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 second quarter 2018.
Highlights
- Net income for the second quarter was
$3.1 million, or $0.03 per diluted share, compared with net income
of $3.2 million, or $0.04 per diluted share, for the second quarter
2017.
- Shipping revenues for the second
quarter 2018 were $95.4 million, down 0.9% compared with the same
period in 2017. Time charter equivalent (TCE) revenues(A), a
non-GAAP measure, for the second quarter 2018 were $86.0 million,
down 5.6% compared with the second quarter 2017. These results
reflect an active fleet of 22 vessels in the second quarter of 2018
compared to 24 vessels in the second quarter 2017.
- Second quarter 2018 Adjusted EBITDA(B),
a non-GAAP measure, was $23.3 million, down 21.1% from $29.6
million in the second quarter 2017.
- Total cash(C) was $131.2 million as of
June 30, 2018.
- In July 2018, the Company signed
binding contracts with Hyundai Mipo Dockyard Company Ltd. for the
construction of two 50,000 deadweight tons class product chemical
tankers for anticipated delivery to the Company during the second
half of 2019. Additionally, in July 2018, the Company signed a
binding contract with Gunderson Marine LLC for the construction of
one, approximately 204,000 BBL, oil and chemical tank barge for
anticipated delivery to the Company during the first half of
2020.
Mr. Sam Norton, President and CEO, stated, “While seasonal
softness in spot tanker rates has slowed the momentum of recent
market gains, we remain confident that the mix of our revenue
streams will continue to provide a solid foundation to capture the
benefits of the continuing arc of improving fundamentals. Our niche
businesses once again performed well and progress in securing more
long-term charter contracts during recent months, coupled with
resilience in our ATB earnings stream, gives cause to believe that
our commercial chartering strategy is on the right track.
Importantly, new contract signings for additions to our fleet
position OSG well to reap economic rewards which are expected to
materialize in the wake of new regulations coming into force over
the next two years.”
Second Quarter 2018
Results
Shipping revenues were $95.4 million for the quarter, down 0.9%
compared with the second quarter of 2017. TCE revenues for the
second quarter of 2018 were $86.0 million, a decrease of $5.1
million, or 5.6%, compared with the second quarter of 2017. This
decrease reflected the reduction of two vessels in operation in the
second quarter of 2018 when compared to the 2017 second
quarter.
Operating income for the second quarter of 2018 was $10.5
million, compared to operating income of $14.3 million in the
second quarter of 2017.
Net income for the second quarter was $3.1 million, or $0.03 per
diluted share, compared with net income of $3.2 million, or $0.04
per diluted share, for the second quarter 2017.
Adjusted EBITDA was $23.3 million for the second quarter, a
decrease of $6.3 million compared with the second quarter of 2017,
driven primarily by the decline 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 7.
Conference Call
The Company will host a conference call to discuss its second
quarter 2018 results at 9:00 a.m. Eastern Time (“ET”) on Thursday,
August 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 Thursday, August 9, 2018 by
dialing (877) 344-7529 for domestic callers and (412) 317-0088 for
international callers, and entering Access Code 10122734.
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 EndedJune 30,
Six Months EndedJune 30, 2018
2017 2018 2017 Shipping
Revenues: Time and bareboat charter revenues $ 54,543 $
72,116 $ 108,437 $ 151,883 Voyage charter revenues 40,824
24,109 87,959 52,458 95,367 96,225
196,396 204,341
Operating
Expenses: Voyage expenses 9,402 5,149 21,654 10,941 Vessel
expenses 33,656 32,599 67,160 68,243 Charter hire expenses 22,768
22,856 45,315 45,433 Depreciation and amortization 12,426 15,086
24,798 31,711 General and administrative 6,586 6,190
13,369 14,284 Total operating expenses 84,838
81,880 172,296 170,612 Operating income 10,529
14,345 24,100 33,729 Other income/(expense) 385 (87 ) (246 )
(880 ) Income before interest expense, reorganization items and
income taxes 10,914 14,258 23,854 32,849 Interest expense (7,497 )
(9,445 ) (15,573 ) (18,802 ) Income before reorganization items and
income taxes 3,417 4,813 8,281 14,047 Reorganization items, net —
(9 ) — (244 ) Income before income taxes 3,417 4,804
8,281 13,803 Income tax provision (362 ) (1,593 ) (1,564 ) (5,162 )
Net income $ 3,055 $ 3,211 $ 6,717 $
8,641
Weighted Average Number of Common Shares
Outstanding: Basic - Class A 88,367,302 87,769,483 88,237,093
88,309,231 Diluted - Class A 89,198,996 87,964,755 88,910,518
88,542,779
Per Share Amounts: Basic and diluted net
income - Class A $ 0.03 $ 0.04 $ 0.08 $ 0.10
The Company adopted ASU No. 2017-07, Improving the Presentation
of Net Periodic Pension Cost and Net Periodic Postretirement
Benefit Cost (ASC 715), which requires that an employer classify
and report the service cost component in the same line item or
items in the statement of operations as other compensation costs
arising from services rendered by the pertinent employees during
the period and disclose by line item in the statement of operations
the amount of net benefit cost that is included in the statement of
operations. The other components of net benefit cost would be
presented in the statement of operations separately from the
service cost component and outside the subtotal of income from
operations. The Company adopted this accounting standard on January
1, 2018 and has applied the guidance retrospectively.
