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 2017.
Highlights
- Income from continuing operations for
the first quarter was $5.4 million, or $0.06 per diluted share,
compared to a net loss from continuing operations of $8.7 million,
or ($0.09) per diluted share, for the first quarter 2016.
- Shipping revenues were $108.1 million
for the current quarter, a decrease of 6.1% from $115.1 million in
the prior year quarter. Time charter equivalent (TCE) revenues(A)
for the first quarter 2017 were $102.3 million, down 8.8% compared
to the same period in 2016.
- Net income was $5.4 million for the
quarter ended March 31, 2017, compared to $50.7 million for the
quarter ended March 31, 2016. Net income for the prior year period
included income from discontinued operations from International
Seaways (INSW) of $59.4 million.
- First quarter 2017 adjusted EBITDA(B)
was $36.2 million, down 11.2% from $40.7 million in the same period
in 2016.
- Cash and cash equivalents were $198.1
million at March 31, 2017. Total cash(C) was $204.4 million at the
end of the current quarter.
- Repurchased and retired $14.5 million
in principal of the 8.125% notes due in 2018.
- Pursuant to a final decree and order of
the bankruptcy court, OSG closed its bankruptcy case.
Sam Norton, OSG’s President and CEO stated, “We had a solid
first quarter to start 2017 despite ongoing challenging market
conditions. Although we experienced lower charter rates, our
ability to attain high utilization rates throughout the first
quarter helped drive revenue. Our diverse operating platform, which
includes shuttle tankers in the U.S. Gulf Coast, the only licensed
operator of lightering vessels in the Delaware Bay, and the only
operator of tankers in the Maritime Security Program (“MSP”),
provides stability against market volatility affecting other areas
of our business. Additionally, we are starting to see results of
efforts to be more efficient with general and administrative costs.
This helped reduce expenses which drove higher operating
income.”
First Quarter 2017
Results
TCE revenues for the first quarter of 2017 were $102.3 million,
a decrease of $9.9 million, or 8.8%, compared with the first
quarter of 2016, primarily due to lower average daily rates earned.
Excluding the Delaware Bay lightering TCE revenues, TCE revenues
declined by $12.0 million, of which $10.9 million was due to lower
average daily rates. This decrease in TCE revenues was partially
offset by a $2.0 million increase in Delaware Bay lightering
revenues. Shipping revenues were $108.1 million for the quarter,
down 6.1% compared with the first quarter of 2016. The decrease in
shipping revenues was also driven by lower charter rates.
Operating income for the first quarter of 2017 was $19.3
million, compared to operating income of $17.4 million in the first
quarter of 2016. The increase reflected reduced operating expense,
including depreciation and amortization expense, and lower general
and administrative expenses, which offset the decline in shipping
revenues.
Income from continuing operations for the current period first
quarter was $5.4 million, or $0.06 per diluted share, compared with
a loss from continuing operations of $8.7 million, or ($0.09) per
diluted share, for the first quarter 2016. The increase reflects a
lower tax provision in the first quarter of 2017 compared to 2016.
In the prior year period, a deferred tax liability on the
unremitted earnings of INSW was recorded, resulting in an income
tax provision of $33.2 million, compared to tax expense of $3.6
million in the 2017 period. In addition, interest expense decreased
by $2.6 million in the current period as the result of significant
debt reductions in the current and prior year periods.
Adjusted EBITDA was $36.2 million for the quarter, a decrease of
$4.6 million compared with the first quarter of 2016, driven
primarily by the decline in TCE revenues, partially offset by lower
general and administrative expenses.
Discontinued Operations
As previously disclosed, OSG completed the separation of its
business into two independent publicly traded companies through the
spin-off of its then wholly owned subsidiary INSW on November 30,
2016. The spin-off separated OSG and INSW into two distinct
businesses with separate management. OSG retained the U.S. Flag
business and INSW holds entities and other assets and liabilities
that formed OSG’s former International Flag business. The spin-off
transaction was in the form of a pro rata distribution of INSW’s
common stock to our stockholders and warrant holders of record as
of the close of business on November 18, 2016.
