Rand Logistics Inc.
FOR IMMEDIATE RELEASE
RAND LOGISTICS ANNOUNCES STRONG THIRD QUARTER AND NINE-MONTH RESULTS
New York, NY - February 8, 2007 - Rand Logistics Inc. (OTCBB:RAQC; RAQCW; RAQCU)
("Rand") today announced financial results for the fiscal third quarter and nine
months ended December 31, 2006.
The GAAP results for the quarter ended December 31, 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. (collectively "Lower
Lakes Entities") for the three and nine months ended December 31, 2005.
Third Quarter Financial and Operational Highlights
Versus pro forma quarter ended December 31, 2005
o Revenue increased $8.4 million, or 51%, to $24.8 million (excluding
outside voyage charter revenue).
o Total actual vessel sailing days increased from 725 days for the
three months ended December 31, 2005 to 960 days for the three
months ended December 31, 2006, due primarily to the addition of
three vessels on August 1st under a time charter agreement.
Excluding the three time chartered vessels, total actual vessel
sailing days decreased from 725 days for the three months ended
December 2005 to 687 for the three months ended December 2006. The
decrease was primarily due to: (i) mechanical issues on three
vessels; (ii) a normal dry-dock inspection which commenced December
21; and (iii) an emergency dry-dock repair of a vessel that struck
an unidentified object in November.
o EBITDA increased 40% to $3.0 million despite $700,000 of additional
general and administrative ("G&A") expenses directly associated with
being a public company. EBITDA included $330,000 related to a
variable interest entity ("VIE") for which Rand was the primary
beneficiary under FIN-46R, although Rand has no ownership interest
in that entity. Excluding the VIE and Rand's public company G&A
expenses, EBITDA increased $1.2 million, or 55%, to $3.5 million for
the Lower Lakes Entities, including the vessels operating under new
time charter agreement.
First Nine-Months Financial and Operational Highlights
Versus pro forma nine-month period ended December 31, 2005
o Revenue increased $21.1 million, or 42%, to $70.7 million (excluding
outside voyage charter revenue).
o Total actual vessel sailing days increased from 2,108 days for the
nine months ended December 31, 2005 to 2,566 days for the nine
months ended December 31, 2006, due primarily to the addition of
three vessels on August 1st under a time charter agreement.
Excluding the three time chartered vessels, total actual vessel
sailing days increased slightly from 2,108 days for the nine months
ended December 31, 2005 to 2,110 for the nine-month period ended
December 31, 2006.
o EBITDA increased 31% to $13.5 million despite $1.8 million of
additional G&A expenses directly associated with being a public
company. EBITDA included $1.1 million related to a VIE for which
Rand was the primary beneficiary under FIN-46R, although Rand has no
ownership interest in that entity. Excluding the VIE and Rand's
public company G&A expenses, EBITDA increased by $4.0 million, or
38%, to $14.5 million for the Lower Lakes Entities, including the
vessels operating under the new time charter agreement.
Scott Bravener, President and CEO of Lower Lakes, stated, "Our strong revenue
growth during this fiscal year has been driven by both internal and external
growth. The three vessels added through our August 2006 time charter agreement
contributed approximately $13 million to revenues during their first five months
in our fleet, and were modestly accretive to EBITDA. Organic growth stemmed from
higher rates, greater utilization, and improved trading patterns, which, coupled
with our commitment to improving operating efficiencies, more than offset the
decrease in same-boat sailing days during our third quarter."
Captain Bravener continued, "This week we gave notice of the Company's intent to
purchase the M/V Manistee for a total of $2.2 million. We are financing the
purchase of this boat, which we currently lease, through debt with our existing
lender. We anticipate that the transaction will close by March 31, 2007, and as
previously discussed, it will eliminate approximately $350,000 of annual lease
expense (that would have risen to $500,000 after March 31, 2008), which is
greater than the interest expense we expect to incur on the additional
borrowings."
Laurence S. Levy, Chairman and CEO of Rand, commented, "Despite the impact from
certain repairs during our third fiscal quarter, we are pleased with the results
for the quarter and year-to-date, which essentially represents our operating
fiscal year. There will be very few shipping days during our fourth quarter,
consistent with historical March 31 quarters on the Great Lakes, due to ice and
weather. During this period, we conduct winter maintenance on our entire fleet,
and this winter season we are completing the scheduled five-year surveys on
three of our vessels."
Mr. Levy concluded, "We remain optimistic about Rand's prospects due to the
strength and growth of our base business, where we continue to see strong demand
for our shipping capacity, as well as our focused pursuit of external expansion.
We are actively pursuing opportunities with predictable cash flows, defined
markets and barriers to entry, that focus on shipping or related areas of
business. We look forward to reporting on Rand's continued development."
The Company also reported that the review of Rand's NASDAQ application has
substantially been completed, and it expects a decision within the next few
weeks.
