JEFFERSONVILLE, IN -- (Marketwire) -- 11/01/12 --
Highlights
- Adjusted EBITDAR for the trailing twelve month period ended September 30, 2012 was $229.5 million, including a year-to-date adjustment of $26.7 million for weather-related costs -- a 31.7% increase over Adjusted EBITDAR for the year ended December 31, 2011.
- Adjusted EBITDAR of $55.1 million for the current quarter, including an adjustment of $24.2 million for weather-related costs, increased 14.5% from prior year quarter.
- Operating income of $7.1 million in the current quarter was down $4.7 million but up $59.6 million for the nine months ended September 30, 2012 compared to the comparable prior year periods.
- Strong liquidity with $169.7 million in available borrowing capacity.
Commercial Barge Line Company (the "Company,") today announced results for the quarter and nine months ended September 30, 2012. Revenues for the current quarter decreased 27.9% over the prior year's third quarter to $166.9 million reflecting the challenging operating conditions on the Mississippi River resulting from the current year's extraordinary drought. Revenues for the current nine month period were relatively flat versus the prior nine month period at $603.7 million. For the current quarter, Adjusted EBITDAR, which reflects adjustments for losses associated with the current operating conditions, was $55.1 million, a 14.5% increase from $48.1 million for the prior quarter. Adjusted EBITDAR for the third quarter 2012 reflects $24.2 million of the adjustment related to lower revenue and higher costs incurred as a result of the drought. On a trailing-twelve month basis, Adjusted EBITDAR was $229.5 million, an increase of 31.7% over Adjusted EBITDAR of $174.3 million for the year ended December 31, 2011.
Commenting on the results, Mark Knoy, President and Chief Executive Officer, stated, "The low water levels on the Mississippi River and the extreme drought conditions during the third quarter have resulted in some of the most challenging conditions our industry has experienced in nearly a half century in terms of severity, duration and the impact on the agriculture industry. Current operating conditions and the drought's impact on what had previously been expected to be an all-time record US corn harvest have led to lower revenues and higher costs in the short-term. Initial USDA forecasts, had suggested harvest levels that would have resulted in corn exports through the Gulf at levels nearly twice what we currently expect them to be. In those conditions, the $21 million of revenue we actually realized in grain transport during the third quarter would have been significantly improved."
Mr. Knoy went on to say, "While the current quarter's events have set the industry back in the near-term, transportation of commodities via the inland waterways continues to be the most cost effective and environmentally friendly mode of transport and we believe the fundamentals of our business are strong. Industry sources project an increase in demand for covered hopper transport during 2013, after adjusting for the effect of the 2012 drought, increasing pressure on barge availability and rates. In addition, we remain optimistic that the operating improvements we achieved over the past several quarters will continue to drive sustainable positive momentum in our financial performance when river conditions return to more normal levels. We are also pleased with the continued opportunities that we are experiencing in the liquid market. In the near-term, we are maintaining our focus on operating efficiencies and taking additional actions to mitigate the impact of the current environment on our liquidity and financial performance."
Segment Revenues
Transportation segment revenues decreased 20.3% to $156.6 million while total affreightment ton-mile volume decreased 25.2% to 6.2 billion ton-miles in the current quarter. The average number of barges in affreightment service declined by 19.5% from prior year, accounting for a significant portion of this reduction. Low water conditions during the quarter also led to reduced loading drafts and increases in transit delays, resulting in fewer tons per barge loading and a reduced fleet turn in our dry cargo sector. These conditions directly resulted in a reduction in Transportation segment revenues of approximately $19.2 million and a decline of 842 million ton-miles, or approximately 10%, during the quarter. Export coal volumes increased approximately 70% for the quarter compared to prior year; however, rates somewhat offset this improvement as they declined 10.6% from prior year. The reduced grain harvest and drought related operating conditions led to fewer dry hopper barges deployed and lower tons per barge loaded. As a result, grain shipments declined from prior year by 32.6% and rates on grain shipments were down 11.3% from prior year.
