TRBR Trailer Bridge, Inc. (MM)

Trailer Bridge, Inc. (NASDAQ Global Market: TRBR) today announced unaudited financial results for its second quarter and six months ended June 30, 2011 (see attached tables).

Operational Review

The Company's deployed vessel capacity utilization during the second quarter was 91.2% southbound and 24.1% northbound, compared to 100.1% and 29.5%, respectively, during the second quarter of 2010, and 88.8% and 22.6%, respectively, sequentially from the first quarter of 2011.

Second Quarter Financial Review

• The Company had revenue of $29.0 million during the quarter, compared to $31.7 million in the prior year period. Charter revenues declined to $0.6 million from $0.9 million in the prior year period, but rose by $0.5 million sequentially from the first quarter of 2011.
• The Company reported an operating loss of $1.1 million in the second quarter of 2011 compared to operating income of $3.4 million in the prior year period and an operating loss of $8.0 million in the first quarter of 2011.
• Net loss for the second quarter of 2011 was $3.6 million, or $0.30 per basic and diluted share, compared to net income of $0.9 million, or $0.07 per basic and diluted share, in the prior-year period. Increased fuel prices drove the net fuel expense to $2.2 million, up $1.1 million over the prior-year period. Adjusted EBITDA, as detailed in the accompanying table, was $1.2 million in the second quarter of 2011.

Six Month Financial Review

• The Company had revenue of $53.8 million during the first six months of 2011, compared to $60.5 million in the prior year period. Charter revenues during the period declined to $0.6 million from $2.2 million in the prior year period.
• The Company reported an operating loss of $9.1 million for the first six months of 2011 compared to operating income of $5.6 million in the prior year period.
• Net loss for the first six months of 2011 was $14.0 million, or $1.17 per basic and diluted share, compared to net income of $0.6 million, or $0.05 per basic and diluted share, in the prior-year period. Adjusted EBITDA, as detailed in the accompanying table, was $1.6 million in the six months ended June 30, 2011.
• Each of the Company’s two roll-on, roll-off vessels was sequentially out of service as work related to five-year regulatory requirements was being performed. The Company resumed its regular deployment in late April. One of the Company’s Triplestack Box Carrier® vessels was dry-docked in the second quarter of 2011. Trailer Bridge incurred a total of $6.9 million in expense related to the dry-docking of these vessels, of this amount $6.6 million was incurred in the first quarter of 2011 and the remaining $0.3 million in the second quarter of 2011. There were no dry-docking expenses in the prior year periods.

Refinancing Status

The Company’s refinancing efforts are ongoing. The Company continues actively working with interested lenders and its advisors to refinance the $82.5 million in public notes (“Notes”) due in November 2011 and other indebtedness of the Company. The Company is exploring a number of options, that might involve the private or public lending market and may include an equity component, and that might result in a change of control. The interest rate the Company pays on its overall debt will likely be higher under such refinancing than previously anticipated. In the event the Company is not able to refinance the Notes, the Company’s finances and ability to operate would be severely impaired and the Company could be required to seek protection under federal bankruptcy laws.

Financial Position

At June 30, 2011, the Company had cash balances of $0.2 million and working capital deficit of $88.6 million due to the $82.5 million in Notes due in November 2011 as well as the Company’s Term Loan debt being classified as current liabilities. As of June 30, 2011, the Company had drawn approximately $5.0 million on its $10.0 million revolving credit facility, and, based upon eligible receivables, had $1.8 million of unused availability left under this facility. During the six months ended June 30, 2011, net cash used in operating activities was $13.2 million.

About Trailer Bridge, Inc.

Trailer Bridge provides integrated trucking and marine freight service to and from all points in the lower 48 states and Puerto Rico and Dominican Republic, bringing efficiency, service, security and environmental and safety benefits to domestic cargo in that traffic lane. This total transportation system utilizes its own trucks, drivers, trailers, containers and U.S. flag vessels to link the mainland with Puerto Rico via marine facilities in Jacksonville, San Juan and Puerto Plata. Additional information on Trailer Bridge is available at the www.trailerbridge.com website.

This press release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The matters discussed in this press release include statements regarding the intent, belief or current expectations of the Company, its directors or its officers with respect to the future operating performance of the Company and its asset utilization. Investors are cautioned that any such forward looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those in the forward looking statements as a result of various factors. Without limitation, these risks and uncertainties include the risks of changes in demand for transportation services offered by the Company, the Company’s ability to successfully operate its business, the Company’s ability to refinance its existing maturing debt, maintenance of its revolving credit facility, changes in rate levels for transportation services offered by the Company, changes in the cost of fuel, unfavorable outcomes from the United States Department of Justice (“DOJ”) investigation and related class or individual actions, economic recessions, de-listing from the Nasdaq stock exchange, equipment and driver condition and availability and severe weather as well the ability to retain and/or attract the necessary personnel and maintain necessary vendor relationships.

