Pacer: Profit up despite lower revenue
Pacer International reported third quarter net profit of $1.1 million compared to $600,000 in the same 2009 period.
Revenue was $364.8 million in the quarter compared to $418.7 million in the year-earlier period.
It said results were affected by transition of the east/west domestic container business and sale of its truck services unit in August 2009.
Last November Pacer entered into multiyear deal to extend its relationship with Union Pacific Railroad that resulted in higher rates for domestic containers.
The company said earlier this year in a filing with the Securities and Exchange Commission that under the new arrangements with Union Pacific, substantially all of the wholesale east/west 48-foot and 53-foot container business that it had historically handled on behalf of intermodal marketing companies had transitioned away from Pacer by the end of the first quarter of 2010.
It explained the higher rates resulted in IMCs transitioning their transportation requirements either directly to Union Pacific or to other transportation providers.
It estimated transition of the east/west domestic container business decreased revenues by $62.3 million and volumes by 17.7 percent in 2010 as compared to the 2009 period.
Excluding the impact of the transition of the east/west big box business and sale of the truck services unit in August 2009, it said revenues improved by $20 million or 5.9 percent.
The company also said Hurricane Alex adversely impacted operating income by an estimated $3.5 million to $4 million in the quarter.