Trailer Bridge Reports 2009 Third Quarter Financial Results

November 10, 2009 4:15 PM ET

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Trailer Bridge, Inc. TRBR today reported unaudited financial results for the third quarter ended September 30, 2009 (see attached tables). The Company reported operating income of $4.1 million in the third quarter of 2009, compared to operating income of $2.6 million in the third quarter of 2008; and net income of $1.7 million, or $0.14 per basic and diluted share, for the third quarter of 2009, compared to net income of approximately $34,000, or $0.00 per basic and diluted share, in the year earlier period. EBITDA for the third quarter of 2009 was $5.7 million, a 36.9% improvement from $4.1 million in the year earlier period, and a $0.9 million improvement sequentially from Q2 2009. Adjusted EBITDA, as detailed in the accompanying table, was $6.3 million in the third quarter of 2009.

The Company reported revenue of $30.3 million during the quarter, down 14.4% from the prior year period but an increase of 8.7% sequentially from the second quarter of 2009. Excluding the effect of fuel surcharges, revenue decreased by 4.1% from the prior year but increased 6.6% from the second quarter of 2009.

Ivy Suter, Trailer Bridge’s Chief Executive Officer, said, “We saw increased capacity utilization in the quarter with a favorable trend of growth throughout the period. Our increased capacity utilization and revenue compared to the second quarter of 2009 produced profitable operations. The flexibility of our system has permitted us to better utilize our assets and transportation system. We continue to focus on asset utilization, operational excellence and streamlined costs to best position ourselves in our respective markets and offer a cost-efficient service. Our robust cash generation and strong financial position permitted us to purchase $1.5 million face amount of our outstanding public debt at attractive rates. We will continue to focus on free cash flow through revenue generation and cost reduction.”

The Company's deployed vessel capacity utilization during the third quarter was 90.2% southbound and 30.6% northbound, compared to 81.9% and 23.0%, respectively, during the third quarter of 2008, and 82.8% and 31.4%, respectively, sequentially. Overall volume southbound increased 12.4% from the second quarter of 2009 and decreased 6.9% from the same quarter last year.

Financial Position

At September 30, 2009, the Company had cash balances of $10.3 million and working capital of $11.3 million. The Company has no outstanding amount on its $10.0 million revolving credit facility, and, based upon eligible receivables, currently has $9.5 million of availability under this facility. During the nine months ended September 30, 2009 net cash from operating activities was $8.6 million.

During the three months ended September 30, 2009 the Company paid approximately $1.4 million to purchase $1.5 million (face amount) of its 9.25% Senior Secured Notes in open market transactions. The aggregate principal outstanding on the 9.25% Senior Secured Notes following the Company’s purchases was $83.5 million. This partial retirement resulted in a gain on extinguishment of debt of $132,500 in the third quarter of 2009.

Conference Call

The Company will discuss these results in a conference call on Wednesday, November 11, 2009 at 11:00 AM ET. The dial in numbers are (888) 737-9834 (US) and (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://investor.shareholder.com/media/eventdetail.cfm?mediaid=39407&c=TRBR&mediakey=EF9F878C6DAC3C7B4841B50067B5EB8F&e=0.

The webcast will be archived and accessible for approximately 30 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 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 economic recessions, the risk of an ongoing Department of Justice investigation into the pricing practices in the Puerto Rico trade, the outcome of related class action lawsuits, severe weather, changes in the price of fuel, changes in demand for transportation services offered by the Company, capacity conditions in the Puerto Rico trade lane and changes in rate levels for transportation services offered by the Company.


