Pacer International Reports Third Quarter Results

  Pacer International Reports Third Quarter Results

Business Wire

DUBLIN, Ohio -- October 24, 2013

Pacer International, Inc. (Nasdaq:PACR), the asset-light North American
freight transportation and logistics services provider, today reported
financial results for the three and nine month periods ended September30,
2013.

THIRD QUARTER RESULTS

  *Earnings per share more than doubled from the third quarter of 2012 to
    $0.08;
  *Total revenues decreased $98.9 million from the third quarter of 2012. As
    expected, the decrease was primarily due to the new cross border agreement
    with Union Pacific where we no longer collect and pass through the rail
    transportation costs to automotive intermediaries servicing the US-Mexico
    business;
  *Total cost of purchased transportation and services decreased $99.0
    million from the third quarter of 2012. As expected, the decrease was
    primarily due to the implementation of the new cross border agreement with
    Union Pacific;
  *Income from operations increased $2.7 million from the third quarter of
    2012 to $5.0 million, primarily due to improved gross margins in both the
    intermodal and logistics segments. Intermodal income from operations
    improved by $2.6 million or 29.9% and the logistics loss from operations
    decreased by $0.6 million or 26.1%;
  *Net income increased $1.7 million from the third quarter of 2012 to $2.8
    million;
  *Cash on hand at September 30, 2013 improved to $39.7 million primarily due
    to $15.0 million in cash provided by operating activities during the
    quarter.

(In millions, except for per share data)

Selected Financial Data
                                2013                               2012
                                 Q1         Q2         Q3          Q3
Revenue                          $ 232.7     $ 238.0     $ 250.0     $ 348.9
Cost of purchased                177.9       181.2       192.2       291.2
transportation and services
Gross margin                     $ 31.9      $ 32.7      $ 34.6      $ 31.7
Gross margin %                   13.7    %   13.7    %   13.8    %   9.1     %
SG&A                             $ 29.8      $ 29.9      $ 29.9      $ 29.6
Income from operations           $ 2.4       $ 3.0       $ 5.0       $ 2.3
Operating margin %               1.0     %   1.3     %   2.0     %   0.7     %
Net income                       $ 1.3       $ 1.9       $ 2.8       $ 1.1
Earnings per share               $ 0.04      $ 0.05      $ 0.08      $ 0.03


“We continue to see improved operating results in our intermodal segment from
the efforts we have taken to further lower our network costs through better
management of our empty miles, network flows, and box utilization. Our
logistics segment, while not yet profitable, has improved significantly over
the last four quarters,” said Daniel W. Avramovich, Chairman and Chief
Executive Officer.

YEAR-TO-DATE RESULTS

  *Earnings per share more than doubled from the 2012 period to $0.17;
  *Total revenues decreased $342.4 million from the 2012 period. As expected,
    the decrease was primarily due to the new cross border agreement with
    Union Pacific where we no longer collect and pass through the rail
    transportation costs to automotive intermediaries servicing the US-Mexico
    business;
  *Total cost of purchased transportation and services decreased $339.4
    million from the 2012 period. As expected, the decrease was primarily due
    to the implementation of the new cross border agreement with Union
    Pacific;
  *Selling, general and administrative expenses decreased $1.8 million from
    the 2012 period, or 2.0%;
  *Income from operations increased $5.6 million from the 2012 period to
    $10.4 million. Intermodal income from operations improved by $5.6 million
    or 21.3% and the logistics loss from operations decreased by $0.7 million
    or 8.8%;
  *Net income increased $3.9 million from the 2012 period to $6.0 million.

