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8-K - FORM 8-K - Horizon Lines, Inc.d578489d8k.htm

Exhibit 99.1

 

LOGO

PRESS RELEASE

For information contact:

Mike Avara

704-973-7027

mavara@horizonlines.com

HORIZON LINES REPORTS SECOND-QUARTER FINANCIAL RESULTS

Adjusted EBITDA Increases 92.1% and Rate, Net of Fuel, Rises 2.6% from Year Ago

CHARLOTTE, NC, August 2, 2013 – Horizon Lines, Inc. (OTCQB: HRZL) today reported financial results for the fiscal second quarter ended June 23, 2013.

Financial results are being presented on a continuing operations basis, excluding the discontinued trans-Pacific container shipping operations.

 

Comparison of GAAP and Non-GAAP Results from Continuing Operations

   Quarter Ended  
(in millions, except per share data)*    6/23/2013     6/24/2012  

GAAP:

    

Operating revenue

   $ 259.8      $ 270.9   

Operating income

   $ 16.0      $ 1.0   

Net loss

   $ (0.9   $ (31.1

Net loss per share

   $ (0.02   $ (1.55

Non-GAAP:*

    

EBITDA

   $ 28.8      $ (0.6

Adjusted operating income

   $ 16.5      $ 2.2   

Adjusted EBITDA

   $ 29.2      $ 15.2   

Restructuring charge

   $ 19.8        —     

Adjusted net loss

   $ (0.1   $ (14.8

Adjusted net loss per share

   $ —        $ (0.74

 

* See attached schedules for reconciliation of second-quarter 2013 and 2012 reported GAAP results to Non-GAAP results. Per-share amounts reflect the weighted average of 35.6 million shares outstanding for the 2013 second quarter, compared with 20.1 million weighted average shares for the 2012 period.

“Horizon Lines second-quarter adjusted EBITDA nearly doubled from the same period a year ago, driven largely by reduced vessel charter expense, lower dry-dock transit and crew-related expenses, lower fuel consumption, higher non-transportation revenue, reduced overhead and gains on the sale of assets,” said Sam Woodward, President and Chief Executive Officer. “The positive factors driving adjusted EBITDA growth were partially offset by reduced container volume and increased vessel operating expenses. Second-quarter results demonstrate that we are executing on our plan to improve Horizon Lines’ financial performance.”


Horizon Lines 2nd Quarter 2013    Page 2 of 12

 

Second-Quarter 2013 Financial Highlights

 

LOGO Volume, Rate & Fuel CostContainer volume for the 2013 second quarter totaled 56,159 revenue loads, down 6.0% from 59,768 loads for the same period a year ago. The decline was primarily a result of the reduced number of sailings between Jacksonville and San Juan. Unit revenue per container totaled $4,263 in the 2013 second quarter, compared with $4,269 a year ago. Second-quarter unit revenue per container, net of fuel surcharges, was $3,250, up 2.6% from $3,168 a year ago. Vessel fuel costs averaged $659 per metric ton in the second quarter, 10.1% below the average price of $733 per ton in the same quarter a year ago.

 

LOGO Operating RevenueSecond-quarter operating revenue declined 4.1% to $259.8 million from $270.9 million a year ago. The factors driving the $11.1 million revenue decrease were an $11.5 million volume contraction, largely due to reduced sailings out of Jacksonville, and lower fuel surcharges of $8.2 million. These items were partially offset by a $4.5 million increase in container revenue rates, and a $4.1 million rise in non-transportation revenue. The improvement in non-transportation revenue was primarily due to an increase in certain transportation services agreements and other services.

