Rand Logistics Inc.
RAND LOGISTICS REPORTS FISCAL YEAR 2008 FINANCIAL RESULTS
Company Announces 21% Year-Over-Year Improvement in Vessel Margins
New York, NY - June 26, 2008 - Rand Logistics Inc. (Nasdaq: RLOG; RLOGW; RLOGU)
("Rand") today announced operational and financial results for the fiscal year
ended March 31, 2008, and provided an update on recent business developments and
their expected contribution to future results.
Full-Year Fiscal 2008 Financial Results
o Marine freight revenue (excluding fuel surcharge, outside charter
and other revenue) increased by $6.7 million, or 10.5%, to $70.3
million in fiscal year 2008, from $63.6 million in fiscal year 2007.
o Marine freight revenue per day increased by $2,180, or 9.4%, to
$25,359 in fiscal year 2008, from $23,179 in fiscal year 2007. (1)
o Vessel margin per day (after expensed winter work) increased by
$1,131, or 21.2%, to $6,470 in fiscal year 2008, from $5,339 in
fiscal year 2007. (1)
Laurence S. Levy, Chairman and CEO of Rand, commented, "Despite the fact that
our financial results in fiscal year 2008 were impacted by the strike at
Wisconsin and Michigan Steamship ("WMS"), we nevertheless enjoyed a material
increase in vessel margin(1), primarily due to an increase in freight rates, a
significant improvement in the performance of our U.S. fleet and the continued
strong performance of our Canadian fleet."
"We are also pleased to announce that we have met or exceeded our previously
stated targets for revenue per day(1), vessel margin per day, and public company
cash expenses in fiscal 2008, and we continue to expect that our G&A expenses
will grow at a lesser rate than our revenues, further boosting our future
operating margins," Mr. Levy continued.
For the year ended March 31, 2008, excluding the Variable Interest Entity
("VIE"), earnings before interest, taxes, depreciation and amortization
("EBITDA"), was a loss of $1.2 million, compared to income of $3.6 million in
fiscal year 2007. Fiscal year 2008 results were impacted by a loss of $4.7
million related to the WMS vessels, versus breakeven for the twelve months ended
March 31, 2007. This decrease was largely attributable to the strike associated
with the three vessels previously operated under the time charter with WMS,
which lasted from May through August of 2007 and impacted the Company's full
sailing season. An additional impact on fiscal year 2008 results was a $1.6
million charge to EBITDA, associated with previously announced one-time expenses
related to improving management infrastructure, upgrading business software and
IT, further improving internal controls, Voyageur transaction costs and a prior
period restricted stock grant.
Fourth Quarter Fiscal 2008 Financial Results
Marine freight revenue increased 2.8% to $3.0 million in the fiscal fourth
quarter, which is the Company's winter lay-up quarter, during which time the
Company's vessels are not operational.
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(1) Excluding the three vessels previously operated under a time charter with
Wisconsin and Michigan Steamship ("WMS"), the two conventional bulk carriers
acquired in late August from the Voyageur group of companies, as well as all
outside charter and contract of affreightment revenues.
Excluding the VIE, the Company incurred an EBITDA loss of $9.0 million for the
quarter ended March 31, 2008 versus a loss of $8.8 million for the quarter ended
March 31, 2007. Vessel margins were constant between the quarter ended March 31,
2007 and March 31, 2008, despite the fact that the Company added five vessels
during the quarter ended March 31, 2008 versus March 31, 2007, resulting in an
increase in winterwork expense of over $1.2 million. G&A expenses increased by
6.1% to $3.1 million in the fourth quarter of fiscal year 2008 versus $3.0
million for the fourth quarter of fiscal year 2007.
During the fourth quarter of fiscal year 2008, the Company hired 104 new
employees to crew the three vessels that it purchased from WMS and to staff the
two Voyageur vessels given the termination of the crew manning agreement.
Management notes that substantially all of the integration work associated with
the WMS acquisition and the remaining Voyageur vessels is complete as of March
31, 2008.
Subsequent Developments
Subsequent to quarter end, Rand completed the repowering of the Saginaw, one of
its Canadian-flagged vessels, with a new highly automated emissions-compliant
power plant. The vessel is now fully operational and the repowering is expected
to improve operating margins going forward, due to an increase in speed, and a
reduction in fuel consumption, labor, maintenance and other operating costs.
Management estimates that the repowering will generate an annual mid-teens
return on investment.
