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8-K - FORM 8-K DATED MAY 8, 2015 - DAKOTA PLAINS HOLDINGS, INC. | dakota151708_8k.htm |
Exhibit 99.1
DAKOTA PLAINS HOLDINGS, INC.
REPORTS FIRST QUARTER 2015 FINANCIAL RESULTS
WAYZATA, Minnesota, (May 8, 2015) -- Dakota Plains Holdings, Inc. (“Dakota Plains”) (NYSE MKT: DAKP) today announced financial results for the three months ended March 31, 2015.
Operational & Corporate Update Summary
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The Company billed 4.6 million barrels of transloaded oil, an increase of approximately 61% compared to first quarter of 2014.
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Sand transloading volumes for the first quarter of 2015 were 110,000 tons compared to 81,000 tons in the fourth quarter of of 2014, a 35% increase. Sand transloading operations commenced in the second quarter of 2014.
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The construction of the third crude oil storage tank is two months ahead of schedule, remains on budget, and is fully funded.
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The Company announced plans to bring its crude oil and sand transloading operations in-house effective June 1, 2015.
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The Company retained a financial advisor and launched a strategic alternatives process.
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Financial Summary
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The Company experienced net income of $183,000 compared to a net loss of $1.3 million for the first quarter 2014.
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Adjusted EBITDA (a non-GAAP measure described below) was $3.9 million compared to $0.3 million for the first quarter 2014.
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Revenue from transloading oil was $8.5 million compared to $5.5 million for the first quarter 2014.
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Revenue from transloading sand was $0.9 million for the first quarter of 2015.
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Craig M. McKenzie, Chief Executive Officer of Dakota Plains, said: “We delivered solid financial results for the first quarter with our EBITDA surpassing that of full year 2014, which is validation of our successful transition of the Company.”
Added McKenzie, “Going forward, we will continue to focus on increasing the throughput volume and operating efficiency of the Pioneer Terminal while we are considering strategic options available to the Company.”
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First Quarter 2015 Financial Results
The Company reported net income of $183,000 for the first quarter 2015, compared to a net loss of $1.3 million for the first quarter 2014. Net income for the first quarter of 2015 was driven by an increase in revenue from oil transloading and the addition of revenue from sand transloading. The net loss for the first quarter of 2014 was driven by a decrease in the income from the Company’s indirect ownership interest in the marketing joint venture.
Adjusted EBITDA for the quarter was $3.9 million compared to $0.3 million for the first quarter of 2014. The difference was primarily driven by the increase in income from the transloading operations as a result of increased volume and relatively flat cost of revenues and reduction in corporate general and administrative expenses. This impact was partially offset by the increase in transloading operating expenses as a result of assuming the entire cost associated with insuring the Pioneer Terminal facility.
General and administrative expenses were $1.9 million for the first quarter compared to $2.6 million for the first quarter of 2014. The $2.6 million expense in March 31, 2014 included $0.5 million related to the consolidation of the transloading joint venture and $0.3 million for professional fees.
Revenue from oil transloading was $8.5 million in the first quarter compared to $5.5 million for the first quarter of 2014. The increase was driven by volume, as first quarter 2015 billed volume was 4.6 million barrels of oil compared to 2.8 million barrels of oil for the first quarter of 2014, a 61% increase. Cost of revenue in the first quarter of 2015 was slightly higher than the previous year due to the increased volume, and operating expenses increased, primarily due to increased insurance costs related to the Pioneer Terminal.
Revenue from sand transloading was $0.9 million for the three months ended March 31, 2015. The sand operations commenced in June 2014. For the three months ended March 31, 2015, the Company transloaded 110,000 tons of sand with volumes increasing in each month.
For the quarter ended March 31, 2015, the Company incurred $0.9 million in expenses related to its inventory of tank cars that were assumed upon the dissolution of the joint ventures. The Company accounted for these expenses under Other Income (Expense) on its income statement as it does not consider the tank cars as a core business. The $0.9 million expense was partially off-set by a $0.2 million adjustment to the contingent override payment.
Interest expense was $1.9 million for the first quarter of 2015 compared to $0.5 million for the first quarter of 2014. The increase was primarily driven by the contingent override payment of $0.225 per barrel payable to the Company’s former joint venture partner, as part of the November 30, 2014 acquisition of the transloading, marketing and sand joint ventures.