(In millions, except for per share data)

Selected Financial Data
                                               2013          2012
                                                Year-to-Date   Year-to-Date
Revenue                                         $  720.7       $  1,063.1
Cost of purchased transportation and services   551.3          890.7
Gross margin                                    $  99.2        $  96.0
Gross margin %                                  13.8      %    9.0        %
SG&A                                            $  89.6        $  91.4
Income from operations                          $  10.4        $  4.8
Operating margin %                              1.4       %    0.5        %
Net income                                      $  6.0         $  2.1
Earnings per share                              $  0.17        $  0.06


Certain reclassifications have been made to the 2012 operating expenses in
order to conform to the 2013 presentation.The reclassifications had no impact
on previously reported income. A tabular reconciliation detailing the
reclassification amounts for 2012 is contained in the schedules attached to
this press release.

2013 GUIDANCE

We are tightening our 2013 earnings per share guidance and reconfirming our
2013 revenue guidance. We expect 2013 earnings per share to range between
$0.26 and $0.33 and revenues to range between $1.0 billion and $1.1 billion.

CONFERENCE CALL TODAY Pacer International will hold a conference call for
investors, analysts, business and trade media, and other interested parties at
8:30 a.m. EDT, today (Thursday, October24, 2013). To participate, please call
five minutes early by dialing (800)230-1059 (in USA) and ask for “Pacer
International Third Quarter Earnings Call.” International callers can dial
(612)234-9959.

An audio-only, simultaneous webcast of the live conference call can be
accessed through the Investors link on the company’s website at www.pacer.com.
For persons unable to participate in either the conference call or the
webcast, a digitized replay will be available from October24, 2013 at 11:00
a.m. EDT to November 24, 2013 at 11:59 p.m. EST. For the replay, dial
(800)475-6701(USA) or (320)365-3844 (International), using access code
303541. During such period, the replay also can be accessed through the
Investors link on the company’s website at www.pacer.com.

USE OF NON-GAAP FINANCIAL MEASURES: From time to time in press releases
regarding quarterly earnings, presentations and other communications, we may
provide financial information determined by methods other than in accordance
with generally accepted accounting principles ("GAAP").

These measures include adjusted results for 2012 which exclude from revenues
and costs of purchased transportation, the rail transportation costs in our
wholesale intermodal auto business that we no longer collect and pass through
to automotive intermediaries servicing the US-Mexico business. Adjusted
results for the three and nine months ended September 30, 2012 are set forth
in the tables of this press release.

Management uses these non-GAAP measures in its analysis of the Company’s
performance and regularly reports such information to our Board of Directors.
Management believes that presentations of financial measures excluding the
impact of these items provides useful supplemental information that is
essential to a proper understanding of the operating results of our core
businesses and allows investors, management and our Board to more easily
compare operating results from period to period. However, the use of any such
non-GAAP financial information should not be considered in isolation or as a
substitute for revenues, net income or loss, operating income or loss, cash
flows from operations or other income or cash flow data prepared in accordance
with GAAP or as a measure of our profitability or liquidity. These non-GAAP
measures may not be comparable to those used by other companies.

ABOUT PACER INTERNATIONAL (www.pacer.com)

Pacer International, a leading asset-light North American freight
transportation and logistics services provider, offers a broad array of
services to facilitate the movement of freight from origin to destination
through its intermodal and logistics operating segments. The intermodal
segment offers container capacity, integrated local transportation services,
and door-to-door intermodal shipment management. The logistics segment
provides truck brokerage, warehousing and distribution, international freight
forwarding, and supply-chain management services. For more information on
Pacer International visit www.pacer.com.

CERTAIN FORWARD-LOOKING STATEMENTS - This press release contains or may
contain forward-looking statements, including revenue and earnings per share
guidance for 2013, within the meaning of Section27A of the Securities Act of
1933, as amended, and Section21E of the Securities Exchange Act of 1934, as
amended. These forward-looking statements are based on the company’s current
expectations and beliefs and are subject to a number of risks, uncertainties
and assumptions. Among the important factors that could cause actual results
to differ materially from those expressed or implied in the forward-looking
statements are general economic and business conditions including the current
U.S. and global economic environment and the timing and strength of economic
recovery in the U.S. and internationally; industry trends, including changes
in the costs of services from rail, motor, ocean and air transportation
providers; and other risks discussed in the company’s Form 10-K and other
filings with the Securities and Exchange Commission. Should one or more of
these risks or uncertainties materialize, or should underlying assumptions or
estimates prove incorrect, actual results may vary materially from those
described herein as anticipated, believed, expected or intended. Except as
otherwise required by federal securities laws, the company does not undertake
any obligation to update such forward-looking statements whether as a result
of new information, future events or otherwise.

