> SOUTHERN INDIANA —
American Commercial Lines Inc. released its second-quarter earnings Thursday and although all of its figures are not showing improvement the company continues to gain ground.
In the second quarter and six months ending June 30, ACL lost 11 cents per share and 38 cents per share, respectively. While it is still posting losses, the figures have improved when comparing last year’s losses per share of 30 cents in the second quarter and 73 cents per share in the first half of 2009.
“Our second quarter earnings performance was stronger than first quarter and stronger than second quarter 2009,” said Michael Ryan, president and chief executive officer of ACL during Thursday’s earnings call. “This strength demonstrates to us that our strategies are starting to make positive results.”
The strategy that the nation’s largest inland-shipbuilder has been employing for the first half of 2010 is the same route that was being pursued in 2009. The company continues to cut costs, reduce the number of employees and redundant positions and streamline operations.
Despite a major drop in revenues for the second quarter — $164.3 million compared to $218.5 million for the same quarter of 2009 — a nearly 25 percent decrease, ACL’s bottom line actually improved in some areas.
“With revenues down, we focused primarily on cost control, a path that drove a $10.4 million improvement in the transportation segment’s operating income compared to the prior year quarter,” Ryan said.
Jeffboat, ACL’s manufacturing division, showed a large loss in manufacturing revenues of $11.9 million in the second quarter of 2010 compared to $70.9 million in the second quarter of 2009. In the first half of the year, Jeffboat posted a $82.8 million loss in revenues, or a drop of 78 percent from the first half of 2009.
Officials from the company said that economic conditions are largely to blame for the losses in the company’s manufacturing segment.
“Our manufacturing business volumes declined significantly as potential customers are delaying capital spending for new barges,” Ryan said. “We have right-sized our manufacturing business during this downturn and were still able to generate positive operating income in the first half, despite the negative impact of a month-long labor strike in April.”
Jeffboat was able to stay close to break-even in its operating margin of $10.5 million because the costs were offset by $7.3 million in gains, primarily from the sale of surplus boats during the first quarter, and receiving grant funding of $2.3 million. The grant was part of federal American Recovery and Reinvestment Act funding for improvements made to ALCI’s Jeffboat facility in 2009.
In its manufacturing segment, ACL is not expecting to recover until the economy fully bounces back.
“We do not foresee a rebound in the manufacturing segments until overall barge industry freight demand and market conditions improve,” said Thomas Pilholski, ACL chief financial officer during the earnings call.
Overall, manufacturing losses in the second quarter equal $10.9 million and $14.8 million year-to-date, he said.
“I think you’ll see us by the end of the year, we’ll be profitable at Jeffboat,” Ryan said. “We are currently running to the size of the market. We have two manufacturing lines running and they are close to sold out for the remainder of the year.
“We have seen some volume recovery in our key transportation business lines of liquids and metals, but volumes still remain below prerecession levels. [We are] unlikely return to prerecession business levels in 2010.”
But it may be good news for ACL that it is breaking even in the first half of the year, because historically the second half of the year is when the company generates more revenue. The majority of crops are shipped in the third and fourth quarters and the company is expected to see improvement in its numbers.
Improvements in the second half of the year will have a net effect on Jeffboat, which built 50 new dry-covered hopper barges in the first half of the year. Losses at Jeffboat were mitigated by the company’s other segments, moving it closer to showing substantial gains.
“The improved results ... were driven by stronger transportation segment results, reduced interest costs on lower outstanding debt balances and the impact of the prior year noncomparable charges,” Ryan said.
ACL’s stock (Nasdaq: ACLI) closed up 16 cents at $14.15 per share Friday. The year range for shares is $14.09 to $30.50, according to Yahoo! Finance.
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