Trimac Announces Second Quarter Results
CALGARY, Aug. 11 /CNW/ - Trimac Income Fund (TSX Symbol TMA.UN) (the "Fund") today released improved financial results of the Fund and Trimac Transportation Services Limited Partnership ("Trimac" or the "Partnership") for the second quarter ended June 30, 2010.
Three months ended Six months ended
June 30, June 30,
Partnership 2010 2009 2010 2009
(millions of dollars) -----------------------------------------------
Transportation revenue 67.3 60.2 127.4 120.5
Fuel surcharges 6.0 3.7 11.4 8.4
-----------------------------------------------
Total revenue 73.3 63.9 138.8 128.9
EBITDA(1) 8.3 7.2 14.0 12.7
Net earnings 3.1 1.1 3.7 0.4
Three months ended Six months ended
June 30, June 30,
The Fund 2010 2009 2010 2009
-----------------------------------------------
(millions of dollars,
except per unit amounts
and numbers of units)
Distributable cash per
unit(1)(2) $0.1814 $0.1905 $0.2997 $0.3011
Distributions per unit(1) $0.1200 $0.1200 $0.2400 $0.2400
Basic earnings per unit $0.0876 $0.0331 $0.1170 $0.0281
Fully diluted earnings
(loss) per unit $0.0876 $0.0306 $0.1170 $(0.0143)
Number of units used in
computing basic earnings
per unit 12,604,908 12,584,679 12,604,908 12,584,679
Number of units
outstanding used in
computing diluted
earnings (loss) per
unit 26,275,939 25,532,452 26,275,939 25,532,452
(1) EBITDA, distributable cash per unit and distributions per unit are
not recognized measures under generally accepted accounting
principles (GAAP) and do not have a standardized meaning prescribed
by GAAP. Therefore, these amounts may not be comparable to similar
measures presented by other issuers. Management considers EBITDA and
distributable cash to be key measures that indicate the ability of
the Fund to meet its capital and financing commitments.
(2) Distributable cash available, which is not a recognized measure under
GAAP, will fluctuate on a monthly basis due to seasonal cash flows,
sustaining capital incurred, income taxes, and interest paid. See
"Distributable Cash" for additional commentary.
Trimac's revenue, including fuel surcharges, for the three-month period ended June 30, 2010 ("current period") increased by $9.4 million or 14.7 percent as compared to June 30, 2009 ("prior period"). This increase was primarily the result of a $2.3 million increase in fuel surcharge revenue, incremental revenue of $1.1 million from the March 29, 2010 acquisition of GH Trucking, and increased volumes from new and existing customers. EBITDA increased by $1.1 million or 15.3 percent over the prior period to $8.3 million. As a percentage of revenue, EBITDA was 11.3 percent which is unchanged from the prior period. Net earnings increased by $2.0 million from the prior period of $1.1 million. This was primarily as a result of higher volumes referred to above, with the corresponding increase to EBITDA and reduced depreciation due to a change in the estimated useful life of certain rolling stock.
In commenting on the results for the second quarter, Jeffrey J. McCaig, Chairman and CEO of Trimac, said:
"We are very pleased with the recovery made in the second quarter. Capacity has tightened in the market and volumes have increased. As demonstrated with our consistent EBITDA and strong balance sheet, Trimac continues to be well positioned to balance capacity and costs with current and pending business activity."
Conversion to a Corporation
Since the original announcement of the SIFT Rules in October, 2006, the board of directors of Trimac Transportation Services Inc., as administrator of the Fund, have been regularly reviewing the merits of continuing to operate Trimac under the income trust structure. It is expected that the Fund will convert to a corporate structure on or about January 1, 2011, however, no definitive conversion plan has been approved by the board of directors and trustees of the Fund. The dividend policy of the corporation will be considered and finalized at the time of approval of the conversion plan by the board and trustees.
For comments regarding management's outlook for 2010 please see Trimac's Management's Discussion and Analysis for the period ended June 30, 2010.
Financial Highlights for the Partnership
Three months ended Six months ended
June 30 June 30
(millions of dollars) 2010 2009 2010 2009
-------------------------------------------------------------------------
Revenues
Transportation revenue 67.3 60.2 127.4 120.5
Fuel surcharges 6.0 3.7 11.4 8.4
-----------------------------------------------
73.3 63.9 138.8 128.9
Direct costs 54.3 45.9 104.0 94.8
Selling and
administrative 10.7 10.8 20.8 21.4
-----------------------------------------------
-----------------------------------------------
EBITDA(1) 8.3 7.2 14.0 12.7
Depreciation net of
gains on disposal of
capital assets(2) 4.1 5.0 8.2 10.0
-----------------------------------------------
Operating earnings 4.2 2.2 5.8 2.7
Interest expense (net) 1.1 1.0 2.0 2.0
-----------------------------------------------
-----------------------------------------------
Earnings before taxes 3.1 1.2 3.8 0.7
Income tax expense - 0.1 0.1 0.3
-----------------------------------------------
Net earnings 3.1 1.1 3.7 0.4
-----------------------------------------------
-----------------------------------------------
As a percentage of
revenue
--------------------------
Direct costs 74.1% 71.8% 74.9% 73.5%
Selling and
administrative 14.6% 16.9% 15.0% 16.6%
EBITDA(1) 11.3% 11.3% 10.1% 9.9%
Depreciation(2) 5.6% 7.8% 5.9% 7.8%
Operating earnings 5.7% 3.4% 4.2% 2.1%
As at As at
June 30, December
(millions of dollars) 2010 31, 2009
---------------------
Total assets 147.7 140.1
Total long-term liabilities 58.0 45.3
The above selected financial and operating information have been derived from, and should be read in conjunction with, the unaudited interim consolidated financial statements of the Partnership.
