Transportacion Maritima Mexicana Reports First
Quarter 2001 Financial Results
- 8 Cents Earnings Per Share for TMM
- Closing of Securitization Program This Week
- Approval From CNBV (Mexican SEC) To Proceed in Principle with Merger of
Two Classes of Shares
- Cost Reduction Program Expanded
- Earnings Forecasts For 2001 Continues on Target
- TFM Equity Options Described
MEXICO CITY, April 30 -- Transportacion Maritima Mexicana,
S.A. de C.V. , the largest Latin American multi-modal
transportation and logistics company, announced first quarter 2001 results
with net revenues of $237.8 million for TMM, the consolidating parent company
of TFM. Additionally, TMM earned operating income of $38.7 million and net
income before taxes of $60.4 million.
In the first quarter, unconsolidated TMM reported net revenues of
$83.2 million compared with $82 million in the first quarter 2000, an increase
of 1.5%, despite a slowdown in North American economic activity. Operating
income for the quarter was $7.1 million, compared with $8.1 million in 2000,
net income before taxes in the quarter was $3.4 million compared with
$2.2 million in 2000, and net income was $4.6 million, or $0.08 per share, as
compared with $6.5 million or $0.11 per share in the same quarter in 2000.
TFM reported net revenues of $156.1 million compared with $146.7 million
in the first quarter 2000, an increase of 6.4%. Operating income for the
quarter was $31.6 million, compared with $40.3 million in 2000, and net income
was $24.6 million, as compared with $16.9 million in the same quarter in 2000.
The company additionally noted that even though first quarter is traditionally
the slowest time of year, March was the highest freight bill count in TFM's
history, producing a 70.1% operating ratio, and an operating profit for the
month of $23.8 million.
TMM reported EBITDA of $65.2 million for the three months ended
March 30, 2001, compared with $73.5 million in the same period last year.
Unconsolidated TMM obtained EBITDA of $13.4 million in the first quarter
compared with $14.3 million in 2000 and TFM reached EBITDA of $52.2 million
compared with $60 million for 2000.
The company reported that administrative costs in the first quarter were
$12.4 million, compared with $12 million in 2000, primarily due to peso
appreciation. In the fourth quarter of 2000, the company stated that SG&A
would continue to decline substantially by at least $8 million annually. In
the first quarter, the company reduced SG & A by $4 million dollars on an
annualized basis, which will begin to be reflected in second quarter results.
The company has set a goal of SG&A representing 7% of revenues over the next
several years in spite of peso appreciation. Moreover, interest costs are
expected to be reduced substantially in 2001 to $43 million from $59 million
in 2000.
Additionally, the company described how within the next 20 days a
conclusion would be reached regarding the remaining equity owned by the
government in TFM. TMM has proposed to the government a comprehensive
settlement related to all the remaining equity (including the call, the put,
the redundant line credit, and the VAT Lawsuit) or the company would pursue
exercising the call option at Grupo TMM and would accelerate its Value Added
Tax lawsuit in relation to the put option. Either course of action the
company believes would be additive to book value, earnings, and cash flow.
Jose Serrano, chairman and CEO, said: "We are pleased to have made great
progress toward completing many of the initiatives we laid out in the fourth
quarter conference call. Our program to financially consolidate TMM and TFM
has led to a stronger, healthier company, poised to improve return on assets
and significantly increased cash flow. We expect 2001 to be an exciting year
for TMM and are confident that our rail, port operations, specialized
maritime, trucking, and logistics businesses, will generate cash and build
profitability in the near and long-term."
Javier Segovia, president of TMM added: "We found a great deal to
encourage us during the first quarter, including the completion of a
securitization program this week to strengthen our balance sheet, progress on
the merger of the two share classes and confirmation through various court
rulings of $16 million in tax refunds expected later this year. Overall TMM is
better positioned than any other company in Mexico to take advantage of the
current and future growth strategy of the country that is now set in motion."
Segovia continued, "We have made significant operating changes that are
designed to improve the return on assets and generate increased EBITDA. We
were encouraged by the strong performance of the TFM rail operation in March
with a 70.1% operating ratio and are confident in achieving our prior
forecasts for 2001 even with the slowness at the beginning of this past
quarter."
TMM's Mexican-based business components include: 1) multi-modal logistics
facilities throughout the country; 2) the world class TFM Railroad; 3) the
Texas Mexican Railway; 4) ownership and management of key Mexican port
facilities; 5) diverse trucking operations; 6) a specialized marine transport
division; and 7) the continuation of alliances with leading transportation and
distribution companies. These units collectively allow TMM to continue to
market a full range of non-owned alliance assets.
