Overseas Shipholding Group, Inc. (OSG) (NYSE MKT:OSG, OSGB), a
provider of oceangoing energy transportation services, today
reported results for the quarter ended March 31, 2016.
Highlights
- Time charter equivalent (TCE)
revenues(A) for the first quarter of 2016 were $236.9 million, up
7% compared with the same period in 2015.
- Net income for the first quarter was
$50.7 million, or $0.09 per diluted share, compared with $42.9
million, or $0.07 per diluted share, in the first quarter of
2015.
- Adjusted EBITDA(B) was $129.5 million,
up 14% from $113.7 million in the same period in 2015.
- Total cash(C) was $416.6 million as of
March 31, 2016.
- Repurchased and retired $95.9 million
in principal amount of subsidiary term loans in 2016 at a
discounted price of $88.8 million.
- Made a mandatory prepayment of $51.3
million in principal amount of domestic subsidiary term loan.
- Repurchased and retired $58 million of
Class A common stock and warrants at an average share equivalent
price of $2.03, in the first quarter of 2016.
- The Board declared a dividend of
$0.17968 per outstanding Class B common stock and Class B warrants,
payable on May 13, 2016, in connection with the previously
announced settlement in its lawsuit against Proskauer.
“We are pleased to report strong first quarter performance,”
said Captain Ian T. Blackley, OSG’s president and CEO. “In our
International business, rates in the crude sector remained
attractive as ton-mile demand growth outpaced newbuilding supply
and our Domestic business turned in another good quarter, as U.S.
crude production held above 9.0 million barrels per day and
gasoline demand continued to grow.
“We are making good progress on our separation plans for the
businesses, which we believe will unlock greater value and enable
us to distribute that value to shareholders more efficiently. At
the same time, strong cash generation from our 79 vessel fleet
allowed us to further enhance our capital structure through debt
repurchases and prepayments and return value to shareholders
through equity buybacks,” concluded Blackley.
First Quarter 2016
Results
TCE revenues grew to $236.9 million for the quarter, an increase
of $15.3 million compared with the first quarter of 2015, driven by
continuing strength in VLCC spot market rates, increased Delaware
Bay lightering volumes and an increase in revenue days.
Net income for the first quarter of 2016 was $50.7 million, or
$0.09 per diluted share, compared with $42.9 million, or $0.07 per
diluted share, in the first quarter of 2015. The increase reflects
the impact of strengthened TCE revenues, lower general and
administrative expenses and lower interest expense, partially
offset by increases in depreciation and amortization expenses.
Adjusted EBITDA was $129.5 million for the quarter, an increase
of $15.8 million compared with the first quarter of 2015, driven
primarily by the strength of VLCC spot rates, increased Delaware
Bay lightering volumes and an increase in revenue days.
International Crude Tankers
TCE revenues for the International Crude Tankers segment were
$87.4 million for the quarter, an increase of $20.5 million
compared with the first quarter of 2015. This significant increase
resulted from a strengthening in daily rates across most vessel
types in the segment, with the VLCC spot rate increasing to $63,400
per day in the first quarter, up 29% from the comparable 2015
period and the Panamax blended rate increasing 23% to $25,600 per
day. Additionally, revenue days for the segment increased 9.5% over
the first quarter of 2015 primarily driven by the Company’s ULCC
exiting lay-up and commencing a time charter for storage in April
2015 and 66 fewer VLCC drydock days in the current quarter.
International Product Carriers
TCE revenues for the International Product Carriers segment were
$37.3 million for the quarter, down 14% compared with the first
quarter of 2015. This decrease was primarily due to lower average
daily blended rates earned by the MR fleet. Also contributing was a
178-day decrease in revenue days resulting from the sale of the
Luxmar in July 2015 and the redelivery of one time chartered-in
vessel at the expiry of its charter. These decreases were partially
offset by the LR1 blended rate increasing to approximately $23,000
in the first quarter, up 20% from the comparable 2015 period.
