RLOGU Rand Logistics Unit 10/26/08 (MM)

Rand Logistics, Inc. (Nasdaq:RLOG; RLOGW; RLOGU) (�Rand�) today announced financial results for the first quarter ended June 30, 2007. First Quarter 2008 Financial and Operational Highlights Versus Quarter ended June 30, 2006 -- Revenue increased $3.2 million, or 16%, to $23.1 million (excluding outside voyage charter revenue). The three vessels operated under a time charter agreement contributed $3.0 million of the increase during the period until the work stoppage commenced by the licensed officers on May 9, 2007 (which recently concluded upon the expiration of the officers' labor agreement). -- Total actual vessel sailing days increased by 119, or 17%, from 696 days to 815 days, primarily due to the addition of the three time chartered vessels. However, the time chartered vessels sailed only 118 of 273 potential sailing days due to the aforementioned work stoppage. Excluding the three time chartered vessels, total actual vessel sailing days were 697 compared to 696 in the quarter ended June 30, 2006. -- EBITDA was $3.7 million, compared to $4.3 million in the prior year quarter. EBITDA included $0.8 million related to a variable interest entity ("VIE") for which Rand was the primary beneficiary under FIN-46R, although Rand has no ownership interest in that entity. -- Excluding the VIE, EBITDA was $2.9 million, compared to $4.3 million in the prior year quarter. The decline in EBITDA was primarily due to: -- The impact of the work stoppage on the three time chartered vessels, as Rand continued to incur certain contractual costs including principle payments, cash interest expense, insurance, certain employee benefits, lay-up costs, and other out-of-pocket costs, which resulted in a loss of $1.0 million on the time charter contract during the quarter. -- Higher G&A costs, largely related to increased finance staffing and the implementation of a SOX compliant business software and IT infrastructure ($250,000), and amortization of certain compensation costs paid in fiscal 2007 ($166,000). Scott Bravener, President and CEO of Lower Lakes, stated, �Our revenue growth during the quarter was driven primarily by additional sailing days from the time chartered vessels for a portion of the quarter, as well as rate increases and scheduling efficiencies. However, our results also reflect the delayed startup of some customer sites this spring due to the unusually cold and wet late winter weather, particularly in April, as well as the work stoppage. Despite the work stoppage, we worked diligently throughout the quarter, and were able to meet most of our customers� shipping requirements. As we announced on August 6, WMS� agreement with the American Maritime Officers expired and was not renewed by WMS. A separate contract with the unlicensed crew members has been extended until October 31, 2007. WMS is currently evaluating the supervisory staffing needs of these three vessels to enable them to commence sailing as soon as possible.� Captain Bravener continued, �During the first quarter, we began to achieve significant improvements in the performance within our US fleet, which met both our operational and profit targets. Investments we have made in maintenance engineers, preventative maintenance, and winter work for these vessels have reduced repair costs, improved loading and unloading efficiencies, and generated increased revenues. We have continued to realize these performance improvements in July and August 2007 relative to 2006, and are optimistic that these vessels will continue to outperform comparable periods from last year.� Laurence S. Levy, Chairman and CEO of Rand, commented, �We are certainly pleased that the work stoppage has concluded, and are confident that we can fully utilize the boats once they begin sailing again in the near-term. We remain optimistic about Rand�s long-term prospects, due to the strength and growth of our base business, where we continue to see strong demand for our shipping capacity, as well as our active pursuit of external expansion opportunities. Our criteria continues to include predictable cash flows, defined markets and barriers to entry, and shipping or related areas of business. Following the warrant exercise program completed after quarter-close, which generated cash of $17.8 million for Rand, we are well funded to make further investments in growing our business internally and externally. The warrant exercises also improved our liquidity and reduced the warrant overhang on our common stock. We look forward to keep you apprised of Rand�s continued development.� Summary Statement of Operations (unaudited) � � � Three months ended June 30, 2007 � Three months ended June 30, 2006 Revenue - Company operated vessels 23,099 19,892 Revenue - Outside voyage charter revenue � 2,131 � 2,353 25,230 22,245 Expenses Outside voyage charter fees 2,137 2,318 Vessel operating expenses 17,317 14,295 Non operational repairs and maintenance � 94 � 57 � � 19,548 � 16,670 Income before general and administrative, depreciation, amortization of drydock costs and intangibles, other income and expenses and income taxes � 5,682 � 5,575 � General and administrative 1,941 1,278 Depreciation and amortization of drydock costs and intangibles 2,259 1,491 Loss (gain) on foreign exchange � (173) � 37 � � 4,027 � 2,806 Income before interest, other income and expenses and income taxes � 1,655 � 2,769 � Net income � (1,154) � 720 Net income (loss) per share � basic ($0.12) $0.13 Net income (loss) per share � diluted ($0.12) $0.06 Conference Call Management will conduct a conference call focusing on the financial results on: Tuesday, August 14, 2007 9:00am ET Dial-in number: 706-679-3155 Conference ID: 10972676 A phone replay will be available from 12:00 noon ET on Tuesday, August 14, 2007 until midnight ET on Friday, August 21, 2007. Dial 