WAYZATA, Minn.–(BUSINESS WIRE)–Dakota Plains Holdings, Inc. (“Dakota Plains” or the “Company”) (NYSE MKT: DAKP) today announced financial results for the three months ended June 30, 2015.
Operational & Corporate Update Summary
Financial Summary
Craig M. McKenzie, Chief Executive Officer of Dakota Plains, said: “Despite a ‘bear market’ in crude oil, we achieved solid results. Our crude oil volumes were down, consistent with crude by rail market share in the Bakken, while our frac sand volumes are running well ahead of expectations. Bringing our Pioneer operations in-house reduces our operating costs, and positions us well in this competitive environment.”
Added McKenzie, “We believe that conditions are stabilizing. We have contracted 58,000 barrels per day for August, our highest monthly volume ever, and we are seeing renewed interest in multi-month contracts. Our recently completed crude oil storage expansion will allow further increases in volume. We remain confident that the progress we have made over the last two years positions us well for the future.”
Second Quarter 2015 Financial Results
Adjusted EBITDA for the quarter was $3.0 million compared to $(0.2) million for the second quarter of 2014. The difference was primarily driven by an increase in frac sand transloading volumes and fees associated with our crude oil transloading contracts. This was partially offset by the increase in transloading operating expenses as a result of assuming the entire cost associated with insuring the Pioneer Terminal facility.
The Company experienced a net loss of approximately $550,000 for the second quarter 2015, compared to a net loss of approximately $1.0 million for the second quarter 2014. The net loss for the second quarter of 2015 was driven by lower crude oil transloading volumes. The net loss for the second quarter of 2014 was driven by the loss from the Company’s indirect ownership interest in the subsequently discontinued marketing joint venture.
General and administrative expenses were $2.6 million for the second quarter compared to $1.9 million for the second quarter of 2014. The increase in general and administrative expenses was due to an increase in compensation expense associated with increased headcount and higher legal expenses.
Revenue from crude oil transloading was $5.8 million in the second quarter compared to $7.3 million for the second quarter of 2014. The decrease was driven by volume, as second quarter 2015 billed volume was 3.3 million barrels of crude oil transloaded compared to 3.9 million of barrels of crude oil for the second quarter of 2014, a 16% decrease. Cost of revenue in the second quarter of 2015 was $1.7 million compared to $1.8 million for the second quarter 2014 due to the decrease in volume. The Company expects to maintain a lower cost of revenue going forward as it realizes the cost savings from bringing the transloading of crude oil in house effective June 1, 2015.
Revenue from frac sand transloading was $1.6 million for second quarter compared to $0.2 million for the second quarter 2014. The increase in revenue was due to the fact that the frac sand transloading operations did not commence until June 2014. The Company transloaded 195,000 short tons of frac sand during the second quarter 2015, which was the highest quarterly throughput to date. The Company also successfully brought the frac sand transloading services in-house effective June 1, 2015.
For the second quarter, the Company incurred $0.8 million in expenses related to its inventory of tank cars that were assumed upon the dissolution of the joint ventures. The Company accounted for these expenses under Other Income (Expense) on its income statement as it does not consider the tank cars a core business. The $0.8 million was offset by $0.3 million in income reported related to the decrease in the operational override liability after adjusting for actual barrels of crude oil transloaded during the second quarter of 2015.
Interest expense was $2.0 million for the second quarter of 2015 compared to $0.5 million for the second quarter of 2014. The increase was primarily driven by the interest expense related to the operational override liability and the additional debt incurred for the acquisition of 50% of the outstanding interest of the transloading, frac sand, and marketing joint ventures in the fourth quarter of 2014.
Adjusted EBITDA
Adjusted EBITDA and adjusted EBITDA attributable to stockholders of Dakota Plains Holdings, Inc., is a non-GAAP measure. A reconciliation of this measure to its most directly comparable GAAP measure is included in the accompanying financial tables found later in this release. Management believes the use of this non-GAAP financial measure provides useful information to investors to gain an overall understanding of current financial performance. Specifically, management believes the non-GAAP results included herein provide useful information to both management and investors by excluding certain expenses and gains and losses on the extinguishment of debt that management believes are not indicative of Dakota Plains’ core operating results. In addition, this non-GAAP financial measure is used by management for budgeting and forecasting as well as subsequently measuring Dakota Plains’ performance, and management believes it is providing investors with a financial measure that most closely aligns to its internal measurement processes.
About Dakota Plains Holdings, Inc.
Dakota Plains Holdings, Inc. is an integrated midstream energy company operating the Pioneer Terminal transloading facility. The Pioneer Terminal is centrally located in Mountrail County, North Dakota, for Bakken and Three Forks related Energy & Production activity. For more information please visit the corporate website at: www.dakotaplains.com.