U.S. Flag
TCE revenues for the U.S. Flag segment were $112.2 million for
the quarter, an increase of $1.0 million compared with the first
quarter of 2015, driven primarily by increased Delaware Bay
lightering volumes, as 145,000 barrels per day were transported
during the quarter, double the comparable 2015 period. Lower oil
prices and the resulting drop in U.S. crude oil production has
narrowed the pricing spread between Brent crude and West Texas
Intermediate crude making it more attractive for U.S. Northeast
refineries to import crude oil.
Conference Call
The Company will host a conference call to discuss its first
quarter 2016 results at 9:00 a.m. ET on Tuesday, May 10, 2016.
To access the call, participants should dial (866) 490-3149 for
domestic callers and (707) 294-1567 for international callers.
Please dial in ten minutes prior to the start of the call and enter
Conference ID 3193934.
A live webcast of the conference call will be available from the
Investor Relations section of the Company’s website at
http://www.osg.com/
An audio replay of the conference call will be available
starting at 12:00 p.m. ET on Tuesday, May 10, 2016 through 11:59
p.m. ET on Tuesday, May 17, 2016 by dialing (855) 859-2056 for
domestic callers and (404) 537-3406 for international callers, and
entering Conference ID 3193934.
About OSG
Overseas Shipholding Group, Inc. (NYSE MKT: OSG, OSGB) is a
publicly traded tanker company providing energy transportation
services for crude oil and petroleum products in the U.S. and
International Flag markets. OSG is committed to setting high
standards of excellence for its quality, safety and environmental
programs. OSG is recognized as one of the world’s most
customer-focused marine transportation companies and is
headquartered in New York City, NY. More information is available
at www.osg.com.
Forward-Looking Statements
This release contains forward looking statements. In addition,
the Company may make or approve certain statements in future
filings with the Securities and Exchange Commission (SEC), in press
releases, or in oral or written presentations by representatives of
the Company. All statements other than statements of historical
facts should be considered forward-looking statements. These
matters or statements may relate to the Company's prospects,
including statements regarding trends in the tanker and articulated
tug/barge markets, and possibilities of certain strategic alliances
and investments. Forward-looking statements are based on the
Company’s current plans, estimates and projections, and are subject
to change based on a number of factors. Investors should carefully
consider the risk factors outlined in more detail in the Company’s
Annual Report for 2015 on Form 10-K under the caption “Risk
Factors” and in similar sections of other filings made by the
Company with the SEC from time to time. The Company assumes no
obligation to update or revise any forward looking statements.
Forward looking statements and written and oral forward looking
statements attributable to the Company or its representatives after
the date of this release are qualified in their entirety by the
cautionary statements contained in this paragraph and in other
reports previously or hereafter filed by the Company with the
SEC.
Consolidated Statements of
Operations
($ in thousands, except per share
amounts)
Three Months Ended March 31, 2016
2015
Shipping Revenues:
(unaudited) (unaudited) Pool revenues
$90,529 $78,769 Time and bareboat charter revenues 120,373 107,942
Voyage charter revenues 32,854 46,831 Total Shipping
Revenues 243,756 233,542
Operating Expenses:
Voyage expenses 6,834 11,900 Vessel expenses 71,042 69,239 Charter
hire expenses 31,057 31,898 Depreciation and amortization 43,083
37,119 General and administrative 17,349 19,282 Technical
management transition costs - 40 Severance and relocation costs - 5
Gain on disposal of vessels and other property (157)
(1,073) Total Operating Expenses 169,208 168,410
Income from vessel operations 74,548 65,132 Equity in income of
affiliated companies 11,605 12,412 Operating income
86,153 77,544 Other income 2,574 73 Income before
interest expense, reorganization items
and income taxes
88,727 77,617 Interest expense (22,659) (28,569)
Income before reorganization items and income taxes 66,068 49,048
Reorganization items, net 17,910 (3,487) Income
before income taxes 83,978 45,561 Income tax provision (33,239)
(2,660)
Net Income $50,739
$42,901
Weighted Average Number of Common Shares
Outstanding: Basic - Class A 568,425,634 573,434,452 Diluted -
Class A 568,450,678 573,451,145 Basic and Diluted - Class B
7,919,819 7,924,944
Per Share Amounts:
Basic and Diluted net income - Class A and Class B $0.09 $0.07 Cash
dividends declared $0.08 $ -
On December 17, 2015, all shareholders of record of the
Company’s Class A and B common stock as of December 3, 2015,
received a dividend of one-tenth of one share of Class A common
stock for each share of Class A common stock and Class B common
stock held by them as of the record date. In accordance with the
relevant accounting guidance, the Company was required to adjust
the computations of basic and diluted earnings per share
retroactively for all periods presented to reflect that change in
capital structure.
