CALGARY, Aug. 12 /CNW/ - Trimac Income Fund (TSX Symbol TMA.UN) (the "Fund") today released the financial results of the Fund and Trimac Transportation Services Limited Partnership ("Trimac" or the "Partnership") for the second quarter ended June 30, 2008.
Three months Six months
ended June 30, ended June 30,
Partnership 2008 2007 2008 2007
------------------------------------------------
(millions of dollars)
Revenues 83.0 84.2 159.8 163.3
EBITDA(1) 9.4 10.5 16.4 18.8
Net earnings 2.6 7.9 3.2 9.4
Three months Six months
ended June 30, ended June 30,
The Fund 2008 2007 2008 2007
------------------------------------------------
(millions of dollars,
except per unit amounts
and numbers of units)
Distributable cash
per unit(1)(2) $0.2499 $0.3864 $0.3626 $0.4355
Distributions per
unit(1) $0.2313 $0.2313 $0.4626 $0.4626
Basic earnings per unit $0.0914 $0.1744 $0.1297 $0.2256
Fully diluted earnings
per unit $0.0914 $0.1744 $0.1224 $0.2256
Weighted average number
of units used in
computing basic
earnings per unit 12,564,362 12,528,515 12,564,362 12,528,515
Weighted average
number of units
outstanding used in
computing diluted
earnings per unit 24,294,701 23,609,506 24,294,701 23,609,506
(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 will fluctuate on a monthly basis due to
seasonal cash flows, sustaining capital incurred and income taxes and
interest paid. See "Distributable Cash" for additional commentary.
Trimac's revenue in the quarter ended June 30, 2008 ("current period") decreased by $1.2 million or 1.4 percent as compared to the second quarter ended June 30, 2007 ("prior period") while EBITDA declined by $1.1 million or 10.5 percent. Distributable cash per unit in the current period decreased by 13.6 cents as compared to the prior period. The operating environment and economic conditions were similar to the 1st quarter of 2008 with the exception of fuel price increases, which impacted reported results for revenue, fuel surcharges, and direct expenses. Total loads hauled in the current period decreased when compared to the prior period due to reduced demand in certain regions and product lines. This reduction was mostly offset by higher revenue from fuel surcharges. The western division's economic activity remained strong in the current period, however, demand in the petroleum, chemical, and industrial mineral product lines are slightly down from the prior period. Continued economic weakness in central Canada resulted in the erosion of the revenue base and profitability for the eastern division. Bulk Plus Logistics ("BPL") experienced a substantial improvement in profitability in the current period as EBITDA increased despite reduced revenue of $1.9 million due to the non-recurrence of a short-term freight brokerage contract in the prior period.
The following one-time items occurred in the prior years results:
- Both BPL and the eastern division benefited from a short-term
contract that contributed $3.5 million in revenue in the prior
period and $7.7 million in the first six months of 2007,
- The Partnership successfully concluded the sale of a non-strategic
facility in June 2007 for $5.9 million (net of disposal costs). This
sale generated a gain on disposal of $2.9 million in the prior
period,
- The Partnership recorded higher net earnings in the prior period due
to a one-time future tax recovery of $1.7 million resulting from a
corporate reorganization.
In commenting on the results for the current period, Jeffrey J. McCaig, Chairman, President and CEO of Trimac, said:
"The bulk trucking operations experienced some reduction in customer demand translating into reduced loads hauled and lower profitability. Fuel surcharges in the current period increased by $5.1 million or 55% over the prior period. This increase in revenue is primarily a cost recovery.
When prior period one-time events (described above) are considered, consolidated net earnings are very similar to 2007 for the current period."
In commenting on the future activities and outlook for the business, Mr. McCaig noted:
"As Trimac's management look ahead to the second half of 2008, it foresees the continuation of the current operating environment."
