Pacer reports 1Q income down 41%

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Pacer International, a nonasset-based North America third-party logistics and freight transportation provider, reported today, may 4, financial results for the three-month period ended April 6. Reflecting a softening in domestic intermodal and truck volumes for the quarter, income from operations decreased 41.0 percent to $14.4 million, compared to $24.4 million for the quarter ended April 7, 2006. Revenues decreased $4.3 million to $465.1 million compared to $469.4 million a year earlier.

“The softer domestic market impacted the company’s rail brokerage, trucking and domestic Stacktrain operations and was partially offset by increased wholesale auto and wholesale international volumes,” said Mike Uremovich, chairman and chief executive officer of Concord, Calif.-based Pacer. Results include $1.8 million in severance costs and restructuring charges incurred during the 2007 quarter, and a $1.8 million write-off of loan fees associated with the refinancing of Pacer’s credit facility during the quarter, Uremovich said.

Pacer’s cash flow remains strong with $26.7 million of operating cash flow for the quarter, Uremovich said. Cash flow was used to pay a $5.6 million dividend declared in the fourth quarter of 2006 and to repurchase $9.8 million of common stock during the 2007 quarter. “We are making changes at Pacer to streamline operations and increase efficiency and profitability in both of our operating segments and in the corporate offices,” Uremovich said. “We have incurred severance costs during the quarter that will reduce employment, and we plan on closing four facilities within our logistics segment by June 2007.

“In addition, we have established a senior management team to identify and implement process improvements and other savings opportunities to improve results in the future,” Uremovich said. “We have favorably refinanced our debt and increased our borrowing capacity to a total of $250 million, and we have extended the maturity of our credit agreement to the year 2012. We expect these actions to provide additional framework for improved results. Also, our board of directors, on April 3, 2007, approved an additional $100 million share repurchase.”