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 fourth quarter and full year 2017.
Highlights
- Income from continuing operations for
the fourth quarter was $53.6 million, or $0.61 per diluted share,
compared with income from continuing operations of $64.7 million,
or $0.74 per diluted share for the fourth quarter 2016.
- Income from continuing operations for
the full year 2017 was $56.0 million, or $0.64 per diluted share,
compared with a loss of $1.1 million, or $0.01 per diluted share
for the full year 2016.
- Shipping revenues for the fourth
quarter and full year 2017 were $92.8 million and $390.4 million,
down 19% and 16%, respectively, compared with the same periods in
2016. Time charter equivalent (TCE) revenues(A), a non-GAAP
measure, for the fourth quarter and full year 2017 were $82.8
million and $361.0 million, down 24% and 19%, respectively,
compared with the same periods in 2016.
- Fourth quarter and full year 2017
Adjusted EBITDA(B), a non-GAAP measure, was $22.7 million and
$111.1 million, down 54% and 37%, respectively, from $49.9 million
and $176.2 million in the same periods in 2016.
- Total cash(C), was $166.3 million as of
December 31, 2017.
- Principal payment of $26.4 million plus
accrued and unpaid interest of $514 thousand was made on December
27, 2017, on all of the outstanding 8.125% Notes in the fourth
quarter, and as a result, the Company's obligations under the
indenture was canceled and discharged.
Mr. Norton stated, “We witnessed a robust recovery of spot
market rates during the fourth quarter. While still early days, we
consider realized reduction in available supply and the emergence
of the demand catalysts that we have been looking for - in
particular in respect to demand for domestic crude oil
transportation - as supportive of increased confidence in a
progression towards a more balanced and normalized market
environment.”
Fourth Quarter 2017
Results
Shipping revenues were $92.8 million for the quarter, down 19%
compared with the fourth quarter of 2016. TCE revenues for the
fourth quarter of 2017 were $82.8 million, a decrease of $26.8
million, or 24%, compared with the fourth quarter of 2016,
primarily due to lower average daily rates earned, which accounted
for a $22.8 million decrease in TCE revenues and a 138-day decrease
in revenue days for its fleet, excluding its modern lightering
ATBs, driven by additional drydock and repair days resulting in a
$4.0 million decrease in TCE revenues.
A, B, C Reconciliations of these non-GAAP financial measures are
included in the financial tables attached to this press release
starting on Page 8.
Operating income for the fourth quarter of 2017 was $3.9
million, compared to operating income of $4.1 million in the fourth
quarter of 2016.
Net income for the fourth quarter was $53.6 million, compared
with net loss of $275.5 million for the fourth quarter 2016. Net
income from continuing operations for the fourth quarter was $53.6
million, or $0.61 per diluted share, compared with a net income
from continuing operations of $64.7 million, or $0.74 per diluted
share for the fourth quarter 2016. The increase reflects the income
tax benefit primarily as a result of the remeasurement of the net
deferred tax liability to the newly enacted statutory rate of
21%.
Adjusted EBITDA was $22.7 million for the quarter, a decrease of
$27.1 million compared with the fourth quarter of 2016, driven
primarily by the decline in TCE revenues.
Full Year 2017 Results
Shipping revenues were $390.4 million for the full year 2017,
down 16% compared with the full year 2016. TCE revenues for the
full year 2017 were $361.0 million, a decrease of $85.1 million, or
19%, compared with the full year 2016, primarily due to lower
average daily rates, which accounted for a $75.2 million decrease
in TCE revenues and a 278-day decrease in revenue days for its
Jones Act fleet, excluding its modern lightering ATBs, driven by an
increase in drydock days resulting in a $9.8 million decrease in
TCE revenues.
Operating income for the full year 2017 was $37.8 million,
compared to operating loss of $31.5 million for the full year
2016.
Net income for the full year 2017 was $56.0 million, compared
with net loss of $293.6 million for the full year 2016. Income from
continuing operations for the full year 2017 was $56.0 million, or
$0.64 per diluted share, compared with a loss from continuing
operations of $1.1 million, or $0.01 per diluted share for the full
year 2016. The increase reflects the income tax benefit primarily
as a result of the remeasurement of the net deferred tax liability
to the newly enacted statutory rate of 21%.
Adjusted EBITDA was $111.1 million for the full year 2017, a
decrease of $65.1 million compared with the full year 2016, driven
primarily by the decline in TCE revenues.