 

LOGO Operating IncomeOperating income for the second quarter totaled $16.0 million, compared with $1.0 million a year ago. The $15.0 million improvement was primarily driven by a $3.9 million reduction in vessel lease expense, $2.9 million in lower dry-dock transit and crew-related expenses, and a $2.5 million improvement in fuel recovery primarily due to lower fuel consumption. 2013 second-quarter operating income includes expenses totaling $0.5 million primarily associated with the return of excess equipment related to the 2012 fourth-quarter service change in Puerto Rico. 2012 second-quarter operating income includes $1.2 million of antitrust-related legal expense, refinancing costs, an impairment charge and severance expense. Excluding these items, second-quarter 2013 adjusted operating income totaled $16.5 million, compared with $2.2 million a year ago. (See reconciliation tables for specific line-item amounts.)

 

LOGO EBITDA – EBITDA totaled $28.8 million for the 2013 second quarter, compared with negative $0.6 million for the same period a year ago. Adjusted EBITDA for the second quarter of 2013 was $29.2 million, an increase of 92.1% from $15.2 million for 2012. EBITDA and adjusted EBITDA for the 2013 and 2012 second quarters were impacted by the same factors affecting operating income. Additionally, 2013 adjusted EBITDA reflects the exclusion of $0.1 million of non-cash gains on marking the conversion feature in the company’s convertible debt to fair value. Adjusted EBITDA for the 2012 second quarter also reflects the exclusion of a primarily non-cash net loss of $14.9 million, resulting from a $47.7 million loss on the conversion of debt to equity, which was partially offset by a $32.8 million gain on marking the conversion feature of the company’s convertible debt to fair value. (See reconciliation tables for specific line-item amounts.)

 


Horizon Lines 2nd Quarter 2013    Page 3 of 12

 

LOGO Net LossThe second-quarter net loss from continuing operations totaled $0.9 million, or $0.02 per share, on a weighted average of 35.6 million shares outstanding. This compares with a year-ago net loss of $31.1 million, or $1.55 per share, on a weighted average of 20.1 million shares outstanding. On an adjusted basis, the second-quarter net loss from continuing operations totaled $0.1 million, or $0.00 per share, compared with an adjusted net loss of $14.8 million, or $0.74 per share, a year ago. The 2013 and 2012 second-quarter net losses reflect the same items impacting adjusted EBITDA. Additionally, the adjusted net loss for the 2013 second quarter excludes the non-cash accretion of the estimated multi-employer pension plan withdrawal liability related to our move from Elizabeth, New Jersey to Philadelphia, Pennsylvania, and the adjusted net loss for both the 2013 and 2012 periods excludes the non-cash accretion of payments associated with antitrust-related legal settlements, and includes the tax impact of the adjustments. (See reconciliation tables for specific line-item amounts.)

 

LOGO Six-Month ResultsFor the first half of fiscal 2013, operating revenue decreased 5.6% to $504.3 million from $534.3 million for the same period in 2012. EBITDA totaled $37.2 million compared with $5.1 million a year ago. First-half 2013 adjusted EBITDA totaled $42.9 million, compared with $26.0 million for the same period in 2012. The $16.9 million improvement was primarily due to the same factors impacting the second quarter performance versus the same period a year ago. These factors include a reduction in vessel lease expense, improved fuel recovery, lower dry-dock transit and crew-related expenses, reduced overhead, higher non-transportation revenue, and gains on the sale of assets, partially offset by lower volume and higher vessel operating expenses. The net loss from continuing operations for the 2013 six-month period totaled $20.9 million, or $0.59 per share on 35.2 million weighted average shares outstanding, compared with a net loss of $57.9 million, or $5.00 per share on 11.6 million weighted average shares outstanding, for the prior year. The adjusted net loss from continuing operations for the 2013 six-month period totaled $14.6 million, or $0.41 per share, compared with an adjusted net loss from continuing operations of $35.9 million, or $3.09 per share, for the comparable year-ago period. (See reconciliation tables for specific line items excluded from adjusted EBITDA and adjusted net loss.)

