Rand Logistics Inc.
FOR IMMEDIATE RELEASE
RAND LOGISTICS ANNOUNCES SECOND QUARTER RESULTS AND PROVIDES UPDATE ON
RECENT BUSINESS DEVELOPMENTS
Conclusion of Work Stoppage and Recently Acquired Vessels Expected to Produce
Profitable Growth Going Forward
New York, NY - November 13, 2007 - Rand Logistics Inc. (Nasdaq: RLOG; RLOGW;
RLOGU) ("Rand") today announced operational and financial results for the second
quarter and six months ended September 30, 2007, and provided an update on
recent business developments and their expected contribution to future results.
Business Highlights
o EBITDA increased 22% excluding the three vessels Rand operates on time
charter from Wisconsin and Michigan Steamship (WMS) (which was affected by
a now concluded work stoppage) and before the operating G&A expense
increase (a significant part of which is non-recurring). This EBITDA
increase illustrates the positive operating leverage that Rand is
realizing from better pricing and higher fleet utilization.
o The WMS vessels that experienced a work stoppage from May through July 31
started sailing on dates beween late August and late October, and are now
fully operational with a lower cost structure. The Company expects them to
contribute positively to Rand's results over the next year.
o The Company acquired two conventional bulk carriers (the Voyageur
acquisition) in late August for approximately $23.7 million. The vessels
are fully committed with take-or-pay contracts. Rand expects that the
purchase price multiple for the two vessels was approximately 5 times
EBITDA.
o Rand has spent over $1 million to improve its management infrastructure.
Many of these costs are non-recurring, and the Company now has the
capacity to run an expanded company without substantially increasing
overhead costs.
o The underlying economics of the business are strong. In the U.S., the
Company's results are significantly ahead of last year. There is more
demand than capacity in the markets Rand serves, and the rates the Company
charges are increasing. Rand is also benefitting from the strength of the
Canadian dollar, which accounts for over half of the Company's revenue and
cash flow.
Second Quarter Results
In the second quarter ended September 30, 2007, revenue was $26.4 million
(excluding outside voyage charter revenue) compared to $26.1 million in the
prior year quarter. The three vessels that Rand operates under a time charter
agreement with WMS contributed only $1.8 million of revenue during the period
compared to $5.5 million in the prior year due to the aforementioned work
stoppage. EBITDA was $3.9 million, compared to $6.2 million in the prior year
quarter. EBITDA included $0.9 million related to a variable interest entity
("VIE") versus $0.7 million in the prior year quarter for which Rand was the
primary beneficiary under FIN-46R, although Rand has no ownership interest in
that entity. Excluding the VIE, EBITDA was $3.0 million, compared to $5.5
million in the prior year quarter. The decline in EBITDA was primarily due to:
a) A $2.8 million negative EBITDA differential due to the WMS time
chartered vessels which generated an EBITDA loss of $1.4 million, versus a
positive EBITDA of $1.4 million in the quarter ended September 30, 2006,
as Rand continued to incur certain contractual costs without generating
revenue during the work stoppage; and
b) A $1.0 million increase in G&A costs, largely related to employment
related costs and training of a larger finance and administrative staff,
the implementation of SOX compliant business software and IT
infrastructure and expensed legal costs arising from agreements associated
with the August 2007 acquisition of the bulk carriers. Management believes
that many of these costs are not recurring in nature.
Captain Scott Bravener, President and CEO of Lower Lakes stated, "During the
second quarter, our Canadian fleet operated effectively and we continued to
achieve improvements in the performance of our US fleet, which substantially
exceeded both operational and financial performance in the comparable period
last year. EBITDA growth excluding WMS and G&A exceeded revenue growth due to
higher freight rates, better vessel utilization and the benefit from investments
we have made. I see no reason why this trend will not continue into the future
and may in fact accelerate as we are able to bring the three WMS vessels and two
bulk carriers up to their full potential. We have not been adversely affected by
increased fuel prices, as these are passed along to our customers under the fuel
surcharges in our customer contracts."
Outlook
Laurence S. Levy, Chairman and CEO of Rand, added, "Rand's financial results
next year will be more indicative of the Company's earnings power. Included in
the year will be a full year of operations from the three WMS time chartered
vessels, as well as the two newly acquired bulk carriers. We have had strong
contract renewals for next year and have enhanced our capacity utilization."