800-642-1687 (706-645-9291 for international callers) and enter the code 10972676 for the phone replay. Additionally, the Company will file a transcript of the call with the Securities and Exchange Commission, which will be available at www.sec.gov. Reconciliation of Non-GAAP Measure to GAAP EBITDA represents earnings before interest, income tax expense, depreciation and amortization, loss on asset disposal, and loss (gain) on foreign exchange. EBITDA is not a measure of performance or liquidity calculated in accordance with generally accepted accounting principles (�GAAP�), is unaudited and should not be considered an alternative to, or more meaningful than, net income or income from operations as an indicator of our operating performance, or cash flows from operating activities, as measures of liquidity. EBITDA has been presented as a supplemental disclosure because it is a widely used measure of performance and basis for valuation. A reconciliation of GAAP net income to EBITDA is included in the financial tables accompanying this release. About Rand Logistics Rand Logistics, Inc. is a leading provider of bulk freight shipping services throughout the Great Lakes region. Through its subsidiaries, the Company operates a fleet of eleven self unloading bulk carriers, including nine River Class vessels and one River Class integrated tug/barge unit. The Company is the only carrier able to offer significant domestic port-to-port services in both Canada and the U.S. on the Great Lakes. The Company�s vessels operate under the U.S. Jones Act � which dictates that only ships that are built, crewed and owned by U.S. citizens can operate between U.S. ports � and the Canada Marine Act � which requires Canadian commissioned ships to operate between Canadian ports. Forward-Looking Statements This press release may contain forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) concerning the Company and its operating subsidiaries. Forward-looking statements are statements that are not historical facts, but instead statements based upon the current beliefs and expectations of management of the Company. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from the results included in such forward-looking statements. Rand Logistics, Inc. Consolidated Statements of Operations � � Three months ended June 30, 2007 (unaudited) � Three months ended June 30, 2006 (unaudited) REVENUE � $ 25,230 $ 22,245 � EXPENSES Outside voyage charter fees 2,137 2,318 Vessel operating expenses 17,317 14,295 Repairs and maintenance 94 57 General and administrative 1,941 1,278 Depreciation 1,543 1,054 Amortization of drydock costs 358 84 Amortization of intangibles 358 353 � (Gain) loss on foreign exchange � (173) � � 37 � � 23,575 � � 19,476 INCOME BEFORE OTHER INCOME AND EXPENSES AND INCOME TAXES � � 1,655 � � 2,769 � OTHER INCOME AND EXPENSES Interest expense 1,012 674 Interest income (65) (2) Gain on hedging transaction (79) - Amortization of chartering agreement costs � 49 � � - � � 917 � 672 INCOME BEFORE INCOME TAXES 738 2,097 PROVISION (RECOVERY) FOR INCOME TAXES � � � � � Current � (43) � � (80) Deferred � 361 � � 1,165 NET INCOME $ 420 � $ 1,012 MINORITY INTEREST 321 - PREFERRED STOCK DIVIDENDS $ 296 $ 292 STOCK WARRANT INDUCEMENT DISCOUNT $ 957 � � - NET (LOSS) INCOME APPLICABLE TO COMMON STOCKHOLDERS $ (1,154) � $ 720 � Net (loss) earnings per share basic (Note 19) $ (0.12) � $ .13 Net (loss) earnings per share diluted $ (0.12) � $ .06 Weighted average shares basic � 9,312,241 � � 5,600,000 Weighted average shares diluted � 9,312,241 � � 15,841,639 � � � � � Rand Logistics, Inc. Selected Financial Information (unaudited) Reconciliation of Income before Interest, Other Income and Expenses and Income Taxes to EBITDA � Rand Logistics, Inc. Three months ended June 30, 2007 � Three months ended June 30, 2007 Impact of Fin 46R � Consolidated Three months ended June 30, 2007 � Consolidated Three months ended June 30, 2006 � Income before interest, other income and expenses and income taxes 1,172 483 1,655 2,769 � Loss (gain) on foreign exchange (173) 0 (173) 37 Depreciation and amortization of dry-dock costs and intangibles � 1,945 � 314 � 2,259 � 1,491 � EBITDA 2,944 � 797 � 3,741 � 4,297 Rand Logistics, Inc. Consolidated Balance Sheets � June 30, March 31, 2007 2007 ASSETS (unaudited) (audited) CURRENT Cash and cash equivalents $ 1,567 $ 7,207 Accounts receivable 13,167 2,702 Prepaid expenses and other current assets 3,321 3,122 Income taxes receivable 306 263 � Deferred income taxes � � 1,283 � � 1,219 Total current assets 19,644 14,513 BLOCKED ACCOUNT 2,700 2,700 PROPERTY AND EQUIPMENT, NET 68,047 66,859 DEFERRED INCOME TAXES 14,098 13,574 DEFERRED DRYDOCK COSTS, NET 6,478 5,895 INTANGIBLE ASSETS, NET 13,613 13,334 GOODWILL � � 6,363 � � 6,363 Total assets � $ 130,943 � $ 123,238 LIABILITIES CURRENT Bank indebtedness $ 2,362 $ 5,097 Accounts payable 10,091 11,445 Accrued liabilities 3,433 3,237 Interest rate swap contract 57 135 Income taxes payable 346 385 Deferred income taxes 892 589 � Current portion of long-term debt � � 4,582 � � 4,398 Total current liabilities 21,763 25,286 LONG-TERM DEBT 35,008 34,864 ACQUIRED MANAGEMENT BONUS PROGRAM 3,000 3,000 DEFERRED INCOME TAXES � � 14,321 � � 13,624 Total liabilities � � 74,092 � � 76,774 COMMITMENTS AND CONTINGENCIES - - STOCKHOLDERS' EQUITY Preferred stock, $.0001 par value, 14,900 14,900 Authorized 1,000,000 shares, Issued and outstanding 300,000 shares Common stock, $.0001 par value 1 1 Authorized 50,000,000 shares, Issued and outstanding 10,041,378 shares Additional Paid-in Capital 47,978 38,407 Accumulated deficit (7,101) (5,947) Accumulated other comprehensive income (loss) 576 (1,073) � Minority interest of variable interest entity � � 497 � � 176 Total stockholders� equity � � 56,851 � � 46,464 Total liabilities and stockholders� equity � $ 130,943 � $ 123,238