PORT OPERATIONS
The company reported that its port facilities revenues increased over 20%
in the first quarter of 2001 compared with first quarter last year. Francisco
Kassian, president of TMM's Port and Terminals business noted that the
Manzanillo operations continued to perform at peak levels of efficiency, and
that berth positions would continue to expand as more vessel operations
utilize the company's services with larger ships.
Kassian also reported that the Tuxpan Port project (the nearest port to
Mexico City), a 494-acre facility owned by TMM, will become a superior port
expansion opportunity. He said, "Large container shipping companies have shown
a tremendous amount of interest in positioning larger ships at this site. The
company also reported that construction on the highway linking Mexico City to
Tuxpan has begun. Kassian said, "The very nature of this river port allows an
18-meter depth, far exceeding Veracruz's current capacity. Also, Tuxpan is
protected from high wind conditions that traditionally reduce operational
effectiveness throughout the year at Veracruz. We are excited by the future
of this business."
TFM RAIL OPERATIONS
Despite the slow down in the U.S. market that was felt beginning in
November of 2000, first quarter revenues for TFM continued to grow as compared
with last year. TFM's operating profit for the quarter was $31.6 million,
producing an operating ratio of 79.8% as compared with $40.3 million in the
first quarter of 2000 with a corresponding operating ratio of 72.5%. Mario
Mohar, CEO and president of TFM and president of Tex-Mex Rail, noted, "In the
month of March alone, however, our operating ratio was 70.1% and our operating
profit was $23.8 million, 75% of the first quarter's total.
Mohar noted that the operation is beginning to see a clearer picture of
volume trends that have been occurring since November. He said, "As we look
at our volume base during the first quarter, in spite of the dire, negative
sentiments from U.S. markets, auto grew by 7%, intermodal by 14%, metals and
minerals by 8%, industrial products by 9% and agro-industrial by 8%. Chemicals
and petrochemicals fell by 5%. As stated earlier overall growth increased by
6.4%. We are still optimistic that TFM will perform on an annualized basis
consistent with the 16% revenue growth projection. While the first two months
of volume were slow, traffic began to pick up in February and strengthened in
March."
TFM highlighted other factors that impacted performance in January and
February including higher fuel prices than first quarter 2000, resulting in
additional costs of approximately $1.4 million for the quarter, and increased
car hire and labor costs.
Mohar added, "We were able to eliminate 32 surplus locomotives discussed
in our fourth quarter results. This action will reduce our costs by $1 million
dollars per quarter. Furthermore, we are developing pre-blocking and pre-
clearing agreements with Kansas City Southern and Burlington Northern Santa Fe
on the TexMex, eliminating the need for redundant switching and using the
TexMex as a more efficient railroad to and from TFM.
"Because of the steps we have taken to improve congestion and reduce car
hire, costs should fall by $5 million on an annualized basis. Fuel should
fall by $1.1 million per quarter, if prices continue at April levels, and all
of these actions should assure that TFM returns to the low 70% operating ratio
level."
As stated earlier, March volume for the unit improved dramatically. Mohar
concluded, "We still expect to attain 16% growth this year, taking TFM to
$743 million of net revenues and an operating ratio of 72%, for the full year.
Our demonstrated abilities to reduce and control costs in March, and new
programs, such as Roadrailer, customs brokerage and growth in our commodity
base, will assure that we reach our previously stated goals."
TEXMEX RAIL OPERATIONS
TMM's Rail Operations reported that problems with TexMex operations began
to surface during the fourth quarter of 2000. Mario Mohar noted that, "We
experienced a number of derailments and related congestion problems. Over the
years, we have taken the right steps to expand volume. However, in the fourth
quarter of 2000 and the first quarter of 2001, we simply outgrew our line haul
capacity sooner than we expected. Revenue increased by 11.3% in the first
quarter, but TexMex was not operating in an efficient manner." The company
reported that the unit failed to contribute operating profit and EBITDA.
Mohar continued, "As we described to you in February, we have taken
actions to correct the congestion problems, and more importantly, we are
taking aggressive steps to fix TexMex's capability once and for all. At the
TexMex Board Meeting on April 18th, the Board approved a plan for a 10 year
off balance sheet financing agreement with Alstom, which will allow us to
invest $40 to $45 million to rehabilitate and expand all of TexMex's track.