Total liquid revenues increased by $2.3 million driven by a 30% increase in our dedicated petroleum services in the Gulf coast region, partially offset by a slight decline in chemical transportation services up river. Operating conditions had less negative impact on the Company's liquid transportation sector as these barges normally operate at much lower drafts than is required by dry cargo barges. Rates on liquid transport increased by 3.7% for the quarter compared to prior year.
Manufacturing segment revenues decreased 70.7% to $10.3 million, as 18 barges were sold to third-parties compared to 63 sold in the prior year quarter. This decline is attributable to the shift of a significant portion of the manufacturing segment's capacity to the production of barges for the transportation segment during the third quarter, as 15 new liquid barges and 35 new dry hopper barges were placed in service in the current quarter compared to two oversize liquid tank barges and 30 dry hopper barges in the prior year quarter.
Transportation segment revenues were down slightly at $513.1 million for the nine month period, with the third quarter revenue losses associated with the drought diminishing an otherwise solid year-over-year performance despite a difficult pricing environment. Total affreightment ton-mile volume decreased 4.6% to 21.7 billion ton-miles, produced with an affreightment barge fleet that was 17.3% smaller. After giving consideration to the estimated impact of the third quarter drought conditions discussed above, total ton-miles declined less than 1% for the year-to-date period.
Manufacturing segment revenues for the current nine month period increased 3.4% to $90.6 million, with 162 total barges sold to third parties in both the current and prior year nine month periods.
Operating Results
Operating income decreased by $4.7 million compared to the prior year quarter, reflecting the degradation in Mississippi River operating conditions experienced during the quarter. These losses were partially offset by a one-time gain of $11.4 million recognized on the resolution of an insurance claim related to a terminal damaged in the 2011 flood. For the quarter, the Company reported a net loss of $0.3 million. For the nine month period, operating income and net income rose $59.6 million and $35.6 million, respectively.
Adjusted EBITDAR for the three and nine months ended September 30, 2012 includes adjustments to reflect the impact of the challenging operating conditions on the Mississippi River experienced as a result of the current drought. These adjustments were estimated by comparing the Company's actual operating performance metrics to those that were achieved during the months leading up to the drought period. The impact related to the drought is attributable to the following factors:
- Reduction in Tons per Load: Extremely low Mississippi River levels limited the amount of cargo that could be carried due to reduced drafts. On average, the Company's dry cargo tons per barge declined by nearly 7% during the quarter compared to levels that were achieved prior to the drought. This decline in tons transported resulted in a reduction in EBITDAR of $9.8 million for the quarter and $10.9 million year-to-date.
- Reduction in Barges per Tow: The number of barges per tow was reduced along the Mississippi River in the most seriously impacted river segments between St. Louis and Vicksburg as part of an industry-wide agreement aimed at controlling disruptions to the flow of traffic on the river. As a result, the Company required more tow boats in service to deliver the same equivalent amount of freight based upon number of barges per tow. The cost of this excess towing capacity during the third quarter was $5.9 million and $6.0 million year-to-date.
- Reduction in Asset Turns: River conditions led to more traffic disruptions on the Mississippi River south of St. Louis, resulting in a reduced turn of fleet assets. As a result, the Company was required to use more tow boat power to deliver booked freight during the quarter and the slower turn also impacted the number of revenue earning days on the barge fleet. The impact of these incremental costs and lost margin totaled $8.5 million during the quarter and $9.8 million year-to-date.
In addition, Adjusted EBITDAR for the quarter has been adjusted to eliminate the gain realized on the insurance settlement discussed earlier of $11.4 million given its non-recurring nature.
After consideration of the adjustments discussed above, Adjusted EBITDAR was $55.1 million, a 14.5% increase over $48.1 million for the prior quarter. This increase over prior year can be attributed to improved boat productivity and other operating costs of $2.3 million, reduced repairs and maintenance costs of $6.7 million, increased gains on the sale of barges of $4.3 million and reduced compensation costs of $1.5 million, partially offset by lost margin on lower net affreightment volumes of $2.6 million and pricing of $1.8 million.
