GRUPO SENDA AUTOTRANSPORTE, S.A. DE C.V. ANNOUNCES THIRD QUARTER AND NINE MONTH RESULTS AS OF SEPTEMBER 30, 2008

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1 GRUPO SENDA AUTOTRANSPORTE, S.A. DE C.V. ANNOUNCES THIRD QUARTER AND NINE MONTH RESULTS AS OF SEPTEMBER 30, 2008 Monterrey, Nuevo Leon, Mexico October 23, 2008 Grupo Senda Autotransporte, S.A. de C.V. ( the Company or Grupo Senda ) today announced its results for the third quarter (3Q) and for the nine months (9M) ended September 30, All peso amounts are presented in nominal pesos as of September 30, 2008, except for the figures for the third quarter of 2007 and figures as of September 2007, which are expressed in constant pesos as of December 31, 2007 according Mexican Financial Reporting Standards (NIFs). 3Q As of September % % Revenue 811, , % 2,324,892 2,186, % Operating Expenses 737, , % 2,069,556 1,862, % EBIT 74, , % 255, , % EBITDA 155, , % 506, , % EBITDA mgn 19.2% 26.6% 21.8% 26.2% Net income -154,809 48, % -112, , % Net income mgn -19.1% 6.2% -4.8% 4.9% CAPEX 7, ,469 8,288 (Figures in thousand pesos numbers as of December 31, 2007) FINANCIAL HIGHLIGHTS (For the nine months ended September 30, 2008 vs 2007): Revenue increased 6.3% to Ps. 2,324.9 million Operating expenses increased 11.1% to Ps. 2,069.6 million Operating income decreased 21.1% to Ps million EBITDA decreased 11.6% to Ps million Net income decreased 206.1% to Ps million FINANCIAL HIGHLIGHTS (3Q08 vs 3Q07): Revenues increased 3.5% to Ps million Operating expenses increased 12.1% to Ps million Operating income decreased 41.2% to Ps million EBITDA decreased 25.3% to Ps million Net income decreased 420.7% to Ps million Investor Relations Contacts: Jose Juan Gonzalez, Investor Relations Officer Grupo Senda Autotransporte, S.A. de C.V. Bernardo Reyes 3810 Nte. Col Popular, Monterrey, N.L. Tel: jose.gonzalez@gruposenda.com

2 RESULTS BY SEGMENT (For the nine months ended September 30, 2008 vs 2007): Passenger Transport Service revenue increased 5.1% to Ps. 1,878.7 million, mainly due to a 7.5% increase in operating volume and a 2.2% decrease in revenue per kilometer (RPKs). Operating income decreased 31.4% to Ps million due to the aforementioned decrease in revenue per kilometer and a 3.1% increase in cost per kilometer. Personnel Transport Service revenue increased 11.9% to Ps million, mainly due to a 7.9% increase in RPKs and a 3.7% increase in operating volume. Operating income increased 10.0% to Ps million. RESULTS BY SEGMENT (3Q08 vs 3Q07): Passenger Transport Service revenue increased 1.5% to Ps million, mainly due to an 11.4% in operating volume and an 8.9% decrease in RPKs. Operating income decreased 57.7% to Ps million due to the aforementioned decrease in RPKs and a 1.1% increase in cost per kilometer. Personnel Transport Service revenue increased 13.0% to Ps million, primarily due to a 10.5% increase in RPKs. Operating income increase 28.3% to Ps million. Comments from the Chief Executive Officer Grupo Senda continues to be on track to reach its 2008 goals. During this quarter, we have successfully implemented our bus ticket discount campaign that has allowed us to gain market share in traditional and new routes, as well as to begin operations in new markets. In the third quarter of 2008, net income decreased 420% compared to the same period of 2007, primarily because of non cash expenses related to foreign exchange losses on dollar denominated debt, as well as inflation effects no longer registered according to Mexican Financial Reporting Standards. However, approximately 70% of the variation is non-cash in nature, and does not affect the Company s liquidity. During the third quarter of 2008, the Company s cost per kilometer has begun to increase at a smaller rate due to the reduced security and image expenses, as well as economies of scale reached fue to additional volume. We expect to continue decreasing our cost per kilometer in the following quarters through cost reduction projects, resulting in improved EBITDA. As of September 30, 2008, the Company had a very strong liquidity position. Our ending balance of cash and equivalents amounted to million pesos. Additionally, we have available working capital credit lines. At the same time, 2009 debt amortizations are in line based on Senda s cash generation levels. Furthermore, Senda does not possess any US dollar amortization until It is worth mentioning that the Company does not have any speculative derivative exposure. Grupo Senda has felt no direct impact from the current economic situation. The passenger division, which represents approximately 80% of the Company s overall revenue, has historically been countercyclical to economic slowdowns due to the fact that during these periods people tend to seek cheaper means of transportation, as bus travel is the cheapest option in Mexico. On the other hand, the personnel transportation segment has begun to adjust the current economic environment and we will remain cautious regarding the future performance of this particular segment. Page 2 of 14

