initiatives: the continued development of our best-in-class intermodal services; significantly growing our local trucking capabilities; improving the performance of our logistics services; and successfully implementing the SAP systems platform integration to improve process efficiencies and reduce costs.”
For the year ended December 26, 2008, revenues increased $118.3 million to $2,087.7 million compared to $1,969.4 million for the year ended December 28, 2007. Income from operations declined $92.7 million to $1.8 million compared to $94.5 million in the prior year. Net income decreased from $54.3 million in 2007 to a loss of $16.6 million, and diluted earnings per share declined $1.99 to a loss of $0.48 per share compared to an income of $1.51 per share a year earlier. Income from operations, net income and diluted earnings per share all include the non-cash goodwill impairment charge of $87.9 million pre-tax, $73.3 million after-tax, or $2.11 per diluted share. Net income and diluted earnings per share also include a tax benefit of $3.5 million ($0.10 per share) for the resolution of open tax positions during 2008. Cash provided by operating activities was $59.6 million for 2008. The company repaid $20.2 million of debt during the year, paid $20.8 million in cash dividends and had capital expenditures of $24.8 million largely related to the SAP software project.
Net income, adjusted to exclude the $87.9 million pre-tax logistics segment goodwill impairment charge ($73.3 million after-tax) increased to $56.7 million in 2008 from $54.3 million in 2007. Adjusted diluted earnings per share increased to $1.63 from $1.51 in 2007. Similarly, adjusted income from operations for 2008 declined $4.8 million to $89.7 million from $94.5 million a year earlier.
CONFERENCE CALL TODAY--Pacer International will hold a conference call for investors, analysts, business and trade media, and other interested parties at 5:00 p.m. ET, today (Wednesday, February 11). To participate, please call five minutes early by dialing (888)276-0005(in USA) and ask for "4th Quarter Earnings Call." International callers can dial (612) 332-0228.
An audio-only, simultaneous Webcast of the live conference call can be accessed through the Investors link on the company’s Web site at www.pacer.com. For persons unable to participate in either the conference call or the Webcast, a digitized replay will be available from February 11 at 7:30 p.m. ET to March 13 at 11:59 p.m. ET. For the replay, dial (800) 475-6701(USA) or (320) 365-3844 (international), using access code 976637. The replay can be accessed through the Investors link on the company's Web site at www.pacer.com
ABOUT PACER INTERNATIONAL (www.pacer.com)
Pacer International is a leading asset-light North American freight transportation and logistics provider, and through its intermodal and logistics operating segments, offers a broad array of services to facilitate the movement of freight from origin to destination. The intermodal segment offers wholesale services provided by Pacer Stacktrain (cost-efficient, two-tiered rail transportation for containerized shipments) and Pacer Cartage (local trucking), as well as retail services through its Rail Brokerage unit (intermodal marketing). The logistics segment provides retail truck brokerage, trucking, warehousing and distribution, international freight forwarding, and supply-chain management services. Pacer International is headquartered in Concord, California. Its intermodal and logistics operating segments are headquartered in Concord, California, and in Dublin, Ohio, respectively.
USE OF NON-GAAP FINANCIAL MEASURES: This press release contains “non-GAAP financial measures” as defined by the Securities and Exchange Commission, including adjusted diluted earnings per share, adjusted net income and adjusted income from operations for the logistic segment and on a consolidated basis. These non-GAAP measures which exclude the effect of the company’s goodwill impairment write-off in the fourth quarter of 2008 are used by Management and the Board of Directors in their analysis of the company's ongoing core operating performance. Management believes that these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the company's core businesses and allows investors to more easily compare operating results from period to period. A tabular reconciliation of the differences between the non-GAAP financial information discussed in this release and the most directly comparable financial information calculated and presented in accordance with GAAP is contained in the financial summary statements attached to this press release.
CERTAIN FORWARD-LOOKING STATEMENTS--This press release contains or may contain forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). These forward-looking statements are based on the company's current expectations and beliefs and are subject to a number of risks, uncertainties and assumptions. Among the important factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements are general economic and business conditions including the length and severity of the current economic recession; industry trends, including changes in the costs of services from rail and motor transportation providers; difficulties in maintaining or enhancing our information technology systems including potential delays and cost overruns in the implementation of an enterprise suite of software applications that we purchased in the fourth quarter of 2007; the loss of one or more of our major customers; the effect of the current economic recession on our customers including reduced transportation needs and an inability to pay us on time or at all; the impact of competitive pressures in the marketplace; the frequency and severity of accidents, particularly involving our trucking operations; changes in the terms of contracts with our underlying rail carriers that are less favorable to us relative to our current contracts as these expire; the possibility of future goodwill impairment charges; changes in, or the failure to comply with, government regulation; changes in our business strategy, development plans or cost savings plans; congestion, work stoppages, equipment and capacity shortages, weather related issues and service disruptions affecting our rail and motor transportation providers; changes in fuel prices; changes is international and domestic shipping patterns; availability of qualified personnel; increases in interest rates; increases in our leverage; our ability to successfully identify and implement process improvements and cost savings opportunities to improve our operating results; our ability to integrate acquired businesses; and terrorism and acts of war. Additional information about these and other factors that could affect the company's business is set forth in the company's various filings with the Securities and Exchange Commission, including those set forth in the company's annual report on Form 10-K for the year ended December 28, 2007 filed with the SEC on February 19, 2008. Should one or more of these risks or uncertainties materialize, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described herein as anticipated, believed, expected or intended. Except as otherwise required by federal securities laws, the company does not undertake any obligation to update such forward-looking statements whether as a result of new information, future events or otherwise.