2001 First Quarter ResultsTrailer Bridge, Inc. Press Release Trailer Bridge Reports First Quarter Results JACKSONVILLE, Fla. -- Trailer Bridge, Inc. (TRBR) today reported financial results for the first quarter ended March 31, 2001. Total revenue for the three months ended March 31, 2001 was $20,636,713, a decrease of $696,693, or 3.3% compared to the first quarter of 2000. Core trailer volume to Puerto Rico increased 7.7% compared to the year earlier period while total car and other vehicle volume was down 27.1% compared to the year earlier period. As a result, core trailer revenue increased $431,236 or 3.3%, compared to the year earlier period; conversely, car and other vehicle revenue decreased 30.1% compared to the year earlier period. For the first quarter, revenue from shipper owned or leased equipment moving to Puerto Rico decreased $220,865, or 27.1%, from the year earlier period. Trailer volume from Puerto Rico decreased 8.8%, while related revenue decreased $231,197, or 10.6%, compared to the first quarter of 2000. Total domestic revenue of $986,338 represented an increase of $242,845, or 32.7%, from the year earlier period. The PIERS data indicates that the overall Puerto Rico market was up 1.5% compared to the year earlier quarter but down 6.4% compared sequentially to the fourth quarter of 2000. Based upon the change to weekly frequency in the Northeast, the effect of which was mitigated by the dry-docking of both roll-on, roll-off vessels, Trailer Bridge had 9.1% more overall vessel capacity in the Puerto Rico lane compared to the first quarter of 2000 but 2.5% less capacity compared to the fourth quarter The market conditions characterized by excess high-cost vessel capacity continued throughout the first quarter. Recent overall market volume reductions and the movement towards a bankruptcy filing by a large carrier further exacerbated competitive activity. On March 21, 2001, the largest participant in the Puerto Rico market, NPR/Navieras, which had a 29.0% share of market in 2000, in conjunction with its parent and affiliates filed for Chapter 11 bankruptcy protection in the Delaware Bankruptcy Court in Wilmington, Delaware. Comparing overall market share changes from the fourth quarter of 2000 to the first quarter of 2001, all carriers other than Navieras increased their market share, although generally below Trailer Bridge's increase. Navieras market share declined 3.7 percentage points to an overall share of 25.0% in the first quarter. The operating loss for the first quarter ended March 31, 2001 was $4,532,174, as compared to an operating loss of $903,031 in the prior year period. The first quarter results do not include a forgiveness of charter due to an affiliate of $1,809,000 that was accounted for outside of the income statement as a capital contribution. The first quarter results also include a dry-docking expense of $877,865 related to the entire expenditures on the five-year regulatory dry-docking of a vessel in January. Compared to the first quarter of 2000, operating income was lower primarily due to lower capacity utilization, lower yields, the costs related to an additional vessel, the dry-docking expense and higher purchased transportation and fuel costs. As a result of the above, the operating ratio was 122.0% during the first quarter of 2001 compared to the 104.2% operating ratio during the year earlier period. Net interest expense of $873,862 was down $70,134 from the year earlier period. The Company's loss before income taxes for the first quarter ended March 31, 2001 was $5,374,153, compared to a pre-tax loss of $1,836,265 in the year earlier period. After a full valuation allowance for income tax credits, the net loss for the first quarter remained at $5,374,153, or $.55 per share, as compared to a net loss of $1,150,927, or $.12 per share for the year earlier period. After reflecting the capital contribution of $1,809,000, or $.18 per share, stockholder's equity decreased $3,609,046 or $.36 per share. That change in stockholder's equity represented an improvement of $.62 per share sequentially from the $.98 per share reduction in stockholder's equity in the fourth quarter. Note that the first quarter of 2001 includes no income tax effect while the year earlier period included a $.07 per share non-cash tax credit and the fourth quarter of 2000 included a $.38 per share non-cash tax charge. Approximately 94% of the overall operating loss for the first quarter
occurred in January and February. The following table highlights the
actual operating results for the quarter by month. Note that the
dry-docking occurred in January and that no one month should be looked at
in isolation. This additional disclosure does demonstrate, and can be
interpreted to mean, that performance at the end of the quarter was well
