JEFFERSONVILLE, Ind., July 29 /PRNewswire-FirstCall/ -- American Commercial Lines Inc. ("ACL" or the "Company") today announced results for the three and six months ended June 30, 2008. Revenues for the quarter were $322.7 million, a 23.5% increase compared with $261.2 million for the second quarter of 2007. Net income from continuing operations for the quarter was $3.4 million or $0.06 per diluted share, compared to net income of $5.9 million or $0.09 per diluted share for the second quarter of 2007. Results of the quarter ended June 30, 2008 included after-tax debt retirement expenses of $1.5 million or $0.03 per diluted share on the amendment of the Company's credit facility. Results for the quarter ended June 30, 2007 included after-tax debt retirement expenses of $1.4 million on the replacement of the Company's previous revolving credit facility which reduced earnings per share by $0.02.
Michael P. Ryan, President and Chief Executive Officer, stated, "The second quarter presented us with the dual challenges of inclement weather and continued cost inflation. Despite these obstacles, we were able to progress our strategy of building a better book of business and controlling our costs to improve profitability. While we understand that the results of one quarter do not represent a trend, and we continue to face industry volatility, we are pleased to have achieved some performance highlights in the second quarter. Our manufacturing segment's second quarter operating performance was the strongest in several years. In Transportation, we achieved revenue growth in our liquids business for the fifth consecutive quarter. We continue to experience steady demand and pricing strength across both liquid and dry businesses, realizing approximately 13% fuel-neutral rate increases. We are advancing our cost control efforts, with further reductions in SG&A expenses this quarter which, combined with our first quarter actions, will result in over $5.5 million of annualized savings.
In the second quarter, we also completed a modification of our credit facility which increased the allowable debt to EBITDA ratio through March 2009. We are strategically reviewing our capital needs, and we intend to have a new facility in place before the expiration of our current credit agreement in March 2009.
Finally, we recognize the magnitude of the July 23, 2008 collision between a tow operated by DRD Towing Company, which was towing an ACL barge containing oil, and a second vessel operated by Laurin Maritime. ACL is assisting the US Coast Guard and other agencies and organizations, providing our expertise to the clean-up efforts."
For the six months ended June 30, 2008 revenues were $593.2 million, a 21.2% increase compared with $489.5 million for the first six months of 2007. Net income from continuing operations for the six months ended June 30, 2008 was $5.7 million or $0.11 per diluted share, compared to net income of $4.8 million or $0.08 per diluted share for the first six months of 2007. Results for the six months ended June 30, 2008 included after-tax debt retirement expenses of $1.5 million or $0.03 per diluted share on the amendment of the Company's credit facility, and an after-tax benefit of $1.3 million or $0.03 per diluted share related to the decision not to withdraw from a multi- employer pension plan for certain represented employees of the Company's terminal operations. Results for the first six months of 2007 included after- tax debt retirement expenses of $14.9 million related to the retirement of the Company's 9.5% senior notes and the Company's previous revolving credit facility, which reduced earnings per share by $0.24.
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) from continuing operations for the second quarter of 2008 were $27.3 million with an EBITDA margin of 8.5% compared to $26.9 million for the second quarter of 2007 with an EBITDA margin of 10.3%. For the six months ended June 30, 2008, EBITDA from continuing operations was $50.3 million compared to $62.3 million for the six months ended June 30, 2007. EBITDA margin was 8.5% for the six months ended June 30, 2008 and 12.7% for the six months ended June 30, 2007. The attachment to this press release reconciles net income to EBITDA.