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Pro Forma Summary Statement of Operations (unaudited)
Pro Forma Pro Forma
Three Months Three months Nine months Nine months Year
Ended ended ended ended ended
December 31, December 31, December 31, December 31, December 31,
Selected statement of operations data 2006 2005 2006 2005 2005
------------ ------------ ------------ ------------ ------------
Revenue - Company operated vessels $ 24,766,926 $ 16,351,174 $ 70,726,155 $ 49,673,433 $ 53,819,958
Revenue - Outside voyage charter revenue 1,337,208 1,523,481 5,010,898 4,571,465 7,420,577
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26,104,134 17,874,655 75,737,053 54,244,898 $ 61,240,535
Expenses
Outside voyage charter fees 1,309,961 1,472,946 4,935,002 4,478,259 7,379,638
Vessel operating expenses 19,818,927 13,329,233 52,304,556 37,006,508 40,628,366
Non operational repairs and maintenance 40,314 15,543 97,062 104,172 1,625,671
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21,169,202 14,817,722 57,336,620 41,588,939 49,633,675
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Income before general and administrative,
depreciation, amortization of drydock costs and
intangibles, other income and expenses and
income taxes 4,934,932 3,056,933 18,400,433 12,655,959 11,606,860
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General and administrative 1,954,780 933,464 4,913,783 2,397,210 3,276,188
Depreciation and amortization of drydock costs
and intangibles 1,839,472 1,294,823 5,078,348 3,822,428 4,972,759
Loss on asset disposal -- -- -- -- 113,405
Loss (gain) on foreign exchange 88,680 21,235 177,958 49,274 (276,251)
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3,882,932 2,249,522 10,170,089 6,268,912 8,086,101
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Income before interest, other income and
expenses and income taxes 1,052,000 807,411 8,230,344 6,387,047 3,520,759
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Net income $ 333,658 $ 149,351 $ 3,674,765 $ 2,968,712 $ 455,200
===================================================================================================================================
Net income (loss) per share - basic $ 0.03 ($ 0.07) $ 0.42 $ 0.37 ($ 0.13)
Net income (loss) per share - diluted $ 0.03 ($ 0.07) $ 0.35 $ 0.34 ($ 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
nine months ended December 31, 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.
Conference Call
Management will conduct a conference call focusing on the financial results on:
Friday, February 9, 2007
9:00am ET
Dial-in number: 706-679-3155
Conference ID: 7443480
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 Friday, February 9, 2007
until midnight ET on Friday, February 16, 2007. Dial 800-642-1687 (706-645-9291
for international callers) and enter the code 2281005 for the phone replay.
Additionally, the Company will file a transcript of the call with the Securities
and Exchange Commission, which will be available at www.sec.gov.
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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
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Rand Logistics, Inc.
Consolidated Statements of Operations (unaudited)
(2005 Figures are Pro Forma)
Lower Lakes Lower Lakes
Three months Three months Nine months Nine months
Lower Lakes March 31, Ended Ended Ended Ended
March 31, 2006 December 31, December 31, December 31, December 31,
2005 Combined 2006 2005 2006 2005
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
REVENUE 52,110,040 60,564,767 26,104,134 17,874,655 75,737,053 54,244,898
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EXPENSES
Outside voyage charter fees 6,180,452 5,337,004 1,309,961 1,472,946 4,935,002 4,478,259
Vessel operating expenses 32,210,813 40,556,161 19,818,927 13,329,233 52,304,556 37,006,508
Repairs and maintenance 1,668,315 2,225,426 40,314 15,543 97,062 104,172
General and administrative 2,420,777 4,015,118 1,954,780 821,842 4,913,783 2,141,849
Depreciation 3,231,774 3,858,706 1,407,585 963,045 3,736,591 2,837,257
Amortization of drydock costs 654,911 915,880 82,741 281,778 250,806 835,171
Amortization of inatngibles -- 397,804 349,146 -- 1,090,951 --
Loss on asset disposal 113,405 -- -- -- -- --
Loss on foreign exchange (435,655) 30,789 88,680 21,235 177,958 49,274
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46,044,792 57,336,888 25,052,134 16,905,622 67,506,709 47,452,490
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INCOME (LOSS) BEFORE OTHER INCOME AND
EXPENSES AND INCOME TAX 6,065,248 3,227,879 1,052,000 969,033 8,230,344 6,792,408
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OTHER INCOME AND EXPENSES
Interest expense 3,220,177 3,387,163 1,024,371 1,005,868 2,636,610 2,950,971
Interest income (6,831) (9,635) (135,164) (41) (223,243) (9,632)
Loss on debt extinguishment 698,200 -- -- -- -- --
Amortization of deferred financing costs 866,835 548,041 142,045 146,788 238,421 548,041
