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Press release from CNW Group

Contrans Group Inc. Announces First Quarter Results

Monday, May 14, 2012

Contrans Group Inc. Announces First Quarter Results12:49 EDT Monday, May 14, 2012(TSX:CSS)WOODSTOCK, ON, May 14, 2012 /CNW/ -Financial Highlights ($CAD millions except per share amounts) For the three months ended March 3120122011Revenue - as stated$121.4   $101.1      - fuel surcharges (19.0)    (12.5)       Revenue - transportation services 102.4 100.0% 88.6 100.0%Direct operating expenses - net of fuel surcharges (1) 81.6 79.7  72.4 81.7 Gross Margin 20.8 20.3  16.2 18.3 General and administration expenses 11.8 11.5  9.9 11.2 Net financing costs 1.6 1.6  1.2 1.4 Earnings before income taxes 7.4 7.2  5.1 5.7 Income tax expense 2.1 2.1  1.6 1.8 Net earnings and comprehensive income$5.3 5.1%$3.5 3.9%Earnings per share - basic and diluted$0.15   $0.10     Weighted average shares outstanding (000s)   34,482      35,794     Dividend declared per share  $ 0.10     $ 0.08   Depreciation 5.2    3.6   Amortization of intangibles  $ 1.0     $ 1.0    "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 OPERATIONSRevenueRevenue 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 expensesAcquisitions 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 2011 Q1.Net financing costsNet 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 MEASURESManagement 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.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: