Rand Logistics Inc. (Nasdaq: RLOG; RLOGW; RLOGU) (�Rand�) today
announced operational and financial results for the fiscal third
quarter ended December 31, 2007, and provided an update on recent
business developments and their expected contribution to future
results. Business Highlights Rand recently exercised its option and
purchased three vessels it previously operated under a time charter
from Wisconsin and Michigan Steamship (�WMS�) for approximately $20
million in cash including transaction expenses. This acquisition
represents a significant opportunity for future profit growth
through the elimination of duplicate overhead and the full
integration of the vessels into Rand�s fleet, resulting in more
cost efficient operations. Going forward, the results of the three
vessels will be consolidated into Rand�s financial statements,
eliminating the Variable Interest Entity line item. Rand has
announced that it has begun an approximately $13 million project to
repower the Saginaw, one of its Canadian-flagged vessels, with a
new highly automated emissions-compliant power plant. The
repowering is expected to improve operating margins due to an
increase in speed, and a reduction in fuel consumption, labor,
maintenance and other operating costs. Management estimates that
the investment will generate an annual mid-teens return on
investment and will be completed in April 2008. The Company
recently announced that it has amended its credit facility with GE
Capital, increasing its borrowing capacity to approximately $100
million. The additional capital will be used to finance the WMS
acquisition, the Saginaw repowering project and will provide
additional liquidity for future capital investments. Rand has
decided to permanently retire the Calumet, the oldest and smallest
vessel in its fleet. The capital investment required to enable the
vessel to generate a satisfactory rate of return over the next five
years was not justifiable. In addition, one of the three vessels
purchased from WMS has been transferred to Canadian registry. The
removal of the Calumet and one of the WMS vessels from the U.S.
market reduces 3.0 million tons of capacity. The retirement of the
Calumet will not have a material impact on Rand�s cash flow. During
the nine months ended December 31, 2007, the Company incurred $1.2
million in one-time G&A expenses to improve its management
infrastructure, upgrade business software and IT, and further
improve internal controls. With this enhanced infrastructure in
place, the Company now has the capacity to expand without
substantially increasing overhead costs. Management believes that
it has now substantially completed the necessary infrastructure
investments. Rand Chairman and Chief Executive Officer Laurence S.
Levy commented, �The successful implementation of several strategic
initiatives is the result of the continued execution of our
business plan and the hard work of all our employees. We are
pleased to be able to demonstrate the strength of our business and
are excited about the growth opportunities that lie ahead.� Third
Quarter Fiscal 2008 Financial Results In the fiscal third quarter
ended December 31, 2007, revenue increased 38% to $35.9 million,
compared to $26.1 million in the prior year period, primarily due
to increased freight rates, better operating efficiencies and the
acquisition of the two Voyageur vessels. The increase in revenues
was partially offset by a decrease in revenues from the three WMS
vessels due to difficulties in assembling qualified crews to
operate the vessels subsequent to the end of the previously
announced work stoppage. These three vessels contributed $6.3
million of revenue during the period, compared to $7.5 million in
the prior year period. Excluding the VIE, earnings before interest,
taxes, depreciation and amortization (�EBITDA�) for the fiscal
third quarter ended December 31, 2007, was $1.9 million, compared
to $2.7 million in the prior year quarter. The decline in EBITDA
was primarily due to: A loss of $1.1 million from the three vessels
operated under the time charter with WMS for the three months ended
December 31, 2007, due to the previously announced work stoppage,
versus a profit of $1.2 million for the three months ended December
31, 2006; and, A $0.3 million charge to EBITDA associated with
one-time expenses related to improving management infrastructure,
upgrading business software and IT, and further improving internal
controls. Year To Date Fiscal 2008 Financial Results For the nine
months ended December 31, 2007, total revenues were $90.0 million,
an increase of approximately 19% compared to $75.7 million for the
first nine months of fiscal 2007. Excluding the VIE, EBITDA for the
first nine months of fiscal 2008 was $7.8 million compared to $12.4
million in the prior year. Fiscal 2008 year-to-date EBITDA was
impacted by: A loss of $3.4 million from the three vessels operated
under the time charter with WMS for the nine months ended December
31, 2007, versus a profit of $2.6 million for the nine months ended
December 31, 2006; and, A $1.2 million charge to EBITDA for the
nine months ended December 31, 2007, associated with one-time
expenses related to improving management infrastructure, upgrading
business software and IT, and further improving internal controls.
Scott Bravener, President of Lower Lakes stated, �Despite the
effect of the WMS work stoppage, we continued to see significant
margin improvement at the vessel operating level due to freight
rate increases, ongoing investments in our infrastructure and
vessel upgrades. For example, capital investments together with an
increased focus on training and procedures for our U.S.-flagged
vessels in early 2007 contributed to a 77% increase in operating
margin for the nine months ended December 31, 2007, over the prior
year period. �In addition, our significant investments in IT,
software and key administrative staff have set the foundation for
additional efficiency going forward,� Bravener continued. �Public
company G&A expense declined by 30% in the third quarter due to
further efficiencies at the corporate operating level. Importantly,
we expect our G&A expenses will not grow at the same rate as
our business, further boosting our future operating margins.�
Outlook Laurence Levy concluded, �We are very positive about the
outlook for the Company in the near and long term. The underlying
economics of the business remain strong. We operate in an industry
with high barriers to entry and where freight demand significantly
exceeds available capacity. In addition, our diversified cargo base
and strong network of blue-chip customers uniquely positions Rand
to weather any near-term macro-economic challenges. Lastly, our low
cost operating structure and long-term contractual revenue provide
strong cash flow visibility and a clear path to profitability.
Concurrently, we continue to explore attractive, financially
prudent acquisition opportunities to complement our organic growth
initiatives.� Rand Logistics, Inc. Summary Statement of Operations
(unaudited) � � � � � � Three months ended Three months ended Nine
months ended Nine months ended � � 31-Dec-07 � 31-Dec-06 31-Dec-07
� 31-Dec-06 Revenue - Company operated vessels 31,840 24,767 81,327
70,726 Revenue - Outside voyage charter revenue � 4,077 � 1,337
8,697 � 5,011 35,917 26,104 90,024 75,737 Expenses Outside voyage
charter fees 4,034 1,310 8,605 4,935 Vessel operating expenses
26,281 19,819 63,381 52,304 Non operational repairs and maintenance
� 7 � 40 101 � 97 � � 30,322 � 21,169 72,087 � 57,336 Income before
general and administrative, depreciation, amortization of drydock
costs and intangibles, other income and expenses and income taxes �
5,595 � 4,935 17,937 � 18,401 � General and administrative 2,648
1,955 7,391 4,914 Depreciation and amortization of drydock costs
and intangibles 2,744 1,840 7,535 5,079 Write-off of retired vessel
to salvage value 1,687 - 1,687 - Loss (gain) on foreign exchange �
11 � 88 (208) � 178 � � 7,090 � 3,883 16,405 � 10,171 Income before
interest, other income and expenses and income taxes � (1,495) �
1,052 1,532 � 8,230 � Net income � (2,178) � 232 (4,015) � 2,900
Net income (loss) per share � basic (0.18) 0.03 (0.36) 0.42 Net
income (loss) per share � diluted (0.18) 0.03 (0.36) 0.35
Conference Call Management will host a conference call to discuss
the results at 8:30 a.m. ET on Thursday, February 14, 2008.
Interested parties may participate in the conference call by
dialing 800-257-6566 (303-205-0033 for international callers). When
prompted, ask for the "Rand Logistics Third Quarter Fiscal 2008
Earnings Conference Call." A phone replay will be available from
10:30 a.m. ET on Thursday, February 14, 2008, until midnight ET on
Friday, February 22, 2008. Dial (800) 405-2236 (305-590-3000 for
international callers) and enter the code 11108709# to access the
phone replay. Additionally, the conference call will be webcast
simultaneously on the Thomson Streetevents website at
www.streetevents.com. Reconciliation of Non-GAAP Measure to GAAP
EBITDA represents earnings before interest, income tax expense,
depreciation and amortization, loss on asset disposal, and loss
(gain) on foreign exchange. EBITDA is not a measure of performance
or liquidity calculated in accordance with generally accepted
accounting principles (�GAAP�), is unaudited and should not be
considered an alternative to, or more meaningful than, net income
or income from operations as an indicator of our operating
performance, or cash flows from operating activities, as measures
of liquidity. EBITDA has been presented as a supplemental
disclosure because it is a widely used measure of performance and
basis for valuation. A reconciliation of GAAP net income to EBITDA
is included in the financial tables accompanying this release.
About Rand Logistics Rand Logistics, Inc. is a leading provider of
bulk freight shipping services throughout the Great Lakes region.
Through its subsidiaries, the Company operates a fleet of ten
self-unloading bulk carriers, including nine River Class vessels
and one River Class integrated tug/barge unit, and three
conventional bulk carriers, of which one is operated under a
contract of affreightment. The Company is the only carrier able to
offer significant domestic port-to-port services in both Canada and
the U.S. on the Great Lakes. The Company�s vessels operate under
the U.S. Jones Act � which dictates that only ships that are built,
crewed and owned by U.S. citizens can operate between U.S. ports �
and the Canada Marine Act � which requires Canadian commissioned
ships to operate between Canadian ports. Forward-Looking Statements
This press release may contain forward-looking statements (within
the meaning of the Private Securities Litigation Reform Act of
1995) concerning the Company and its operating subsidiaries.
Forward-looking statements are statements that are not historical
facts, but instead statements based upon the current beliefs and
expectations of management of the Company. Such forward-looking
statements are subject to risks and uncertainties, which could
cause actual results to differ from the results included in such
forward-looking statements. Rand Logistics, Inc. Consolidated
Statements of Operations (U.S. Dollars in Thousands except Earnings
Per Share Figures) � � Three months ended December 31, 2007 � Three
months ended December 31, 2006 � Nine months ended December 31,
2007 � Nine months ended December 31, 2006 � � (unaudited) �
(unaudited) � (unaudited) � (unaudited) REVENUE � 35,917 � � �
26,104 � � 90,024 � � � 75,737 � � EXPENSES Outside voyage charter
fees 4,034 1,310 8,605 4,935 Vessel operating expenses 26,281
19,819 63,381 52,304 Repairs and maintenance 7 40 101 97 General
and administrative 2,648 1,955 7,391 4,914 Depreciation 1,719 1,408
4,882 3,737 Amortization of drydock costs 376 83 1,149 251
Amortization of intangibles 633 295 1,392 1,001 Amortization of
chartering agreement costs 16 54 112 90 Write-off of retired vessel
to salvage value 1,687 - 1,687 - (Gain) loss on foreign exchange �
11 � � � 88 � � (208 ) � � 178 � � � 37,412 � � � 25,052 � � 88,492
� � � 67,507 � INCOME BEFORE OTHER INCOME AND EXPENSES AND INCOME
TAXES � � � � 1,052 � � 1,532 � � � 8,230 � � OTHER INCOME AND
EXPENSES Interest expense 1,369 1,166 3,486 2,875 Interest income
(53 ) (135 ) (195 ) (223 ) Loss on interest rate swap contract � 35
� � � - � � 43 � � � - � � � 1,351 � � � 1,031 � � 3,334 � � �
2,652 � (2,846 ) 21 (1,802 ) 5,578 INCOME BEFORE INCOME TAXES � � �
� � � � PROVISION (RECOVERY) FOR INCOME TAXES Current 76 (68 ) 43
(57 ) Deferred � (833 ) � � (245 ) � (462 ) � � 1,960 � NET INCOME
BEFORE MINORITY INTEREST (2,089 ) 334 (1,383 ) 3,675 MINORITY
INTEREST � (228 ) � � (443 ) � (259 ) � � (360 ) NET INCOME �
(1,861 ) � � 777 � � (1,124 ) � � 4,035 � PREFERRED STOCK DIVIDENDS
317 295 909 885 COMMON STOCK DIVIDEND OF VIE � - � � � 250 � � - �
� � 250 � STOCK WARRANT INDUCEMENT DISCOUNT � - - � � � - � � 1,982
� � � - � NET (LOSS) INCOME APPLICABLE TO COMMON STOCKHOLDERS �
(2,178 ) � � 232 � � (4,015 ) � � 2,900 � � Net (loss) earnings per
share basic ($0.18 ) $ 0.03 ($0.36 ) $ 0.42 Net (loss) earnings per
share diluted ($0.18 ) $ 0.03 ($0.36 ) $ 0.35 Weighted average
shares basic 12,092,142 8,003,754 11,109,942 6,937,185 Weighted
average shares diluted 12,092,142 12,466,881 11,109,942 10,830,400
Rand Logistics, Inc. Selected Financial Information (unaudited)
Reconciliation of Income before Interest, Other Income and Expenses
and Income Taxes to EBITDA � � � � Rand Logistics three months
ended � Variable Interest Entity three months ended � Consolidated
three months ended � Rand Logistics three months ended � Variable
Interest Entity three months ended � Consolidated three months
ended 31-Dec-07 � 31-Dec-07 � 31-Dec-07 � 31-Dec-06 � 31-Dec-06 �
31-Dec-06 � Income before interest, other income and expenses and
income taxes (2,055) 560 (1,495) 962 90 1,052 � Loss (gain) on
foreign exchange 11 0 11 88 0 88 Write-off of retired vessel to
salvage value 1687 0 1,687 0 0 0 Depreciation and amortization of
dry-dock costs and intangibles � 2,235 � 509 � 2,744 � 1,601 � 239
� 1,840 � EBITDA 1,878 � 1,069 � 2,947 � 2,651 � 329 � 2,980 Rand
Logistics nine months ended Variable Interest Entity nine months
ended Consolidated nine months ended Rand Logistics nine months
ended Variable Interest Entity nine months ended Consolidated nine
months ended 31-Dec-07 31-Dec-07 31-Dec-07 31-Dec-06 31-Dec-06
31-Dec-06 � Income before interest, other income and expenses and
income taxes (293 ) 1,825 1,532 7,564 666 8,230 � Loss (gain) on
foreign exchange (208 ) 0 (208 ) 178 0 178 Write-off of retired
vessel to salvage value 1687 0 1,687 0 0 0 Depreciation and
amortization of dry-dock costs and intangibles 6,590 � 945 7,535 �
4,680 398 5,078 � EBITDA 7,776 � 2,770 10,546 � 12,422 1,064 13,486
Rand Logistics, Inc. Consolidated Balance Sheets U.S. Dollars in
Thousands � � December 31, � March 31, 2007 2007 ASSETS (unaudited)
� � (audited) CURRENT Cash and cash equivalents $ 3,150 $ 7,207
Blocked Account 2,700 - Accounts receivable 16,943 2,702 Prepaid
expenses and other current assets 3,848 3,122 Income taxes
receivable 263 263 Deferred income taxes � � 1,238 � � 1,219 Total
current assets 28,142 14,513 � BLOCKED ACCOUNT - 2,700 PROPERTY AND
EQUIPMENT, NET 83,622 66,859 DEFERRED INCOME TAXES 14,408 13,574
DEFERRED DRYDOCK COSTS, NET 7,412 5,895 INTANGIBLE ASSETS, NET
16,468 13,334 GOODWILL � � 11,711 � � 6,363 $ 161,763 $ 123,238
Total assets � � � � � � LIABILITIES CURRENT Bank indebtedness $
2,823 $ 5,097 Accounts payable 12,342 11,445 Accrued liabilities
6,178 3,237 Acquired Management Bonus Program 3,000 - Interest rate
swap contract 187 135 Income taxes payable 338 385 Deferred income
taxes 969 589 Current portion of long-term debt � � 17,994 � �
4,398 Total current liabilities 43,831 25,286 LONG-TERM DEBT 38,823
34,864 ACQUIRED MANAGEMENT BONUS PROGRAM - 3,000 DEFERRED INCOME
TAXES � � 14,397 � � 13,624 97,051 76,774 Total liabilities � � � �
� � COMMITMENTS AND CONTINGENCIES - STOCKHOLDERS' EQUITY Preferred
stock, $.0001 par value, 14,900 14,900 Authorized 1,000,000 shares,
Issued and outstanding 300,000 shares Common stock, $.0001 par
value 1 1 Authorized 50,000,000 shares, Issued and outstanding
12,092,142 shares Additional paid-in capital 58,232 38,407
Accumulated deficit (9,962) (5,947) Accumulated other comprehensive
income (loss) 1,625 (1,073) Minority interest of variable interest
entity � � (84) � � 176 64,712 46,464 Total stockholders� equity �
� � � � � Total liabilities and stockholders� equity � $ 161,763 �
$ 123,238
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