Overseas Shipholding Group, Inc. (NYSE:OSG) (the “Company” or
“OSG”) a provider of energy transportation services for crude oil
and petroleum products in the U.S. Flag markets, today reported
results for the first quarter 2019.
Highlights
- Net income for the first quarter 2019
was $3.2 million, or $0.04 per diluted share, compared with net
income of $3.7 million, or $0.04 per diluted share, for the first
quarter 2018. The Company's 2019 first quarter net income of $3.2
million compares to a $5.2 million loss in the 2018 fourth
quarter.
- Shipping revenues for the first quarter
2019 were $87.7 million, down 13.2% compared with the same period
in 2018. Time charter equivalent (TCE) revenues(A), a non-GAAP
measure, for the first quarter 2019 were $82.8 million, down 6.8%
compared with the first quarter 2018. First quarter 2019 TCE
revenues exceeded fourth quarter 2018 by 3.6%.
- First quarter 2019 Adjusted EBITDA(B),
a non-GAAP measure, was $23.6 million, down 15.5% from $28.0
million in the first quarter 2018. Adjusted EBITDA increased 2.2%
from the fourth quarter 2018.
- Total cash(C) was $75.8 million as of
March 31, 2019.
- In January 2019, we entered into a
10-year bareboat charter party agreement for a U.S. flagged product
tanker and we exercised an option to construct a second
approximately 204,000 BBL, oil and chemical tank barge for
anticipated delivery to the Company during the second half of
2020.
Mr. Sam Norton, President and CEO, stated, “Our first quarter
financial performance is evidence of the developing recovery of
OSG’s earnings power, as improved charter terms for our
conventional tanker fleet counterbalanced the retirement of aging
tonnage as part of our ongoing fleet renewal efforts. Time
charter contracts fixed during the second half of 2018, coupled
with active interest in the few spot days available, led
utilization rates for the combined conventional tanker and ATB
fleet to exceed 95% of available operating days during the
quarter. In line with tightening supply availability, we are
seeing the benefits of both an improved rate environment and better
utilization rates. In particular, conventional tanker TCE earnings
have improved 5% from the 4th quarter of 2018 and more than 25%
from their 3rd quarter levels. Meanwhile, our niche businesses
continued to perform in-line with our expectations, providing a
solid foundation of industrial business that underlies our growth
and margin expansion initiatives.”
Mr. Norton added, “We are confident in the strong, tangible
fundamentals underlying the Jones Act and U.S. Flag energy
transportation markets in which we operate. We anticipate that the
full effects of our high operating leverage will be more fully
expressed in the latter part of 2019 and into 2020, alongside the
additional earnings contribution we expect from our newly built
ATBs and MR tankers delivering over the next 18 months. All in all,
we remain extremely upbeat about the future and the promise of
improving earnings in our core businesses.”
First Quarter 2019
Results
Shipping revenues were $87.7 million for the quarter, down 13.2%
compared with the first quarter of 2018. TCE revenues for the first
quarter of 2019 were $82.8 million, a decrease of $6.0 million, or
6.8%, compared with the first quarter of 2018. This decrease
reflected two fewer vessels in operation in the first quarter of
2019 when compared to the 2018 first quarter and a decrease in spot
market charters as our fleet moved to long-term time charters.
A, B, C
Reconciliations of these non-GAAP
financial measures are included in the financial tables attached to
this press release starting on Page 7.
Operating income for the first quarter of 2019 was $9.7 million,
compared to operating income of $13.6 million in the first quarter
of 2018.
Net income for the first quarter 2019 was $3.2 million, or $0.04
per diluted share, compared with net income of $3.7 million, or
$0.04 per diluted share, for the first quarter 2018.
Adjusted EBITDA was $23.6 million for the first quarter, a
decrease of $4.4 million compared with the first quarter of 2018,
driven primarily by the decline in TCE revenues.
Conference Call
The Company will host a conference call to discuss its 2019
first quarter results at 11:00 a.m. Eastern Time (“ET”) on
Thursday, May 9, 2019.
To access the call, participants should dial (844) 850-0546 for
domestic callers and (412) 317-5203 for international callers.
Please dial in ten minutes prior to the start of the call.
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 1:00 p.m. ET on Thursday, May 9, 2019, by dialing (877)
344-7529 for domestic callers and (412) 317-0088 for international
callers and entering Access Code 10131358.
About Overseas Shipholding Group, Inc.
Overseas Shipholding Group, Inc. (NYSE:OSG) is a publicly traded
tanker company providing energy transportation services for crude
oil and petroleum products in the U.S. Flag markets. OSG is a major
operator of tankers and ATBs in the Jones Act industry. OSG’s
21-vessel U.S. Flag fleet consists of five ATBs, two lightering
ATBs, three shuttle tankers, nine MR tankers, and two non-Jones Act
MR tankers that participate in the U.S. MSP. 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 Tampa, FL. 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, its
ability to retain and effectively integrate new members of
management, the delivery timelines for the Company's new vessels,
and the performance of the Company's niche and core businesses.
Forward-looking statements are based 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 Annual Report on Form 10-K
for OSG 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, 2019
2018 Shipping Revenues: Time and bareboat
charter revenues $ 63,120 $ 53,895 Voyage charter revenues
24,617 47,135 87,737
101,030
Operating Expenses: Voyage expenses
4,984 12,252 Vessel expenses 32,446 33,505 Charter hire expenses
22,298 22,547 Depreciation and amortization 12,478 12,372 General
and administrative 5,674 6,783 Loss on disposal of vessels and
other property, including impairments 117 —
Total operating expenses 77,997 87,459
Operating income 9,740 13,571 Other income/(expense)
355 (631 ) Income before interest expense,
reorganization items and income taxes 10,095 12,940 Interest
expense (6,506 ) (8,076 ) Income before income taxes
3,589 4,864 Income tax provision (392 ) (1,202 )
Net income $ 3,197 $ 3,662
Weighted
Average Number of Common Shares Outstanding: Basic - Class A
89,004,947 88,105,439 Diluted - Class A 89,421,143 88,620,596
Per Share Amounts: Basic and diluted net income - Class A $
0.04 $ 0.04
Consolidated Balance Sheets
($ in thousands)
March 31, December 31, 2019 2018
(unaudited) ASSETS Current Assets: Cash and
cash equivalents $ 75,602 $ 80,417 Restricted cash 59 59 Voyage
receivables, including unbilled of $8,400 and $10,160 26,799 16,096
Income tax receivable 505 439 Other receivables 1,452 3,027 Prepaid
expenses 1,751 9,886 Inventories and other current assets
2,465 2,456 Total Current Assets 108,633
112,380 Vessels and other property, less accumulated depreciation
598,407 597,659 Deferred drydock expenditures, net 24,105
26,099 Total Vessels, Other Property and
Deferred Drydock 622,512 623,758
Restricted cash - noncurrent 140 165 Investments in and advances to
affiliated companies 38 3,585 Intangible assets, less accumulated
amortization 35,267 36,417 Operating lease right-of-use assets
247,262 — Other assets 50,411 51,425
Total Assets $ 1,064,263 $ 827,730
LIABILITIES AND EQUITY Current Liabilities: Accounts
payable, accrued expenses and other current liabilities $ 30,571 $
34,678 Current portion of operating lease liabilities 81,897 —
Current installments of long-term debt 26,306
23,240 Total Current Liabilities 138,774 57,918 Reserve for
uncertain tax positions 218 220 Noncurrent operating lease
liabilities 181,211 — Long-term debt 315,211 322,295 Deferred
income taxes, net 73,373 73,365 Other liabilities 21,463
44,464 Total Liabilities 730,250 498,262
Equity: Common stock - Class A ($0.01 par value;
166,666,666 shares authorized; 85,292,751 and 84,834,790 shares
issued and outstanding) 853 848 Paid-in additional capital 589,086
587,826 Accumulated deficit (248,817 ) (252,014 )
341,122 336,660 Accumulated other comprehensive loss (7,109
) (7,192 ) Total Equity 334,013 329,468
Total Liabilities and Equity $ 1,064,263 $ 827,730
Consolidated Statements of Cash
Flows
($ in thousands)
Three Months Ended March 31, 2019
2018 Cash Flows from Operating Activities: Net income $
3,197 $ 3,662 Items included in net income not
affecting cash flows: Depreciation and amortization 12,478 12,372
Loss on disposal of vessels and other property, including
impairments 117 — Amortization of debt discount and other deferred
financing costs 510 1,106 Compensation relating to restricted stock
awards and stock option grants 309 793 Deferred income tax
provision 111 1,492 Other – net 231 645 Distributed earnings of
affiliated companies 3,548 3,747 Payments for drydocking (1,342 )
(2,037 ) Changes in operating assets and liabilities (8,040 )
(1,789 ) Loss on extinguishment of debt, net —
981 Net cash provided by operating activities 11,119
20,972 Cash Flows from Investing Activities:
Expenditures for vessels and vessel improvements (10,955 ) —
Expenditures for other property (588 ) — Net
cash used in investing activities (11,498 ) —
Cash Flows from Financing Activities: Payments on debt (4,167 )
(28,166 ) Extinguishment of debt — (47,000 ) Tax withholding on
share-based awards (294 ) (359 ) Net cash used in
financing activities (4,461 ) (75,525 ) Net decrease
in cash, cash equivalents and restricted cash (4,840 ) (54,553 )
Cash, cash equivalents and restricted cash at beginning of period
80,641 166,269 Cash, cash equivalents
and restricted cash at end of period $ 75,801 $ 111,716
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, 2019, and the comparable period of
2018. Revenue days in the quarter ended March 31, 2019, totaled
1,784 compared with 1,932 in the prior year quarter. A summary
fleet list by vessel class can be found later in this press
release.
