Trailer Bridge TRBR
January 21, 2003 - 6:05pm EST by
2003 2004
Price: 2.02 EPS
Shares Out. (in M): 0 P/E
Market Cap (in $M): 20 P/FCF
Net Debt (in $M): 0 EBIT 0 0

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This is a long overdue update of my 2001 recomendation of TRBR. The thesis remains that this is a turnaround with $1-3 earnings potential with the catalyst I predicted already having occured.

In reality the turnaround is taking longer than I thought (as someone suggested) and the stock has drifted lower...

I still think this is an attractive investment...I won't reiterate the original thesis, but will update it to the present.

1) Market Events - the major catalyst that I was predicting took place last summer in that NPR a high 20% market share competitor (this fell from low 30s at original post) has been sold to a competitor Seastar, who has liquidated 2/3 of the capacity. This has lead to an jump in capacity utilization of the remaing carriers. Seastar immediate raised prices 10%

2) effect on TRBR...slower than I expected, but volume and price moving in the right direction. Volume will come first...I think that operating rate will be in the 90%+ range southbound, and they should be profitable in the 4Q. TRBR, being tug and barge, get the lower tarrif goods (no refrigerated, etc)so they will be price followers rather than leaders. I hear that they have been getting reasonable price increases on renewal.

3)Carlysle Group bought competitor CSX lines, which had other profitable markets. There is a natural consolidation of CSX and Seastar as they are both self propelled vessel (TRBR is tug and barge). If this happens, this will further improve the competitive situation (to 3 comps.) I personally hope that TRBR would combine with Crowley the other barge and tug company. There are typically pretty good synergies in these mergers.

4) High oil prices are a negative as historically they haven't been able to fully pass these through


4Q profitability, flow through of industry capacity reduction
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