Financial Highlights
Three months ended Six months ended
June 30, June 30,
---------------------------------------------------
(millions of dollars) 2008 2007 2008 2007
---------------------------------------------------
Revenues
Western 49.0 48.5 94.7 92.6
Eastern 29.5 30.2 56.6 60.1
---------------------------------------------------
Canadian trucking 78.5 78.7 151.3 152.7
BPL 4.6 5.5 8.5 10.6
Other (0.1) - - -
---------------------------------------------------
83.0 84.2 159.8 163.3
Direct costs 61.8 61.7 120.1 121.5
Selling and
administrative 11.8 12.0 23.3 23.0
---------------------------------------------------
EBITDA(1) 9.4 10.5 16.4 18.8
Depreciation net of
gains on disposal
of capital assets(2) 5.3 2.8 10.4 8.5
---------------------------------------------------
Operating earnings 4.1 7.7 6.0 10.3
Interest expense (net) 1.3 1.3 2.5 2.5
---------------------------------------------------
Earnings before taxes 2.8 6.4 3.5 7.8
Income tax expense
(recovery)(3) 0.2 (1.5) 0.3 (1.6)
---------------------------------------------------
Net earnings 2.6 7.9 3.2 9.4
---------------------------------------------------
---------------------------------------------------
As a percentage of revenue
--------------------------
Direct costs 74.5% 73.3% 75.2% 74.4%
Selling and administrative 14.2% 14.3% 14.6% 14.1%
EBITDA(1) 11.2% 12.4% 10.3% 11.5%
Depreciation(2) 6.4% 3.3% 6.5% 5.2%
Operating earnings 4.9% 9.1% 3.8% 6.3%
As at As at
June 30, December 31,
(millions of dollars) 2008 2007
----------------------------
Total assets 160.5 154.3
Total long-term
liabilities 51.0 44.7
The above selected financial and operating information has 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) Results in 2007 include a $2.9 million gain on the disposal of a
non strategic facility.
(3) June 2007 results include a $1.7 million reversal of a previously
recorded future tax liability resulting from a corporate
reorganization.
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) 2008 2007 2008 2007
-------------------------------------------------------------------------
Net cash provided by
operations 5.0 8.4 13.5 14.4
Net change in non-cash
working capital(1) 2.8 0.7 (0.1) 1.8
--------------------------------------------------
Cash provided by
operations 7.8 9.1 13.4 16.2
Less adjustment for:
Net sustaining capital
expenditures
(net of proceeds)(2)(3) (1.3) 5.3 (3.8) (0.4)
Provision for sustaining
capital commitments(4) - (4.7) - (4.0)
Provision for long-term
unfunded contractual
operational
obligations(5) 0.1 - 0.1 (0.2)
--------------------------------------------------
Total estimated cash
available for distribution
(before public expenses) 6.6 9.7 9.7 11.6
Percentage of available
cash distributable to
unitholders(6) 52% 53% 52% 53%
--------------------------------------------------
Cash available for
distribution to
unitholders (before
public expenses) 3.4 5.1 5.1 6.2
Public expenses(7) (0.3) (0.3) (0.5) (0.7)
--------------------------------------------------
Distributable cash from
operations(2)(8) 3.1 4.8 4.6 5.5
Distributions declared
and payable 2.9 2.9 5.8 5.8
Distributable cash
per unit(2)(8) 0.2499 0.3864 0.3626 0.4355
Distributions declared
per unit 0.2313 0.2313 0.4626 0.4626
Payout ratio(2)(8) 92.6% 59.9% 127.6% 106.2%
Weighted average
number of units
outstanding 12,564,362 12,528,515 12,564,362 12,528,515
Net capital expenditures
Sustaining capital
expenditures(2) 2.3 1.5 5.7 7.5
Proceeds on disposal
of capital assets (1.0) (6.8) (1.9) (7.1)
--------------------------------------------------
Net sustaining capital
expenditures(2)(3) 1.3 (5.3) 3.8 0.4
Growth capital
expenditures(2)(9) 2.3 0.6 4.8 1.9
--------------------------------------------------
3.6 (4.7) 8.6 2.3
--------------------------------------------------
--------------------------------------------------
(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. Management
believes that they are important and useful measures for readers to
evaluate the performance of the Fund.
(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. See "Liquidity and Capital
Resources - Capital Expenditures".