(1) EBITDA (earnings before interest, taxes, depreciation and
amortization) is not a recognized measure under GAAP, does not have a
standardized meaning prescribed by GAAP and, therefore, may not be
comparable to similar measures presented by other issuers. Management
believes that EBITDA is a useful complementary measure of cash
available for distribution before debt servicing expense, capital
expenditures and income taxes.
(2) Effective January 1, 2010 the Partnership has revised its estimate of
useful life on certain of its trailers. The change was adopted
prospectively and has resulted in lower depreciation expense of $0.6
million during the current period and $1.2 million during the six
month period ended June 30, 2010 ("current year").
Distributable Cash
The table below illustrates distributable cash to unitholders beginning with net cash provided by the Partnership's operations.
(millions of dollars
except unit amounts, Three months ended Six months ended
certain percentages June 30 June 30
and number of units) 2010 2009 2010 2009
-------------------------------------------------------------------------
Net cash provided by
operations 5.9 8.5 5.0 13.5
Net change in non-cash
working capital(1) 1.2 (2.2) 6.8 (2.9)
-----------------------------------------------
Cash provided by
operations 7.1 6.3 11.8 10.6
Less adjustments for:
Net sustaining capital
expenditures (net of
proceeds)(2)(3) (2.2) (0.7) (3.3) (1.9)
Provision for long-term
unfunded contractual
operational
obligations(4) 0.1 (0.3) - (0.2)
-----------------------------------------------
Total estimated cash
available for
distribution (before
public expenses) 5.0 5.3 8.5 8.5
Percentage of available
cash distributable to
unitholders(5) 48% 49% 48% 49%
-----------------------------------------------
Cash available for
distribution to
unitholders (before
public expenses) 2.4 2.6 4.1 4.2
Public expenses(6) (0.1) (0.2) (0.3) (0.4)
-----------------------------------------------
Distributable cash from
operations(2)(7) 2.3 2.4 3.8 3.8
Distributions declared
and payable 1.5 1.6 3.0 3.1
Distributable cash per
unit(2)(7) 0.1814 0.1905 0.2997 0.3011
Distributions declared
per unit 0.1200 0.1200 0.2400 0.2400
Payout ratio(2)(7) 66.1% 63.0% 80.1% 79.7%
Number of units
outstanding 12,604,908 12,584,679 12,604,908 12,584,679
Net capital expenditures
Sustaining capital
expenditures(2) 2.6 1.1 4.0 3.2
Proceeds on disposal
of replaced assets (0.4) (0.4) (0.7) (1.3)
-----------------------------------------------
Net sustaining capital
expenditures(2)(3) 2.2 0.7 3.3 1.9
Growth capital
expenditures(2)(8) 3.6 3.2 3.9 3.9
-----------------------------------------------
5.8 3.9 7.2 5.8
-----------------------------------------------
-----------------------------------------------
(1) Changes in non-cash operating assets and liabilities are not included
in the calculation of distributable cash. Working capital investments
are funded through a combination of cash flow not distributed and the
use of credit facilities available to the Partnership.
(2) Distributable cash from operations, sustaining capital expenditures,
net sustaining capital expenditures, payout ratio, and growth capital
expenditures are not measures recognized by GAAP, do not have
standardized meanings prescribed by GAAP and may not be comparable to
similarly named measures presented by other issuers.
(3) Net sustaining capital expenditures refers to capital expenditures,
net of proceeds on disposal of assets replaced, which are necessary
to sustain current revenue levels.
(4) Represents a provision for cash requirements relating to a long-term
incentive plan and an executive pension liability.
(5) Percentage is equal to the number of units outstanding of 12,604,908
divided by fully diluted units of 26,275,939.
(6) Represents expenses associated with the Fund's status as a reporting
issuer.
(7) Distributable cash available will fluctuate on a monthly basis due to
seasonal cash flows, sustaining capital expenditures incurred, income
taxes paid and interest costs on outstanding debt.
(8) Cash used to fund growth capital expenditures does not affect
distributable cash to unitholders where financing is available for
these purposes. The Partnership funds growth capital from
undistributed cash from operations, cash available from distributions
on non-cash exchangeable shares and, to the extent available,
existing lines of credit.
During the current period, the Partnership's cash provided by operations increased by $0.8 million and the provision for long-term unfunded executive compensation plans decreased by $0.4 million. This was offset, however, by a $1.5 million increase in net sustaining capital expenditures. The Fund's distributable cash from operations of $2.3 million in the current period was less than that recorded in the prior period by $0.1 million, as a result of its share of the aforementioned Partnership changes in cash provided by operations, sustaining capital expenditures and provisions for executive compensation plans. During the current year distributable cash from operations was $3.8 million, the same as in the six month period ended June 30, 2009 ("prior year") as increased cash provided by operations was used to support increases in net sustaining capital expenditures.
Distributions in the current period were paid using cash generated from operations including cash retained in the business relating to non-cash exchangeable shares. Due to the seasonal nature of the Partnership's business and the timing of sustaining capital purchases, the amount of distributable cash may vary from quarter to quarter. Trimac's Board of Directors approves the level of monthly distributions based upon estimated annual cash flows, less estimated cash required for debt service, cash taxes, other amounts (including sustaining capital expenditures, current expenses and provisions) and reserves to stabilize the monthly amount of distributions to unitholders as may be considered appropriate by the Board of Directors. Growth capital expenditures are funded from undistributed cash from operations, cash available from notional distributions on non-cash exchangeable shares, and, to the extent available, cash and existing lines of credit.
Distributable cash from operations is not a defined term under GAAP but is determined by the Partnership as net cash provided by operations for the period, adjusted to remove specific non-cash items, including changes in working capital, and reduced by sustaining capital expenditures, provisions for funding long-term liabilities, provisions for committed capital purchases in progress, and public costs.
Management believes that distributable cash from operations is a useful supplemental measure of performance as it provides investors with an indication of the amount of cash available for distribution to unitholders. Investors are cautioned, however, that distributable cash from operations should not be construed as an alternative to using net income as a measure of profitability or as an alternative to the statement of cash flows. In addition, the Fund's method of calculating distributable cash from operations may not be comparable to calculations used by other issuers.
Operating Results
Effective January 1, 2010, Trimac set up a separate industrial services division called National Tank Services (NTS). This division, which was previously included in the bulk trucking division, does routine repairs and maintenance and washrack services to rolling stock for both the Trimac fleet and for other non-related trucking companies. As these operations are an integral part of Trimac, it was determined that its operations should be separately reported. Prior period comparatives have been restated to present this division separately.
Revenue - Q2
-------------------------------------------------------------------------
Three months ended June 30
-------------------------------------------------------------------------
(millions of
dollars) 2010 2009
-------------------------------------------------------------------------
Fuel Net Trans- Fuel Net Trans-
Total Sur- portation Total Sur- portation
Revenue charges Revenue Revenue charges Revenue
-------------------------------------------------------------------------
Bulk
trucking
----------
Western
division 41.4 3.4 38.0 33.9 2.0 31.9
Eastern
division 26.2 2.6 23.6 24.5 1.7 22.8
-------------------------------------------------------------------------
Total bulk
trucking 67.6 6.0 61.6 58.4 3.7 54.7
-------------------------------------------------------------------------
BPL 3.1 - 3.1 3.1 - 3.1
-------------------------------------------------------------------------
NTS 7.3 - 7.3 7.3 - 7.3
less:interco.
revenue (4.7) - (4.7) (4.9) - (4.9)
-------------------------------------------------------------------------
Other 0.0 - 0.0 - - -
-------------------------------------------------------------------------
Total revenue 73.3 6.0 67.3 63.9 3.7 60.2
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-----------------------------------------------------
Three months ended June 30
-----------------------------------------------------
(millions of
dollars) Gross Revenue Net Revenue
-----------------------------------------------------
Variance % Variance %
-----------------------------------------------------
Bulk
trucking
----------
Western
division 7.5 22.1% 6.1 19.1%
Eastern
division 1.7 6.9% 0.8 3.5%
-----------------------------------------------------
Total bulk
trucking 9.2 15.8% 6.9 12.6%
-----------------------------------------------------
BPL - 0.0% - 0.0%
-----------------------------------------------------
NTS - 0.0% - 0.0%
less:interco.
revenue 0.2 0.2
-----------------------------------------------------
Other 0.0 0.0
-----------------------------------------------------
Total revenue 9.4 14.7% 7.1 11.8%
-----------------------------------------------------
-----------------------------------------------------
For the current period, total revenue increased by $9.4 million or 14.7 percent from the prior period. Fuel surcharges as a percentage of bulk trucking revenue totaled approximately 9.7 percent in comparison to 6.8 percent in the prior period, resulting in an increase in fuel surcharge revenue of $2.3 million. Revenue net of fuel surcharges increased by $7.1 million or 11.8 percent from the prior period. Increased revenue was primarily a result of increased volumes with existing and new customers.
The western division's revenue increased by $7.5 million or 22.1 percent. Fuel surcharge revenue was $1.4 million higher than the prior period. Revenue net of fuel surcharges increased by $6.1 million or 19.1 percent compared to the prior period. The revenue increase was due to incremental revenue of $1.1 million from the March 29, 2010 acquisition of the GH Trucking assets and the remainder was primarily due to increased volumes in all product lines except the industrial gas product line.