   

TRAILER BRIDGE, INC.

CONDENSED STATEMENTS OF OPERATIONS

(unaudited)

        Three Months Ended     Six Months Ended June 30, June 30, 2011     2010 2011     2010 OPERATING REVENUES $ 29,000,936 $ 31,656,653 $ 53,814,883 $ 60,501,618 OPERATING EXPENSES: Salaries, wages, and benefits 4,117,729 4,174,077 7,630,623 8,213,832 Purchased transportation and other rent 8,583,890 7,890,464 15,854,229 15,065,666 Fuel 5,652,241 4,406,820 10,730,160 8,700,474

Operating and maintenance (exclusive of depreciation & dry-docking  shown separately below)

7,215,871 7,590,395 13,521,349 14,148,476 Dry-docking 290,031 - 6,900,293 - Taxes and licenses 112,431 136,645 250,730 315,469 Insurance and claims 769,363 797,625 1,537,677 1,569,557 Communications and utilities 202,004 177,754 387,574 349,543 Depreciation and amortization 1,589,805 1,552,360 3,152,830 3,093,103 (Gain) loss on sale of property and equipment (2,642 ) 4,852 (3,420 ) 26,196 Other operating expenses   1,599,369     1,534,839     2,997,136     3,397,772     30,130,092     28,265,831     62,959,181     54,880,088   OPERATING (LOSS) INCOME (1,129,156 ) 3,390,822 (9,144,298 ) 5,621,530   NONOPERATING (EXPENSE) INCOME: Interest expense (2,513,660 ) (2,490,697 ) (4,882,640 ) (5,025,888 ) Interest income   1,297     4,537     2,741     8,923     (LOSS) INCOME BEFORE PROVISION FOR INCOME TAXES (3,641,519 ) 904,662 (14,024,197 ) 604,565   PROVISION FOR INCOME TAXES (7,200 ) (7,200 ) (14,400 ) (14,670 )         NET (LOSS) INCOME $ (3,648,719 ) $ 897,462   $ (14,038,597 ) $ 589,895     PER SHARE AMOUNTS:   NET (LOSS) INCOME PER SHARE BASIC $ (0.30 ) $ 0.07   $ (1.17 ) $ 0.05   NET (LOSS) INCOME PER SHARE DILUTED $ (0.30 ) $ 0.07   $ (1.17 ) $ 0.05      

TRAILER BRIDGE, INC.

CONDENSED BALANCE SHEETS

            June 30,       December 31, 2011 2010 (unaudited) ASSETS Current Assets: Cash and cash equivalents $ 173,164 $ 11,481,965 Trade receivables, less allowance for doubtful accounts of $1,062,272 and $1,065,955 14,798,131 13,022,057 Prepaid and other current assets 2,656,900 2,397,948 Deferred income taxes, net   225,645     225,645   Total current assets 17,853,840 27,127,615   Property and equipment, net 81,229,126 82,631,050 Reserve fund for long-term debt 4,640,742 4,638,215 Other assets   1,899,370     2,004,426   TOTAL ASSETS $ 105,623,078   $ 116,401,306     LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities: Accounts payable $ 7,306,084 $ 7,411,181 Accrued liabilities 3,840,335 4,725,030 Unearned revenue 1,621,478 1,410,963 Current portion of long-term debt   93,711,161     85,374,700   Total current liabilities 106,479,058 98,921,874   Long-term debt, less current portion   13,065,882     17,795,827   TOTAL LIABILITIES   119,544,940     116,717,701     Commitments and Contingencies   Stockholders' Deficit: Preferred stock, $.01 par value, 1,000,000, shares authorized; no shares issued or outstanding - - Common stock, $.01 par value, 20,000,000 shares authorized; 12,102,587 shares issued; 12,016,681 shares outstanding at June 30, 2011 and December 31, 2010 121,026 121,026 Treasury stock, at cost, 85,906 shares at June 30, 2011 and December 31, 2010 (318,140 ) (318,140 ) Additional paid-in capital 55,046,773 54,613,643 Capital deficit   (68,771,521 )   (54,732,924 ) TOTAL STOCKHOLDERS' DEFICIT   (13,921,862 )   (316,395 ) TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 105,623,078   $ 116,401,306      

TRAILER BRIDGE, INC.

