U.S. ocean shipping company
Horizon Lines, Inc. has confirmed that its average bunker costs decreased during the fourth quarter of 2013 in comparison with the corresponding period the previous year.
Vessel fuel costs averaged $645 per metric tonne in the fourth quarter, down $49 per tonne, or 7.1%, on the average price of $694 per tonne recorded for the same quarter in 2012.
The fuel data was revealed today (21 March) by Horizon Lines, Hawaii's second largest ocean shipper, in its fourth quarter and full year results for 2013.
Full Year Results
For the full fiscal year ended December 22, 2013, operating revenue decreased by 3.8% to $1.03 billion from $1.07 billion for fiscal 2012. Earnings before interest, taxes, depreciation, and amortization (EBITDA) totalled $83.2 million compared with $39.7 million a year ago.
Adjusted EBITDA for 2013 totalled $95.2 million, versus $66.0 million a year ago. The $29.2 million improvement was said to be principally due to a reduction in vessel lease expense, lower dry-dock transit and crew-related expenses, higher non-transportation revenue, lower overhead and cost efficiencies resulting from its 2012 and 2013 initiatives, partially offset by lower fuel recovery and lower rates, net of fuel.
The net loss for 2013 totalled $33.4 million, or $0.91 per share, based on a weighted average of 36.5 million shares outstanding. This compares with a 2012 net loss of $74.4 million, or $3.26 per share, based on a weighted average of 22.8 million shares outstanding. The adjusted net loss for 2013 totalled $20.9 million, or $0.57 per share, compared with an adjusted net loss of $46.1 million, or $2.02 per share per share, for 2012.
Fourth Quarter 2013 Results
EBITDA totalled $14.7 million for the 2013 fourth quarter, compared with $8.2 million for the same period a year ago. Adjusted EBITDA for the fourth quarter of 2013 was $17.3 million, versus $13.0 million for 2012. EBITDA and adjusted EBITDA for the 2013 and 2012 fourth quarters were said to have been impacted by the same factors affecting operating income. Additionally, 2013 adjusted EBITDA excludes $0.1 million of gain on the conversion of debt. Adjusted EBITDA for the 2012 fourth quarter excludes $0.2 million in gains on the conversion of debt.
Operating income for the fourth quarter totalled $1.8 million, compared with a loss of $3.9 million a year ago. The 2013 operating income reflects charges totalling $2.7 million associated with legal settlements, an equipment impairment charge and certain legal expenses. The 2012 operating loss includes charges totalling $4.9 million related to a restructuring charge, employee severance, certain legal expenses and an equipment impairment charge. Adjusting to exclude these items, fourth quarter 2013 adjusted operating income totalled $4.5 million, compared with $1.0 million a year earlier.
Fourth quarter operating revenue declined by 1.7% to $255.4 million from $259.8 million a year ago. The factors in the $4.4 million revenue shortfall were a $5.1 million decrease in fuel surcharges and a $0.5 million decline in container revenue rates, partially offset by a $1.2 million rise in non-transportation revenue.
Container volume for the 2013 fourth quarter totalled 56,628 revenue loads, up 27 loads from the same period a year ago. Unit revenue per container totalled $4,187 in the fourth quarter, compared with $4,295 in 2012. Unit revenue per container, net of fuel surcharges was $3,222 - down 0.3% from $3,233 a year ago.
Commenting on the results,
Sam Woodward, President and Chief Executive Officer, said: "Horizon Lines fourth quarter adjusted EBITDA increased 33.1% over the same period a year ago and the company generated GAAP operating income of $1.8 million in the quarter, the first fourth quarter GAAP operating profit since 2009. The improvement in adjusted EBITDA was driven largely by reduced vessel charter expense, the absence of vessel incidents, and an increase in third party services.
"The factors driving adjusted EBITDA growth were partially offset by modestly lower rates, net of fuel and reduced fuel recovery. Results represent the fourth consecutive quarter with double-digit percentage growth in adjusted EBITDA over prior year results, adding further momentum to the improvement of Horizon Lines’ financial performance."
2014 Outlook
In its outlook for 2014, Horizon Lines said: "We expect 2014 revenue container loads to be above 2013 levels due to anticipated modest volume growth in all three markets we serve. This projected volume growth takes into consideration the estimated impacts of a new competitor that entered the Puerto Rico Gulf service during 2013 for a full year in 2014, as well as a second vessel being added by a competitor in our Hawaii service during 2014, partially offset by the full-year impact of adding a bi-weekly Jacksonville sailing to our southbound service between Houston, Texas and San Juan, Puerto Rico.
"Overall, revenue container rates are expected to range from flat to a marginal improvement in 2014. We expect the new vessel capacity added in Puerto Rico during 2013 and being added in Hawaii in 2014, as well as a challenging economic environment in Puerto Rico, to impact rates in 2014.
"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. Although the number of vessels being dry-docked in 2014 is less than 2013, the costs associated with repositioning vessels and expenses related to spare vessels will slightly exceed 2013 levels.
"We expect 2014 financial results to approximate 2013 results, with 2014 adjusted EBITDA projected between $82.0 million and $97.0 million, compared with $95.2 million in fiscal 2013.
"Based on our current level of operations, we believe cash flow from operations and borrowings available under the ABL Facility will be adequate to support our business plans. We expect total liquidity during 2014 to reach a low of approximately $30.0 million following payment in April of our semi-annual cash interest and principal obligations under the First Lien Notes, then build over the balance of the year and end 2014 at approximately $70.0 million."