Conference Call
The Company will host a conference call to discuss its fourth
quarter and full year 2017 results at 9:00 a.m. Eastern Time (“ET”)
on Friday, March 9, 2018.
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 Friday, March 9, 2018, through 10:59
p.m. ET on Friday, March 16, 2018, by dialing (877) 344-7529 for
domestic callers and (412) 317-0088 for international callers, and
entering Access Code 10117595.
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
23-vessel U.S. Flag fleet consists of seven 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 and the effect of the Company’s spin-off of
International Seaways, Inc. 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 December 31, Fiscal Year Ended
December 31, 2017 2016 2017 2016
(unaudited) (unaudited) Shipping Revenues:
Time and bareboat charter revenues 57,400 85,539 266,193 372,149
Voyage charter revenues 35,415 29,237
124,233 90,271 Total shipping revenues
92,815 114,776 390,426
462,420
Operating Expenses: Voyage expenses
10,061 5,219 29,390 16,260 Vessel expenses 34,658 33,343 135,991
140,696 Charter hire expenses 23,101 23,138 91,587 91,947
Depreciation and amortization 12,573 20,862 58,673 89,563 General
and administrative 6,413 7,013 27,493 41,608 Severance costs —
10,758 16 12,996 Loss on disposal of vessels and other property,
including impairments 5,847 6,623
13,200 104,532 Total operating expenses
92,653 106,956 356,350
497,602 Income/(loss) from vessel operations 162
7,821 34,076 (35,182 ) Equity in income of affiliated companies
3,747 3,656 3,747
3,642 Operating income/(loss) 3,909 11,476 37,823 (31,540 )
Other expense (826 ) (295 ) (1,881 )
(2,391 ) Income/(loss) before interest expense, reorganization
items and income taxes and income taxes 3,083 11,181 35,942 (33,931
) Interest expense (9,125 ) (9,765 ) (37,401 )
(43,151 ) (Loss)/income before reorganization items and
income taxes and income taxes (6,042 ) 1,416 (1,459 ) (77,082 )
Reorganization items, net 8 (393 ) (190
) 10,925 (Loss)/income from continuing operations
before income taxes (6,034 ) 1,023 (1,649 ) (66,157 ) Income tax
benefit from continuing operations 59,679
63,653 57,627 65,098 Net
income/(loss) from continuing operations 53,645 64,678 55,978
(1,059 ) Net income/(loss) from discontinued operations —
(340,153 ) — (292,555 )
Net
income/(loss) $ 53,645 $ (275,475 ) $ 55,978 $
(293,614 )
Weighted Average Number of Common Shares
Outstanding: Basic - Class A 87,840,169 87,497,273 87,834,769
90,949,577 Diluted - Class A 88,108,079 87,721,704 88,082,978
90,949,577 Basic and diluted - Class B — — — 533,758
Per
Share Amounts from Continuing Operations: Basic and diluted net
income/(loss) – Class A $ 0.61 $ 0.74 $ 0.64 $ (0.01 ) Basic and
diluted net income/(loss) – Class B — — — $ (0.11 )
Per Share
Amounts from Discontinued Operations: Basic and diluted net
income/(loss) – Class A — $ (3.89 ) — $ (3.24 ) Basic and diluted
net income/(loss) – Class B — — — $ 4.54
On June 2, 2016, the Board approved the Reverse Split Amendment
to the Company’s Amended and Restated Certificate of Incorporation.
The Reverse Split Amendment effected the Reverse Split. The Reverse
Split Amendment became effective on June 13, 2016. In accordance
with Financial Accounting Standards Board (“FASB”) Accounting
Standards Codification (“ASC”) ASC 260, Earnings Per Share, the
Company adjusted the computations of basic and diluted earnings per
share retroactively for all periods presented to reflect that
change in its capital structure.
