Rand Logistics Inc.
FOR IMMEDIATE RELEASE
RAND LOGISTICS ANNOUNCES STRONG FIRST QUARTER RESULTS
Company to Conduct Conference Call Thursday, August 17th at 10:30am ET
Certain Members of Senior Management Convert Compensation to Warrants
New York, NY - August 14, 2006 - Rand Logistics Inc. (OTC:RAQC.OB; RAQCW.OB;
RAQCU.OB) today announced financial results for its first quarter ended June 30,
2006. The first quarter results represent the first complete quarter following
Rand's March 3, 2006 acquisition of Lower Lakes Towing Ltd. and Grand River
Navigation Company, Inc. The GAAP results for the quarter ended June 30, 2005
reflect Rand prior to the acquisition; since the Company did not have any
operations during that period, the results do not provide a meaningful basis for
comparison of financial results.
First Quarter Financial and Operational Highlights - versus pro forma quarter
ended 6/30/05
o Revenues excluding outside voyage charter revenue increased 28% from
$15.5 million for the three months ended June 30, 2005 to $19.9
million for the three months ended June 30, 2006.
o Total vessel sailing days increased from 666 days for the three
months ended June 30, 2005 to 696 for the three months ended June
30, 2006.
o EBITDA increased 26% or $894,823 to $4.3 million, despite a $573,293
increase in general and administrative expenses, which was primarily
attributable to costs associated with being a public company.
Pro Forma Summary Statement of Operations
Pro Forma Pro Forma
Three Months Three months Year ended
ended June 30, ended June 30, December 31,
2006 2005 2005
-------------- -------------- --------------
(unaudited) (unaudited) (unaudited)
- ---------------------------------------------------------------------------------------------------------------------
Revenue - Company operated vessels $ 19,892,303 $ 15,501,817 $ 53,819,958
Revenue - Outside voyage charter revenue 2,352,813 1,561,826 7,420,577
- ---------------------------------------------------------------------------------------------------------------------
$ 22,245,116 $ 17,063,643 $ 61,240,535
Expenses
Outside voyage charter fees 2,317,901 1,561,826 7,379,638
Vessel operating expenses 14,295,673 11,306,510 40,628,366
Non operational repairs and maintenance 56,748 88,629 1,625,671
- ---------------------------------------------------------------------------------------------------------------------
16,670,322 12,956,965 49,633,675
- ---------------------------------------------------------------------------------------------------------------------
Income before general and administrative, depreciation,
amortization of drydock costs and intangibles, other
income and expenses and income taxes 5,574,794 4,106,678 11,606,860
- ---------------------------------------------------------------------------------------------------------------------
General and administrative 1,278,237 704,944 3,276,188
Depreciation and amortization of drydock costs and
intangibles 1,491,079 1,249,720 4,972,759
Loss on asset disposal -- -- 113,405
Loss (gain) on foreign exchange 36,686 103,529 (276,251)
- ---------------------------------------------------------------------------------------------------------------------
2,806,002 2,058,193 8,086,101
- ---------------------------------------------------------------------------------------------------------------------
Income before interest, other income and expenses and
income taxes 2,768,792 2,048,485 3,520,759
- ---------------------------------------------------------------------------------------------------------------------
Net income 1,012,102 963,258 455,200
=====================================================================================================================
Net income (loss) per share - basic $ 0.13 $ 0.12 $ (0.13)
Net income (loss) per share - diluted $ 0.06 $ 0.06 $ (0.13)
The information in the table above gives effect to the acquisition of Lower
Lakes Towing Ltd. and Grand River Navigation Company, Inc. for the three months
ended June 30, 2005. However, the general and administrative expenses shown in
the pro forma periods reflect the actual expenses incurred by Lower Lakes and
Rand prior to the acquisitions. There have been no adjustments to reflect higher
general and administrative expense at the Company during the pro forma periods.