This initiative will result in an increase of main line speed from
30 to 49 mph over the next 18 months." Mohar additionally noted that TexMex
has acquired the Rosenburg Victoria Line, an important strategic acquisition,
reducing the distance between Laredo to Houston and Beaumont by 70 miles. We
expect TexMex revenues to grow exceptionally and costs to fall, improving
operating profits starting in third quarter 2001."
SPECIALIZED MARITIME
TMM reported that its Specialized Maritime division added an additional
supply ship. Silverio Di Costanzo, general director of TMM's Specialized
Maritime Group, said, "This fireboat is anticipated to produce an additional
$3.5 million of revenue per year."
Di Costanzo additionally noted, "We have withdrawn from one of our car
carrier services between Europe and South America. As the company has said in
the past if an operation cannot contribute in a positive way, we will take
action to either improve or eliminate it. We have too many other uses for our
capital to enhance our growth." The company noted that this service is a
joint venture and no book value loss will occur.
Additionally, Di Costanzo added that additional long-term dedicated
contracts for chemicals were signed in the parcel tanker division. These
contracts are expected to increase revenues by approximately $2 million on an
annualized basis. Finally, the company reported that it is exploring with the
government ways to improve the quality of Pemex's tanker fleet and terminals.
LAND OPERATIONS
The company reported that its land operations division closed a contract
with Companie General Maritime, and has received approval by several
automobile manufacturers to handle all parts distribution to the after market
throughout Mexico. Gerardo Primo, general director of the Land Operations
Group, noted that these three contracts are anticipated to produce an
additional $9.5 million in revenue on an annualized basis beginning in the
second quarter.
Additionally, during the first quarter, the Logistics division closed a
$1.5 million outsourced contract with Chrysler involving the handling of
vehicles at all three Chrysler facilities. Primo said, "This action positions
us for further expansion at Toluca, where production will increase by 50% over
the next 2 years." Primo also noted that the division was shifting trucking
assets from the North South International lanes and reassigning those assets
to higher priced margin intra-Mexican uses.
2001 OUTLOOK
The company is confident that it will produce EBITDA for unconsolidated
TMM of $71 million in 2001. Joined with TFM, the company anticipates Grupo
TMM to reach a consolidated EBITDA of approximately $364 million. The company
projects year over year top-line growth in the range of 17%, and forecasts a
combined operating profit of approximately $270 million, which would represent
a 23% increase compared with 2000. In addition, corporate overhead and
interest charges are projected to decline dramatically compared with 2000.
All projections include consolidated financials from TFM.
Segovia concluded: "Two years ago, TMM was focused on debt reduction. We
have transformed ourselves and are now growing, entering the market with
products and services that compliment NAFTA and European trade growth. A U.S.
rail analyst recently said the following about our largest investment, TFM:
"We do not want to underestimate the long term period. We have not seen a
railroad in North America in the 15 years we have studied the industry with
the combination of growth potential and management capabilities that exist at
TFM."
"I believe that within a few years, analysts will be able to say the same
thing about all of TMM. TMM is THE logistics provider of Mexico, integrating a
variety of services, providing door-to-door supply chain management in and out
of Mexico to manufacturers and consumers. As I have stated in previous
conference calls, I see a company in four or five years with a cash flow
between $600 to $700 million with continuing advancements in operating profit
and earnings. I believe we possess all of the components to see this vision
through to completion."
TMM will broadcast its first quarter conference call and presentation for
investors over the Internet at http://www.vcall.com on Wednesday, May 2, 2001, at
11:00 a.m. EST. The delay between the release of earnings and the conference
call is due to fact that the Bolsa Exchange is closed for the May Day holiday
on Tuesday, May 1. To listen to the live call, please go to the Web site at
least 15 minutes early to register, download and install any necessary audio
software. A replay will also be available for 90 days after the conclusion of
the call at this Web site.
Headquartered in Mexico City, TMM is Latin America's largest multimodal
transportation company. Through its branch offices and network of subsidiary
companies, TMM provides a dynamic combination of ocean and land transportation
services. TMM also has a significant interest in Transportacion Ferroviaria
Mexicana (TFM), which operates Mexico's Northeast railway and carries over
40 percent of the country's rail cargo. Visit TMM's web site at
http://www.tmm.com.mx and TFM's web site at http://www.gtfm.com.mx . Both
sites offer Spanish/English language options. For free fax on demand
information, dial 1-800-PRO-INFO and enter the company's symbol: TMM.
Included in this report are certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Such forward-looking
statements are based on the beliefs of the Company's management, as well as on
assumptions made by and information currently available to the Company at the
time such statements were made. The words "believe", "expect" and "anticipate"
and similar expressions identify some of these forward-looking statements.
Statements looking forward in time involve risks, uncertainties and other
factors which may cause the actual results, performance or achievements of the
company to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
factors include, among others, global, U.S. and Mexican economic and social
conditions; the effect of the North American Free Trade Agreement ("NAFTA") on
the level of U.S. -Mexico trade; the company's ability to convert customers
from using trucking services to rail transport services; competition from
other rail carriers and trucking companies in Mexico; the company's ability to
control expenses; and the effect of the company's employee training,
technological improvements and capital expenditures on labor productivity,
operating efficiencies and service reliability. Actual results could differ
materially from those included in such forward-looking statements. Readers are
cautioned not to place undue reliance on such forward-looking statements,
which speak only as of their respective dates. The company undertakes no
obligation to update publicly or revise any forward-looking statements,
whether as a result of new information, future events or otherwise. These risk
factors and additional information are included in the Company's reports on
Forms 6K and 20-F on file with the Securities and Exchange Commission.
Transportacion Maritima Mexicana, S.A. de C.V. and subsidiaries
* Consolidated Statement of Income
- millions of dollars -
Three months ended
31-Mar
2001 2000
Revenue from freight and services 237.784 81.958
Cost & expenses of opetarion (164.245) (58.802)
Depreciation & amortization of
vessels and operating equipment (22.396) (2.997)
51.143 20.159
Administrative expenses (12.457) (12.022)
Operating income 38.686 8.137
Financial (expenses) income,net (33.647) (6.384)
Exchange and derivatives gain (loss)
- Net 2.753 1.125
(30.894) (5.259)
Other income (expense) - Net 52.566 (0.638)
Income before taxes 60.358 2.240
Provision for taxes (29.713) 8.496
Income before minority interest 30.645 10.736
Minority interest (26.084) (2.735)
Net income before results for
investment in TFM 4.561 8.001
Financial expense attributable to TFM
investment 0.000 (7.938)
Interest in TFM 0.000 6.383
Net income 4.561 6.446
Weighted average outstanding shares
(millions) 56.698 56.598
Earnings per share (dollars / share) 0.08 0.11
Outstanding shares at end of period
(millions) 56.698 56.598
Earnings per share (dollars / share) 0.08 0.11
* Prepared in accordance with International Accounting Standards
Transportacion Maritima Mexicana, S.A. de C.V. and subsidiaries
* Consolidated Balance Sheet
- millions of dollars -
31-Mar 31-Mar
2001 2000
CURRENT ASSETS
Cash and cash equivalents 87.772 87.247
Marketable securities 0.105 0.076
87.877 87.323
Accounts receivable
Customers 132.121 116.689
Other accounts receivable 86.759 94.324
Prepaid expenses 45.279 43.510
Total current assets 352.036 341.846
ACCOUNTS RECEIVABLE AND MARKETABLE
SECURITIES (LONG-TERM) 80.889 1.739
VESSELS, EQUIPMENT AND PROPERTY 1964.470 1958.316
INVESTMENT IN TFM 0.000 0.000
OTHER ASSETS 121.714 120.270
DEFERRED TAXES 220.127 249.790
ASSETS OF DISCONTINUING BUSINESS 3.000 3.955
2742.236 2675.916
CURRENT LIABILITIES
Bank loans and current maturities of
long term liabilities 68.027 72.081
Suppliers 71.129 82.642
Other accounts payable and accrued
expenses 148.798 120.464
Total current liabilities 287.954 275.187
REVENUE AND COSTS OF VOYAGES IN
PROCESS-NET, AND OTHER DEFERRED
