Horizon Lines Post 4Q 2014 Results

Horizon Lines, Inc. today reported financial results for the fiscal fourth quarter ended December 21, 2014.

"Horizon Lines' fourth-quarter adjusted EBITDA increased 26.6% over the same period a year ago. The improvement in adjusted EBITDA was driven largely by higher fuel recovery, lower transit and replacement vessel costs associated with dry-docking of our vessels and increased space charter revenue," said Steve Rubin, President and Chief Executive Officer. "The factors driving adjusted EBITDA growth were partially offset by modestly lower rates, net of fuel and higher vessel operating costs. Results represent the third consecutive quarter of growth in adjusted EBITDA over prior-year results.  The fourth-quarter operating loss was driven by a $65.7 million pre-tax restructuring charge related to the decision to exit our Puerto Rico market."

On November 11, 2014, the company announced plans to discontinue providing liner service between the United States and Puerto Rico and cease San Juan terminal service operations in the first quarter of 2015. Horizon Lines operated in the Puerto Rico market for all of 2014.  The company expects to meet the accounting criteria to classify Puerto Rico as a discontinued operation during 2015.

Fourth-Quarter 2014 Financial Highlights 

Volume, Rate & Fuel Cost – Container volume for the 2014 fourth quarter totaled 56,872 revenue loads, up 244 loads from the same period a year ago.  Unit revenue per container totaled $4,110 in the fourth quarter, compared with $4,187 in 2013.  Unit revenue per container, net of fuel surcharges was $3,153, down 2.1% from $3,222 a year ago, primarily due to mix with more cars transported in Hawaii.  Vessel fuel costs averaged $572 per metric ton in the fourth quarter, down 10.9% from the average price of $642 per ton for the same quarter in 2013.

Operating Revenue – Fourth-quarter operating revenue increased 0.2% to $255.8 million from $255.4 million a year ago.  The factors in the $0.4 million revenue improvement were a $4.0 million growth in non-transportation revenue, a $0.8 million increase as a result of higher container volumes, partially offset by a $0.9 million decrease in fuel surcharges and a $3.5 million decline due to lower container rates.          
Operating Loss – The GAAP operating loss for the fourth quarter totaled $(58.3) million, compared with income of $1.8 million a year ago.  The 2014 GAAP operating loss reflects expenses totaling $70.0 million associated with restructuring charges, transaction-related expense, an impairment charge and employee severance.  The 2013 GAAP operating income includes expenses totaling $3.1 million related to restructuring charges, transaction-related expense, an impairment charge and legal expenses and settlements. After excluding these items, fourth-quarter 2014 adjusted operating income totaled $11.7 million, compared with $4.9 million a year earlier

 EBITDA – EBITDA totaled $(47.6) million for the 2014 fourth quarter, compared with $14.7 million for the same period a year ago.  Adjusted EBITDA for the fourth quarter of 2014 was $22.4 million, versus $17.7 million for 2013.  EBITDA and adjusted EBITDA for the 2014 and 2013 fourth quarters were impacted by the same factors affecting operating income. In addition, adjusted EBITDA excludes changes in values of debt conversion features

Net Loss – On a GAAP basis, the fourth-quarter net loss totaled $(76.3) million, or $(1.88) per share on a weighted average of 40.6 million basic and fully diluted shares outstanding.  This compares with the prior-year net loss of $(14.0) million, or $(0.36) per basic and fully diluted share, based on a weighted average of 39.4 million basic and fully diluted shares outstanding.  On an adjusted basis, the 2014 fourth-quarter net loss totaled $(6.1) million, or $(0.14) per share, compared with a net loss of $(11.1) million, or $(0.27) per share, for the 2013 fourth quarter.  Adjusted net loss for the 2014 and 2013 fourth quarters reflects the same items that impacted adjusted EBITDA.  In addition, adjusted net loss for both periods excludes the accretion of non-cash interest.  Adjusted net loss for 2013 fourth-quarter also excludes the tax impact of the adjustments

Full-Year Results – For the full fiscal year ended December 21, 2014, operating revenue increased 4.9% to $1.08 billion from $1.03 billion for fiscal 2013. EBITDA totaled $25.4 million compared with $83.2 million a year ago. Adjusted EBITDA for 2014 totaled $102.5 million, versus $96.2 million in the prior year. The $6.3 million improvement was primarily due to higher volume, improved fuel recovery, increased space charter revenue and decreased workers compensation expense, partially offset by lower rates, net of fuel and higher vessel operating costs. Adjusted EBITDA for 2014 excludes expense totaling $77.0 million associated with restructuring charges, transaction-related expense, an impairment charge, legal settlements and expenses, severance and a gain from marking the conversion feature of debt to fair market value. Adjusted EBITDA in 2013 excludes expense totaling $13.0 million associated with each of the items affecting 2014.

 The net loss for 2014 totaled $(94.6) million, or $(2.33) per share, based on a weighted average of 40.6 million shares outstanding. This compares with a 2013 net loss of $(33.4) million, or $(0.91) per share, based on a weighted average of 36.5 million shares outstanding. The adjusted net loss for 2014 totaled $(16.7) million, or $(0.41) per share, compared with an adjusted net loss of $(19.9) million, or $(0.55) per share per share, for 2013.