Warrant Compensation Program
Additionally, the Company reported that it initiated an equity compensation
program whereby certain members of the Company's and Lower Lakes' management
team, including Scott Bravener, James Siddall, Joe McHugh and Jeff Botham were
awarded warrants to acquire Rand common stock. In addition, both the Chairman
and CEO and the President of Rand Logistics, as well as Rand's non-executive
directors, have elected to receive warrants to purchase Rand common stock in
lieu of cash compensation, reflecting their optimism about Rand's prospects. All
warrants are substantially identical to the warrants included in the units
issued in Rand's initial public offering. Laurence S. Levy, Chairman and CEO of
Rand Logistics commented, "Our equity compensation program is designed to
further align the interests of our officers and directors with those of our
shareholders. It highlights not only our optimism about the Company's future
prospects, but also reflects our commitment to maximizing shareholder value."
Management's Comments
Scott Bravener, President and CEO of Lower Lakes Transportation, stated,
"Revenue growth during the quarter was driven primarily by higher vessel
utilization rates (as measured by vessel sailing days) relative to the same
period last year, more efficient trading patterns and improved operating
performance, particularly in our U.S. fleet. We were also aided by the
strengthening of the Canadian dollar, which benefited pre-tax, pre-interest
profitability relative to the same period in 2005 by approximately $264,000. We
achieved improved results as compared to last year despite being adversely
affected by light loading due to inadequate dredging at many ports, and low
water levels in the Great Lakes on the whole."
Mr. Levy continued, "As we announced on the first of this month, our wholly
owned subsidiary, Lower Lakes Transportation Company, entered into a time
charter agreement with Wisconsin & Michigan Steamship Company for the capacity
utilization of three self-unloading bulk carriers. The three vessels increase
our existing daily shipping capacity by approximately 44%. These vessels have
been integrated into the Lower Lakes fleet, and are being fully utilized under
existing and new long-term contracts. We expect the vessels to be accretive to
EBITDA (earnings before interest, taxes, depreciation and amortization)."
Mr. Levy concluded, "We are optimistic about the Company's near-term outlook,
based on our contractual bookings, the interest we are receiving from potential
new customers, and the capacity and operating flexibility afforded as a result
of our recently signed time charter agreement. We also remain enthusiastic about
Rand's long-term prospects for growth as we continue to pursue transactions that
will build long-term sustainable value for our owners."
Conference Call
Management will conduct a conference call focusing on the financial results, and
the recently announced time charter agreement for three self-unloading bulk
carriers, on:
Thursday, August 17, 2006
10:30am ET
Dial-in number: 706-679-3155
Conference ID: 4588551
Management on the call:
Laurence S. Levy, Chairman & CEO
Edward Levy, President
Joseph McHugh, CFO
Scott Bravener, President & CEO of Lower Lakes Transportation, Rand's wholly
owned subsidiary
A phone replay will be available from 1:30pm ET on Thursday, August 17, 2006
until 5:00pm ET on Monday, August 21, 2006. Dial 800-642-1687 (706-645-9291 for
international callers) and enter the code 4588551 for the phone replay.
2
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 River Class self-unloading carriers and one integrated
self-unloading tug/barge unit. 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.
CONTACT: -OR- INVESTOR RELATIONS COUNSEL:
Rand Logistics, Inc. The Equity Group Inc.
Laurence S. Levy, Chairman & CEO Loren G. Mortman
212-644-3450 (212) 836-9604
LMortman@equityny.com
www.theequitygroup.com
3
Rand Logistics, Inc.
Consolidated Statements of Operations
Three months Three months
Ended June ended June
30, 2006 30, 2005
(unaudited) (unaudited)
- -------------------------------------------------------------------------------
REVENUE $ 22,245,116 $ --
EXPENSES
Outside voyage charter fees 2,317,901 --
Vessel operating expenses 14,295,673 --
Repairs and maintenance 56,748 --
General and administrative 1,278,237 64,236
Depreciation 1,054,269 --
Amortization of drydock costs 83,988 --
Amortization of intangibles 352,822 --
Loss on foreign exchange 36,686 --
- -------------------------------------------------------------------------------
19,476,324 64,236
- -------------------------------------------------------------------------------
INCOME (LOSS) BEFORE OTHER INCOME AND EXPENSES
AND INCOME TAXES 2,768,792 (64,236)
- -------------------------------------------------------------------------------
OTHER INCOME AND EXPENSES
Interest expense 644,169 --
Interest income (1,972) (133,343)
Amortization of deferred financing costs 29,437 --
- -------------------------------------------------------------------------------
671,634 (133,343)
- -------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 2,097,158 69,107
PROVISION (RECOVERY) FOR INCOME TAXES
Current (79,500) 43,000
Deferred 1,164,556
- -------------------------------------------------------------------------------
NET INCOME $ 1,012,102 $ 26,107
===============================================================================
PREFERRED STOCK DIVIDENDS $ 292,377 $ --
===============================================================================
NET INCOME APPLICABLE TO COMMON STOCKHOLDERS $ 719,725 $ 26,107
===============================================================================
Rand Logistics, Inc.