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Income from the Company’s indirect investment in the marketing joint venture was $87,000 for the three months ended March 31, 2014. In December 2014, the Company immediately ceased the buying and selling of crude oil in conjunction with the acquisition of ownership interests in the marketing joint venture from its then existing partner.
On November 24, 2014, the Company sold its 50% ownership interest in the trucking joint venture to its trucking partner. Income from the Company’s indirect investment in the trucking joint venture was $121,000 for the three months ended March 31, 2014.
Adjusted EBITDA
Adjusted EBITDA and adjusted EBITDA attributable to stockholders of Dakota Plains Holdings, Inc., is a non-GAAP measure. A reconciliation of this measure to its most directly comparable GAAP measure is included in the accompanying financial tables found later in this release. Management believes the use of this non-GAAP financial measure provides useful information to investors to gain an overall understanding of current financial performance. Specifically, management believes the non-GAAP results included herein provide useful information to both management and investors by excluding certain expenses and gains and losses on the extinguishment of debt that management believes are not indicative of Dakota Plains’ core operating results. In addition, this non-GAAP financial measure is used by management for budgeting and forecasting as well as subsequently measuring Dakota Plains’ performance, and management believes it is providing investors with a financial measure that most closely aligns to its internal measurement processes.
About Dakota Plains Holdings, Inc.
Dakota Plains Holdings, Inc. is an integrated midstream energy company operating the Pioneer Terminal transloading facility. The Pioneer Terminal is centrally located in Mountrail County, North Dakota, for Bakken and Three Forks related Energy & Production activity. For more information please visit the corporate website at: www.dakotaplains.com.
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Forward Looking Statements
Statements made by representatives of Dakota Plains in this press release that are not historical facts are forward-looking statements. These statements are based on certain assumptions and expectations made by the Company which reflect management’s experience, estimates and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or anticipated in the forward-looking statements. These include risks relating to global economics or politics, our ability to obtain additional capital needed to implement our business plan, minimal operating history, loss of key personnel, lack of business diversification, reliance on strategic, third-party relationships, financial performance and results, prices and demand for oil, our ability to make acquisitions on economically acceptable terms, and other factors described from time to time in the Company’s periodic reports filed with the SEC that could cause actual results to differ materially from those anticipated or implied in the forward-looking statements. Dakota Plains undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information or future events.
For more information, please contact:
Company Contact
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Investor and Media Contact
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Tim Brady, CFO
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Dan Gagnier, Sard Verbinnen
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tbrady@dakotaplains.com
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DGagnier@sardverb.com
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Phone: 952.473.9950
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Phone: 212.415.8972
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www.dakotaplains.com
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www.sardverb.com
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- TABLES FOLLOW –
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DAKOTA PLAINS HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2015 AND DECEMBER 31, 2014
ASSETS
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March 31,
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December 31,
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2015
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2014
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CURRENT ASSETS
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Cash and Cash Equivalents
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$ | 6,504,373 | $ | 4,690,706 | ||||
Trade Receivables
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6,128,903 | 3,268,386 | ||||||
Income Tax Receivable
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14,803 | 14,803 | ||||||
Other Current Assets
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861,041 | 99,776 | ||||||
Other Receivables
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637,687 | 781,135 | ||||||
Deferred Tax Asset
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1,969,000 | 2,266,000 | ||||||
Total Current Assets
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16,115,807 | 11,120,806 | ||||||
PROPERTY AND EQUIPMENT
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Land
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3,191,521 | 3,191,521 | ||||||
Site Development
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5,829,640 | 5,829,640 | ||||||
Terminal
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21,468,675 | 21,383,972 | ||||||
Machinery
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18,133,754 | 18,133,754 | ||||||
Construction in Progress
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2,616,454 | 1,886,470 | ||||||
Other Property and Equipment
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12,157,937 | 11,910,987 | ||||||
Total Property and Equipment
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63,397,981 | 62,336,344 | ||||||
Less – Accumulated Depreciation