The eastern division's revenue increased by $1.7 million or 6.9 percent. Fuel surcharge revenue was $0.9 million higher than the prior period. Revenue net of fuel surcharges increased by $0.8 million or 3.5 percent compared to the prior period. Revenue increases came from the petroleum product line due to the addition of new business, the dry bulk product line due to increased volumes in cement hauling and the chemical product line due to increased volumes with existing customers.
Bulk Plus Logistics' (BPL) revenue remained unchanged as compared to the prior period. Revenues from increased volumes in the freight brokerage operations were mitigated by decreased revenues in the third party logistics operations.
NTS' revenue for the current period was also unchanged as compared to the prior period.
Revenue - YTD Q2
-------------------------------------------------------------------------
Six months ended June 30
-------------------------------------------------------------------------
(millions of
dollars) 2010 2009
-------------------------------------------------------------------------
Fuel Net Trans- Fuel Net Trans-
Total Sur- portation Total Sur- portation
Revenue charges Revenue Revenue charges Revenue
-------------------------------------------------------------------------
Bulk
trucking
----------
Western
division 77.6 6.6 71.0 70.5 5.0 65.5
Eastern
division 50.5 4.8 45.7 46.7 3.4 43.3
-------------------------------------------------------------------------
Total bulk
trucking 128.1 11.4 116.7 117.2 8.4 108.8
-------------------------------------------------------------------------
BPL 5.2 - 5.2 6.4 - 6.4
-------------------------------------------------------------------------
NTS 14.5 - 14.5 15.3 - 15.3
less:interco.
revenue (9.0) - (9.0) (10.0) - (10.0)
-------------------------------------------------------------------------
Other 0.0 - 0.0 - - -
-------------------------------------------------------------------------
Total
revenue 138.8 11.4 127.4 128.9 8.4 120.5
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-----------------------------------------------------
Six months ended June 30
-----------------------------------------------------
(millions of
dollars) Gross Revenue Net Revenue
-----------------------------------------------------
Variance % Variance %
-----------------------------------------------------
Bulk
trucking
----------
Western
division 7.1 10.1% 5.5 8.4%
Eastern
division 3.8 8.1% 2.4 5.5%
-----------------------------------------------------
Total bulk
trucking 10.9 9.3% 7.9 7.3%
-----------------------------------------------------
BPL (1.2) -18.8% (1.2) -18.8%
-----------------------------------------------------
NTS (0.8) -5.2% (0.8) -5.2%
less:interco.
revenue 1.0 1.0
-----------------------------------------------------
Other 0.0 0.0
-----------------------------------------------------
Total revenue 9.9 7.7% 6.9 5.7%
-----------------------------------------------------
-----------------------------------------------------
For the current year, total revenue increased by $9.9 million or 7.7 percent from the prior year. Fuel surcharges as a percentage of bulk trucking revenue totaled approximately 9.8 percent in comparison to 7.7 percent in the prior year, resulting in an increase in fuel surcharge revenue of $3.0 million. Revenue net of fuel surcharges increased by $6.9 million or 5.7 percent from the prior year. Increased revenue was primarily a result of increased volumes with existing and new customers and pricing returning to appropriate levels.
The western division's revenue increased by $7.1 million or 10.1 percent. Fuel surcharge revenue was $1.6 million higher than the prior year. Revenue net of fuel surcharges increased by $5.5 million or 8.4 percent compared to the prior year. Increased revenue was due to incremental revenue of $1.1 million from the GH Trucking assets acquired, increased volumes and increased utility in the petroleum, woodchips, chemicals and resource commodity product lines.
The eastern division's revenue increased by $3.8 million or 8.1 percent. Fuel surcharge revenue was $1.4 million higher than the prior year. Revenue net of fuel surcharges increased by $2.4 million or 5.5 percent compared to the prior year. The increased revenues were attributable to higher revenues generated in the petroleum, dry bulk, chemical and edible product lines due to increased volumes and tightening capacity in the market.
For the current year, BPL's revenue decreased by $1.2 million or 18.8 percent. This decrease was primarily due to 2009 rate concessions and lower revenue in our third party logistics operations and lower volumes in the freight brokerage operations.
NTS' revenue for the current year decreased by $0.8 million or 5.2 percent. An increase in third party revenue of $0.2 million was offset by lower internal repairs and maintenance requirements for the western division.
EBITDA - Q2
-------------------------------------------------------------------------
Three months ended June 30
-------------------------------------------------------------------------
(millions of % Rev.
dollars) 2010 % Rev. 2009 % Rev. Variance % change
-------------------------------------------------------------------------
Bulk trucking
-------------
Western division 4.8 11.6% 4.4 13.0% 0.4 9.1% -1.4%
Eastern division 2.5 9.5% 1.9 7.8% 0.6 31.6% 1.8%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total bulk trucking 7.3 10.8% 6.3 10.8% 1.0 15.9% 0.0%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
BPL 0.4 12.9% 0.5 16.1% (0.1) -20.0% -3.2%
-------------------------------------------------------------------------
NTS 0.7 9.6% 0.7 9.6% - 0.0% 0.0%
-------------------------------------------------------------------------
Other (0.1) (0.3) 0.2
-------------------------------------------------------------------------
Total EBITDA 8.3 11.3% 7.2 11.3% 1.1 15.3% 0.0%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
EBITDA for the current period totaled $8.3 million, a $1.1 million or 15.3 percent increase over the prior period. The western division experienced a $0.4 million or 9.1 percent increase in the current period. The eastern division had increased EBITDA of $0.6 million or 31.6 percent. These increases were primarily the result of the increased revenue volumes. BPL's EBITDA was $0.1 million lower than in the prior period primarily due to price concessions in its third party logistics operations. NTS' EBITDA remained unchanged compared to the prior period.