Scott Bravener, President of Lower Lakes stated, "We are pleased to have
completed the successful repowering of the Saginaw. This project, which was
completed on budget, demonstrates our commitment to make continuing investments
in our fleet, to provide the best available service to our customers. We
anticipate this fully operational vessel will contribute to operating margin
improvements going forward, as it adds necessary capacity to our fleet to meet
the steadily growing demand for transportation services on the Great Lakes."
In April, Rand announced the appointment of Michael D. Lundin as an independent
member of its Board of Directors. Lundin is the former President and Chief
Executive Officer of the Oglebay Norton Company, a miner, processor, transporter
and marketer of industrial minerals and aggregates. This latest appointment
expands Rand's Board to six members, including four non-management independent
directors.
Outlook
Rand enters Fiscal 2009 in a position to capitalize on consistent favorable
demand for transportation services on the Great Lakes.
Mr. Levy concluded, "Our ongoing operational improvements, strategic
acquisitions and vessel upgrades, in conjunction with the elimination of
non-recurring IT and infrastructure expenses should continue to drive profit
growth, as we maintain a leadership position in an industry with high barriers
to entry and significant demand. Rand is in a unique position to take advantage
of the strong demand for capacity and the firm freight rate environment. Our
vessels are fully committed for the current fiscal year. We are excited about
the outlook of our business for this year and beyond. Based on our preliminary
actual results thus far in fiscal 2009, we are confident that our operations for
the quarter ended June 30, 2008 will demonstrate Rand's inherent earnings
capability. We anticipate a significant increase in Rand's earnings from those
reported in the comparable quarter last year."
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Rand Logistics, Inc.
Summary Statement of Operations
(U.S. Dollars 000's except for Earnings Per Share figures)
Year ended Year ended
31-Mar-08 31-Mar-07
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Revenue - Company operated vessels 85,239 74,175
Revenue - Outside voyage charter revenue 9,530 5,011
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94,769 79,186
Expenses
Outside voyage charter fees 9,436 4,935
Vessel operating expenses 69,117 57,474
Non operational repairs and maintenance 3,844 3,382
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82,397 65,791
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Income before general and administrative, depreciation, amortization of drydock
costs and intangibles, other income and expenses and income taxes 12,372 13,395
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General and administrative 10,678 8,069
Depreciation and amortization of drydock costs and intangibles 10,153 7,107
Gain on sale of vessels by variable interest entity (667) --
Loss on retirement of owned vessel 1,735 --
Loss (gain) on foreign exchange (163) 128
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21,736 15,304
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Income before interest, other income and expenses and income taxes (9,364) (1,909)
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Net income (14,518) (4,521)
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Net income (loss) per share - basic (1.28) (0.63)
Net income (loss) per share - diluted (1.28) (0.63)
Conference Call
Management will host a conference call to discuss the results at 5:00 p.m. ET on
Thursday, June 26, 2008. Interested parties may participate in the conference
call by dialing 866-249-5225 (303-262-2141 for international callers). When
prompted, ask for the "Rand Logistics Fiscal Year 2008 Earnings Conference
Call."
A phone replay will be available from 8:00 p.m. ET on Thursday, June 26, 2008,
until 11:59 p.m. ET on Saturday, July 5, 2008. Dial (800) 405-2236 (305-590-3000
for international callers) and enter the code 11116280# to access the phone
replay.
The conference call will be webcast simultaneously on the Rand Logistics Inc.
website at www.randlogisticsinc.com under Investors: Webcasts & Presentations.
The webcast replay will be archived for 12 months.
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.
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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 self-unloading bulk carriers, including eight River
Class vessels and one River Class integrated tug/barge unit, and three
conventional bulk carriers, of which one is operated under a contract of
affreightment. 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 Piacente Group, Inc.
Laurence S. Levy, Chairman & CEO Lesley Snyder
Edward Levy, President (212) 481-2050
212-644-3450 Lesley@tpg-ir.com
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Rand Logistics, Inc.
