Contrans Announces Record Financial Results
WOODSTOCK, ON, March 5, 2013 /CNW
|For the years ended December 31|
|($CAD millions except share and per share amounts)||2012||2011|
|- fuel surcharges||(77.8)||(60.7)|
|Revenue||- transportation services||444.4||100.0||%||378.1||100.0||%|
|Direct operating expenses - net of fuel surcharges (1)||350.3||78.8||299.0||79.1|
|General and administration expenses||47.6||10.7||43.7||11.5|
|Net financing costs||6.9||1.6||5.6||1.5|
|Earnings before income taxes||39.6||8.9||29.8||7.9|
|Income tax expense||11.3||2.5||9.3||2.5|
|Net earnings and comprehensive income||$||28.3||6.4||%||$||20.5||5.4||%|
|Earnings per share - basic and diluted||$||0.83||$||0.57|
|Weighted average shares outstanding (000s):|
|Long-term debt and finance lease obligations||131.2||132.4|
|Cash and cash equivalents and short-term investments||33.6||71.1|
|Dividends declared per share||0.40||0.38|
|Amortization of intangibles||$||4.2||$||4.0|
(1) See "Use of non-GAAP Financial Measures" below.
"Contrans established several new company records with an exceptional financial performance in 2012," stated Contrans' Chairman and Chief Executive Officer, Stan Dunford. "Given the state of the economy in 2012, this accomplishment is even more satisfying. Contrans' 2012 success is attributable to robust internal growth, the contributions of new business units that were acquired and the dedication of the Company's managers, employees and owner-operators."
"Great customer service means much more than moving goods from point to point," added Mr. Dunford. "For years, our managers have been finding operating efficiencies and innovative solutions that have made our customers more successful. These efforts have set the standard for excellence in customer service for our industry. Furthermore, Contrans' operating capabilities have been complemented by the Company's financial strength and stability. Armed with a strong balance sheet, Contrans has been able to respond quickly to customer demands that have required substantial capital investment in specialized equipment. The Company's financial strength and stability also provides assurance that Contrans will maintain its investment in its modern, well-equipped fleet. These attributes differentiate Contrans from its competitors and have earned us the trust of our customers, the privilege to haul their freight and the reward of being compensated fairly for doing so."
"After considering Contrans' strong balance sheet and the record financial performance achieved in 2012, the Company's Board of Directors announced its intention to increase the Company's dividend by 25%," continued Mr. Dunford. "This announcement also reflects the Board's confidence in management's ability to continue to successfully execute its business plans. The Board remains committed to paying out a significant portion of the Company's earnings to its shareholders. We believe that this strategy should make Contrans attractive to yield-seeking investors."
"Management is pleased to deliver record-setting results and a dividend increase to Contrans' shareholders and seeks to improve upon this performance," concluded Mr. Dunford. "Our goal is to be the best, not the biggest. To achieve this goal, we will remain committed to operating with the same disciplines that have allowed Contrans to grow steadily and profitably for so many years. Quite simply, our business model works - in good times and in bad, to the benefit of the long-term value of our shareholders."
Results from Operations
Business acquisitions contributed approximately $38.6 million of revenue from transportation services ("revenue") in 2012 and $9.4 million in the fourth quarter of 2012 ("2012 Q4"). There was also internal growth throughout Contrans' operating units in 2012 that approximated $27.8 million. This was the result of adding new customers and from securing additional lanes from existing customers. Fuel surcharges increased in 2012 compared to 2011 due to increased revenue and higher average fuel prices.
Direct operating expenses
Acquisitions added approximately $31.0 million to direct operating expenses in 2012 ($6.8 million - 2012 Q4). Excluding the impact of acquisitions, provisions for insurance claims were $1.1 million higher in 2012 than in 2011 ($0.1 million increase in 2012 Q4 compared to 2011 Q4). Depreciation of tractors and trailers was $3.2 million higher in 2012 than in 2011 ($0.5 million higher - 2012 Q4). The impact of these increased costs was mitigated by improved equipment utilization.