Consolidated Balance Sheets
($ in thousands)
June 30, 2018 December 31,
2017 (unaudited) ASSETS Current Assets:
Cash and cash equivalents $ 130,974 $ 165,994 Restricted cash 59 58
Voyage receivables, including unbilled of $6,135 and $9,919 18,257
24,209 Income tax receivable 835 1,122 Receivable from INSW 34 372
Other receivables 1,471 2,184 Inventories, prepaid expenses and
other current assets 14,854 13,356 Total Current
Assets 166,484 207,295 Vessels and other property, less accumulated
depreciation 615,530 632,509 Deferred drydock expenditures, net
24,062 23,914 Total Vessels, Other Property and
Deferred Drydock 639,592 656,423 Restricted cash -
non current 191 217 Investments in and advances to affiliated
companies 38 3,785 Intangible assets, less accumulated amortization
38,717 41,017 Other assets 22,539 23,150 Total Assets
$ 867,561 $ 931,887
LIABILITIES AND
EQUITY Current Liabilities: Accounts payable, accrued
expenses and other current liabilities $ 34,643 $ 34,371 Current
installments of long-term debt — 28,160 Total Current
Liabilities 34,643 62,531 Reserve for uncertain tax positions 3,254
3,205 Long-term debt 376,660 420,776 Deferred income taxes, net
84,757 83,671 Other liabilities 47,415 48,466 Total
Liabilities 546,729 618,649
Equity: Common stock -
Class A ($0.01 par value; 166,666,666 shares authorized; 80,713,679
and 78,277,669 shares issued and outstanding 807 783 Paid-in
additional capital 586,414 584,675 Accumulated deficit (260,269 )
(265,758 ) 326,952 319,700 Accumulated other comprehensive loss
(6,120 ) (6,462 ) Total Equity 320,832 313,238 Total
Liabilities and Equity $ 867,561 $ 931,887
Consolidated Statements of Cash
Flows
($ in thousands)
Six Months EndedJune 30, 2018
2017 Cash Flows from Operating Activities: Net income
$ 6,717 $ 8,641 Items included in net income not
affecting cash flows: Depreciation and amortization 24,798 31,711
Amortization of debt discount and other deferred financing costs
2,099 2,653 Compensation relating to restricted stock awards and
stock option grants 1,497 1,699 Deferred income tax provision 1,057
2,121 Reorganization items, non-cash — 85 Other – net 1,110 1,481
Loss on extinguishment of debt, net 981 1,189 Distributed earnings
of affiliated companies 3,747 3,656 Payments for drydocking (4,107
) (3,305 ) SEC, Bankruptcy and IRS claim payments — (5,000 )
Changes in operating assets and liabilities 2,603 (20,273 )
Net cash provided by operating activities 40,502 24,658
Cash Flows from Investing Activities: Expenditures for other
property (22 ) (11 ) Net cash used in investing activities (22 )
(11 ) Cash Flows from Financing Activities: Payments on debt
(28,166 ) — Extinguishment of debt (47,000 ) (20,008 ) Tax
withholding on share-based awards (359 ) (1,062 ) Net cash used in
financing activities (75,525 ) (21,070 ) Net (decrease)/increase in
cash, cash equivalents and restricted cash (35,045 ) 3,577 Cash,
cash equivalents and restricted cash at beginning of period 166,269
206,933 Cash, cash equivalents and restricted cash at
end of period $ 131,224 $ 210,510
The Company adopted ASU No. 2016-18, Statement of Cash Flows
(ASC 230), Restricted Cash, which requires that amounts generally
described as restricted cash and restricted cash equivalents be
included with cash and cash equivalents when reconciling the
beginning-of-period and end-of-period total amounts shown on the
statement of cash flows. The standard is effective for annual
periods beginning after December 31, 2017 and interim periods
within that reporting period. The Company adopted this accounting
standard on January 1, 2018. The prior period has been adjusted to
conform to current period presentation, which resulted in a
decrease of $9,909 in net cash provided by investing activities for
the six months ended June 30, 2017, related to changes in
restricted cash amounts.