Pacer International, Inc.
Unaudited Condensed Consolidated Balance Sheets
(in millions)

                                       September 30, 2013  December 31, 2012
Assets
Current assets
Cash and cash equivalents               $    39.7            $    20.2
Accounts receivable, net                109.6                132.7
Prepaid expenses and other              11.0                 9.4
Deferred income taxes                   2.2                 2.4           
Total current assets                    162.5               164.7         
Property and equipment
Property and equipment, cost            105.9                108.8
Accumulated depreciation                (59.2         )      (62.0         )
Property and equipment, net             46.7                46.8          
Other assets
Deferred income taxes                   8.7                  12.6
Other assets                            9.0                 9.9           
Total other assets                      17.7                22.5          
Total assets                            $    226.9          $    234.0    
Liabilities & Equity
Current liabilities
Accounts payable and other accrued      $    98.5            $    112.5
liabilities
Long-term liabilities
Other                                   1.0                 1.3           
Total liabilities                       99.5                113.8         
Stockholders’ equity
Common stock                            0.4                  0.4
Additional paid-in capital              307.0                305.7
Accumulated deficit                     (179.9        )      (185.9        )
Accumulated other comprehensive loss    (0.1          )      —             
Total stockholders’ equity              127.4               120.2         
Total liabilities and stockholders’     $    226.9          $    234.0    
equity


Pacer International, Inc.
Unaudited Condensed Consolidated Statements of Operations
(in millions, except share and per share data)

                  Three Months Ended             Nine Months Ended
                   September 30,   September      September     September
                   2013             30, 2012       30, 2013       30, 2012
Revenues           $   250.0        $   348.9      $   720.7      $  1,063.1
Operating
expenses:
Cost of
purchased          192.2            291.2          551.3          890.7
transportation
and services
Direct operating   23.2             26.0           70.2           76.4
expenses
Selling, general
and                29.9             29.6           89.6           91.4
administrative
expenses
Other income       (0.3        )    (0.2       )   (0.8       )   (0.2       )
Total operating    245.0           346.6         710.3         1,058.3    
expenses
Income from        5.0              2.3            10.4           4.8
operations
Interest expense   (0.4        )    (0.3       )   (0.9       )   (1.1       )
Income before      4.6              2.0            9.5            3.7
income taxes
Income tax         (1.8        )    (0.9       )   (3.5       )   (1.6       )
expense
Net income         $   2.8         $   1.1       $   6.0       $  2.1     
Earnings per
share:
Basic:
Earnings per       $   0.08        $   0.03      $   0.17      $  0.06    
share
Weighted average
shares             35,325,993      35,087,082    35,270,337    35,064,057 
outstanding
Diluted:
Earnings per       $   0.08        $   0.03      $   0.17      $  0.06    
share
Weighted average
shares             35,679,419      35,380,600    35,559,160    35,328,023 
outstanding


Pacer International, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in millions)