Mr. Levy concluded, "Longer-term, we remain optimistic about Rand's outlook, due
to the strength and growth of our base business, where market demand continues
to exceed capacity, as well as our active pipeline of in-market acquisition
opportunities that capitalize on our position on the Great Lakes."
Summary Statement of Operations (unaudited; in thousands)
Three months ended Six months ended
9/30/07 9/30/06 9/30/07 9/30/06
====================================================================================================== ===================
Revenue - Company operated vessels 26,388 26,067 49,487 45,959
Revenue - Outside voyage charter revenue 2,489 1,321 4,620 3,674
====================================================================================================== ===================
28,877 27,388 54,107 49,633
Expenses
Outside voyage charter fees 2,434 1,307 4,571 3,625
Vessel operating expenses 19,783 18,190 37,100 32,485
Non operational repairs and maintenance 0 0 94 57
====================================================================================================== ===================
22,217 19,497 41,765 36,167
====================================================================================================== ===================
Income before general and administrative, depreciation, amortization of drydock
costs and intangibles, other income and expenses and income taxes 6,660 7,891 12,342 13,466
====================================================================================================== ===================
General and administrative 2,802 1,681 4,743 2,959
Depreciation and amortization of drydock costs and intangibles 2,436 1,711 4,695 3,203
Loss (gain) on foreign exchange (46) 53 (219) 90
====================================================================================================== ===================
5,192 3,445 9,219 6,252
====================================================================================================== ===================
Income before interest, other income and expenses and income taxes 1,468 4,446 3,123 7,214
====================================================================================================== ===================
Net income (683) 1,948 (1,837) 2,668
====================================================================================================== ===================
Net income (loss) per share - basic (0.06) 0.27 (0.17) (0.42)
Net income (loss) per share - diluted (0.06) 0.13 (0.17) (0.19)
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Conference Call
Management will conduct a conference call focusing on the financial results on:
Wednesday, November 14, 2007
9:00am ET
Dial-in number: (706) 679-3155
Conference ID: 23257843
A phone replay will be available from 12:00 noon ET on Wednesday, November 14,
2007 until midnight ET on Friday, November 16, 2007. Dial 800-642-1687
(706-645-9291 for international callers) and enter the code 23257843 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.
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 eleven self unloading bulk carriers, including nine River
Class vessels and one River Class integrated tug/barge unit, and three
conventional bulk carriers. 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
Edward Levy, President (212) 836-9604
212-644-3450 LMortman@equityny.com
www.theequitygroup.com
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RAND LOGISTICS, INC.
Consolidated Statements of Operations
(U.S. Dollars in Thousands except for Earnings Per Share figures)
Three months Three months Six months Six months
ended September ended September ended September ended September
30, 2007 30, 2006 30, 2007 30, 2006
(unaudited) (unaudited) (unaudited) (unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
REVENUE 28,877 27,388 54,107 49,633
- ------------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Outside voyage charter fees 2,434 1,307 4,571 3,625
Vessel operating expenses 19,783 18,190 37,100 32,485
Repairs and maintenance -- -- 94 57
General and administrative 2,802 1,681 4,743 2,959
Depreciation 1,620 1,275 3,163 2,329
Amortization of drydock costs 415 84 773 168
Amortization of intangibles 401 352 759 706
(Gain) loss on foreign exchange (46) 53 (219) 90
- ------------------------------------------------------------------------------------------------------------------------------------
27,409 22,942 50,984 42,419
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE OTHER INCOME AND EXPENSES AND INCOME TAXES 1,468 4,446 3,123 7,214
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER INCOME AND EXPENSES
Interest expense 1,105 1,035 2,117 1,709
Interest income (77) (86) (142) (88)
Loss on interest rate swap contract 87 -- 8 --
Amortization of chartering agreement costs 47 36 96 36
- ------------------------------------------------------------------------------------------------------------------------------------
1,162 985 2,079 1,657
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 306 3,461 1,044 5,557
====================================================================================================================================
PROVISION (RECOVERY) FOR INCOME TAXES
Current 10 91 (33) 11
Deferred 11 1,041 372 2,205
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCOME BEFORE MINORITY INTEREST 285 2,329 705 3,341
MINORITY INTEREST (353) 83 (32) 83
====================================================================================================================================
NET INCOME 638 2,246 737 3,258
====================================================================================================================================
PREFERRED STOCK DIVIDENDS 296 298 592 590
STOCK WARRANT INDUCEMENT DISCOUNT 1,025 -- 1,982 --
====================================================================================================================================
NET (LOSS) INCOME APPLICABLE TO COMMON STOCKHOLDERS (683) 1,948 (1,837) 2,668
====================================================================================================================================
Net (loss) earnings per share basic ($ 0.06) $ 0.27 ($ 0.17) $ 0.42
Net (loss) earnings per share diluted ($ 0.06) $ 0.13 ($ 0.17) $ 0.19
Weighted average shares basic 11,917,519 7,193,265 10,618,842 6,400,986
Weighted average shares diluted 11,917,519 17,895,696 10,618,842 16,862,299
Rand Logistics, Inc.