Forward Looking Statements
Statements made by representatives of Dakota Plains in this press release that are not historical facts are forward-looking statements. These statements are based on certain assumptions and expectations made by the Company which reflect management’s experience, estimates and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or anticipated in the forward-looking statements. These include risks relating to global economics or politics, our ability to obtain additional capital needed to implement our business plan, minimal operating history, loss of key personnel, lack of business diversification, reliance on strategic, third-party relationships, financial performance and results, prices and demand for oil, our ability to make acquisitions on economically acceptable terms, and other factors described from time to time in the Company’s periodic reports filed with the SEC that could cause actual results to differ materially from those anticipated or implied in the forward-looking statements. Dakota Plains undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information or future events.
| DAKOTA PLAINS HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||||||
| AS OF JUNE 30, 2015 AND DECEMBER 31, 2014 | ||||||||||||||
| ASSETS | ||||||||||||||
| June 30, | December 31, | |||||||||||||
| 2015 | 2014 | |||||||||||||
| CURRENT ASSETS | ||||||||||||||
| Cash and Cash Equivalents | $ | 5,221,381 | $ | 4,690,706 | ||||||||||
| Trade Receivables, Net | 6,959,661 | 3,268,386 | ||||||||||||
| Income Tax Receivable | 14,803 | 14,803 | ||||||||||||
| Other Current Assets | 656,256 | 99,776 | ||||||||||||
| Other Receivables | 527,277 | 781,135 | ||||||||||||
| Deferred Tax Asset | 912,000 | 2,266,000 | ||||||||||||
| Total Current Assets | 14,291,378 | 11,120,806 | ||||||||||||
| PROPERTY AND EQUIPMENT | ||||||||||||||
| Land | 3,191,521 | 3,191,521 | ||||||||||||
| Site Development | 5,829,640 | 5,829,640 | ||||||||||||
| Terminal | 21,505,220 | 21,383,972 | ||||||||||||
| Machinery | 18,208,136 | 18,133,754 | ||||||||||||
| Construction in Progress | 5,388,163 | 1,886,470 | ||||||||||||
| Other Property and Equipment | 12,234,176 | 11,910,987 | ||||||||||||
| Total Property and Equipment | 66,356,856 | 62,336,344 | ||||||||||||
| Less – Accumulated Depreciation | 8,391,499 | 6,143,159 | ||||||||||||
| Total Property and Equipment, Net | 57,965,357 | 56,193,185 | ||||||||||||
| FINANCE COSTS, NET | 1,057,111 | 1,537,795 | ||||||||||||
| RESTRICTED CASH | 3,000,293 | 3,000,000 | ||||||||||||
| DEFERRED TAX ASSET | 28,327,000 | 26,762,000 | ||||||||||||
| OTHER ASSETS | 542,902 | 512,901 | ||||||||||||
| Total Assets | $ | 105,184,041 | $ | 99,126,687 | ||||||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||||||||
| CURRENT LIABILITIES | ||||||||||||||
| Accounts Payable | $ | 10,319,666 | $ | 7,387,612 | ||||||||||
| Accrued Expenses | 1,776,197 | 1,696,358 | ||||||||||||
| Promissory Notes, SunTrust | 23,625,000 | 23,250,000 | ||||||||||||
| Operational Override Liability | 646,702 | 715,497 | ||||||||||||
| Notes Payable – Vehicles | 56,745 | – | ||||||||||||
| Total Current Liabilities | 36,424,310 | 33,049,467 | ||||||||||||
| LONG-TERM LIABILITIES | ||||||||||||||
| Promissory Notes, SunTrust | 27,500,000 | 25,250,000 | ||||||||||||
| Operational Override Liability | 44,136,636 | 44,595,370 | ||||||||||||
| Notes Payable – Vehicles | 198,688 | – | ||||||||||||
| Other Non-Current Liabilities | 6,417 | 9,917 | ||||||||||||
| Total Long-Term Liabilities | 71,841,741 | 69,855,287 | ||||||||||||
| Total Liabilities | 108,266,051 | 102,904,754 | ||||||||||||
| COMMITMENTS AND CONTINGENCIES (NOTE 12) | ||||||||||||||
| STOCKHOLDERS’ DEFICIT | ||||||||||||||
| Preferred Stock – Par Value $.001; 10,000,000 Shares Authorized; None Issued or Outstanding | – | – | ||||||||||||
| Common Stock, Par Value $.001; 100,000,000 Shares Authorized; 55,095,810 | ||||||||||||||
