UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 1, 2015
HORIZON LINES, INC.
(Exact name of registrant as specified in its Charter)
Delaware | 001-32627 | 74-3123672 | ||
(State or Other Jurisdiction of Organization) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
2550 West Tyvola Road
Coliseum 3, Suite 530
Charlotte, North Carolina 28217
(Address of Principal Executive Offices, including Zip Code)
(704) 973-7000
(Registrants telephone number, including area code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. | Results of Operations and Financial Condition. |
On May 1, 2015, Horizon Lines, Inc. issued a press release announcing its financial results for the fiscal first quarter ended March 22, 2015. A copy of the press release is filed as Exhibit 99.1 hereto, and is incorporated herein by reference.
Item 7.01. | Regulation FD Disclosure. |
The disclosure under Item 2.02 of this Current Report on Form 8-K is incorporated herein by reference.
The information under Items 2.02 and 7.01 and in Exhibit 99.1 in this Form 8-K is being furnished and shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934 (the Exchange Act) or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into a filing under the Securities Act of 1933, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
SAFE HARBOR STATEMENT
The information contained in this Current Report on Form 8-K (including the exhibits hereto) should be read in conjunction with our filings made with the Securities and Exchange Commission. This Current Report on Form 8-K (including the exhibit hereto) contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those that do not relate solely to historical fact. They include, but are not limited to, any statement that may predict, forecast, indicate or imply future results, performance, achievements or events. Words such as, but not limited to, believe, anticipate, plan, targets, projects, will, expect, would, could, should, may, and similar expressions or phrases identify forward-looking statements.
All forward-looking statements involve risk and uncertainties. The occurrence of the events described, and the achievement of the expected results, depend on many events, some or all of which are not predictable or within our control. Actual results may differ materially from expected results.
Factors that may cause actual results to differ from expected results include: our ability to consummate the transaction with Pasha to sell our Hawaii business or the merger transaction with Matson; unexpected costs, litigation and other operational complications that may arise from these proposed transactions; our business may suffer as a result of uncertainty surrounding the proposed merger and the Hawaii sale, including adverse impact on relationships with customers, suppliers and regulators; the companys inability to retain and if necessary, attract key employees, particularly during the pendency of the merger and the Hawaii sale; diversion of managements attention from ongoing business operations during the pendency of the merger and the Hawaii sale; a governmental authority prohibiting or otherwise restraining the transaction with Pasha to sell our Hawaii
business or the merger transaction with Matson; our substantial leverage may restrict cash flow and thereby limit our ability to invest in our business; our ability to maintain adequate liquidity to operate our business; our ability to make interest payments on our outstanding indebtedness; our ability to manage the exhaust gas cleaning systems initiative effectively to deliver the results we hope to achieve; our ability to mitigate expenses and increased charges associated with the shutdown of our Puerto Rico tradIt elane; volatility in fuel prices; work stoppages, strikes, and other adverse union actions; the vessels in our fleet continue to age, and we may not have the resources to replace our vessels; decreases in shipping volumes; failure to comply with safety and environmental protection and other governmental requirements; increased inspection procedures and tighter import and export controls; the start-up of any additional Jones-Act competitors; the ability to effectively compete as competitors deploy additional tonnage; repeal or substantial amendment of the coastwise laws of the United States, also known as the Jones Act; catastrophic losses and other liabilities; failure to comply with the various ownership, citizenship, crewing, and build requirements dictated by the Jones Act; the arrest of our vessels by maritime claimants; severe weather and natural disasters; or unexpected substantial dry-docking or repair costs for our vessels.
In light of these risks and uncertainties, expected results or other anticipated events or circumstances discussed in this Form 8-K might not occur. We undertake no obligation, and specifically decline any obligation, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
See the section entitled Risk Factors in our 2014 Form 10-K filed with the SEC on March 13, 2015, for a more complete discussion of the above mentioned risks and uncertainties and for other risks and uncertainties. Those factors and the other risk factors described therein are not necessarily all of the important factors that could cause actual results or developments to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could harm our results. Consequently, there can be no assurance that actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, us. Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking statements.
NON-GAAP FINANCIAL MEASURES
Item 2.02 and 7.01, and Exhibit 99.1 hereto, contain the following financial measures: adjusted operating income (loss) from continuing operations, adjusted net loss from continuing operations, adjusted net loss per share from continuing operations, as well as EBITDA and adjusted EBITDA. These are non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission.