Selected Financial Information
Reconciliation of Income before Interest, Other Income
and Expenses and Income Taxes to EBITDA
Pro Forma Pro Forma
Three Months Three months Year ended
ended June 30, ended June 30, December 31,
2006 2005 2005
--------------- --------------- ---------------
(unaudited) (unaudited) (unaudited)
Income before interest, other income and expenses
and income taxes 2,768,792 2,048,485 3,520,759
Loss on asset disposal -- -- 113,405
Loss (gain) on foreign exchange 36,686 103,529 (276,251)
Depreciation and amortization of drydock costs and
intangibles 1,491,079 1,249,720 4,972,759
EBITDA $ 4,296,557 $ 3,401,734 $ 8,330,672
4
Rand Logistics, Inc.
Consolidated Balance Sheets
June 30, March 31,
2006 2006
(unaudited) (audited)
------------ ------------
ASSETS
CURRENT
Cash and cash equivalents $ 767,427 $ 2,574,325
Accounts receivable 10,793,572 2,107,282
Prepaid expenses and other current assets 1,391,883 1,460,267
Income tax receivable 93,632 --
Deferred income taxes 1,142,986 1,160,651
- ----------------------------------------------------------------------------------------------------------
Total current assets 14,189,500 7,302,525
PROPERTY AND EQUIPMENT, NET 49,287,342 48,160,837
DEFERRED INCOME TAXES 8,254,488 9,386,020
DEFERRED DRYDOCK COSTS, NET 1,604,628 1,614,173
DEFERRED TRANSACTION COSTS 189,446 --
INTANGIBLE ASSETS, NET 14,008,607 13,942,329
GOODWILL 6,362,952 6,362,952
- ----------------------------------------------------------------------------------------------------------
Total assets $ 93,896,963 $ 86,768,836
==========================================================================================================
LIABILITIES
CURRENT
Bank indebtedness $ 3,895,902 $ --
Accounts payable 8,116,498 7,617,899
Accrued liabilities 2,816,012 2,615,159
Income taxes payable -- 50,787
Deferred income taxes 443,469 405,886
Current portion of long-term debt 2,529,231 1,772,055
Current portion of long-term capital lease obligation - vessel lease 2,097,959 2,108,132
- ----------------------------------------------------------------------------------------------------------
Total current liabilities 19,899,071 14,569,918
- ----------------------------------------------------------------------------------------------------------
LONG-TERM DEBT 20,463,781 20,378,630
ACQUIRED MANAGEMENT BONUS PROGRAM 3,000,000 3,000,000
DEFERRED INCOME TAXES 12,050,694 12,063,059
- ----------------------------------------------------------------------------------------------------------
Total liabilities 55,413,546 50,011,607
- ----------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES -- --
STOCKHOLDERS' EQUITY
Preferred stock, $.0001 par value,
Authorized 1,000,000 shares, Issued and outstanding 300,000 shares 14,900,000 14,900,000
Common stock, $.0001 par value
Authorized 50,000,000 shares, Issued and outstanding 5,600,000 shares 560 560
Additional Paid-in Capital 24,629,291 24,629,291
Accumulated deficit (706,342) (1,426,067)
Accumulated other comprehensive loss (340,092) (1,346,555)
- ----------------------------------------------------------------------------------------------------------
Total stockholders' equity 38,483,417 36,757,229
- ----------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 93,896,963 $ 86,768,836
==========================================================================================================
###
5