CREDITS 3.529 2.263
DEFERRED TAXES 32.348 32.366
LONG-TERM LIABILITIES
Bank loans and other obligations 1,208.197 1,192.832
Other long-term liabilities 14.142 6.453
Total long-term liabilities 1,222.339 1,199.285
LIABILITIES OF DISCONTINUING BUSINESS 1.290 2.683
1,547.460 1,511.784
MINORITY INTEREST 1,035.856 1,009.772
STOCKHOLDER'S EQUITY
Capital stock 105.915 105.915
Premium on sale of stock 71.407 71.407
Reserve for repurchase of shares 20.734 20.734
Retained earnings 24.114 19.554
Initial translation loss (63.250) (63.250)
158.920 154.360
2,742.236 2,675.916
* Prepared in accordance with International Accounting Standards
Transportacion Maritima Mexicana, S.A. de C.V. and subsidiaries
Consolidated Statement of Cash Flow
- millions of dollars -
Three months ended
31-Mar
2001 2000
OPERATIONS
Income before results 4.561 6.446
Charges (credits) to income not
affecting resources:
Depreciation & amortization 26.473 6.216
Interest in TFM 0.000 (6.383)
Minority interest 26.084 2.735
Results on sale of assets and
subsidiaries (60.754) 0.250
Deferred income taxes 29.645 (8.639)
Other non-cash items 17.585 2.121
Total non-cash items 39.033 (3.700)
Changes in assets & liabilities (11.219) (21.574)
Total adjustments 27.814 (25.274)
Net cash (used in) provided by
operating activities 32.375 (18.828)
INVESTMENT
Proceeds from sales of assets
(net) 1.456 0.689
Payments for purchases of assets (27.544) (3.691)
Sale of subsidiaries, net of cash
sold 0.000 54.724
Purchase & sale of marketable
securities (net) 0.000 (2.922)
Net cash (used in) provided by
investment activities (26.088) 48.800
FINANCING
Short-term borrowings (net) (1.786) (6.226)
Principal payments under capital
lease obligations (4.775) (0.427)
(Repurchase) sale of accounts
receivable (net) 0.000 (20.000)
Repayment of long-term debt (10.981) (0.505)
Proceeds from issuance of long-
term debt 8.800 0.000
New capital lease obligations 2.980 0.000
Net cash (used in) provided by
financing activities (5.762) (27.158)
Net increase (decrease) in cash 0.525 2.814
Cash at beginning of period 87.247 84.122
Cash at end of period 87.772 86.936
* Prepared in accordance with International Accounting Standards
Transportacion Maritima Mexicana, S.A. de C.V. and subsidiaries
Statement of Income (without TFM)
- millions of dollars -
Three months ended
31-Mar
2001 2000
Revenue from freight and services 83.165 81.958
Cost of freight and services (60.278) (58.802)
Depreciation of vessels and operating
equipment (3.302) (2.997)
19.585 20.159
Administrative expenses (12.457) (12.022)
Operating income 7.128 8.137
Financial (expenses) income,net (3.219) (6.384)
Exchange and derivatives gain (loss)
- Net (0.293) 1.125
(3.512) (5.259)
Other income (expense) - Net (0.258) (0.638)
Income before taxes 3.358 2.240
Provision for taxes 5.185 8.496
Income before minority interest 8.543 10.736
Minority interest (4.911) (2.735)
Net income before results for
investment in TFM 3.632 8.001
Financial expense attributable to TFM
investment (8.641) (7.938)
Interest in TFM 9.570 6.383
Net income 4.561 6.446
Weighted average outstanding shares
(millions) 56.698 56.598
Earnings per share (dollars / share) 0.08 0.11
Outstanding shares at end of period
(millions) 56.698 56.598
Earnings per share (dollars / share) 0.08 0.11
* Prepared in accordance with International Accounting Standards
Transportacion Maritima Mexicana, S.A. de C.V. and
subsidiaries
Balance Sheet (without TFM)
- millions of dollars -
31-Mar 31-Dec
2001 2000
CURRENT ASSETS
Cash and cash equivalents 44.870 54.209
Marketable securities 0.105 0.076
44.975 54.285
Accounts receivable
Customers 56.217 49.658
Other accounts receivable 46.484 40.505
Prepaid expenses 11.198 10.726
Total current assets 158.874 155.174
ACCOUNTS RECEIVABLE AND MARKETABLE
SECURITIES (LONG-TERM) 1.739 1.739
VESSELS, EQUIPMENT AND PROPERTY 185.085 167.316
INVESTMENT IN TFM 383.387 374.125
