Published: October 29, 2009 08:39 pm      

ACL reports $12.2M loss in third quarter

Downsized Jeffboat may continue to get leaner

American Commercial Lines Inc. posted a $12.17 million loss in the third quarter on revenues which were down nearly $100 million compared to the same quarter of 2008.

The Jeffersonville-based company lost 31 percent of revenues for the three months ended Sept. 30, bringing in $215.97 million, as compared to $313.68 million in the third quarter last year. Shares (Nasdaq: ACLI) closed down 7.5 percent, or $1.80, to $22.20, on about triple the normal volume.

“[It] was clearly our most challenging quarter in the current recession,” said President and CEO Michael Ryan in a Thursday conference call.

Ryan said revenues were impacted by three major factors: after-debt retirement expenses of $11.2 million related to its debt refinancing in July; an after-tax charge of $2.8 million related to an impairment charge on the assets of ACL’s engineering business; and an after-tax charge of $1.5 million related to a customer contract dispute in its manufacturing division.

ACL’s manufacturing segment has taken quite a hit recently. The most recent round of layoffs cut 10 percent of Jeffboat’s work force in the current quarter and it has cut 30 percent of its work force overall. Jeffboat has about 1,000 workers.

The cuts are expected to save more than $1 million in annual compensation expenses, Ryan said. More cuts and restructuring for salaried employees have saved the company $25 million since May 2008. Despite the layoffs and restructuring, the cuts may not be over.

“There could always be new cost-cutting events,” Ryan said. “I can’t tell if the work force is the right size. I’m not sure we right-sized the production level yet ... we may have gone too far.”

Other factors contributing to uncertainty are linked to the economy and the weather.

Reductions in production of metals, chemicals — due to the economy — and a wet and late harvest season have limited the number of barge shipments. The late harvest, in particular, could have an impact on the company’s earnings for the rest of the year.

Normally, a harvest sends out the bulk of product for shipping all at the same time, allowing the shippers to dictate transportation costs.

“The pricing leverage that we traditionally have is going to be diminished,” Ryan said.

Because of wet conditions, the harvest has been spread out and is later than normal, but will likely extend into the beginning of 2010.

Another factor in supply and demand for shipping has decreased ACL’s revenues.

Because of the need in directional shipping, moving empty barges has cost ACL $6.4 million in the quarter and $16.1 million so far this year, said Senior Vice President and Chief Financial Officer Thomas Pilholski.

Part of the company’s strategy has been to replace older barges with new, more efficient ships, but at a rate meant to streamline the fleet.

“Our production capacity is shrinking by design,” Ryan said.

However, some good news for Jeffboat is there are plans to build 50 dry-hopper barges in the first half of 2010. Also, 25 orders for dry cargo barges and five liquid-tank barges were added to the manufacturing backlog during the quarter, the earnings report says.

The bad news for Jeffboat is beyond the 50 hopper barges, no new orders are on the books.

“Right now, there is definitely excess capacity [for barges],” Ryan said.

The company lost $24.3 million, or $1.68 per share, in the first nine months of the year.