Consolidated
Balance Sheets
($ in thousands)
March 31,
2016
December 31,
2015
ASSETS (unaudited) Current Assets: Cash and
cash equivalents $402,005 $502,836 Restricted cash 5,587 10,583
Voyage receivables 68,293 81,612 Income tax recoverable 1,119 1,664
Other receivables 4,814 7,195 Inventories, prepaid expenses and
other current assets 21,401 20,041 Total
Current Assets 503,219 623,931 Restricted cash
– non current 8,989
8,989 Vessels and other property, less accumulated depreciation
2,052,968 2,084,859 Deferred drydock expenditures, net 84,969
95,241 Total Vessels, Deferred Drydock and
Other Property 2,137,937 2,180,100
Investments in and advances to affiliated companies 351,503 348,718
Intangible assets, less accumulated amortization 49,067 50,217
Other assets1 19,906 18,455
Total
Assets $3,070,621 $3,230,410
LIABILITIES AND EQUITY Current
Liabilities: Accounts payable, accrued expenses and other
current liabilities $87,292 $91,233 Income taxes payable 1,465 13
Current installments of long-term debt 71,154
63,039 Total Current Liabilities 159,911 154,285 Reserve for
uncertain tax positions 2,529 2,520 Long-term debt1 1,072,533
1,223,224 Deferred income taxes 239,414 208,195 Other liabilities
60,823 61,698 Total Liabilities 1,535,210
1,649,922
Equity: Total Equity 1,535,411
1,580,488
Total Liabilities and Equity
$3,070,621 $3,230,410
1The Company adopted ASU No. 2015-03, simplifying the
Presentation of Debt Issuance Costs (ASC 835), which amends the
requirement to recognize debt issuance costs as deferred charges.
The amendment requires that debt issuance costs related to a
recognized debt liability be presented on the balance sheet as a
direct deduction from the carrying cost of that debt liability,
consistent with debt discounts. The Company adopted this accounting
standard on January 1, 2016 and has applied the guidance
retrospectively. The impact of the retrospective adoption on the
Company’s December 31, 2015 balance sheet are reductions of both
other assets and long-term debt by $44,543.
Consolidated Statements of Cash
Flows
($ in thousands)
Three Months Ended March 31,
2016 2015 (unaudited)
(unaudited) Cash Flows from Operating Activities: Net
income $ 50,739 $ 42,901 Items included in net income not affecting
cash flows: Depreciation and amortization 43,083 37,119
Amortization of debt discount and other deferred financing costs
3,322 2,501 Compensation relating to restricted stock/stock unit
and stock option grants 971 357 Deferred income tax
provision/(benefit) 31,246 (7,622) Undistributed earnings of
affiliated companies (7,967) (9,073) Reorganization items, non-cash
136 55 Other – net 492 82 Items included in net income related to
investing and financing activities: Gain on disposal of vessels and
other property – net (157) (1,073) Gain on repurchase of debt
(2,382) - Payments for drydocking (5,917) (7,876) Bankruptcy claim
payments (5,000) (3,084) Changes in other operating assets and
liabilities 4,852 12,127 Net cash provided by operating activities
113,418 66,414
Cash Flows from Investing Activities: Change
in restricted cash 4,996 5,167 Expenditures for vessels and vessel
improvements (58) - Proceeds from disposal of vessels and other
property - 7,757 Expenditures for other property (151) (65)
Investments in and advances to affiliated companies (1,054) (500)
Repayments of advances from affiliated companies - 12,500 Net cash
provided by investing activities 3,733 24,859
Cash Flows from
Financing Activities: Cash dividend paid (30,573) - Payments on
debt (54,237) (3,178) Repurchase of debt (89,046) - Repurchase of
common stock and common stock warrants (44,126) -
Net cash used in financing activities
(217,982) (3,178) Net increase/(decrease) in cash and cash
equivalents (100,831) 88,095 Cash and cash equivalents at beginning
of year 502,836 389,226 Cash and cash equivalents at end of period
$402,005 $477,321
Spot and Fixed TCE Rates Achieved and Revenue Days
The following tables provides a breakdown of TCE rates achieved
for spot and fixed charters and the related revenue days for the
three months ended March 31, 2016 and the comparable periods of
2016. Revenue days in the quarter ended March 31, 2016 totaled
6,501 compared with 6,424 in the prior year quarter. A summary
fleet list by vessel class can be found later in this press
release.