Transportation Results
The transportation segment's revenues were $217.2 million in the second quarter 2008, an increase of 16.8% over the second quarter of the prior year. The revenue increase was driven by 27.9% higher pricing on affreightment contracts, higher outside towing and charter/day rate revenues and higher revenue from scrapping barges, partially offset by lower ton-mile volumes. Slightly over half of the affreightment rate increases were driven by fuel escalations under the Company's contracts, and the remainder was attributable to higher fuel-neutral pricing. On average, compared to the second quarter of 2007, the fuel-neutral rate on the dry freight business increased 12.9% and the liquid freight business increased 13.2% in 2008. Total volume measured in ton-miles declined in the second quarter of 2008 to 9.6 billion from 10.8 billion in the same period of the prior year, a decrease of 10.7%. More than one-half of the volume declines in the quarter were attributable to lower grain volumes combined with lower bulk and coal volumes, all of which were adversely affected by flooding conditions throughout much of the inland waterway system. On average, 4.1% or 117 fewer barges operated in the second quarter of this year compared to the second quarter of last year.
Year-to-date, the 16.6% revenue increase over 2007 was driven by increases in outside towing and charter/day rate revenues and increased revenue from scrapping barges, combined with a 21.9% increase on affreightment contracts, partially offset by lower ton-mile volumes. Almost 60% of the affreightment rate increases were driven by fuel escalations and the remainder was attributable to higher fuel-neutral pricing. On average, compared to the six months ended June 30, 2007, the fuel neutral rate on the dry freight business increased 8.9% and it increased 9.8% on the liquid freight business. Year-to- date total volume measured in ton-miles declined in the first six months of 2008 to 19.7 billion from 21.0 billion in the same period of the prior year, a decrease of 6.4%, much of it attributable to inclement weather conditions and severe flooding. On average, 4.9% or 142 fewer barges operated in the first six months of this year compared to the first six months of the prior year.
Operating income in the transportation segment decreased 33.2% or $3.3 million to $6.7 million in the quarter ended June 30, 2008 compared to the same period of the prior year. This decline was due primarily to unfavorable weather-related operating conditions and significant increases in fuel prices. Continuing high-water conditions resulted in more than 16,000 idle barge days in the quarter, an increase of 287% or more than 12,000 days over the prior year. The Company estimates this negatively impacted the transportation segment's operating margin by approximately $6 million in the quarter. Fuel prices increased 72% over second quarter 2007, with an average cost of $3.44 per gallon. The Company estimates it had approximately $8.6 million in direct and indirect unrecovered fuel price increases during the quarter. These were partially offset by the higher fuel-neutral pricing and a $3.5 million increase in income from scrapping and disposal of barges.
Year-to-date operating income in the transportation segment decreased 56.4%, or $16.9 million, to $13.1 million in the six months ended June 30, 2008 compared to the same period of the prior year. This decline was also due to significant increases in fuel prices and unfavorable weather-related operating conditions. The Company estimates it had approximately $18.0 million in direct and indirect unrecovered fuel price increases. During the past six months high-water conditions caused by abnormally high precipitation levels along the inland waterway increased idle barge days 155% (more than 16,000 days) and drove additional cost inefficiencies of approximately $11 million. These were partially offset by the higher fuel-neutral pricing and a $3.1 million increase in income from scrapping and disposal of barges.
Manufacturing Results
ACL's manufacturing business, Jeffboat, completed 112 barges during the quarter ended June 30, 2008 compared to 101 barges in the second quarter of 2007. Jeffboat sold 93 dry hopper barges in the second quarters of 2008 and 2007. Jeffboat also sold 17 liquid tank barges and two special vessels during the second quarter, an increase of nine tank barges and two special vessels over the second quarter of 2007. Two liquid barges were built during the second quarter of 2007 for internal use by ACL in 2007 and none were built in the current year.
On a year-to-date basis Jeffboat sold 201 barges, 11 more barges than in the prior year. This included three fewer dry hopper barges, 11 more liquid tank barges and three additional special vessels. The two liquid barges built for internal use in the second quarter of 2007 were the only internal builds in the six months ended June 30, 2007.
Manufacturing revenues were $95.6 million in the second quarter of 2008 compared to $75.3 million during the same period last year. This increase was driven by the additional tank barge sales. Manufacturing operating margin increased quarter-over-quarter from 5.2% to 7.0%, an increase of $2.7 million to $6.7 million, primarily driven by improved labor utilization in the shipyard and the reduction in build hours per barge. Manufacturing lost five weather-related production days during the quarter, two more than second quarter 2007.