(4) During the second quarter of 2007, this represented the partial
reversal of $0.3 million in the quarter ($1.0 million year to date)
of a cash reserve in the three month period ($1.0 million for the
full year) accrued in the fourth quarter of 2006 for a facility
capital expansion that commenced in 2006. In addition, the
Partnership had reserved $5.0 million of proceeds on the disposal of
a non-strategic facility in June 2007 to be used to acquire
replacement facilities in a subsequent period.
(5) Represents a provision for cash requirements relating to a long-term
incentive plan and an executive pension liability.
(6) Percentage is equal to weighted average number of units outstanding
of 12,564,362 divided by fully diluted units of 24,294,701.
(7) Represents expenses associated with the Fund's status as a reporting
issuer.
(8) 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.
(9) 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 quarter the Partnership's cash provided by operations decreased by $1.3 million and net sustaining capital expenditures increased by $1.9 million (including provisions for sustaining capital commitments). The Fund's distributable cash was $3.1 million in the current period, a decrease of $1.7 million from the prior period resulting from its share of the aforementioned Partnership changes in cash provided by operations and sustaining capital. On a year-to-date basis, distributable cash from operations was $4.6 million, a $0.9 million decrease from the prior year. The decrease was due to decreased cash provided by operations, partially offset by a reduced level of 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 cash flow on an annual basis, less estimated cash required for debt service, cash taxes, other amounts (including sustaining capital expenditures, working capital and provisions) to stabilize the monthly amount of distributions to unitholders. 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
In the current period Trimac's total revenues were $83.0 million, a decrease of $1.2 million or 1.4 percent from the prior period. Contributing to this revenue decline in the current period was the non-recurrence of a short-term contract that contributed $3.5 million in revenue in the prior period. In the quarter, fuel surcharges as a percentage of base trucking revenue totalled 17.2 percent in comparison to 10.9 percent in the prior period. EBITDA for the quarter was $9.4 million, a decrease of $1.1 million or 10.5 percent from the prior period. On a year-to-date basis revenue decreased by $3.5 million or 2.1 percent to $159.8 million compared to $163.3 million in the prior year. EBITDA for the current six-month period totalled $16.4 million, a decrease of $2.4 million or 12.8 percent over the same period last year.
Bulk Trucking Operations
The western division generated $49.0 million in revenue in the current period, an increase of $0.5 million from the prior period. The division achieved revenue growth of approximately $2.6 million or 7 percent in its B.C. and Prairie Provinces operations. Revenue increased in the compressed gases, edibles, and industrial minerals product lines throughout western Canada. The April 30, 2007 acquisition of Ken Angeli Trucking Ltd (KAT) and the June 1, 2007 acquisition of certain assets of Logistics Express, Inc. ("Logex") contributed $0.9 million of incremental revenue increase over the prior period. The division's revenue growth was partially offset by a $1.6 million or 24 percent decline in the woodchip product line, resulting from temporary and permanent closures of sawmills and pulp mills primarily in 2007. Despite increased revenue, higher fuel costs and the non-recurrence of a one-time cost recovery in the prior period resulted in a $1.2 million or 15.5 percent decrease in EBITDA to $6.6 million in the current period.
On a year-to-date basis, the western division's revenue increased to $94.7 million from $92.6 million in 2007, an increase of $2.1 million or 2.3 percent. Operations in British Columbia and the Prairie Provinces experienced year-over-year growth of 8 percent in revenue. The April 30, 2007 acquisition of KAT and the June 1, 2007 acquisition of certain assets of Logex contributed $3.2 million of incremental revenue over the prior year. This revenue growth was partially offset by a $3.2 million decline in the woodchip product line and lower demand in petroleum and chemical product lines. Despite increased revenue and improvements in both accident and repair costs, higher fuel costs and the non-recurrence of a one-time cost recovery in the prior period resulted in a $1.0 million or 7.4 percent decrease in EBITDA to $11.8 million in the current year.
The eastern division's revenue totalled $29.5 million in the current period, which is $0.7 million or 2.3 percent lower than in the prior period. Revenue gains of $1.1 million from the November 6, 2007 acquisition of Stan Fergusson Fuels Ltd. (Fergusson) were more than offset by reduced demand and a reduction in loads hauled in liquid chemical, plastics, and petroleum product lines. In addition, the division experienced a revenue decline of $1.6 million relating to a non-recurring short-term contract in the prior period. EBITDA decreased by $0.8 million or 30.7 percent to $1.8 million in the current period due to reduced demand and competitive renewals.