Consolidated Statements of Operations
(U.S. Dollars in Thousands except for Earnings Per Share figures)
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Year Ended Year Ended
March 31, 2008 March 31, 2007
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REVENUE 94,769 79,186
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EXPENSES
Outside voyage charter fees 9,436 4,935
Vessel operating expenses 69,117 57,474
Repairs and maintenance 3,844 3,382
General and administrative 10,678 8,069
Depreciation 6,428 5,142
Amortization of drydock costs 1,476 388
Amortization of intangibles 1,912 1,433
Amortization of chartering agreement costs 337 144
Gain on sale of vessels by variable interest entity (667) --
Loss on retirement of owned vessel 1,735 --
(Gain) loss on foreign exchange (163) 128
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104,133 81,095
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INCOME BEFORE OTHER INCOME AND EXPENSES AND INCOME TAXES (9,364) (1,909)
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OTHER INCOME AND EXPENSES
Interest expense 4,883 3,778
Interest income (235) (349)
Loss on interest rate swap contract 1,338 135
Loss on extinguishment of debt 753 --
Loss on deconsolidation of VIE 302 --
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7,041 3,564
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INCOME BEFORE INCOME TAXES (16,405) (5,473)
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PROVISION (RECOVERY) FOR INCOME TAXES
Current 372 277
Deferred (5,360) (2,437)
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NET INCOME BEFORE MINORITY INTEREST (11,417) (3,313)
MINORITY INTEREST (176) (224)
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NET INCOME (11,241) (3,089)
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PREFERRED STOCK DIVIDENDS 1,295 1,182
COMMON STOCK DIVIDEND OF VIE -- 250
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STOCK WARRANT INDUCEMENT DISCOUNT 1,982 --
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NET (LOSS) INCOME APPLICABLE TO COMMON STOCKHOLDERS (14,518) (4,521)
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Net (loss) earnings per share basic ($1.28) ($0.63)
Net (loss) earnings per share diluted ($1.28) ($0.63)
Weighted average shares basic 11,355,068 7,225,083
Weighted average shares diluted 11,355,068 7,225,083
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Rand Logistics, Inc.
Selected Financial Information
Reconciliation of Income before Interest, Other Income and
Expenses and Income Taxes to EBITDA
(U.S. Dollars 000's)
Year ended March 31, 2008 Year ended March 31, 2007
Rand Logistics Impact of Rand Logistics Impact of
Inc. FIN46R Consolidated Inc. FIN46R Consolidated
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Income (loss) before interest, other income
and expenses and income taxes (11,872) 2,508 (9,364) (2,989) 1,080 (1,909)
Loss (gain) on foreign exchange (163) (163) 128 128
Gain on sale of vessels by variable
interest entity (667) (667)
Loss on retirement of owned vessel 1,735 1,735
Depreciation and amortization of dry-dock
costs and intangibles 9,101 1,052 10,153 6,456 651 7,107
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EBITDA (1,199) 2,893 1,694 3,595 1,731 5,326
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Rand Logistics, Inc.
Consolidated Balance Sheets
(U.S. Dollars 000's)
March 31, March 31,
2008 2007
---------------------------------
ASSETS
CURRENT
Cash and cash equivalents $ 5,626 $ 7,207
Accounts receivable 3,468 2,702
Prepaid expenses and other current assets 3,122 3,122
Income taxes receivable 193 263
Deferred income taxes 1,355 1,219
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Total current assets 13,764 14,513
BLOCKED ACCOUNT -- 2,700
PROPERTY AND EQUIPMENT, NET 96,349 66,859
DEFERRED INCOME TAXES 20,318 13,574
DEFERRED DRYDOCK COSTS, NET 9,082 5,895
INTANGIBLE ASSETS, NET 17,979 13,334
GOODWILL 10,193 6,363
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Total assets $ 167,685 $ 123,238
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LIABILITIES
CURRENT
Bank indebtedness $ 269 $ 5,097
Accounts payable 14,985 11,445
Accrued liabilities 7,243 3,237
Acquired Management Bonus Program 3,000 --
Interest rate swap contract 1,274 135
Income taxes payable 422 385
Deferred income taxes 1,508 589
Current portion of long-term debt 3,521 4,398
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Total current liabilities 32,222 25,286
LONG-TERM DEBT 66,896 34,864
ACQUIRED MANAGEMENT BONUS PROGRAM -- 3,000
DEFERRED INCOME TAXES 14,703 13,624
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Total liabilities 113,821 76,774
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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 58,350 38,407
Accumulated deficit (20,465) (5,947)
Accumulated other comprehensive income (loss) 1,078 (1,073)
Minority interest of variable interest entity -- 176
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Total stockholders' equity 53,864 46,464
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Total liabilities and stockholders' equity $ 167,685 $ 123,238
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