                                      Nine Months Ended
                                       September 30, 2013  September 30, 2012
Cash flows from operating activities
Net income                             $     6.0            $     2.1
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization          6.3                  5.8
Amortization of deferred gain on       (0.6          )      (0.6          )
sale lease-back transactions
Deferred taxes                         3.7                  1.0
Stock based compensation expense       2.0                  1.3
Change in operating assets and
liabilities
Accounts receivable, net               23.1                 (7.5          )
Prepaid expenses and other             (1.6          )      (1.2          )
Accounts payable and other accrued     (13.2         )      (4.6          )
liabilities
Other assets                           0.9                  0.9
Other liabilities                      (0.2          )      (1.1          )
Net cash provided by (used in)         26.4                (3.9          )
operating activities
Cash flows from investing activities
Capital expenditures                   (6.6          )      (9.3          )
Purchase of railcar assets             —                    (28.4         )
Net proceeds from sale lease-back      —                    30.2
transaction
Proceeds from sales of property and    —                   0.1           
equipment
Net cash used in investing             (6.6          )      (7.4          )
activities
Cash flows from financing activities
Debt issuance costs paid to third      —                    (0.2          )
parties
Repurchase and retirement of Pacer     —                    (0.1          )
common stock
Withholding tax paid upon vesting of
restricted and performance stock       (0.3          )      (0.1          )
units
Net cash used in financing             (0.3          )      (0.4          )
activities
Net increase (decrease) in cash and    19.5                 (11.7         )
cash equivalents
Cash and cash equivalents at           20.2                24.0          
beginning of period
Cash and cash equivalents at end of    $     39.7          $     12.3    
period


Pacer International, Inc.
Unaudited Results by Segment
(in millions)

                Three Months Ended September 30,              Nine Months Ended September 30,
                 2013       2012       Change     % Change   2013       2012       Change      % Change
Revenues
Intermodal       $ 193.3     $ 291.0     $ (97.7 )   (33.6 )%   $ 558.0     $ 882.7     $ (324.7 )   (36.8 )%
Logistics        57.0        58.1        (1.1    )   (1.9  )    163.6       181.0       (17.4    )   (9.6  )
Inter-segment    (0.3    )   (0.2    )   (0.1    )   N/M        (0.9    )   (0.6    )   (0.3     )   N/M
elimination
Total            250.0       348.9       (98.9   )   (28.3 )    720.7       1,063.1     (342.4   )   (32.2 )
Cost of
purchased
transportation
and services
Intermodal       142.8       240.4       (97.6   )   (40.6 )    409.2       732.7       (323.5   )   (44.2 )
Logistics        49.7        51.0        (1.3    )   (2.5  )    143.0       158.6       (15.6    )   (9.8  )
Inter-segment    (0.3    )   (0.2    )   (0.1    )   N/M        (0.9    )   (0.6    )   (0.3     )   N/M
elimination
Total            192.2       291.2       (99.0   )   (34.0 )    551.3       890.7       (339.4   )   (38.1 )
Direct
operating
expenses
Intermodal       23.2       26.0       (2.8    )   (10.8 )    70.2       76.4       (6.2     )   (8.1  )
Total            23.2        26.0        (2.8    )   (10.8 )    70.2        76.4        (6.2     )   (8.1  )
Gross margin
Intermodal       27.3        24.6        2.7         11.0       78.6        73.6        5.0          6.8
Logistics        7.3        7.1        0.2        2.8        20.6       22.4       (1.8     )   (8.0  )
Total            $ 34.6      $ 31.7      $ 2.9       9.1        $ 99.2      $ 96.0      $ 3.2        3.3
Gross margin
percentage
Intermodal       14.1    %   8.5     %   5.6     %              14.1    %   8.3     %   5.8      %
Logistics        12.8        12.2        0.6                    12.6        12.4        0.2
Total            13.8    %   9.1     %   4.7     %              13.8    %   9.0     %   4.8      %
Selling,
general &
administrative
expenses
Intermodal       $ 16.0      $ 15.9      $ 0.1       0.6        $ 46.7      $ 47.3      $ (0.6   )   (1.3  )
Logistics        9.3         9.6         (0.3    )   (3.1  )    28.7        30.6        (1.9     )   (6.2  )
Corporate        4.6        4.1        0.5        12.2       14.2       13.5       0.7         5.2
Total            29.9        29.6        0.3         1.0        89.6        91.4        (1.8     )   (2.0  )
Other income
Logistics        (0.3    )   (0.2    )   (0.1    )   50.0       (0.8    )   (0.2    )   (0.6     )   N/M
Total            (0.3    )   (0.2    )   (0.1    )   50.0       (0.8    )   (0.2    )   (0.6     )   N/M
Income (loss)
from
operations
Intermodal       11.3        8.7         2.6         29.9       $ 31.9      $ 26.3      $ 5.6        21.3
Logistics        (1.7    )   (2.3    )   0.6         26.1       (7.3    )   (8.0    )   0.7          8.8
Corporate        (4.6    )   (4.1    )   (0.5    )   (12.2 )    (14.2   )   (13.5   )   (0.7     )   (5.2  )
Total            5.0         2.3         2.7         N/M        10.4        4.8         5.6          N/M
Interest         (0.4    )   (0.3    )   (0.1    )   (33.3 )%   (0.9    )   (1.1    )   0.2          18.2  %
expense
Income tax       (1.8    )   (0.9    )   (0.9    )   N/M        (3.5    )   (1.6    )   (1.9     )   N/M
Net income       $ 2.8      $ 1.1      $ 1.7      N/M        $ 6.0      $ 2.1      $ 3.9       N/M