OTHER ASSETS 62.154 59.334
DEFERRED TAXES 116.943 111.708
ASSETS OF DISCONTINUING BUSINESS 3.000 3.955
911.182 873.351
CURRENT LIABILITIES
Bank loans and current maturities of
long term liabilities 68.027 67.854
Suppliers 48.349 43.335
Other accounts payable and accrued
expenses 111.693 87.704
Total current liabilities 228.069 198.893
REVENUE AND COSTS OF VOYAGES IN
PROCESS-NET, AND OTHER DEFERRED
CREDITS 3.529 2.263
DEFERRED TAXES 32.348 32.366
LONG-TERM LIABILITIES
Bank loans and other obligations 380.836 381.508
Other long-term liabilities 0.000 0.000
Total long-term liabilities 380.836 381.508
LIABILITIES OF DISCONTINUING BUSINESS 1.290 2.683
646.072 617.713
MINORITY INTEREST 106.190 101.278
STOCKHOLDER'S EQUITY
Capital stock 105.915 105.915
Premium on sale of stock 71.407 71.407
Reserve for repurchase of shares 20.734 20.734
Retained earnings 24.114 19.554
Initial translation loss (63.250) (63.250)
158.920 154.360
911.182 873.351
* Prepared in accordance with International Accounting Standards
Transportacion Maritima Mexicana, S.A. de C.V. and subsidiaries
Statement of Cash Flow (without TFM)
- millions of dollars -
Three months ended
31-Mar
2001 2000
OPERATIONS
Income before results 4.561 6.446
Charges (credits) to income not
affecting resources:
Depreciation & amortization 6.349 6.216
Interest in TFM (9.570) (6.383)
Minority interest 4.911 2.735
Results on sale of assets and
subsidiaries 0.004 0.250
Deferred income taxes (5.253) (8.639)
Other non-cash items 2.256 2.122
Total non-cash items (1.303) (3.699)
Changes in assets & liabilities 1.756 (21.575)
Total adjustments 0.453 (25.274)
Net cash (used in) provided by
operating activities 5.014 (18.828)
INVESTMENT
Proceeds from sales of assets
(net) 0.995 0.689
Payments for purchases of assets (13.108) (3.691)
Sale of subsidiaries, net of cash
sold 0.000 54.724
Purchase & sale of marketable
securities (net) 0.000 (2.922)
Net cash (used in) provided by
investment activities (12.113) 48.800
FINANCING
Short-term borrowings (net) (1.786) (6.226)
Principal payments under capital
lease obligations (0.016) (0.427)
(Repurchase) sale of accounts
receivable (net) 0.000 (20.000)
Repayment of long-term debt (0.438) (0.505)
Net cash (used in) provided by
financing activities (2.240) (27.158)
Net increase (decrease) in cash (9.339) 2.814
Cash at beginning of period 54.209 84.122
Cash at end of period 44.870 86.936
* Prepared in accordance with International Accounting Standards
Grupo TMM
First Quarter 2001 vs. First Quarter 2000
(Thousands of USD)
Q1 2001 TFM Ports Special Logistics
Mar
Revenue 156,085 23,133 29,956 16,075
Costs 124,527 12,472 26,768 11,007
Gross Result 10,661 3,188 5,068
Gross Margin 46.1% 10.6% 31.5%
SG & A Estimate 2,690 2,588 1,868
Operating Results 31,558 7,971 600 3,200
Operating Margin 20.2% 34.5% 2.0% 19.9%
Q1 2001 TexMex Other Total
Revenue 14,614 (2,079) 237,784
Costs 13,968 (2,101) 186,641
Gross Result 646 22 n.a.
Gross Margin 4.4% (1.1%) n.a.
SG & A Estimate 1,206 4,105 12,457
Operating Results (560) (4,083) 38,686
Operating Margin (3.8%) 196.4% 16.3%
(Thousands of USD)
Q1 2000 TFM Ports Special Logistics
Mar.
Revenue 146,665 19,062 29,036 21,882
Costs 106,339 10,506 24,622 15,823
Gross Result 8,556 4,414 6,059
Gross Margin 44.9% 15.2% 27.7%
SG & A Estimate 2,031 1,941 1,444
Operating Results 40,326 6,525 2,473 4,615
Operating Margin 27.5% 34.2% 8.5% 21.1%
Q1 2000 TexMex Other Total
Revenue 13,126 (3,447) 226,324
Costs 11,952 (3,403) 165,839
Gross Result 1,174 (44) n.a.
Gross Margin 8.9% 1.3% n.a.
SG & A Estimate 1,395 5,211 12,022
Operating Results (221) (5,255) 48,463
Operating Margin (1.7%) (152.5%) 21.4%
Grupo Transportacion Ferroviaria Mexicana, S.A. De C.V. ("TFM")
Reports First Quarter Results For The Period Ended March 31, 2001
MEXICO CITY, Mexico, April 30 Transportacion Ferroviaria
Mexicana today reported operational results for the first quarter of 2001.
