Trailer Bridge, Inc. (NASDAQ Global Market: TRBR) today
reported audited financial results for its fourth quarter and
twelve-months ended December 31, 2010 (see attached tables).
Refinancing Progress
Trailer Bridge also announced significant progress on the
re-financing of its 9 1/4 % Notes due November 2011. The Company
expects to refinance these Notes prior to their due date of
November 2011. The Company is actively working with two lenders on
a combined refinancing to redeem the Notes and concurrently
refinance other indebtedness of the Company. The Company is in the
process of documentation with the lenders and in the second quarter
expects to give the required 45 – 60 day notice to the existing
bondholders of its intent to redeem such notes. The expected
blended interest rate will be under 10.25%, and the Company will
incur certain one-time charges at the time of closing. The
refinancing is expected to consist solely of debt, to bear interest
at a variable rate, in part, and at a fixed rate, in part, to have
a term of not less than five years, and to be secured by
substantially all of Trailer Bridge’s revenue generating assets.
Since the Company has not refinanced its public Notes due November
2011, the $82.5 million is treated as a current liability and the
unqualified audit report of its Independent Registered Certified
Public Accounting Firm includes an explanatory going-concern
paragraph.
Completion of San Juan Ramp Capital Improvement
Trailer Bridge held the inauguration of its new ramp in San Juan
on March 18, 2011. This ramp replaces an older, smaller ramp. The
ramp is designed with a 50-year life, meets all hurricane and
earthquake codes, and will handle significantly heavier loads than
the ramp it replaced. The company expects to attract new freight
that could not previously be handled by the prior ramp. In
addition, maintenance expenses associated with the prior ramp will
be significantly reduced going forward. The new ramp represents a
$6 million investment by the Company to serve the Puerto Rico
market with significantly improved capability and service.
Completion of Two Ro/Ro Vessel Five-Year Regulatory Dry
Docking
The regulatory dry docking of two ro/ros commenced in late
December 2010. A TBC (triplestack box carrier) has replaced one
ro/ro during the dry docking to provide our twice weekly service to
customers. The normal weekly ro/ro service is expected to return on
April 8, 2011.
Ivy Suter, Trailer Bridge’s Chief Executive Officer, said, “We
are pleased with the progress we have made on the refinancing of
our Notes due in November 2011, and we expect to give notice of
redemption to the holders in the second quarter. We are also
pleased with the completion of our new loading ramp in San Juan
that will enhance our capabilities and the expected completion of
our regulatory 5-year dry docking on our two ro/ro vessels, both on
schedule and on budget.”
Operational Review
The Company's deployed vessel capacity utilization during the
fourth quarter was 97.5% southbound and 22.2% northbound, compared
to 92.0% and 29.8%, respectively, during the fourth quarter of 2009
on one less sailing than the previous year, and 91.9% and 25.9%,
respectively, sequentially from the third quarter of 2010. The
fourth-quarter sailing schedule was impacted by weather which
required additional expense of approximately $200,000 to insert an
additional vessel and tug to return to our normal schedule. The
reduction of one sailing at the end of the fourth quarter enabled
the commencement of the ro/ro dry docking.
Fourth Quarter Financial Review
- The Company had revenue of $28.4
million during the quarter, compared to $30.7 million in the prior
year, down 7.6% from the prior year period and down 3.0%
sequentially from the third quarter of 2010. Excluding the effect
of fuel surcharges, revenue decreased 11.3% from the prior year
period and 4.0% from the third quarter of 2010. Charter revenues
were lower during the period at $0.1 million, compared to $1.3
million in the prior year period, and lower by $0.9 million
sequentially from the third quarter of 2010.
- The Company reported an operating loss
of $0.4 million in the fourth quarter of 2010 versus operating
income of $3.6 million in the prior year period and $2.5 million in
the third quarter of 2010.
- Net loss for the fourth quarter of 2010
was $2.9 million, or $0.24 per basic and diluted share, compared to
net income of $1.0 million, or $0.08 per basic and diluted share,
in the prior-year period. Expenses related to the ro/ro dry docking
were approximately $446,000, and there was a non-recurring
employment related settlement charge of approximately $200,000
incurred in this period.
- EBITDA for the fourth quarter of 2010
was $1.1 million, declining from $5.2 million in the prior-year
period. Adjusted EBITDA, as detailed in the accompanying table, was
$1.8 million in the fourth quarter of 2010.
Twelve Month Financial Review
- The Company reported revenue of $118.2
million during the twelve months ended December 31, 2010, up 3.4%
from $114.3 million in the prior year period. Excluding the effect
of fuel surcharges, revenue increased by 0.3% from the prior year
period.