On a year-to-date basis, manufacturing revenues were $159.7 million for the six months ended June 30, 2008 compared to $127.5 million for the six months ended June 30, 2007. This increase was also driven by the additional liquid barge sales, despite 24 production days lost year-to-date due to weather, over twice as many as the 10 days lost in the first six months of 2007. Manufacturing operating margin increased on year-to-date basis from 4.7% to 6.3% compared to the six months ended June 30, 2007, an increase of $4.1 million to $10.0 million, primarily driven by improved labor utilization in the shipyard and the reduction in build-hours per barge.
Cash Flow and Debt
During the second quarter of 2008, the Company amended its Credit Agreement to provide additional financial flexibility by, among other actions, increasing its allowable leverage ratio from 3.0 times EBITDA to 3.75 times EBITDA. The maturity of the amended agreement was shortened to March 2009; hence, the Company is already exploring alternatives for a longer term credit facility.
ACL's liquidity under the amended Credit Agreement was $102 million on June 30, 2008 and the leverage ratio was 2.9 times EBITDA, well within the 3.75 limit.
During the second quarter, the Company had $12.9 million of capital expenditures, generated $50.9 million in cash from operations, and reduced its revolver by $27.9 million to $445 million.
For the six months ended June 30, 2008, ACL had $25.0 million of capital expenditures, used $8.5 million to complete the acquisition of Summit Contracting, and increased its revolver by $6.0 million.
Second Quarter 2008 Earnings Conference Call
The company will conduct a live webcast and conference call to review and discuss its second quarter 2008 financial results on Wednesday, July 30, 2008, at 10:00 a.m. Eastern time.
ACL's live webcast, featuring a slide presentation, may be accessed at http://www.aclines.com/. The telephone numbers to access the conference call are: Domestic (800) 261-3417 and International (617) 614-3673. The Participant Passcode is 20468436. For those unable to participate in the live webcast or conference call, the call will be archived at http://www.aclines.com/ within three hours of the conclusion of the webcast and the call and will remain available through September 29, 2008.
American Commercial Lines Inc., headquartered in Jeffersonville, Indiana, is an integrated marine transportation and service company operating in the United States Jones Act trades, with approximately $1 billion in annual revenues and approximately 3,300 employees as of December 31, 2007. For more information about American Commercial Lines Inc. generally, visit http://www.aclines.com/.
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 American Commercial Lines Inc. Risks and uncertainties are detailed from time to time in American Commercial Lines Inc.'s and its subsidiaries' filings with the SEC, including the Form 10-K for the year ended December 31, 2007 and the Company's Form 10-Q for the most recent quarter. American Commercial Lines Inc. 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.