CONDENSED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED JUNE 30,

            2011       2010 (unaudited) (unaudited) Operating activities: Net (loss) income $ (14,038,597 ) $ 589,895

Adjustments to reconcile net (loss) income to net cash (used in)  provided by operating activities:

Depreciation and amortization 3,152,830 3,093,103 Amortization of loan costs 474,461 456,794 Non-cash stock compensation expense 433,128 452,143 Provision for doubtful accounts 451,388 347,325 (Gain) loss on sale of property and equipment (3,420 ) 26,196 (Increase) decrease in: Trade receivables (2,227,462 ) (2,899,760 ) Prepaid and other current assets (258,952 ) 755,827 Other assets (384,004 ) 5,375 (Decrease) increase in: Accounts payable (105,097 ) 3,411,814 Accrued liabilities (884,692 ) (1,487,655 ) Unearned revenue 210,516 272,987     Net cash (used in) provided by operating activities   (13,179,901 )   5,024,044     Investing activities: Purchases of property and equipment (1,795,330 ) (1,024,661 ) Proceeds from sale of property and equipment 59,917 48,038 Additions to other assets   -     (385,999 ) Net cash used in investing activities   (1,735,413 )   (1,362,622 )   Financing activities: Proceeds from revolving line of credit 20,248,603 - Payments on revolving line of credit (15,204,737 ) Exercise of stock options - (5,562 ) Principal payments on notes payable (1,437,353 ) (2,453,795 ) Purchase of treasury stock   -     (106,699 ) Net cash provided by (used in) financing activities   3,606,513     (2,566,056 )   Net (decrease) increase in cash and cash equivalents (11,308,801 ) 1,095,366 Cash and cash equivalents, beginning of the period   11,481,965     10,987,379     Cash and cash equivalents, end of period $ 173,164   $ 12,082,745     Supplemental cash flow information: Cash paid for interest $ 4,912,064   $ 5,081,979        

TRAILER BRIDGE, INC.

RECONCILIATION OF GAAP NET (LOSS) INCOME, TO EARNINGS BEFORE INTEREST, TAXES,

DEPRECIATION & AMORTIZATION; AND ADJUSTED EARNINGS BEFORE INTEREST, TAXES,

DEPRECIATION & AMORTIZATION (1)

(UNAUDITED)

                              Three months ended Three months ended Six months ended Six months ended June 30, 2011 June 30, 2010 June 30, 2011 June 30, 2010   GAAP, Net (loss) income $ (3,648,719 ) $ 897,462 $ (14,038,597 ) $ 589,895 Net interest expense 2,512,363 2,486,160 4,879,899 5,016,965 Provision for income taxes 7,200 7,200 14,400 14,670 Depreciation and amortization   1,589,805     1,552,360     3,152,830     3,093,103   Non-GAAP, EBITDA $ 460,649   $ 4,943,182   $ (5,991,468 ) $ 8,714,633   Adjustments: Dry-docking 290,031 - 6,900,293 - Severance, including officers 213,046 - 213,046 - Stock compensation 208,123 226,071 433,130 452,143 Anti-trust related legal expense 9,370 145,529 34,630 525,431 (Gain) loss on asset sales   (2,642 )   4,852     (3,420 )   26,196   Total Adjustments   717,928     376,452     7,577,679     1,003,770   Non-GAAP, Adjusted EBITDA $ 1,178,577   $ 5,319,634   $ 1,586,211   $ 9,718,403     Other financial measures: EBITDA margin 1.6 % 15.6 % (11.1 )% 14.4 % Adjusted EBITDA margin 4.1 % 16.8 % 2.9 % 16.1 % Net debt to adjusted EBITDA 12.8x 3.9x 12.8x 3.9x Adjusted EBITDA to interest expense 0.5x 2.1x 0.3x 1.9x  

Use of Non-GAAP measures

(1) The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). The Company also believes that the presentation of certain non-GAAP measures, i.e., results excluding certain costs and expenses, provides useful information for the understanding of its ongoing operations and enables investors to focus on comparisons of operating performance from period to period without the impact of significant special items. Non-GAAP measures are reconciled in the accompanying financial table. The Company cautions that non-GAAP measures should be considered in addition to, but not as a substitute for the Company’s reported GAAP results.

Adjusted EBITDA is calculated by adding back legal expenses associated with dry-docking, non-recurring severance charges, non-cash compensation charges, the anti-trust litigation, and loss/gain on asset sales. Adjusted EBITDA was calculated on a twelve month trailing rate for purposes of calculating net debt to adjusted EBITDA. Adjusted EBITDA for the twelve months trailing June 30, 2011 and 2010 was $7,978,127 and $22,792,857, respectively.