Reclassifications of 2012 Quarterly Results to Conform to 2013 Presentation
For the Three and Nine Months Ended September 30, 2012
(in millions)

                Three Months Ended September 30, 2012         Nine Months Ended September 30, 2012
                 As          Reclassification  As             Originally  Reclassification  As
                 Originally
                 Reported     Amount 1/          Reclassified   Reported     Amount 1/          Reclassified
Cost of
purchased        $  287.7     $    3.5           $  291.2       $  880.6     $    10.1          $  890.7
transportation
and services
Direct
operating        23.3         2.7                26.0           68.2         8.2                76.4
expenses
Selling,
general and      33.5         (3.9         )     29.6           103.7        (12.3        )     91.4
administrative
expenses
Depreciation
and              2.1          (2.1         )     —              5.8          (5.8         )     —
amortization
Other income     $  —         $    (0.2    )     $  (0.2   )    $  —         $    (0.2    )     $  (0.2   )

                 Three Months Ended September 30, 2012          Nine Months Ended September 30, 2012
                 As           Reclassification   As             Originally   Reclassification   As
                 Originally
                 Reported     Amount 1/          Reclassified   Reported     Amount 1/          Reclassified
Gross margin
Intermodal       $  27.3      $    (2.7    )     $  24.6        $  81.8      $    (8.2    )     $  73.6
Logistics        10.6        (3.5         )     7.1           32.5        (10.1        )     22.4      
Total            $  37.9      $    (6.2    )     $  31.7        $  114.3     $    (18.3   )     $  96.0
Gross margin
percentage
Intermodal       9.4      %                      8.5       %    9.3      %                      8.3       %
Logistics        18.2                            12.2           18.0                            12.4
Total            10.9     %                      9.1       %    10.8     %                      9.0       %

     Certain reclassifications have been made to the 2012 operating expenses
     in order to conform to the 2013 presentation. The reclassifications had
     no impact on previously reported income. Specifically, Pacer reclassified
1/  certain expenses from selling, general and administrative to costs of
     purchased transportation and services and direct operating expenses.
     Pacer also reclassified depreciation and amortization as direct operating
     expenses and selling, general and administrative expenses.