 

LOGO Shares OutstandingThe company had a weighted daily average of 35.6 million shares outstanding for the second quarter of 2013, and 35.2 million weighted average shares outstanding for the first six months of the year. In 2012, the company had a weighted daily average of 20.1 million shares outstanding for the second quarter, and 11.6 million shares outstanding for the six-month period. Shares outstanding reflect the company’s financial restructuring and 1-for-25 reverse stock split in the fourth quarter of 2011, a mandatory debt-for-equity exchange in the first quarter of 2012, and a further financial restructuring in the second quarter of 2012. At July 26, 2013, the equivalent of 92.5 million fully diluted shares of the company’s stock was outstanding, consisting of 35.7 million shares of common stock and warrants convertible into 56.8 million shares of common stock.

 


Horizon Lines 2nd Quarter 2013    Page 4 of 12

 

LOGO Liquidity & Debt Structure – The company had total liquidity of $40.5 million as of June 23, 2013, consisting of cash of $13.8 million and $26.7 million available under its asset-based loan (ABL) revolving credit facility. Funded debt outstanding totaled $532.4 million, consisting of: $221.6 million of 11.00% first-lien secured notes due October 15, 2016; $171.0 million of 13.00% – 15.00% second-lien secured notes due October 15, 2016, bearing interest at 15.00% being paid in kind with additional second-lien secured notes; $32.5 million drawn on the ABL facility, maturing October 5, 2016, and bearing interest at a weighted average of 4.03%; a $75.8 million term loan to fund the January 2013 purchase of the company’s Alaska vessels, bearing interest at 10.25% and maturing September 30, 2016; a $20.0 million super-priority term loan, also for 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 $9.5 million in capital leases. The company’s weighted average interest rate for funded debt was 11.61%. Availability under the ABL credit facility is based on a percentage of eligible accounts receivable and customary reserves, with a maximum of $100.0 million of borrowing availability. Letters of credit issued against the ABL facility totaled $13.2 million at June 23, 2013.

Please see attached schedules for the reconciliation of second-quarter 2013 and 2012 reported GAAP results and Non-GAAP adjusted results.

Outlook

Management continues to expect full fiscal year revenue container volume, excluding the loss of revenue loads associated with the reduced number of sailings between Jacksonville and San Juan, and rates to be slightly higher than 2012 levels. Revenue container rate increases are necessary to mitigate contractual and inflationary growth in expenses, including the company’s vessel payroll and benefits, stevedoring, port charges, wharfage, inland transportation, and rolling stock costs, among others.

During 2012, the company dry-docked four vessels and incurred considerable transit expenses associated with the dry-docking in Asia of three of the vessels currently serving its East Coast operations. Although the company also intends to dry-dock four vessels this year, the expenses will be significantly below those incurred in 2012, due to the much shorter transit and out-of-service times for these West Coast vessels.

Vessel lease expense in 2013 will be approximately $13.8 million lower than in 2012, due to the January acquisition of three Jones Act-qualified vessels that were previously chartered. The lower vessel lease expense will be partially offset by approximately $8.5 million of additional interest expense in 2013 in connection with debt incurred for the acquisition of the vessels.

The company continues to expect overhead savings related to the reduction of its non-union workforce, completed in the first quarter of 2013, beyond the reductions associated with the Puerto Rico service change. We continually evaluate our processes for potential efficiencies and have employed numerous cost savings initiatives. For example, our move

 


Horizon Lines 2nd Quarter 2013    Page 5 of 12

 

from Elizabeth, New Jersey to Philadelphia will produce significant advantages for our customers and will also yield long term-cost efficiencies for us. These reductions will be partially offset by higher incentive and stock-based compensation, as well as other administrative expenses.

As a result of these factors, management continues to expect 2013 financial results will significantly exceed 2012 results, with 2013 adjusted EBITDA projected between $85.0 million and $97.0 million, compared with $66.0 million in fiscal 2012.

The company remains focused on continuing to further improve liquidity. Based upon our current level of operations, we believe cash flow from operations and available cash, together with borrowings available under the ABL Facility, will be adequate to meet our liquidity needs for the remainder of fiscal 2013. Total liquidity during the remainder of 2013 is expected to range between a low of approximately $45.0 million at the end of fiscal July to a high of approximately $60.0 million at the end of fiscal December.