EBITDA - Q2 YTD
-------------------------------------------------------------------------
Six months ended June 30
-------------------------------------------------------------------------
(millions of % Rev.
dollars) 2010 % Rev. 2009 % Rev. Variance % change
-------------------------------------------------------------------------
Bulk trucking
-------------
Western division 8.7 11.2% 7.9 11.2% 0.8 10.1% 0.0%
Eastern division 3.7 7.3% 2.8 6.0% 0.9 32.1% 1.3%
-------------------------------------------------------------------------
Total bulk trucking 12.4 9.7% 10.7 9.1% 1.7 15.9% 0.6%
-------------------------------------------------------------------------
BPL 0.4 7.7% 1.4 21.9% (1.0) -71.4% -14.2%
-------------------------------------------------------------------------
NTS 1.2 8.3% 1.1 7.2% 0.1 9.1% 1.1%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Other 0.0 (0.5) 0.5
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total EBITDA 14.0 10.1% 12.7 9.9% 1.3 10.2% 0.2%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
EBITDA for the current year totaled $14.0 million, a $1.3 million or 10.2 percent increase from the prior year. The western division experienced a $0.8 million or 10.1 percent increase in the period, and the eastern division was higher than prior by $0.9 million or 32.1 percent. These increases were the result of the higher revenue volumes, tighter capacity in the market and more appropriate pricing levels. BPL's EBITDA was $1.0 million or 71.4 percent lower than in the prior year-to-date period primarily due to lower revenue volumes in the freight brokerage product line and 2009 rate concessions in its third party logistics operations. NTS' EBITDA for the current year was $1.2 million or 9.1 percent over the prior year. This increase was primarily due to a reduction in direct costs.
Capital Expenditures - Q2
Three months ended
June 30
(millions of dollars) 2010 2009
-------------------------------------------------------------------------
Gross sustaining capital expenditures 2.6 1.1
Less: proceeds on disposal of capital assets (0.4) (0.4)
---------------------
Net sustaining capital expenditures 2.2 0.7
Growth capital expenditures 3.6 3.2
---------------------
Net capital expenditures 5.8 3.9
---------------------
---------------------
The Partnership's net capital expenditures, including growth and sustaining capital, totaled $5.8 million in the current period as compared to $3.9 million in the prior period. The increase of $1.9 million compared to the prior period was due to increased net sustaining capital expenditures of $1.5 million and higher growth capital expenditures of $0.4 million. Gross sustaining capital expenditures were $1.5 million higher than the prior period which was primarily due to an increase of $1.0 million of replacement tractor and trailer expenditures and an increase of $0.5 million in washrack facility upgrades. Proceeds on disposal of capital assets remained unchanged from that recorded in the prior period. Increased growth capital expenditures were attributed to increased tractor and trailer expenditures of $1.9 million in the current period partially offset by a $1.5 million land purchase in the prior period.
Gross sustaining capital purchases of $2.6 million in the current period included replacement tractors which accounted for 28 percent of the total, trailers which accounted for 44 percent of the total, facility upgrades which accounted for 17 percent of total gross sustaining capital purchases and the balance applicable to other operating assets.
Growth capital expenditures of $3.6 million were mainly due to equipment purchases for new business awards. Growth capital purchases are funded from undistributed cash from operations, cash available from notional distributions on non-cash exchangeable shares and, to the extent required, available cash and existing lines of credit.
Capital Expenditures - YTD
Six months ended
June 30
(millions of dollars) 2010 2009
-------------------------------------------------------------------------
Gross sustaining capital expenditures 4.0 3.2
Less: proceeds on disposal of capital assets (0.7) (1.3)
---------------------
Net sustaining capital expenditures 3.3 1.9
Growth capital expenditures 3.9 3.9
---------------------
Net capital expenditures 7.2 5.8
---------------------
---------------------
The Partnership's net capital expenditures, including growth and sustaining capital, totaled $7.2 million in the current year as compared to $5.8 million in the prior year. The increase of $1.4 million compared to the prior year was entirely due to increased net sustaining capital expenditures of $1.4 million. Gross sustaining capital expenditures increased by $0.8 million as compared to the prior year which was primarily due to an increase in replacement tractor and trailer expenditures of $0.3 million and an increase of $0.5 million of washrack facility upgrades. Proceeds on disposal of capital assets decreased by $0.6 million compared to the prior year due to fewer tractor and trailer disposals in the current year and proceeds of $0.3 million from a property sale in the prior year. Growth capital expenditures remained unchanged as compared to the prior year.