Reconciliation of GAAP Results to Adjusted Results
For the Three and Nine Months Ended September 30, 2013 and 2012
(in millions)
                
                 Three                                                             
                 Months
                 Ended
                 September
                 30, 2013    Three Months Ended September 30, 2012         Adjusted    %
                                                                                       Adjusted
                 GAAP        GAAP                            Adjusted    Variance    Variance
                 Results     Results          Adjustments      Results     2013 vs     2013 vs
                                                                           2012        2012
Total revenues   $ 250.0     $ 348.9          $  (95.9  ) 2/   $ 253.0     $ (3.0  )   (1.2  )%
Total cost of
purchased        192.2      291.2      1/   (95.9     ) 2/   195.3      (3.1    )   (1.6  )
transportation
and services
Total net        $ 57.8      $ 57.7           $  —             $ 57.7      $ 0.1       0.2
revenue
Total gross
margin           13.8    %   9.1       % 1/                    12.5    %   1.3     %
percentage
Total
operating        2.0     %   0.7       %                       0.9     %   1.1     %
margin
percentage
                                                                                       
Intermodal       $ 193.3     $ 291.0          $  (95.9  ) 2/   $ 195.1     $ (1.8  )   (0.9  )
revenues
Intermodal
cost of
purchased        142.8      240.4      1/   (95.9     ) 2/   144.5      (1.7    )   (1.2  )
transportation
and services
Intermodal net   $ 50.5      $ 50.6           $  —             $ 50.6      $ (0.1  )   (0.2  )%
revenue
Intermodal
gross margin     14.1    %   8.5       % 1/                    12.6    %   1.5     %
percentage
Intermodal
operating        5.8     %   3.0       %                       4.5     %   1.3     %
margin
percentage

                 
                 Nine
                 Months
                 Ended
                 September
                 30, 2013    Nine Months Ended September 30, 2012          Adjusted    %
                                                                                       Adjusted
                 GAAP        GAAP                              Adjusted    Variance    Variance
                 Results     Results          Adjustments      Results     2013 vs     2013 vs
                                                                           2012        2012
Total revenues   $ 720.7     $ 1,063.1        $  (287.9 ) 2/   $ 775.2     $ (54.5 )   (7.0  )%
Total cost of
purchased        551.3      890.7      1/   (287.9    ) 2/   602.8      (51.5   )   (8.5  )
transportation
and services
Total net        $ 169.4     $ 172.4          $  —             $ 172.4     $ (3.0  )   (1.7  )
revenue
Total gross
margin           13.8    %   9.0       % 1/                    12.4    %   1.4     %
percentage
Total
operating        1.4     %   0.5       %                       0.6     %   0.8     %
margin
percentage
                                                                                       
Intermodal       $ 558.0     $ 882.7          $  (287.9 ) 2/   $ 594.8     $ (36.8 )   (6.2  )
revenues
Intermodal
cost of
purchased        409.2      732.7      1/   (287.9    ) 2/   444.8      (35.6   )   (8.0  )
transportation
and services
Intermodal net   $ 148.8     $ 150.0          $  —             $ 150.0     $ (1.2  )   (0.8  )%
revenue
Intermodal
gross margin     14.1    %   8.3       % 1/                    12.4    %   1.7     %
percentage
Intermodal
operating        5.7     %   3.0       %                       4.4     %   1.3     %
margin
percentage

1/  2012 GAAP results are after reclassification of certain selling, general
     and administrative expenses to cost of purchased transportation.

     Effective January 1, 2013, we now act as Union Pacific's network manager
     for US-Mexico cross-border shipments. We are compensated on a fee basis
     for such services and these fees are recorded as revenues in 2013. We no
2/   longer collect and pass through the rail transportation costs to
     automotive intermediaries servicing the US-Mexico business. Accordingly,
     adjustments were made to exclude these costs from revenues and cost of
     purchased transportation to present 2012 on a net basis.

Contact:

INVESTORS:
Pacer International, Inc.
Steve Markosky, 614-923-1703
VP, Investor Relations& Financial Planning& Analysis
steve.markosky@pacer.com
or
MEDIA:
Princeton Partners
James Curtis, 609-452-8500, ext. 118
Account Executive
jcurtis@princetonpartners.com
 
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