For the current nine month period, Adjusted EBITDAR was $169.3 million, a 48.5% increase over $114.0 million for the prior nine month period. On a trailing-twelve month basis, Adjusted EBITDAR was $229.5 million, an increase of 31.7% over Adjusted EBITDAR of $174.3 million for the year ended December 31, 2011.
Outlook
Commenting on the Company's outlook, Mr. Knoy said, "Operating conditions on the Mississippi River below St. Louis continue to impact our operating efficiencies at levels comparable to what we experienced during the third quarter. We cannot predict how long we will face these conditions but we will continue to tightly control expenses and maintain the safety of our employees, our equipment, the environment and our customers' cargoes until conditions improve.
"We continue to see opportunities in the energy sector, as US coal exports are strong and North American oil production continues to rise. Tank barge capacity in the industry continues to be in tight supply and we are exploring a number of strategies that we believe will take advantage of these market dynamics. However, a number of factors will impact the dry cargo market for the remainder of 2012 and into next year. Coal demand at domestic utilities remains sluggish as a result of high inventories and coal's recent competitive disadvantage to natural gas and increased emissions regulations. This reduced demand has led to pricing pressure for open-top barge freight in the US and we expect that dynamic to continue. In addition, the drought had a significant negative impact on this year's grain harvest, which is reducing projected grain exports to levels not seen since the mid-1990s. As a result, we expect that demand for grain transport in the coming months will be significantly reduced from demand in the prior year. Finally, the overall economic conditions in the United States have resulted in reduced industrial demand for our dry cargo services."
Mr. Knoy went on to say, "We are responding to these conditions by remaining very focused on operating efficiencies, including maintaining our network density and tight coordination of multiple freight movements to minimize non-revenue generating activities. In addition, we continue to review our previously announced capital spending plan to ensure that we are deploying our new investments to those opportunities that present the best returns."
Liquidity and Debt Position
At September 30, 2012, we had total long-term debt of $444.0 million, including $200.0 million related to the 2017 Notes, $25.0 million in unamortized premium recorded at the Acquisition-date to recognize their fair value, and $219.0 million drawn on our Credit Facility. At this level of debt, we had $169.7 million in remaining availability under our Credit Facility. The Credit Facility has no maintenance financial covenants unless borrowing availability is less than $48.8 million. At September 30, 2012, debt levels were $120.9 million above this threshold.
As of September 30, 2012, the present value of lease payments associated with revenue generating equipment was $45.5 million. Including the present value of these lease payments and excluding the unamortized premium on the 2017 Notes, the Company's total funded net long-term debt was $464.5 million as of September 30, 2012. The ratio of funded net debt to Adjusted EBITDAR for the trailing twelve months ended September 30, 2012 was 2.0 times, reflecting an improvement from 2.3 times as of December 31, 2011.
About the Company
Commercial Barge Line Company, headquartered in Jeffersonville, Indiana, is an integrated marine transportation and service company operating in the United States Jones Act trades. For more information about the Company, visit the Company's website at http://www.aclines.com/.
Non-GAAP Measures
Adjusted EBITDAR is a non-GAAP financial measure that the Company believes provides investors with a useful tool for analyzing its operating results as it eliminates the impact of certain non-comparable items and discontinued operations. The Company has included a reconciliation of its financial results to Adjusted EBITDAR elsewhere in this release.
Forward-Looking Statements
This release includes certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's present expectations and beliefs about future events. As with any projection or forecast, these statements are inherently susceptible to risks, uncertainty and changes in circumstance. Important factors could cause actual results to differ materially from those expressed or implied by the forward-looking statements and should be considered in evaluating the outlook of Commercial Barge Line Company. Risks and uncertainties are detailed from time to time in Commercial Barge Line Company's filings with the SEC, including our report on Form 10-K for the year ended December 31, 2011. Commercial Barge Line Company is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of changes, new information, subsequent events or otherwise.