On a year-to-date basis, the eastern division's revenue decreased to $56.6 million, compared to $60.1 million in 2007, a decrease of $3.5 million or 5.8 percent. Revenue gains of $2.3 million from the November 6, 2007 acquisition of Fergusson were more then offset by: a short-term contract that contributed $4.2 million of revenue in the first half of 2007; reduced demand in the cement and liquid chemical product lines; and, lower volumes with existing customers. Increased operating costs as a percentage of revenue, higher fuel costs, and lower revenue resulted in a $2.1 million or 40.3 percent decrease in EBITDA to $3.1 million.
Logistics Operations
BPL's revenue was $4.6 million in the current period, a $0.9 million decrease from the prior period. This decrease was the result of a $1.3 million reduction in freight brokerage revenue that was due to a short-term contract that contributed $1.9 million of revenue in the second quarter of 2007 and management's decision to exit a transload facility management contract on May 23, 2008. In the U.S., revenue gains in third-party logistics management and freight brokerage were partially offset by reduced revenue in the transload operation and the translation impact from U.S. dollars to Canadian dollars due to the appreciation of the Canadian dollar. For the quarter, revenue generated by the U.S. operation increased by $0.4 million or 39.7 percent to $1.4 million. BPL achieved a $0.2 million increase in EBITDA to $0.8 million over the prior period, despite the reduction in revenue.
On a year-to-date basis, BPL's revenue was $8.5 million compared to $10.6 million in 2007, a reduction of $2.1 million or 19.8 percent. Although increased revenue was achieved in Canadian and U.S. consulting operations these gains were offset by lower freight brokerage revenue that resulted from the non-recurrence of a short-term contract that contributed $3.5 million of revenue in the first half of 2007. In addition, reduced U.S. transload revenue and the translation impact from U.S. dollars to Canadian dollars due to the strengthening Canadian dollar added to the reduction in revenue. EBITDA for the current year was unchanged from the prior year at $1.0 million as reduced revenue was offset by more profitable contracts signed in the current year.
Capital Expenditures
The Partnership's net capital expenditures, including growth and sustaining capital, totalled $3.6 million in the current period compared to net proceeds of $4.7 million in the prior period. The increase of $8.3 million from the prior period was made up of higher gross sustaining capital purchases of $0.8 million, decreased proceeds on the disposal of capital assets of $5.8 million and increased growth capital purchases of $1.7 million. Gross sustaining capital purchases of $2.3 million were primarily made up of replacement tractors and trailers accounting for approximately 90 percent of the total.
Net sustaining capital purchases were $6.6 million higher in the current period, due to increased trailer spending and a $5.8 million decrease in disposal proceeds in the current period. The higher replacement trailer purchases were necessary to support existing business in the edible and industrial mineral product lines. Proceeds on disposal were lower in the current period due to the disposal of the Oakville facility in the prior period for $5.8 million. Increased growth capital spending of $1.7 million in the current period was primarily the result of trailer purchases to support new business secured in the edible, industrial mineral, and petroleum product lines. Tractors and trailers accounted for substantially all of growth capital expenditures in the current period.
On a year-to-date basis, net capital expenditures totalled $8.6 million compared to $2.3 million for the prior year. The $6.3 million increase in net capital expenditures from the prior year was made up of a $5.2 million decrease in proceeds on the disposal of capital assets, primarily from the 2007 disposal of the aforementioned non-strategic facility, and a $2.9 million increase in growth capital to support new business. This was partially offset by a $1.8 million reduction in sustaining capital purchases. Sustaining capital purchases decreased when compared to the prior year due to the timing of 2007 tractor purchases of $4.2 million.
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. Estimated net ongoing sustaining capital expenditure requirements for fiscal 2008 are expected to be in the range of $8.0 million to $9.0 million.
