TRBR Trailer Bridge, Inc. (MM)

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.