Spot and Fixed TCE Rates Achieved and Revenue Days
The following tables provide a breakdown of TCE rates achieved
for the three and six months ended June 30, 2018 and 2017, between
spot and fixed earnings and the related revenue days. Revenue days
in the quarter ended June 30, 2018 totaled 1,945 compared with
2,127 in the same quarter in the prior year. A summary fleet list
by vessel class can be found later in this press release.
2018 2017 Three Months Ended
June 30,
Spot Earnings
Fixed Earnings
Spot Earnings
Fixed Earnings
Jones Act Handysize Product Carriers: Average rate $ 32,180 $
60,953 $ 18,288 $ 63,796 Revenue days 282 795 173 900 Non-Jones Act
Handysize Product Carriers: Average rate $ 32,493 $ — $ 28,169 $
12,836 Revenue days 163 — 91 91 ATBs: Average rate $ 20,679 $
23,629 $ 7,234 $ 26,047 Revenue days 268 255 202 488 Lightering:
Average rate $ 63,999 $ — $ 69,183 $ — Revenue days 182 — 182 —
2018 2017 Six Months Ended
June 30,
Spot Earnings
Fixed Earnings
Spot Earnings
Fixed Earnings
Jones Act Handysize Product Carriers: Average rate $ 37,109 $
62,852 $ 26,361 $ 63,421 Revenue days 619 1,515 245 1,889 Non-Jones
Act Handysize Product Carriers: Average rate $ 34,939 $ — $ 30,353
$ 13,997 Revenue days 342 — 203 159 ATBs: Average rate $ 16,508 $
23,300 $ 11,856 $ 27,802 Revenue days 530 516 382 1,012 Lightering:
Average rate $ 67,372 $ — $ 72,137 $ — Revenue days 355 — 362 —
Fleet Information
As of June 30, 2018, 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 June 30, 2018 Vessel Type
Number
Weighted by
Ownership
Number
Weighted by
Ownership
Total Vessels
Vessels
Weighted by
Ownership
Total dwt (1) Handysize Product Carriers 4 4.0
10 10.0 14 14.0 664,490 Rebuilt 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) 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 EndedJune 30,
Six Months EndedJune 30, ($ in thousands)
2018
2017 2018 2017 Time charter
equivalent revenues $ 85,965 $ 91,076 $ 174,742 $ 193,400 Add:
voyage expenses 9,402 5,149 21,654 10,941
Shipping revenues $ 95,367 $ 96,225 $ 196,396
$ 204,341
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 EndedJune 30,
Six Months EndedJune 30, ($ in thousands)
2018
2017 2018 2017 Niche Market
Activities $ 24,342 $ 27,303 $ 52,250 52,744 Jones Act Handysize
Tankers 156 2,066 2,465 10,082 ATBs 5,043 6,252 7,552
16,898 Vessel Operating Contribution 29,541 35,621
62,267 79,724 Depreciation and amortization 12,426
15,086 24,798 31,711 General and administrative 6,586 6,190
13,369 14,284 Operating income $ 10,529 $
14,345 $ 24,100 $ 33,729
(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 EndedJune 30,
Six Months EndedJune 30, ($ in thousands)
2018
2017 2018 2017 Net income $
3,055 $ 3,211 $ 6,717 $ 8,641 Income tax provision 362 1,593 1,564
5,162 Interest expense 7,497 9,445 15,573 18,802 Depreciation and
amortization 12,426 15,086 24,798 31,711
EBITDA 23,340 29,335 48,652 64,316 Severance costs — — — 16 Loss on
extinguishment of debt, net — 252 981 1,189 Reorganization items,
net — 9 — 244 Adjusted EBITDA $ 23,340
$ 29,596 $ 49,633 $ 65,765
(C) Total Cash
($ in thousands)
June 30, 2018
December 31, 2017
Cash and cash equivalents $ 130,974 165,994 Restricted cash -
current 59 58 Restricted cash – non-current 191 217 Total
Cash $ 131,224 $ 166,269
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180809005136/en/
Investor Relations & Media Contact:Overseas
Shipholding Group, Inc.Susan Allan, (813)
209-0620sallan@osg.com
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