COMMERCIAL BARGE LINE COMPANY
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited - In thousands)
Three Three Nine Nine
Months Ended Months Ended Months Ended Months Ended
September 30, September 30, September 30, September 30,
2012 2011 2012 2011
------------- ------------- ------------- -------------
Revenues
Transportation
and Services $ 156,588 $ 196,350 $ 513,057 $ 520,793
Manufacturing 10,297 35,086 90,636 87,640
------------- ------------- ------------- -------------
Revenues 166,885 231,436 603,693 608,433
------------- ------------- ------------- -------------
Cost of Sales
Transportation
and Services 138,232 172,372 447,389 498,302
Manufacturing 9,607 34,932 81,247 86,377
------------- ------------- ------------- -------------
Cost of
Sales 147,839 207,304 528,636 584,679
------------- ------------- ------------- -------------
Gross Profit 19,046 24,132 75,057 23,754
Selling, General
and
Administrative
Expenses 11,923 12,276 34,623 42,966
------------- ------------- ------------- -------------
Operating Income
(Loss) 7,123 11,856 40,434 (19,212)
------------- ------------- ------------- -------------
Other Expense
(Income)
Interest
Expense 7,874 7,553 23,185 22,645
Other, Net (181) (188) (484) (532)
------------- ------------- ------------- -------------
Other
Expense 7,693 7,365 22,701 22,113
------------- ------------- ------------- -------------
(Loss) Income
from Continuing
Operations
Before Income
Taxes (570) 4,491 17,733 (41,325)
Income Taxes
(Benefit) (273) (486) 6,659 (16,784)
------------- ------------- ------------- -------------
(Loss) Income
from Continuing
Operations (297) 4,977 11,074 (24,541)
Discontinued
Operations, Net
of Tax - 85 26 122
------------- ------------- ------------- -------------
Net (Loss)
Income $ (297) $ 5,062 $ 11,100 $ (24,419)
============= ============= ============= =============
COMMERCIAL BARGE LINE COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, December 31,
2012 2011
------------- -------------
(Unaudited)
ASSETS
Current Assets
Cash and Cash Equivalents $ 2,667 $ 938
Accounts Receivable, Net 77,700 87,368
Inventory 62,318 62,483
Prepaid and Other Current Assets 37,299 27,310
------------- -------------
Total Current Assets 179,984 178,099
Properties, Net 982,060 935,576
Investment in Equity Investees 6,619 6,470
Accounts Receivable, Related Parties, Net 12,558 12,021
Goodwill 17,692 17,692
Other Assets 37,590 45,521
------------- -------------
Total Assets $ 1,236,503 $ 1,195,379
============= =============
LIABILITIES
Current Liabilities
Accounts Payable 39,123 $ 48,653
Accrued Payroll and Fringe Benefits 14,273 20,035
Deferred Revenue 15,252 15,251
Accrued Claims and Insurance Premiums 12,340 13,823
Other Current Liabilities 41,840 41,977
------------- -------------
Total Current Liabilities 122,828 139,739
Long Term Debt 443,979 384,225
Pension and Post Retirement Liabilities 62,526 67,531
Deferred Tax Liability 180,665 178,602
Other Long Term Liabilities 35,746 46,335
------------- -------------
Total Liabilities 845,744 816,432
------------- -------------
SHAREHOLDER'S EQUITY
Other Capital 424,432 424,932
Retained Deficit (9,727) (20,826)
Accumulated Other Comprehensive Loss (23,946) (25,159)
------------- -------------
Total Shareholder's Equity 390,759 378,947
------------- -------------
Total Liabilities and Shareholder's
