Contrans Group Inc : 02.26.2014 Contrans Announces Record Results

C O NT R A NS AN NO U NC E S RE CO RD R ES U LT S

(1) See "Use of Non-GAAP Financial Measure" below.

"Contrans had an excellent year in 2013, the second year in a row in which new Company financial records were established" stated Stan Dunford, Contrans' Chairman of the Board of Directors and Chief Executive Officer. "This achievement featured healthy organic growth powered by several major awards of new business. The Company's performance would have been even better were it not for a series of challenging situations that reduced shipments of freight from some of our top customers. Lower commodity prices adversely affected business activity in the resource sector. In Quebec, the Charbonneau Commission inquiry into corruption in that province and a general construction strike hindered shipments of construction materials. Construction season throughout Canada had a late start in 2013 due to a prolonged winter that was followed by an unusually wet spring. In Ontario, a labour dispute at a major customer disrupted their freight shipments. The professionalism with which Contrans' managers responded to this set of challenges resulted in substantial revenue growth for the Company in 2013. Their efforts should be applauded."
"The Board of Directors believes that Contrans' shareholders deserve to participate in the Company's continued success by receiving a dividend increase" added Mr. Dunford. "Accordingly, after considering the Company's outstanding 2013 financial performance and its prospects for 2014, Contrans' Board of Directors recently concluded that increasing the rate of annual dividends from $0.50 to $0.60 would be appropriate. This would be nearly double the annual dividend rate of $0.32 per share that the Company paid to its shareholders in 2010."
"Contrans has been resilient through economic downturns due in part to the fact that the Company has not been heavily burdened with debt" Mr. Dunford further added. "Approximately $30 million of Contrans' term debt matured in December 2013 and was repaid. This payment was a particularly satisfying achievement for management as it reflected the Company's operating successes and its financial strength. Entering 2014, Contrans' balance sheet is very strong and the Company is well- positioned for continued growth."
"Contrans has continued to invest in trucks and trailers" noted Mr. Dunford. "Contrans' fleet of equipment is considered to be the most modern and efficient in the industry providing Contrans with a meaningful advantage over its competitors. An efficient fleet optimizes hauling capacity which, in turn, greatly enhances customer service. A modern fleet is more attractive and reliable than an older fleet making Contrans far more appealing to both owner-operators and to company drivers."
"Contrans has been built on principles designed to sustain the Company's health through economic downturns" Mr. Dunford pointed out. "Maintaining a conservative capital structure is fundamental to this objective. Contrans utilizes a variable cost structure that permits management to react swiftly to reduced business activity. Unlike a less-than-truckload carrier, Contrans does not have the burden of costs arising from maintaining a large network of terminals, cross-docking facilities and a fleet of local pick-up and delivery vehicles regardless of the amount of revenue being generated. Another important factor that has insulated Contrans against the effects of economic downturns is the quality and diversity of its customer base. The Company has earned the trust and respect of its customers by providing high levels of service and by providing a full range of the most modern and efficient equipment in the industry. Furthermore, Contrans has successfully grown in several niche markets where shippers are as sensitive to service as they are to price. These factors enabled Contrans to continue to grow both in size and in diversity in 2013. These strategies have enabled the Company to maintain its margins of profit in good times and in bad times with, quite remarkably, little variation. Contrans' track record speaks for itself. Our business model works."
"Contrans would not be what it is today without the contributions of its management team" concluded Mr. Dunford." The Company's long record of steady, profitable growth highlighted by consecutive record-setting years in 2012 and 2013 is testimony to their efforts. This, however, is not a group that has ever rested upon its laurels. Year after year, management has raised the standard of excellence that it sets for itself. Contrans' management is an inspired, experienced, high-performing team that is dedicated to adding long-term value for the Company and its shareholders."

RESULTS FROM OPERATIONS - CONSOLIDATED Revenue

Acquisitions contributed approximately $20.7 million of incremental service revenue ("revenue") in
2013 and approximately $5.2 million of revenue in the fourth quarter of 2013 ("2013 Q4"). Revenue
also increased in 2013 due to organic growth. In February 2013, Contrans commenced collecting
residential waste in Edmonton, Alberta. This generated $4.3 million of revenue in 2013 (2013 Q4 - $1.2
million). On July 1, 2013, Contrans commenced transporting waste from Calgary, Alberta to Coronation,
Alberta. This new contract contributed $4.1 million of revenue in 2013 (2013 Q4 - $2.0 million). Contrans
was also awarded a contract to transport metallurgical coke from Hamilton, Ontario to Nanticoke,
Ontario. Work began in October 2013 and generated approximately $2.8 million of revenue in 2013 Q4.