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7,251,173 | 6,143,159 | ||||||
Total Property and Equipment, Net
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56,146,808 | 56,193,185 | ||||||
FINANCE COSTS, NET
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1,297,453 | 1,537,795 | ||||||
RESTRICTED CASH
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3,000,141 | 3,000,000 | ||||||
DEFERRED TAX ASSET
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26,939,000 | 26,762,000 | ||||||
OTHER ASSETS
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512,901 | 512,901 | ||||||
Total Assets
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$ | 104,012,110 | $ | 99,126,687 | ||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT
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CURRENT LIABILITIES
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Accounts Payable
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$ | 8,790,698 | $ | 7,387,612 | ||||
Accrued Expenses
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1,866,535 | 1,696,358 | ||||||
Promissory Notes, SunTrust
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23,437,500 | 23,250,000 | ||||||
Operational Override Liability
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782,151 | 715,497 | ||||||
Notes Payable – Vehicles
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41,144 | - | ||||||
Total Current Liabilities
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34,918,028 | 33,049,467 | ||||||
LONG-TERM LIABILITIES
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Promissory Notes, SunTrust
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27,875,000 | 25,250,000 | ||||||
Operational Override Liability
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44,368,573 | 44,595,370 | ||||||
Notes Payable – Vehicles
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148,935 | - | ||||||
Other Non-Current Liabilities
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8,167 | 9,917 | ||||||
Total Long-Term Liabilities
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72,400,675 | 69,855,287 | ||||||
Total Liabilities
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107,318,703 | 102,904,754 | ||||||
COMMITMENTS AND CONTINGENCIES (NOTE 12)
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STOCKHOLDERS’ DEFICIT
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Preferred Stock – Par Value $.001; 10,000,000 Shares Authorized; None Issued or Outstanding
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- | - | ||||||
Common Stock – Par Value $.001; 100,000,000 Shares Authorized; 54,926,227 and 55,044,829 Issued and Outstanding, Respectively
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54,925 | 55,044 | ||||||
Additional Paid-In Capital
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6,556,388 | 6,267,788 | ||||||
Accumulated Deficit
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(9,917,906 | ) | (10,100,899 | ) | ||||
Total Stockholders’ Deficit
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(3,306,593 | ) | (3,778,067 | ) | ||||
Total Liabilities and Stockholders’ Deficit
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$ | 104,012,110 | $ | 99,126,687 |
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DAKOTA PLAINS HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014
Three Months Ended
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March 31,
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2015
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2014
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REVENUES
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Transloading Revenue
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$ | 8,479,261 | $ | 5,445,458 | ||||
Sand Revenue
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878,373 | - | ||||||
Rental Income
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30,000 | 30,000 | ||||||
Total Revenues
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9,387,634 | 5,485,458 | ||||||
COST OF REVENUES
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2,214,662 | 2,098,699 | ||||||
(exclusive of items shown separately below)
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OPERATING EXPENSES
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Transloading Operating Expenses
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1,123,872 | 462,235 | ||||||
General and Administrative Expenses
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1,919,189 | 2,555,543 | ||||||
Depreciation and Amortization
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1,108,014 | 1,035,215 | ||||||
Total Operating Expenses
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4,151,075 | 4,052,993 | ||||||
INCOME (LOSS) FROM OPERATIONS
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3,021,897 | (666,234 | ) | |||||
OTHER INCOME (EXPENSE)
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Income from Investment in DPTS Marketing LLC
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- | 86,632 | ||||||
Income from Investment in Dakota Plains Services, LLC
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- | 121,454 | ||||||
Interest Expense (Net of Interest Income)
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(1,946,742 | ) | (502,136 | ) | ||||
Other Income (Expense)
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(764,662 | ) | - | |||||
Total Other Income (Expense)
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(2,711,404 | ) | (294,050 | ) | ||||
INCOME (LOSS) BEFORE TAXES
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310,493 | (960,284 | ) | |||||
INCOME TAX PROVISION (BENEFIT)
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127,500 | (514,885 | ) | |||||
NET INCOME (LOSS)
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182,993 | (445,399 | ) | |||||
NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS
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- | 890,864 | ||||||
NET INCOME (LOSS) ATTRIBUTABLE TO STOCKHOLDERS OF DAKOTA PLAINS HOLDINGS, INC.
