Trimac Announces Its Robust Fourth Quarter & Year-End Results

Mar 03, 2011, 14:17 ET from Trimac Transportation Ltd.

CALGARY, March 3 /PRNewswire-FirstCall/ - Trimac Transportation Ltd. (TSX: TMA) ("Trimac") today released the financial results of Trimac Income Fund (the "Fund") and Trimac Transportation Services Limited Partnership (the "Partnership") for the fourth quarter ended December 31, 2010.    

The Partnership's consolidated revenue, including fuel surcharges, for the three-month period ended December 31, 2010 ("current period") increased by $9.3 million or 14.2 percent as compared to the three month period ended December 31, 2009 ("prior period"). This increase was the result of increased volumes in most of the commodities hauled from new and existing customers, a $1.5 million increase in fuel surcharge revenue and incremental revenue of $0.9 million from the March 29, 2010 purchase of the assets of GH Trucking.

EBITDA for the current period increased by $1.2 million or 14.4 percent over the prior period to $9.5 million and as a percentage of revenue, EBITDA was 12.7 percent.  Net earnings for the current period increased to $4.5 million from the prior period amount of $1.2 million.  This was primarily as a result of higher revenue volumes referred to above, improved pricing, strong cost controls, improved utility and reduced depreciation due to a change in the estimated useful life of certain rolling stock.   

For the year ended December 31, 2010 ("current year"), consolidated revenue increased by 10.7 percent to $291.1 million from the $262.9 million reported for the year ended December 31, 2009 ("prior year") while EBITDA increased $4.2 million or 14 percent to $34.3 million for the current year. Operating earnings nearly doubled to $17.7 million in the current year from the $9.3 million reported in the prior year. 

In commenting on the results for the year Edward V. Malysa, President & Chief Operating Officer of Trimac, said "The Partnership's results in 2010 were significantly improved over 2009.  Our revenue increased by approximately 11 percent with improved EBITDA of 14 percent.  This was due to an improved economy, increased business levels with our long-term blue chip customer base, and our dedicated professional drivers and support team of mechanics, technicians and administrative staff."

Ken Arthur Receives Alberta Motor Transport Association's 2010 Safety Person of the Year
Trimac is pleased to announce that our own training instructor for the Trimac Learning Centre, Ken Arthur, has won the Safety Person of the Year!  This prestigious award is a great example of the commitment that Ken has, that goes beyond what is normally required, to the safety of the industry and to the Trimac truck drivers, mechanics and technicians.  It also demonstrates the excellent relationships Ken has built in the trucking and safety community to ensure that safety is in the forefront of everyone's mind.  In commenting on this award, Jeffrey J. McCaig stated, "We are very proud of Ken's dedication to Trimac's safety and the safety of the industry and are honoured to have him as part of the Trimac team.  Congratulations Ken!"

Financial Highlights for the Partnership    
         
  Three months ended     Year ended 
  December 31     December 31 
(millions of dollars) 2010 2009     2010 2009

Revenue

         
  Transportation revenue (1) 68.6 60.8     267.5 244.9
  Fuel surcharges (2) 6.4 4.9     23.6 18.0
  75.0 65.7     291.1 262.9
               
  Direct costs (1) 55.0 47.7     213.3 191.8
  Selling and administrative 10.5 9.7     43.5 41.0
             
EBITDA (3) 9.5 8.3     34.3 30.1
  Depreciation net of gains on disposal(4) 4.1 5.6     16.6 20.8
             
Operating earnings (1) 5.4 2.7     17.7 9.3
  Interest expense, net(5) 0.9 1.2     4.1 4.1
             
Earnings before taxes 4.5 1.5     13.6 5.2
  Income tax expense (6) - 0.3     0.2 (0.2)
Net earnings 4.5 1.2     13.4 5.4
             
As a percentage of revenue            
  Direct costs (1) 73.3% 72.6%     73.3% 73.0%
  Selling and administrative 14.0% 14.8%     14.9% 15.6%
  EBITDA(3) 12.7% 12.6%     11.8% 11.4%
  Depreciation (4) 5.5% 8.5%     5.7% 7.9%
  Operating earnings(3) 7.2% 4.1%     6.1% 3.5%
               
(millions of dollars)            
As at December 31,         2010 2009
               
  Total assets         143.8 140.1
  Total long-term liabilities(7)         68.9 45.3

(1)      Transportation revenue and direct costs have been restated in 2009 from those previously reported.  There has been no effect to net earnings.
(2)      Fuel surcharges are in place with substantially all customers to recover any changes in fuel prices within direct expenses.
(3)     EBITDA is defined as earnings before interest, taxes, depreciation and amortization and operating earnings are not recognized measures under GAAP, do not have a standardized meaning prescribed by GAAP and, therefore, may not be comparable to similar measures presented by other issuers.
(4)      Effective January 1, 2010, the Partnership revised its estimate of useful life on certain of its trailers.  The change was adopted prospectively and has resulted in lower depreciation expense of $0.5 million during the current period and $2.3 million during the current year.
(5)      Net of market value gain on derivative.
(6)     Includes a one-time future tax recovery of $0.7 million in 2009.
(7)      The increase is due mainly to the repayment of the Partnership's current debt maturities through the revolving credit facility which is classified as long-term debt.