Three Months Ended
March 31, 2016 Three Months Ended March 31,
2015 Spot
Fixed Total Spot
Fixed Total
International Crude Tankers
ULCC
Average TCE Rate $ — $ 39,881 $
— $ — Number of Revenue Days — 91 91 — — — VLCC Average TCE Rate
$63,402 $ 42,372 $49,280 $ — Number of Revenue Days 607 116 723 648
— 648 Aframax Average TCE Rate $31,301 $ — $30,932 $ — Number of
Revenue Days 627 — 627 620 — 620 Panamax Average TCE Rate $28,421
$20,975 $27,695 $14,007 Number of Revenue Days 448 272 720 348 354
702 Other Intl. Crude Tankers Revenue Days1 —
— — 3 —
3
Total Intl. Crude Tankers Revenue Days
1,682 479 2,161
1,619 354 1,973
International Product Carriers
LR2 Average TCE Rate $28,341 $ — $26,755 $ — Number
of Revenue Days 90 — 90 90 — 90 LR1 Average TCE Rate $31,170
$20,426 $29,741 $15,732 Number of Revenue Days 91 266 357 90 270
360 MR Average TCE Rate $16,200 $10,499 $18,846 $9,816 Number of
Revenue Days 1,597 155
1,752 1,761 167
1,928
Total Intl. Product Carriers Revenue Days
1,778 421 2,199
1,941 437 2,378
U.S. Flag
Jones Act Handysize Product Carriers Average TCE Rate $ —
$64,498 $ — $64,777 Number of Revenue Days — 1,080 1,080 — 1,070
1,070 Non-Jones Act Handysize Product Carriers Average TCE Rate
$31,517 $19,016 $28,103 $ — Number of Revenue Days 91 91 182 164 —
164 ATBs Average TCE Rate $ — $37,870 $ — $38,429 Number of Revenue
Days — 697 697 — 690 690 Lightering Average TCE Rate $63,036 $ —
$71,390 $ — Number of Revenue Days 182
— 182 149 —
149
Total U.S. Flag Revenue Days
273 1,868 2,141 313
1,760 2,073
TOTAL REVENUE DAYS
3,733 2,768 6,501
3,873 2,551 6,424
1 Other International Crude Tankers revenue days relate
to the Company’s ULCC for the quarter ended March 31, 2015.
Fleet Information
As of March 31, 2016, OSG’s owned and operated fleet totaled 79
International Flag and U.S. Flag vessels (62 vessels owned and 17
chartered-in) compared with 79 at December 31, 2015. Those figures
include vessels in which the Company has a partial ownership
interest through its participation in joint ventures.
Vessels
Owned Vessels Chartered-in Total at March 31, 2016 Vessel Type
Number Weighted byOwnership
Number Weighted byOwnership
Total Vessels VesselsWeighted byOwnership
Total Dwt2
Operating Fleet
FSO 2 1.0 — — 2
1.0 873,916 VLCC and ULCC 9 9.0 — — 9 9.0
2,875,798 Aframax 7 7.0 — — 7 7.0 787,859 Panamax
8 8.0 — —
8 8.0 557,187 International Flag
Crude Tankers 26 25.0 — — 26 25.0 5,094,760 LR2 1 1.0 — — 1
1.0 109,999 LR1 4 4.0 — — 4 4.0 297,705 MR 13
13.0 7 7.0
20 20.0 955,979 International Flag
Product Carriers 18 18.0 7 7.0 25 25.0 1,363,683
Total Int’l Flag Operating Fleet
44 43.0 7 7.0
51 50.0 6,458,443
Handysize Product Carriers 1 4 4.0 10
10.0 14 14.0 664,490 Clean ATBs 8 8.0 — — 8 8.0 226,064 Lightering
ATBs 2 2.0 —
— 2 2.0
91,112 Total U.S. Flag Operating Fleet 14
14.0 10 10.0
24 24.0 981,666
LNG Fleet 4
2.0 — — 4
2.0 864,800 cbm Total Operating Fleet
62 59.0 17 17.0
79 76.0
7,440,109and864,800 cbm
1 Includes two owned shuttle tankers, one chartered in shuttle
tanker and two owned U.S. Flag Product Carriers that trade
internationally.
