Attached files
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| 8-K - FORM 8-K DATED NOVEMBER 6, 2015 - DAKOTA PLAINS HOLDINGS, INC. | dakota153839_8k.htm |
Exhibit 99.1
Dakota Plains HOLDINGS, INC.
Reports THIRD QUARTER 2015 Financial Results
WAYZATA, Minnesota, (November 6, 2015) -- Dakota Plains Holdings, Inc. (“Dakota Plains” or the “Company”) (NYSE MKT: DAKP) today announced financial results for the three months ended September 30, 2015.
Operational Summary
| · | The Company billed 4.8 million barrels of transloaded crude oil, an increase of approximately 43% compared to the third quarter of 2014. |
| · | Frac sand transloading volumes were 141,000 tons, an increase of approximately 102% compared to the third quarter of 2014. |
| · | The Company benefitted from its first full quarter of in-house operations at the Pioneer Terminal, materially reducing operating costs. |
Financial Summary
| · | Adjusted EBITDA (a non-GAAP measure defined below) was $2.0 million compared to $1.5 million for the third quarter of 2014. |
| · | The Company had a net loss of $21.2 million compared to breakeven results for the third quarter of 2014 after adjusting for non-controlling interests. Included in the net loss of $21.2 million was the application of a non-cash valuation allowance on our deferred tax assets of $26.2 million and an offsetting non-cash adjustment made to the Operational Override liability in the amount of $10.0 million. |
| · | Revenue from transloading crude oil was $5.1 million compared to $6.3 million for the third quarter of 2014. |
| · | Revenue from transloading frac sand was $1.0 million compared to $0.6 million in the third quarter 2014. |
Craig M. McKenzie, Chief Executive Officer of Dakota Plains, said, “The energy industry continues to adjust to lower oil prices, and crude by rail is rationalizing in response to the broader sector. At Dakota Plains we are positioning for long term competitive success as evidenced by our record crude oil transloading volumes, steady top-line, lower costs and increasing market share.”
Third Quarter 2015 Financial Results
Adjusted EBITDA for the quarter was $2.0 million compared to $1.5 million for the third quarter of 2014. The difference was primarily driven by higher crude oil and frac sand transloading throughput and improved efficiencies in crude oil and frac sand transloading from bringing the transloading operations in-house.
The Company experienced a net loss of approximately $21.2 million for the third quarter 2015, compared to breakeven results after adjusting for non-controlling interests for the third quarter 2014. The net loss was driven by the valuation allowance on our deferred tax assets of $26.2 million, partially offset by improved operating efficiencies in crude oil and frac sand transloading and the $10.0 million gain realized from the revaluation of the Operational Override liability.
General and administrative expenses were $2.6 million for the third quarter compared to $1.6 million for the third quarter of 2014. The increase in general and administrative expenses was primarily due to $0.8 million in fees related to the strategic alternatives process and $0.2 million in non-cash general and administrative expenses.
Revenue from crude oil transloading was $5.1 million in the third quarter compared to $6.3 million for the third quarter of 2014. The decrease was driven by lower crude oil transloading fees, partially offset by increased throughput, as the Company billed 4.8 million barrels of transloaded crude oil during the third quarter of 2015 compared to 3.4 million barrels during the same period of 2014. Cost of revenue for crude oil transloading was $1.3 million for the third quarter of 2015 compared to $1.8 million for the third quarter of 2014. The reduction was primarily due to bringing the transloading of crude oil in-house during the second quarter of 2015.
Revenue from frac sand transloading was $1.0 million for the third quarter compared to $0.6 million for the third quarter of 2014. The increase in revenue was driven by volume as the Company transloaded approximately 141,000 tons of frac sand during the third quarter of 2015 compared to approximately 70,000 tons transloaded during the same period of 2014. The cost of revenue related to frac sand transloading was $0.1 million for the third quarter of 2015 compared to $0.3 million for the third quarter of 2014. The decrease was due to improved efficiencies as a result of bringing the transloading operations in-house during the second quarter of 2015.
Interest expense was $2.1 million for the third quarter compared to $0.5 million for the third quarter of 2014. The increase was primarily driven by the interest expense related to the Operational Override liability and the additional debt resulting from the acquisition of 50% of the outstanding interest of the transloading, sand and marketing joint ventures in the fourth quarter of 2014.
