Great Lakes bulk carrier operator Rand Logistics, Inc. (Nasdaq:RLOG) today reported results for its FY 2012 first quarter ended June 30, 2011.
Marine freight revenue (excluding fuel and other surcharges, and outside charter revenue) was $30.7 million, an increase of 8.1 percent from $28.4 million. The increase came from a 4.1 percent increase in number of days sailed, contractual price increases, new business and an increase in the average size of vessels operating following the February 2011 acquisition of two vessels. The company says the increase in revenues was "somewhat offset" by inefficiencies in matching fleet configurations with trade patterns as a result of the late sailing of several vessels due to delays in completing winter work, and the Michipicoten being out of service for 61 days in the quarter ended June 30, 2011 due to its repowering from steam to diesel.
Marine freight revenue per sailing day increased by $1,054, or 3.8 percent, to $28,821.
Vessel operating expenses per sailing day increased by $3,736, or 16.2 percent, to $26,832. This increase was primarily attributable to higher fuel costs, which the company contractually passes through to customers, and a stronger Canadian dollar.
Winter repairs and maintenance expenses were approximately $0.8 million in the three month period ended June 30, 2011 compared to a negligible amount in the three month period ended June 30, 2010 due to the timing of completing winter work.
Operating income plus depreciation and amortization increased 10.4 percent to $9.7 million for the quarter compared to $8.8 million for the comparable quarter last year.
Scott Bravener, President of Lower Lakes stated, "We are pleased with our first quarter results. Our customer demand is the best that it has been since 2008. We are fully booked for the remainder of the sailing season and based on current market demand we expect to again operate certain of our vessels into January."
"Several vessels experienced start up delays during the quarter ended June 2011 due to winter repair work not being completed on schedule. This resulted in 42 lost sailing days in April 2011, in addition to 30 lost days related to the Michipicoten repowering. These lost sailing days caused inefficiencies in matching fleet configuration with trade patterns. In addition, the late sailings resulted in approximately $0.8 million of winter repairs and maintenance expenses in the three month period ended June 30, 2011 compared to a negligible amount in the three month period ended June 30, 2010."
"The Michipicoten repowering project, which began in December 2010, was successfully completed in May 2011. The benefits of the conversion include increased revenues from higher speeds and lower costs from reduced fuel consumption, labor efficiencies and reduced maintenance and other operating expenses. This was our last steam powered vessel to be converted to diesel power and we believe that our fleet has among the newest and most efficient propulsion systems on the Great Lakes. Since introducing the vessel back into service, we have been satisfied with both its financial and operating results. Additionally, the vessels which we acquired in February 2011 are performing well and we believe that there is an opportunity for these vessels to exceed the performance expectations that the transaction was based on. Finally, our newly acquired vessel, the Manitoba, formerly known as the Maritime Trader, went into service on August 6, 2011 and is already helping to balance our capacity and customer demand more effectively."
Laurence S. Levy, Chairman and CEO of Rand, commented, "We continue to believe that the long term fundamentals of our business and the end markets that we serve remain strong. Our outlook for fiscal year 2012 remains positive given the contractual nature of our business which is providing excellent visibility for the remainder of the sailing season, the high barriers to entry into our markets and our financial performance to date. We have now completed half of the 2011 sailing season, which typically accounts for approximately two-thirds of our annual operating income plus depreciation and amortization. Based on results to date, we are reaffirming our guidance that assuming a full sailing season of the Michipicoten, operating income plus depreciation and amortization will be between $34 and $36 million and that free cash flow per common share will be between $1.15 and $1.30."
"Over the next 24 months, we remain highly confident that we will have the opportunity to accelerate our free cash flow growth as we improve the profitability of our fleet through existing contractual price increases and by better aligning our assets to the trade patterns that they are best suited for. Continued improvement in vessel utilization resulting from increased customer demand reinforces our confidence in a positive future for Rand, our customers, employees and shareholders."
August 15, 2011
Rand Logistics reports increased revenue
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