3 OPERATING RESULTS Total Revenue For the nine months ended September 30, 2008, total revenue increased 6.3%, from Ps. 2,186.5 million as of September 30, 2007 to Ps. 2,324.9 million as of September 30, 2008.This was primarily due to a 6.6% increase in our operating volume resulting from an expansion of services in high potential growth markets in central Mexico, as well as international routes, in addition to a 13.2% increase in total transported passengers. Total revenue increased 3.5% from Ps million in the third quarter of 2007 to Ps million in the third quarter of 2008 mainly due to a 9.3% increase in our operating volume resulting from the increase of services mentioned before, a 15.5% increase in transported passengers and a 5.3% decrease in our RPKs primarily related to the start of operations of new routes in central Mexico which normally begin with low passenger loads and relatively low RPKs. Nevertheless, during the third quarter of 2008, we were able to efficiently increase passenger loads in those new routes as a result of strategic ticket price discounts. During the third quarter 2008, 80.9% of total revenue derived from passenger transportation services, including 5.4% from the package delivery services business; the remaining 19.1% was derived from the personnel transportation services business. Operating Expenses For the nine months ended September 30, 2008, total operating expenses increased 11.1%, from Ps. 1,862.8 million as of September 30, 2007 to Ps. 2,069.6 million as of September 30, 2008, due to a 6.6% increase in our operating volume and a 4.3% increase in cost per kilometer. 21.8% of the increase in cost per kilometer is related to the security and bus image improvement campaign, 15.9% is derived from brand name positioning expenses, 44.4% results from inflation and 6.5% is attributable to above average fuel price increases. The rest of the variation is primarily due to the increase of operating leases in the personnel transportation segment, in addition to operating volume in the packaging business. Total operating expenses increased 12.1% from Ps million in the third quarter of 2007 to Ps million in the third quarter of 2008, due to a 9.3% increase in operating volume and a 2.6% increase in cost per kilometer, primarily driven by the aforementioned reasons. The company is making substantial progress in lowering controllable costs. During the third quarter of 2008, costs related to the Company s security and image campaign decreased approximately 60% as compared to the second quarter of Following are some of the key operating costs: Transportation costs include driver wages and compensation, maintenance of equipment, toll fees, driver travel expenses, insurance and bus operating lease costs, among others. For the nine months ended September 30, 2008, transportation costs increased 14.5%, from Ps million as of September 30, 2007 to Ps million as of September 30, 2008, mainly due to an increase in our operating volume which represents 30.6% of the variation, to the bus security and image improvement strategy which represents 25.9% of the variation and a general cost increase of 5.5% (inflation rate), which represents 37.7%. The rest of the variation Page 3 of 14

