Rand Logistics Inc.FOR IMMEDIATE RELEASE
RAND LOGISTICS ANNOUNCES STRONG SECOND QUARTER RESULTS
New York, NY - November 20, 2006 - Rand Logistics Inc. (OTC:RAQC.OB; RAQCW.OB;
RAQCU.OB) ("Rand") today announced financial results for the second quarter and
six months ended September 30, 2006.
The GAAP results for the quarter ended September 30, 2005 reflect Rand prior to
its March 3, 2006 acquisition of Lower Lakes Towing Ltd. and Grand River
Navigation Company, Inc.; since the Company did not have any operations during
that period, the results do not provide a meaningful basis for comparison of
financial results. The pro forma results give effect to the acquisition of Lower
Lakes Towing Ltd. and Grand River Navigation Company, Inc. for the three and six
months ended September 30, 2005.
Second Quarter Financial and Operational Highlights
Versus pro forma quarter ended 9/30/05
o Revenue increased 46% to $26.1 million (excludes outside voyage
charter revenue).
o Total vessel sailing days increased from 717 days for the three
months ended September 30, 2005 to 910 days for the three months
ended September 30, 2006, due primarily to the addition of three
vessels on August 1st under a time charter agreement.
o EBITDA increased 31% to $6.2 million despite a $922,000 increase in
general and administrative expenses, which was primarily
attributable to costs associated with being a public company. EBITDA
included $734,000 related to a variable interest entity for which
Rand was the primary beneficiary under FIN-46R, although Rand has no
ownership interest. Excluding the time charter and Rand's increased
G&A expenses incurred as a public company, EBITDA increased by $1.6
million or 34%.
First-Half Financial and Operational Highlights
Versus pro forma six months ended 9/30/05
o Revenue increased 38% to $46.0 million (excludes outside voyage
charter revenue).
o Total vessel sailing days increased from 1,383 days for the six
months ended September 30, 2005 to 1,606 for the six months ended
September 30, 2006, due primarily to the addition of three vessels
on August 1st under a time charter agreement.
o EBITDA increased 29% to $10.5 million despite a $1.5 million
increase in general and administrative expenses, which was primarily
attributable to costs associated with being a public company.
Excluding the time charter and Rand's increased G&A expenses
incurred as a public company, EBITDA increased by $2.8 million or
34%.
Scott Bravener, President and CEO of Lower Lakes Transportation, stated, "We
achieved strong revenue growth during the second quarter due to improvements in
rates, utilization, trading patterns and efficiencies within our existing fleet,
as well as two months of operations of three vessels under our recently formed
time charter agreement with Wisconsin & Michigan Steamship Company. These
vessels contributed over $4.6 million to our revenues and were accretive to our
EBITDA during the quarter. These vessels were fully utilized under existing and
new long-term contracts. We were also aided by the strengthening of the Canadian
dollar during the quarter, which benefited pre-tax, pre-interest profitability
relative to the same period in 2005 by approximately $217,000."
Captain Bravener continued, "Recently, we determined to exercise our option to
purchase the Manistee for $2.2 million, and we are in discussions with our
existing lender to fund this purchase. The purchase of the Manistee is expected
to eliminate as much as $350,000 of annual lease expense, which is greater than
the interest expense we would expect to incur on the additional borrowings."
Laurence S. Levy, Chairman and CEO of Rand, commented, "Since Rand acquired
Lower Lakes and Grand River Navigation about eight months ago, the Company has
reported two quarters of solid financial results, raised $13 million of common
equity, and substantially expanded daily shipping capacity and operating
flexibility with the time charter agreement covering three boats. Demand for our
capacity remains robust, and we are optimistic about the Company's prospects for
the balance of fiscal 2007. We also remain enthusiastic about Rand's long-term
outlook in light of our strong and growing base business, as well as our focused
pursuit of external expansion. We continue to pursue opportunities with
predictable cash flows, defined markets and barriers to entry, that focus on
shipping or related areas of business, in line with our objective to build
long-term sustainable value for our shareholders."