| and 55,044,829 Issued and Outstanding, Respectively | 55,095 | 55,044 | ||||||||||||
| Additional Paid-In Capital | 7,330,751 | 6,267,788 | ||||||||||||
| Accumulated Deficit | (10,467,856 | ) | (10,100,899 | ) | ||||||||||
| Total Stockholders’ Deficit | (3,082,010 | ) | (3,778,067 | ) | ||||||||||
| Total Liabilities and Stockholders’ Deficit | $ | 105,184,041 | $ | 99,126,687 | ||||||||||
| DAKOTA PLAINS HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||||||
| FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2015 AND 2014 | ||||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||||||||
| REVENUES | ||||||||||||||||||||||
| Transloading Revenue | $ | 5,804,272 | $ | 7,298,561 | $ | 14,283,533 | $ | 12,754,019 | ||||||||||||||
| Sand Revenue | 1,560,055 | 176,187 | 2,438,428 | 176,187 | ||||||||||||||||||
| Rental Income | 30,000 | 30,000 | 60,000 | 60,000 | ||||||||||||||||||
| Other | 1,316,700 | – | 1,316,700 | – | ||||||||||||||||||
| Total Revenues | 8,711,027 | 7,504,748 | 18,098,661 | 12,990,206 | ||||||||||||||||||
| COST OF REVENUES | 2,075,834 | 1,757,462 | 4,290,496 | 3,856,161 | ||||||||||||||||||
| (exclusive of items shown separately below) | ||||||||||||||||||||||
| OPERATING EXPENSES | ||||||||||||||||||||||
| Transloading Operating Expenses | 1,280,374 | 516,150 | 2,404,246 | 978,385 | ||||||||||||||||||
| General and Administrative Expenses | 2,625,458 | 1,939,107 | 4,544,647 | 4,494,650 | ||||||||||||||||||
| Depreciation and Amortization | 1,140,326 | 1,086,271 | 2,248,340 | 2,121,486 | ||||||||||||||||||
| Total Operating Expenses | 5,046,158 | 3,541,528 | 9,197,233 | 7,594,521 | ||||||||||||||||||
| INCOME FROM OPERATIONS | 1,589,035 | 2,205,758 | 4,610,932 | 1,539,524 | ||||||||||||||||||
| OTHER INCOME (EXPENSE) | ||||||||||||||||||||||
| Loss from Investment in DPTS Marketing LLC | – | (1,669,846 | ) | – | (1,583,214 | ) | ||||||||||||||||
| Income from Investment in Dakota Plains Services, LLC | – | 303,226 | – | 424,680 | ||||||||||||||||||
| Interest Expense, Net of Interest Income | (2,012,040 | ) | (504,244 | ) | (3,958,782 | ) | (1,006,380 | ) | ||||||||||||||
| Other Expense | (457,945 | ) | – | (1,222,607 | ) | – | ||||||||||||||||
| Total Other Income (Expense) | (2,469,985 | ) | (1,870,864 | ) | (5,181,389 | ) | (2,164,914 | ) | ||||||||||||||
| INCOME (LOSS) BEFORE TAXES | (880,950 | ) | 334,894 | (570,457 | ) | (625,390 | ) | |||||||||||||||
| INCOME TAX BENEFIT | (331,000 | ) | (647,000 | ) | (203,500 | ) | (1,161,885 | ) | ||||||||||||||
| NET INCOME (LOSS) | (549,950 | ) | 981,894 | (366,957 | ) | 536,495 | ||||||||||||||||
| NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS | – | 2,018,943 | – | 2,909,807 | ||||||||||||||||||
| NET LOSS ATTRIBUTABLE TO SHAREHOLDERS | ||||||||||||||||||||||
| OF DAKOTA PLAINS HOLDINGS, INC. | $ | (549,950 | ) | $ | (1,037,049 | ) | $ | (366,957 | ) | $ | (2,373,312 | ) | ||||||||||
| Net Loss Per Common Share – Basic and Diluted | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.04 | ) | ||||||||||
| Weighted Average Shares Outstanding – Basic and Diluted | 54,184,792 | 53,781,435 | 54,135,531 | 53,690,564 | ||||||||||||||||||
| DAKOTA PLAINS HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||
| CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS | ||||||||||||||
| FOR THE SIX MONTHS ENDED JUNE 30, 2015 AND 2014 | ||||||||||||||
| Six Months Ended | ||||||||||||||
| June 30, | ||||||||||||||
| 2015 | 2014 | |||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||||
| Net Income (Loss) | $ | (366,957 | ) | $ | 536,495 | |||||||||
| Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by (Used in) Operating Activities: | ||||||||||||||
| Depreciation and Amortization | 2,248,340 | 2,121,486 | ||||||||||||
| Amortization of Debt Discount | – | 174,813 | ||||||||||||
| Amortization of Finance Costs | 480,684 | 36,586 | ||||||||||||
| Deferred Income Taxes | (211,000 | ) | (1,170,000 | ) | ||||||||||
| Loss from Investment in DPTS Marketing LLC | – | 1,583,214 | ||||||||||||
