News and Tribune

November 5, 2012

Blame it on the rain: ACL posts third quarter losses, cites drought

By BRADEN LAMMERS
braden.lammers@newsandtribune.com

JEFFERSONVILLE — American Commercial Lines Inc. posted a loss in its third quarter, based largely on drought conditions that slowed barge transportation on the Mississippi River.

According to the results reported Thursday for the quarter ending Sept. 31, the inland barge manufacturing company posted a loss of $297,000 in the quarter, compared to $5 million in the third quarter last year.

“The low water levels on the Mississippi River and the extreme drought conditions during the third quarter have resulted in some of the most challenging conditions our industry has experienced in nearly a half century in terms of severity, duration and the impact on the agriculture industry,” said ACL President and CEO Mark Knoy in the earnings statement. “Current operating conditions and the drought’s impact on what had previously been expected to be an all-time record U.S. corn harvest have led to lower revenues and higher costs in the short-term. Initial USDA forecasts, had suggested harvest levels that would have resulted in corn exports through the Gulf [of Mexico] at levels nearly twice what we currently expect them to be.”

For the third quarter alone, ACL reported costs of more than $24 million in “drought, flood and other costs.”

Revenues posted by the company in both transportation and manufacturing — Jeffboat — were down.

Transportation

Transportation segment revenues decreased 20 percent to $157 million, while total ton-mile volume decreased 25 percent to 6.2 billion ton-miles in the third quarter. The average number of barges in service was down by 19.5 percent, compared to last year, which accounted for a significant portion of reduction, according to the earnings report.

The low water conditions during the quarter also led to reduced loads and transit delays.

According to the earnings report, on average, the per-ton barge load for a dry cargo barge declined by nearly 7 percent during the quarter. The decline resulted in a reduction in earnings of $9.8 million for the quarter and $10.9 million for nine months. The reduction in barges-per-tow also required more tow boats to be in service to deliver the same amount of freight costing the company $5.9 million in the quarter and $6 million for nine months.

Revenues for the transportation of liquids actually increased by $2.3 million, driven by a 30 percent increase in the dedicated petroleum services in the Gulf Coast region, according to the earnings statement.

Overall, for nine months ACL’s transportation segment revenues were down slightly, at $513 million, compared to 2011 for the nine month period at $521 million.

According to the report total ton-mile volume decreased 4.6 percent to 21.7 billion ton-miles. And after giving consideration to the estimated impact of the drought, the total ton-miles declined less than 1 percent for the year-to-date period.

Manufacturing

Jeffboat, ACL’s manufacturing segment, revenues also took a major hit dropping nearly 71 percent to $10.3 million, as 18 barges were sold to third-parties compared to 63 sold in the third quarter 2011.

The company attributed the decline to the shift of Jeffboat’s capacity to the production of barges for its own transportation segment during the third quarter. According to the earnings statement, 15 new liquid barges and 35 new dry hopper barges were placed in service in the third quarter, compared to two oversize liquid tank barges and 30 dry hopper barges in the third quarter in 2011.

During the nine-month period, manufacturing revenues increased slightly, by 3.4 percent to $90.6 million, with 162 total barges sold to third parties, matching last year’s total through nine months.

Operating income decreased by $4.7 million, but was partially offset by an $11.4 million insurance claim to damages from the 2011 flood, according to the earnings statement.

Overall numbers

Despite the losses posted for the quarter — revenues for the third quarter dropped 28 percent compared to the third quarter in 2011— for the year ACL is still posting better net figures than last year.

ACL posted an $11.1 million gain compared to a $24.4 million loss, respectively.