Conversion to a Corporation
On January 1, 2011 the Fund converted to a corporate structure by way of a plan of arrangement under the Business Corporations Act (Alberta).  Pursuant to the plan of arrangement and related transactions, all of the units of the Fund and all of the exchangeable shares in the capital of Trimac Transportation Services Inc. ("TTSI") were transferred to Trimac in exchange for Class A Common Shares and Class B Convertible Voting Shares in the capital of Trimac and the Fund was subsequently dissolved.  Since January 1, 2011, Trimac through its investment in the Partnership has carried on the same business as was previously conducted by the Fund through its investment in the Partnership. It is expected that Trimac will pay an annual dividend of $0.25, payable on a quarterly basis.

Declaration of Quarterly Dividend
The Board of Directors today declared a dividend of $0.0625 per share on the Class A Common Shares, payable on April 15, 2011 to shareholders of record at the close of business on March 31, 2011.  This dividend is designated as an eligible dividend pursuant to subsection 89(14) of the Income Tax Act (Canada) and any applicable provincial legislation pertaining to eligible dividends.

New Terms for Credit Facility
Following the conversion of the Fund from a trust structure, the Partnership and TTSI amended and restated its existing credit agreement on its $85 million syndicated revolving credit facility. Under the amended terms, the credit agreement is not subject to renewal until July 31, 2013. If the facility is not renewed at this time, the loans are repayable one year after the termination date. The previous agreement was subject to renewal in July 2011. In addition, as was noted in our third quarter press release, the amended agreement also includes a reduction in interest rate spreads of 100 basis points. 

Normal Course Issuer Bid
The Board of Directors of Trimac has approved the repurchase of up to 1,100,000 Class A Common Shares by Trimac.  The Board of Directors and management of Trimac believe that at the present time, and from time to time, the trading price of the Class A Common Shares on the TSX does not reflect the underlying value of the Class A Common Shares and that such repurchases are accretive to those shareholders of Trimac who continue to hold their shares.  Trimac will repurchase such Class A Common Shares pursuant to available exemptions from the issuer bid requirements under applicable Canadian securities laws including the repurchase of 400,000 Class A Common Shares from a director of Trimac, followed by a repurchase of up to 700,000 Class A Common Shares pursuant to a normal course issuer bid through the facilities of the TSX, subject to the acceptance by the TSX of a Notice of Intention to Make a Normal Course Issuer Bid to be filed by Trimac.  The repurchase of the 400,000 Class A Common Shares from a director of Trimac will be completed in March 2011 and the purchase price per Class A Share will be equal to the simple average closing price of the Class A Common Shares on the TSX for each of the business days on which there was a closing price for the Class A Common Shares during the 20 business days preceding the effective date of the transaction.

Forward-Looking Statements
Certain information included in this news release constitutes "forward-looking statements".  Trimac cautions that, by their nature, these forward-looking statements are based on suppositions, risks, and uncertainties as well as on management's best possible evaluation of future events. Trimac cautions that its assumptions may not materialize and that current economic conditions render such assumptions, although reasonable at the time they were made, subject to greater uncertainty. Such forward-looking statements are not guarantees of future performance and the actual results or performance of Trimac or the transportation industry may be materially different from the outlook or any future results or performance implied by such statements.  Please see "Forward-Looking Statements" in the Management's Discussion and Analysis of Trimac Income Fund and Trimac Transportation Services Limited Partnership for the year ended December 31, 2010 for a discussion on the material factors that could cause actual results to differ from the forward-looking information contained herein and the material factors and assumptions that were applied in preparing such forward-looking information.

Trimac is Canada's largest provider of bulk trucking services with operations from coast to coast.  In addition, through its National Tank Services division, Trimac performs repairs, maintenance and tank-trailer cleaning services for both the Trimac fleet and for third party commercial customers. Trimac also provides third party transportation logistics services in Canada and the United States through its wholly owned subsidiary Bulk Plus Logistics.  Shares of Trimac Transportation Ltd. are traded on the Toronto Stock Exchange under the symbol TMA.

For more detailed information, please visit our website at www.trimac.ca or SEDAR at www.sedar.com and review our MD&A and financial statements for the Fund and the Partnership. 

You are invited to join us on a conference call (conference ID 3297801) at 10:30 a.m. Eastern Time on Friday, March 4, 2011.  For North American participants, please dial 1-800-820-0231 or for international participants, please dial ++1-416-640-5926 at least 10 minutes prior to the start time of the call.  An audio playback of the call will be available starting Monday, March 7, 2011 on our website at http://www.trimac.ca/page/eventscalendar.

SOURCE Trimac Transportation Ltd.