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Press release from CNW Group

Contrans announces fourth quarter results

Monday, March 05, 2012

Contrans announces fourth quarter results12:38 EST Monday, March 05, 2012(TSX:CSS)WOODSTOCK, ON, March 5, 2012 /CNW/ -Financial Highlights                               For the periods ended December 31    Three Months  TwelveMonths($CAD millions except per share amounts)    20112010  20112010Revenue- as stated    $113.8     $99.8     $438.8     $396.3     - fuel surcharges    (16.4)      (9.6)      (60.7)      (37.8)    Revenue- transportation services    97.4  100.0%  90.2  100.0%  378.1  100.0%  358.5  100.0%Direct operating expenses - net of fuel surcharges (1)    76.6  78.6   72.1  79.9   299.0  79.1   288.5  80.5                                Gross Margin    20.8  21.4   18.1  20.1   79.1  20.9   70.0  19.5 General and administration expenses    11.1  11.4   11.1  12.3   43.7  11.5   39.8  11.1 Net financing costs    1.5  1.6   1.1  1.2   5.6  1.5   5.4  1.5 Earnings before income taxes (EBT)    8.2  8.4   5.9  6.6   29.8  7.9   24.8  6.9 Income tax expense (2)    2.7  2.8   1.2  1.3   9.3  2.5   7.1  2.0                                Net earnings and comprehensive income    $5.5  5.6% $4.7  5.3% $20.5  5.4% $17.7  4.9%Earnings per share - basic and diluted    $0.15     $0.14     $0.57     $0.53    Total assets    $376.0     $329.9     $376.0     $329.9    Long-term debt and capital lease obligations    132.4      98.5      132.4      98.5    Cash and cash equivalents and short-term investments    71.1      85.8      71.1      85.8    Dividends declared per share    0.10      0.08      0.38      0.24    Depreciation    5.0      3.5      17.1      12.8    Amortization of intangibles    $0.9     $1.0     $4.0     $3.7    (1) See "Use of non-GAAP Financial Measures" below.(2)  The Company's income tax provision increased significantly in 2010 due to the conversion to a corporation from an income trust on December 1, 2009."2011 was another great year for Contrans' shareholders," stated Contrans' Chairman and Chief Executive Officer, Stan Dunford. "In January 2011, Contrans' Board of Directors approved a 25% increase in the quarterly dividend rate from $0.08 to $0.10 per share after considering the improvement in the Company's financial performance in 2010 and its expectations for continued improvement. These expectations proved to be well-founded as Contrans grew steadily in 2011 highlighted by winning two major tenders and completing several acquisitions.  Contrans' pre-tax profit margin continued to improve in 2011 and approached Company records achieved in the years just prior to the recession. This was quite an accomplishment considering that the North American economy was stagnant for much of 2011.""In November, 2011, after concluding that Contrans' shares were undervalued, the Board of Directors approved a plan to repurchase Company shares under a normal course issuer bid.  To date, 1,573,000 shares have been repurchased. This has created additional value for the shareholders who appreciate Contrans' past consistent financial performance and Contrans' future profit potential," added Mr. Dunford."Contrans completed four acquisitions in 2011 that have solidified our presence in several key markets. Enterprises S&S, a dump trailer operation, has positioned Contrans to benefit from increasing activity in the resource sector in Quebec. Aim Transportation Systems, a flatbed operation, has added outbound traffic and has benefitted from backhaul freight provided by our Ontario flatbed operation. TBM Transportation Ltd., a tank operation, has given Contrans a larger footprint in the oil patch. Ever Green Ecological Services gave us a greater piece of the waste collection market in Edmonton.""Contrans' balance sheet remains strong and has enabled further growth in 2012.  In January, Contrans acquired Archer Trucking, a tank operation. Archer is primarily engaged in the transportation of nephelene syenite, a raw material that is essential to the efficient production of glass and is mined in only a few places in the world. Such a niche market is as rare as the mineral itself and adds sustainability to Contrans' earnings. Contrans also acquired the van division of MacKinnon Transport Inc. in January. Management deemed the 70 owner-operators and company drivers that were integral to this deal to be a very valuable resource given the growing driver shortage that is crippling industry capacity. The MacKinnon acquisition is a unique example of how management has been able to leverage Contrans' financial strength for the ongoing benefit of its shareholders.""Contrans has been a leading freight transportation provider in North America for the past two decades," concluded Mr. Dunford. "No other company can offer shippers as wide an array of transportation solutions or better service. We believe Contrans' fleet of tractors and trailers is the best and most competitive on the road. This promotes pride in the Company from the driver's seat to the boardroom table. Contrans' flexible cost model and conservative capital structure have kept the Company financially sound through both good times and bad times. This has allowed management to operate from a position of strength in its quest to add value for Contrans' shareholders who have benefitted in 2011 from a dividend increase, from shares being repurchased and from outstanding business growth. Moreover, we believe that the prospects for further enhancement of long-term value for Contrans' shareholders are excellent."Results from OperationsRevenueContrans' revenue from transportation services ("revenue") has increased in 2011 as a result of acquisitions and from internal growth. Acquisitions contributed $17.0 million of revenue in 2011 [$3.7 million in the fourth quarter of 2011 ("2011 Q4")].  