Overseas Shipholding Group, Inc. (NYSE: OSG) (the “Company” or
“OSG”), a leading provider of liquid bulk transportation services
in the energy industry for crude oil and petroleum products in the
U.S. Flag markets, today reported results for the second quarter of
2023.
- Net income for the second quarter of 2023 was $12.3 million, or
$0.15 per diluted share, compared with net income of $3.7 million,
or $0.04 per diluted share, in the second quarter of 2022.
- Shipping revenues for the second quarter of 2023 were $106.6
million, a decrease of $11.4 million, or 9.6%, from the second
quarter of 2022.
- Time charter equivalent (TCE) revenues(A), a non-GAAP measure,
for the second quarter of 2023 were $100.1 million, a decrease of
$3.1 million, or 3.0%, from the second quarter of 2022.
- Second quarter 2023 Adjusted EBITDA(B), a non-GAAP measure, was
$39.5 million, an increase of $8.0 million, or 25.4%, from the
second quarter of 2022.
- In April 2023, OSG's three non-Jones Act MR tankers were
accepted into the U.S. Tanker Security Program (“TSP”).
- During the quarter, the Military Sealift Command (“MSC”)
awarded one of our vessels, the Overseas Mykonos, a time charter
contract to provide ongoing fuel transportation services to the MSC
in support of our nation’s defense. The Overseas Mykonos will be
transferred out of the TSP and delivered to the MSC in August
2023.
- Total cash and investments(C) were $120.8 million as of June
30, 2023.
- In June 2023, our Board of Directors authorized an increase of
$10.0 million to our current stock repurchase program, raising the
total value of the program to $20.0 million. We purchased 2.1
million shares for $8.0 million during the second quarter of
2023.
“Solid and satisfying best characterizes the second quarter
results that OSG announced earlier this morning,” Sam Norton, OSG's
President and CEO, said. “Contributing to the favorable second
quarter results were notably higher average TCE rates for our Jones
Act MR tankers, a reflection of the tight market conditions that
have been present for most of this year. Stable and historically
consistent returns from our specialized assets continued to
generate positive cashflow and provide sufficient liquidity to fund
our previously announced share buy-back program which, during the
quarter, saw over 2 million shares repurchased at an average price
of $3.81 per share.”
Mr. Norton continued, “Also of note during the past quarter was
MSC’s award of a long-term charter for the Overseas Mykonos. The
contract calls for the vessel to be stationed in the Pacific in
support of key Department of Defense operations and represents an
important step in meeting OSG’s ambition to expand its US flag
operations outside of coastwise trades. The Overseas Mykonos is
expected to give delivery to the MSC in mid-August and to
contribute more than $20 million in time charter equivalent
earnings during the initial contract year.”
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.
Second Quarter 2023
Results
Shipping revenues were $106.6 million for the second quarter of
2023, a decrease of $11.4 million, or 9.6%, compared to the second
quarter of 2022. TCE revenues were $100.1 million for the second
quarter of 2023, a decrease of $3.1 million, or 3.0%, from the
second quarter of 2022. The decreases primarily resulted from (a)
fewer vessels in our fleet as we redelivered three conventional
tankers leased from American Shipping Company in December 2022; (b)
a 14-day increase in drydock days; (c) one less Government of
Israel voyage during the second quarter of 2023 compared to the
second quarter of 2022; and (d) no MSC voyages during the second
quarter of 2023 compared to one full MSC voyage and one partial MSC
voyage that began during the second quarter of 2022 and overlapped
into the third quarter, both of which were longer international
voyages. The decreases were partially offset by an 82-day decrease
in layup days. We had no vessels in layup during the second quarter
of 2023. During the second quarter of 2022, we had two vessels in
layup until May 2022 when they returned to service. Additionally,
the decreases in revenues were partially offset by (a) an increase
in average daily rates earned by our fleet, (b) an increase in
Delaware Bay lightering volumes, and (c) a 10-day decrease in
repair days.