2 Total Dwt is defined as the total deadweight of all 79
vessels.
Reconciliation to Non-GAAP Financial Information
The Company believes that, in addition to conventional measures
prepared in accordance with GAAP, the following non-GAAP measures
may provide certain investors with additional information that will
better enable them to evaluate the Company’s performance.
Accordingly, these non-GAAP measures are intended to provide
supplemental information, and should not be considered in isolation
or as a substitute for measures of performance prepared with
GAAP.
(A) Time Charter Equivalent (TCE) Revenues
Consistent with general practice in the shipping industry, the
Company uses TCE revenues, which represents shipping revenues less
voyage expenses, as a measure to compare revenue generated from a
voyage charter to revenue generated from a time charter. TCE
revenues, a non-GAAP measure, provides additional meaningful
information in conjunction with shipping revenues, the most
directly comparable GAAP measure, because it assists Company
management in making decisions regarding the deployment and use of
its vessels and in evaluating their financial performance.
Reconciliation of TCE revenues of the segments to shipping revenues
as reported in the consolidated statements of operations
follow:
Three Months Ended March 31,
($ in thousands)
2016 2015 TCE revenues
$236,922 $221,642 Add: Voyage Expenses 6,834
11,900 Shipping revenues $243,756 $ 233,542
(B) EBITDA and Adjusted EBITDA
EBITDA represents net income before interest expense, income
taxes and depreciation and amortization expense. Adjusted EBITDA
consists of EBITDA adjusted for the impact of certain items that we
do not consider indicative of our ongoing operating performance.
EBITDA and Adjusted EBITDA do not represent, and should not be
considered a substitute for, net income or cash flows from
operations as determined in accordance with GAAP. Some of the
limitations are: (i) EBITDA and Adjusted EBITDA do not reflect our
cash expenditures, or future requirements for capital expenditures
or contractual commitments; (ii) EBITDA and Adjusted EBITDA do not
reflect changes in, or cash requirements for, our working capital
needs; and (iii) EBITDA and Adjusted EBITDA do not reflect the
significant interest expense, or the cash requirements necessary to
service interest or principal payments, on our debt. While EBITDA
and Adjusted EBITDA are frequently used as a measure of operating
results and performance, neither of them is necessarily comparable
to other similarly titled captions of other companies due to
differences in methods of calculation. The following table
reconciles net income as reflected in the condensed consolidated
statements of operations, to EBITDA and Adjusted EBITDA:
Three Months Ended March 31,
($ in thousands)
2016
2015
Net Income $50,739 $42,901 Income tax provision
33,239 2,660 Interest expense 22,659 28,569 Depreciation and
amortization 43,083 37,119 EBITDA 149,720 111,249
Technical management transition costs - 40 Severance and relocation
costs - 5 Gain on disposal of vessels and other property (157)
(1,073) Gain on repurchase of debt (2,332) - Other costs associated
with repurchase of debt 217 - Reorganization items, net (17,910)
3,487 Adjusted EBITDA $129,538 $
113,708
(C) Total Cash
($ in thousands)
March
31,
2016
December 31,
2015
Cash and cash equivalents $402,005 $502,836 Restricted cash
14,576 19,572 Total Cash $416,581
$522,408
A, B, CReconciliations of these non-GAAP financial measures are
included in the financial tables attached to this press release
starting on Page 8.
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version on businesswire.com: http://www.businesswire.com/news/home/20160510005894/en/
For Overseas Shipholding Group, Inc.Investor Relations
& Media:Brian Tanner, 212-578-1645btanner@osg.com
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