AMERICAN COMMERCIAL LINES INC. CONDENSED CONSOLIDATED INCOME STATEMENTS (Dollars in thousands, except shares and per share amounts) (Unaudited) Quarter Ended June 30, Six Months Ended June 30, 2008 2007 2008 2007 Revenues Transportation and Services $227,085 $185,869 $433,539 $361,998 Manufacturing 95,609 75,345 159,671 127,460 Revenues 322,694 261,214 593,210 489,458 Cost of Sales Transportation and Services 200,698 158,462 381,736 299,066 Manufacturing 88,059 70,355 147,904 119,568 Cost of Sales 288,757 228,817 529,640 418,634 Gross Profit 33,937 32,397 63,570 70,824 Selling, General and Administrative Expenses 20,431 18,407 40,504 34,838 Operating Income 13,506 13,990 23,066 35,986 Other Expense (Income) Interest Expense 5,988 2,818 12,720 5,999 Debt Retirement Expenses 2,379 2,189 2,379 23,938 Other, Net (296) (491) (1,146) (1,721) Other Expenses 8,071 4,516 13,953 28,216 Income from Continuing Operations before Income Taxes 5,435 9,474 9,113 7,770 Income Taxes 2,071 3,574 3,446 2,936 Income from Continuing Operations 3,364 5,900 5,667 4,834 Discontinued Operations, Net of Tax 291 (3) 303 (49) Net Income $3,655 $5,897 $5,970 $4,785 Basic earnings per common share: Income from continuing operations $0.06 $0.10 $0.11 $0.08 Income from discontinued operations, net of tax 0.01 - 0.01 - Basic earnings per common share $0.07 $0.10 $0.12 $0.08 Earnings per common share - assuming dilution: Income from continuing operations $0.06 $0.09 $0.11 $0.08 Income from discontinued operations, net of tax 0.01 - 0.01 - Earnings per common share - assuming dilution $0.07 $0.09 $0.12 $0.08 Weighted Average Shares Outstanding: Basic 50,477,384 61,349,569 50,277,909 61,349,190 Diluted 50,897,559 62,645,171 50,911,237 62,858,400 AMERICAN COMMERCIAL LINES INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except shares and per share amounts) June 30, December 31, 2008 2007 (1) (Unaudited) ASSETS Current Assets Cash and Cash Equivalents $14,010 $5,021 Accounts Receivable, Net 126,062 114,921 Inventory 87,930 70,890 Deferred Tax Asset 2,430 2,582 Assets Held for Sale 2,934 325 Prepaid and Other Current Assets 30,310 26,336 Total Current Assets 263,676 220,075 Properties, Net 510,974 511,832 Investment in Equity Investees 3,511 3,456 Other Assets 23,388 25,448 Total Assets $801,549 $760,811 LIABILITIES Current Liabilities Accounts Payable $56,692 $61,130 Accrued Payroll and Fringe Benefits 15,890 15,720 Deferred Revenue 27,018 17,824 Accrued Claims and Insurance Premiums 16,848 15,647 Accrued Interest 3,027 1,688 Short Term Debt 445,000 - Current Portion of Long Term Debt 750 - Customer Deposits 8,456 5,596 Other Liabilities 38,473 32,036 Total Current Liabilities 612,154 149,641 Long Term Debt 700 439,760 Pension Liability 7,430 5,252 Deferred Tax Liability 27,981 26,569 Other Long Term Liabilities 14,047 14,198 Total Liabilities 662,312 635,420 STOCKHOLDERS' EQUITY Common stock; authorized 250,000,000 shares at $.01 par value; 63,227,300 and 62,549,666 shares issued and outstanding as of June 30, 2008 and December 31, 2007, respectively 632 626 Treasury Stock; 12,597,748 and 12,407,006 shares at June 30, 2008 and December 31, 2007, respectively (312,822) (309,517) Other Capital 288,699 279,266 Retained Earnings 153,879 148,426 Accumulated Other Comprehensive Income 8,849 6,590 Total Stockholders' Equity 139,237 125,391 Total Liabilities and Stockholders' Equity $801,549 $760,811 (1) The Condensed Consolidated Balance Sheet at December 31, 2007 has been derived from the audited consolidated financial statements at that date, but does not included all the information and footnotes required by generally accepted accounting principles. AMERICAN COMMERCIAL LINES INC. NET INCOME TO EBITDA RECONCILIATION (Dollars in thousands) (Unaudited) Quarter Ended Six Months Ended June 30, June 30, 2008 2007 2008 2007 Net Income from Continuing Operations $3,364 $5,900 $5,667 $4,834 Discontinued Operations, Net of Income Taxes 291 (3) 303 (49) Consolidated Net Income $3,655 $5,897 $5,970 $4,785 Adjustments from Continuing Operations: Interest Income (12) (103) (62) (127) Interest Expense 5,988 2,818 12,720 5,999 Debt Retirement Expenses 2,379 2,189 2,379 23,938 Depreciation and Amortization 13,488 12,554 26,134 24,765 Taxes 2,071 3,574 3,446 2,936 Adjustments from Discontinued Operations: Interest Income (13) (32) (32) (86) Depreciation and Amortization - - - - Taxes 158 (1) 165 (29) EBITDA from Continuing Operations 27,278 26,932 50,284 62,345 EBITDA from Discontinued Operations 436 (36) 436 (164) Consolidated EBITDA $27,714 $26,896 $50,720 $62,181 EBITDA from Continuing Operations by Segment: Transportation Net Income $(3,448) $1,981 $(4,458) $(1,379) Interest Income (10) (103) (58) (127) Interest Expense 5,988 2,818 12,720 5,999 Debt Retirement Expenses 2,379 2,189 2,379 23,938 Depreciation and Amortization 12,232 11,922 24,139 23,553 Taxes 2,071 3,574 3,446 2,936 Transportation EBITDA $19,212 $22,381 $38,168 $54,920 Manufacturing Net Income $6,807 $4,821 $10,314 $7,267 Interest Income - - - - Interest Expense - - - - Depreciation and Amortization 694 632 1,348 1,212 Taxes - - - - Total Manufacturing EBITDA 7,501 5,453 11,662 8,479 Intersegment Profit (87) (902) (234) (1,054) External Manufacturing EBITDA $7,414 $4,551 $11,428 $7,425 Management considers EBITDA to be a meaningful indicator of operating performance and uses it as a measure to assess the operating performance of the Company's business segments. EBITDA provides us with an understanding of one aspect of earnings before the impact of investing and financing transactions and income taxes. EBITDA should not be construed as a substitute for net income or as a better measure of liquidity than cash flow from operating activities, which is determined in accordance with generally accepted accounting principles ("GAAP"). EBITDA excludes components that are significant in understanding and assessing our results of operations and cash flows. In addition, EBITDA is not a term defined by GAAP and as a result our measure of EBITDA might not be comparable to similarly titled measures used by other companies. However, the Company believes that EBITDA is relevant and useful information, which is often reported and widely used by analysts, investors and other interested parties in our industry. Accordingly, the Company is disclosing this information to permit a more comprehensive analysis of its operating performance. AMERICAN COMMERCIAL LINES INC. Statement of Operating Income by Reportable Segment (Dollars in thousands) (Unaudited) Inter- Reportable Segments All segment Transpor- Manufac- Other Elimin- tation turing Segments ation Total Quarter ended June 30, 2008 Total revenue $217,527 $96,104 $10,161 $(1,098) $322,694 Intersegment revenues 340 495 263 (1,098) - Revenue from external customers 217,187 95,609 9,898 - 322,694 Operating expense Materials, supplies and other 77,392 - - - 77,392 Rent 5,731 - - - 5,731 Labor and fringe benefits 28,988 - - - 28,988 Fuel 65,270 - - - 65,270 Depreciation and amortization 12,232 - - - 12,232 Taxes, other than income taxes 3,765 - - - 3,765 Loss (gain) on disposition of equipment 75 - - - 75 Cost of goods sold - 88,059 7,245 - 95,304 Total cost of sales 193,453 88,059 7,245 - 288,757 Selling, general & administrative 17,020 872 2,539 - 20,431 Total operating expenses 210,473 88,931 9,784 - 309,188 Operating income $6,714 $6,678 $114 $- $13,506 Quarter ended June 30, 2007 Total revenue $186,057 $81,218 $- $(6,061) $261,214 Intersegment revenues 188 5,873 - (6,061) - Revenue from external customers 185,869 75,345 - - 261,214 Operating expense Materials, supplies and other 67,932 - - - 67,932 Rent 6,264 - - - 6,264 Labor and fringe benefits 27,819 - - - 27,819 Fuel 40,372 - - - 40,372 Depreciation and amortization 