JACKSONVILLE, Fla.--(BUSINESS WIRE)--Nov. 14, 2002--Trailer Bridge,
Inc. (NASDAQ National Market: TRBR
- News)
Highlights
Trailer Bridge, Inc. (NASDAQ National Market: TRBR - News) today reported financial results for the third quarter ended September 30, 2002 (see attached table) highlighted by significantly reduced losses and an improved financial condition. The effects from what is anticipated to be continuing improvements in market conditions in the Puerto Rico lane is having a more pronounced effect on fourth quarter results than in the third quarter.
The discontinuance of the direct Northeast service at the end of last year, while significantly reducing costs, reduced revenues in Q3 2002 and led to an overall reduction in vessel capacity deployed of 20.4% this quarter when compared to the third quarter of 2001. Total revenue for the three months ended September 30, 2002 was $18,488,328, a decrease of $1,563,808, or 7.8%, compared to the prior year period; revenues in the third quarter of 2001 included sales related to the now terminated Northeast service. The Company's total volume of freight moving to and from Puerto Rico decreased 9.0% compared to the year earlier period.
Due to the discontinuance of the Northeast service, the Company believes that volume and yield comparisons solely related to freight moving via Jacksonville are most relevant. For the three months ended September 30, 2002, total southbound volume over Jacksonville increased 8.1% compared to the year earlier period and 3.5% sequentially from the second quarter of 2002. Northbound, total volume through Jacksonville increased 5.2% from the year ago period and 4.2% sequentially from the second quarter. The effective yield of all of the southbound freight moving via Jacksonville represented an increase of 0.6% from the year earlier period and a decrease of 1.5% sequentially from the second quarter. Northbound, the effective yield on all cargo moving via Jacksonville increased 2.9% from the year ago period and decreased 7.7% sequentially from the second quarter of 2002.
Trailer Bridge's deployed vessel capacity utilization overall during the third quarter of 2002 was 79.3% to Puerto Rico and 22.6% from Puerto Rico, compared to 69.5% and 19.1% overall, respectively, during the third quarter of 2001. Compared sequentially, the third quarter of 2002 capacity utilization figures represented increases southbound and northbound from the second quarter when deployed vessels were utilized 75.5% southbound and 21.3% northbound. The Company had an average of 198 tractor units operating on the mainland during the quarter, generating an average of 9,349 miles per month of which 80.2% were loaded, an improvement in both productivity and efficiency from the year earlier period (8,829 miles and 79.0% loaded, respectively) and a slight reduction sequentially from the second quarter of 2002 (9,383 miles and 82.1% loaded, respectively).
The Company's operating loss for the third quarter ended September 30, 2002 narrowed significantly to $1,519,385 from an operating loss of $4,851,420 in the year earlier period. This improvement was due to increased volume in Jacksonville, discontinuing the direct Northeast service, reductions in headcount and equipment and other cost-cutting initiatives. Compared sequentially to the second quarter of 2002, the operating loss increased by $1,057,436 primarily due to a difference in revenue mix, higher purchased transportation costs resulting from that difference and slight reductions in average revenue per actual trailer southbound and northbound. Total new car revenue for the third quarter was $1,185,567 less than the second quarter. The incremental costs associated with new car revenue are less than the incremental costs associated with trailers. In addition, part of the decrease in new car revenue included a non-recurring movement of new cars that moved northbound during the second quarter. All of Trailer Bridge's new car revenue results from contracts where Trailer Bridge is the exclusive carrier. As a result of the above, Trailer Bridge had an operating ratio of 108.2% during the third quarter of 2002 compared to 124.2% during the year earlier period and 102.5% compared sequentially to the second quarter. Net interest expense of $758,010 was down slightly from the year earlier period. Trailer Bridge also realized a net gain of $14,923 from equipment sales and other non-operating items during the quarter compared to a net gain of $38,157 from equipment sales during the year earlier quarter.
For the third quarter ended September 30, 2002, Trailer Bridge's loss before income taxes was $2,262,472, an improvement of $3,358,075 compared to the $5,620,547 pre-tax loss in the third quarter of 2001. With an effective tax rate of zero, the net loss for the third quarter was $2,265,777, as compared to a net loss of $5,598,418, for the year earlier period and a net loss of $1,130,298, sequentially in the second quarter of 2002. The net loss applicable to common shares for the quarter ended September 30, 2002 after accretion of preferred stock discount was equivalent to $.25 per share as compared to $.57 per share for the year earlier period. The accretion of preferred stock discount is a non-cash item as no actual dividends become payable and no liability will be recognized until 2003. As a result, this non-cash accretion item does not impact overall stockholders' equity.
At September 30, 2002, Trailer Bridge had total cash of $1,312,548, current assets of $12,952,309 and stockholders' equity of $10,571,492. Trailer Bridge's current assets were slightly below total current liabilities of $13,720,867 that included $3,053,442 in current portion of long term debt. The Company believes its liquidity is more than sufficient to meet all of its obligations, including all scheduled long-term principal payments. Trailer Bridge has remained in compliance with the new, reset financial covenants under its senior loan agreement and believes it will maintain compliance going forward.
