TRBR Trailer Bridge, Inc. (MM)

Trailer Bridge, Inc. (NASDAQ Global Market: TRBR) today reported unaudited financial results for its third quarter and nine-months ended September 30, 2010 (see attached tables).

Third Quarter Financial Review

• The Company reported revenue of $29.3 million during the quarter, down 3.4% from the prior year period and down 7.5% sequentially from the second quarter of 2010. Excluding the effect of fuel surcharges, revenue decreased by 5.4% from the prior year period and 7.5% from the second quarter of 2010. Revenues were affected by lower charter rates during the period of $0.9 million, compared to $1.6 million in the prior year period, and $0.9 million sequentially from the second quarter of 2010.
• The Company reported operating income of $2.5 million in the third quarter of 2010, a 40.3% decrease compared to operating income of $4.1 million in the third quarter of 2009.
• Net income for the third quarter of 2010 was $6,876, or $0.00 per basic and diluted share, compared to $1.7 million, or $0.14 per basic and diluted share, in the prior-year period.
• EBITDA for the third quarter of 2010 was $4.0 million, a 29.2% decline from $5.7 million in the prior-year period. Adjusted EBITDA, as detailed in the accompanying table, was $4.4 million in the third quarter of 2010.

Nine Month Financial Review

• The Company reported revenue of $89.8 million during the first nine months of 2010, up 7.4% from the prior year period. Excluding the effect of fuel surcharges, revenue increased by 4.6% from the prior year period.
• The Company reported operating income of $8.1 million for the first nine months of 2010 compared to operating income of $9.1 million for same period in the prior year.
• Net income was $0.6 million, or $0.05 per basic and diluted share, for the first nine months of 2010 compared to net income of $1.6 million, or $0.13 per basic and diluted share, for the same period in the prior year.
• EBITDA for the nine months ended September 30, 2010 was $12.7 million, a 7.7% decline from $13.8 million for the same period in the prior year. Adjusted EBITDA, as detailed in the accompanying table, was $14.1 million for the nine months ended September 30, 2010 compared to $15.9 million for the same period in the prior year.

Ivy Suter, Trailer Bridge’s Chief Executive Officer, said, “We continue to focus on maintaining high asset utilization and reducing costs through operational-excellence initiatives. In doing so, we are well positioned to take advantage of market improvements in Puerto Rico and chartering projects. Our Dominican Republic business remains strong.”

Operational Review

The Company's deployed vessel capacity utilization during the third quarter was 91.9% southbound and 25.9% northbound, compared to 90.2% and 30.6%, respectively, during the third quarter of 2009, and 100.1% and 29.5%, respectively, sequentially from the second quarter of 2010. Overall volume southbound decreased 8.2% from the second quarter of 2010 and decreased 2.1% from the same quarter last year.

These volume decreases were largely the result of a three-week period in early September in which utilization rates temporarily decreased to approximately 82.9%. Utilization rates rebounded after that period, and continued rising to full utilization into the fourth quarter of 2010. The Company was also affected by lower charter rates during the period for the Company’s three vessels not in liner service.

Financial Position

At September 30, 2010, the Company had cash balances of $13.2 million and working capital of $14.4 million. The Company has no outstanding amount on its $10.0 million revolving credit facility, and, based upon eligible receivables, currently has $7.3 million of availability under this facility. During the nine months ended September 30, 2010, net cash from operating activities was $7.9 million. Trailer Bridge’s net debt to adjusted EBITDA ratio improved to 4.1x at September 30, 2010, from 4.4x at September 30, 2009. The Company and its financial advisor are working towards refinancing its $82.5 million of outstanding public debt due November 2011.

Management Overview

Trailer Bridge reported net cash from operating activities of $7.9 million at September 30, 2010, $2.9 million of which was generated during the 2010 third quarter. At September 30, 2010, the Company’s balance sheet included cash and equivalents of $13.2 million. Trailer Bridge believes that its business model can generate substantial cost advantages over its competitors in the Puerto Rico and Dominican Republic lanes. Trailer Bridge also continues to believe there is potential growth by utilizing its current deployed capacity both in and out of both Puerto Rico and the Dominican Republic.