Consolidated Balance Sheets
($ in thousands)
December 31, December 31, 2017
2016 ASSETS Current Assets: Cash and cash
equivalents $ 165,994 $ 191,089 Restricted cash 58 7,272 Voyage
receivables, including unbilled of $9,919 and $12,593 24,209 23,456
Income tax recoverable 1,122 877 Receivable from INSW 372 683 Other
receivables 2,184 2,696 Inventories, prepaid expenses and other
current assets 13,356 12,243 Total
Current Assets 207,295 238,316 Restricted cash 217 8,572 Vessels
and other property, less accumulated depreciation 632,509 684,468
Deferred drydock expenditures, net 23,914
31,172 Total Vessels, Deferred Drydock and Other Property
656,423 715,640 Investments in and
advances to affiliated companies 3,785 3,694 Intangible assets,
less accumulated amortization 41,017 45,617 Other assets
23,150 18,658 Total Assets $ 931,887 $
1,030,497
LIABILITIES AND EQUITY Current
Liabilities: Accounts payable, accrued expenses and other
current liabilities $ 34,220 $ 57,222 Income taxes payable 151 306
Current installments of long-term debt 28,160
— Total Current Liabilities 62,531 57,528 Reserve for
uncertain tax positions 3,205 3,129 Long-term debt 420,776 525,082
Deferred income taxes 83,671 141,457 Other liabilities
48,466 48,969 Total Liabilities 618,649
776,165 Commitments and contingencies
Equity: Common stock - Class A ($0.01 par value;
166,666,666 shares authorized; 78,277,669 and 70,271,172 shares
issued and outstanding) 783 702 Paid-in additional capital 584,675
583,526 Accumulated deficit (265,758 ) (321,736 )
319,700 262,492 Accumulated other comprehensive loss (6,462
) (8,160 ) Total Equity 313,238 254,332
Total Liabilities and Equity $ 931,887 $ 1,030,497
Consolidated Statements of
Cash Flows
($ in thousands)
Years Ended December 31, 2017 2016
2015 Cash Flows from Operating Activities: Net income/(loss)
$ 55,978 $ (293,614 ) $ 283,960 (Loss)/income from discontinued
operations — (292,555 ) 203,395
Net income/(loss) from continuing operations 55,978 (1,059 ) 80,565
Items included in net income/(loss) from continuing operations not
affecting cash flows: Depreciation and amortization 58,673 89,563
76,851 Vessel impairment charges 5,878 104,405 — Amortization of
debt discount and other deferred financing costs 5,167 6,005 5,154
Compensation relating to restricted stock, stock unit and stock
option grants 2,388 7,441 3,580 Deferred income tax benefit (59,047
) (67,394 ) (69,564 ) Undistributed earnings of affiliated
companies (91 ) 132 (399 ) Deferred payment obligations on
charters-in — — 590 Reorganization items, non-cash (105 ) 5,198 (50
) Other – net 3,282 2,268 1,971 Items included in net income/(loss)
related to investing and financing activities: Loss on repurchases
and extinguishment of debt 3,237 2,988 — Loss on disposal of
vessels and other property, net 7,322 127 207 Distributions from
INSW — 202,000 200,000 Payments for drydocking (8,390 ) (6,844 )
(41,323 ) SEC payment, bankruptcy and IRS claim payments (5,000 )
(7,136 ) (8,343 ) Deferred financing costs paid for loan
modification — — (4,220 ) Changes in operating assets and
liabilities: (Increase)/decrease in receivables (753 ) (16,794 )
6,502 (Increase)/decrease in income tax recoverable (246 ) 323
54,637 (Decrease)/increase in deferred revenue (4,639 ) 63 (3,034 )
Net change in prepaid items and accounts payable, accrued expenses
and other current and long-term liabilities (20,035 )
7,574 (26,791 ) Net cash provided by operating
activities 43,619 328,860
276,333 Cash Flows from Investing Activities: Change in
restricted cash 15,569 (5,261 ) 42,502 Expenditures for other
property (11 ) (666 ) (75 ) Proceeds from disposal of vessels and
other property 1,055 — — Other – net — —
(54 ) Net cash provided by/(used in) investing
activities 16,613 (5,927 ) 42,373
Cash Flows from Financing Activities: Cash dividends paid —
(31,910 ) — Payments on debt, including adequate protection
payments — (54,345 ) (6,030 ) Repurchases and extinguishment of
debt (84,170 ) (120,224 ) (326,051 ) Repurchases of common stock
and common stock warrants — (119,343 ) (3,633 ) Tax withholding on
share-based awards (1,157 ) — —
Net cash used in financing activities (85,327 )
(325,822 ) (335,714 ) Net decrease in cash and cash
equivalents (25,095 ) (2,889 ) (17,008 ) Cash and cash equivalents
at beginning of year 191,089 193,978
210,986 Cash and cash equivalents at end of year $
165,994 $ 191,089 $ 193,978 Cash flows
from discontinued operations: Cash flows provided by operating
activities $ — $ 111,768 $ 222,739 Cash flows provided by investing
activities — 25,202 114,163 Cash flows used in financing activities
— (355,687 ) (206,284 ) Net
(decrease)/increase in cash and cash equivalents from discontinued
operations $ — $ (218,717 ) $ 130,618
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 and fiscal year ended December 31, 2017, and the
comparable periods of 2016. Revenue days in the quarter ended
December 31, 2017, totaled 2,029 compared with 2,167 in the prior
year quarter. Revenue days in the fiscal year ended December 31,
2017, totaled 8,378 compared with 8,658 in the prior year. A
summary fleet list by vessel class can be found later in this press
release.