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4,778,381 3,925,569 1,031,252 1,152,615 2,651,788 3,489,380
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INCOME (LOSS) BEFORE INCOME TAXES 1,286,867 (697,690) 20,748 (183,582) 5,578,556 3,303,028
PROVISION (RECOVERY) FOR INCOME TAXES
Current -- -- -- -- -- --
PROVISION (RECOVERY) FOR INCOME TAXES 178,672 (182,710) (312,910) (91,227) 1,903,791 1,417,577
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NET INCOME (LOSS) 1,108,195 (514,980) 333,658 (92,355) 3,674,765 1,885,451
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MINORITY INTEREST 189,556 -- 442,481 84,383 359,942 --
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COMMON STOCK DIVIDENDS (VIE) -- -- (250,000) -- (250,000) --
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PREFERRED STOCK DIVIDENDS -- (90,417) (294,370) -- (884,788) --
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NET INCOME (LOSS) APPLICABLE TO COMMON
STOCKHOLDERS 1,297,751 (605,397) 231,769 (7,972) 2,899,919 1,885,451
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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)
Rand Logistics Variable Interest Entity Consolidated Pro Forma
Three Months Ended Three Months Ended Three Months Ended Three Months Ended
December 31, 2006 December 31, 2006 December 31, 2006 December 31, 2005
Income before interest, other
income and expenses and
income taxes 961,926 90,074 1,052,000 969,033
Rand G&A (2005 only) (111,622)
Loss on asset disposal -- -- -- --
Loss (gain) on foreign
exchange 88,680 -- 88,680 21,235
Depreciation and amortization
of drydock costs and
intangibles 1,600,222 239,250 1,839,472 1,244,823
EBITDA 2,650,828 329,324 2,980,152 2,123,469
Rand Logistics Variable Interest Entity Consolidated Pro Forma
Nine Months Ended Nine Months Ended Nine Months Ended Nine months Ended
December 31, 2006 December 31, 2006 December 31, 2006 December 31, 2005
Income before interest, other
income and expenses and income
taxes 7,565,119 665,225 8,230,344 6,792,408
Rand G&A (2005 only) (255,361)
Loss on asset disposal -- -- -- --
Loss (gain) on foreign exchange 177,958 -- 177,958 49,274
Depreciation and amortization
of drydock costs and
intangibles 4,679,632 398,716 5,078,348 3,672,428
EBITDA 12,422,709 1,063,941 13,486,650 10,258,749
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Rand Logistics, Inc.
Consolidated Balance Sheets (unaudited)
December 31, March 31,
2006 2006
-------------- --------------
ASSETS
CURRENT
Cash and cash equivalents $ 9,367,480 $ 2,574,325
Accounts receivable 13,765,481 2,107,282
Prepaid expenses and other current assets 1,680,720 1,460,267
Income tax receivable 237,795 --
Deferred income taxes 1,187,023 1,160,651
- --------------------------------------------------------------------------------------------------------
Total current assets 26,238,499 7,302,525
BLOCKED ACCOUNT 2,700,000 --
PROPERTY AND EQUIPMENT, NET 64,290,070 48,160,837
DEFERRED INCOME TAXES 7,080,235 9,386,020
DEFERRED DRYDOCK COSTS, NET 1,828,969 1,614,173
INTANGIBLE ASSETS, NET 13,731,319 13,942,329
GOODWILL 6,362,952 6,362,952
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Total assets $ 122,232,044 $ 86,768,836
========================================================================================================
LIABILITIES
CURRENT
Bank indebtedness $ 3,612,315 $ --
Accounts payable 7,598,855 7,617,899
Accrued liabilities 3,221,111 2,615,159
Income taxes payable 31,000 50,787
Deferred income taxes 530,934 405,886
Current portion of long-term debt 4,112,941 1,772,055
Current portion of long-term capital lease obligation - vessel
lease 2,077,612 2,108,132
- --------------------------------------------------------------------------------------------------------
Total current liabilities 21,184,768 14,569,918
- --------------------------------------------------------------------------------------------------------
LONG-TERM DEBT 33,763,144 20,378,630
ACQUIRED MANAGEMENT BONUS PROGRAM 3,000,000 3,000,000
DEFERRED INCOME TAXES 11,554,599 12,063,059
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Total liabilities 69,502,511 50,011,607
- --------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES -- --
STOCKHOLDERS' EQUITY
Preferred stock, $.0001 par value, 14,900,000 14,900,000
Authorized 1,000,000 shares, Issued and outstanding 300,000
shares
Common stock, $.0001 par value 801 560
Authorized 50,000,000 shares, Issued and outstanding 8,006,777
shares
Additional Paid-in Capital 37,598,150 24,629,291
Accumulated surplus (deficit) 1,473,852 (1,426,067)
Minority Interest 40,058 --
Accumulated other comprehensive loss (1,283,328) (1,346,555)
- --------------------------------------------------------------------------------------------------------
Total stockholders' equity 52,729,533 36,757,229
- --------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 122,232,044 $ 86,768,836
========================================================================================================
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