AUGUST 7, 2013 — Great Lakes operator Rand Logistics, Inc. (Nasdaq:RLOG) today announced its financial results for its fiscal year 2014 first quarter ended June 30, 2013.
Rand, which operates both U.S.-flag and Canadian-flag vessels, saw net income fall to $1,724,000 compared to $2,337,000 in the prior year first quarter.
Marine freight revenue (excluding fuel and other surcharges) increased by 9.0% to $39.6 million from $36.3 million. This increase was primarily attributable to contractual price increases and 88 additional sailing days. In addition, certain customer contract renewals included a reset of the base fuel price to reflect prevailing market conditions for fuel, resulting in an increase in marine freight revenue and an equivalent reduction in fuel surcharges.
Marine freight revenue per sailing day increased by 1.4% to $31,383 from $30,943. This increase was offset by a weaker Canadian dollar and a shift in sailing days to aggregates from iron ore and coal.
Total revenue declined by 2.4% to $48.4 million from $49.6 million. This decrease was primarily attributable to reduced fuel surcharges and a mix shift from iron ore and coal to lower revenue generating commodities. A 7.4% increase in tons hauled and a 7.5% increase in days sailed helped to mitigate the impact of the mix shift.
Vessel operating expenses decreased by 1.4% to $32.7 million from $33.2 million. This decrease was primarily attributable to a reduction in vessel incident costs, partially offset by a greater number of sailing days. Due in part to improved cost control, vessel operating expenses per sailing day declined by 8.3%, or $2,345 per day, to $25,898 from $28,243.
Operating income plus depreciation and amortization decreased by 2.6% to $12.0 million from $12.3 million. The weaker Canadian dollar comprised $0.2 million of this reduction in operating income plus depreciation and amortization.
"We are pleased with our execution in the first quarter," commented Laurence Levy, Executive Chairman of Rand. "We believe that we are starting to see the benefits from investments made over the last two years in our operating procedures and protocols as well as our engineering team. By eliminating lost sailing days due to vessel incidents in the quarter and reducing lost time due to mechanical delays by 44.1%, we were able to significantly reduce our vessel costs per day. We reduced the impact of lost iron ore and coal carrying days by substituting other commodities, including salt and aggregates, resulting in a 7.4% increase in our total tonnage hauled."
Scott Bravener, President of Lower Lakes, added, "The elimination of lost days due to incidents led to marked improvements in the operating performance of our fleet in the quarter and contributed to an 88 day, or 7.5%, increase in sailing days. In the comparable period last season, we had 60 lost sailing days due to incidents. Inclement weather patterns in the Great Lakes region during the quarter proved challenging and led to the delayed opening of certain customer facilities, an increase in weather delays due to ice conditions and extensive flooding in some of the tributaries that we service. The higher than average precipitation has resulted in a rapid rebound for Great Lakes water levels and all of the lakes are now above their year ago levels. We have been successful in reducing our vessel operating expenses per day by 8.3% in the quarter compared to last year's comparable quarter and as a result we achieved a vessel margin per day of $11,807 for our 15 operating vessels, despite the challenging operating environment."
Laurence Levy concluded, "We believe that fiscal 2014 is off to a solid start. Rand's fundamentals remain intact and we are well positioned to achieve further improvements in profitability and gain additional market share. We continue to leverage our low operating cost position and have recently added new business opportunities within our existing customer network for the 2014 sailing season that should improve our commodity mix, our revenue and profitability and further solidify our position as the leader in the river class market. In addition, we are focusing significant resources on improving our data capture and analytical capabilities to further maximize fleet efficiency and optimize returns