above performance at the beginning of the quarter. January February March 1Q2001 Revenue 6,973,092 6,351,438 7,312,183 20,636,713 Operating (loss) income (2,343,337) (1,903,970) (284,866) (4,532,173) Net (loss) income (2,647,592) (2,186,152) (540,409) (5,374,153) For the three months ended March 31, 2001, Trailer Bridge received lending support from an affiliate totaling approximately $3.2 million comprised of $1.0 million in direct advances, $800,000 to fund dry-docking expenditures and $1.4 million at the end of the quarter to fund the semi-annual Title XI payment. The forgiveness of charter previously paid during the first quarter was accomplished through a reduction of $1,809,000 in amounts due to an affiliate. At March 31, 2001, cash amounted to $481,508, working capital was $3.0 million and stockholders equity was $15.3 million. One measure of cash flow for the Company is operating income before depreciation, related party charter and dry-docking expenses. Using this measure, operating cash flow as defined increased $1,523,892 sequentially from negative $2,070,998 in the fourth quarter to negative $547,106 in the first quarter. The Company believes that it presently has sufficient capital resources and liquidity for its current and anticipated operations. For the three months ended March 31, 2001, total southbound volume increased 1.8% and total northbound volume decreased 9.0% compared to the year earlier period. These year-to-year overall comparisons were affected by declines in car and other volume. Trailer and container volume alone increased 7.7% southbound while decreasing 9.3% northbound. Southbound market share improved to 13.6% from 12.2% from the year earlier period and 13.2% in the fourth quarter of 2000. Northbound market share declined slightly to 15.3% from 15.6% from the year earlier period but recovered significantly from the 13.8% in the fourth quarter of 2000. Overall combined market share improved to 14.0% in the first quarter of 2001 from 13.0% in the first quarter of 2000 and 13.4% in the fourth quarter of 2000, continuing the upward trend that has been consistently evident in year-to-year and sequential quarterly comparisons. Comparing total volume and total revenue by direction, Trailer Bridge's effective yield to and from Puerto Rico decreased 6.7% and 5.2%, respectively, compared to the same period last year. Trailer Bridge had an average of 202 tractor units operating on the mainland during the quarter, generating 9,202 miles per month of which 74.7% were loaded. Those later figures represented a meaningful improvement sequentially from the fourth quarter of 2000 when our tractors averaged only 8,815 miles per month of which 72.7% were loaded. Therefore, the average tractor was realizing 7.3% more loaded miles in the first quarter compared to the fourth quarter. The Company anticipates that the loaded miles of its tractors will continue to increase due to improved operating procedures that are resulting in more miles and a lower deadhead percentage. The Company's Puerto Rico deployed vessel capacity utilization overall during the first quarter was 70.7% to Puerto Rico and 22.0% from Puerto Rico. These were below comparable figures of 74.7% to Puerto Rico and 26.8% from Puerto Rico during the first quarter of 2000. As implied in the table above, however, Trailer Bridge's vessel capacity utilization was improved at the end of the quarter. All of these capacity utilization figures are based upon vessels deployed in service and exclude the effect of one Triplestack Box Carriers(TM) that is presently laid-up. Total net expenses related to that vessel, consisting primarily of depreciation and interest, were $150,762 during the first quarter. In February, the Company made changes related to tugs pulling two of the Triplestack Box Carriers(TM) and believes these changes will lead to better schedule integrity. Both of the roll-on, roll-off vessels began their five-year regulatory dry-docking during the quarter. As a result of this event and the accounting method the Company has elected, the entire drydocking expenditure incurred in the first quarter of $877,865 was expensed. The prevailing practice in the marine industry is to capitalize and amortize dry-docking costs over some future period. Our understanding is that the method preferred by the SEC is to expense these maintenance costs when incurred. Because new accounting rules currently under consideration will likely require similar treatment, and because the Company believes that capitalizing such costs overstates assets, it has elected a conservative accounting treatment relative to most other marine companies, including it's competitors. Due to these dry-dockings, two less roll-on, roll-off voyages, one at the beginning and one at the end, occurred during the quarter. The revenue related to the voyages immediately preceding the dry-dockings was $1.8 million. While not all revenue related to the cancelled voyages is lost when Trailer Bridge is not operating at capacity, there are cost implications to a lost sailing. As such, Trailer Bridge believes that the revenue from a sailing preceding a cancelled voyage is a simple, effective proxy for the overall impact to the Company. Both in recognition of this and in furtherance of its support of Trailer Bridge's superior business model, the affiliate that owns the vessels elected to forgive the entire $1,809,000 of charter that would otherwise have been due during the first quarter. This forgiveness was treated as a direct capital contribution and not shown as a reduction of operating expenses. The Company expects this affiliate, which itself has stockholders