Equity $ 1,236,503 $ 1,195,379
============= =============
COMMERCIAL BARGE LINE COMPANY
NET INCOME (LOSS) TO ADJUSTED EBITDA AND EBITDAR RECONCILIATION
( Unaudited - Dollars in thousands)
For the Three Months For the Nine Months
Ended Ended
September 30, September 30,
---------------------- -------------------------
2012 2011 2012 2011
---------- ---------- ---------- ----------
Consolidated Net Income
(Loss) $ (297) $ 5,062 $ 11,100 $ (24,419)
Less Discontinued
Operations, Net of
Income Taxes - 85 26 122
---------- ---------- ---------- ----------
Net (Loss) Income from
Continuing Operations (297) 4,977 11,074 (24,541)
Adjustments from
Continuing Operations:
Interest Income - (4) (5) (162)
Interest Expense 7,874 7,553 23,185 22,645
Depreciation and
Amortization 26,148 26,626 80,353 82,020
Taxes (273) (486) 6,659 (16,784)
---------- ---------- ---------- ----------
EBITDA from Continuing
Operations 33,452 38,666 121,266 63,178
---------- ---------- ---------- ----------
Adjustments from
Continuing Operations
for EBITDAR:
Long-term Boat and
Barge Rents 3,822 3,873 11,592 11,550
---------- ---------- ---------- ----------
EBITDAR from Continuing
Operations 37,274 42,539 132,858 74,728
---------- ---------- ---------- ----------
Adjustments from
Discontinued Operations:
Interest Income - - - (18)
Depreciation and
Amortization - 23 - 61
---------- ---------- ---------- ----------
EBITDA from Discontinued
Operations - 108 26 165
---------- ---------- ---------- ----------
Adjustments from
Discontinued Operations
for EBITDAR:
---------- ---------- ---------- ----------
EBITDAR from Discontinued
Operations - 108 26 165
---------- ---------- ---------- ----------
Consolidated EBITDAR $ 37,274 $ 42,647 $ 132,884 $ 74,893
========== ========== ========== ==========
Other Adjustments to
EBITDAR
Other Non-cash or Non-
comparable charges
included in net income:
Continuing Ops
Share based
compensation and
restructuring $ 21 $ 943 $ 234 $ 4,586
Other
restructuring/
acqusition-related
costs and consulting 3,887 3,455 9,671 14,994
Other non-cash impacts
of purchase accounting (2,028) (730) (6,084) (1,952)
Purchase accounting
impact on boat/barge
gains 2,866 559 28,311 3,688
Gain on excess boat
sales 335 - (10,943) -
Insurance gain on 2011
flood claims (11,442) - (11,442) -
Drought, flood and
other costs 24,164 1,325 26,714 (A) 17,943
---------- ---------- ---------- ----------
Total Continuing Ops 17,803 5,552 36,461 39,259
---------- ---------- ---------- ----------
Adjusted EBITDAR from
Continuing Ops 55,077 48,091 169,319 113,987
---------- ---------- ---------- ----------
Discontinued Ops
Merger Related and
Consulting Expenses - - - 20
---------- ---------- ---------- ----------
Total Discontinued - - - 20
---------- ---------- ---------- ----------
Adjusted EBITDAR form
Discontinued Ops - 108 26 185
---------- ---------- ---------- ----------
Adjusted Consolidated
EBITDAR $ 55,077 $ 48,199 $ 169,345 $ 114,172
========== ========== ========== ==========
(A) In order to provide a comprehensive estimate of the total drought
effect, we have included $2,550 of drought related impact, incurred in
June, in the nine months ended September 30, 2012. This amount was not
included in adjusted EBITDAR in the second quarter 10Q filed on August 14,
2012 as materiality and duration of the drought were not known at that
time.