In accordance with Accounting Standards Update (“ASU”) 2014-08,
Reporting Discontinued Operations and Disclosures of Disposals of
Components of an Entity, the assets and liabilities and results of
operations of INSW are reported as discontinued operations for the
first quarter of 2016.
Net income from discontinued operations for the first quarter of
2016 was $59.4 million.
A, B, CReconciliations of these non-GAAP financial measures are
included in the financial tables attached to this press release
starting on Page 8.
Conference Call
The Company will host a conference call to discuss its first
quarter 2017 results at 9:00 a.m. Eastern Time (“ET”) on Wednesday,
May 10, 2017.
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 11:00 a.m. ET on Wednesday, May 10, 2017 by dialing
(877) 344-7529 for domestic callers and (412) 317-0088 for
international callers, and entering Access Code 10106141.
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
24-vessel U.S. Flag fleet consists of eight 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 as defined
under the federal securities laws. Words such as “may”, “should”,
”believes”, “estimates”, “targets”, “anticipates” and similar
expressions generally identify forward-looking statements; however,
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 and the effect of
the Company’s spin-off of International Seaways, Inc.
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. The following factors, among others, could
cause the Company’s actual results to differ: the reduced
diversification and heightened exposure to the Jones Act market of
OSG’s business following the spin-off from OSG on November 30, 2016
of International Seaways, Inc. (INSW), which owned or leased OSG’s
fleet of International Flag vessels, which may make OSG more
susceptible to market fluctuations than before such spin-off; the
highly cyclical nature of OSG’s industry; fluctuations in the
market value of vessels; declines in charter rates, including spot
charter rates or other market deterioration; an increase in the
supply of vessels without a commensurate increase in demand; the
impact of adverse weather and natural disasters; the adequacy of
OSG’s insurance to cover its losses, including in connection with
maritime accidents or spill events; constraints on capital
availability; the Company’s ability to generate sufficient cash to
service its indebtedness and to comply with debt covenants; the
Company’s ability to renew its time charters when they expire or to
enter into new time charters; competition within the Company’s
industry and OSG’s ability to compete effectively for charters; the
loss of a large customer; and changes in demand in specialized
markets in which the Company currently trades. Investors should
also 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, 2017 2016
Shipping
Revenues: unaudited unaudited Time and bareboat charter
revenues $ 79,767 $ 98,690 Voyage charter revenues 28,349
16,390 108,116 115,080
Operating Expenses:
Voyage expenses 5,792 2,867 Vessel expenses 35,609 35,904 Charter
hire expenses 22,577 22,842 Depreciation and amortization 16,625
23,124 General and administrative 8,255 12,957 Total
operating expenses 88,858 97,694 Operating income 19,258
17,386 Other (expense)/income (668) 1,158 Income before
interest expense, reorganization items and income taxes 18,590
18,544 Interest expense (9,357) (11,917) Income before
reorganization items and income taxes 9,233 6,627 Reorganization
items, net (235) 17,910 Income from continuing operations
before Income Taxes 8,998 24,537 Income tax provision from
continuing operations (3,569) (33,235) Income/(loss) from
continuing operations 5,429 (8,698) Income from discontinued
operations - 59,437
Net income $ 5,429 $ 50,739
Weighted Average Number of Common Shares
Outstanding: Basic - Class A 87,908,032 94,737,606 Diluted -
Class A 88,179,855 94,741,560 Basic - Class B - 1,319,970 Diluted -
Class B - 1,319,970
Per Share Amounts: Basic and
Diluted income (loss) - Class A from continuing operations $ 0.06 $
(0.09) Basic and Diluted income - Class A from discontinued
operations $ - $ 0.62 Basic and Diluted net income - Class A $ 0.06
$ 0.53 Basic and Diluted income (loss) - Class B from
continuing operations $ - (0.09) Basic and Diluted income - Class B