We use adjusted operating income (loss) from continuing operations, adjusted net loss from continuing operations and adjusted net loss per share from continuing operations to exclude certain items to provide a useful measure of our operations without the impact of significant special items. We define EBITDA as net loss plus net interest expense, income taxes, depreciation and amortization and adjusted EBITDA as net loss plus net interest expense, income taxes, depreciation and amortization adjusted to exclude significant special items.
We believe that these non-GAAP financial measures provide information that is useful to our investors. We believe that this information is helpful in understanding period-over-period operating results separate and apart from items that may, or could, have a disproportional positive or negative impact on our results of operations in any particular period. Additionally, we use these non-GAAP measures to evaluate past performance and prospects for future performance. We also utilize certain of these measures to compensate certain of our management personnel.
We believe that EBITDA is a meaningful measure for investors as EBITDA is a component of the measure used by our board of directors and management team to evaluate our operating performance and EBITDA is a measure used by our management team to make day-to-day operating decisions.
We also use a non-GAAP net loss measure on a per share basis. We believe that it is important to provide per share information, in addition to absolute dollar measures, when describing our business, including when presenting non-GAAP measures.
We use adjusted financial measures to exclude certain items in order to illustrate the affect of those items on our financial performance. Adjusted financial measures are the measures used by management to compare operating results and to evaluate operating performance.
The financial measures adjusted net loss and adjusted net loss per share, as well as EBITDA and adjusted EBITDA are not recognized terms under GAAP and do not purport to be alternatives to net income or earnings per share as a measure of earnings, as they do not consider certain cash requirements such as dividend payments and debt service requirements. Because all companies do not use identical calculations, these presentations of non-GAAP financial measures may not be comparable to other similarly titled measures of other companies.
Reconciliations of the non-GAAP measures to the most directly comparable GAAP measures are provided in the press release filed as Exhibit 99.1.
Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
99.1 | Press Release of Horizon Lines, Inc. dated May 1, 2015. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
HORIZON LINES, INC. | ||||||
(Registrant) | ||||||
Date: May 1, 2015 | By: | /s/ Michael T. Avara | ||||
Michael T. Avara | ||||||
Executive Vice President and Chief Financial Officer |
Exhibit Index
Item 9.01 | Financial Statements and Exhibits. |
(d) | Exhibits |
99.1 | Press Release of Horizon Lines, Inc. dated May 1, 2015. |
Exhibit 99.1
PRESS RELEASE
For information contact:
Mike Avara
704-973-7027
mavara@horizonlines.com
HORIZON LINES REPORTS FIRST-QUARTER 2015 FINANCIAL RESULTS
Adjusted EBITDA Increases 64.2% for 4th Consecutive Quarter of Year-over-Year Improvement
CHARLOTTE, NC, May 1, 2015 Horizon Lines, Inc. (OTCQB: HRZL) today reported financial results for the fiscal first quarter ended March 22, 2015.
Horizon Lines first-quarter adjusted EBITDA increased 64.2% over the same period a year ago. The improvement in adjusted EBITDA was driven largely by improved fuel recovery, lower transit and replacement vessel costs associated with dry-docking of our vessels and higher volume, said Steve Rubin, President and Chief Executive Officer. The factors driving adjusted EBITDA growth were partially offset by modestly lower rates, net of fuel; productivity losses in connection with the west coast ILWU negotiations and the resulting congestion impact and higher vessel operating costs. Results represent the fourth consecutive quarter of growth in adjusted EBITDA over prior-year results.
Financial results are being presented on a continuing operations basis.