Selected Financial Information (unaudited)
Reconciliation of Income before Interest, Other Income and
Expenses and Income Taxes to EBITDA
(U.S. Dollars in Thousands)
Variable Variable
Interest Interest
Rand Logistics Entity Consolidated Rand Logistics Entity Consolidated
three months three months three months three months three months three months
ended ended ended ended ended ended
9/30/07 9/30/07 9/30/07 9/30/06 9/30/06 9/30/06
---------------------------------------------------------------------------------------
Income before interest, other income and
expenses and income taxes 878 590 1,468 3,871 575 4,446
Loss (gain) on foreign exchange (46) 0 (46) 53 0 53
Depreciation and amortization of dry-dock
costs and intangibles 2,121 315 2,436 1,551 160 1,711
- -----------------------------------------------------------------------------------------------------------------------------------
EBITDA 2,953 905 3,858 5,475 735 6,210
---------------------------------------------------------------------------------------
Variable Variable
Interest Interest
Rand Logistics Entity Consolidated Rand Logistics Entity Consolidated
six months six months six months six months six months six months
ended ended ended ended ended ended
09/30/07 09/30/07 09/30/07 09/30/06 09/30/06 09/30/06
---------------------------------------------------------------------------------------
Income before interest, other income and
expenses and income taxes 2,050 1,073 3,123 6,639 575 7,214
Loss (gain) on foreign exchange (219) 0 (219) 90 0 90
Depreciation and amortization of dry-dock
costs and intangibles 4,066 629 4,695 3,043 160 3,203
- -----------------------------------------------------------------------------------------------------------------------------------
EBITDA 5,897 1,702 7,599 9,772 735 10,507
---------------------------------------------------------------------------------------
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Rand Logistics, Inc.
Consolidated Balance Sheets
U.S. Dollars in Thousands
September 30, March 31,
2007 2007
ASSETS (unaudited) (audited)
-------------------------------
CURRENT
Cash and cash equivalents $ 3,010 $ 7,207
Accounts receivable 16,915 2,702
Prepaid expenses and other current assets 3,537 3,122
Income taxes receivable 330 263
Deferred income taxes 1,356 1,219
- ----------------------------------------------------------------------------------------------------------------------------------
Total current assets 25,148 14,513
BLOCKED ACCOUNT 2,700 2,700
PROPERTY AND EQUIPMENT, NET 85,527 66,859
DEFERRED INCOME TAXES 14,860 13,574
DEFERRED DRYDOCK COSTS, NET 6,281 5,895
INTANGIBLE ASSETS, NET 17,176 13,334
GOODWILL 11,711 6,363
- ----------------------------------------------------------------------------------------------------------------------------------
Total assets $ 163,403 $ 123,238
==================================================================================================================================
LIABILITIES
CURRENT
Bank indebtedness $ 2,801 $ 5,097
Accounts payable 9,570 11,445
Accrued liabilities 5,545 3,237
Interest rate swap contract 143 135
Income taxes payable 329 385
Deferred income taxes 714 589
Current portion of long-term debt 5,837 4,398
- ----------------------------------------------------------------------------------------------------------------------------------
Total current liabilities 24,939 25,286
LONG-TERM DEBT 51,978 34,864
ACQUIRED MANAGEMENT BONUS PROGRAM 3,000 3,000
DEFERRED INCOME TAXES 16,106 13,624
- ----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 96,023 76,774
==================================================================================================================================
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 (7,784) (5,947)
Accumulated other comprehensive income (loss) 1,887 (1,073)
Minority interest of variable interest entity 144 176
- ----------------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 67,380 46,464
- ----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 163,403 $ 123,238
==================================================================================================================================
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