from discontinued operations $ - 0.64 Basic and Diluted net income
- Class B $ - 0.55 Cash dividends declared - Class A $ -
0.48 Cash dividends declared - Class B $ - 0.48
Consolidated Balance Sheets
($ in thousands)
March 31, December 31, 2017 2016 unaudited
ASSETS Current Assets: Cash and cash equivalents $
198,082 $ 191,089 Restricted cash 6,029 7,272 Voyage receivables,
including unbilled of $4,444 and $12,593 24,147 23,456 Income tax
recoverable 313 877 Receivable from INSW 595 683 Other receivables
17,140 2,696 Inventories, prepaid expenses and other current assets
11,306 12,243 Total Current Assets 257,612 238,316
Restricted cash – non-current 272 8,572 Vessels and other property,
less accumulated depreciation of $223,356 and $213,173 674,290
684,468 Deferred drydock expenditures, net 26,678
31,172 Total Vessels, Deferred Drydock and Other Property
700,968 715,640 Investments in and advances to affiliated
companies 38 3,694 Intangible assets, less accumulated amortization
of $47,533 and $46,383 44,467 45,617 Other assets 21,666
18,658 Total Assets $ 1,025,023 $ 1,030,497
LIABILITIES AND EQUITY Current Liabilities: Accounts
payable, accrued expenses and other current liabilities $ 54,008 $
57,222 Income taxes payable 2,085 306 Current installments of
long-term debt 95,177 - Total Current Liabilities
151,270 57,528 Reserve for uncertain tax positions 3,152 3,129
Long-term debt 416,856 525,082 Deferred income taxes 142,719
141,457 Other liabilities 51,636 48,969 Total
Liabilities 765,633 776,165 Commitments and contingencies
Equity: Common stock 738 702 Paid-in additional
capital 582,971 583,526 Accumulated deficit (316,307)
(321,736) 267,402 262,492 Accumulated other comprehensive loss
(8,012) (8,160) Total Equity 259,390
254,332 Total Liabilities and Equity $ 1,025,023 $ 1,030,497
Consolidated Statements of Cash
Flows
($ in thousands)
Three Months Ended March 31, 2017 2016 Cash
Flows from Operating Activities: Net income $ 5,429 $ 50,739 Less:
Net income from discontinued operations - 59,437 Net income/(loss)
from continuing operations 5,429 (8,698) Items included in net
(loss)/income from continuing operations not affecting cash flows:
Depreciation and amortization 16,625 23,124 Amortization of debt
discount and other deferred financing costs 1,334 1,686
Compensation relating to restricted stock/stock unit and stock
option grants 541 780 Deferred income tax benefit 1,178 31,246
Reorganization items, non-cash 214 136 Discount on repurchase of
debt - (3,415) Other – net 616 487 Distributions from INSW - 72,000
Distributed earnings of affiliated companies 3,657 3,789 Payments
for drydocking (730) (3,527) SEC, Bankruptcy and IRS claim payments
(5,000) (7,136) Changes in operating assets and liabilities:
(10,853) 4,588 Net cash provided by operating activities 13,011
115,060 Cash Flows from Investing Activities: Change in restricted
cash 9,542 4,996 Expenditures for vessels and vessel improvements -
(58) Expenditures for other property - (147) Net cash provided by
investing activities 9,542 4,791 Cash Flows from Financing
Activities: Cash dividends paid - (30,574) Payments on debt
(14,500) (52,667) Extinguishment of debt - (23,879) Repurchases of
common stock and common stock warrants - (44,126) Treasury stock
minimum tax withholding related to vesting of restricted stock
(1,060) - Net cash used in financing activities (15,560) (151,246)
Net increase/(decrease) in cash and cash equivalents from
continuing operations 6,993 (31,395) Cash and cash equivalents at
beginning of period 191,089 193,978 Cash and cash equivalents at
end of period 198,082 162,583 Cash flows from discontinued
operations: Cash flows provided by operating activities - 70,358
Cash flows used in investing activities - (1,058) Cash flows used
in financing activities - (138,738) Net decrease in cash and cash
equivalents from discontinued operations $ - $ (69,438)
Spot and Fixed TCE Rates Achieved and Revenue Days
The following tables provide a breakdown of TCE rates achieved
for spot and fixed charters and the related revenue days for the
three months ended March 31, 2017 and 2016. Revenue days in the
quarter ended March 31, 2017 totaled 2,125 compared with 2,141 in
the same quarter in the prior year. A summary fleet list by vessel
class can be found later in this press release.