Comparison of GAAP and Non-GAAP Results from Continuing Operations |
Quarters Ended | |||||||
(in millions, except per share data)* | 3/22/2015 | 3/23/2014 | ||||||
GAAP: |
||||||||
Operating revenue |
$ | 180.9 | $ | 183.3 | ||||
Operating income (loss) |
$ | 1.5 | $ | (3.5 | ) | |||
Net loss |
$ | (16.4 | ) | $ | (20.6 | ) | ||
Net loss per share |
$ | (0.40 | ) | $ | (0.52 | ) | ||
Non-GAAP:* |
||||||||
EBITDA |
$ | 10.2 | $ | 6.3 | ||||
Adjusted operating income (loss) |
$ | 4.6 | $ | (1.8 | ) | |||
Adjusted EBITDA |
$ | 13.3 | $ | 8.1 | ||||
Adjusted net loss |
$ | (13.3 | ) | $ | (18.9 | ) | ||
Adjusted net loss per share |
$ | (0.32 | ) | $ | (0.47 | ) |
* | See attached schedules for reconciliation of first-quarter 2015 and 2014 reported GAAP results to non-GAAP results. Per-share amounts reflect the weighted average of 41.3 million basic and fully diluted shares outstanding for the 2015 first quarter, compared with 39.9 million basic and fully diluted shares outstanding for the 2014 period. |
In the first quarter of 2015, the company discontinued providing liner service between the United States and Puerto Rico and ceased San Juan terminal service operations. The company has met the accounting criteria to classify Puerto Rico operations as discontinued operations during 2015. As such, Puerto Rico results are included in discontinued operations in all periods presented. Horizon Lines operated in the Puerto Rico market for all of 2014.
Horizon Lines 1st Quarter 2015 | Page 2 of 11 |
First-Quarter 2015 Financial Highlights from Continuing Operations
| Volume, Rate & Fuel Cost Container volume for the 2015 first quarter totaled 37,754 revenue loads, up 1,790 loads from the same period a year ago. Unit revenue per container totaled $4,792 in the first quarter, compared with $5,098 a year ago. Unit revenue per container, net of fuel surcharges was $3,489, down 5.8% from $3,702 a year ago. The rate decline was primarily due to a change in cargo mix associated with higher automobile shipments in Hawaii, as well as increased competition in our markets. Vessel fuel costs averaged $364 per metric ton in the first quarter, down 43.8% from the average price of $648 per ton for the same quarter in 2014. |
| Operating Revenue First-quarter operating revenue decreased 1.3% to $180.9 million from $183.3 million a year ago. The factors in the $2.4 million revenue reduction were an $8.2 million decline due to lower container rates and a $4.9 million decrease in fuel surcharges partially offset by a $6.7 million increase as a result of higher container volumes and $4.0 million growth in non-transportation revenue. |
| Operating Income GAAP operating income for the first quarter totaled $1.5 million, compared with an operating loss of $(3.5) million a year ago. The 2015 GAAP operating income reflects expenses totaling $3.1 million associated with transaction-related costs and antitrust and false claims legal expenses. The 2014 GAAP operating loss includes expenses totaling $1.8 million related to transaction-related costs, antitrust and false claims legal expenses and employee severance as well as a gain on the change in value of debt conversion features. After excluding these items, first-quarter 2015 adjusted operating income totaled $4.6 million, compared with an adjusted operating loss of $(1.8) million a year earlier (See reconciliation tables for specific line-item amounts). |
| EBITDA EBITDA totaled $10.2 million for the 2015 first quarter, compared with $6.3 million for the same period a year ago. Adjusted EBITDA for the first quarter of 2015 was $13.3 million, versus $8.1 million for 2014. EBITDA and adjusted EBITDA for the 2015 and 2014 first quarters were impacted by the same factors affecting operating income (loss). (See reconciliation tables for specific line-item amounts). |
| Net Loss from Continuing Operations On a GAAP basis, the first-quarter net loss totaled $(16.4) million, or $(0.40) per share on a weighted average of 41.3 million basic and fully diluted shares outstanding. This compares with the prior-year net loss of $(20.6) million, or $(0.52) per basic and fully diluted share, based on a weighted average of 39.9 million basic and fully diluted shares outstanding. On an adjusted basis, the 2015 first-quarter net loss totaled $(13.3) million, or $(0.32) per share, compared with a net loss of $(18.9) million, or $(0.47) per share, for the 2014 first quarter. Adjusted net loss for the 2015 and 2014 first quarters reflects the same items that impacted adjusted EBITDA. (See reconciliation tables for specific line-item amounts). |
| Shares Outstanding The company had a daily weighted average of 41.3 million basic and fully diluted shares outstanding for the first quarter of 2015. This compares with a daily weighted average of 39.9 million basic and fully diluted shares outstanding for the 2014 first quarter. As of April 24, 2015, the equivalent of 92.4 million fully diluted shares of the companys stock were outstanding, consisting of 40.9 million shares of common stock and warrants convertible into 51.5 million shares of common stock. |