2019 2018 Spot
Fixed Spot Fixed Three Months Ended
March 31, 2019 Earnings Earnings Earnings
Earnings Jones Act Handysize Product Carriers: Average rate
$ 27,940 $ 56,863 $ 41,227 $ 64,947 Revenue days 90 982 337 720
Non-Jones Act Handysize Product Carriers: Average rate $ 25,898 $
12,097 $ 35,900 $ 62,542 Revenue days 113 67 172 8 ATBs: Average
rate $ 20,992 $ 21,557 $ 12,230 $ 22,979 Revenue days 86 266 261
261 Lightering: Average rate $ 72,905 $ — $ 70,925 $ — Revenue days
180 — 173 —
Fleet Information
As of March 31, 2019, OSG’s operating fleet consisted of 21
vessels, 11 of which were owned, with the remaining vessels
chartered-in. Vessels chartered-in are on Bareboat Charters.
Vessels Vessels Total
Vessel Type Owned Chartered-In
Vessels Total dwt (2) Handysize Product
Carriers (1) 4 10 14 664,490 Refined Product ATBs 5 — 5 141,612
Lightering ATBs 2 — 2 91,112 Total Operating Fleet 11 10 21 897,214
(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 aggregate
deadweight tons for all vessels of that type.
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. Time
charter equivalent 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, 2019
2018 Time charter equivalent revenues $ 82,753 $
88,778 Add: Voyage expenses 4,984 12,252 Shipping
revenues $ 87,737 $ 101,030
Vessel Operating Contribution
Vessel operating contribution, a non-GAAP measure, is TCE
revenues minus vessel expenses and charter hire expenses.
Our “niche market activities,” which includes Delaware Bay
lightering, MSP vessels and shuttle tankers, continue to provide a
stable operating platform underlying our total US Flag operations.
These vessels’ operations are insulated from the forces affecting
the broader Jones Act market.
The following table sets forth the contribution of our
vessels:
Three Months Ended March 31, ($ in thousands)
2019 2018 Niche Market Activities $ 22,602 $
27,908 Jones Act Handysize Tankers 2,439 2,309 ATBs 2,968
2,509 Vessel Operating Contribution 28,009
32,726 Depreciation and amortization 12,478 12,372 General and
administrative 5,674 6,783 Loss on disposal of vessels and other
property, including impairments 117 — Operating
income $ 9,740 $ 13,571
(B) EBITDA and Adjusted EBITDA
EBITDA represents net (loss)/income from continuing operations
before interest expense, income taxes and depreciation and
amortization expense. Adjusted EBITDA consists of EBITDA adjusted
to exclude amortization classified in charter hire expenses,
interest expense classified in charter hire expenses, gain/(loss)
on disposal of vessels and other property, including impairments,
loss on repurchases and extinguishment of debt, non-cash stock
based compensation expense and the impact of other items that we do
not consider indicative of our ongoing operating performance.
EBITDA and Adjusted EBITDA do not represent, and should not be a
substitute for, net (loss)/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/(loss) from continuing operations as
reflected in the consolidated statements of operations, to EBITDA
and Adjusted EBITDA. Prior periods have been adjusted to conform to
current year presentation.
Three Months Ended March 31, ($ in thousands)
2019 2018 Net income $ 3,197 $ 3,662 Income
tax provision 392 1,202 Interest expense 6,506 8,076 Depreciation
and amortization 12,478 12,372 EBITDA 22,573 25,312
Amortization classified in charter hire expenses 231 465 Interest
expense classified in charter hire expenses 404 433 Non-cash stock
based compensation expense 309 793 Loss on disposal of vessels and
other property, including impairments 117 — Loss on extinguishment
of debt, net — 981 Adjusted EBITDA $ 23,634 $ 27,984
(C) Total Cash
March 31, December 31, ($ in thousands)
2019 2018 Cash and cash equivalents $ 75,602 $
80,417 Restricted cash - current 59 59 Restricted cash –
non-current 140 165 Total Cash $ 75,801 $ 80,641
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190509005379/en/
Susan Allan, Overseas Shipholding Group, Inc.(813)
209-0620sallan@osg.com
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