Three Months Ended March 31, 2017
Three Months Ended March 31, 2016 Spot
Fixed Total Spot
Fixed Total Jones Act Handysize Product Carriers
Average TCE Rate $45,061 $63,136 $ — $64,491
Number of Revenue Days 72 989 1,061 — 1,080 1,080 Non-Jones Act
Handysize Product Carriers Average TCE Rate $32,132 $15,543 $31,517
$19,016 Number of Revenue Days 112 68 180 91 91 182 ATBs Average
TCE Rate $ 17,057 $29,433 $ — $38,075 Number of Revenue Days 180
524 704 — 697 697 Lightering Average TCE Rate $75,124 $ — $63,036 $
— Number of Revenue Days 180 — 180 182 — 182
TOTAL REVENUE DAYS 544 1,581 2,125 273
1,868 2,141
Fleet Information
As of March 31, 2017, OSG’s owned and operated fleet totaled 24
vessels (14 vessels owned and 10 chartered-in) which remains
unchanged since December 31, 2016. 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, 2017 Vessel Type Number Weighted
byOwnership Number Weighted byOwnership
Total Vessels
VesselsWeighted byOwnership
Total Dwt2
Operating Fleet
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 Operating Fleet 14
14.0 10 10.0 24
24.0 981,666
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 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 in
accordance 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, 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)
2017 2016 TCE revenues $102,324 $112,213 Add:
Voyage Expenses 5,792 2,867 Shipping revenues $108,116 $115,080
(B) EBITDA and Adjusted EBITDA
EBITDA represents net income before interest expense, income
taxes and depreciation and amortization expense. Adjusted EBITDA
consists of EBITDA adjusted for the impact of certain items that we
do not consider indicative of our ongoing operating performance.
EBITDA and Adjusted EBITDA do not represent, and should not be a
substitute for, net income or cash flows from operations as
determined in accordance with GAAP. Some of the limitations are:
(i) EBITDA and Adjusted EBITDA do not reflect our cash
expenditures, or future requirements for capital expenditures or
contractual commitments; (ii) EBITDA and Adjusted EBITDA do not
reflect changes in, or cash requirements for, our working capital
needs; and (iii) EBITDA and Adjusted EBITDA do not reflect the
significant interest expense, or the cash requirements necessary to
service interest or principal payments, on our debt. While EBITDA
and Adjusted EBITDA are frequently used as a measure of operating
results and performance, neither of them is necessarily comparable
to other similarly titled captions of other companies due to
differences in methods of calculation. The following table
reconciles net income as reflected in the consolidated statements
of operations, to EBITDA and Adjusted EBITDA:
Three Months Ended March 31, ($ in thousands)
2017
2016 Net income (loss) $5,429 ($8,698) Income tax
provision 3,569 33,235 Interest expense 9,357 11,917 Depreciation
and amortization 16,625 23,124 EBITDA 34,980 59,578 Loss
(gain) on repurchase of debt 937 (1,014) Other costs associated
with repurchase of debt - 77 Reorganization items, net 235
(17,910) Adjusted EBITDA $36,152 $40,731
(C) Total Cash
($ in thousands)
March 31,2017
December 31,2016
Cash and cash equivalents $198,082 $191,089
Restricted cash 6,301 15,844 Total Cash $204,383
$206,933
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version on businesswire.com: http://www.businesswire.com/news/home/20170510005529/en/
Overseas Shipholding Group, Inc.Investor Relations &
Media:Christopher Wolf, 813-209-0699cwolf@osg.com
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