Revenue from new major customers in 2011 amounted to $15.5 million ($11.4 million in 2011 Q4). Contrans' 2011 revenue was, however, adversely affected by business lost in competitive bid processes. This reduced revenue by $7.3 million in 2011 compared to 2010 [$2.0 million reduction in 2011 Q4 compared to 2010 Q4, ("2010 Q4")]. Revenue has also been adversely impacted by a shortage of owner-operators that is affecting the entire trucking industry.  Revenue from fuel surcharges was higher in 2011 Q4 than in 2010 Q4 due to higher diesel prices and increased revenue.Direct operating expensesAcquisitions completed in 2011 and during 2010 added $12.4 million of direct operating expenses in 2011 compared to 2010 ($3.6 million added expenses in 2011 Q4 compared to 2010 Q4). Depreciation of rolling stock, excluding that relating to acquisitions, increased in 2011 by $3.5 million compared to 2010 ($1.6 million increase in 2011 Q4 compared to 2010 Q4) due to increased capital expenditures in 2010 and in 2011. These expenditures were incurred in respect of growth opportunities, to take advantage of favourable pricing conditions and to replace equipment that had been previously financed through operating leases with owned equipment. Equipment lease expenses were $2.2 million lower in 2011 as a result ($0.3 million lower in 2011 Q4 than in 2010 Q4). Provisions for insurance claims were $0.8 million lower in 2011 than in 2010 ($0.2 million lower in 2011 Q4 than in 2010 Q4). Management also negotiated insurance premiums that were $0.3 million lower in 2011 than in 2010.General and administration expensesStock options were granted to certain officers, directors and employees of Contrans in April, 2011. As a result, $1.3 million was charged to general and administration ("G&A") expenses in 2011 ($0.2 million in 2011 Q4).  Acquisitions added $2.0 million to Contrans' G&A expenses in 2011 ($0.3 million in 2011 Q4).  G&A expenses in 2011 were favourably impacted by a reduction in the provisions for doubtful accounts of $0.4 million recorded in the first quarter.Net financing costsNet financing costs have increased as Contrans increased it fleet of rolling stock through finance leases and utilization of cash.  Interest earned has increased as Contrans had use of the proceeds received from the issue of shares in June 2010 for a full year.Cash FlowContrans purchased 536,000 shares for $4.0 million under its normal course issuer bid initiated in November, 2011.  Contrans continued to purchase shares in 2012 and has purchased 1,045,000 shares for $9.0 million up to March 5, 2012.  Management believes that Contrans shares have been undervalued historically and that buying back shares will add value for Contrans' remaining shareholders.Contrans purchased land in Calgary, Alberta and Edmonton, Alberta for the purpose of developing terminals to replace rented premises for total consideration of approximately $8.0 million in 2011. Building construction is expected to commence in 2012 and the cost to complete the plans is expected to range between $5.0 million to $8.0 million.  Contrans also purchased a terminal in Oakville, Ontario in 2011 for $6.5 million that it had been renting since 2006 in conjunction with the acquisition of a subsidiary.Approximately $9.8 million has been expended in 2011 to replace tractors and trailers that had been previously financed through operating leases. In addition, approximately $4.9 million of expenditures have been incurred to acquire specialized equipment to service new customer contracts.Contrans' Board of Directors has declared dividends of $13.6 million during 2011 and subsequent to the year-end declared a dividend of $3.4 million.Contrans spent $6.1 million on acquisitions in 2011.Use of Non-GAAP Financial MeasuresManagement has included a non-GAAP financial measure, "Direct operating expenses - net of fuel surcharges", to supplement its consolidated financial statements. This non-GAAP 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.Forward-looking StatementsManagement'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 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 statements.For further information: Stan G. Dunford, Chairman and Chief Executive Officer, or Gregory W. Rumble, President and Chief Operating Officer Phone: 519-421-4600 E-mail: Web site: