WAYZATA, Minnesota, (August 11, 2014) Dakota Plains Holdings, Inc. (“Dakota Plains” and “DAKP”), (NYSEMKT: DAKP) today announced financial results for the three months ended June 30, 2014.
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• | Second quarter transloading joint venture volumes were 3.9 million barrels of oil compared to 2.3 million barrels of oil for the same period in 2013. |
• | Second quarter marketing joint venture volumes were 2.2 million barrels of oil compared to 2.6 million barrels of oil for the same period in 2013. |
• | Second quarter trucking joint venture volumes were 1.6 million barrels of oil compared to 1.3 million barrels of oil for the same period in 2013. |
• | Operations at the UNIMIN Corporation frac sand storage and transloading facility commenced on June 12, 2014, with the Company and its joint venture partner entering into an agreement with Rail Link, Inc., to operate and maintain the facility. |
• | On June 18, 2014, Dakota Plains Holdings, Inc., Dakota Plains Marketing, LLC and Dakota Plains Transloading, LLC were removed as parties to the potential Canadian class-action pending in the Quebec Superior Court related to the Lac-Mégantic train derailment. |
• | Subsequent to the end of the second quarter Dakota Plains and its joint venture partner entered into an agreement with a local gathering pipeline company to bring additional third party crude oil volumes to the Pioneer Terminal. |
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• | Income from the Company’s indirect investment in the marketing joint venture was $(1.7) million for the second quarter compared to $0.9 million for the same period in 2013. |
• | Income from the Company’s indirect investment in the trucking joint venture was $0.3 million for the second quarter compared to $0.1 million for the same period in 2013. |
• | Net income from the UNIMIN frac sand start-up was $0.1 million for second quarter 2014. |
Craig M. McKenzie, Chairman and Chief Executive Officer of Dakota Plains, said: “The operational and financial performance of the Pioneer Terminal continues to meet our expectations. We are working with our joint venture partner to reach an agreement on the expansion of that operation, as well as address the ongoing issues related to the performance of our marketing joint venture.”
Second Quarter 2014 Financial Results
The Company reported a net loss attributable to stockholders of DAKP of $1.0 million for the second quarter compared to a net loss of $0.6 million for the second quarter of 2013. The net loss for the second quarter was driven by the loss from our indirect ownership interest in the marketing joint venture. This marketing loss was partially offset by the increased income from the transloading joint venture, which experienced increased throughput volumes and reduced operating costs.
Adjusted EBITDA attributable to stockholders of DAKP for the second quarter was $(0.2) million compared to $1.5 million for the second quarter of 2013. The year-over-year decrease was primarily driven by the losses from the marketing joint venture in 2014.
General and administrative expenses were flat year-over-year at $2.5 million for the three months ended June 30, 2014 and 2013. For the three months ended June 30, 2014, a decrease of $1.1 million in share-based compensation expense at Dakota Plains Holdings, Inc. was offset by increases of $0.4 million in legal and consulting fees related to the Lac-Mégantic incident, $0.2 million in other general and administrative expenses related to the growth of the Company and employee headcount, and $0.5 million related to the consolidation of the transloading joint venture G&A.
Revenue from the transloading joint venture was $7.3 million for the three months ended June 30, 2014, compared to $4.6 million for the same period in 2013. The increase in revenue was driven by a 73% increase in volume transloaded as the second quarter 2014 volume was 3.9 million barrels of crude oil, compared to 2.3 million barrels of crude oil transloaded for the same period in 2013.
Net income from the transloading joint venture was $3.9 million for the three months ended June 30, 2014 compared to $2.5 million for the same period in 2013. The increase in net income was driven by a combination of greater revenue and reduced operating costs that resulted from a renegotiated service contract. It should be noted that depreciation expense
related to the expansion of the Pioneer Terminal is approximately $1.0 million per quarter and has been reflected in the Company’s consolidated financials effective January 1, 2014.
Income from the Company’s indirect investment in the marketing joint venture was $(1.7) million for the three months ended June 30, 2014, compared to $0.9 million for the same period in 2013. The reduction is primarily due to competitive pressures that resulted in an average net income of $(0.76) per barrel for the three months ended June 30, 2014 compared to $0.35 per barrel for the same period in 2013.
Income from the Company’s indirect investment in the trucking joint venture was $0.3 million for the three months ended June 30, 2014, compared to $0.1 million for the same period in 2013. The trucking joint venture hauled 1.6 million barrels of crude oil during the second quarter of 2014, compared to 1.3 million barrels hauled for the same period in 2013 – a 20% increase.
Net income from DPTS Sand, LLC was $0.1 million for the three months ended June 30, 2014. The sand joint venture commenced operations on June 12, 2014.
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP measure. A reconciliation of this measure to its most directly comparable GAAP measure is included in the accompanying financial tables found later in this release. Management believes the use of this non-GAAP financial measure provides useful information to investors to gain an overall understanding of current financial performance. Specifically, management believes the non-GAAP results included herein provide useful information to both management and investors by excluding certain expenses and gains and losses on the extinguishment of debt that management believes are not indicative of Dakota Plains’ core operating results. In addition, this non-GAAP financial measure is used by management for budgeting and forecasting as well as subsequently measuring Dakota Plains’ performance, and management believes it is providing investors with a financial measure that most closely aligns to its internal measurement processes.
About Dakota Plains Holdings, Inc.
Dakota Plains Holdings, Inc. is an integrated midstream energy company, which competes through its 50/50 joint ventures to provide customers with crude oil off take services that include crude oil marketing, crude oil transloading, sand transloading and trucking of crude oil and related products. Direct and indirect assets include a proprietary trucking fleet, over 1,000 railroad tank cars, and the Pioneer Terminal transloading facility centrally located in Mountrail County, North Dakota, for Bakken and Three Forks related Energy & Production activity. For more information please visit the corporate website at:www.dakotaplains.com.
Cautionary Note Regarding Forward Looking Statements
This announcement contains forward-looking statements that reflect the current views of Dakota Plains, including, but not limited to, statements regarding our future growth and plans for our business and operations. We do not undertake to update our forward-looking statements. These statements involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of lack of diversification, dependency upon strategic relationships, dependency on a limited number of major customers, competition for the loading, marketing and transporting of crude oil and related products, difficulty in obtaining additional capital that will be needed to implement business plans, difficulties in attracting and retaining talented personnel, risks associated with building and operating a transloading facility, changes in commodity prices and the demand for crude oil and natural gas, competition from other energy sources, inability to obtain necessary facilities, difficulty in obtaining crude oil to transport, increases in our operating expenses, an economic downturn or change in government policy that negatively impacts demand for our services, penalties we may incur, costs imposed by environmental laws and regulations, inability to obtain or maintain necessary licenses, challenges to our properties, technological unavailability or obsolescence, and future acts of terrorism or war, as well as the threat of war and other factors described from time to time in the company’s reports filed with the U.S. Securities and Exchange Commission.
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For more information, please contact: | |
Company Contact | Investor and Media Contact |
Tim Brady, CFO | Dan Gagnier, Sard Verbinnen |
tbrady@dakotaplains.com | DGagnier@sardverb.com |
Phone: 952.473.9950 | Phone: 212.415.8972 |
www.dakotaplains.com | www.sardverb.com |
DAKOTA PLAINS HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2014 AND DECEMBER 31, 2013
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| | June 30,
2014 | | | December 31,
2013 | |
ASSETS | | | | | | | | |
CURRENT ASSETS | | | | | | | | |
Cash and Cash Equivalents | | $ | 5,045,328 | | | $ | 13,011,608 | |
Trade Receivables | | | 1,322,269 | | | | - | |
Income Tax Receivable | | | 1,120,057 | | | | 1,120,057 | |
Other Current Assets | | | 539,455 | | | | 542,523 | |
Due from Related Party | | | 1,325,817 | | | | 2,840,292 | |
Other Receivables | | | 185,671 | | | | 68,896 | |
Deferred Tax Asset | | | 1,682,000 | | | | 3,728,000 | |
Total Current Assets | | | 11,220,597 | | | | 21,311,376 | |
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PROPERTY AND EQUIPMENT | | | | | | | | |
Land | | | 3,166,849 | | | | 3,166,849 | |
Site Development | | | 5,829,640 | | | | 5,498,501 | |
Terminal | | | 20,659,474 | | | | 19,813,452 | |
Machinery | | | 17,805,275 | | | | 12,702,655 | |
Construction in Progress | | | 96,761 | | | | 7,551,187 | |
Other Property and Equipment | | | 11,602,643 | | | | 6,747,349 | |
Total Property and Equipment | | | 59,160,642 | | | | 55,479,993 | |
Less - Accumulated Depreciation | | | 3,931,745 | | | | 1,810,259 | |
Total Property and Equipment, Net | | | 55,228,897 | | | | 53,669,734 | |
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PREFERRED DIVIDEND RECEIVABLE | | | 499,999 | | | | 252,057 | |
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INVESTMENT IN DPTS MARKETING LLC | | | 9,627,680 | | | | 11,458,836 | |
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INVESTMENT IN DAKOTA PLAINS SERVICES, LLC | | | 495,079 | | | | 70,399 | |
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FINANCE COSTS, NET | | | 86,694 | | | | 123,280 | |
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DEFERRED TAX ASSET | | | 3,369,000 | | | | 153,000 | |
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OTHER ASSETS | | | 14,100 | | | | 15,902 | |
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Total Assets | | $ | 80,542,046 | | | $ | 87,054,584 | |
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LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | |
CURRENT LIABILITIES | | | | | | | | |
Accounts Payable | | $ | 3,607,784 | | | $ | 8,286,489 | |
Accrued Expenses | | | 229,966 | | | | 1,547,645 | |
Accounts Payable – Related Parties | | | - | | | | 722 | |
Total Current Liabilities | | | 3,837,750 | | | | 9,834,856 | |
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LONG-TERM LIABILITIES | | | | | | | | |
Promissory Notes, Net of Debt Discount | | | 7,251,145 | | | | 7,076,332 | |
Promissory Note, Pioneer Terminal | | | 7,212,297 | | | | 7,500,000 | |
Other Non-Current Liabilities | | | 13,417 | | | | 16,917 | |
Total Long-Term Liabilities | | | 14,476,859 | | | | 14,593,249 | |
Total Liabilities | | | 18,314,609 | | | | 24,428,105 | |
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STOCKHOLDERS’ EQUITY | | | | | | | | |
Preferred Stock - Par Value $.001; 10,000,000 Shares Authorized; None Issued or Outstanding | | | - | | | | - | |
Common Stock - Par Value $.001; 100,000,000 Shares Authorized; 54,900,787 and 54,206,380 Issued and Outstanding, Respectively | | | 54,900 | | | | 54,206 | |
Additional Paid-In Capital | | | 44,843,952 | | | | 43,836,032 | |
Accumulated Deficit | | | (9,210,137 | ) | | | (6,836,825 | ) |
Total Equity Dakota Plains Holdings, Inc. | | | 35,688,715 | | | | 37,053,413 | |
Non-Controlling Interest in Subsidiaries | | | 26,538,722 | | | | 25,573,066 | |
Total Stockholders’ Equity | | | 62,227,437 | | | | 62,626,479 | |
| | | | | | | | |
Total Liabilities and Stockholders’ Equity | | $ | 80,542,046 | | | $ | 87,054,584 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
DAKOTA PLAINS HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013
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| | Three Months Ended
June 30, | | | Six Months Ended
June 30, | |
| | 2014 | | | 2013 | | | 2014 | | | 2013 | |
REVENUES | | | | | | | | | | | | | | | | |
Transloading Revenue | | $ | 7,298,561 | | | $ | - | | | $ | 12,754,019 | | | $ | - | |
Sand Revenue | | | 176,187 | | | | - | | | | 176,187 | | | | - | |
Rental Income | | | 30,000 | | | | 99,570 | | | | 60,000 | | | | 194,769 | |
Total Revenues | | | 7,504,748 | | | | 99,570 | | | | 12,990,206 | | | | 194,769 | |
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COST OF REVENUE | | | 1,757,462 | | | | - | | | | 3,856,161 | | | | - | |
| | | | | | | | | | | | | | | | |
Gross Profit | | | 5,747,286 | | | | 99,570 | | | | 9,134,045 | | | | 194,769 | |
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OPERATING EXPENSES | | | | | | | | | | | | | | | | |
General and Administrative Expenses | | | 2,455,257 | | | | 2,545,452 | | | | 5,473,035 | | | | 3,989,843 | |
Depreciation and Amortization | | | 1,086,271 | | | | 43,874 | | | | 2,121,486 | | | | 84,858 | |
Total Operating Expenses | | | 3,541,528 | | | | 2,589,326 | | | | 7,594,521 | | | | 4,074,701 | |
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INCOME (LOSS) FROM OPERATIONS | | | 2,205,758 | | | | (2,489,756 | ) | | | 1,539,524 | | | | (3,879,932 | ) |
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OTHER INCOME (EXPENSE) | | | | | | | | | | | | | | | | |
Income from Investment in Dakota Petroleum Transport Solutions, LLC | | | - | | | | 1,364,661 | | | | - | | | | 2,778,921 | |
Income (Loss) from Investment in DPTS Marketing LLC | | | (1,669,846 | ) | | | 906,327 | | | | (1,583,214 | ) | | | 2,672,890 | |
Income from Investment in Dakota Plains Services, LLC | | | 303,226 | | | | 136,374 | | | | 424,680 | | | | 198,429 | |
Interest Expense (Net of Interest Income) | | | (504,244 | ) | | | (900,408 | ) | | | (1,006,380 | ) | | | (1,791,213 | ) |
Total Other Income (Expense) , net | | | (1,870,864 | ) | | | 1,506,954 | | | | (2,164,914 | ) | | | 3,859,027 | |
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INCOME (LOSS) BEFORE TAXES | | | 334,894 | | | | (982,802 | ) | | | (625,390 | ) | | | (20,905 | ) |
| | | | | | | | | | | | | | | | |
INCOME TAX BENEFIT | | | (647,000 | ) | | | (389,000 | ) | | | (1,161,885 | ) | | | (16,000 | ) |
| | | | | | | | | | | | | | | | |
NET INCOME (LOSS) | | | 981,894 | | | | (593,802 | ) | | | 536,495 | | | | (4,905 | ) |
| | | | | | | | | | | | | | | | |
NET INCOME ATTRIBUTABLE TO NON- CONTROLLING INTERESTS | | | 2,018,943 | | | | - | | | | 2,909,807 | | | | - | |
| | | | | | | | | | | | | | | | |
NET LOSS ATTRIBUTABLE TO SHAREHOLDERS OF DAKOTA PLAINS HOLDINGS, INC. | | $ | (1,037,049 | ) | | $ | (593,802 | ) | | $ | (2,373,312 | ) | | $ | (4,905 | ) |
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Net Loss Per Common Share – Basic and Diluted | | $ | (0.02 | ) | | $ | (0.01 | ) | | $ | (0.04 | ) | | $ | (0.00 | ) |
| | | | | | | | | | | | | | | | |
Weighted Average Shares Outstanding – Basic and Diluted | | | 53,781,435 | | | | 41,854,205 | | | | 53,690,564 | | | | 41,637,609 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
DAKOTA PLAINS HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2014 AND 2013
| | | | | | | | |
| | Six Months Ended
June 30, | |
| | 2014 | | | 2013 | |
CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | | |
Net Income (Loss) | | $ | 536,495 | | | $ | (4,905 | ) |
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided By (Used In) Operating Activities | | | | | | | | |
Depreciation and Amortization | | | 2,121,486 | | | | 84,858 | |
Amortization of Debt Discount | | | 174,813 | | | | 174,816 | |
Amortization of Finance Costs | | | 36,586 | | | | 33,325 | |
Deferred Income Taxes | | | (1,170,000 | ) | | | 635,000 | |
Share-Based Consulting Fees | | | - | | | | 224,992 | |
Decrease in Deferred Rental Income | | | - | | | | (19,052 | ) |
Income from Investment in Dakota Petroleum Transport Solutions, LLC | | | - | | | | (2,778,921 | ) |
Loss (Income) from Investment in DPTS Marketing LLC | | | 1,583,214 | | | | (2,672,890 | ) |
Income from Investment in Dakota Plains Services, LLC | | | (424,680 | ) | | | (198,429 | ) |
Non-Cash Rental Income | | | - | | | | (7,747 | ) |
Non-Cash Rental Expense | | | 9,790 | | | | - | |
Amortization of Deferred Rent | | | (3,500 | ) | | | (500 | ) |
Share-Based Compensation | | | 1,504,293 | | | | 1,859,267 | |
Changes in Working Capital and Other Items: | | | | | | | | |
Increase in Trade Receivables | | | (1,321,269 | ) | | | (145,766 | ) |
Increase in Other Receivables | | | (116,775 | ) | | | - | |
Decrease (Increase) in Other Current Assets | | | 153,068 | | | | (152,289 | ) |
Decrease (Increase) in Due from Related Party | | | 1,514,475 | | | | (77,897 | ) |
Increase in Accounts Payable | | | 122,509 | | | | 52,561 | |
Decrease in Income Taxes Payable | | | - | | | | (724,705 | ) |
Decrease in Accrued Expenses | | | (1,317,679 | ) | | | (127,773 | ) |
Decrease in Deferred Rental Income | | | - | | | | (8,106 | ) |
Decrease in Accounts Payable – Related Party | | | (722 | ) | | | - | |
Decrease (Increase) in Other Assets | | | 1,802 | | | | (12,500 | ) |
Net Cash Provided By (Used In) Operating Activities | | | 3,403,906 | | | | (3,866,661 | ) |
| | | | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | |
Purchases of Property and Equipment | | | (8,481,863 | ) | | | (94,173 | ) |
Cash Received from DPTS Marketing LLC | | | - | | | | 2,910,000 | |
Cash Received from Dakota Plains Services, LLC | | | - | | | | 59,906 | |
Cash Received from Dakota Petroleum Transport Solutions, LLC | | | - | | | | 95,642 | |
Net Cash Provided By (Used In) Investing Activities | | | (8,481,863 | ) | | | 2,971,375 | |
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CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | |
Principal Payments on Promissory Note, Pioneer Terminal | | | (287,703 | ) | | | - | |
Cash Distributions Paid to Non-Controlling Interests | | | (1,954,941 | ) | | | - | |
Finance Costs Paid | | | - | | | | (9,783 | ) |
Common Shares Surrendered | | | (645,679 | ) | | | (568,058 | ) |
Net Cash Used In Financing Activities | | | (2,888,323 | ) | | | (577,841 | ) |
| | | | | | | | |
NET DECREASE IN CASH AND CASH EQUIVALENTS | | | (7,966,280 | ) | | | (1,473,127 | ) |
| | | | | | | | |
CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD | | | 13,011,608 | | | | 2,340,083 | |
| | | | | | | | |
CASH AND CASH EQUIVALENTS – END OF PERIOD | | $ | 5,045,328 | | | $ | 866,956 | |
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Supplemental Disclosure of Cash Flow Information | | | | | | | | |
Cash Paid During the Period for Interest | | $ | 866,041 | | | $ | 1,583,197 | |
Cash Paid During the Period for Income Taxes | | $ | 8,115 | | | $ | 73,705 | |
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Non-Cash Financing and Investing Activities: | | | | | | | | |
Purchase of Property and Equipment Paid Subsequent to Period End | | $ | 1,382,639 | | | $ | 49,467 | |
Change in Preferred Dividend Receivable | | $ | 247,942 | | | $ | 246,576 | |
Fair Value of Warrants Issued for Consulting Fees | | $ | - | | | $ | 208,663 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
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NON-GAAP FINANCIAL MEASURES |
RECONCILIATION OF ADJUSTED EBITDA |
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| | Three Months Ended
June 30, | | | Six Months Ended
June 30, | |
| | 2014 | | | 2013 | | | 2014 | | | 2013 | |
Net Income (Loss) | | $ | 981,894 | | | $ | (593,802 | ) | | $ | 536,495 | | | $ | (4,905 | ) |
Add Back: | | | | | | | | | | | | | | | | |
Income Tax Benefit | | | (647,000 | ) | | | (389,000 | ) | | | (1,161,885 | ) | | | (16,000 | ) |
Depreciation and Amortization | | | 1,086,271 | | | | 43,874 | | | | 2,121,486 | | | | 84,858 | |
Share Based Compensation - Employees and Directors | | | 375,361 | | | | 1,438,377 | | | | 1,504,293 | | | | 1,859,267 | |
Share Based Compensation - Consultants | | | - | | | | 94,223 | | | | - | | | | 224,992 | |
Interest Expense, net | | | 504,244 | | | | 900,408 | | | | 1,006,380 | | | | 1,791,213 | |
Adjusted EBITDA | | $ | 2,300,770 | | | $ | 1,494,080 | | | $ | 4,006,769 | | | $ | 3,939,425 | |
| | | | | | | | | | | | | | | | |
Adjusted EBITDA Attributable to Non-Controlling Interests | | | 2,537,723 | | | | - | | | | 3,922,140 | | | | - | |
| | | | | | | | | | | | | | | | |
Adjusted EBITDA Attributable to Shareholders of Dakota Plains Holdings, Inc. | | $ | (236,953 | ) | | $ | 1,494,080 | | | $ | 84,629 | | | $ | 3,939,425 | |