Fuel Costs
Fuel costs fluctuated during the current quarter with average daily-posted rack prices for ultra-low-sulphur diesel fuel at refineries across Canada ranging from $0.93 per litre to $1.08 per litre. Trimac has fuel surcharge programs in place with substantially all of its customers and the effect of changes in fuel prices has generally been neutral to its results in past years.
The bulk trucking industry and the majority of customers have generally agreed to monthly fuel surcharges, a practice which tends to create a shortfall in fuel recoveries in periods of rising fuel prices and an over-recovery when fuel prices decline. Fuel surcharges averaged approximately 15.3 percent of base trucking revenue during the current year and have risen dramatically over the past six months from an average low of $0.76 cents per litre at the end of January 2008, for fuel picked up at the refinery, to $1.08 at the end of June 2008, an increase of 42.1 percent. Recovery of rising fuel costs is impacted by the inherent lag in resetting surcharges due to contractual agreements with customers; price increase thresholds set in fuel surcharge programs; the fuel content percentage agreed on in the surcharge mechanism; and the timing of price increases compared to agreed upon reset periods. All of the above factors may vary from customer to customer as no standard exists in the industry. The Partnership believes its fuel surcharge program is effective in recovering fuel cost increases over time; however, there is a lag in fuel price recovery that may result in quarterly shortfalls or surpluses depending on the price trend in any given period.
Forward-Looking Statements
This news release contains statements concerning the outlook for Trimac's business and estimates for sustaining capital or other expectations, plans, goals, objectives, assumptions, information or statements about future events, conditions, results of operations or performance that may constitute forward-looking statements or information under applicable securities legislation. Words such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", and words and expressions of similar import are intended to identify these forward-looking statements. Such forward-looking statements or information are based on a number of assumptions, which may prove to be incorrect. In addition to any other assumptions identified in this news release, certain assumptions have been made concerning the forward-looking information contained herein including, among other things: Trimac will be successful in maintaining its customer relationships and such customers will not materially reduce the volume of business provided to Trimac; general economic conditions will not be materially different in 2008 from those prevailing in the first quarter of 2008; Trimac will continue to attract and retain a sufficient number of qualified drivers and mechanics; Trimac will continue to be successful in recovering fuel price increases from its customers; adverse weather will not unduly impact Trimac's operations; the Canadian dollar will not materially strengthen against the United States dollar; distributions payable by Trimac to its unitholders will not be subject to tax in 2008; there will be no material changes to the laws and regulations applicable to Trimac or its businesses; the seasonality of Trimac's business will be consistent with historical trends; no irreparable damage will be done to Trimac's operating systems and databases or information contained thereon; Trimac will maintain or improve upon its competitive position within the bulk trucking sector; adequate financing will be available to Trimac to fund capital expenditures, working capital and distributions on terms and conditions favourable to Trimac; Trimac will not have any judgment entered against it in a court of law which would have a material adverse effect on Trimac or its businesses; Trimac will continue to have all material licences and permits required by law to conduct its businesses as presently conducted; there will not be a material increase in the price of equipment required in the business of Trimac; and the estimated useful life of equipment and the proceeds received on the disposition thereof will be consistent with historical trends at Trimac.
Although the Fund believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because the Fund can give no assurance that such expectations will prove to be correct. Forward-looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by the Fund and described in the forward-looking statements or information. These risks and uncertainties include but are not limited to:
- General economic conditions - Certain product lines of Trimac are
dependent on the general economic conditions of the regions in which
Trimac operates and cash flows may be negatively impacted by economic
downturns in any particular region;
- Labour - Trimac's cash flow and growth are dependent on its ability
to hire and retain quality drivers and mechanics;
- Fuel - Rising fuel prices and the ability of Trimac to recover cost
increases in the marketplace may impact cash flow;
- Weather - Adverse weather may impact Trimac's transportation of goods
and increase operating costs;
- Foreign currency exchange - The strengthening Canadian dollar may
impact Trimac's customers' cost competitiveness and negatively impact
the volume of goods transported;
- Tax structure - Changes in government regulation may negatively
impact Trimac's distributable cash;
- Environmental considerations - Changes in environmental law may
impact operating costs;
- Seasonality of business - Financial results may be impacted by the
seasonality of the business;
- Information technology - Cash flow could be adversely affected by an
event that caused irreparable damage to Trimac's operating systems
and databases or information contained in the databases;
- Accident costs - Financial results may be impacted by large accident
claims;
- Competitive conditions - There can be no assurance that Trimac will
be able to compete successfully against its current or future
competitors or that competition will not have a material adverse
affect on its results of operations and financial condition; and
- Financing - No assurances can be made that financing will be
available when required by business needs.