Conference Call

The Company will then discuss those results in a conference call on Tuesday, November 16, 2010 at 1:00 PM ET.

The dial-in numbers are:

    (888) 737-9834 (Domestic) (706) 643-9215 (International)

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=161968.

The webcast will be archived and accessible for approximately 30 days if you are unable to listen to the live call.

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, 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 actions, economic recessions and severe weather as well as the ability to retain and/or attract the necessary personnel and maintain necessary vendor relationships.

         

TRAILER BRIDGE, INC.

CONDENSED STATEMENTS OF OPERATIONS

(unaudited)

  Three Months Ended Nine Months Ended September 30, September 30,   2010         2009     2010         2009   OPERATING REVENUES $ 29,287,787 $ 30,325,952 $ 89,789,405 $ 83,567,679 OPERATING EXPENSES: Salaries, wages, and benefits 3,554,055 4,624,800 11,767,887 13,125,894 Purchased transportation and other rent 7,741,389 6,802,571 22,807,055 18,709,578 Fuel 4,268,648 3,946,011 12,969,122 10,625,906 Operating and maintenance (exclusive of depreciation & dry-docking shown separately below) 6,836,686 6,603,337 20,985,162 18,331,151 Dry-docking - 53,702 - 709,917 Taxes and licenses 183,231 157,087 498,700 471,868 Insurance and claims 776,395 756,325 2,345,953 2,330,130 Communications and utilities 215,431 152,181 564,975 520,048 Depreciation and amortization 1,556,747 1,554,791 4,649,850 4,668,295 Loss on sale of property & equipment 1,201 8,231 27,398 35,874 Other operating expenses   1,691,974     1,544,781     5,089,746     4,907,396     26,825,757     26,203,817     81,705,848     74,436,057   OPERATING INCOME 2,462,030 4,122,135 8,083,557 9,131,622   NONOPERATING (EXPENSE) INCOME: Interest expense (2,481,159 ) (2,576,930 ) (7,507,047 ) (7,796,229 ) Gain on debt extinguishment - 132,500 - 132,500 Interest income   33,205       11,313     42,127       122,867     INCOME BEFORE (PROVISION) BENEFIT FOR INCOME TAXES 14,076 1,689,018 618,637 1,590,760   (PROVISION) BENEFIT FOR INCOME TAXES (7,200 ) 19,424 (21,870 ) 6,337         NET INCOME $ 6,876   $ 1,708,442   $ 596,767   $ 1,597,097     PER SHARE AMOUNTS:   NET INCOME PER SHARE BASIC $ 0.00   $ 0.14   $ 0.05   $ 0.13   NET INCOME PER SHARE DILUTED $ 0.00   $ 0.14   $ 0.05   $ 0.13     WEIGHTED AVERAGE SHARES OUTSTANDING BASIC   12,027,033     11,915,562     12,028,406     11,880,619   SHARES OUTSTANDING DILUTED   12,046,837     12,236,393     12,099,771     12,028,007                          

TRAILER BRIDGE, INC.

CONDENSED BALANCE SHEETS

  September 30, December 31, 2010 2009 (unaudited) ASSETS Current Assets: Cash and cash equivalents $ 13,179,202 $ 10,987,379 Trade receivables, less allowance for doubtful accounts of $679,584 and $441,985 13,468,696 12,814,741 Prepaid and other current assets 2,216,442 2,444,337 Deferred income taxes, net   278,856     278,856   Total current assets 29,143,196 26,525,313   Property and equipment, net 81,893,641 84,891,922 Reserve fund for long-term debt 4,635,960 4,237,385 Other assets   2,175,249     2,862,911   TOTAL ASSETS $ 117,848,046   $ 118,517,531     LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 4,980,239 $ 3,088,124 Accrued liabilities 6,359,791 6,458,760 Unearned revenue 549,471 611,147 Current portion of long-term debt   2,874,700     3,874,700   Total current liabilities 14,764,201 14,032,731   Other accrued liabilities - 55,556 Long-term debt, less current portion   100,712,277     103,170,528   TOTAL LIABILITIES   115,476,478     117,258,815     Commitments and contingencies   Stockholders' 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; 12,016,781 and 11,992,534 shares outstanding at September 30, 2010 and December 31, 2009, respectively 121,026 120,317 Treasury stock, at cost, 85,806 and 39,173 shares at September 30, 2010 and December 31, 2009, respectively (317,805 ) (156,692 ) Additional paid-in capital 54,387,572 53,711,081 Capital deficit   (51,819,225 )   (52,415,990 ) TOTAL STOCKHOLDERS' EQUITY   2,371,568     1,258,716   TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 117,848,046   $ 118,517,531                              

TRAILER BRIDGE, INC.