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$ | 182,993 | $ | (1,336,263 | ) | |||
Net Income (Loss) Per Common Share – Basic and Diluted
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$ | 0.00 | $ | (0.02 | ) | |||
Weighted Average Shares Outstanding – Basic
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54,085,723 | 53,598,684 | ||||||
Weighted Average Shares Outstanding – Diluted
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55,304,822 | 53,598,684 |
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DAKOTA PLAINS HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014
Three Months Ended
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March 31,
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2015
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2014
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CASH FLOWS FROM OPERATING ACTIVITIES
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Net Income (Loss)
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$ | 182,993 | $ | (445,399 | ) | |||
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by (Used in) Operating Activities
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Depreciation and Amortization
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1,108,014 | 1,035,215 | ||||||
Amortization of Debt Discount
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- | 87,408 | ||||||
Amortization of Finance Costs
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240,342 | 18,700 | ||||||
Deferred Income Taxes
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120,000 | (523,000 | ) | |||||
Income from Investment in DPTS Marketing LLC
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- | (86,632 | ) | |||||
Income from Investment in Dakota Plains Services, LLC
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- | (121,454 | ) | |||||
Non-Cash Rental Income
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- | 4,895 | ||||||
Amortization of Deferred Rent
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(1,750 | ) | (1,750 | ) | ||||
Share-Based Compensation
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509,531 | 1,128,932 | ||||||
Changes in Working Capital and Other Items, Net of Consolidation of VIE:
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Increase in Trade Receivables
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(2,860,517 | ) | (856,273 | ) | ||||
Decrease (Increase) in Other Receivables
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143,448 | (102,856 | ) | |||||
Increase in Other Current Assets
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(761,265 | ) | (49,641 | ) | ||||
Decrease in Due from Related Party
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- | 1,388,982 | ||||||
Increase in Accounts Payable
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933,750 | 421,134 | ||||||
Increase (Decrease) in Accrued Expenses
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170,177 | (1,440,380 | ) | |||||
Increase in Due from Related Party
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- | 7,972 | ||||||
Increase in Restricted Cash
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(141 | ) | - | |||||
Decrease in Operational Override Liability
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(160,143 | ) | - | |||||
Net Cash Provided By (Used In) Operating Activities
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(375,561 | ) | 465,853 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES
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Purchases of Property and Equipment
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(592,301 | ) | (4,709,437 | ) | ||||
CASH FLOWS USED IN FINANCING ACTIVITIES
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Common Shares Surrendered
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(221,050 | ) | (645,679 | ) | ||||
Advances on Promissory Notes, SunTrust
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3,000,000 | - | ||||||
Payments on Promissory Notes, SunTrust
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(187,500 | ) | - | |||||
Proceeds from Notes Payable – Vehicles
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196,152 | - | ||||||
Payments on Notes Payable – Vehicles
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(6,073 | ) | - | |||||
Net Cash Provided By (Used In) Financing Activities
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2,781,529 | (645,679 | ) | |||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
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1,813,667 | (4,889,263 | ) | |||||
CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD
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4,690,706 | 13,011,608 | ||||||
CASH AND CASH EQUIVALENTS – END OF PERIOD
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$ | 6,504,373 | $ | 8,122,345 | ||||
Supplemental Disclosure of Cash Flow Information
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Cash Paid During the Period for Interest
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$ | 460,952 | $ | 445,246 | ||||
Cash Paid During the Period for Income Taxes
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$ | 7,500 | $ | 8,115 | ||||
Non-Cash Financing and Investing Activities:
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Purchase of Property and Equipment Paid Subsequent to Period End
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$ | 1,223,969 | $ | 4,174,456 | ||||
Preferred Dividend Receivable
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$ | - | $ | 123,288 |
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Non-GAAP Financial Measures
Dakota Plains Holdings, Inc.
Reconciliation of Adjusted EBITDA
Three
Months Ended
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March
31,
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2015
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2014
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Net Income (Loss)
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$ | 182,993 | $ | (445,399 | ) | |||
Add Back:
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Income Tax Provision (Benefit)
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127,500 | (514,885 | ) | |||||
Depreciation and Amortization
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1,108,014 | 1,035,215 | ||||||
Share Based Compensation
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509,531 | 1,128,932 | ||||||
Interest Expense
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1,946,742 | 502,136 | ||||||
Adjusted EBITDA
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$ | 3,874,780 | $ | 1,705,999 | ||||
Adjusted EBITDA Attributable to Non-Controlling Interests
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- | 1,384,417 | ||||||
Adjusted EBITDA Attributable to Shareholders of Dakota Plains Holdings, Inc.
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$ | 3,874,780 | $ | 321,583 |
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