The foregoing list of risks and uncertainties is not exhaustive. Additional information on these and other factors which may affect Trimac's operations or financial results and those of the Fund are included under the heading "Risk Factors" in the Fund's current Annual Information Form and as may be updated in the Fund's annual and interim Management's Discussion and Analysis and Annual Information Form, which are or will be filed with securities regulators. The Fund undertakes no obligation to update publicly or otherwise revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Trimac is Canada's largest provider of bulk trucking services, with operations from coast to coast. In addition, through its wholly owned subsidiary, BPL, Trimac provides third-party transportation logistics services in Canada and the United States. Trust units of Trimac Income Fund are traded on The Toronto Stock Exchange under the symbol TMA.UN.
You are invited to join us on a conference call at 9:30 a.m. Eastern Time on Wednesday, August 13, 2008. For North American participants, please dial 1-888-300-0053 or for international participants, please dial ++1 647-427-3420 at least 10 minutes prior to the start time of the call.
A playback of the call will be available starting at noon Eastern Time on Wednesday, August 13, 2008 until midnight August 20, 2008. To hear the playback, please dial 1-800-395-0363 or for international participants, please dial ++1 402-220-2888 and when prompted please enter the conference ID number 58361060.
Trimac Income Fund
Consolidated Balance Sheet
(unaudited)
-------------------------------------------------------------------------
(thousands of dollars)
As at As at
June 30, December
2008 31, 2007
-------------------------
$ $
Assets
Current assets
Cash 683 404
Interest receivable 233 238
Distributions receivable 802 866
Prepaid expenses 96 64
-------------------------
1,814 1,572
Investment in Trimac Transportation Services
Limited Partnership 68,812 72,961
Note receivable from Trimac Transportation
Services Inc. 35,438 35,141
-------------------------
106,064 109,674
-------------------------
-------------------------
Liabilities
Current liabilities
Accounts payable and accrued liabilities 158 189
Due to associated companies and partnerships 696 439
Distributions payable 969 967
-------------------------
1,823 1,595
Deferred compensation plan 26 -
-------------------------
1,849 1,595
Unitholders' equity 104,215 108,079
-------------------------
106,064 109,674
-------------------------
-------------------------
The Fund commenced business operations on February 25, 2005 and earnings
of the Fund's investment in Trimac have been accounted for using the equity
method of accounting since commencement. Under this method, the Fund's share
of earnings of Trimac, 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 earnings of Trimac
Transportation Services Limited 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 for number of units)
Three months Three months Six months Six months
ended ended ended ended
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
------------------------- -------------------------
$ $ $ $
Share of earnings of
Trimac Transportation
Services Limited
Partnership (note 4) 679 1,747 651 2,089
Interest income 706 698 1,416 1,392
Administrative costs (236) (260) (438) (654)
------------------------- -------------------------
Net earnings 1,149 2,185 1,629 2,827
Other comprehensive
(loss) income - share
of Partnership other
comprehensive (loss)
income (4) (45) 20 (48)
------------------------- -------------------------
Comprehensive income 1,145 2,140 1,649 2,779
Opening unitholders'
equity 105,806 111,110 108,079 113,403
Adoption of new
accounting standard - - - (35)
Issue of additional units 172 - 297 -
Distributions (2,908) (2,898) (5,810) (5,795)
------------------------- -------------------------
Closing unitholders'
equity 104,215 110,352 104,215 110,352
------------------------- -------------------------
------------------------- -------------------------
Basic earnings per
unit(2) $ 0.0914 $ 0.1744 $ 0.1297 $ 0.2256
Fully diluted
earnings per unit $ 0.0914 $ 0.1744 $ 0.1224 $ 0.2256
Weighted average
number of units
outstanding used in
computing basic
earnings per unit 12,564,362 12,528,515 12,564,362 12,528,515
Weighted average number
of units outstanding
used in computing
diluted earnings
per unit(1) 24,294,701 23,609,506 24,294,701 23,609,506
(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 recorded in the
consolidated financial statements of the Partnership to the amount
recorded by the Fund.
