Rand Logistics Reports Third Quarter Fiscal 2009 Financial Results

NEW YORK-(Business Wire)-February 11, 2009 - Rand Logistics Inc. (Nasdaq: RLOG) (“Rand”) today announced financial and operational results for the third quarter of fiscal 2009 ended December 31, 2008.

Third Quarter Fiscal 2009 Business Highlights

Marine freight revenue (excluding fuel surcharges, outside charter and other surcharges) was $24.2 million, a decrease of 7.0% from $26.0 million in the third quarter of fiscal 2008. The decline in marine freight revenue resulted primarily from a decline in the Canadian dollar compared to the U.S. dollar as well as 55 fewer sailing days in the quarter ended December 31, 2008 versus December 31, 2007.
Vessel margins¹ (after expensed winter work) increased by 51.8%, to $7.0 million, from $4.6 million in the same period last year, as a result of substantial performance improvements in the former WMS vessels and increased operating leverage.
EBITDA¹ increased by 135.5% to $4.4 million from $1.9 million in the third quarter of fiscal 2008.

Year To Date Fiscal 2009 Financial Results

For the nine months ended December 31, 2008, marine freight revenue (excluding fuel surcharges, outside charter and other surcharges) increased by 23.7% to $83.9 million, compared to $67.8 million for the same period last year.
Vessel margins¹(after expensed winterwork) increased by 122.8% to $34.0 million during the nine month period ended December 31, 2008, compared to $15.3 million during the nine month period ended December 31, 2007.
EBITDA¹ increased by 232.8% to $25.9 million for the nine months ended December 31, 2008, compared to $7.8 million in the same period last year. The $18.1 million increase in EBITDA was due to ongoing operational improvements, the successful integration of strategic acquisitions, vessel upgrades, infrastructure investments and improved freight rates.

¹ Vessel Margin and EBITDA for the quarter ended December 31, 2007 excludes the results of the previously consolidated VIE, for which Rand received no economic benefit from earnings.

Management Comments

Scott Bravener, President and CEO of Lower Lakes, stated, “With the exception of the second half of December, demand for our services continued to meet our expectations in the third quarter of fiscal 2009. We experienced a slowdown in demand from our aggregates customers in the second half of December, as quarries were closed early due to the weakening economy. EBITDA for the quarter increased by 135.5% to $4.4 million compared to the third quarter of fiscal 2008, driven by vessel margins of $7.0 million, which increased 51.8% year-over-year due to substantial performance improvements in the former WMS vessels and increased operating leverage. We are particularly pleased with this quarter’s results given that we lost 23% of our sailing days in December due to the early shutdown of our customer quarries and cessation of iron ore shipments to our only steel manufacturing customer. While we lost no sailing days in December due to challenging weather conditions, our results were affected, because the decline in demand for our services from the stone quarries, limited our flexibility to efficiently schedule around the difficult weather conditions. Furthermore, we experienced over a $1.2 million decrease in U.S. dollar based EBITDA during the quarter, due to a nearly 20% decline in the Canadian dollar compared to the U.S. dollar. That said, the benefit of the weakening Canadian dollar was a $7.5 million decrease in our term debt denominated in U.S. dollars. Our near and long term outlook for the Company remains positive and we are confident our results will continue to demonstrate the earnings power of our assets.”

Outlook

Laurence S. Levy, Chairman and CEO of Rand, added, “The strong growth in marine freight revenue, vessel margins and EBITDA for the first nine months of fiscal year 2009 serves to highlight the effectiveness of our strategic acquisitions, vessel upgrades and infrastructure investments to-date. We believe that our business continues to remain well protected as a result of the barriers to entry in our business, the diversity of the end markets and customers that we serve, our low cost operating position and the long-term contractual nature of our revenues. Based on contractual commitments that we have in hand, we continue to believe that our vessels will be fully utilized for the 2009 sailing season, but recognize that this is largely contingent upon our customers’ ability to forecast their end customers’ needs, which is difficult in these uncertain economic times. As the underlying fundamentals of our business remain sound and we have realized operating efficiencies from our fleet, we are confident in our ability to achieve our previously stated fiscal year 2009 EBITDA guidance of $18.0 million to $19.5 million.”