| Income from Investment in Dakota Plains Services, LLC | – | (424,680 | ) | |||||||||||
| Non-Cash Rental Expense | – | 9,790 | ||||||||||||
| Amortization of Deferred Rent | (3,500 | ) | (3,500 | ) | ||||||||||
| Share-Based Compensation | 1,259,951 | 1,504,293 | ||||||||||||
| Changes in Working Capital and Other Items | ||||||||||||||
| Increase in Trade Receivables | (3,691,275 | ) | (1,321,269 | ) | ||||||||||
| Decrease (Increase) in Other Receivables | 253,858 | (116,775 | ) | |||||||||||
| Decrease (Increase) in Other Current Assets | (406,481 | ) | 153,068 | |||||||||||
| Decrease in Due from Related Party | – | 1,514,475 | ||||||||||||
| Increase in Accounts Payable | 428,160 | 122,509 | ||||||||||||
| Decrease in Accrued Expenses | (46,048 | ) | (1,317,679 | ) | ||||||||||
| Decrease in Accounts Payable – Related Party | – | (722 | ) | |||||||||||
| Increase in Restricted Cash | (293 | ) | – | |||||||||||
| Decrease in Operational Override Liability | (481,011 | ) | – | |||||||||||
| Decrease in Other Assets | – | 1,802 | ||||||||||||
| Net Cash Provided By (Used In) Operating Activities | (535,572 | ) | 3,403,906 | |||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||||
| Purchases of Property and Equipment | (1,516,618 | ) | (8,481,863 | ) | ||||||||||
| Cash Paid for Deposits | (30,000 | ) | – | |||||||||||
| Net Cash Used In Investing Activities | (1,546,618 | ) | (8,481,863 | ) | ||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||||
| Commons Shares Surrendered | (221,050 | ) | (645,679 | ) | ||||||||||
| Principal Payments on Promissory Note, Pioneer Terminal | – | (287,703 | ) | |||||||||||
| Cash Distributions Paid to Non-Controlling Interests | – | (1,954,941 | ) | |||||||||||
| Advances on Promissory Notes, SunTrust | 3,000,000 | – | ||||||||||||
| Payments on Promissory Notes, SunTrust | (375,000 | ) | – | |||||||||||
| Proceeds from Notes Payable – Vehicles | 270,165 | – | ||||||||||||
| Payments on Notes Payable – Vehicles | (14,732 | ) | – | |||||||||||
| Payment on Operational Override Liability | (46,518 | ) | – | |||||||||||
| Net Cash Provided By (Used In) Financing Activities | 2,612,865 | (2,888,323 | ) | |||||||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 530,675 | (7,966,280 | ) | |||||||||||
| CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD | 4,690,706 | 13,011,608 | ||||||||||||
| CASH AND CASH EQUIVALENTS – END OF PERIOD | $ | 5,221,381 | $ | 5,045,328 | ||||||||||
| Supplemental Disclosure of Cash Flow Information | ||||||||||||||
| Cash Paid During the Period for Interest | $ | 2,681,241 | $ | 866,041 | ||||||||||
| Cash Paid During the Period for Income Taxes | $ | 7,500 | $ | 8,115 | ||||||||||
| Non-Cash Financing and Investing Activities: | ||||||||||||||
| Purchase of Property and Equipment Paid Subsequent to Period End | $ | 3,258,527 | $ | 1,382,639 | ||||||||||
| Change in Preferred Dividend Receivable | $ | – | $ | 247,942 | ||||||||||
| Non-GAAP Financial Measures | ||||||||||||||||
| Dakota Plains Holdings, Inc. | ||||||||||||||||
| Reconciliation of Adjusted EBITDA | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Net Income (Loss) | $ | (549,950 | ) | $ | 981,894 | $ | (366,957 | ) | $ | 536,495 | ||||||
| Add Back: | ||||||||||||||||
| Income Tax Benefit | (331,000 | ) | (647,000 | ) | (203,500 | ) | (1,161,885 | ) | ||||||||
| Depreciation and Amortization | 1,140,326 | 1,086,271 | 2,248,340 | 2,121,486 | ||||||||||||
| Share-Based Compensation | 750,420 | 375,361 | 1,259,951 | 1,504,293 | ||||||||||||
| Interest Expense | 2,012,040 | 504,244 | 3,958,782 | 1,006,380 | ||||||||||||
| Adjusted EBITDA | $ | 3,021,836 | $ | 2,300,770 | $ | 6,896,616 | $ | 4,006,769 | ||||||||
| Adjusted EBITDA Attributable to Non-Controlling
Interests |
— | 2,537,723 | — | 3,922,140 | ||||||||||||
| Adjusted EBITDA Attributable to Shareholders
of Dakota Plains Holdings, Inc. |
$ | 3,021,836 | $ | (236,953 | ) | $ | 6,896,616 | $ | 84,629 | |||||||