Horizon Lines 1st Quarter 2015 | Page 3 of 11 |
Liquidity & Debt Structure
The company had total liquidity of $57.7 million as of March 22, 2015, consisting of cash of $10.4 million and $47.3 million available under its asset-based loan (ABL) revolving credit facility. Funded debt outstanding totaled $526.6 million, consisting of: $218.3 million of 11.00% first-lien secured notes due October 15, 2016; $212.5 million of second-lien secured notes due October 15, 2016, bearing interest at 15.00%, being paid in kind with additional second-lien secured notes; a $68.3 million term loan to fund the January 2013 purchase of the companys Alaska vessels, bearing interest at 10.25% and maturing September 30, 2016; a $20.0 million super-priority term loan, also for the purchase of the Alaska vessels, bearing interest at 8.00% and maturing September 30, 2016; $2.0 million of 6.00% convertible notes, due April 15, 2017; and $5.5 million in capital leases. There were no borrowings on the companys ABL revolving credit facility, which matures October 5, 2016 (but 90 days earlier if the First Lien Notes and the Second Lien Notes are not repaid or refinanced as of such date). The companys weighted average interest rate for funded debt was 12.5%. Availability under the ABL revolving credit facility is based on a percentage of eligible accounts receivable and customary reserves, with a maximum of $80.0 million. Letters of credit issued against the ABL revolving credit facility totaled $10.5 million on March 22, 2015.
Please see attached schedules for the reconciliation of first-quarter 2015 and 2014 reported GAAP results and Non-GAAP adjusted results.
Outlook
The 2015 outlook does not contemplate the consummation of the sale of our Hawaii business to The Pasha Group (Pasha) or the consummation of the merger of the remainder of the company into a subsidiary of Matson Navigation Company, Inc. (Matson) as the timing and certainty of such transactions are unknown at this time.
We anticipate that our 2015 continuing operations will include our shipping and integrated logistics services to and from the continental U.S. and Alaska and Hawaii, vessel loading and unloading services that we provide for vessel operators at our terminals, agency services, and other non-transportation services. We discontinued our Puerto Rico operations during the first quarter of 2015.
We expect 2015 revenue container loads in our two remaining markets to be above 2014 levels due to anticipated modest volume growth in both markets we serve. Overall, revenue container rates are expected to decline slightly in 2015 largely due to cargo mix.
Horizon Lines 1st Quarter 2015 | Page 4 of 11 |
We will experience increases in expenses associated with our revenue container volumes, including our vessel payroll costs and benefits, stevedoring, port charges, wharfage, inland transportation costs, and rolling stock costs, among others.
We expect four vessel dry-dockings in 2015 compared with two vessel dry-dockings in 2014. However, in 2014 one of the vessel dry-dockings resulted in negligible repositioning and incremental costs. As a result, we expect the costs associated with repositioning vessels and expenses related to spare vessels will meaningfully exceed 2014 levels.
Our operations share corporate and administrative functions such as finance, information technology, human resources, and legal. Centralized functions are performed primarily at our Charlotte, North Carolina, headquarters and at our operations center in Irving, Texas. Due to the discontinuation of our Puerto Rico operations, we will evaluate the appropriate level of resources to support our Alaska and Hawaii tradelanes throughout 2015. However, many of these expenses will continue for a portion of 2015.
In addition, we expect net cash inflows of approximately $3.5 million associated with restructuring charges and the wind-down of our Puerto Rico business during 2015. Proceeds from the sale of assets are expected to exceed cash outflows associated with restructuring.
Based on our current level of operations, we believe cash flows from operations and borrowings available under the ABL Facility will be adequate to support our business plans.
Use of Non-GAAP Measures
Horizon Lines reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). The company also believes that the presentation of certain non-GAAP measures, i.e., EBITDA and results excluding certain expenses and income, provides useful information for the understanding of its ongoing operations and enables investors to focus on period-over-period operating performance without the impact of significant special items. The company further feels these non-GAAP measures enhance the users overall understanding of the companys current financial performance relative to past performance and provide a better baseline for modeling future earnings expectations. Non-GAAP measures are reconciled in the financial tables accompanying this press release. The company cautions that non-GAAP measures should be considered in addition to, but not as a substitute for, the companys reported GAAP results.