CONDENSED STATEMENTS OF CASH FLOWS

NINE MONTHS ENDED SEPTEMBER 30,

(unaudited)

    2010     2009   Operating activities: Net income $ 596,767 $ 1,597,097 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,649,850 4,668,295 Amortization of loan costs 681,904 620,176 Non-cash stock compensation expense 678,214 348,382 Provision for doubtful accounts 686,225 758,571 Deferred tax benefit - - Loss on sale of property and equipment 27,398 35,874 Gain on extinguishment of debt - (132,500 ) Decrease (increase) in: Trade receivables (1,340,181 ) 1,989,283 Prepaid and other current assets 227,895 (554,063 ) Other assets (24,925 ) (172,631 ) Increase (decrease) in: Accounts payable 1,892,115 (605,135 ) Accrued liabilities (138,083 ) (456,353 ) Unearned revenue (61,676 ) 333,449     Net cash provided by operating activities   7,875,503     8,430,445     Investing activities: Purchases of property and equipment (1,757,322 ) (1,735,557 ) Proceeds from sale of property and equipment 96,462 48,178 Additions to other assets   (385,999 )   -   Net cash used in investing activities   (2,046,859 )   (1,687,379 )   Financing activities: (Purchase) reissuance of treasury stock (161,113 ) 250,000 Exercise of stock options (1,013 ) (58,596 ) Principal payments on notes payable   (3,474,695 )   (3,868,146 ) Net cash used in financing activities   (3,636,821 )   (3,676,742 )   Net increase in cash and cash equivalents 2,191,823 3,066,324 Cash and cash equivalents, beginning of the period   10,987,379     7,216,283     Cash and cash equivalents, end of period $ 13,179,202   $ 10,282,607     Supplemental cash flow information: Cash paid for interest $ 5,901,133   $ 6,201,740    

TRAILER BRIDGE, INC.

 

RECONCILIATION OF GAAP NET INCOME, TO EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION &

AMORTIZATION; AND ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION &

AMORTIZATION (1)

                        Three months ended Three months ended Nine months ended Nine months ended September 30, 2010     September 30, 2009       September 30, 2010     September 30, 2009   GAAP, Net income $ 6,876 $ 1,708,442 $ 596,767 $ 1,597,097 Net interest expense 2,447,954 2,565,617 7,464,920 7,673,362 Provision (benefit) for income taxes 7,200 (19,424) 21,870 (6,337) Depreciation and amortization 1,556,747 1,554,791 4,649,850 4,668,295 Gain on extinguishment of debt -     (132,500)       -     (132,500) Non-GAAP, EBITDA $ 4,018,777     $ 5,676,926       $ 12,733,407     $ 13,799,917 Adjustments: Stock compensation 226,071 153,537 678,214 348,382 Anti-trust related legal expense 116,513 359,993 641,944 1,052,380 Loss on asset sales 1,201 8,231 27,398 35,874 Dry-docking -     53,702       -     709,917 Total Adjustments 343,785     575,463       1,347,556     2,146,553 Non-GAAP, Adjusted EBITDA $ 4,362,562     $ 6,252,389       $ 14,080,963     $ 15,946,470   Other financial measures: EBITDA margin 13.7% 18.7% 14.2% 16.5% Adjusted EBITDA margin 14.9% 20.6% 15.7% 19.1% Net debt to adjusted EBITDA 4.1x 4.4x 4.1x 4.4x Adjusted EBITDA to interest expense 1.8x 2.4x 1.9x 2.0x

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 September 30, 2010 and 2009 was $20,903,033 and $21,063,721, respectively.