HispanicBusiness

"Although river conditions are now back to pre-drought conditions, we will continue to suffer market related effects of the 2012 drought through the first half of 2013, as grain stockpiles available for export have fallen off significantly from historic levels. This reduction in available product has also driven domestic prices to levels that are not competitive in the international export markets, thereby putting further downward pressure on export volumes. We do expect that domestic plantings will again be at historically high levels in 2013, and that we may see improved dynamics in this sector when the first harvested acres reach market in the early third quarter."

Mr. Knoy went on to say, "We entered 2013 positioned very well to respond to improved operating and market conditions as a result of the investments made in our fleet assets over the past 18 months. We have eliminated nearly 450 of our poorest performing barges from our fleet and have invested over $90 million in our fleet of tow boats, greatly improving their reliability, towing capacity and fuel efficiency. We countered the impact of these barge retirements through the addition of 95 new covered hopper barges during the year. In addition, we invested $69 million in new tank barges to take advantage of the strong market fundamentals in that sector and similarly expect to invest an additional $38 million in 2013 to support contracted business in this space. With these actions, we have improved the age of our covered hopper fleet to approximately 12 years and the age of our 30,000 barrel tank barge fleet will be approximately the same level as we complete our current construction program in 2013. Despite the magnitude of these investments, we entered 2013 with significant liquidity, with $177 million of total availability on our line of credit." The Company estimates that capital spending for 2013 will be in the range of $40 million to $45 million, excluding the $38 million that will be spent to complete the new barge construction referred to above.

Adjusted EBITDAR
For the year ended December 31, 2012, Adjusted EBITDAR was $232.1 million, a 33.2% increase over $174.3 million for the prior year. The improvement in Adjusted EBITDAR over prior year was driven by a $26.4 million reduction in repairs and claims costs, $16.0 million in improved boat productivity resulting from fewer boats in service, $5.3 million in reduced compensation and selling, general and administrative expenses, $1.2 million improvement in fuel efficiency and price and $2.0 million higher manufacturing margin resulting from higher sales and improved efficiency. The year's gains were partially offset by $5.5 million in pricing softness, where pricing strength in the Company's liquids business was more than offset by weakness in the grain and export coal markets. Gains on the sale of excess assets contributed $17.3 million to the current year improvement.

Adjusted EBITDAR for the three months ended December 31, 2012 was $62.8 million compared to $60.3 million in the prior year quarter. The change in Adjusted EBITDAR included $9.6 million lower repairs and claims, $3.8 million in reduced compensation costs and selling, general and administrative expenses, $1.1 million improvement in boat productivity, $0.9 million improvement in fuel efficiency and price, and $1.2 million as the pricing of liquids and coal more than offset negative grain pricing during the quarter. These positive factors were partially offset by $5.6 million in margin impact of reduced volumes and lower gains on the sale of excess assets of $4.4 million.