Rand Logistics, Inc. (RLOG) (“Rand”) announced its financial results for the fiscal year 2015 first quarter ended June 30, 2014. Quarter Ended June 30, 2014
Versus Quarter Ended June 30, 2013 Financial Results
• Operating income plus depreciation, amortization of drydock costs and amortization of intangibles was $12.0 million, which was consistent with the prior year period. This was achieved despite challenging weather and ice conditions in April 2014, which caused operating income plus depreciation, amortization of drydock costs and amortization of intangibles in April 2014 to be $3.0 million below April 2013. This shortfall was offset by May and June 2014 operating results, which were materially better than the prior year comparable periods due to strong market conditions and efficient operating execution. • Marine freight revenue (which excludes fuel and other surcharges, and outside charter revenue) decreased by 7.6% to $36.6 million from $39.6 million. This decrease was primarily attributable to a 13.5% decrease in tonnage carried and 124 fewer Sailing Days due to adverse April weather and ice conditions on the Great Lakes impacting the start of the sailing season. This decline was partially offset by contractual price increases, an improvement in commodity mix and an increase in the percentage of time our vessels were in revenue loaded condition. Excluding the impact of currency changes, freight revenue decreased 4.4% during the 2015 fiscal first quarter compared to the 2014 fiscal first quarter. • Freight and related revenue per Sailing Day increased by 2.5%, or $790, to $32,173 per Sailing Day from $31,383 per Sailing Day. The change in the mix of cargos carried and an increase in the percentage of time our vessels were in revenue loaded condition more than offset inefficiencies that we encountered due to adverse April weather and ice conditions. Excluding the negative impact of currency changes, freight revenue per day increased by 6.0%, or $1,879, to $33,262 per Sailing Day during the quarter. • Total revenue decreased by 10.5% to $43.3 million from $48.4 million. This decrease was primarily attributable to reduced tonnage carried, a 9.8% decrease in the number of days we sailed, reduced fuel surcharges and a weaker Canadian dollar, partially offset by increased prices, an improved commodity mix and an increase in the percentage of time our vessels were in revenue loaded condition. • Vessel operating expenses decreased by 14.2% to $28.0 million compared to $32.7 million. This decrease was primarily due to fewer Sailing Days and a weaker Canadian dollar, partially offset by increased fuel consumption and other costs due to challenging operating conditions at the start of the sailing season. Vessel operating expenses per Sailing Day declined by 4.9% to $24,628 from $25,898.
“We were pleased with our first quarter financial results,” commented Laurence Levy, Executive Chairman of Rand. “As a result of adverse ice and weather conditions on the Great Lakes, the start of the sailing season was delayed, resulting in a reduction of 124 Sailing Days in the quarter ended June 30, 2014 versus the comparable quarter last year. Those of our vessels that operated in April 2014 experienced significant weather delays and trade pattern inefficiencies. As a result, operating income before depreciation and amortization was $3.0 million less in April 2014 compared to April 2013. These adverse weather conditions abated by mid-May and we enjoyed excellent operational execution throughout the remainder of the quarter. As a result, our vessel margin per day for the entire quarter increased 5% to $12,390 despite April’s challenging sailing conditions.”
Scott Bravener, President of Lower Lakes, stated, “We continue to experience year-over-year improvements in the operating reliability of the fleet. During the quarter, we reduced mechanical delays by a further 7.7% compared to the same quarter last year and we have yet to experience any lost days due to incidents in the 2014 sailing season. While operations in April were challenging due to weather conditions, we were pleased with our vessel margin per day in May and June. The improvement in margin per day is being driven by an improved commodity mix resulting from new business wins and operating efficiencies that we are capturing by virtue of executing our strategy to increase the percentage of time that our vessels are in revenue loaded condition. Specifically, during the months of May and June, the former of which was modestly impaired by weather and ice conditions, vessel margin per day exceeded the prior year by 11.5%, or 15.0% excluding the impact of currency changes.”
Laurence Levy concluded, “Business conditions continue to be the best that we have experienced in the last five years and we believe that demand will remain strong throughout the 2014 sailing season. This will allow us to continue to optimize our trade patterns and improve the percentage of time that our vessels are in revenue loaded condition, allowing us to capture the inherent operating leverage in our business. Organic growth and recent market share gains also support the introduction of our newest and most efficient vessel in the second half of calendar 2015, which will be accretive to future profitability and earnings per share.”