Horizon Lines profits from tonnage tax shift
Horizon Lines Monday reported third quarter net income of $52.9 million, compared with $13.3 million a year earlier, thanks primarily to about $39.4 million in tax savings.
The U.S. Jones Act carrier has elected to pay a tonnage tax based upon the net tonnage of its U.S.-flag vessels of at least 10,000 deadweight tons operating in the U.S. foreign trade, rather than the regular U.S. corporate income tax on the taxable income from such vessels.
On a comparable basis, ignoring the tax return, Horizon Lines' net income was up 7.5 percent to $14.3 million.
Operating income for the third quarter was $35.2 million, up 91.3 percent compared to $18.4 million in the same quarter 2005. Revenue improved 5.4 percent to $304.7 million from $289.1 million.
'Freight rate improvement, cargo mix upgrades and higher fuel surcharges more than offset some modest volume softness to drive operating revenue growth in the third quarter,' Horizon Lines said.
'We continued to successfully execute on our core business strategy in the third quarter of 2006, generating record earnings and our 19th consecutive quarter of adjusted EBITDA growth,' said Chuck Raymond, Horizon Lines' chairman, president and chief executive officer. 'We also adopted the tonnage tax election, which will result in substantial tax savings that will allow us to further reinvest in our business.'
For the year to date, Horizon Lines reported a net income of $62.7 million, compared to deficit of $7.4 million after nine months last year. Operating income jumped 115 percent to $73.5 million while revenue improved 6.4 percent to $869.4 million.
Looking ahead, Raymond said the company is 'optimistic about the economic outlook for the remainder of 2006.' For the full year it forecasts revenue at $1.156 billion to $1.161 billion, compared to the $1.01 billion posted in 2005.