Pacer International, a nonasset-based North America third-party logistics and freight transportation provider, on Tuesday, Aug. 7, reported financial results for the three- and six-month periods ended June 29.
Reflecting improved intermodal volumes for the quarter ended June 29, revenues increased $16.7 million, or 3.6 percent, to $474.9 million compared to $458.2 million for the quarter ended June 30, 2006. Income from operations declined $3.7 million from the 2006 quarter to $21.5 million for the 2007 quarter. Intermodal segment income from operations declined $3.0 million from last year, logistics segment income from operations increased $0.5 million from last year, and corporate expenses were $1.2 million higher than last year.
“We are pleased to see intermodal volumes for our stacktrain operation up 7.3 percent with increases in all three lines of business, and for our rail brokerage operation up 1.7 percent compared to last year,” said Mike Uremovich, chairman and chief executive officer of Concord, Calif.-based Pacer. “However, there still is excess capacity in the market that has led to lower pricing and margins.” Results include $1.3 million of costs related to the initial vesting in June 2007 of restricted stock awards and $0.3 million of additional severance costs during the 2007 quarter, Uremovich said.
Pacer’s cash flow remains strong,Uremovich said. The company used $11.6 million of operating cash flow for the quarter, along with $24.0 million borrowed from the credit facility and cash on hand at the beginning of the quarter, to pay a $5.6 million dividend declared in the first quarter of 2007 and to repurchase $44.5 million of common stock during the second quarter of 2007.
For the six months ended June 29, revenues increased $12.4 million, or 1.3 percent, to $940.0 million compared to $927.6 million for the six months ended June 30, 2006. Income from operations declined $13.7 million from the 2006 period to $35.9 million for the 2007 period. Intermodal segment income from operations declined $13.1 million from last year, logistics segment income from operations increased $1.0 million from last year, and corporate expenses were $1.6 million higher than last year. During the first half of 2007, Pacer paid $11.2 million in dividends and repurchased $54.4 million of common stock.
On Aug. 2, Pacer International announced an organizational restructuring designed to streamline operations, strengthen its core intermodal business and increase product integration capabilities across business units. “As a result of our realignment and organizational investments, we expect to accelerate our product development and achieve improved levels of customer service so we are better positioned to meet our customers’ day-to-day market requirements,” Uremovich said.
Pacer also will continue to focus on reducing costs related to overhead, Uremovich said. “Through the second quarter of 2007, we have closed three facilities and reduced SG&A expenses in a number of areas,” he said. “As we continue to reduce overhead and grow more efficiently, we expect to meet or exceed our goals in the second half of 2007.”