11,922 - - - 11,922 Taxes, other than income taxes 4,112 - - - 4,112 Gain on disposition of equipment 41 - - - 41 Cost of goods sold - 70,355 - - 70,355 Total cost of sales 158,462 70,355 - - 228,817 Selling, general & administrative 17,357 1,050 - - 18,407 Total operating expenses 175,819 71,405 - - 247,224 Operating income $10,050 $3,940 $- $- $13,990 Six Months ended June 30, 2008 Total revenue $422,464 $160,657 $12,091 $(2,002) $593,210 Intersegment revenues 456 986 560 (2,002) - Revenue from external customers 422,008 159,671 11,531 - 593,210 Operating expense Materials, supplies and other 154,819 - - - 154,819 Rent 11,936 - - - 11,936 Labor and fringe benefits 56,037 - - - 56,037 Fuel 119,510 - - - 119,510 Depreciation and amortization 24,139 - - - 24,139 Taxes, other than income taxes 7,909 - - - 7,909 Gain on disposition of equipment (284) - - - (284) Cost of goods sold - 147,904 7,670 - 155,574 Total cost of sales 374,066 147,904 7,670 - 529,640 Selling, general & administrative 34,840 1,760 3,904 - 40,504 Total operating expenses 408,906 149,664 11,574 - 570,144 Operating income $13,102 $10,007 $(43) $- $23,066 Six Months ended June 30, 2007 Total revenue $362,307 $133,898 $- $(6,747) $489,458 Intersegment revenues 309 6,438 - (6,747) - Revenue from external customers 361,998 127,460 - - 489,458 Operating expense Materials, supplies and other 129,715 - - - 129,715 Rent 12,237 - - - 12,237 Labor and fringe benefits 52,916 - - - 52,916 Fuel 74,391 - - - 74,391 Depreciation and amortization 23,553 - - - 23,553 Taxes, other than income taxes 7,838 - - - 7,838 Loss on disposition of equipment (1,584) - - - (1,584) Cost of goods sold - 119,568 - - 119,568 Total cost of sales 299,066 119,568 - - 418,634 Selling, general & administrative 32,891 1,947 - - 34,838 Total operating expenses 331,957 121,515 - - 453,472 Operating income $30,041 $5,945 $- $- $35,986 AMERICAN COMMERCIAL LINES INC. SELECTED FINANCIAL AND NONFINANCIAL DATA (Dollars in thousands except where noted) (Unaudited) Quarter Ended Six Months Ended June 30, June 30, 2008 2007 2008 2007 Consolidated EBITDA $27,714 $26,896 $50,720 $62,181 Transportation Revenue and EBITDA Revenue $217,187 $185,869 $422,008 $361,998 EBITDA 19,212 22,381 38,168 54,920 Manufacturing Revenue and EBITDA (External and Internal) Revenue $96,104 $81,218 $160,657 $133,898 EBITDA 7,501 5,453 11,662 8,479 Manufacturing External Revenue and EBITDA Revenue $95,609 $75,345 $159,671 $127,460 EBITDA 7,414 4,551 11,428 7,425 Average Domestic Barges Operated Dry 2,359 2,485 2,389 2,543 Liquid 384 375 386 374 Total 2,743 2,860 2,775 2,917 Fuel Price (Average Dollars per gallon) $3.44 $2.01 $3.12 $1.89 Capital Expenditures (including software) $13,455 $25,243 $26,049 $32,819 Management considers EBITDA to be a meaningful indicator of operating performance and uses it as a measure to assess the operating performance of the Company's business segments. EBITDA provides us with an understanding of the Company's revenues before the impact of investing and financing transactions and income taxes. EBITDA should not be construed as a substitute for net income or as a better measure of liquidity than cash flow from operating activities, which is determined in accordance with generally accepted accounting principles ("GAAP"). EBITDA excludes components that are significant in understanding and assessing our results of operations and cash flows. In addition, EBITDA is not a term defined by GAAP and as a result our measure of EBITDA might not be comparable to similarly titled measures used by other companies. However, the Company believes that EBITDA is relevant and useful information, which is often reported and widely used by analysts, investors and other interested parties in our industry. Accordingly, the Company is disclosing this information to permit a more comprehensive analysis of its operating performance.