Transportacion Maritima Mexicana, S.A. de C.V. owns a
significant interest in Transportacion Ferroviaria Mexicana (TFM).
OPERATIONAL RESULTS FOR THE FIRST QUARTER OF 2001
Consolidated net revenues for the first quarter of 2001 were
$156.1 million, which represents an increase of $9.4 million or 6.4% from
revenues of $146.7 million for the same period in 2000. First quarter
consolidated revenues were the highest recorded in any first quarter during
TFM's operating history despite the impact of the slowdown of the U.S. economy
which diminished the pace of TFM's growth from the first quarter of 2000. At
the same time, TFM's first quarter revenues for 2001 reflect the negative
effects of seasonality as the year-end holiday season brought about a decrease
in business volumes. Despite these factors, TFM experienced growth in all
product segments in the first quarter, with the highest growth in the
automotive, metals and minerals and intermodal segments. The intermodal
product segment continued experiencing double-digit growth mainly as a result
of TFM's strategy of conversion of traffic from truck to rail transport.
Consolidated operating expenses for the first quarter of 2001 increased to
$124.5 million from $106.3 million for the same period in 2000. The increase
in operating expenses resulted mainly from higher variable direct costs
related to the growth of TFM's business, including costs of salaries and
fringe benefits, car hire and operating leases as new locomotives and freight
cars were added to TFM's fleet. Operating expenses were also affected by a
21.5% increase in fuel costs as a consequence of high diesel fuel prices in
the first quarter of 2001 compared to the first quarter of 2000.
Consolidated operating profit for the first quarter of 2001 was
$31.6 million, representing a decrease of $8.8 million from the first quarter
of 2000. The decrease in consolidated operating profit for the first quarter
of 2001 was due mainly to the effects of higher fuel prices as well as higher
car hire and operating lease costs. Increased car hire costs reflect TFM's use
of higher-priced equipment needed in the automotive product segment which
experienced larger than average volume growth relative to other product
segments. In addition, lease costs increased at a higher than average rate
relative to the growth in overall operating costs as 25 GE 4000 H.P.
locomotives were added to TFM's fleet. These locomotives represent the final
phase of a long-term leasing program under which a total of 150 new
locomotives have been delivered to TFM by General Electric and Electro-Motive
Division, a subsidiary of General Motors. In connection with completion of
the long-term leasing program, beginning in April 2001, locomotives operated
by TFM under short-term leases are being returned to the supplier as those
short-term leases begin to expire. As a result of the foregoing, TFM's
operating ratio (operating expenses as a percentage of revenues) for the first
quarter of 2001 was 79.8% which represents an increase of 7.3% from the first
quarter of 2000.
FINANCIAL EXPENSES
Net financial expenses incurred in the first quarter of 2001 were
$18.9 million and include $ 10.7 million of amortization of discount
debentures. TFM recognized a $ 3.0 million foreign exchange gain resulting
from a 1.2% appreciation of the peso against the dollar during the first
quarter of 2001.
NET INCOME
Net income for the first quarter of 2001 was positively impacted by a one-
time profit item resulting from the sale by TFM to the Mexican government of
the La Griega-Mariscala line, an approximately 32-kilometer portion of
redundant track in the vicinity of the city of Queretaro. The profits from
this sale (net of certain related costs and the results of sales of other
assets in the first quarter) were recorded as other income in the amount of
US$53.0 million. On the other hand, net income for the first quarter was
negatively impacted by a deferred income tax expense of $34.9 million,
attributable mainly to the profits generated by the sale of the La Griega-
Mariscala line, which are considered taxable income for 2001, together with
the effects of TFM having estimated a higher depreciation of the peso against
the dollar relative to the Mexican inflation rate for tax purposes during this
period.
EBITDA
EBITDA for the first quarter of 2001 was $52.2 million which represented a
decrease of $7.8 million or 13.0% from EBITDA for the first quarter of 2000.
EBITDA margin (EBITDA as a percentage of revenues) for the first quarter of
2001 was 33.5%.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2001, the accounts receivable balance increased by 4.1% to
$130.2 million from $ 125.1 million at December 31, 2000. Outstanding trade
receivables were below 30 days, which meets TFM's objectives in the management
of working capital. The accounts receivable balance includes, among other
items, VAT (value-added tax) and IEPS (fuel tax) credits from ongoing business
transactions.