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 user’s overall understanding of the company’s 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 company’s reported GAAP results.

About Horizon Lines

Horizon Lines, Inc. is one of the nation’s leading domestic ocean shipping companies and the only ocean cargo carrier serving all three noncontiguous domestic markets of Alaska, Hawaii and Puerto Rico from the continental United States. The company owns a fleet of 13 fully Jones Act qualified vessels and operates five port terminals in Alaska, Hawaii and Puerto Rico. A trusted partner for many of the nation’s leading retailers, manufacturers and U.S. government agencies, Horizon Lines provides reliable transportation services that leverage its unique combination of ocean 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.

 


Horizon Lines 2nd Quarter 2013    Page 6 of 12

 

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: volatility in fuel prices; decreases in shipping volumes; our ability to maintain adequate liquidity to operate our business; our ability to make interest payments on our outstanding indebtedness; work stoppages, strikes and other adverse union actions; the reaction of our customers and business partners to our announcements and filings, including those referred to herein; prices for our services; government investigations and legal proceedings; suspension or debarment by the federal government; failure to comply with safety and environmental protection and other governmental requirements; failure to comply with the terms of our probation; increased inspection procedures and tighter import and export controls; repeal or substantial amendment of the coastwise laws of the United States, also known as the Jones Act; catastrophic losses and other liabilities; the successful start-up of any Jones-Act competitor; failure to comply with the various ownership, citizenship, crewing, and U.S. build requirements dictated by the Jones Act; the arrest of our vessels by maritime claimants; severe weather and natural disasters; and the aging of our vessels and 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 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 2012 Form 10-K filed with the SEC on March 12, 2013, 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 2nd Quarter 2013    Page 7 of 12

 

Horizon Lines, Inc.

Unaudited Condensed Consolidated Balance Sheets

(in thousands, except per share data)

 

     June 23,
2013
    December 23,
2012
 

Assets

    

Current assets

    

Cash

   $ 13,824      $ 27,839   

Accounts receivable, net of allowance of $3,372 and $3,465 at June 23, 2013 and December 23, 2012, respectively

     104,701        99,685   

Materials and supplies

     24,614        29,521   

Deferred tax asset

     3,610        4,626   

Other current assets

     9,253        8,563   
  

 

 

   

 

 

 

Total current assets

     156,002        170,234   

Property and equipment, net

     229,899        160,050   

Goodwill

     198,793        198,793   

Intangible assets, net

     42,050        48,573   

Other long-term assets

     26,179        23,584   
  

 

 

   

 

 

 

Total assets

   $ 652,923      $ 601,234   
  

 

 

   

 

 

 

Liabilities and Stockholders’ Deficiency

    

Current liabilities

    

Accounts payable

   $ 42,262      $ 46,584   

Current portion of long-term debt, including capital lease

     6,293        3,608   

Accrued vessel rent

     —          4,902   

Other accrued liabilities

     80,584        87,358   
  

 

 

   

 

 

 

Total current liabilities

     129,139        142,452   

Long-term debt, including capital lease, net of current portion

     527,183        434,222   

Deferred rent

     —          9,081   

Deferred tax liability

     3,769        4,662   

Other long-term liabilities

     29,651        27,559   
  

 

 

   

 

 

 

Total liabilities

     689,742        617,976   
  

 

 

   

 

 

 

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, 35,631 shares issued and outstanding as of June 23, 2013, and 100,000 shares authorized, 34,434 issued and outstanding as of December 23, 2012

     961        954   

Additional paid in capital

     382,900        381,445   

Accumulated deficit

     (419,814     (397,958

Accumulated other comprehensive loss

     (866     (1,183
  

 

 

   

 

 

 

Total stockholders’ deficiency

     (36,819     (16,742
  

 

 

   

 

 

 

Total liabilities and stockholders’ deficiency

   $ 652,923      $ 601,234   
  

 

 

   

 

 

 

 


Horizon Lines 2nd Quarter 2013    Page 8 of 12

 

Horizon Lines, Inc.

