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 November 6, 2015 - 9:00 AM EST
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Dakota Plains Holdings, Inc. Reports Third Quarter 2015 Financial Results

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.

- 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
 

Dakota Plains Holdings, Inc.
Tim Brady, 952-473-9950
CFO
tbrady@dakotaplains.com
www.dakotaplains.com
or
Sard Verbinnen
Dan Gagnier, 212-415-8972
DGagnier@sardverb.com
www.sardverb.com


Source: Business Wire (November 6, 2015 - 9:00 AM EST)

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