TRAILER BRIDGE, INC. CONDENSED STATEMENTS OF OPERATIONS (Unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
		2009			2008			2009			2008
OPERATING REVENUES	$	30,325,952		$	35,413,471		$	83,567,679		$	99,720,978
OPERATING EXPENSES:
Salaries, wages, and benefits		4,624,800			4,445,122			13,125,894			13,034,880
Purchased transportation and other rent		6,802,571			9,033,758			18,709,578			25,292,014
Fuel		3,946,011			7,648,613			10,625,906			22,888,206
Operating and maintenance (exclusive of depreciation & dry-docking
shown separately below)		6,603,337			6,659,483			18,331,151			19,097,626
Dry-docking		53,702			-			709,917			236,525
Taxes and licenses		157,087			136,725			471,868			414,540
Insurance and claims		756,325			794,760			2,330,130			2,333,955
Communications and utilities		152,181			197,540			520,048			576,981
Depreciation and amortization		1,554,791			1,537,069			4,668,295			4,615,048
Loss on sale of property & equipment		8,231			17,193			35,874			109,350
Other operating expenses		1,544,781			2,332,923			4,907,396			5,610,738
		26,203,817			32,803,186			74,436,057			94,209,863
OPERATING INCOME		4,122,135			2,610,285			9,131,622			5,511,115

NONOPERATING (EXPENSE) INCOME:
Interest expense		(2,576,930	)		(2,584,466	)		(7,796,229	)		(7,759,277	)
Gain on debt extinguishment		132,500			-			132,500			-
Interest income		11,313			44,816			122,867			130,572

INCOME (LOSS) BEFORE BENEFIT (PROVISION) FOR
INCOME TAXES		1,689,018			70,635			1,590,760			(2,117,590	)

BENEFIT (PROVISION) FOR INCOME TAXES		19,424			(36,191	)		6,337			215

NET INCOME (LOSS)	$	1,708,442		$	34,444		$	1,597,097		$	(2,117,375	)

PER SHARE AMOUNTS:

NET INCOME (LOSS) PER SHARE BASIC	$	0.14		$	0.00		$	0.13		$	(0.18	)
NET INCOME (LOSS) PER SHARE DILUTED	$	0.14		$	0.00		$	0.13		$	(0.18	)

WEIGHTED AVERAGE
SHARES OUTSTANDING BASIC		11,915,562			11,937,921			11,880,619			11,937,701
SHARES OUTSTANDING DILUTED		12,236,393			12,334,543			12,028,007			11,937,701


TRAILER BRIDGE, INC. CONDENSED BALANCE SHEETS (Unaudited)

			September 30,			December 31,
				2009			2008
ASSETS
Current Assets:
	Cash and cash equivalents		$	10,282,607		$	7,216,283
	Trade receivables, less allowance for doubtful
		accounts of $470,433 and $599,017		14,070,404			16,818,259
	Prepaid and other current assets			2,438,004			1,883,942
	Deferred income taxes, net			278,856			278,856
		Total current assets		27,069,871			26,197,340

Property and equipment, net				86,306,139			89,304,822
Reserve fund for long-term debt				4,231,151			4,125,995
Other assets				3,133,682			3,704,490
TOTAL ASSETS			$	120,740,843		$	123,332,647

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
	Accounts payable		$	4,654,220		$	5,259,355
	Accrued liabilities			7,507,121			7,694,690
	Unearned revenue			718,907			385,458
	Current portion of long-term debt			2,874,700			2,874,700
		Total current liabilities		15,754,948			16,214,203

Other accrued liabilities				103,728			414,910
Long-term debt, less current portion				104,586,977			108,545,228
TOTAL LIABILITIES				120,445,653			125,174,341

Commitments and contingencies

Stockholders' Equity (Deficit):
	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; 11,975,012 and 11,938,921 shares issued;
		11,935,839 and 11,838,921 shares outstanding at September 30,2009
		and December 31, 2008, respectively		119,750			119,389
	Treasury stock, at cost, 39,173 and 100,000 shares at September 30, 2009
		and December 31, 2008, respectively		(156,692	)		(400,000	)
	Additional paid-in capital			53,756,901			53,460,783
	Capital deficit			(53,424,769	)		(55,021,866	)
		TOTAL STOCKHOLDERS' EQUITY (DEFICIT)		295,190			(1,841,694	)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)			$	120,740,843		$	123,332,647


TRAILER BRIDGE, INC. CONDENSED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, (Unaudited)