About Horizon Lines
Horizon Lines, Inc. is one of the nations leading domestic ocean shipping companies and the only ocean cargo carrier currently serving the two noncontiguous domestic markets of Alaska and Hawaii. The company owns a fleet of 11 fully Jones Act qualified vessels and operates four port terminals in Alaska and Hawaii. A trusted partner for many of the nations leading retailers, manufacturers and U.S. government agencies, Horizon Lines provides reliable transportation services that leverage its unique combination of ocean
Horizon Lines 1st Quarter 2015 | Page 5 of 11 |
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.
Forward Looking Statements
The information contained in this press release should be read in conjunction with our filings made with the Securities and Exchange Commission. This press release contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are those that do not relate solely to historical fact. They include, but are not limited to, any statement that may predict, forecast, indicate or imply future results, performance, achievements or events. Words such as, but not limited to, believe, anticipate, plan, targets, projects, will, expect, would, could, should, may, and similar expressions or phrases identify forward-looking statements.
Factors that may cause expected results or anticipated events or circumstances discussed in this press release to not occur or to differ from expected results include: our ability to consummate the transaction with Pasha to sell our Hawaii business or the merger transaction with Matson; unexpected costs, litigation and other operational complications that may arise from these proposed transactions; our business may suffer as a result of uncertainty surrounding the proposed merger and the Hawaii sale, including adverse impact on relationships with customers, suppliers and regulators; the companys inability to retain and if necessary, attract key employees, particularly during the pendency of the merger and the Hawaii sale; diversion of managements attention from ongoing business operations during the pendency of the merger and the Hawaii sale; a governmental authority prohibiting or otherwise restraining the transaction with Pasha to sell our Hawaii business or the merger transaction with Matson; our substantial leverage may restrict cash flow and thereby limit our ability to invest in our business; our ability to maintain adequate liquidity to operate our business; our ability to make interest payments on our outstanding indebtedness; our ability to manage the three Alaska vessels exhaust gas cleaning systems initiative effectively to deliver the results we hope to achieve; our ability to mitigate expenses and increased charges associated with the shutdown of our Puerto Rico tradelane; volatility in fuel prices; work stoppages, strikes, and other adverse union actions; the vessels in our fleet continue to age, and we may not have the resources to replace our vessels; decreases in shipping volumes; failure to comply with safety and environmental protection and other governmental requirements; increased inspection procedures and tighter import and export controls; the start-up of any additional Jones-Act competitors; the ability to effectively compete as competitors deploy additional tonnage; repeal or substantial amendment of the coastwise laws of the United States, also known as the Jones Act; catastrophic losses and other liabilities; failure to comply with the various ownership, citizenship, crewing, and build requirements dictated by the Jones Act; the arrest of our vessels by maritime claimants; severe weather and natural disasters; or unexpected substantial dry-docking or repair costs for our vessels.
All forward-looking statements involve risk and uncertainties. In light of these risks and uncertainties, expected results or other anticipated events or circumstances discussed in
Horizon Lines 1st Quarter 2015 | Page 6 of 11 |
this press release might not occur. The forward-looking statements included in the press release are made only as of the date they are made, and the company undertakes no obligation to update any such statements, except as otherwise required by applicable law. See the section entitled Risk Factors in our 2014 Form 10-K filed with the SEC on March 13, 2015, for a more complete discussion of these risks and uncertainties and for other risks and uncertainties. Those factors and the other risk factors described therein are not necessarily all of the important factors that could cause actual results or developments to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could harm our results. Consequently, there can be no assurance that actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences.
(tables follow)
Horizon Lines 1st Quarter 2015 | Page 7 of 11 |
Horizon Lines, Inc.