During the quarter the Company reduced the fair value of its Operational Override liability to more accurately reflect the current operating environment, resulting in a $10.0 million non-cash gain. In addition, the Company applied a non-cash valuation allowance of $26.2 million to its net deferred tax assets.
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 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.
For more information, please contact:
| Company Contact | Investor and Media Contact |
| Tim Brady, CFO | Dan Gagnier, Sard Verbinnen |
| tbrady@dakotaplains.com | DGagnier@sardverb.com |
| Phone: 952.473.9950 | Phone: 212.415.8972 |
| www.dakotaplains.com |
www.sardverb.com
|
– TABLES FOLLOW –
DAKOTA PLAINS HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2015 AND DECEMBER 31, 2014
| September 30, | December 31, | |||||||
| 2015 | 2014 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and Cash Equivalents | $ | 1,776,210 | $ | 4,690,706 | ||||
| Trade Receivables, Net | 7,600,850 | 3,268,386 | ||||||
| Income Tax Receivable | 9,648 | 14,803 | ||||||
| Other Current Assets | 1,484,556 | 99,776 | ||||||
| Other Receivables | 1,407,374 | 781,135 | ||||||
| Deferred Tax Asset | — | 2,266,000 | ||||||
| Total Current Assets | 12,278,638 | 11,120,806 | ||||||
| PROPERTY AND EQUIPMENT | ||||||||
| Land | 3,191,521 | 3,191,521 | ||||||
| Site Development | 5,829,640 | 5,829,640 | ||||||
| Terminal | 21,437,077 | 21,383,972 | ||||||
| Machinery | 18,218,163 | 18,133,754 | ||||||
| Construction in Progress | — | 1,886,470 | ||||||
| Other Property and Equipment | 18,241,921 | 11,910,987 | ||||||
| Total Property and Equipment | 66,918,322 | 62,336,344 | ||||||
| Less – Accumulated Depreciation | 9,648,336 | 6,143,159 | ||||||
| Total Property and Equipment, Net | 57,269,986 | 56,193,185 | ||||||
| FINANCE COSTS, NET | 859,896 | 1,537,795 | ||||||
| RESTRICTED CASH | 3,000,444 | 3,000,000 | ||||||
| DEFERRED TAX ASSET | 114,000 | 26,762,000 | ||||||
| OTHER ASSETS | 542,901 | 512,901 | ||||||
| Total Assets | $ | 74,065,865 | $ | 99,126,687 | ||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts Payable | $ | 7,591,751 | $ | 7,387,612 | ||||
| Accrued Expenses | 2,110,636 | 1,696,358 | ||||||
| Promissory Notes, SunTrust | 23,812,500 | 23,250,000 | ||||||
| Operational Override Liability | 1,884,186 | 715,497 | ||||||
| Deferred Tax Liability | 114,000 | — | ||||||
| Notes Payable - Vehicles | 56,961 | — | ||||||
| Total Current Liabilities | 35,570,034 | 33,049,467 | ||||||
| LONG-TERM LIABILITIES | ||||||||
| Promissory Notes, SunTrust | 29,125,000 | 25,250,000 | ||||||
| Operational Override Liability | 32,910,427 | 44,595,370 | ||||||
| Notes Payable – Vehicles | 182,926 | — | ||||||
| Other Non-Current Liabilities | 4,667 | 9,917 | ||||||
| Total Long-Term Liabilities | 62,223,020 | 69,855,287 | ||||||
| Total Liabilities | 97,793,054 | 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; 55,087,996 and 55,044,829 Issued and Outstanding, Respectively | 55,088 | 55,044 | ||||||
| Additional Paid-In Capital | 7,873,415 | 6,267,788 | ||||||
| Accumulated Deficit | (31,655,692 | ) | (10,100,899 | ) | ||||
| Total Stockholders' Deficit | (23,727,189 | ) | (3,778,067 | ) | ||||
| Total Liabilities and Stockholders' Deficit | $ | 74,065,865 | $ | 99,126,687 | ||||
DAKOTA PLAINS HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| REVENUES | ||||||||||||||||
| Transloading Revenue | $ | 5,137,567 | $ | 6,349,502 | $ | 19,421,100 | $ | 19,103,521 | ||||||||