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

 

     Quarter Ended     Six Months Ended  
     June 23,
2013
    June 24,
2012
    June 23,
2013
    June 24,
2012
 

Operating revenue

   $ 259,784      $ 270,939      $ 504,275      $ 534,294   

Operating expense:

        

Vessel

     73,184        92,222        149,422        180,868   

Marine

     50,567        51,740        99,951        102,344   

Inland

     45,131        46,629        87,022        93,326   

Land

     36,215        35,609        71,633        73,489   

Rolling stock rent

     9,918        10,694        19,571        20,667   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of services (excluding depreciation expense)

     215,015        236,894        427,599        470,694   

Depreciation and amortization

     9,580        10,397        19,150        20,797   

Amortization of vessel dry-docking

     3,178        2,622        6,210        6,635   

Selling, general and administrative

     18,075        19,529        37,839        41,042   

Restructuring charge

     409        —          5,252        —     

Impairment charge

     18        257        18        257   

Miscellaneous (income) expense, net

     (2,467     233        (3,472     (77
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expense

     243,808        269,932        492,596        539,348   

Operating income (loss)

     15,976        1,007        11,679        (5,054

Other expense:

        

Interest expense, net

     16,934        17,491        32,635        35,230   

(Gain) loss on conversion of debt

     (5     47,403        (5     36,421   

Gain on change in value of debt conversion features

     (114     (32,800     (159     (19,130

Other expense, net

     7        4        9        18   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from continuing operations before income tax expense

     (846     (31,091     (20,801     (57,593

Income tax expense

     7        49        126        346   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss from continuing operations

     (853     (31,140     (20,927     (57,939

Net loss from discontinued operations

     (651     (14,934     (929     (20,641
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (1,504   $ (46,074   $ (21,856   $ (78,580
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted net loss per share:

        

Continuing operations

   $ (0.02   $ (1.55   $ (0.59   $ (5.00

Discontinued operations

     (0.02     (0.75     (0.03     (1.78
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted net loss per share

   $ (0.04   $ (2.30   $ (0.62   $ (6.78
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted net loss per share:

        

Continuing operations

   $ (0.02   $ (1.55     $ (0.59   $ (5.00

Discontinued operations

     (0.02     (0.75     (0.03     (1.78
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted net loss per share

   $ (0.04   $ (2.30   $ (0.62   $ (6.78
  

 

 

   

 

 

   

 

 

   

 

 

 

Number of weighted average shares used in calculation:

        

Basic

     35,602        20,068        35,174        11,595   

Diluted

     35,602        20,068        35,174        11,595   

 


Horizon Lines 2nd Quarter 2013    Page 9 of 12

 

Horizon Lines, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

 

     Six Months Ended  
     June 23,
2013
    June 24,
2012
 

Cash flows from operating activities:

    

Net loss from continuing operations

   $ (20,927   $ (57,939

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

    

Depreciation

     12,393        10,672   

Amortization of other intangible assets

     6,757        10,125   

Amortization of vessel dry-docking

     6,210        6,635   

Amortization of deferred financing costs

     1,580        1,404   

Gain on change in value of conversion features

     (159     (19,130

Restructuring charge

     5,252        —     

Impairment charge

     18        257   

(Gain) loss on conversion of debt

     (5     36,421   

Deferred income taxes

     123        266   

Gain on equipment disposals

     (2,598     (213

Stock-based compensation

     1,607        258   

Payment-in-kind interest expense

     12,472        9,396   

Accretion of interest on debt

     451        3,931   

Other non-cash interest accretion

     661        1,121   

Changes in operating assets and liabilities:

    

Accounts receivable

     (5,016     (10,764

Materials and supplies

     4,652        94   

Other current assets

     (796     (407

Accounts payable

     (4,321     14,358   

Accrued liabilities

     (3,774     (3,251

Vessel rent

     (777     (6,612

Vessel dry-docking payments

     (6,314     (9,336

Legal settlement payments

     (6,500     (1,500

Other assets/liabilities

     146        32   
  

 