		2009			2008
Operating activities:
Net income (loss)	$	1,597,097		$	(2,117,375	)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization		4,668,295			4,615,048
Amortization of loan costs		620,176			553,530
Non-cash stock compensation expense		348,382			299,701
Provision for doubtful accounts		758,571			563,470
Deferred tax benefit		-			(49,815	)
Loss on sale of property and equipment		35,874			109,350
Decrease (increase) in:
Trade receivables		1,989,283			(3,993,183	)
Prepaid and other current assets		(554,063	)		(44,061	)
Other assets		(172,631	)		(47,538	)
Increase (decrease) in:
Accounts payable		(605,135	)		(1,084,947	)
Accrued liabilities		(456,353	)		3,461,527
Unearned revenue		333,449			695,309

Net cash provided by operating activities		8,562,945			2,961,016

Investing activities:
Purchases of property and equipment		(1,735,557	)		(1,047,479	)
Proceeds from sale of property and equipment		48,178			171,876
Additions to other assets		-			(36,799	)
Net cash used in investing activities		(1,687,379	)		(912,402	)

Financing activities:
Cash proceeds from note payable		-			1,339,290
Reissuance of treasury stock		250,000			-
Exercise of stock options		(58,596	)		(18,269	)
Principal payments on notes payable		(3,868,146	)		(1,834,926	)
Gain on extinguishment of debt		(132,500	)		-
Net cash used in financing activities		(3,809,242	)		(513,905	)

Net increase in cash and cash equivalents		3,066,324			1,534,709
Cash and cash equivalents, beginning of the period		7,216,283			1,932,535

Cash and cash equivalents, end of period	$	10,282,607		$	3,467,244

Supplemental cash flow information and non-cash investing
and financing activities:
Cash paid for interest	$	6,201,740		$	6,112,705


TRAILER BRIDGE, INC. RECONCILIATION OF GAAP NET INCOME (LOSS), 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, 2009			September 30, 2008			September 30, 2009			September 30, 2008

GAAP, Net income (loss)		$	1,708,442		$	34,444		$	1,597,097		$	(2,117,375	)
	Net interest expense		2,565,617			2,539,650			7,673,362			7,628,705
	Gain on extinguishment of debt		(132,500	)		-			(132,500	)		-
	(Benefit) provision for income taxes		(19,424	)		36,191			(6,337	)		(215	)
	Depreciation and amortization		1,554,791			1,537,069			4,668,295			4,615,048
Non-GAAP, EBITDA		$	5,676,926		$	4,147,354		$	13,799,917		$	10,126,163
Adjustments:
	Anti-trust related legal expense		359,993			988,178			1,052,380			1,123,665
	Dry-docking		53,702			-			709,917			236,525
	Stock compensation		153,537			99,900			229,785			299,701
	Loss on asset sales		8,231			17,193			35,874			109,350
	Strategic alternative fees		-			-			-			390,231
	Total Adjustments		575,463			1,105,271			2,027,956			2,159,472
Non-GAAP, Adjusted EBITDA		$	6,252,389		$	5,252,625		$	15,827,873		$	12,285,635

Other financial measures:
	EBITDA margin		18.7	%		11.7	%		16.5	%		10.2	%
	Adjusted EBITDA margin		20.6	%		14.8	%		18.9	%		12.3	%
	Net debt to adjusted EBITDA	4.4		x	6.1		x	4.4		x	6.1		x
	Adjusted EBITDA to interest expense	2.4		x	2.0		x	2.0		x	1.6		x

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, loss on asset sales, and strategic alternative fees. Adjusted EBITDA was calculated on a twelve month trailing rate for purposes of calculating net debt to adjusted EBITDA.

Trailer Bridge, Inc.
Ivy Barton Suter, 800-554-1589
Chief Executive Officer
www.trailerbridge.com
or
TRBR Investor Relations Counsel:
The Equity Group Inc.
Adam Prior, 212-836-9606
www.theequitygroup.com

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