| Sand Revenue | 983,572 | 557,168 | 3,422,000 | 733,355 | ||||||||||||
| Rental Income | 30,000 | 30,000 | 90,000 | 90,000 | ||||||||||||
| Other | — | — | 1,316,700 | — | ||||||||||||
| Total Revenues | 6,151,139 | 6,936,670 | 24,249,800 | 19,926,876 | ||||||||||||
| COST OF REVENUES (exclusive of items shown separately below) |
1,303,801 | 1,919,429 | 5,594,297 | 5,775,590 | ||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Transloading Operating Expenses | 837,646 | 759,535 | 3,241,892 | 1,737,920 | ||||||||||||
| General and Administrative Expenses | 2,626,713 | 1,552,245 | 7,171,360 | 6,046,895 | ||||||||||||
| Depreciation and Amortization | 1,256,837 | 1,108,348 | 3,505,177 | 3,229,834 | ||||||||||||
| Total Operating Expenses | 4,721,196 | 3,420,128 | 13,918,429 | 11,014,649 | ||||||||||||
| INCOME FROM OPERATIONS | 126,142 | 1,597,113 | 4,737,074 | 3,136,637 | ||||||||||||
| OTHER INCOME (EXPENSE) | ||||||||||||||||
| Income (Loss) from Investment in DPTS Marketing LLC | — | 289,232 | — | (1,293,982 | ) | |||||||||||
| Income from Investment in Dakota Plains Services, LLC | — | 164,738 | — | 589,418 | ||||||||||||
| Interest Expense (Net of Interest Income) | (2,068,419 | ) | (496,637 | ) | (6,027,201 | ) | (1,503,017 | ) | ||||||||
| Change in Operational Override Liability | 9,987,725 | — | 10,469,736 | — | ||||||||||||
| Other Income (Expense) | — | — | (1,704,618 | ) | — | |||||||||||
| Total Other Income (Expense) | 7,919,306 | (42,667 | ) | 2,737,917 | (2,207,581 | ) | ||||||||||
| INCOME BEFORE TAXES | 8,045,448 | 1,554,446 | 7,474,991 | 929,056 | ||||||||||||
| INCOME TAX PROVISION (BENEFIT) | 29,233,284 | 19,737 | 29,029,784 | (1,142,148 | ) | |||||||||||
| NET INCOME | (21,187,836 | ) | 1,534,709 | (21,554,793 | ) | 2,071,204 | ||||||||||
| NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS | — | 1,521,295 | — | 4,431,102 | ||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO SHAREHOLDERS OF DAKOTA PLAINS HOLDINGS, INC. | $ | (21,187,836 | ) | $ | 13,414 | $ | (21,554,793 | ) | $ | (2,359,898 | ) | |||||
| Net Income (Loss) Per Common Share – Basic and Diluted | $ | (0.39 | ) | $ | 0.00 | $ | (0.40 | ) | $ | (0.04 | ) | |||||
| Weighted Average Shares Outstanding – Basic | 54,317,463 | 53,884,637 | 54,196,842 | 53,755,966 | ||||||||||||
| Weighted Average Shares Outstanding – Diluted | 54,317,463 | 54,908,368 | 54,196,842 | 53,755,966 | ||||||||||||
DAKOTA PLAINS HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2015 | 2014 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net Income (Loss) | $ | (21,554,793 | ) | $ | 2,071,204 | |||
| Adjustments to Reconcile Net Income to Net Cash Provided by (Used in) Operating Activities | ||||||||
| Depreciation and Amortization | 3,505,177 | 3,229,834 | ||||||
| Amortization of Debt Discount | — | 262,221 | ||||||
| Amortization of Finance Costs | 721,023 | 52,841 | ||||||
| Deferred Income Taxes | 29,028,000 | (1,154,000 | ) | |||||
| Loss from Investment in DPTS Marketing LLC | — | 1,293,982 | ||||||
| Income for Investment in Dakota Plains Services, LLC | — | (589,418 | ) | |||||
| Decrease in Operational Override Liability | (10,469,736 | ) | — | |||||
| Non-Cash Rental Expense | — | 14,685 | ||||||
| Amortization of Deferred Rent | (5,250 | ) | (5,250 | ) | ||||
| Share-Based Compensation | 1,884,485 | 1,904,658 | ||||||
| Changes in Working Capital and Other Items | ||||||||
| Increase in Trade Receivables | (4,332,464 | ) | (1,860,513 | ) | ||||