Gross sustaining capital purchases of $4.0 million in the current year included replacement tractors, trailers and facility upgrades. Growth capital expenditures of $3.9 million in the current year related primarily to equipment, facility upgrades and other operating assets.
Net annual capital expenditures relating to sustaining capital requirements will vary from year to year based on: the economic life of the capital assets; historical purchase dates; the mix of life cycles expiring in a given year; other factors affecting equipment cost; disposal proceeds of replaced assets; and annual equipment utilization. Sustaining capital purchases are funded from the Partnership's net cash provided by operations in the year, cash available from notional distributions on non-cash exchangeable shares and, thereafter, to the extent required, available credit facilities.
You are invited to join us on a conference call at 9:30 a.m. Eastern Time on Thursday, August 12, 2010. For North American participants, please dial 1-866-321-8231 or for international participants, please dial ++1-416-642-5213 at least 10 minutes prior to the start time of the call.
A playback of the call will be available starting at 1:30 p.m. Eastern Time on Thursday, August 12, 2010 until midnight August 19, 2010. To hear the playback dial 1-888-203-1112 or for international participants, please dial ++1-647-436-0148 and give the conference ID number: 6485470.
Trimac Income Fund
Consolidated Balance Sheet
(Unaudited)
-------------------------------------------------------------------------
(thousands of dollars)
As at As at
June 30, December 31,
2010 2009
$ $
---------------------------
Assets
Current assets
Cash 47 180
Interest receivable 235 241
Distributions receivable 332 172
Prepaid expenses 34 85
---------------------------
648 678
Investment in Trimac Transportation Services
Limited Partnership 61,353 63,136
Note receivable from Trimac Transportation
Services Inc. 35,719 35,438
---------------------------
---------------------------
97,720 99,252
---------------------------
---------------------------
Liabilities
Current liabilities
Accounts payable and accrued liabilities 45 60
Due to associated companies and partnerships 36 107
Distributions payable 506 504
---------------------------
587 671
Deferred compensation plan 158 144
---------------------------
---------------------------
745 815
Unitholders' equity 96,975 98,437
---------------------------
---------------------------
97,720 99,252
---------------------------
---------------------------
The Fund commenced business operations on February 25, 2005 and earnings of the Fund's investment in Trimac Transportation Services Limited Partnership ("Partnership") have been accounted for using the equity method of accounting since commencement. Under this method, the Fund's share of earnings of the Partnership, adjusted for the amortization of certain tangible and intangible assets arising from the use of purchase accounting is reflected in the statement of earnings of the Fund as "Share of adjusted loss of the Partnership". The results of operations of the Fund are predominately dependent on the performance of the Partnership.
Trimac Income Fund
Consolidated Statement of Earnings, Comprehensive Income and Unitholders'
Equity
(Unaudited)
-------------------------------------------------------------------------
(thousands of dollars, except per unit amounts and number of units)
Three months Three months Six months Six months
ended ended ended ended
June 30, June 30, June 30, June 30,
2010 2009 2010 2009
------------------------ ------------------------
$ $ $ $
Share of adjusted
earnings (loss) of
the Partnership(1) 558 (90) 392 (652)
Interest income (net) 709 707 1,408 1,389
Administrative costs (162) (200) (325) (383)
------------------------ ------------------------
Net earnings 1,105 417 1,475 354
Other comprehensive
loss - share of
Partnership other
comprehensive loss (190) (72) (193) (47)
------------------------ ------------------------
Comprehensive income 915 345 1,282 307
Opening unitholders'
equity 97,294 101,275 98,437 102,824
Issue of additional
units 281 - 281 -
Distributions declared (1,515) (1,510) (3,025) (3,021)
------------------------ ------------------------
Closing unitholders'
equity 96,975 100,110 96,975 100,110
------------------------ ------------------------
------------------------ ------------------------
Basic earnings per
unit(2) 0.0876 0.0331 0.1170 0.0281
Fully diluted earnings
(loss) per unit(2) 0.0876 0.0306 0.1170 (0.0143)
Number of units
outstanding used in
computing basic
earnings per unit 12,604,908 12,584,679 12,604,908 12,584,679
Number of units
outstanding used in
computing diluted
earnings (loss)
per unit 26,090,257 25,304,697 26,090,257 25,304,697
(1) The net earnings of the Partnership are allocated between TTSI and the Fund based on the terms of the partnership agreement. The following is a reconciliation of net earnings in the unaudited interim consolidated financial statements of the Partnership to the amount recorded by the Fund.