Unaudited Condensed Consolidated Balance Sheets
(in thousands, except per share amounts)
March 22, 2015 |
December 21, 2014 |
|||||||
Assets |
||||||||
Current assets |
||||||||
Cash |
$ | 10,395 | $ | 8,552 | ||||
Accounts receivable, net of allowance |
81,797 | 76,242 | ||||||
Materials and supplies |
13,480 | 15,236 | ||||||
Deferred tax asset |
2,575 | 2,575 | ||||||
Other current assets |
9,080 | 9,050 | ||||||
Assets of discontinued operations |
11,773 | 27,497 | ||||||
|
|
|
|
|||||
Total current assets |
129,100 | 139,152 | ||||||
Property and equipment, net |
177,109 | 180,291 | ||||||
Goodwill |
198,793 | 198,793 | ||||||
Intangible assets, net |
23,382 | 25,291 | ||||||
Other long-term assets |
13,836 | 15,619 | ||||||
Long-term assets of discontinued operations |
| 20,916 | ||||||
|
|
|
|
|||||
Total assets |
$ | 542,220 | $ | 580,062 | ||||
|
|
|
|
|||||
Liabilities and Stockholders Deficiency |
||||||||
Current liabilities |
||||||||
Accounts payable |
$ | 32,738 | $ | 38,255 | ||||
Current portion of long-term debt, including capital lease |
11,878 | 11,838 | ||||||
Other accrued liabilities |
63,698 | 55,237 | ||||||
Liabilities of discontinued operations |
25,599 | 46,184 | ||||||
|
|
|
|
|||||
Total current liabilities |
133,913 | 151,514 | ||||||
Long-term debt, including capital lease, net of current portion |
526,505 | 520,522 | ||||||
Deferred tax liability |
3,124 | 3,052 | ||||||
Other long-term liabilities |
24,181 | 24,010 | ||||||
Long-term liabilities of discontinued operations |
23,697 | 26,226 | ||||||
|
|
|
|
|||||
Total liabilities |
711,420 | 725,324 | ||||||
|
|
|
|
|||||
Stockholders deficiency |
||||||||
Preferred stock, $.01 par value, 30,500 shares authorized; no shares issued or outstanding |
| | ||||||
Common stock, $.01 par value, 150,000 shares authorized, 40,753 and 40,033 shares issued and outstanding as of March 22, 2015 and December 21, 2014, respectively |
1,017 | 1,010 | ||||||
Additional paid in capital |
383,527 | 383,809 | ||||||
Accumulated deficit |
(548,306 | ) | (524,484 | ) | ||||
Accumulated other comprehensive loss |
(5,438 | ) | (5,597 | ) | ||||
|
|
|
|
|||||
Total stockholders deficiency |
(169,200 | ) | (145,262 | ) | ||||
|
|
|
|
|||||
Total liabilities and stockholders deficiency |
$ | 542,220 | $ | 580,062 | ||||
|
|
|
|
Horizon Lines 1st Quarter 2015 | Page 8 of 11 |
Horizon Lines, Inc.
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
Quarters Ended | ||||||||
March 22, 2015 |
March 23, 2014 |
|||||||
Operating revenue |
$ | 180,913 | $ | 183,335 | ||||
Operating expense: |
||||||||
Vessel |
38,114 | 51,582 | ||||||
Marine |
43,897 | 42,247 | ||||||
Inland |
33,775 | 32,073 | ||||||
Land |
28,779 | 25,936 | ||||||
Rolling stock rent |
6,956 | 6,631 | ||||||
|
|
|
|
|||||
Cost of services (excluding depreciation expense) |
151,521 | 158,469 | ||||||
Depreciation and amortization |
6,079 | 7,129 | ||||||
Amortization of vessel dry-docking |
2,634 | 2,679 | ||||||
Selling, general and administrative |
19,592 | 18,893 | ||||||
Miscellaneous income, net |
(429 | ) | (292 | ) | ||||
|
|
|
|
|||||
Total operating expense |
179,397 | 186,878 | ||||||
Operating income (loss) |
1,516 | (3,543 | ) | |||||
Other expense: |
||||||||
Interest expense, net |
17,856 | 17,008 | ||||||
Gain on change in value of debt conversion features |
(2 | ) | (71 | ) | ||||
Other expense, net |
| 1 | ||||||
|
|
|
|
|||||
Loss from continuing operations before income tax expense |
(16,338 | ) | (20,481 | ) | ||||
Income tax expense |
72 | 152 | ||||||
|
|
|
|
|||||
Net loss from continuing operations |