COMMERCIAL BARGE LINE COMPANY
Statement of Operating Income by Reportable Segment
(Dollars in thousands)
(Unaudited)
Reportable Segments Intersegment
-----------------------------
Transportation Manufacturing Eliminations Total
-------------- ------------- ------------ ----------
Three Months ended
September 30, 2012
Total revenue $ 156,727 $ 47,182 $ (37,024) $ 166,885
Less Intersegment
revenues 139 36,885 (37,024) -
-------------- ------------- ------------ ----------
Revenue from
external customers 156,588 10,297 - 166,885
Operating expense
Materials,
supplies and
other 38,374 - - 38,374
Rent 6,646 - - 6,646
Labor and fringe
benefits 28,262 - - 28,262
Fuel 38,161 - - 38,161
Depreciation and
amortization 25,719 - - 25,719
Taxes, other than
income taxes 2,684 - - 2,684
Gain on
disposition of
equipment (1,614) - - (1,614)
Cost of goods
sold - 9,607 - 9,607
-------------- ------------- ------------ ----------
Total cost of
sales 138,232 9,607 - 147,839
Selling, general
& administrative 11,059 864 - 11,923
-------------- ------------- ------------ ----------
Total operating
expenses 149,291 10,471 - 159,762
-------------- ------------- ------------ ----------
Operating income $ 7,297 $ (174) $ - $ 7,123
============== ============= ============ ==========
Three Months ended
September 30, 2011
Total revenue $ 196,694 $ 56,907 $ (22,165) $ 231,436
Less Intersegment
revenues 344 21,821 (22,165) -
-------------- ------------- ------------ ----------
Revenue from
external customers 196,350 35,086 - 231,436
Operating expense
Materials,
supplies and
other 63,391 - - 63,391
Rent 6,960 - - 6,960
Labor and fringe
benefits 28,875 - - 28,875
Fuel 45,347 - - 45,347
Depreciation and
amortization 24,645 - - 24,645
Taxes, other than
income taxes 3,094 - - 3,094
Gain on
disposition of
equipment 60 - - 60
Cost of goods
sold - 34,932 - 34,932
-------------- ------------- ------------ ----------
Total cost of
sales 172,372 34,932 - 207,304
Selling, general
& administrative 11,823 453 - 12,276
-------------- ------------- ------------ ----------
Total operating
expenses 184,195 35,385 - 219,580
-------------- ------------- ------------ ----------
Operating income $ 12,155 $ (299) $ - $ 11,856
============== ============= ============ ==========
COMMERCIAL BARGE LINE COMPANY
Statement of Operating Income by Reportable Segment
(Dollars in thousands)
(Unaudited)
Reportable Segments Intersegment
-----------------------------
Transportation Manufacturing Eliminations Total
-------------- ------------- ------------ ----------
Nine Months ended
September 30, 2012
Total revenue $ 513,489 $ 153,233 $ (63,029) $ 603,693
Less Intersegment
revenues 432 62,597 (63,029) -
-------------- ------------- ------------ ----------
Revenue from
external customers 513,057 90,636 - 603,693
Operating expense
Materials,
supplies and
other 146,209 - - 146,209
Rent 20,073 - - 20,073
Labor and fringe
benefits 85,084 - - 85,084
Fuel 120,960 - - 120,960
Depreciation and
amortization 76,019 - - 76,019
Taxes, other than
income taxes 8,545 - - 8,545
Gain on
disposition of
equipment (9,501) - - (9,501)
Cost of goods sold - 81,247 - 81,247
-------------- ------------- ------------ ----------
Total cost of
sales 447,389 81,247 - 528,636
Selling, general &
administrative 31,591 3,032 - 34,623
-------------- ------------- ------------ ----------
Total operating
expenses 478,980 84,279 - 563,259
-------------- ------------- ------------ ----------
Operating income $ 34,077 $ 6,357 $ - $ 40,434
============== ============= ============ ==========
Nine Months ended
September 30, 2011
Total revenue $ 521,674 $ 121,488 $ (34,729) $ 608,433
Less Intersegment
revenues 881 33,848 (34,729) -
-------------- ------------- ------------ ----------
Revenue from
external customers 520,793 87,640 - 608,433
Operating expense
Materials,
supplies and
other 181,647 - - 181,647
Rent 20,924 - - 20,924
Labor and fringe
benefits 84,801 - - 84,801
Fuel 126,919 - - 126,919
Depreciation and
amortization 76,072 - - 76,072
Taxes, other than
income taxes 9,207 - - 9,207
Gain on
disposition of
equipment (1,268) - - (1,268)
Cost of goods sold - 86,377 - 86,377
-------------- ------------- ------------ ----------
Total cost of
sales 498,302 86,377 - 584,679
Selling, general &
administrative 41,505 1,461 - 42,966
-------------- ------------- ------------ ----------
Total operating
expenses 539,807 87,838 - 627,645
-------------- ------------- ------------ ----------
Operating income $ (19,014) $ (198) $ - $ (19,212)
============== ============= ============ ==========
