Post by HardTimeTrucker on Oct 27, 2008 8:48:38 GMT -5
The JOURNAL of COMMERCE
Anti-trust probe, other costs hit Horizon Lines profit
October 24, 2008
By Peter T. Leach
Horizon Lines today reported net income that was sharply higher in the third quarter, but lower year-on-year when adjusted for legal expenses related to a federal anti-trust investigation and a loss on early payment of debt and a reevaluation of its tonnage tax.
The largest Jones Act carrier also lowered its guidance for full-year revenue and pre-tax earnings.
On a GAAP basis, Horizon reported a profit of $12.5 million for the third quarter ended Sept. 30, from $1.6 million in the previous-year period.
On an adjusted basis, third-quarter profit fell to $16.2 million from $20.7 million.
Operating revenue in the quarter increased 9.8 percent to $352.6 million from $321.1 million. Operating income totaled $21.8 million, down from $35.3 million for the three-month period in 2007.
The company said the decline in operating income primarily reflects lower overall container volume, increased fuel costs, and legal fees related to the antitrust investigation. The decline was slightly offset by rate improvements. Adjusted operating income totaled $26.4 million for the 2008 third quarter.
"Volumes were negatively impacted by continued weakness in our Puerto Rico market, which was exacerbated by five tropical storms including three hurricanes, and by a sharper-than-anticipated slowdown in Hawaii, where a steep drop in tourism pressured the economy," said Chuck Raymond, chairman, president and chief executive officer of Charlotte-based Horizon. "Although fuel prices moderated somewhat during the period, they remained high; on average, 82 percent above their levels of a year ago."
Adjusted pre-tax earnings came in at $42.2 million, off from $50.8 million a year ago, hit by the same factors affecting operating income.
For the first nine months of 2008, operating revenue increased 11.1 percent to $989.5 million from $890.5 million on-year. Pre-tax earnings totaled $97.6 million compared with $86 million a year ago. Adjusted pre-tax earnings, excluding the items previously mentioned as well as 2008 second-quarter severance cost related to early retirement for specific union employees, was $105.4 million, down from $124.5 million.
Nine-month net income totaled $21.9 million, compared with $18.2 million in the prior-year period. Adjusted net income was $28.1 million, down from $35.2 million, which excludes the after-tax loss related to the extinguishment of debt, as well as a $7.3 million deferred tax revaluation benefit.
Based on management's expectations for a continued recession in Puerto Rico, further weakening in the Hawaii economy, and continuing volatility in fuel prices, the company lowered its guidance for the full year 2008.
It expects full-year revenues of $1.27-1.29 billion, down from its previous estimate of $1.34-1.36 billion. Pre-tax earnings are revised to $120-130 million from $135-150 million.
Anti-trust probe, other costs hit Horizon Lines profit
October 24, 2008
By Peter T. Leach
Horizon Lines today reported net income that was sharply higher in the third quarter, but lower year-on-year when adjusted for legal expenses related to a federal anti-trust investigation and a loss on early payment of debt and a reevaluation of its tonnage tax.
The largest Jones Act carrier also lowered its guidance for full-year revenue and pre-tax earnings.
On a GAAP basis, Horizon reported a profit of $12.5 million for the third quarter ended Sept. 30, from $1.6 million in the previous-year period.
On an adjusted basis, third-quarter profit fell to $16.2 million from $20.7 million.
Operating revenue in the quarter increased 9.8 percent to $352.6 million from $321.1 million. Operating income totaled $21.8 million, down from $35.3 million for the three-month period in 2007.
The company said the decline in operating income primarily reflects lower overall container volume, increased fuel costs, and legal fees related to the antitrust investigation. The decline was slightly offset by rate improvements. Adjusted operating income totaled $26.4 million for the 2008 third quarter.
"Volumes were negatively impacted by continued weakness in our Puerto Rico market, which was exacerbated by five tropical storms including three hurricanes, and by a sharper-than-anticipated slowdown in Hawaii, where a steep drop in tourism pressured the economy," said Chuck Raymond, chairman, president and chief executive officer of Charlotte-based Horizon. "Although fuel prices moderated somewhat during the period, they remained high; on average, 82 percent above their levels of a year ago."
Adjusted pre-tax earnings came in at $42.2 million, off from $50.8 million a year ago, hit by the same factors affecting operating income.
For the first nine months of 2008, operating revenue increased 11.1 percent to $989.5 million from $890.5 million on-year. Pre-tax earnings totaled $97.6 million compared with $86 million a year ago. Adjusted pre-tax earnings, excluding the items previously mentioned as well as 2008 second-quarter severance cost related to early retirement for specific union employees, was $105.4 million, down from $124.5 million.
Nine-month net income totaled $21.9 million, compared with $18.2 million in the prior-year period. Adjusted net income was $28.1 million, down from $35.2 million, which excludes the after-tax loss related to the extinguishment of debt, as well as a $7.3 million deferred tax revaluation benefit.
Based on management's expectations for a continued recession in Puerto Rico, further weakening in the Hawaii economy, and continuing volatility in fuel prices, the company lowered its guidance for the full year 2008.
It expects full-year revenues of $1.27-1.29 billion, down from its previous estimate of $1.34-1.36 billion. Pre-tax earnings are revised to $120-130 million from $135-150 million.