GRUPO TMM REPORTS SECOND-QUARTER
AND FIRST SIX-MONTHS 2007 FINANCIAL RESULTS
- Financing in Place to Support Rapid Expansion of Maritime, Ports and Transportation Assets
- Operating Performance Up Dramatically
- TMM is Growing Again
(Mexico City, July 26, 2007) – Grupo TMM, S.A.B. (NYSE: TMM and BMV: TMM A; “TMM” or the “Company”) a Mexican multi-modal transportation and logistics company, reported today its financial results for the second quarter and first half of 2007.
MANAGEMENT OVERVIEW
Javier Segovia, president of Grupo TMM, said, “Our results in the second quarter of 2007 and first half of this year reflect a continued improvement in direction and accomplishment and a return to growth.
“In July we took a major step toward ensuring TMM’s growth by securitizing the revenues of 20 of our vessels, 18 offshore vessels and 2 product tankers, through the issuance of the first tranche of 20-year Mexican Trust Certificates in the amount of 3.0 billion Mexican pesos, or approximately $280 million dollars. This securitization was completed under the Company’s Mexican Trust Certificates Program and may increase up to 9.0 billion Mexican pesos. The Certificates Program provides long-term financing tied to the useful life of our vessels. This transaction was rated AA (mex) by Fitch Ratings, reflecting TMM’s participation in the increasing demand for maritime transportation services in Mexico and an impressive operating performance. This Program will improve TMM’s debt profile by increasing its duration relative to its former vessel financings. We are now well positioned to participate in Mexico’s expanding demand for offshore and product tanker vessels, port terminals and other transportation assets while diversifying our brand name.”
Segovia continued, “Our Maritime division continues to exceed all of our expectations. Last year this division produced $44.8 million of EBITDA, and we anticipate this division will exceed $55 million in EBITDA in 2007. Vessel utilization in the second quarter was at 100 percent for our product tankers, excluding the re-delivery of one vessel in June, and at 94 percent for our offshore vessels. During the second quarter, we also purchased two of our previously leased chemical carriers for a purchase price of $41.1 million through a 10-year financing facility, which we anticipate will reduce operating costs by approximately $3.0 million annually.
“Additionally, we announced this week that TMM Logistics expanded its services by acquiring an important fleet of auto hauling equipment and operating yards, while simultaneously entering into long-term contracts with two major automobile manufacturers. The acquisition price for these new assets was $36 million. The addition of this business further expands our logistics offerings for shippers within Mexico, improving the division’s market leadership and reflecting our commitment to comprehensive solutions for our customers. This acquisition is estimated to improve the Logistics division’s revenue by more than $40 million annually.
“With the incorporation of our new auto hauling operations, we believe that the Logistics division will definitely exceed an annual EBITDA run rate of $17 million by the fourth quarter of this year, as we have described in the past. Everything we are doing in this division, including the addition of new trucking equipment, the elimination of old and obsolete equipment, the modernization of all of our facilities including our yards, improvement in software and controls, the expansion of our brand to incorporate warehousing and auto hauling services, and the shutdown of inefficient operations, we believe will bring the Logistics division from an operating loss of $2.4 million in 2006 to very positive results in the second half of 2007.”
Segovia concluded, “We believe our growing Maritime and Logistics operations joined with our very stable port operations will bring TMM’s annual EBITDA to $58 million after corporate expenses in 2007. We are now positioned to grow organically throughout 2008 and substantially increase our EBITDA.”
FINANCIAL RESULTS
Comparing the second quarter of 2007 with the second quarter of 2006, TMM reported the following results:
* Revenue of $73.3 million, up 19.6 percent from $61.3 million
* Transportation income of $6.5 million, up 2.0 times from $3.2 million
* Operating margin of 8.9 percent, up 3.7 percentage points
* EBITDA of $13.5 million, up 53.4 percent from $8.8 million
* Net loss of $0.6 million compared to a net loss of $7.4 million
Comparing the first six months of 2007 with the first six months of 2006, TMM reported the following results:
* Revenue of $141.9 million, up 14.7 percent from $123.7 million
* Transportation income of $12.9 million, up 2.6 times from $4.9 million
* Operating margin of 9.1 percent, up 5.1 percentage points
* EBITDA of $26.3 million, up 63.4 percent from $16.1 million
* Net loss of $5.7 million compared to net income of $71.5 million
Revenues in the second quarter of 2007 were impacted by $2.4 million from the cancellation of service agreements by Kansas City Southern de Mexico.
Increased consolidated transportation income is mainly attributable to improved transportation income at the Maritime division of $3.6 million in the second quarter of 2007 and $8.1 million in the first six months of 2007 compared to the same periods last year.