Three months ended Six months ended
June 30 June 30,
2008 2007 2008 2007
$ $ $ $
Net earnings of the
Partnership 2,615 7,922 3,209 9,430
Add: Interest expense
on TTSI debt included
in Partnership earnings 1,019 1,019 2,037 2,026
-----------------------------------------------
Adjusted Partnership
earnings 3,634 8,941 5,246 11,456
Less: Purchase price
allocation adjustments:
Increase in
amortization of
capital assets and
loss on disposal of
capital assets(1) (601) (2,990) (1,230) (3,533)
Amortization of
intangible assets(2) (1,011) (1,010) (2,022) (2,020)
-----------------------------------------------
Partnership earnings
after purchase price
adjustments 2,022 4,941 1,994 5,903
-----------------------------------------------
Share of Partnership
earnings 679 1,747 651 2,089
-----------------------------------------------
-----------------------------------------------
(2) Pursuant to an investor liquidity agreement, holders of TTSI
Exchangeable Shares have the right to effectively liquidate their
10,045,266 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.
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,
2008 2007 2008 2007
------------------------- -------------------------
$ $ $ $
Cash provided (used)
Operations
Net earnings 1,149 2,185 1,629 2,827
Add (deduct) items
not affecting cash:
Share of earnings
from Trimac
Transportation
Services Limited
Partnership (679) (1,747) (651) (2,089)
Distributions from
Trimac Transportation
Services Limited
Partnership 651 1,747 651 2,089
Deferred compensation
costs 26 - 26 -
------------------------- -------------------------
Cash provided by
operations 1,147 2,185 1,655 2,827
Net change in non-cash
working capital 30 100 199 (90)
------------------------- -------------------------
Net cash provided by
operations 1,177 2,285 1,854 2,737
------------------------- -------------------------
Investments
Distributions from
Trimac Transportation
Services Limited
Partnership 1,765 670 4,233 2,906
------------------------- -------------------------
Cash provided by
investing activities 1,765 670 4,233 2,906
------------------------- -------------------------
Financing
Distributions paid (2,906) (2,898) (5,808) (5,795)
------------------------- -------------------------
Cash used in financing
activities (2,906) (2,898) (5,808) (5,795)
------------------------- -------------------------
Increase in cash 36 57 279 (152)
Cash, beginning of year 647 14 404 223
------------------------- -------------------------
Cash, end of year 683 71 683 71
------------------------- -------------------------
------------------------- -------------------------
Supplemental information
Cash received from
interest 718 706 1,421 1,399
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
2008 31, 2007
-------------------------
$ $
Assets
Current assets
Cash and term deposits 597 -
Accounts receivable 39,543 32,816
Materials and supplies 1,800 1,777
Due from related parties 2,657 2,685
Income taxes recoverable - 61
Prepaid expenses 10,392 9,637
-------------------------
54,989 46,976
Capital assets 96,009 97,467
Intangible assets 2,054 2,387
Goodwill 6,052 6,052
Other 1,420 1,398
-------------------------
160,524 154,280
-------------------------
-------------------------
Liabilities
Current liabilities
Bank indebtedness 450 238
Accounts payable and accrued liabilities 34,929 28,559
Distributions payable 3,609 4,765
Income taxes payable 16 -
Due to related parties 2,878 2,173
Current maturities of long-term debt 18,666 18,666
-------------------------
60,548 54,401
Long-term debt 48,790 42,338
Future income taxes 407 435
Other long-term liabilities 1,778 1,920
-------------------------
111,523 99,094
Partnership equity 49,001 55,186
-------------------------
160,524 154,280
-------------------------
-------------------------
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,
2008 2007 2008 2007
------------------------- -------------------------
$ $ $ $
Transportation revenue 68,732 74,985 135,319 146,384
Fuel surcharges 14,289 9,194 24,453 16,938
------------------------- -------------------------
Total revenues 83,021 84,179 159,772 163,322
------------------------- -------------------------