For the three months ended December
31, 2017 2016 Spot Fixed
Spot Fixed Earnings Earnings
Earnings Earnings Jones Act Handysize Product
Carriers: Average rate $ 31,397 $ 63,163 $ 29,742 $ 65,060 Revenue
days 284 790 92 972 Non-Jones Act Handysize Product Carriers:
Average rate $ 28,334 $ — $ 24,311 $ 9,628 Revenue days 184 — 147
37 ATBs: Average rate $ 12,644 $ 25,363 $ 26,473 $ 32,029 Revenue
days 317 270 83 652 Lightering: Average rate $ 42,802 $ — $ 91,052
$ — Revenue days 184 — 184 —
For the years ended
December 31, 2017 2016 Spot Fixed
Spot Fixed Earnings Earnings
Earnings Earnings Jones Act Handysize Product
Carriers: Average rate $ 27,179 $ 63,604 $ 27,989 $ 64,919 Revenue
days 896 3,411 208 4,103 Non-Jones Act Handysize Product Carriers:
Average rate $ 31,174 $ 14,031 $ 31,422 $ 16,141 Revenue days 566
159 544 186 ATBs: Average rate $ 11,111 $ 26,863 $ 26,473 $ 35,269
Revenue days 979 1,637 83 2,802 Lightering: Average rate $ 61,648 $
— $ 72,271 $ — Revenue days 730 — 732 —
Fleet Information
As of December 31, 2017, OSG’s operating fleet consisted of 23
vessels, 13 of which were owned, with the remaining vessels
chartered-in. Vessels chartered-in are on Bareboat Charters.
Vessels Owned Vessels
Chartered-in Total at December 31, 2017 Vessel
Type Number Weighted by
Ownership
Number Weighted by
Ownership
Total Vessels Vessels
Weighted by
Ownership
Total dwt (2) Handysize Product Carriers (1) 4
4.0 10 10.0 14 14.0 664,490 Refined Product ATBs 7 7.0 — — 7 7.0
195,131 Lightering ATBs 2 2.0 — — 2 2.0 91,112 Total Operating
Fleet 13 13.0 10 10.0 23 23.0 950,733
(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 total 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 Fiscal Year Ended
December 31, December 31, ($ in thousands)
2017 2016 2017 2016 TCE
revenues $ 82,754 $ 109,557 $ 361,036 $ 446,160 Add: Voyage
Expenses 10,061 5,219 29,390 16,260
Shipping revenues $ 92,815 $ 114,776 $ 390,426 $ 462,420
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:
Years Ended December 31, 2017
2016 2015 Niche Market Activities $ 101,405 $
106,410 $ 97,890 Jones Act Handysize Tankers 6,083 36,648 46,539
ATBs 26,057 69,928 74,678 Vessel Operating
Contribution $ 133,545 $ 212,986 $ 219,107
(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
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
(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:
Three Months Ended Fiscal Year Ended
December 31, December 31, ($ in thousands)
2017 2016 2017 2016 Net
Income/(loss) from continuing operations $ 53,645 $ 64,678 $ 55,978
$ (1,059 ) Income tax benefit from continuing operations (59,679 )
(63,653 ) (57,627 ) (65,098 ) Interest expense 9,125 9,765 37,401
43,151 Depreciation and amortization 12,573
20,862 58,673 89,563 EBITDA
15,664 31,652 94,425 66,557 Severance costs — 10,758 16 12,996 Loss
on disposal of vessels and other property, including impairments
5,847 6,623 13,200 104,532 Loss on repurchase of debt 1,238 456
3,237 2,988 Reorganization items, net (8 ) 393
190 (10,925 ) Adjusted EBITDA $ 22,741
$ 49,882 $ 111,068 $ 176,225
(C) Total Cash
December 31, December 31, ($ in
thousands)
2017 2016 Cash and cash equivalents $
165,994 $ 191,089 Restricted cash - current 58 7,272 Restricted
cash – non-current 217 8,572 Total Cash $ 166,269 $
206,933
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180309005347/en/
Overseas Shipholding Group, Inc.Susan Allan,
813-209-0620sallan@osg.com
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