- The Company reported operating income
of $7.7 million for the twelve months ended December 31, 2010,
compared to operating income of $12.7 million for same period in
the prior year.
- Net loss was $2.3 million, or $0.19 per
basic and diluted share, for the twelve months ended December 31,
2010 compared to net income of $2.6 million, or $0.22 per basic and
diluted share, for the same period in the prior year.
- Adjusted EBITDA, as detailed in the
accompanying table, was $15.9 million for the twelve months ended
December 31, 2010 compared to $22.8 million for the same period in
the prior year.
Ms. Suter continued, “Our fourth quarter results were negatively
impacted in two areas that management had expressed concern about
in previous earnings releases and conference calls – its charter
business and its northbound liner accounts that are driven by
payments from the Puerto Rico government. Shortfalls in these two
areas account for the majority of the decline in earnings for the
period, when combined with expenditures related to dry docking and
an employment-related settlement.
The Company’s charter business was negatively affected by events
in the Gulf of Mexico in April of 2010, resulting in almost no
charter revenue in the fourth quarter. In response, we redirected
our marketing and sales efforts, resulting in long-term charters
for all three of its vessels in charter service, with the first
charter having started in March 2011 to be followed by the next two
charters in May 2011. The northbound liner accounts that were
negatively impacted rely on payments from the Puerto Rico
government, which slowed significantly in the 3rd and 4th quarters,
resulting in additional reserves and a reduction in our revenue and
profitability. This situation has continued into the 1st quarter of
2011. We expect resolution to occur in 2011; however, to reverse
this situation, the company has begun to replace this volume from
several new northbound accounts that gained traction in the 1st
quarter of 2011.”
Ms. Suter concluded, “While the Puerto Rico market remains
challenging and the price of fuel continues to rise, we note that
our southbound volume in the fourth quarter of 2010 increased both
compared to the third quarter of 2010 and the fourth quarter of
2009. The yield on our core southbound container volume for the
fourth quarter of 2010 was essentially flat compared sequentially
to the third quarter of 2010 and down slightly compared to the
fourth quarter of 2009. Yield deterioration for the full year 2010
was related specifically to non-containerized freight, which
declined significantly. With the expense of the ro/ro drydockings
as well as the disruption associated with a ro/ro sailing only
every other week we will report a loss in the first quarter of
2011. With our dry-docking and ramp projects completed, we expect
to return to our normal deployment in the second quarter.”
Financial Position
At December 31, 2010, the Company had cash balances of $11.5
million and working capital deficit of $71.8 million due to the
inclusion of the $82.5 million in Notes due in November 2011.
Treating such Notes as long-term, the Company’s working capital
would have been $10.7 million. As of December 31, 2010, the Company
had no outstanding amount on its $10.0 million revolving credit
facility, and, based upon eligible receivables, had $7.1 million of
availability under this facility. During the twelve months ended
December 31, 2010, net cash from operating activities was $8.9
million.
Conference Call
The Company will discuss these results in a conference call on
Friday, April 1, 2011 at 10:00 AM ET.
The dial-in numbers are:
(888) 737-9834 (In the United States) (706) 643-9215
(International)
A recorded replay of the call will be available until 11:59 PM
Eastern Time on April 3, 2011. Listeners may dial 800-642-1687 (In
the United States) or 706-645-9291 (International) and use the code
39084049 for the replay.
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, or go
directly to:
http://www.investorcalendar.com/IC/CEPage.asp?ID=163134
About Trailer Bridge, Inc.
Trailer Bridge provides integrated trucking and marine freight
service to and from all points in the lower 48 states and Puerto
Rico and Dominican Republic, bringing efficiency, service, security
and environmental and safety benefits to domestic cargo in that
traffic lane. This total transportation system utilizes its own
trucks, drivers, trailers, containers and U.S. flag vessels to link
the mainland with Puerto Rico via marine facilities in
Jacksonville, San Juan and Puerto Plata. 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 and its asset utilization. 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 changes in
demand for transportation services offered by the Company, the
Company’s ability to refinance its existing maturing debt,
maintenance of its revolving credit facility, changes in rate
levels for transportation services offered by the Company, changes
in the cost of fuel, unfavorable outcomes from the United States
Department of Justice (“DOJ”) investigation and related class or
individual actions, economic recessions, equipment and driver
availability and severe weather as well the ability to retain
and/or attract the necessary personnel and maintain necessary
vendor relationships.