Operating costs and
expenses
Direct 61,780 61,728 120,123 121,593
Selling and
administrative 11,783 12,002 23,266 22,988
Depreciation and
amortization 5,546 5,942 10,962 11,791
Gain on sale of
assets (net) (149) (3,164) (526) (3,330)
------------------------- -------------------------
Operating expense 78,960 76,508 153,825 153,042
------------------------- -------------------------
Operating earnings 4,061 7,671 5,947 10,280
Interest on long-term
debt 1,279 1,233 2,440 2,405
Other interest 15 19 26 32
------------------------- -------------------------
1,294 1,252 2,466 2,437
------------------------- -------------------------
Earnings before
income taxes 2,767 6,419 3,481 7,843
Income tax expense (recovery)
Current 172 221 298 323
Future (20) (1,724) (26) (1,910)
------------------------- -------------------------
152 (1,503) 272 (1,587)
------------------------- -------------------------
Net earnings 2,615 7,922 3,209 9,430
Other comprehensive income
(loss) - net change in
cumulative translation
adjustments (13) (127) 57 (136)
------------------------- -------------------------
Comprehensive income 2,602 7,795 3,266 9,294
Opening partnership
equity 51,073 53,606 55,186 57,064
Adoption of new
accounting standard - - - (81)
Distributions declared (4,674) (4,600) (9,451) (9,476)
------------------------- -------------------------
Closing partnership
equity 49,001 56,801 49,001 56,801
------------------------- -------------------------
------------------------- -------------------------
Accumulated other
comprehensive losses
(included in partnership
equity)
-------------------------
Opening balance (199) (29) (269) (20)
Other comprehensive
income (loss) (13) (127) 57 (136)
------------------------- -------------------------
Closing balance (212) (156) (212) (156)
------------------------- -------------------------
------------------------- -------------------------
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,
2008 2007 2008 2007
------------------------- -------------------------
$ $ $ $
Cash provided (used)
Operations
Net earnings 2,615 7,922 3,209 9,430
Add back (deduct) items
not affecting cash:
Depreciation and
amortization 5,546 5,942 10,962 11,791
Gain on sale of
assets (net) (149) (3,164) (526) (3,330)
Future income tax
recovery (20) (1,724) (26) (1,910)
Other non-cash items (151) 86 (155) 163
------------------------- -------------------------
Cash provided by
operations 7,841 9,062 13,464 16,144
Net change in non-cash
working capital (2,803) (697) 61 (1,798)
------------------------- -------------------------
Net cash provided by
operations 5,038 8,365 13,525 14,346
------------------------- -------------------------
Investments
Purchases of capital
assets (4,572) (2,124) (10,504) (9,399)
Proceeds on sale of
capital assets 916 6,778 1,859 7,106
Decrease in accounts
payable and accrued
liabilities relating
to investing activities (321) (176) (388) (197)
Increase in accounts
receivable relating to
investing activities 51 79 14 3
Other (5) (73) 34 (87)
------------------------- -------------------------
Cash used in investing
activities (3,931) 1,220 (8,985) (5,838)
------------------------- -------------------------
Financing
Increase in
long-term debt 3,833 - 6,452 7,618
Repayments of
long-term debt - (5,878) - (5,878)
Distributions paid (5,050) (4,368) (10,607) (9,411)
------------------------- -------------------------
Cash (used in) provided
by financing activities (1,217) (10,246) (4,155) (7,671)
------------------------- -------------------------
Increase in cash and
term deposits (110) (661) 385 837
Bank indebtedness,
beginning of period 257 799 (238) (699)
------------------------- -------------------------
Cash and term deposits,
end of period 147 138 147 138
------------------------- -------------------------
------------------------- -------------------------
Supplemental Information
Income taxes paid 200 (50) 221 607
Interest paid 166 234 2,350 2,443
Cash consists of the following:
Cash and term deposits 597 1,196
Bank indebtedness (450) (1,058)
-------------------------
147 138
-------------------------
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.