SG&A of $18.5 million in the first six months of 2007 increased 6.6 percent, or $1.2 million, over the same period of 2006 due mainly to higher legal expenses associated with specific litigations and to expenses related to new projects and acquisitions.
Net financial cost in the first half of 2007 was $20.9 million, which included an exchange loss of $0.4 million, compared to $34.3 million in the same period of 2006, which included an exchange loss of $2.4 million. The decrease in the 2007 period resulted mainly to costs incurred in the first six months of 2006 of $18.4 million and $9.8 million attributable to the amortization of transaction costs and interest related to the Company’s 2007 Notes, respectively. Additionally, in the first half of 2007 TMM incurred $13.4 million of interest and amortization of expenses associated with the Company’s securitization program and $2.0 million of increased interest related to other debt. Also in the first half of 2007 financial income decreased $1.4 million.
BALANCE SHEET
As of June 30, 2007, TMM’s total nominal debt was $397.0 million, of which $187.9 million is related to the Company’s securitization facility, $205.8 million is related to vessel financings and $3.3 million is related to other debt.
Nominal Value of Debt as of June 30, 2007
(Millions of dollars)
| Securitization Facility |
$187.9 |
| Offshore Vessels |
$102.6 |
| Two Chemical Tankers |
$52.2 |
| Two Product Tankers |
$51.0 |
| Other debt |
$3.3 |
| Total Nominal Value of Debt (1) |
$397.0 |
(1) The Company’s total debt as presented in its balance sheet as of June 30, 2007, includes $3.4 million of accrued unpaid interest and is reduced by $8.0 million of related expenses to be amortized over time.
DIVISIONAL RESULTS (All numbers in thousands)
Second Quarter 2007 |
Maritime |
Logistics |
Ports |
Corporate and Others |
Total |
Revenues |
45,494 |
25,932 |
1,944 |
(66) |
73,304 |
Costs |
33,174 |
22,844 |
1,112 |
(64) |
57,066 |
Gross Result |
12,320 |
3,088 |
832 |
2 |
16,238 |
Gross Margin |
27.1% |
11.9% |
42.8% |
n/a |
22.2% |
SG & A |
808 |
2,175 |
392 |
6,336 |
9,711 |
Transportation Income |
11,512 |
913 |
440 |
(6,338) |
6,527 |
Operating Margin |
25.3% |
3.5% |
22.6% |
n/a |
8.9% |
Second Quarter 2006 |
Maritime |
Logistics |
Ports |
Corporate and Others |
Total |
Revenues |
36,945 |
22,607 |
1,729 |
(16) |
61,265 |
Costs |
27,712 |
20,168 |
1,199 |
35 |
49,114 |
Gross Result |
9,233 |
2,439 |
530 |
(51) |
12,151 |
Gross Margin |
25.0% |
10.8% |
30.7% |
n/a |
19.8% |
SG & A |
1,273 |
1,860 |
395 |
5,438 |
8,966 |
Transportation Income |
7,960 |
579 |
135 |
(5,489) |
3,185 |
Operating Margin |
21.5% |
2.6% |
7.8% |
n/a |
5.2% |
First Six Months 2007 |
Maritime |
Logistics |
Ports |
Corporate and Others |
Total |
Revenues |
87,378 |
50,017 |
4,678 |
(150) |
141,923 |
Costs |
63,525 |
44,836 |
2,328 |
(152) |
110,537 |
Gross Result |
23,853 |
5,181 |
2,350 |
2 |
31,386 |
Gross Margin |
27.3% |
10.4% |
50.2% |
n/a |
22.1% |
SG & A |
2,313 |
3,769 |
825 |
11,557 |
18,464 |
Transportation Income |
21,540 |
1,412 |
1,525 |
(11,555) |
12,922 |
Operating Margin |
24.7% |
2.8% |
32.6% |
n/a |
9.1%% |
First Six Months 2006 |
Maritime |
Logistics |
Ports |
Corporate and Others |
Total |
Revenues |
68,134 |
51,766 |
3,833 |
(76) |
123,657 |
Costs |
52,097 |
47,073 |
2,370 |
(111) |
101,429 |
Gross Result |
16,037 |
4,693 |
1,463 |
35 |
22,228 |
Gross Margin |
23.5% |
9.1% |
38.2% |
n/a |
18.0% |
SG & A |
2,594 |
3,433 |
782 |
10,518 |
17,327 |
Transportation Income |
13,443 |
1,260 |
681 |
(10,483) |
4,901 |
Operating Margin |
19.7% |
2.4% |
17.8% |
n/a |
4.0% |
SEGMENT RESULTS
Maritime
Comparing the second quarter of 2007 with the same period of last year:
- Revenues increased 33.3 percent to $17.6 million in the offshore segment mainly due to an improved revenue mix and to one more vessel in operation.