(Tables to Follow)
TRAILER BRIDGE, INC.CONDENSED
STATEMENTS OF OPERATIONS
Three Months Ended
Twelve Months Ended
December 31, December 31, 2010 2009 2010 2009
(unaudited) (unaudited) OPERATING REVENUES $
28,396,224 $ 30,735,071 $ 118,185,628 $ 114,302,750 OPERATING
EXPENSES: Salaries, wages, and benefits 3,806,248 4,952,670
15,574,135 18,078,564 Purchased transportation and other rent
7,835,275 6,754,971 30,642,330 25,464,549 Fuel 4,827,527 4,136,565
17,796,649 14,762,470 Operating and maintenance (exclusive of
depreciation & dry-docking shown separately below) 7,366,912
6,344,465 28,352,075 24,675,616 Dry-Docking 445,737 248,574 445,737
958,491 Taxes and licenses 146,834 144,275 645,534 616,143
Insurance and claims 804,859 791,917 3,150,812 3,122,047
Communications and utilities 189,398 169,917 754,372 689,965
Depreciation and amortization 1,553,482 1,554,663 6,203,333
6,222,958 (Gain) loss on sale of property & equipment (1,800 )
(2,730 ) 25,598 33,144 Other operating expenses 1,839,696
2,040,772 6,929,439
6,948,168 28,814,168 27,136,059
110,520,014 101,572,115 OPERATING
(LOSS) INCOME (417,944 ) 3,599,012 7,665,614 12,730,635
NONOPERATING (EXPENSE) INCOME: Interest expense (2,437,935 )
(2,591,833 ) (9,944,981 ) (10,388,060 ) Gain on debt extinguishment
- - - 132,500 Interest income 2,587 6,537
44,714 129,405 (LOSS)
INCOME BEFORE (PROVISION) BENEFIT FOR INCOME TAXES (2,853,292 )
1,013,716 (2,234,653 ) 2,604,480 (PROVISION) BENEFIT FOR
INCOME TAXES (60,411 ) (4,942 ) (82,281 ) 1,396
NET (LOSS) INCOME $ (2,913,703 ) $ 1,008,774 $
(2,316,934 ) $ 2,605,876 PER SHARE AMOUNTS:
NET (LOSS) INCOME PER SHARE BASIC $ (0.24 ) $ 0.08 $ (0.19 )
$ 0.22 NET (LOSS) INCOME PER SHARE DILUTED $ (0.24 ) $ 0.08
$ (0.19 ) $ 0.22
TRAILER BRIDGE, INC.CONDENSED
BALANCE SHEETS
December 31, December 31, 2010
2009 ASSETS Current Assets: Cash and cash equivalents $
11,481,965 $ 10,987,379 Trade receivables, less allowance for
doubtful accounts of $1,065,955 and $441,985 13,022,057 12,814,741
Prepaid and other current assets 2,397,948 2,444,337 Deferred
income taxes, net 225,645 278,856 Total
current assets 27,127,615 26,525,313 Property and equipment,
net 82,631,050 84,891,922 Reserve fund for long-term debt 4,638,215
4,237,385 Other assets 2,004,426 2,862,911
TOTAL ASSETS $ 116,401,306 $ 118,517,531
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY Current
Liabilities: Accounts payable $ 7,411,181 $ 3,088,124 Accrued
liabilities 4,725,030 6,458,760 Unearned revenue 1,410,963 611,147
Current portion of long-term debt 85,374,700
3,874,700 Total current liabilities 98,921,874 14,032,731
Other accrued liabilities - 55,556 Long-term debt, less
current portion 17,795,827 103,170,528
TOTAL LIABILITIES 116,717,701 117,258,815
Commitments and Contingencies Stockholders'
(Deficit) Equity: Preferred stock, $.01 par value, 1,000,000,
shares authorized; no shares issued or outstanding - - Common
stock, $.01 par value, 20,000,000 shares authorized; 12,102,587 and
12,031,707 shares issued; 12,016,681 and 11,992,534 shares
outstanding at December 31, 2010 and 2009, respectively 121,026
120,317 Treasury stock, at cost, 85,906 and 39,173 shares at
December 31, 2010 and 2009, respectively (318,140 ) (156,692 )
Additional paid-in capital 54,613,643 53,711,081 Capital deficit
(54,732,924 ) (52,415,990 ) TOTAL STOCKHOLDERS'
(DEFICIT) EQUITY (316,395 ) 1,258,716 TOTAL
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY $ 116,401,306
$ 118,517,531
TRAILER BRIDGE, INC.CONDENSED
STATEMENTS OF CASH FLOWSTWELVE MONTHS ENDED DECEMBER
31,
2010 2009 Operating activities:
Net (loss) income $ (2,316,934 ) $ 2,605,876 Adjustments to
reconcile net (loss) income to net cash provided by operating
activities: Depreciation and amortization 6,203,333 6,222,958
Amortization of loan costs 911,774 866,930 Non-cash stock
compensation expense 904,285 398,867 Provision for doubtful