 

   

 

 

 

Net cash provided by (used in) operating activities from continuing operations

     1,135        (14,182

Net cash used in operating activities from discontinued operations

     (1,331     (19,908
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Purchases of property and equipment

     (96,621     (4,230

Proceeds from the sale of property and equipment

     5,480        830   
  

 

 

   

 

 

 

Net cash used in investing activities from continuing operations

     (91,141     (3,400

Cash flows from financing activities:

    

Proceeds from issuance of debt

     95,000        —     

Borrowing under ABL facility

     15,000        42,500   

Payments under ABL facility

     (25,000     —     

Payments on long-term debt

     (1,125     (1,125

Payments of financing costs

     (5,557     (4,400

Payments on capital lease obligations

     (996     (900
  

 

 

   

 

 

 

Net cash provided by financing activities

     77,322        36,075   
  

 

 

   

 

 

 

Net (decrease) increase in cash from continuing operations

     (12,684     18,493   

Net decrease in cash from discontinued operations

     (1,331     (19,908
  

 

 

   

 

 

 

Net decrease in cash

     (14,015     (1,415

Cash at beginning of period

     27,839        21,147   
  

 

 

   

 

 

 

Cash at end of period

   $ 13,824      $ 19,732   
  

 

 

   

 

 

 

Supplemental disclosure of non-cash financing activity:

    

Second lien notes issued to SFL

   $ 40,000      $ —       

Conversion of debt to equity

   $ 283,278      $ —       

Notes issued as payment-in-kind

   $ 15,730      $ —       

 


Horizon Lines 2nd Quarter 2013    Page 10 of 12

 

Horizon Lines, Inc.

Adjusted Operating Income (Loss) Reconciliation

(in thousands)

 

     Quarter Ended
June 23, 2013
     Quarter Ended
June 24, 2012
     Six Months Ended
June 23, 2013
     Six Months Ended
June 24, 2012
 

Operating Income (Loss)

   $ 15,976       $ 1,007       $ 11,679       $ (5,054

Adjustments:

           

Restructuring Charge

     409         —           5,252         —     

Antitrust Legal Expenses

     35         427         247         1,183   

Impairment Charge

     18         257         18         257   

Union/Other Severance

     17         156         318         1,279   

Refinancing Costs

     —           303         —           949   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Adjustments

     479         1,143         5,835         3,668   

Adjusted Operating Income (Loss)

   $ 16,455       $ 2,150       $ 17,514       $ (1,386
  

 

 

    

 

 

    

 

 

    

 

 

 

Horizon Lines, Inc.

Adjusted Net Loss Reconciliation

(in thousands)

 

     Quarter Ended
June 23, 2013
    Quarter Ended
June 24, 2012
    Six Months Ended
June 23, 2013
    Six Months Ended
June 24, 2012
 

Net Loss

   $ (1,504   $ (46,074   $ (21,856   $ (78,580

Net Loss from Discontinued Operations

     (651     (14,934     (929     (20,641
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Loss from Continuing Operations

     (853     (31,140     (20,927     (57,939

Adjustments:

        

Restructuring Charge

     409        —          5,252        —     

Accretion of Legal Settlements

     240        578        504        1,121   

Accretion of Estimated Multi-employer Pension Plan Withdrawal Liability

     157        —          157        —     

Antitrust Legal Expenses

     35        427        247        1,183   

Impairment Charge

     18        257        18        257   

Union/Other Severance

     17        156        318        1,279   

Gain on Change in Value of Debt Conversion Features

     (114     (32,800     (159     (19,130

(Gain) Loss on Conversion of Debt/Other Refinancing Costs

     (5     47,706        (5     37,370   

Tax Impact of Adjustments

     1        —          7        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Adjustments

     758        16,324        6,339        22,080   

Adjusted Net Loss from Continuing Operations

   $ (95   $ (14,816   $ (14,588   $ (35,859
  

 

 

   

 

 

   

 

 

   

 

 

 

 


Horizon Lines 2nd Quarter 2013    Page 11 of 12

 

Horizon Lines, Inc.