Rand Logistics, Inc.
Summary Statements of Operations (Unaudited)
(U.S. Dollars 000’s except for Earnings (Loss) Per Share figures)


		Three months ended December 31						Nine months ended December 31
		2008			2007			2008			2007
Revenue	$	36,158		$	35,917		$	131,853		$	90,024

Expenses
Outside voyage charter fees		5,310			4,034			17,618			8,605
Vessel operating expenses		24,025			26,281			79,936			63,381
Repairs and maintenance		73			7			961			101
		29,408			30,322			98,515			72,087
Income before general and administrative, depreciation, amortization of drydock costs and intangibles, other income and expenses and income taxes		6,750			5,595			33,338			17,937

General and administrative		2,326			2,648			7,457			7,391
Depreciation and amortization of drydock costs and intangibles		2,588			2,744			7,996			7,535
Write-off of retired vessel to salvage value		-			1,687			-			1,687
Loss (gain) on foreign exchange		22			11			(19	)		(208	)
		4,936			7,090			15,434			16,405
Income (loss) before interest, other income and expenses and income taxes		1,814			(1,495	)		17,904			1,532

Net income (loss)	$	(6,377	)	$	(2,178	)	$	721		$	(4,015	)
Net earnings (loss) per share – basic	$	(0.50	)	$	(0.18	)	$	0.06		$	(0.36	)
Net earnings (loss) per share – diluted	$	(0.50	)	$	(0.18	)	$	0.06		$	(0.36	)

Conference Call

Management will host a conference call to discuss the results at 8:30 a.m. ET on Wednesday, February 11, 2009. Interested parties may participate in the conference call by dialing 800-240-4186 (303-262-2175 for international callers). When prompted, ask for the "Rand Logistics Third Quarter Fiscal 2009 Earnings Conference Call."

A phone replay will be available from 10:30 a.m. ET on Wednesday, February 11, 2009, until 11:59 p.m. ET on Wednesday, February 18, 2009. Dial 800-405-2236 (305-590-3000 for international callers) and enter the code 11125762# to access the phone replay.

The conference call will be webcast simultaneously on the Rand Logistics, Inc. website at www.randlogisticsinc.com under Investors: Webcasts & Presentations. The webcast replay will be archived for 12 months.

Reconciliation of Non-GAAP Measure to GAAP

EBITDA represents earnings before interest, income tax expense, depreciation and amortization, loss on asset disposal, and loss (gain) on foreign exchange. EBITDA is not a measure of performance or liquidity calculated in accordance with generally accepted accounting principles (“GAAP”), is unaudited and should not be considered an alternative to, or more meaningful than, net income or income from operations as an indicator of our operating performance, or cash flows from operating activities, as measures of liquidity. EBITDA has been presented as a supplemental disclosure because it is a widely used measure of performance and basis for valuation. A reconciliation of GAAP net income to EBITDA is included in the financial tables accompanying this release.

About Rand Logistics

Rand Logistics, Inc. is a leading provider of bulk freight shipping services throughout the Great Lakes region. Through its subsidiaries, the Company operates a fleet of ten self-unloading bulk carriers, including eight River Class vessels and one River Class integrated tug/barge unit, and three conventional bulk carriers, of which one is operated under a contract of affreightment. The Company is the only carrier able to offer significant domestic port-to-port services in both Canada and the U.S. on the Great Lakes. The Company’s vessels operate under the U.S. Jones Act – which dictates that only ships that are built, crewed and owned by U.S. citizens can operate between U.S. ports – and the Canada Marine Act – which requires Canadian commissioned ships to operate between Canadian ports.

Forward-Looking Statements

This press release may contain forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) concerning the Company and its operating subsidiaries. Forward-looking statements are statements that are not historical facts, but instead statements based upon the current beliefs and expectations of management of the Company. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from the results included in such forward-looking statements.

RAND LOGISTICS, INC.
Consolidated Statements of Operations (Unaudited)
(U.S. Dollars 000’s except for Earnings (Loss) Per Share figures)


			Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
			December 31, 2008			December 31, 2007			December 31, 2008			December 31, 2007
REVENUE		$	36,158		$	35,917		$	131,853		$	90,024

EXPENSES
	Outside voyage charter fees		5,310			4,034			17,618			8,605
	Vessel operating expenses		24,025			26,281			79,936			63,381
	Repairs and maintenance		73			7			961			101
	General and administrative		2,326			2,648			7,457			7,391
	Depreciation		1,683			1,719			5,086			4,882
	Amortization of drydock costs		507			376			1,641			1,149
	Amortization of intangibles		398			633			1,269			1,392
	Amortization of chartering agreement costs		-			16			-			112
	Write-off of retired vessel to salvage value		-			1,687			-			1,687
	Loss (gain) on foreign exchange		22			11			(19	)		(208	)
			34,344			37,412			113,949			88,492
INCOME (LOSS) BEFORE OTHER INCOME AND EXPENSES AND INCOME TAXES			1,814			(1,495	)		17,904			1,532

OTHER (INCOME) AND EXPENSES
Interest expense			1,538			1,369			5,011			3,486
Interest income			(19	)		(53	)		(25	)		(195	)
Interest rate swap contracts			3,437			35			2,865			43
			4,956			1,351			7,851			3,334
INCOME (LOSS) BEFORE INCOME TAXES			(3,142	)		(2,846	)		10,053			(1,802	)
PROVISION (RECOVERY) FOR INCOME TAXES
Current			-			76			-			43
Deferred			2,853			(833	)		8,176			(462	)
NET INCOME (LOSS) BEFORE MINORITY INTEREST			(5,995	)		(2,089	)		1,877			(1,383	)
MINORITY INTEREST			-			(228	)		-			(259	)
NET INCOME (LOSS)			(5,995	)		(1,861	)		1,877			(1,124	)
PREFERRED STOCK DIVIDENDS			382			317			1,156			909