Pro Forma Summary Statement of Operations (unaudited)
Pro Forma Pro Forma Pro Forma
Three Months Three months Six months Six months Year
ended ended ended ended ended
September 30, September 30, September 30, September 30, December 31,
2006 2005 2006 2005 2005
Revenue - Company operated vessels $ 26,066,926 $ 17,820,738 $ 45,959,229 $ 33,322,259 $ 53,819,958
Revenue - Outside voyage charter revenue 1,320,877 1,485,862 3,673,690 3,047,984 7,420,577
- ---------------------------------------------------------------------------------------------------------------------------
27,387,803 19,306,600 49,632,919 36,370,243 61,240,535
Expenses
Outside voyage charter fees 1,307,140 1,443,487 3,625,041 3,005,313 7,379,638
Vessel operating expenses 18,189,956 12,370,765 32,485,629 23,677,275 40,628,366
Non operational repairs and maintenance -- -- 56,748 88,629 1,625,671
- ---------------------------------------------------------------------------------------------------------------------------
19,497,096 13,814,252 36,167,418 26,771,217 49,633,675
- ---------------------------------------------------------------------------------------------------------------------------
Income before general and administrative,
depreciation, amortization of drydock
costs and intangibles, other income and
expenses and income taxes 7,890,707 5,492,348 13,465,501 9,599,026 11,606,860
- ---------------------------------------------------------------------------------------------------------------------------
General and administrative 1,680,766 758,802 2,959,003 1,463,746 3,276,188
Depreciation and amortization of drydock
costs and intangibles 1,747,797 1,277,885 3,238,876 2,527,605 4,972,759
Loss on asset disposal -- -- -- -- 113,405
Loss (gain) on foreign exchange 52,592 (75,490) 89,278 28,039 (276,251)
- ---------------------------------------------------------------------------------------------------------------------------
3,481,155 1,961,197 6,287,157 4,019,390 8,086,101
- ---------------------------------------------------------------------------------------------------------------------------
Income before interest, other income and
expenses and income taxes - Total 4,409,552 3,531,151 7,178,344 5,579,636 3,520,759
Income before interest, other income and
expenses and income taxes - Excluding
variable interest entity 3,834,401 3,531,151 6,603,193 5,579,636 3,520,759
- ---------------------------------------------------------------------------------------------------------------------------
Net income - Total 2,329,005 1,856,103 3,341,107 2,819,361 455,200
===========================================================================================================================
Net income (loss) per share - basic $ 0.27 $ 0.28 $ 0.42 $ 0.40 ($ 0.13)
Net income (loss) per share - diluted $ 0.13 $ 0.11 $ 0.19 $ 0.17 ($ 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 and six
months ended September 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.
2
Conference Call
Management will conduct a conference call focusing on the financial results on:
Tuesday, November 21, 2006
9:00am ET
Dial-in number: 706-679-3155
Conference ID: 2683245
Management on the call:
Laurence S. Levy, Chairman & CEO
Edward Levy, President
Joseph McHugh, CFO
Scott Bravener, President & CEO of Lower Lakes Towing and Lower Lakes
Transportation, Rand's indirect, wholly owned subsidiaries
A phone replay will be available from 12:00 noon ET on Tuesday, November 21,
2006 until 5:00pm ET on Wednesday, November 29, 2006. Dial 800-642-1687
(706-645-9291 for international callers) and enter the code 2683245 for the
phone replay.
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 (unaudited)
(2005 Figures are Pro Forma)
Lower Lakes Lower Lakes Three months Three months Six months Six months
Excluding Rand Including Rand Ended Ended Ended Ended
Year Ended Year Ended September 30, September 30, September 30, September 30,
March 31, 2005 March 31, 2006 2006 2005 2006 2005
REVENUE 52,110,040 60,564,767 27,387,803 19,306,600 49,632,919 36,370,243
- -----------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Outside voyage charter fees 6,180,452 5,337,004 1,307,140 1,443,487 3,625,041 3,005,313
Vessel operating expenses 32,210,813 40,556,161 18,189,956 12,370,765 32,485,629 23,677,275
Repairs and maintenance 1,668,315 2,225,426 -- -- 56,748 88,629
General and administrative 2,420,777 4,015,118 1,680,766 679,300 2,959,003 1,320,007
Depreciation 3,231,774 3,858,706 1,274,737 949,077 2,329,006 1,874,212
Amortization of drydock costs 654,911 915,880 84,077 278,808 168,065 553,393
Amortization of intangibles -- 397,804 388,983 -- 741,805 --
Loss on asset disposal 113,405 -- -- -- -- --
Loss on foreign exchange (435,655) 30,789 52,592 (75,490) 89,278 28,039
- -----------------------------------------------------------------------------------------------------------------------------------
46,044,792 57,336,888 22,978,251 15,645,947 42,454,575 30,546,868
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE OTHER INCOME
AND EXPENSES AND INCOME TAX 6,065,248 3,227,879 4,409,552 3,660,653 7,178,344 5,823,375
- -----------------------------------------------------------------------------------------------------------------------------------
OTHER INCOME AND EXPENSES
Interest expense 3,220,177 3,387,163 968,070 997,930 1,612,239 1,945,103
Interest income (6,831) (9,635) (86,107) (741) (88,079) (9,591)
Loss on debt extinguishment 698,200 -- -- -- -- --
Amortization of deferred
financing costs 866,835 548,041 66,939 239,683 96,376 401,253
- -----------------------------------------------------------------------------------------------------------------------------------
4,778,381 3,925,569 948,902 1,236,872 1,620,536 2,336,765
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES 1,286,867 (697,690) 3,460,650 2,423,781 5,557,808 3,486,610
PROVISION (RECOVERY) FOR INCOME
TAXES
Current -- -- -- -- -- --
Deferred 178,672 (182,710) 1,131,645 1,000,919 2,216,701 1,508,804
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) 1,108,195 (514,980) 2,329,005 1,422,862 3,341,107 1,977,806
===================================================================================================================================
MINORITY INTEREST (189,556) -- 82,539 (158,395) 82,539 84,383
===================================================================================================================================
PREFERRED STOCK DIVIDENDS -- 90,417 298,041 -- 590,418 --
===================================================================================================================================
NET INCOME (LOSS) APPLICABLE TO
COMMON STOCKHOLDERS 1,297,751 (605,397) 1,948,425 1,581,257 2,668,150 1,893,423
===================================================================================================================================
4
Rand Logistics, Inc.