Three months ended Six months ended
June 30 June 30
2010 2009 2010 2009
$ $ $ $
--------------------------------------------------
Net earnings of the
Partnership 3,112 1,056 3,723 373
Add: Interest expense
on TTSI debt included
in Partnership
earnings 340 679 676 1,350
--------------------------------------------------
Adjusted Partnership
earnings 3,452 1,735 4,399 1,723
Less: Purchase price
allocation
adjustments:
Increase in
amortization of
capital assets and
loss on disposal of
capital assets (261) (463) (538) (1,075)
Amortization of
intangible assets (667) (1,012) (1,565) (2,022)
--------------------------------------------------
Partnership earnings
(loss) after purchase
price adjustments 2,524 260 2,296 (1,374)
--------------------------------------------------
--------------------------------------------------
Share of Partnership
earnings (loss) 558 (90) 392 (652)
--------------------------------------------------
--------------------------------------------------
(2) Pursuant to an investor liquidity agreement, holders of TTSI Exchangeable Shares have the right to effectively liquidate their 10,169,852 shares of TTSI and receive units in the Fund. Following the full exercise of such liquidation rights, the Fund would own 100 percent of the Partnership. The number of units used in the calculation of diluted earnings per unit assumes full liquidation at the beginning of the period. The calculation of fully diluted earnings per unit for the three month and six month periods ended June 30, 2010 has not been disclosed as it would have an anti-dilutive effect.
Trimac Income Fund
Consolidated Statement of Cash Flows
(Unaudited)
-------------------------------------------------------------------------
(thousands of dollars)
Three months Three months Six months Six months
ended ended ended ended
June 30, June 30, June 30, June 30,
2010 2009 2010 2009
------------------------ ------------------------
$ $ $ $
Cash provided (used)
Operations
Net earnings 1,105 417 1,475 354
Add items not affecting
cash:
Share of adjusted
(earnings) loss from
the Partnership (558) 90 (392) 652
Distributions from
the Partnership 392 - 392 -
Deferred compensation
costs (3) 37 14 43
------------------------ ------------------------
Cash provided by
operations 936 544 1,489 1,049
Net change in non-cash
working capital 21 (153) (29) (941)
------------------------ ------------------------
------------------------ ------------------------
Net cash provided
by operations 957 391 1,460 108
------------------------ ------------------------
------------------------ ------------------------
Investments
Distributions from
the Partnership 588 1,018 1,430 2,434
------------------------ ------------------------
Cash provided by
investing activities 588 1,018 1,430 2,434
------------------------ ------------------------
Financing
Distributions paid (1,513) (1,512) (3,023) (3,490)
------------------------ ------------------------
Cash used in financing
activities (1,513) (1,512) (3,023) (3,490)
------------------------ ------------------------
Increase (decrease)
in cash 32 (103) (133) (948)
Cash, beginning of
period 15 125 180 970
------------------------ ------------------------
------------------------ ------------------------
Cash, end of period 47 22 47 22
------------------------ ------------------------
------------------------ ------------------------
Supplemental information
Cash received from
interest (net) 715 715 1,414 1,397
The financial statements included in this news release do not contain the notes to the statements. Financial statements with note disclosure are filed with securities regulators.
Trimac Transportation Services Limited Partnership
Consolidated Balance Sheet
(Unaudited)
-------------------------------------------------------------------------
(thousands of dollars)
As at As at
June 30, December 31,
2010 2009
$ $
---------------------------
Assets
Current assets
Cash - 406
Accounts receivable 33,369 28,217
Materials and supplies 1,430 1,389
Due from related parties 1,696 1,479
Income taxes recoverable 68 -
Prepaid expenses 10,505 10,352
---------------------------
---------------------------
47,068 41,843
Capital assets 89,765 87,482
Intangible assets 2,698 2,701
Goodwill 6,182 6,182
Other 1,955 1,870
---------------------------
147,668 140,078
---------------------------
---------------------------
Liabilities
Current liabilities
Bank indebtedness 311 716
Accounts payable and accrued liabilities 24,582 27,072
Distributions payable 1,891 1,953
Income taxes payable - 23
Due to related parties 1,391 1,095
Current maturities of long-term debt 18,667 18,667
---------------------------
---------------------------
46,842 49,526
Long-term debt 55,332 43,392
Interest rate hedge 708 -
Future income taxes 525 507
Other long-term liabilities 1,407 1,439
---------------------------
---------------------------
104,814 94,864
Partnership equity 42,854 45,214
---------------------------
---------------------------
147,668 140,078
---------------------------
---------------------------
The Partnership provides bulk trucking services throughout Canada and complementary logistics services in Canada and the United States. Effective January 1, 2005, the Partnership purchased substantially all of the assets of Trimac Transportation Services Inc. ("TTSI") relating to its Canadian bulk trucking business and its North American logistics business. TTSI and certain of its subsidiaries conducted the business operations of the Partnership prior to January 1, 2005.