STOCK WARRANT INDUCEMENT DISCOUNT			-			-			-			1,982
NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS		$	(6,377	)	$	(2,178	)	$	721		$	(4,015	)

Net earnings (loss) per share basic		$	(0.50	)	$	(0.18	)	$	0.06		$	(0.36	)
Net earnings (loss) per share diluted		$	(0.50	)	$	(0.18	)	$	0.06		$	(0.36	)
Weighted average shares basic			12,804,050			12,092,142			12,450,630			11,109,942
Weighted average shares diluted			12,804,050			12,092,142			12,450,630			11,109,942

Rand Logistics, Inc.
Selected Financial Information (Unaudited)
Reconciliation of Income before Interest, Other Income and Expenses and Income Taxes to EBITDA
(U.S. Dollars 000’s)


	Three Months ended December 31, 2008							Three Months ended December 31, 2007
	Rand Logistics Inc.			Impact of FIN46R	Consolidated			Rand Logistics Inc.			Impact of FIN46R		Consolidated
	Rand Logistics Inc.			Impact of FIN46R	Consolidated			Rand Logistics Inc.			Impact of FIN46R		Consolidated
Income (loss) before interest, other income and expenses and income taxes	$	1,814		-	$	1,814		$	(2,055	)	$	560	$	(1,495	)

Loss (gain) on foreign exchange		22		-		22			11			-		11
Write-off of retired vessel to salvage value		-		-		-			1,687			-		1,687
Depreciation and amortization of drydock costs and intangibles		2,588		-		2,588			2,235			509		2,744

EBITDA	$	4,424		-	$	4,424		$	1,878		$	1,069	$	2,947




	Nine Months ended December 31, 2008							Nine Months ended December 31, 2007
	Rand Logistics Inc.			Impact of FIN46R				Rand Logistics Inc.			Impact of FIN46R
	Rand Logistics Inc.			Impact of FIN46R	Consolidated			Rand Logistics Inc.			Impact of FIN46R		Consolidated

Income (loss) before interest, other income and expenses and income taxes	$	17,904		-	$	17,904		$	(293	)	$	1,825	$	1,532

Loss (gain) on foreign exchange		(19	)	-		(19	)		(208	)		-		(208	)
Write-off of retired vessel to salvage value		-		-		-			1,687			-		1,687
Depreciation and amortization of drydock costs and intangibles		7,996		-		7,996			6,590			945		7,535

EBITDA	$	25,881		-	$	25,881		$	7,776		$	2,770	$	10,546

RAND LOGISTICS, INC.
Consolidated Balance Sheets (Unaudited)
(U.S. Dollars 000’s except for Earnings (Loss) Per Share figures)



			December 31, 2008			March 31, 2008
ASSETS			December 31, 2008			March 31, 2008
CURRENT
	Cash and cash equivalents	$	11,449		$	5,626
	Accounts receivable, net		14,193			3,468
	Prepaid expenses and other current assets		2,349			3,122
	Income taxes receivable		-			193
	Deferred income taxes		1,109			1,355
Total current assets			29,100			13,764

PROPERTY AND EQUIPMENT, NET			86,987			96,349
DEFERRED INCOME TAXES			10,574			20,318
DEFERRED DRYDOCK COSTS, NET			8,088			9,082
INTANGIBLE ASSETS, NET			14,333			17,979
GOODWILL			10,193			10,193
Total assets		$	159,275		$	167,685

LIABILITIES
CURRENT
	Bank indebtedness	$	10,929		$	269
	Accounts payable		6,131			14,985
	Accrued liabilities		10,785			7,243
	Acquired Management Bonus Program		271			3,000
	Interest rate swap contracts		4,047			1,274
	Income taxes payable		76			422
	Deferred income taxes		690			1,508
	Current portion of long-term debt		4,187			3,521
Total current liabilities			37,116			32,222
LONG-TERM DEBT			56,524			66,896
OTHER LIABILITES			232			-
DEFERRED INCOME TAXES			13,391			14,703
			107,263			113,821
Total liabilities
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
	Preferred stock, $.0001 par value,		14,900			14,900
	Authorized 1,000,000 shares, Issued and outstanding 300,000 shares
	Common stock, $.0001 par value		1			1
	Authorized 50,000,000 shares, Issued and outstanding 12,884,339 shares
	Additional paid-in capital		61,555			58,350
	Accumulated deficit		(19,744	)		(20,465	)
	Accumulated other comprehensive income (loss)		(4,700	)		1,078
Total stockholders’ equity			52,012			53,864

Total liabilities and stockholders’ equity		$	159,275		$	167,685