Horizon Lines posts Q3 financial results
Horizon Lines, Inc. (OTCQB: HRZL) today reported financial results for the fiscal third quarter ended September 23, 2012. Financial results are presented on a continuing operations basis, excluding the previously discontinued trans-Pacific FSX service and logistics operations, the shipping company press release said.
Sam Woodward, President and Chief Executive Officer commented: “Horizon Lines generated a 3.4% improvement in container volume and a 2.9% increase in container revenue, net of fuel surcharges, for the third quarter, relative to the same period a year ago. Volume increases in Hawaii and Alaska offset volume weakness in Puerto Rico. However, third-quarter adjusted EBITDA of $27.0 million declined by $6.0 million from a year ago, largely due to $4.6 million of incremental transit and crew costs associated with dry-docking three Puerto Rico vessels in China. We are doing this to facilitate extensive maintenance and highquality enhancements in the most cost-efficient manner possible in order to improve vessel reliability and service integrity in Puerto Rico. Excluding these incremental dry-dock transit and crew costs, the remaining adjusted EBITDA shortfall of $1.4 million reflects a decline in non-transportation revenue, as well as increased maintenance, terminal operations, vessel operating and overhead costs, primarily due to contractual rate increases, port security fees and higher container volumes,” Mr. Woodward said. “These negative variances were partially offset by increased volume, associated improved fuel-cost recovery and modest container rate improvements.”
Some of the company's Q3 2012 financial highlights are as follows:
Third-quarter operating revenue from continuing operations increased 4.5% to $279.6 million from $267.6 million a year ago. The factors driving the $12.0 million revenue improvement were: a $6.3 million gain in volume; a $5.6 million increase from higher container revenue rates; and a $0.7 million rise from fuel surcharges. These increases were partially offset by a $0.6 million decline in nontransportation services revenue.
GAAP operating income from continuing operations for the 2012 third quarter totaled $13.2 million, compared with an operating loss of $99.7 million a year ago. GAAP operating income for the 2012 third quarter includes costs of $0.5 million for antitrust-related legal expenses, severance and refinancing costs. The GAAP operating loss for the 2011 third quarter includes a $117.5 million goodwill impairment charge and $0.8 million for antitrust-related legal expenses and employee severance (see reconciliation tables for specific line-item amounts). Adjusting for these items, third-quarter 2012 adjusted operating income totaled $13.7 million, compared with $18.6 million a year ago.
EBITDA from continuing operations totaled $26.4 million for the 2012 third quarter, compared with a negative $85.3 million for the same period a year ago. Adjusted EBITDA from continuing operations for the third quarter of 2012 was $27.0 million, compared with $33.0 million for 2011. EBITDA and adjusted EBITDA for the 2012 and 2011 third quarters were impacted by the same factors affecting operating income. Additionally, 2012 adjusted EBITDA excludes a $0.3 million gain on marking the conversion feature in the company’s convertible debt to fair value, as well as a $0.4 million loss on the conversion of debt to equity (see reconciliation tables for specific line item amounts).
On a GAAP basis, third-quarter net income from continuing operations totaled $1.4 million, or $0.02 per diluted share on a weighted average of 90.7 million fully diluted shares outstanding. This compares with a 2011 third-quarter net loss from continuing operations of $111.7 million, or $90.36 per share on 1.2 million weighted average shares outstanding. On an adjusted basis, 2012 third-quarter net income from continuing operations totaled $2.3 million, or $0.03 per fully diluted share, compared with net income of $6.1 million, or $4.93 per fully diluted share, a year ago. Adjusted net income for the 2012 and 2011 third quarters reflects the same items impacting adjusted EBITDA in each period. Additionally, adjusted net income for both periods excludes the non-cash accretion of antitrust-related legal settlements and includes the tax impact of the adjustments (see reconciliation tables for specific line item amounts).
About Horizon Lines
Horizon Lines, Inc. is one of the USA leading domestic ocean shipping companies and the only ocean cargo carrier serving all three noncontiguous domestic markets of Alaska, Hawaii and Puerto Rico from the continental United States. The company maintains a fleet of 15 fully Jones Act qualified vessels and operates five port terminals in Alaska, Hawaii and Puerto Rico. A trusted partner for many of the nation’s leading retailers, manufacturers and U.S. government agencies, Horizon Lines provides reliable transportation services that leverage its unique combination of ocean transportation and inland distribution capabilities to deliver goods that are vital to the prosperity of the markets it serves. The company is based in Charlotte, NC, and its stock trades on the over-the-counter market under the symbol HRZL.