Horizon Lines reports record earnings
Horizon Lines, Inc. reported record earnings for the fourth quarter and full year of 2006.
"The fourth quarter brought to a very successful close a milestone year in 2006 for Horizon Lines," said Chuck Raymond, Chairman, President and Chief Executive Officer. "We completed the transition that commenced with our September 2005 initial public offering, from private equity ownership to full public company status. The implementation of our fleet enhancement strategic initiative continued ahead of schedule. Horizon Edge, our process re- engineering and customer service initiative, was launched and captured benefits in excess of first-year targets. We also renewed and extended through 2010 all of our principal commercial and operating arrangements with the A.P. Moller Maersk Group. Horizon Services Group, our technology company, accomplished an industry first with the implementation of radio frequency identification (RFID) technology and broadened its outreach as a third party provider of technology services. We elected application of the tonnage tax, which provides for significant tax savings in 2006 and beyond. Our company continued to deliver strong and improving financial results, setting both earnings and cash flow records in 2006. Finally, we strengthened our Board with the addition of three highly qualified Board Members that will help set the course for Horizon Lines in 2007 and beyond."
Net income for the fourth quarter of 2006 was $10.6 million or $.32 basic earnings per share compared to a net loss of $(10.9) million or $(.38) basic earnings per share in 2005's fourth quarter. After adjustment to exclude non- recurring secondary offering, IPO and transaction-related expenses, and loss on early extinguishment of debt, and to include interest expense savings on debt prepayment, and to apply tonnage tax on pro-forma basis, adjusted net income was $11.5 million or $.34 basic earnings per share in the fourth quarter of 2006 compared to $8.0 million or $ .24 basic earnings per share in the fourth quarter of 2005. The fourth quarter 2006 adjusted basic earnings per share of $.34 was $.01 - $.03 higher than earnings guidance of $.31 - $.33.
Operating revenue increased by $8.5 million or 3% to $287.5 million compared to $279.0 million in the fourth quarters of 2006 and 2005, respectively. This revenue growth was fueled by cargo mix upgrades, rate increases and higher fuel recovery, more than offsetting some volume softness.
Operating income in the fourth quarter 2006 was $22.5 million compared to $12.5 million for the fourth quarter 2005. Operating income would have been $22.9 million in the 2006 fourth quarter, and $19.9 million in the fourth quarter of 2005, excluding the impacts of non-recurring secondary offering, IPO and transaction-related expenses.
Earnings before net interest expense, taxes, depreciation and amortization (EBITDA) was $37.9 million for the fourth quarter 2006 compared to $15.3 million for the 2005 fourth quarter. Excluding the non-recurring secondary offering, IPO and transaction-related expenses, and loss on early extinguishment of debt, EBITDA was $38.9 million in the 2006 fourth quarter versus $35.9 million in the fourth quarter of 2005.
For the full year 2006, net income was $72.4 million or $2.16 basic earnings per share compared to a net loss of $(18.3) million or $(1.05) basic earnings per share in 2005. After adjustment to exclude non-recurring secondary offering expenses and the loss on early extinguishment of debt, 2006 adjusted net income was $74.8 million or $2.23 basic earnings per share, or $.02 - $.04 better than earnings guidance of $2.19 - $2.21. Excluding non- recurring secondary offering, IPO and transaction-related expenses, management fees, and loss on early extinguishment of debt, and to apply tonnage tax on a pro-forma basis, interest expense savings on debt prepayment, and net savings on vessel lease buyouts, adjusted net income was $45.0 million or $1.34 basic earnings per share in 2006 versus $34.8 million or $1.04 basic earnings per share in 2005. Please see attached schedules for reconciliation of fourth quarter and full year 2006 adjusted results and EBITDA amounts to reported results.
"The fourth quarter brought to a very successful close a milestone year in 2006 for Horizon Lines," said Chuck Raymond, Chairman, President and Chief Executive Officer. "We completed the transition that commenced with our September 2005 initial public offering, from private equity ownership to full public company status. The implementation of our fleet enhancement strategic initiative continued ahead of schedule. Horizon Edge, our process re- engineering and customer service initiative, was launched and captured benefits in excess of first-year targets. We also renewed and extended through 2010 all of our principal commercial and operating arrangements with the A.P. Moller Maersk Group. Horizon Services Group, our technology company, accomplished an industry first with the implementation of radio frequency identification (RFID) technology and broadened its outreach as a third party provider of technology services. We elected application of the tonnage tax, which provides for significant tax savings in 2006 and beyond. Our company continued to deliver strong and improving financial results, setting both earnings and cash flow records in 2006. Finally, we strengthened our Board with the addition of three highly qualified Board Members that will help set the course for Horizon Lines in 2007 and beyond."
Net income for the fourth quarter of 2006 was $10.6 million or $.32 basic earnings per share compared to a net loss of $(10.9) million or $(.38) basic earnings per share in 2005's fourth quarter. After adjustment to exclude non- recurring secondary offering, IPO and transaction-related expenses, and loss on early extinguishment of debt, and to include interest expense savings on debt prepayment, and to apply tonnage tax on pro-forma basis, adjusted net income was $11.5 million or $.34 basic earnings per share in the fourth quarter of 2006 compared to $8.0 million or $ .24 basic earnings per share in the fourth quarter of 2005. The fourth quarter 2006 adjusted basic earnings per share of $.34 was $.01 - $.03 higher than earnings guidance of $.31 - $.33.
Operating revenue increased by $8.5 million or 3% to $287.5 million compared to $279.0 million in the fourth quarters of 2006 and 2005, respectively. This revenue growth was fueled by cargo mix upgrades, rate increases and higher fuel recovery, more than offsetting some volume softness.
Operating income in the fourth quarter 2006 was $22.5 million compared to $12.5 million for the fourth quarter 2005. Operating income would have been $22.9 million in the 2006 fourth quarter, and $19.9 million in the fourth quarter of 2005, excluding the impacts of non-recurring secondary offering, IPO and transaction-related expenses.
Earnings before net interest expense, taxes, depreciation and amortization (EBITDA) was $37.9 million for the fourth quarter 2006 compared to $15.3 million for the 2005 fourth quarter. Excluding the non-recurring secondary offering, IPO and transaction-related expenses, and loss on early extinguishment of debt, EBITDA was $38.9 million in the 2006 fourth quarter versus $35.9 million in the fourth quarter of 2005.
For the full year 2006, net income was $72.4 million or $2.16 basic earnings per share compared to a net loss of $(18.3) million or $(1.05) basic earnings per share in 2005. After adjustment to exclude non-recurring secondary offering expenses and the loss on early extinguishment of debt, 2006 adjusted net income was $74.8 million or $2.23 basic earnings per share, or $.02 - $.04 better than earnings guidance of $2.19 - $2.21. Excluding non- recurring secondary offering, IPO and transaction-related expenses, management fees, and loss on early extinguishment of debt, and to apply tonnage tax on a pro-forma basis, interest expense savings on debt prepayment, and net savings on vessel lease buyouts, adjusted net income was $45.0 million or $1.34 basic earnings per share in 2006 versus $34.8 million or $1.04 basic earnings per share in 2005. Please see attached schedules for reconciliation of fourth quarter and full year 2006 adjusted results and EBITDA amounts to reported results.