Direct operating expenses

Acquisitions added approximately $17.0 million to direct operating expenses in 2013 (2013 Q4 - $4.3 million). In addition, Contrans' direct operating expenses increased in 2013 commensurate with increased revenue. Direct operating expenses were also affected by adverse business conditions including unusually poor winter and spring weather, disruptions to the construction industry and a labour dispute at a major customer. These conditions negatively impacted equipment utilization which, in turn, caused operating expenses, measured as a percentage of revenue, to increase. In addition, the Company's fuel surcharge programs consistently lagged steadily increasing fuel prices in 2013. This lag was primarily responsible for fuel expenses increasing by approximately $2.5 million in 2013 compared to 2012 (2013 Q4 - $0.9 million increase). Depreciation of tractors and trailers was $1.7 million higher in 2013 than in 2012 due to increased capital expenditures (2013 Q4 - $0.9 million higher).

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General and administration expenses

Acquisitions added approximately $1.9 million of general and administration expenses in 2013 (2013 Q4
- $0.8 million). Share-based, cash-settled compensation expense increased by $0.6 million in 2013
compared to 2012 (2013 Q4 - $0.2 million increase). This resulted primarily from the appreciation in the
trading price of Contrans' shares from $10.00 at December 31, 2012 to $13.28 at December 31, 2013.
Professional fees were lower in 2013 compared to 2012 primarily as a result of $0.6 million of costs that
were incurred in 2012 that related to a proposed elimination of Contrans' dual class share structure.

Net financing costs

Net financing costs increased by $0.4 million in 2013 compared to 2012 (2013 Q4 - $0.1 million increase). Financing costs increased in 2013 in line with average debt levels. Finance income decreased in 2013 as Contrans used cash and sold short-term investments to fund business acquisitions and purchases of property and equipment.

Income tax expense

In 2012, the Ontario government reversed its decision to lower the provincial corporate tax rate to 10%. Accordingly, Contrans recognized a charge to earnings in 2012 which increased the Company's effective tax rate for 2012.

C AS H F L OW

Contrans incurred capital expenditures, including expenditures that were funded through finance leases, of $51.8 million in 2013 (2012 - $29.2 million). Of this amount, $21.3 million was incurred to support growth initiatives in 2013 (2012 - $6.0 million). Contrans' 2013 capital expenditures also included $7.7 million of costs in the construction of its new terminal facility in Edmonton, Alberta. This new facility opened in December, 2013. In addition, Contrans purchased a warehouse facility in 2013 near Montreal, Quebec for $4.4 million. This purchase was partially financed with a $3.0 million mortgage. This warehouse has enabled the Company to offer ancillary services to its freight transportation customers in Quebec.

Contrans' Board of Directors ("Board") has declared the following dividends:

The payment of dividends is subject to the discretion of Contrans' Board. Prior to declaring a dividend, the Board considers many factors, including Contrans' overall financial condition, its expected future financial performance, its anticipated capital requirements as well as its debt repayment obligations and the covenants that are contained in Contrans' loan agreements.

Use of Non-GAAP Financial Measure

Management has included a non-GAAP financial measure, "Direct operating expenses - net of fuel surcharges", to supplement its interim financial statements. This non-GAAP financial measure does not have any standardized meaning prescribed under IFRS and therefore it may not be comparable to similar measures employed by other issuers. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
Management believes that it is important to isolate the effects of fuel surcharges, a volatile source of revenue and operating expenses, when analyzing operating results. Accordingly, the percentages in the Financial Highlights table were calculated using revenue from services alone as the base. In addition, operating expenses are stated after netting fuel surcharges against fuel expenses in the Financial

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Highlights table. Management believes that this facilitates a better comparison of operating expenses and profit margins between periods.
These non-GAAP financial measures do not have any standardized meaning prescribed under IFRS and therefore may not be comparable to similar measures employed by other issuers. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

F O RW A RD - L O O K I NG S T A T EM EN T S

Management's discussion and analysis contains certain forward-looking statements that involve a number of risks and uncertainties. Forward-looking statements relate to future events or future performance and include, but are not limited to, changes in government regulations regarding weights and dimensions of highway equipment, the age and condition of the transportation fleet and the growth of Contrans' business. Often, but not always, forward-looking statements can be identified by terminology such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential", "continue" or the negative of these terms or other comparable terminology. Such statements reflect the current views and estimates of management with respect to future events, as of the date such statements are made, and they involve known and unknown risks and uncertainties which may cause actual events or results to differ materially from those expressed or implied by forward- looking statements. In evaluating these statements, readers should specifically consider factors such as the risks outlined under "Risk Factors" in Contrans' Annual Information Form, which is available at www.sedar.com. Although Contrans has attempted to identify important factors that could cause actual events, actions or results to differ materially from those described in the forward-looking statements, there may be other factors that cause such events, actions or results to differ. Contrans is under no obligation (and expressly disclaims any such obligation) to update forward-looking statements if circumstances or management's views or estimates change. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements.

For further information:
Stan G. Dunford, Chairman and Chief Executive Officer, or Gregory W. Rumble, President and Chief Operating Officer Phone: 519-421-4600
E-mail: info@contrans.ca
Web site: www.contrans.ca

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