| Decrease (Increase) in Other Receivables | (626,239 | ) | 45,176 | |||||
| Decrease in Income Taxes Receivable | 5,155 | 949,099 | ||||||
| Decrease (Increase) in Other Current Assets | (1,309,781 | ) | 334,130 | |||||
| Decrease in Due from Related Party | — | 1,991,745 | ||||||
| Decrease in Accounts Payable | (156,000 | ) | (181,754 | ) | ||||
| Increase (Decrease) in Accrued Expenses | 407,402 | (1,301,290 | ) | |||||
| Decrease in Accounts Payable - Related Party | — | (722 | ) | |||||
| Increase in Restricted Cash | (444 | ) | — | |||||
| Increase in Other Assets | — | (125,000 | ) | |||||
| Net Cash Provided By (Used In) Operating Activities | (2,903,465 | ) | 6,931,628 | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchases of Property and Equipment | (4,221,839 | ) | (9,670,840 | ) | ||||
| Cash Paid for Deposits | (30,000 | ) | — | |||||
| Net Cash Used In Investing Activities | (4,251,839 | ) | (9,670,840 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Cash Paid for Finance Costs | (43,124 | ) | — | |||||
| Commons Shares Surrendered | (346,937 | ) | (645,679 | ) | ||||
| Principal Payments on Promissory Note, Pioneer Terminal | — | (530,405 | ) | |||||
| Cash Distributions Paid to Non-Controlling Interests | — | (2,561,694 | ) | |||||
| Capital Contribution to DPTS Sand, LLC | — | 1,000 | ||||||
| Advances on Promissory Notes, SunTrust | 5,000,000 | — | ||||||
| Payments on Promissory Notes, SunTrust | (562,500 | ) | — | |||||
| Proceeds from Notes Payable - Vehicles | 270,165 | — | ||||||
| Payments on Notes Payable - Vehicles | (30,278 | ) | — | |||||
| Payments on Operational Override Liability | (46,518 | ) | — | |||||
| Net Cash Provided By (Used In) Financing Activities | 4,240,808 | (3,736,778 | ) | |||||
| NET DECREASE IN CASH AND CASH EQUIVALENTS | (2,914,496 | ) | (6,475,990 | ) | ||||
| CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD | 4,690,706 | 13,011,608 | ||||||
| CASH AND CASH EQUIVALENTS – END OF PERIOD | $ | 1,776,210 | $ | 6,535,618 | ||||
| Supplemental Disclosure of Cash Flow Information | ||||||||
| Cash Paid During the Period for Interest | $ | 4,320,449 | $ | 1,259,582 | ||||
| Cash Paid During the Period for Income Taxes | $ | 1,784 | $ | 11,852 | ||||
| Non-Cash Financing and Investing Activities: | ||||||||
| Purchase of Property and Equipment Paid Subsequent to Period End | $ | 1,114,772 | $ | 885,639 | ||||
| Change in Preferred Dividend Receivable | $ | — | $ | 373,970 | ||||
NON-GAAP FINANCIAL MEASURES
DAKOTA PLAINS HOLDINGS, INC.
RECONCILIATION OF ADJUSTED EBITDA
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Net Income (Loss) | $ | (21,187,836 | ) | $ | 1,534,709 | $ | (21,554,793 | ) | $ | 2,071,204 | ||||||
| Add Back | ||||||||||||||||
| Income Tax Provision (Benefit) | 29,233,284 | 19,737 | 29,029,784 | (1,142,148 | ) | |||||||||||
| Depreciation and Amortization | 1,256,837 | 1,108,348 | 3,505,177 | 3,229,834 | ||||||||||||
| Share Based Compensation | 624,534 | 400,365 | 1,884,485 | 1,904,658 | ||||||||||||
| Interest Expense | 2,068,419 | 496,637 | 6,027,201 | 1,503,017 | ||||||||||||
| Decrease in Operational Override Liability | (9,987,725 | ) | — | (10,469,736 | ) | — | ||||||||||
| Adjusted EBITDA | $ | 2,007,513 | $ | 3,559,796 | $ | 8,422,118 | $ | 7,566,565 | ||||||||
| Adjusted EBITDA Attributable to Non-Controlling Interests | — | 2,051,009 | — | 5,973,149 | ||||||||||||
| Adjusted EBITDA Attributable to Shareholders of Dakota Plains Holdings, Inc. | $ | 2,007,513 | $ | 1,508,787 | 8,422,118 | $ | 1,593,416 | |||||||||