During the three months ended September 30, 2002, Trailer Bridge rescheduled its principal payments under each of its two Title XI bond issues. The combined interest payment due on September 30, 2002 totaling $805,010 was paid on its scheduled date. Trailer Bridge had previously rescheduled the principal payments of $210,300 and $338,360, respectively, due on each of its Title XI bond issues September 30, 2001 and March 31, 2002 for payment on September 30, 2002 and March 31, 2003. This resulted in total scheduled principal payments for the Company's two Title XI issues of $420,600 and $676,720, respectively, for both September 30, 2002 and March 31, 2003. During the three months ended September 30, 2002, the Company rescheduled the full double principal payments due September 30, 2002 and one half of the double principal payments due March 31, 2003. As a result, commencing March 30, 2003, these rescheduled principal payments will be paid equally over the remaining scheduled principal payment periods of each Title XI issue. As rescheduled, the Company's semi-annual principal payments shall increase to $226,073 and $363,118 until fully paid September 30, 2022 and March 30, 2023, respectively. There was no fee or change in interest rate due to this rescheduling. The rescheduling of the double principal payments represents a $1.5 million increase in the Company's liquidity though March 31, 2003.
Additionally, through the issuance of non-convertible preferred stock in payment of an equal face amount of Trailer Bridge's debt to its affiliate, resulting in $10.6 million in stockholders' equity at September 30, 2002, Trailer Bridge has cured its previous non-compliance with NASDAQ maintenance standards thereby permitting the Company's continued listing on the NASDAQ National Stock Market.
The Company believes that the previous level of excess capacity has been the root cause of hyper-competitive conditions in the Puerto Rico market. However, this changed significantly in April 2002 when a competitor with a 27% market share discontinued operations and sold its vessel assets to another competitor. These vessels have since been withdrawn from the Puerto Rico trade lane. The effect on Trailer Bridge of this removal of capacity was mitigated during the seasonally slow period that continued through Labor Day and actual third quarter volumes and market shares are not indicative of equilibrium. With this change, Trailer Bridge believes it and the other remaining carriers in the lane will ultimately benefit from greater asset utilization and an unwinding of the unsustainable pricing characteristic of recent years. Trailer Bridge's own effective yield on core southbound loads is down approximately 25% from five years ago.
John D. McCown, Chairman & CEO, said, "Our own volume growth from the sector's recent changes didn't kick-in much for us in the third quarter due to seasonal and contractual factors, but we believe that the third quarter does not represent the equilibrium that the market will attain over the near term. We are encouraged that in the fourth quarter we are now experiencing meaningfully higher asset utilization. For the first six weeks of the fourth quarter, our actual southbound vessel utilization has been 90.0%. The basic tenants of what we anticipate going forward are still intact and the bubble that characterized a unique and specific business cycle in this freight lane is dissipating."
Trailer Bridge will discuss third quarter results in a conference call at 4:00 P.M. (Eastern Time) on Thursday, November 14th. The dial in number is 800-863-1575. The call will simultaneously be 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 and San Juan. 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, severe weather, changes in demand for transportation services offered by the Company, capacity conditions in the Puerto Rico lane and changes in rate levels for transportation services offered by the Company.
TRAILER BRIDGE, INC.
STATEMENT OF OPERATIONS
(Unaudited)
Three Months Nine Months
Ended September 30, Ended September 30,
2002 2001 2002 2001
----------- ----------- ----------- ------------
OPERATING REVENUES $18,488,328 $20,052,136 $54,085,091 $62,348,033
OPERATING EXPENSES:
Salaries wages, and
benefits 3,824,346 4,377,062 11,338,926 13,167,791
Rent and purchased
transportation:
Related Party 1,849,200 1,849,200 5,487,300 5,487,300
Other 5,586,815 6,857,226 14,794,016 20,495,392
Fuel 1,841,771 2,621,199 5,325,933 8,421,989
Operating and
maintenance
(exclusive of
depreciation shown
separately below) 4,186,873 5,788,434 11,822,377 18,192,884
Taxes and licenses 120,115 195,926 396,962 614,562
Insurance and claims 750,583 679,423 2,214,978 1,936,712
Communications and
utilities 142,628 187,586 467,351 515,340
Depreciation and
amortization 821,154 1,145,842 2,567,420 3,668,253
Other operating
expenses 884,228 1,201,658 2,170,187 3,363,254
----------- ----------- ----------- ------------
20,007,713 24,903,557 56,585,450 75,863,475
----------- ----------- ----------- ------------
OPERATING (LOSS)
INCOME (1,519,385) (4,851,420) (2,500,359) (13,515,442)
NONOPERATING INCOME
(EXPENSE):
Interest expense,
net (758,010) (807,284) (2,287,646) (2,491,824)
Other, net (8,880) - (8,566) -
Gain on sale of
equipment, 23,803 38,157 93,267 (148,379)
----------- ----------- ----------- ------------
(743,087) (769,127) (2,202,945) (2,640,203)
----------- ----------- ----------- ------------
(LOSS) INCOME
BEFORE BENEFIT
(PROVISION) FOR
INCOME TAXES (2,262,472) (5,620,547) (4,703,304) (16,155,645)
BENEFIT (PROVISION)
FOR INCOME TAXES (3,305) 22,129 (3,305) 22,129
----------- ----------- ----------- ------------
NET LOSS $(2,265,777) $(5,598,418) $(4,706,609)$(16,133,516)
ACCRETION OF
PREFERRED STOCK
DISCOUNT (221,775) (221,775)
NET LOSS APPLICABLE
TO COMMON SHARES (2,487,552) (5,598,418) (4,928,384) (16,133,516)
=========== =========== =========== ===========
LOSS PER
COMMON SHARE $ (0.25) $ (0.57) $ (0.50) $ (1.65)
=========== =========== =========== ===========
WEIGHTED AVERAGE
SHARES OUTSTANDING 9,777,500 9,777,500 9,777,500 9,777,500
=========== =========== =========== ===========
Trailer Bridge, Inc.
John D. McCown
Chairman & CEO
(800) 554 -1589
or
TRBR INVESTOR RELATIONS COUNSEL:
The Equity Group Inc.
www.theequitygroup.com
Devin Sullivan, 212/836-9608
Adam Prior, 212/836-9606