(16,410 | ) | (20,633 | ) | ||||
Net loss from discontinued operations |
(7,412 | ) | (5,605 | ) | ||||
|
|
|
|
|||||
Net loss |
$ | (23,822 | ) | $ | (26,238 | ) | ||
|
|
|
|
|||||
Basic and diluted net loss per share: |
||||||||
Continuing operations |
$ | (0.40 | ) | $ | (0.52 | ) | ||
Discontinued operations |
(0.18 | ) | (0.14 | ) | ||||
|
|
|
|
|||||
Basic and diluted net loss per share |
$ | (0.58 | ) | $ | (0.66 | ) | ||
|
|
|
|
|||||
Number of weighted average shares used in calculations: |
||||||||
Basic |
41,305 | 39,917 | ||||||
Diluted |
41,305 | 39,917 |
Horizon Lines 1st Quarter 2015 | Page 9 of 11 |
Horizon Lines, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
Quarters Ended | ||||||||
March 22, 2015 |
March 23, 2014 |
|||||||
Cash flows from operating activities: |
||||||||
Net loss from continuing operations |
$ | (16,410 | ) | $ | (20,633 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
Depreciation |
5,016 | 4,953 | ||||||
Amortization of intangible assets |
1,063 | 2,176 | ||||||
Amortization of vessel dry-docking |
2,634 | 2,679 | ||||||
Amortization of deferred financing costs |
846 | 846 | ||||||
Gain on change in value of debt conversion features |
(2 | ) | (71 | ) | ||||
Deferred income taxes |
72 | 135 | ||||||
Gain on equipment disposals |
(333 | ) | (271 | ) | ||||
Stock-based compensation |
446 | 733 | ||||||
Payment-in-kind interest expense |
8,057 | 6,972 | ||||||
Accretion of interest on debt |
296 | 290 | ||||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
(5,563 | ) | (12,345 | ) | ||||
Materials and supplies |
1,756 | (2,571 | ) | |||||
Other current assets |
(30 | ) | 697 | |||||
Accounts payable |
(5,517 | ) | 891 | |||||
Accrued liabilities |
8,794 | 11,503 | ||||||
Vessel dry-docking payments |
(1,149 | ) | (3,473 | ) | ||||
Legal settlement payments |
(358 | ) | (500 | ) | ||||
Other assets/liabilities |
147 | 121 | ||||||
|
|
|
|
|||||
Net cash used in operating activities from continuing operations |
(235 | ) | (7,868 | ) | ||||
Net cash used in operating activities from discontinued operations |
(4,863 | ) | (7,376 | ) | ||||
|
|
|
|
|||||
Cash flows from investing activities: |
||||||||
Purchases of property and equipment |
(1,969 | ) | (1,363 | ) | ||||
Proceeds from the sale of property and equipment |
845 | 719 | ||||||
|
|
|
|
|||||
Net cash used in investing activities from continuing operations |
(1,124 | ) | (644 | ) | ||||
Net cash provided by (used in) investing activities from discontinued operations |
15,784 | (455 | ) | |||||
|
|
|
|
|||||
Cash flows from financing activities: |
||||||||
Payments on ABL facility |
(9,500 | ) | (12,200 | ) | ||||
Borrowings under ABL facility |
9,500 | 25,700 | ||||||
Payments on long-term debt |
(1,875 | ) | | |||||
Payments on capital lease obligations |
(475 | ) | (380 | ) | ||||
Payments of financing costs |
| (11 | ) | |||||
|
|
|
|
|||||
Net cash (used in) provided by financing activities from continuing operations |
(2,350 | ) | 13,109 | |||||
Net cash used in financing activities from discontinued operations |
(5,369 | ) | (523 | ) | ||||
|
|
|
|
|||||
Net (decrease) increase in cash from continuing operations |
(3,709 | ) | 4,597 | |||||
Net increase (decrease) in cash from discontinued operations |
5,552 | (8,354 | ) | |||||
|
|
|
|
|||||
Net increase (decrease) in cash |
1,843 | (3,757 | ) | |||||
Cash at beginning of period |
8,552 | 5,236 | ||||||
|
|
|
|
|||||
Cash at end of period |
$ | 10,395 | $ | 1,479 | ||||
|
|
|
|
Horizon Lines 1st Quarter 2015 | Page 10 of 11 |
Horizon Lines, Inc.