As of March 31, 2001, accounts payable and accrued expenses were
$73.9 million, a decrease of $2.4 million or 3.1% from December 31, 2000
TFM's capital expenditures were $14.4 million during the first quarter of
2000.
As of March 31, 2001, TFM had an outstanding net debt balance of
$784.5 million, including the discounted value of a $290.0 million U.S.
commercial paper issuance, and $42.9 million of cash and cash equivalents.
TFM refinanced its Senior Secured Credit Facility through the U.S. Commercial
Paper Program backed by letter of credit in September 2000 resulting in a
substantial reduction in debt service.
Grupo Transportacion Ferroviaria Mexicana, S.A. de C.V.
and Subsidiary
Consolidated Statement of Income
( Amounts expressed in thousands of US dollars )
( Unaudited )
Three months ended
March 31,
2001 2000
Transportation revenues 156,085 $146,665
Operating expenses (105,433) (87,553)
Depreciation and
amortization (19,094) (18,786)
(124,527) (106,339)
Operating profit 31,558 40,326
Other income (expenses)
- net 53,042 (5,844)
Financial expenses - net (22,005) (25,892)
Exchange profit - net 3,046 803
Net comprehensive
financing cost (18,959) (25,089)
Income before taxes 65,641 9,393
and minority
interest
Asset tax 0 (6,000)
Deferred income tax (34,898) 17,879
Income before minority
interest 30,743 21,272
Minority interest (6,146) (4,296)
Net income for the
period $24,597 $16,976
The consolidated financial statements were prepared in
accordance with International Accounting Standards
Grupo Transportacion Ferroviaria Mexicana, S.A. de C.V.
and Subsidiary
Consolidated Balance Sheet
( Amounts expressed in thousands of US dollars )
( Unaudited )
March 31, December 31,
2001 2000
Assets
Current assets
Cash and cash equivalents $42,902 $33,038
Accounts receivable - net 130,241 125,098
Materials and supplies 23,805 23,854
Other current assets 10,276 8,930
Total current assets 207,224 190,920
Due from Mexican Government 79,150 0
Concession, property and
equipment - net 1,787,621 1,799,550
Other assets 13,332 14,088
Deferred income tax 103,184 138,082
Total assets $2,190,511 $2,142,640
Liabilities and stockholders'
equity
Current liabilities
Capital lease due within
one year $0 $4,227
Accounts payable and
accrued expenses 73,947 76,318
Total current liabilities 73,947 80,545
Long-term debt and capital
lease obligation 827,361 811,324
Other non-current
liabilities 14,142 6,453
Total long-term liabilities 841,503 817,777
Total liabilities 915,450 898,322
Minority interest 376,522 370,376
Stockholders' equity
Capital stock 807,008 807,008
Retained earnings 91,531 66,934
Total stockholders'
equity 898,539 873,942
Total liabilities and
stockholders' equity $2,190,511 $2,142,640
The consolidated financial statements were prepared in accordance
with International Accounting Standards
Grupo Transportacion Ferroviaria Mexicana, S.A. de C.V.
and Subsidiary
Consolidated Statement of Cash Flows
( Amounts expressed in thousands of US dollars )
( Unaudited )
Three months ended
March 31
2001 2000
Cash flows from operating
activities:
Net income for the period $24,597 $16,976
Adjustments to reconcile net
income to net cash
provided by operating
activities:
Depreciation and amortization 19,094 18,786
Discount on senior secured
debentures 10,733 9,684
Amortization of deferred
financing costs 783 1,561
Other non cash item (14,774) (8,092)
Changes in working capital (12,739) (5,561)
Total adjustments 3,097 16,378
Net cash provided by operating
activities 27,694 33,354
Cash flows from investing
activities:
Acquisitions of property and
equipment - net (14,359) (6,668)
Sale of equipment 51 6,040
Net cash used in investing
activities (14,308) (628)
Cash flows from financing
activities:
Proceeds from (payments of)
commercial paper - net (1,743) 0
Proceeds from capital lease
obligations 2,980 0
Payments of revolving credit
facility - net 0 (10,000)
Principal payments under
capital lease obligations (4,759) (4,227)
Principal payments of senior
secured credit facility 0 (22,611)
Net cash used in financing
activities (3,522) (36,838)
Increase (Decrease) in cash and
cash equivalents 9,864 (4,112)
Cash and cash equivalents
Beginning of period 33,038 10,950
End of period $42,902 $6,838
The consolidated financial statements were prepared in accordance
with International Accounting Standards
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