Selected Financial Information (unaudited)
Reconciliation of Income before Interest, Other Income and
Expenses and Income Taxes to EBITDA
(2005 Figures are Pro Forma)
Lower Lakes Lower Lakes Three months Three months Six months Six months
Excluding Rand Including Rand Ended Ended Ended Ended
Year Ended Year Ended September 30, September 30, September 30, September 30,
March 31, 2005 March 31, 2006 2006 2005 2006 2005
Combined
Income before interest, other
income and expenses and income
taxes 6,065,248 3,227,879 4,409,552 3,660,653 7,178,344 5,823,375
Rand G&A (2005 only) 150,085 79,503 143,739
Loss on asset disposal 113,405 -- -- -- -- --
Loss (gain) on foreign exchange (435,655) 30,789 52,592 (75,490) 89,278 28,039
Depreciation and amortization of
drydock costs and intangibles 3,886,685 5,172,390 1,747,797 1,227,885 3,238,876 2,427,605
EBITDA 9,479,598 8,431,058 6,209,941 4,733,545 10,506,498 8,135,280
5
Rand Logistics, Inc.
Consolidated Balance Sheets (unaudited)
September 30, 2006 March 31, 2006
ASSETS
CURRENT
Cash and cash equivalents $ 9,598,428 $ 2,574,325
Accounts receivable 14,244,088 2,107,282
Prepaid expenses and other current assets 1,902,352 1,460,267
Income tax receivable 185,795 --
Deferred income taxes 1,118,404 1,160,651
- ----------------------------------------------------------------------------------------------------------------
Total current assets 27,049,067 7,302,525
BLOCKED ACCOUNT 2,700,000
PROPERTY AND EQUIPMENT, NET 66,755,890 48,160,837
DEFERRED INCOME TAXES 7,051,533 9,386,020
DEFERRED DRYDOCK COSTS, NET 1,543,288 1,614,173
INTANGIBLE ASSETS, NET 14,552,585 13,942,329
GOODWILL 6,362,952 6,362,952
- ----------------------------------------------------------------------------------------------------------------
Total assets 126,015,315 86,768,836
================================================================================================================
LIABILITIES
CURRENT
Bank indebtedness $ 4,097,245 $ --
Accounts payable 7,770,895 7,617,899
Accrued liabilities 3,664,435 2,615,159
Income taxes payable 99,000 50,787
Deferred income taxes 498,233 405,886
Current portion of long-term debt 3,728,765 1,772,055
Current portion of long-term capital lease obligation - vessel lease 2,087,785 2,108,132
- ----------------------------------------------------------------------------------------------------------------
Total current liabilities 21,946,358 14,569,918
- ----------------------------------------------------------------------------------------------------------------
LONG-TERM DEBT 35,401,859 20,378,630
ACQUIRED MANAGEMENT BONUS PROGRAM 3,000,000 3,000,000
DEFERRED INCOME TAXES 11,811,047 12,063,059
- ----------------------------------------------------------------------------------------------------------------
Total liabilities 72,159,264 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 8,002,957 shares 800 560
Additional Paid-in Capital 37,579,051 24,629,291
Accumulated surplus (deficit) 1,242,083 (1,426,067)
Minority Interest, Variable Interest Entity 482,539 --
Accumulated other comprehensive loss (348,422) (1,346,555)
- ----------------------------------------------------------------------------------------------------------------
Total stockholders' equity 53,856,051 36,757,229
- ----------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 126,015,315 $ 86,768,836
================================================================================================================
####
6