Adjusted Operating Income (Loss) Reconciliation
(in thousands)
Quarter Ended March 22, 2015 |
Quarter Ended March 23, 2014 |
|||||||
Operating income (loss) |
$ | 1,516 | $ | (3,543 | ) | |||
Adjustments: |
||||||||
Transaction related expenses |
3,024 | 910 | ||||||
Antitrust and false claims legal expenses |
73 | 578 | ||||||
Gain on change in value of debt conversion features |
(2 | ) | (71 | ) | ||||
Union/other severance |
| 341 | ||||||
|
|
|
|
|||||
Total adjustments |
3,095 | 1,758 | ||||||
|
|
|
|
|||||
Adjusted operating income (loss) |
$ | 4,611 | $ | (1,785 | ) | |||
|
|
|
|
Horizon Lines, Inc.
Adjusted Net Loss Reconciliation
(in thousands)
Quarter Ended March 22, 2015 |
Quarter Ended March 23, 2014 |
|||||||
Net loss |
$ | (23,822 | ) | $ | (26,238 | ) | ||
Net loss from discontinued operations |
(7,412 | ) | (5,605 | ) | ||||
|
|
|
|
|||||
Net loss from continuing operations |
(16,410 | ) | (20,633 | ) | ||||
Adjustments: |
||||||||
Transaction related expenses |
3,024 | 910 | ||||||
Antitrust and false claims legal expenses |
73 | 578 | ||||||
Gain on change in value of debt conversion features |
(2 | ) | (71 | ) | ||||
Union/other severance |
| 341 | ||||||
|
|
|
|
|||||
Total adjustments |
3,095 | 1,758 | ||||||
|
|
|
|
|||||
Adjusted net loss from continuing operations |
$ | (13,315 | ) | $ | (18,875 | ) | ||
|
|
|
|
Horizon Lines 1st Quarter 2015 | Page 11 of 11 |
Horizon Lines, Inc.
Adjusted Net Loss Per Share Reconciliation
Quarter Ended March 22, 2015 |
Quarter Ended March 23, 2014 |
|||||||
Net loss per share |
$ | (0.58 | ) | $ | (0.66 | ) | ||
Net loss per share from discontinued operations |
(0.18 | ) | (0.14 | ) | ||||
|
|
|
|
|||||
Net loss per share from continuing operations |
(0.40 | ) | (0.52 | ) | ||||
Adjustments Per Share: |
||||||||
Transaction related expenses |
0.08 | 0.02 | ||||||
Antitrust and false claims legal expenses |
| 0.02 | ||||||
Gain on change in value of debt conversion features |
| | ||||||
Union/other severance |
| 0.01 | ||||||
|
|
|
|
|||||
Total adjustments |
0.08 | 0.05 | ||||||
|
|
|
|
|||||
Adjusted net loss from continuing operations |
$ | (0.32 | ) | $ | (0.47 | ) | ||
|
|
|
|
Horizon Lines, Inc.
EBITDA and Adjusted EBITDA Reconciliation
(in thousands)
Quarter Ended March 22, 2015 |
Quarter Ended March 23, 2014 |
|||||||
Net loss |
$ | (23,822 | ) | $ | (26,238 | ) | ||
Net loss from discontinued operations |
(7,412 | ) | (5,605 | ) | ||||
|
|
|
|
|||||
Net loss from continuing operations |
(16,410 | ) | (20,633 | ) | ||||
Interest expense, net |
17,856 | 17,008 | ||||||
Tax expense |
72 | 152 | ||||||
Depreciation and amortization |
8,713 | 9,808 | ||||||
|
|
|
|
|||||
EBITDA |
10,231 | 6,335 | ||||||
Transaction related expenses |
3,024 | 910 | ||||||
Antitrust and false claims legal expenses |
73 | 578 | ||||||
Gain on change in value of debt conversion features |
(2 | ) | (71 | ) | ||||
Union/other severance charges |
| 341 | ||||||
|
|
|
|
|||||
Adjusted EBITDA |
$ | 13,326 | $ | 8,093 | ||||
|
|
|
|
Note: EBITDA is defined as net income (loss) plus net interest expense, income taxes, depreciation and amortization. We believe that EBITDA is a meaningful measure for investors as (i) EBITDA is a component of the measure used by our board of directors and management team to evaluate our operating performance and (ii) EBITDA is a measure used by our management to facilitate internal comparisons to competitors results and the marine container shipping and logistics industry in general. Adjusted EBITDA excludes certain charges in order to evaluate our operating performance, and when determining the payment of discretionary bonuses.
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