Contrans Group Inc. Announces First Quarter Results
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WOODSTOCK, ON, May 14, 2012 /CNW/ -
"Contrans had an excellent first quarter," stated Contrans' Chairman and
Chief Executive Officer, Stan Dunford. "This is a reflection of the
growing momentum in the Company's operating results that began in the
second half of 2011. We also completed two acquisitions in the first
quarter of 2012 that have added to our top line and have further added
to the diversity of Contrans' customer mix. Increased demand from
customers has also contributed to revenue growth and has improved
equipment utilization. Accordingly, Contrans' first quarter profit
margins moved closer to the record levels established in the years just
prior to the recession."
"Contrans recently completed its normal course issuer bid that resulted
in the purchase for cancellation of 2.1 million shares," continued Mr.
Dunford. "This purchase has created additional value for the
shareholders who believe, as we do, that Contrans will continue to
consistently deliver solid financial results."
"The prospects for continued growth are good," added Mr. Dunford. "We
have been receiving more interest from trucking entities interested in
selling their businesses for a variety of reasons. In many cases,
successful owner-managers have reached the age at which they wish to
retire and their only practical succession plan is to sell to a third
party. With few buyers in the market and armed with a strong balance
sheet, Contrans is well-positioned to continue to act upon suitable
acquisition opportunities. Management is continuing to assess all
opportunities in a disciplined manner. "
RESULTS FROM OPERATIONS
Revenue from transportation services ("revenue") increased in the first
quarter of 2012 ("2012 Q1") compared to the first quarter of 2011
("2011 Q1") as a result of acquisitions and internal growth. Contrans'
revenue from acquisitions completed in the second half of 2011 and 2012
Q1 ("acquisitions") contributed approximately $8.5 million of revenue
in 2012 Q1. In addition, milder winter weather resulted in an increase
in productivity in 2012 Q1 compared to 2011 Q1. This, however, also
resulted in reduced revenue from road salt and propane customers.
Higher diesel prices were the primary driver of the increase in revenue
from fuel surcharges in 2012 Q1 compared to 2011 Q1.
Direct operating expenses
Acquisitions added approximately $6.7 million to direct operating
expenses excluding fuel surcharges ("direct operating expenses"). In
addition, provisions for insurance claims were $0.4 million higher in
2012 Q1 than in 2011 Q1. Depreciation charges, excluding the impact
from acquisitions, were $1.3 million higher in 2012 Q1 than in 2011 Q1
resulting from purchases of rolling stock during 2011. The impact of
these increased costs was mitigated by improved equipment utilization.
General and administration expenses
General and administration ("G&A") expenses increased by approximately
$0.6 million due to acquisitions. In addition, compensation costs
increased by approximately $0.7 million in 2012 Q1 compared to 2011 Q1
primarily due to an increase in the provision for management incentive
plans. The provision for doubtful accounts did not change materially
in 2012 Q1. This provision, however, was reduced by $0.4 million in
Net financing costs
Net financing costs have increased in 2012 Q1 compared to 2011 Q1 due to
an increase in the amount of equipment financing debt outstanding. In
addition, interest earned has decreased due to the decrease in average
cash balances in 2012 Q1 as a result of completing two acquisitions and
the share purchases made in conjunction with the Company's normal
course issuer bid ("NCIB").
USE OF NON-GAAP FINANCIAL MEASURES
Management has included a non-GAAP financial measure, "Direct operating
expenses - net of fuel surcharges", as a supplement to the financial
information contained herein. This non-GAAP financial measure does not
have any standardized meaning prescribed under IFRS and therefore it
may not be comparable to similar measures employed by other issuers.
The data is intended to provide additional information and should not
be considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS.
Management believes that it is important to isolate the effects of fuel
surcharges, a volatile source of revenue and operating expenses, when
analyzing operating results. Accordingly, the percentages in the
Financial Highlights table were calculated using revenue from
transportation services alone as the base. In addition, operating
expenses are stated after netting fuel surcharges against fuel expenses
in the Financial Highlights table. Management believes that this
facilitates a better comparison of operating expenses and profit
margins between periods.
Management's discussion and analysis contains certain forward-looking
statements that involve a number of risks and uncertainties.
Forward-looking statements relate to future events or future
performance and include, but are not limited to, changes in government
regulations regarding weights and dimensions of highway equipment, the
age and condition of the transportation fleet and the growth of
Contrans' business. Often, but not always, forward-looking statements
can be identified by terminology such as ''may'', ''will'', ''should'',
''expect'', ''plan'', ''anticipate'', ''believe'', ''estimate'',
''predict'', ''potential'', ''continue'' or the negative of these terms
or other comparable terminology. Such statements reflect the current
views and estimates of management of Contrans with respect to future
events, as of the date such statements are made, and they involve known
and unknown risks and uncertainties which may cause actual events or
results to differ materially from those expressed or implied by
forward-looking statements. In evaluating these statements, readers
should specifically consider factors such as the risks outlined under
''Risk Factors" in Contrans' Annual Information Form, which is
available at www.sedar.com. Although Contrans has attempted to identify
important factors that could cause actual events, actions or results to
differ materially from those described in the forward-looking
statements, there may be other factors that cause such events, actions
or results to differ. Contrans is under no obligation (and expressly
disclaims any such obligation) to update forward-looking statements if
circumstances or management's views or estimates change. Accordingly,
readers are cautioned not to place undue reliance on forward-looking
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