SOURCE: American Commercial Lines Inc.

American Commercial Lines Inc.

November 01, 2012 16:30 ET

Commercial Barge Line Company Announces Results for Third Quarter 2012

JEFFERSONVILLE, IN--(Marketwire - Nov 1, 2012) -

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
Months Ended September 30,
    Three
Months Ended September 30,
    Nine
Months Ended September 30,
    Nine
Months Ended 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
Ended
    For the Nine Months
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 )
                                 

Contact Information

  • Contact Information

    Kim Durbin
    Manager, Corporate Communications
    812-288-1915
    Email Contact