- Revenues increased 27.7 percent to $16.9 million in the product tanker segment mainly due to more vessels in operation. Costs were impacted in this segment by the redelivery of one vessel which was under a bareboat contract and was no longer profitable. However, during this quarter the division added another vessel to its fleet, which is currently in operation under a time charter contract.
- Revenues increased 7.5 percent to $8.2 million in the chemical tanker segment mainly due to higher volumes.
- Consolidated gross profit increased 33.4 percent mainly attributable to a gross profit increase of 56.2 percent to $6.6 million in the offshore segment and to a 70.0 percent increase to $1.0 million in the chemical tanker segment as result of increased owned vessels.
Comparing the first six months of 2007 with the same period of last year:
- Revenue increased 30.1 percent to $33.3 million in the offshore segment mainly due to an improved revenue mix, to two additional vessels in operation and to a 15 percent decrease in dry docking days.
- Revenue increase of 46.2 percent to $32.9 million in the product tanker segment due mainly to more vessels in operation and by increased utilization, from 84 percent to 100 percent, excluding the re-delivery of one vessel in June.
- Revenue increase of 10.8 percent to $15.9 million in the chemical tanker segment mainly due to higher volumes.
- Revenue decrease of 7.0 percent to $5.3 million in the harbor towing segment mainly due to a change in routes of container and refrigerated cargo. As of June 15, tariffs increased 3 percent, which should positively impact revenues going forward.
- Consolidated gross profit increased 48.7 percent mainly attributable to a gross profit increase of 103.3 percent to $12.9 million in the offshore segment and to an 81.7 percent increase to $1.4 million in the chemical tanker segment as a result of increased owned vessels.
Logistics
Comparing the second quarter of 2007 with the same period of last year:
- Trucking revenues increased 16.4 percent to $10.4 million due to increased freight volumes as a result of the acquisition of 130 new tractors and 400 new trailers.
- Warehousing operations contributed $4.1 million of revenues and $1.0 million of gross profit, exceeding the Company’s expectations prior to the peak summer season.
- Maintenance and repair revenues increased 75.2 percent to $1.8 million, and gross profit increased 2.6 times due rehabilitation and expansion of maintenance facilities.
- Inbound logistics revenues were $5.3 million, unchanged compared to the second quarter of 2006.
Comparing the first six months of 2007 with the same period of last year:
- Trucking revenues increased 14.9 percent to $20.0 million due to expanded tractor and trailer fleets and growing customer contracts and volumes.
- Warehousing operations contributed $7.7 million of revenues and $2.2 million of gross profit.
- Maintenance and repair revenues increased 62.5 percent to $3.4 million, and gross profit increased 2.2 times due to refurbished facilities and new international accounts at port facilities.
- Inbound logistics revenues decreased 5.7 percent to $10.0 million due mainly to a decrease in production in the automobile industry export output.
- Consolidated costs decreased 4.8 percent, impacted by a 66.7 percent reduction in cost at auto yards and to reduced activity in intermodal rail use. All other cost centers expanded proportionally with revenue increases.
Ports and Terminals
Comparing the second quarter of 2007 with the same period of last year:
- Revenues increased 12.4 percent, and transportation income increased 3.3 times.
- Revenues at Acapulco increased 22.0 percent to $1.5 million due mainly to a 63.6 percent revenue increase in the cruise ship business segment, partially offset by a 19 percent decrease in auto handling revenues due to lower export volumes.
Comparing the first six months of 2007 with the same period of last year:
- Revenues increased 22.0 percent, and transportation income increased 2.2 times.
- Revenues at Acapulco increased 33.4 percent to $3.5 million due mainly to a 58.1 percent revenue increase in the cruise ship business segment.
- * Auto handling revenues at Acapulco decreased 5.3 percent to $0.8 million as export volumes decreased from 18,867 automobiles to 17,349.
CONFERENCE CALL
TMM’s management will host a conference call and Webcast to review financial and operational highlights on Friday, July 27 at 11:00 a.m. Eastern Time.
To participate in the conference call, please dial 866-540-8136 (domestic) or 416-340-8010 (international) and provide conference ID 3227508 at least five minutes prior to the start of the event. Accompanying visuals and a simultaneous Webcast of the meeting will be available at http://www.visualwebcaster.com/event.asp?id=40626.
A replay of the conference call will be available through August 3, at 11:59 p.m. Eastern Time, by dialing 800-408-3053 or 416-695-5800, and entering conference ID 3227508. On the Internet, a replay will be available for 30 days at http://www.visualwebcaster.com/event.asp?id=40626.
Headquartered in Mexico City, TMM is a Latin American multimodal transportation company. Through its branch offices and network of subsidiary companies, TMM provides a dynamic combination of ocean and land transportation services. Visit TMM’s web site at www.grupotmm.com. The site offers Spanish/English language options.