General and administration expenses
Acquisitions added approximately $2.9 million of general and administration expenses in 2012 ($0.6 million - 2012 Q4). Improved profit performance in 2012 compared to 2011 has resulted in an increase in the provision for management incentive plans by $1.7 million in 2012 compared to 2011 ($0.3 million increase in 2012 Q4 compared to 2011 Q4). This was partially offset by a $0.6 million reduction in share-based compensation expense in 2012 compared to 2011, arising from the graded recognition respecting the Company's stock options that were issued in 2011 Q2 ($0.1 million reduction in 2012 Q4 compared to 2011 Q4). Contrans' assessment from the Ontario Workplace Safety and Insurance Board's New Experimental Experience Rating ("NEER") program improved in 2012. The provision for NEER surcharges was reduced by $0.7 million in 2012 accordingly. Professional fees of $0.6 million were incurred in respect of management's proposal to Contrans' shareholders to eliminate the Company's dual class share structure in the first half of 2012. The provision for doubtful accounts was reduced by $0.4 million in 2011 but was not adjusted significantly in 2012.
Net financing costs
Net financing costs increased by $1.3 million in 2012 compared to 2011 ($0.2 million - 2012 Q4). Financing costs increased in 2012 as average debt levels increased in 2012. Contrans' financing income decreased in 2012 as the Company used cash and short-term investments to fund business acquisitions and to complete its normal course issuer bid ("NCIB").
Contrans invested $24.7 million in business acquisitions in 2012. In addition, the Company incurred $22.7 million in net capital expenditures in 2012. This amount includes $5.9 million of expenditures that were funded with finance leases and $4.9 million for internal growth purposes.
Contrans purchased 1.6 million Class A shares for cancellation under its NCIB for consideration of $13.7 million in 2012. The NCIB was initiated in November 2011 and was completed on April 4, 2012. The bid resulted in a total of 2.1 million Class A shares being purchased for cancellation for total consideration of $17.7 million. The average price paid was $8.42 per share for the purchases under the NCIB.
Contrans' Board of Directors has declared the following dividends:
|Declaration Date||Paid on||
|January 18, 2012||February 15, 2012||$0.10||$3.4 million|
|April 18, 2012||May 15, 2012||$0.10||$3.4 million|
|July 18, 2012||August 15, 2012||$0.10||$3.4 million|
|October 18, 2012||November 15, 2012||$0.10||$3.4 million|
|January 16, 2013||February 15, 2013||$0.10||$3.4 million|
The payment of dividends is subject to the discretion of Contrans' Board of Directors. Prior to declaring a dividend, the Board of Directors considers many factors, including Contrans' overall financial condition, its expected future financial performance, its anticipated capital requirements as well as its debt repayment obligations and the covenants that are contained in Contrans' loan agreements.
Construction commenced in late 2012 on a new terminal in Edmonton, Alberta to replace rented premises for the Company's waste collection business. Costs to complete the plans are expected to range between $6.0 million to $7.0 million.
Use of Non-GAAP Financial Measures
Management has included a non-GAAP financial measure, "Direct operating expenses - net of fuel surcharges", to supplement its consolidated financial statements. This non-GAAP measure does not have any standardized meaning prescribed under IFRS and therefore it may not be comparable to similar measures employed by other issuers. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
Management believes that it is important to isolate the effects of fuel surcharges, a volatile source of revenue and operating expenses, when analyzing operating results. Accordingly, the percentages in the Financial Highlights table were calculated using revenue from transportation services alone as the base. In addition, operating expenses are stated after netting fuel surcharges against fuel expenses in the Financial Highlights table. Management believes that this facilitates a better comparison of operating costs between periods.
Management's discussion and analysis contains certain forward-looking statements that involve a number of risks and uncertainties. Forward-looking statements relate to future events or future performance and include, but are not limited to, changes in government regulations regarding weights and dimensions of highway equipment, the age and condition of the transportation fleet and the growth of Contrans' business. Often, but not always, forward-looking statements can be identified by terminology such as ''may'', ''will'', ''should'', ''expect'', ''plan'', ''anticipate'', ''believe'', ''estimate'', ''predict'', ''potential'', ''continue'' or the negative of these terms or other comparable terminology. Such statements reflect the current views and estimates of management of Contrans with respect to future events, as of the date such statements are made, and they involve known and unknown risks and uncertainties which may cause actual events or results to differ materially from those expressed or implied by forward-looking statements. In evaluating these statements, readers should specifically consider factors such as the risks outlined under ''Risk Factors" in Contrans' Annual Information Form, which is available at www.sedar.com. Although Contrans has attempted to identify important factors that could cause actual events, actions or results to differ materially from those described in the forward-looking statements, there may be other factors that cause such events, actions or results to differ. Contrans is under no obligation (and expressly disclaims any such obligation) to update forward-looking statements if circumstances or management's views or estimates change. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements.
SOURCE Contrans Group Inc.
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