accounts 1,198,526 1,038,210 Deferred tax expense (benefit) 53,211
(29,396 ) Loss on sale of property and equipment 25,598 33,144 Gain
on extinguishment of debt - (132,500 ) (Increase) decrease in:
Trade receivables (1,405,843 ) 2,965,307 Prepaid and other current
assets 46,388 (560,396 ) Other assets (92,262 ) (131,488 ) Increase
(decrease) in: Accounts payable 4,323,058 (2,171,231 ) Accrued
liabilities (1,772,837 ) (1,552,880 ) Unearned revenue 799,816
225,688 Net cash provided by operating activities
8,878,113 9,779,089 Investing
activities: Purchases of property and equipment (4,057,179 )
(1,883,951 ) Proceeds from sale of property and equipment 113,262
64,890 Additions to other assets (385,999 ) -
Net cash used in investing activities (4,329,916 )
(1,819,061 ) Financing activities: Principal payments on
notes payable (3,891,149 ) (4,284,599 ) Exercise of stock options
(1,014 ) (154,333 ) Purchase of treasury stock (161,448 ) -
Reissuance of treasury stock to CEO - 250,000
Net cash used in financing activities (4,053,611 )
(4,188,932 ) Net increase in cash and cash
equivalents 494,586 3,771,096 Cash and cash equivalents, beginning
of the period 10,987,379 7,216,283
Cash and cash equivalents, end of the period $ 11,481,965
$ 10,987,379 Supplemental cash flow
information: Cash paid for interest $ 9,982,213 $ 10,438,563
Cash paid for income taxes $ 34,300 $ 21,670
TRAILER BRIDGE,
INC.RECONCILIATION OF GAAP NET (LOSS) INCOME, TO EARNINGS
BEFORE INTEREST, TAXES,DEPRECIATION & AMORTIZATION; AND
ADJUSTED EARNINGS BEFORE INTEREST, TAXES,DEPRECIATION &
AMORTIZATION (1)(UNAUDITED)
Three
months ended Three months ended Twelve months ended Twelve months
ended
December 31, 2010 December 31, 2009
December 31, 2010 December 31, 2009
GAAP, Net (loss) income $ (2,913,703 ) $ 1,008,774 $
(2,316,934 ) $ 2,605,876 Net interest expense 2,435,348 2,585,296
9,900,267 10,258,655 Depreciation and amortization 1,553,482
1,554,663 6,203,333 6,222,958 Provision (benefit) for income taxes
60,411 4,942 82,281 (1,396 ) Gain on extinguishment of debt
- - - (132,500 )
Non-GAAP, EBITDA $ 1,135,538 $ 5,153,675 $ 13,868,947
$ 18,953,593 Adjustments: Officer severance packages
- 690,000 - 690,000 Anti-trust related legal expense 37,191 676,068
679,135 1,728,448 Dry-docking 445,737 248,574 445,737 958,491 Stock
compensation 226,071 50,485 904,285 398,867 (Gain) loss on asset
sales (1,800 ) (2,730 ) 25,598
33,144 Total Adjustments 707,199
1,662,397 2,054,755 3,808,950
Non-GAAP, Adjusted EBITDA $ 1,842,737 $ 6,816,072 $
15,923,702 $ 22,762,543 Other financial
measures: EBITDA margin 4.0 % 16.8 % 11.7 % 16.6 % Adjusted EBITDA
margin 6.5 % 22.2 % 13.5 % 19.9 % Net debt to adjusted EBITDA
5.5x
4.0x
5.5x
4.0x
Adjusted EBITDA to interest expense
0.8x
2.6x
1.6x
2.2x
Use of Non-GAAP measures
(1) The Company reports its financial results in accordance with
U.S. generally accepted accounting principles (GAAP). The Company
also believes that the presentation of certain non-GAAP measures,
i.e., results excluding certain costs and expenses, provides useful
information for the understanding of its ongoing operations and
enables investors to focus on comparisons of operating performance
from period to period without the impact of significant special
items. Non-GAAP measures are reconciled in the accompanying
financial table. The Company cautions that non-GAAP measures should
be considered in addition to, but not as a substitute for the
Company’s reported GAAP results.
Adjusted EBITDA is calculated by adding back legal expenses
associated with the anti-trust litigation, dry-docking, non-cash
compensation charges, and loss/gain on asset sales. Adjusted EBITDA
was calculated on a twelve month trailing rate for purposes of
calculating net debt to adjusted EBITDA. Adjusted EBITDA for the
twelve months trailing December 31, 2010 and 2009 was $15,923,702
and $22,762,543, respectively.
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