Horizon reports $46 million loss, but revenue rises

   The Jones Act container carrier Horizon Lines said it had a net loss of $46 million in the second quarter, compared to a loss of $5.4 million in the second quarter of 2011 period.
   About $16.1 million of the loss in the most recent quarter was from discontinued operations and $29.9 million from continuing operations.
   Revenue for the carrier was up. The company had operating revenue of $270.9 million in the second quarter of this year, compared to $253.7 million in the second quarter of 2011.
   “Horizon Lines experienced a 3.6 percent improvement in container volume during the second quarter relative to the year-ago period,” said Sam Woodward, president and chief executive officer.
   He added that “our overall adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) performance for the quarter was better than expected, due largely to the volume gain, which in turn improved the recovery of fuel costs.”
   EBITDA from continuing operations totaled a negative $600,000 for the 2012 second quarter, compared to a positive $33.1 million for the same period a year ago. Adjusted EBITDA from continuing operations for the second quarter of 2012 was $15.2 million, compared with $19.7 million for 2011.
   The company said among the key factors in the $4.5 million decline in 2012 second-quarter adjusted EBITDA from a year ago was an incremental $5.4 million increase in transit and crew costs associated with dry-docking in China certain vessels that serve the Puerto Rico trade. The company said it made the decision to drydock the ships “to help ensure our service integrity in Puerto Rico and improve the reliability of these vessels.”
   Horizon sails between the U.S. mainland and Hawaii, Alaska and Puerto Rico. Woodward said:

• “Hawaii experienced continued strong volume gains during the quarter, helped in part by improving tourism and ongoing customer support amid an otherwise sluggish business environment.
• “Alaska’s business rebounded from the first quarter, when record cold and snowfall exacerbated and extended the typically slow winter season. However, volume remained just shy of the year ago level, primarily due to a late start to the summer seafood season.
• “Puerto Rico experienced a modest volume increase from a year ago, characterized by an improved mix of refrigerated cargo.

   The company said container volume for the 2012 second quarter totaled 59,768 revenue loads, up 3.6 percent from 57,677 loads for the same period a year ago. Unit revenue per container totaled $4,269 in the 2012 second quarter, compared with $4,079 in 2011. Unit revenue per container, net of fuel surcharges, was $3,174, up 1.1 percent from $3,140 a year ago. Bunker fuel costs averaged $733 per metric ton in the second quarter, 10.9 percent above the average price of $661 per ton in the same quarter in 2011.
   The company said it continues to project that 2012 container volumes will increase modestly, in the 1-2 percent range, and container rates, net of fuel surcharges, will rise slightly from 2011 levels due to the continuing slow economic recoveries in the markets it serves. Fuel prices for 2012 are currently projected to average in the $675-to-$680 per-ton range.
   “Based upon the company’s current level of operations, as well as the recent restructuring and conversion of its debt and resolution of the lease obligations related to the vessels that served the FSX service (Horizon’s discontinued transpacific service), cash flow from operations and available cash, together with borrowings available under the ABL (asset based loan) facility, are expected to be adequate to meet liquidity needs,” Horizon said. 
   The company expects total liquidity during the remainder of 2012 to remain near or above the $37 million as of June 24. – Chris Dupin