Adjusted Net Loss Per Share Reconciliation

 

     Quarter Ended
June 23, 2013
    Quarter Ended
June 24, 2012
    Six Months Ended
June 23, 2013
    Six Months Ended
June 24, 2012
 

Net Loss Per Share

   $ (0.04   $ (2.30   $ (0.62   $ (6.78

Net Loss Per Share from Discontinued Operations

     (0.02     (0.75     (0.03     (1.78
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Loss Per Share from Continuing Operations

     (0.02     (1.55     (0.59     (5.00

Adjustments Per Share:

        

Restructuring Charge

     0.01        —          0.15        —     

Accretion of Legal Settlements

     0.01        0.03        0.01        0.10   

Accretion of Estimated Multi-employer Pension Plan Withdrawal Liability

     —          —          —          —     

Antitrust Legal Expenses

     —          0.02        0.01        0.10   

Impairment Charge

     —          0.01        —          0.02   

Union/Other Severance

     —          0.01        0.01        0.11   

Gain on Change in Value of Debt Conversion Features

     —          (1.64     —          (1.64

Loss on Conversion of Debt/Other Refinancing Costs

     —          2.38        —          3.22   

Tax Impact of Adjustments

     —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Adjustments

     0.02        0.81        0.18        1.91   

Adjusted Net Loss Per Share from Continuing Operations

   $ —        $ (0.74   $ (0.41   $ (3.09
  

 

 

   

 

 

   

 

 

   

 

 

 

Horizon Lines, Inc.

EBITDA and Adjusted EBITDA Reconciliation

(in thousands)

 

     Quarter Ended
June 23, 2013
    Quarter Ended
June 24, 2012
    Six Months Ended
June 23, 2013
    Six Months Ended
June 24, 2012
 

Net Loss

   $ (1,504   $ (46,074   $ (21,856   $ (78,580

Net Loss from Discontinued Operations

     (651     (14,934     (929     (20,641
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Loss from Continuing Operations

     (853     (31,140     (20,927     (57,939

Interest Expense, Net

     16,934        17,491        32,635        35,230   

Tax Expense

     7        49        126        346   

Depreciation and Amortization

     12,758        13,019        25,360        27,432   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     28,846        (581     37,194        5,069   

Restructuring Charge

     409        —          5,252        —     

Antitrust Legal Expenses

     35        427        247        1,183   

Impairment Charge

     18        257        18        257   

Union/Other Severance

     17        156        318        1,279   

Gain on Change in Value of Debt Conversion Features

     (114     (32,800     (159     (19,130

(Gain) Loss on Conversion of Debt/Other Refinancing Costs

     (5     47,706        (5     37,370   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 29,206      $ 15,165      $ 42,865      $ 26,028   
  

 

 

   

 

 

   

 

 

   

 

 

 

Note: EBITDA is defined as net income 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.

 


Horizon Lines 2nd Quarter 2013    Page 12 of 12

 

Horizon Lines, Inc.

2013 Estimated EBITDA and Adjusted EBITDA Reconciliation

(in thousands)

 

     2013

Net Loss

   $(41,654) - (29,654)

Net Loss from Discontinued Operations

   (1,150)
  

 

Net Loss from Continuing Operations

   (40,504) - (28,504)

Interest Expense, Net

   67,000

Tax Expense

   100

Depreciation and Amortization

   52,500
  

 

EBITDA

   79,096 - 91,096

Restructuring Charges/Severance

   5,600

Impairment Charges

   18

Antitrust Legal Expenses

   450

Gain on Change in Value of Debt Conversion Features

   (164)
  

 

Adjusted EBITDA

   $85,000 - 97,000
  

 

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