Trimac Transportation Services Limited Partnership
Consolidated Statement of Earnings, Comprehensive Income and Partnership
Equity
(Unaudited)
-------------------------------------------------------------------------
(thousands of dollars)
Three months Three months Six months Six months
ended ended ended ended
June 30, June 30, June 30, June 30,
2010 2009 2010 2009
------------------------ ------------------------
$ $ $ $
Revenue
Transportation revenue 67,381 60,240 127,435 120,497
Fuel surcharges 5,993 3,693 11,412 8,411
------------------------ ------------------------
------------------------ ------------------------
73,374 63,933 138,847 128,908
------------------------ ------------------------
Operating costs and
expenses
Direct 54,313 45,976 104,018 94,809
Selling and
administrative 10,755 10,746 20,816 21,367
Depreciation and
amortization 4,147 5,109 8,234 10,327
Gain on sale of assets,
net of losses (51) (84) (72) (274)
------------------------ ------------------------
------------------------ ------------------------
Operating expense 69,164 61,747 132,996 126,229
------------------------ ------------------------
------------------------ ------------------------
Operating earnings 4,210 2,186 5,851 2,679
Interest on long-term
debt 964 1,001 1,873 1,985
Other interest expense 78 22 142 45
------------------------ ------------------------
1,042 1,023 2,015 2,030
------------------------ ------------------------
Earnings before income
taxes 3,168 1,163 3,836 649
Income tax expense
Current 47 102 95 263
Future 9 5 18 13
------------------------ ------------------------
56 107 113 276
------------------------ ------------------------
------------------------ ------------------------
Net earnings 3,112 1,056 3,723 373
Other comprehensive loss
Net change in
cumulative translation
adjustments (30) (289) (40) (189)
Market value adjustment
on designated hedge (708) - (708) -
------------------------ ------------------------
(738) (289) (748) (189)
------------------------ ------------------------
Comprehensive income 2,374 767 2,975 184
Opening partnership
equity 43,148 46,948 45,214 50,763
Distributions declared (2,668) (3,283) (5,335) (6,515)
------------------------ ------------------------
Closing partnership
equity 42,854 44,432 42,854 44,432
------------------------ ------------------------
------------------------ ------------------------
Accumulated other
comprehensive (losses)
income (included in
partnership equity)
Opening balance (196) 364 (186) 264
Other comprehensive loss (738) (289) (748) (189)
------------------------ ------------------------
Closing balance (934) 75 (934) 75
------------------------ ------------------------
------------------------ ------------------------
Trimac Transportation Services Limited Partnership
Consolidated Statement of Cash Flows
(Unaudited)
-------------------------------------------------------------------------
(thousands of dollars)
Three months Three months Six months Six months
ended ended ended ended
June 30, June 30, June 30, June 30,
2010 2009 2010 2009
------------------------ ------------------------
$ $ $ $
Cash provided (used)
Operations
Net earnings 3,112 1,056 3,723 373
Add back (deduct) items
not affecting cash:
Depreciation and
amortization 4,147 5,109 8,234 10,327
Gain on sale of
assets, net of losses (51) (84) (72) (274)
Future income tax
expense 9 5 18 13
Other non-cash items (108) 150 (119) 164
------------------------ ------------------------
Cash provided by
operations 7,109 6,236 11,784 10,603
Net change in non-cash
working capital (1,189) 2,251 (6,826) 2,922
------------------------ ------------------------
Net cash provided by
operations 5,920 8,487 4,958 13,525
------------------------ ------------------------
------------------------ ------------------------
Investments
Purchases of capital
assets (6,249) (4,266) (7,904) (7,096)
Proceeds on sale of
capital assets 392 367 681 1,327
------------------------ ------------------------
------------------------ ------------------------
Net capital
expenditures
delivered (5,857) (3,899) (7,223) (5,769)
Decrease in accounts
payable and accrued
liabilities relating
to investing activities (547) (1,555) (941) (210)
Decrease in accounts
receivable relating
to investing activities 8 - 8 5
------------------------ ------------------------
Net cash expended on
capital expenditures (6,396) (5,454) (8,156) (5,974)
------------------------ ------------------------
Acquisition of
transportation business - - (3,340) -
Other (4) (173) (6) (108)
------------------------ ------------------------
Cash used in investing
activities (6,400) (5,627) (11,502) (6,082)
------------------------ ------------------------
Financing
Increase in long-term
debt 3,765 - 11,940 828
Repayments of long-term
debt - (729) - -
Distributions paid (2,670) (2,795) (5,397) (6,099)
------------------------ ------------------------
Cash provided by
(used in) financing
activities 1,095 (3,524) 6,543 (5,271)
------------------------ ------------------------
Increase (decrease)
in net cash 615 (664) (1) 2,172
(Bank indebtedness) cash,
beginning of period (926) 3,217 (310) 381
------------------------ ------------------------
------------------------ ------------------------
(Bank indebtedness) cash,
end of period (311) 2,553 (311) 2,553
------------------------ ------------------------
------------------------ ------------------------
Supplemental information
Income taxes paid 121 296 186 961
Interest paid 461 346 1,935 2,087
Net cash consists of the
following:
Cash - 5,479
Bank indebtedness (311) (2,926)
------------------------
(311) 2,553
------------------------
------------------------
The financial statements included in this news release do not contain the notes to the statements. Financial statements with note disclosure are filed with securities regulators.
For further information: Edward V. Malysa, Executive Vice President & Chief Operating Officer, Trimac Transportation Services Inc., Telephone: 403-298-5100, Facsimile: 403-298-5258; Scott D. Calver, Vice President & Chief Financial Officer, Trimac Transportation Services Inc., Telephone: 403-298-5100, Facsimile: 403-298-5146; Investor Relations: [email protected]
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