equity in excess of $25 million, will, as needed, continue its demonstrated commitment to and belief in Trailer Bridge. During the first quarter of 2001, total volume on the direct Northeast to Puerto Rico lane decreased 16.5% and 5.7% southbound and northbound, respectively, compared sequentially to the fourth quarter. At the beginning of the fourth quarter, the Port Newark to San Juan service was expanded to weekly frequency from its prior bi-weekly frequency. Overall vessel capacity utilization on the Northeast segment was 50.4% and 8.2% southbound and northbound, respectively, in the first quarter compared to 70.7% and 7.9% in the fourth quarter. Total revenue of $3,448,478 on the Northeast lane was 9.1% less in the first quarter than in the fourth quarter. Trailer Bridge estimates that the loss related to the Northeast service was $1,619,916 during the first quarter, a slight improvement sequentially from the fourth quarter primarily due to lower terminal costs in the Northeast. Performance on this segment relative to the fourth quarter was adversely affected by tug related issues that have been addressed with tug changes discussed above. Despite the present unsatisfactory results on that segment, the Company remains confident about the ultimate performance in this important lane. John D. McCown, Chairman and CEO, said, ``The challenges we face are rooted in macro-economic issues. The supply/demand imbalance in the industry will be sorted out, as it always is, by cost-efficiency, commitment and stamina, metrics where we have comparative advantages. Meanwhile, there is always room for improvement in our own operations and we are all hard at work to build upon and improve our superior freight system.'' Trailer Bridge will discuss first quarter results in a conference call at 4:00 P.M. (Eastern Time) on Tuesday, May 15. The dial in number is 1-212-271-4767. The call will also be simultaneously broadcast over the Internet. To listen to the live webcast, please go to www.trailerbridge.com and click on the conference call link. The conference call will be archived and accessible for approximately 90 days if you are unable to listen to the live call. Trailer Bridge provides integrated trucking and marine freight service to and from all points in the lower 48 states and Puerto Rico, bringing efficiency, environmental and safety benefits to domestic cargo in that traffic lane. This total transportation system utilizes its own trucks, drivers, trailers, containers, U.S. flag vessels and marine facilities in Jacksonville, New York and San Juan. Trailer Bridge's founder and majority stockholder is Malcom P. McLean, the transportation pioneer who invented containerization forty years ago. Additional information on Trailer Bridge is available at the www.trailerbridge.com website. This press release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The matters discussed in this press release include statements regarding the intent, belief or current expectations of the Company, its directors or its officers with respect to the future operating performance of the Company. Investors are cautioned that any such forward looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those in the forward looking statements as a result of various factors. Without limitation, these risks and uncertainties include the risks of economic recessions, changes in demand for transportation services offered by the Company, and changes in rate levels for transportation services offered by the Company. TRAILER BRIDGE, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months
Ended March 31,
---------------------------------
2001 2000
----------- -----------
OPERATING REVENUES $20,636,713 $21,333,405
OPERATING EXPENSES:
Salaries wages, and benefits 4,435,428 4,123,808
Rent and purchased
transportation:
Related Party 1,809,000 1,829,100
Other 6,865,071 5,610,414
Fuel 2,850,887 2,473,776
Operating and maintenance
(exclusive of
depreciation shown
separately below) 6,047,753 5,122,683
Taxes and licenses 181,968 160,102
Insurance and claims 636,072 601,134
Communications and utilities 170,040 163,981
Depreciation and amortization 1,298,202 1,210,230
Other operating expenses 874,466 941,208
----------------- -----------------
25,168,887 22,236,436
----------------- -----------------
OPERATING INCOME (LOSS) (4,532,174) (903,031)
NONOPERATING INCOME
(EXPENSE):
Interest expense, net (873,862) (943,996)
Gain on sale of equipment, 31,883 10,762
----------------- -----------------
(841,979) (933,234)
----------------- -----------------
INCOME (LOSS) BEFORE
(PROVISION)
BENEFIT FOR INCOME TAXES (5,374,153) (1,836,265)
(PROVISION) BENEFIT
FOR INCOME TAXES - 685,338
----------------- -----------------
NET INCOME (LOSS) $(5,374,153) $(1,150,927)
================= =================
NET INCOME (LOSS) $ (0.55) $ (0.12)
================= =================
WEIGHTED AVERAGE
SHARES OUTSTANDING 9,777,500 9,777,500
================= =================
Contact: Trailer Bridge, Inc., Jacksonville
Ralph W. Heim, 800/554-1589
or
(TRBR INVESTOR RELATIONS COUNSEL)
The Equity Group Inc., New York
Devin Sullivan, 212/836-9608
Adam Prior, 212/836-9606
www.theequitygroup.com
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