4 is mainly explained by an increase of operating leases and an increase of operating volume in the packaging business. For the third quarter of 2008, transportation costs increased 15.1%, from Ps million in the third quarter of 2007 to Ps million in the third quarter of 2008, mainly due to the an increase in our operating volume which represents 38.9%, the bus security and image improvement strategy only represents 13.5% of the variation and general cost increase which represents 34.7%. The rest of the variation related to an increase in operating leases in the personnel transportation segment. Fuel costs increased 14.9%, from Ps million as of September 30, 2007 to Ps million as of September 30, 2008, primarily due to the aforementioned 6.6% increase in operating volume and a net impact of 8.4% price increase due to the fact that Mexican diesel prices increased 12.8% and a marginal impact derived from US diesel price average increase by 48.2%. For the third quarter of 2008, fuel cost increased 17.0%, to Ps million, primarily due to a 9.3% increase in our operating volume, as well as the aforementioned net impact on the Company s fuel price. Selling, general and administrative expenses increased 7.3%, from Ps million as of September 30, 2007 to Ps million as of September 30, 2008 mainly due to commercial strategies consisting of additional advertising expenses and strengthening of the sales force, focused on brand positioning in the newly entered markets in the central region of Mexico. For the third quarter of 2008, selling general and administrative expenses increased 9.3% to Ps million due to the aforementioned reason. Depreciation and amortization expenses increased 0.9%, from Ps million as of September 30, 2007, to Ps million as of September 30, For the third quarter of 2008, depreciation and amortization expense decreased 0.8% to Ps million. Operating Income As a result of the above, operating income decreased 21.1%, from Ps million as of September 30, 2007 to Ps million as of September 30, 2008, and the operating margin also decreased from 14.8% as of September 30, 2007 to 11.0% as of September 30, On a quarterly basis, operating income decreased 41.2%, from Ps million for the third quarter of 2007 to Ps million in the third quarter of 2008, while the operating margin also decreased from 16.1% in the third quarter of 2007 to 9.2% in the third quarter of EBITDA Earnings before interest, taxes, depreciation and amortization (EBITDA) decreased 11.6%, from Ps as of September 30, 2007 to Ps million as of September 30, EBITDA margin also decreased from 26.2% as of September 30, 2007 to 21.8% as of September 30, Page 4 of 14

5 On a quarterly basis EBITDA decreased 25.3% from Ps million for the third quarter of 2007 to Ps million for the third quarter of EBITDA margin also decreased from 26.6% for the third quarter of 2007 to 19.2% for the third quarter of Integral Financing Cost Integral Financing Cost (IFC) increased 46.3%, from Ps million as of September 30, 2007 to Ps million as of September 30, 2008, due to a non cash effect related to the fact that monetary position gains on debt are no longer registered according to Mexican Financial Reporting Standards. Additionally, during the nine months ended September 30, 2008, the Mexican peso has depreciated by 0.8%, resulting in a non-cash effect related to foreign exchange loss on dollar-denominated debt of Ps million. The rest of the variation results from additional interest expenses related to additional debt and a slight increase in interest rates. On a quarterly basis, integral financing cost increased 262.1% from Ps million in the third quarter of 2007 to Ps million in the third quarter of 2008, mainly due to a non-cash effect related to foreign exchange loss of Ps million, as a result of a 6.4% Mexican peso depreciation during the third quarter. The foreign exchange loss is related to the Company s dollar denominated debt under the senior secured notes, which matures at Other Expenses, Net Other expenses, net, decreased 3.3% from Ps million as of September 30, 2007 to Ps million as of September 30, On a quarterly basis, other expenses, net, decreased 17.4% from Ps million in the third quarter of 2007 to Ps million in the third quarter of Income Tax Grupo Senda recorded an income tax expense of Ps million as of September 30, 2008, compared to a benefit of Ps million as of September 30, 2007, primarily due to the Business Flat Rate (IETU), which resulted in differed tax expense of Ps. 20 million compared to a differed tax benefit of Ps million. On a quarterly basis, the Company recorded an income tax expense of Ps million in the third quarter of 2008, compared to an income tax expense of Ps. 3.2 million in the third quarter of 2007, due to the aforementioned reason. Consolidated Net Income As a result of the above, consolidated net income decreased 206.1%, from Ps million as of September 30, 2007 to Ps. (112.7) million as of September 30, On a quarterly basis, consolidated net income decreased 420.7%, from Ps million in the third quarter of 2007 to Ps. (154.8) million in the third quarter of Page 5 of 14

6 RESULTS BY SEGMENT Passenger Transport Services The passenger transportation segment includes passenger transportation and package delivery services. Passenger transport is a ticketed, intercity, scheduled bus transportation service. The package delivery business is developed primarily through the use of excess storage capacity on passenger bus routes, terminals and sales and administrative office infrastructure. Revenues from passenger transportation services increased 5.1%, from Ps. 1,787.7 million as of September 30, 2007 to Ps. 1,878.7 million as of September 30, 2008, due to a 7.5% increase in our operating volume resulting from a rise in the number of services in high potential growth markets in the central region of Mexico and international routes. Transported passengers in the central region of Mexico grew 34.5% and 18.3% in the international routes. We have been expanding the number of services and experienced accelerated market share increases in high-value central Mexico routes such as Mexico Guadalajara, Mexico San Luis Potosí, Mexico Leon, Mexico Queretaro, among others. On a quarterly basis, revenues from the passenger transportation segment increased 1.5%, from Ps million for the third quarter of 2007 to Ps million for the third quarter of 2008, due to a 11.4% increase in operating volume related to the aforementioned increase in the number of services in high potential growth markets and a 8.9% decrease in RPKs as a result of the start of operations in the aforementioned routes which normally begin with relatively low passenger loads and RPKs. For this period, transported passengers increased 56.8% in the central region of Mexico and 15.4% in the international routes. Operating income from passenger transportation services decreased 31.4%, from Ps million as of September 30, 2007 to Ps million as of September 30, 2008, mainly due to the aforementioned cost increase which resulted from inflation, operating volume increases, the bus security and image improvement strategy and diesel price increases. On a quarterly basis, operating income from passenger transportation services decreased 57.7%, from Ps million for the third quarter of 2007 to Ps million for the third quarter of 2008 primarily due to the mentioned increases in costs and the decrease in RPKs related to current industry s dynamics. Page 6 of 14

7 Passenger Transport Services Operating Data As of September, % Total bus Km (Thousands) 181, , % Total vehicle fleet 1,297 1, % Km per bus (thousands) % Revenue per Km % Cost per Km % Revenue per vehicle (Thousands) 1,448 1, % 3Q Q 2007 % Total bus Km (Thousands) 65,467 58, % Total vehicle fleet 1,297 1, % Km per bus (thousands) % Revenue per Km % Cost per Km % Revenue per vehicle (Thousands) % Personnel Transportation Services Personnel transportation services consist of contracted intra-city services to transport personnel and students to industrial and educational facilities. Revenues from personnel transportation service increased 11.9%, from Ps million as of September 30, 2007 to Ps million as of September 30, 2008 due to a 3.7% increase in operating volume and a 7.9% increase in RPKs. This resulted mainly from an increase in required services from ongoing customers and enhanced asset utilization, particularly in the Saltillo, Reynosa and San Luis Potosí markets. On a quarterly basis, revenues from personnel transport services increased 13.0% from Ps million to Ps million due to a 2.2% increase in operating volume and 10.5% increase in RPKs due to the aforementioned reasons. Operating income from personnel transportation services increased 10.0%, from Ps million as of September 30, 2007 to Ps million as of September 30, 2008, due to the previously mentioned increases in operating volume and RPKs which were partially offset by cost and expense increases related to significant accumulated inflation, spare parts cost increases and higher fuel costs. On a quarterly basis, operating income from personnel transportation services increased 28.3%, from Ps million for the third quarter of 2007 to Ps million for the third quarter of 2008 due to the reasons explained above. Page 7 of 14

8 Personnel Transport Services Operating Data As of September, % Total bus Km (Thousands) 53,649 51, % Total vehicle fleet 1,203 1, % Km per bus (thousands) % Revenue per Km % Cost per Km % Revenue per vehicle (Thousands) % 3Q Q 2007 % Total bus Km (Thousands) 18,559 18, % Total vehicle fleet 1,203 1, % Km per bus (thousands) % Revenue per Km % Cost per Km % Revenue per vehicle (Thousands) % NON-OPERATING RESULTS Balance Sheet Highlights and Financial Ratios As of September % Cash & cash equivalents 149, , % Current assets 472, , % Total assets 4,498,672 4,606, % Debt 2,558,065 2,538, % Other liabilities 543, , % Equity 1,396,643 1,516, % EBITDA (LTM) 696, ,537 Interest expenses (LTM) 361, ,859 Debt / EBITDA 3.7x 3.5x Net debt / EBITDA 3.5x 3.3x EBITDA / Interest expenses 1.9x 2.3x Debt Profile As of September 30, 2008, debt reached Ps. 2,558.1 million, with an average maturity schedule of approximately 5.7 years. This aggregate debt amount includes working capital revolving credit facilities for Ps. 201 million. Page 8 of 14

9 $1,653 $50 $208 $231 $153 $ Other Credit Facilities ( current portion & long term ) 8yr High Yield Bond Accumulated 2008 CAPEX As of September 30, 2008, Grupo Senda allocated Ps million towards CAPEX, of which 97.0% was invested in buses. Of the total investment in buses, 94.3% was destined to the passenger transportation segment and the remaining 5.7% to the personnel transportation segment. Liquidity position The Company s liquidity position is very strong. As compared to June 2008, cash and equivalents have maintained at very similar levels, having an ending balance of Ps million as of September 30, Cash attached to working capital is marginal since more than 70% of the Company s sales are realized in cash. Debt amortization for next year amounts for approximately 200 million pesos, which is affordable according to the Company s cash generation levels and the Company does not have any dollar denominated debt amortization until At the same time, the Company maintains available working capital and capital expenditure credit lines. The Company does not have any speculative position in derivative instruments. The net value of hedging positions with derivatives as of September 2008, amounts for approximately 2.7 million dollars in the Company s favor. In the event of liquidity needs, the Company s fleet age allows for flexibility in the allocation of cash for capital expenditures related to bus replacement in the following years. # # # # About the Company Grupo Senda is a leading provider of bus transportation services in Mexico, mainly serving the northeastern and central regions of Mexico as well as the state of Texas in the United States. The Company offers scheduled bus passenger service to more than 250 main routes, serving more than 1,000 destinations; throughout 15 states in Mexico and 12 destinations in the United States, with a monthly average of 2,400 daily departures and a fleet of over 1,290 buses. It also offers contracted intra-city service to transport personnel and students to industrial and educational facilities with a fleet Page 9 of 14

10 of over 1,200 buses. The Company maximizes the use of its fleet by offering packaging delivery services through using excess storage capacity on its passenger bus routes, terminals and sales infrastructure and, at the same time, by offering charter services, in which people may contract buses for special occasions, trips and/or corporate events. Forward-Looking Statements This release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the United States Securities Exchange Act of 1934, as amended (the Exchange Act ). These forward-looking statements include, but are not limited to, statements about our future financial position and results of operations, our strategy, plans, objectives, goals and targets, future developments in the markets where we participate or are seeking to participate and other statements contained in this offering circular that are not historical facts. In some cases, you can identify forwardlooking statements by terminology such as anticipate, believe, continue, could, estimate, expect, forecast, intend, may, plan, potential, predict, should, or will or the negative of such terms or comparable terminology. Such forward-looking statements involve known and unkown risks, uncertainties and other factors, some of which are beyond our control, which may cause our actual results, performance or achievements expressed or implied by such forward-looking statements to differ materially from historical results or those anticipated. These forward-looking statements are based on numerous assumptions regarding our present and future business strategies and the environment in which we will operate in the future. These risks, some of which are discussed in Risk Factors, include economic and political conditions and government policies in Mexico or elsewhere, fuel prices, regulatory developments, customer demand, seasonality and competition. (FINANCIAL TABLES FOLLOW) Page 10 of 14

11 Grupo Senda Autotransporte, S.A. de C.V. and Susidiaries Consolidated Income Statement For the Nine-Month Periods Ended September 30, 2008 and 2007 (Thousands of Mexican pesos of purchasing power as of December 31, 2007) As of and for the nine months ended September 30, (in thousand of constant pesos as of December 31, 2007) Operating revenues: Passenger transport services 1,878, % 1,787, % 5.1% Personnel transport services 446, % 398, % 11.9% Total operating revenues 2,324, % 2,186, % 6.3% Operating expenses: Transportation costs 978, , % Fuel costs 381, , % Selling, general and administrative expenses 458, , % Depreciation and amortization 251, , % Total operating expenses 2,069, % 1,862, % 11.1% Operating result: Passenger transport services 167, , % Personnel transport services 88,132 80, % Total operating result 255, % 323, % -21.1% Other expenses, net -49,434-51, % Integral financing cost: Interest expense 259, , % Interest income -4,459-3, % Foreign exchange loss (gain), net 13,733 1, % Gain from monetary position 0-50, % 268, , % Equity in earnings (losses) of associated companies -9,550-1, % Income and asset tax expense (benefit) 40,163-18, % Consolidated net income -112, , % % Page 11 of 14

12 Grupo Senda Autotransporte, S.A. de C.V. and Susidiaries Consolidated Income Statement For the third quarter, 2008 and 2007 (Thousands of Mexican pesos of purchasing power as of December 31, 2007) Third quarter of, (in thousand of constant pesos as of December 31, 2007) Operating revenues: Passenger transport services 656, % 646, % 1.5% Personnel transport services 155, % 137, % 13.0% Total operating revenues 811, % 784, % 3.5% Operating expenses: Transportation costs 346, , % Fuel costs 141, , % Selling, general and administrative expenses 168, , % Depreciation and amortization 81,267 81, % Total operating expenses 737, % 657, % 12.1% Operating result: Passenger transport services 43, , % Personnel transport services 31,196 24, % Total operating result 74, % 126, % -41.2% Other expenses, net -17,243-20, % Integral financing cost: Interest expense 92,187 77, % Interest income ,928 Foreign exchange loss (gain), net 104, % Gain from monetary position 0-22, % 195,735 54, % Equity in earnings (losses) of associated companies -3, % Income and asset tax benefit 12,684 3, % Consolidated net income -154,809 48, % % Page 12 of 14

13 Grupo Senda Autotransporte, S.A. de C.V.and Subsidiaries Consolidated Statement of Changes in Financial Position As of September 30, 2008 and 2007 (Thousands of Mexican pesos numbers in purchasing power as of December 31, 2007) As of September 30, (Unaudited) Operating Activities: Consolidated net income -112, ,201 Items that did not requiere (generate) resources: Equity in earnings of associated companies 9,550 1,295 Depreciation and amortization 251, ,952 Labor obligations 3,984-4,851 Deferred income tax 20,000-27, , ,613 Changes in current assets and liabilities: Accounts receivable -21,975-91,579 Inventories -5,189-4,826 Accounts payable and other 21,440 19,319 Net resources generated from operating activities 166, ,527 Financing Activities: Proceeds from long-term debt 181, ,038 Short-term debt 40,000-42,993 Payments of long-term debt -174, ,986 Monetary effect on debt - -92,343 Net resources generated from financing activities 47,222-25,284 Investing Activities: Acquisition of transportation and other equipment -265, ,497 Other assets -12,256 1,443 Net resources used in investing activities -277, ,054 Cash and cash equivalents: Net increase (decrease) -64,311 58,188 Balance at the beginning of the period 213,939 98,076 Balance at the end of the period 149, ,265 Page 13 of 14

14 Grupo Senda Autotransporte, S.A. de C.V. and Subsidiaries Consolidated Balance Sheet As of September 30, 2008 and 2007 (Thousands of Mexican pesos numbers in purchasing power as of December 31, 2007) As of September 30, (Unaudited) Assets Current Assets: Cash and cash equivalents 149, ,265 Accounts receivable 285, ,854 Inventories 37,517 36,710 Current Assets 472, ,829 Land and buildings net 198, ,616 Transportation and other equipment net 1,941,085 1,957,475 Other assets 110, ,922 Investments in shares 298, ,735 Goodwill and intangible assets 1,477,009 1,477,009 Total 4,498,672 4,606,586 Liabilities and Stockholders Equity Current Liabilities: Bank loans 201, ,074 Current portion of long-term debt 206, ,743 Accounts payable 364, ,709 Current Liabilities 772, ,526 Long-term Liabilities: Long-term debt 2,150,102 2,209,908 Employee retirement obligations 79, ,255 Derivative financial instruments 6,621 6,738 Deferred tax 93,191 71,338 Long-term Liabilities 2,329,078 2,423,239 Total Liabilities 3,102,029 3,089,765 Stockholders Equity: Capital stock 90,873 90,873 Premium on issuance of shares 95,849 95,849 Retained earnings 1,535,191 1,683,108 Insufficiency in restated stockholders equity -378, ,933 Additional minimum pension liability -13,345-10,260 Initial cumulative effect of deferred income tax -84,756-84,761 Unrealized loss on derivative financial -4,884-4,885 Majority Stockholders Equity 1,240,372 1,389,991 Minority Stockholders Equity 156, ,830 Total Stockholders Equity 1,396,643 1,516,821 Total 4,498,672 4,606,586 Page 14 of 14