Operating income for the second quarter of 2023 was $20.3
million compared to operating income of $12.6 million for the
second quarter of 2022. Net income for the second quarter of 2023
was $12.3 million, or $0.15 per diluted share, compared with a net
income of $3.7 million, or $0.04 per diluted share, for the second
quarter of 2022. The increases in operating and net income were
primarily a result of decreases in voyage, vessel and charter hire
expenses of $17.9 million when compared to the second quarter of
2022. The decrease in voyage expenses was primarily due to
decreases in fuel and port expenses, as our vessels performed fewer
voyage charters during the second quarter of 2023 compared to the
second quarter of 2022. The decreases in vessel and charter hire
expenses were primarily due to the redelivery of three conventional
tankers leased from American Shipping Company in December 2022.
Adjusted EBITDA was $39.5 million for the 2023 second quarter,
an increase of $8.0 million compared with the second quarter of
2022, driven primarily by the increases in operating and net
income.
Conference Call
The Company will host a conference call to discuss its second
quarter 2023 results at 9:30 a.m. Eastern Time (“ET”) on Monday,
August 7, 2023.
To access the call, participants should dial (844) 850-0546 for
U.S. callers and (412) 317-5203 for international callers.
Participants have an option of calling in to listen or watching
a live audio webcast and slide presentation available at the
Investors section of the Company’s website located at
www.osg.com/investors. A replay of the webcast will also be
available on the website after the completion of the call.
About Overseas Shipholding Group, Inc.
Overseas Shipholding Group, Inc. (NYSE:OSG) is a publicly traded
company providing liquid bulk and energy transportation services
for crude oil and petroleum products in the U.S. Flag markets. OSG
is a major operator in the Jones Act industry and in the U.S.
Tanker Security Program. OSG’s U.S. Flag fleet consists of Suezmax
crude oil tankers doing business in Alaska, conventional and
lightering ATBs, shuttle and conventional MR tankers, and non-Jones
Act MR tankers.
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 press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. In addition, the Company may make or approve certain
forward-looking 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 fact should be
considered forward-looking statements. These matters or statements
may relate to our prospects, supply and demand for vessels in the
markets in which we operate and the impact on market rates and
vessel earnings, the continued stability of our niche businesses,
the impact of our time charter contracts on our future financial
performance, and external events including geopolitical conflicts
such as the Russia/Ukraine conflict. Forward-looking statements are
based on our 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 our
filings with the SEC. We do not assume any obligation to update or
revise any forward-looking statements except as may be required by
applicable law. Forward-looking statements and written and oral
forward-looking statements attributable to us or our
representatives after the date of this press release are qualified
in their entirety by the cautionary statements contained in this
paragraph and in other reports previously or hereafter filed by us
with the SEC.
Consolidated Statements of
Operations
($ in thousands, except per share
amounts)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Shipping Revenues:
Time and bareboat charter revenues
$
87,257
$
82,969
$
171,397
$
140,204
Voyage charter revenues
19,368
35,016
49,019
81,779
106,625
117,985
220,416
221,983
Operating Expenses:
Voyage expenses
6,498
14,742
15,555
24,816
Vessel expenses
40,798
44,153
83,368
84,950
Charter hire expenses
16,018
22,350
31,755
44,346
Depreciation and amortization
16,449
16,663
32,497
33,156
General and administrative
6,595
7,435
14,438
14,373
Total operating expenses
86,358
105,343
177,613
201,641
Operating income
20,267
12,642
42,803
20,342
Other income/(expense), net
1,460
(16
)
2,540
81
Income before interest expense and income
taxes
21,727
12,626
45,343
20,423
Interest expense
(8,085
)
(8,275
)
(16,241
)
(16,640
)
Income before income taxes
13,642
4,351
29,102
3,783
Income tax expense
(1,339
)
(611
)
(4,660
)
(552
)
Net income
$
12,303
$
3,740
$
24,442
$
3,231
Weighted Average Number of Common
Shares Outstanding:
Basic - Class A
81,404,635
91,254,864
81,703,990
90,984,407
Diluted - Class A
83,699,619
92,607,727
84,518,602
92,345,481
Per Share Amounts:
Basic net income - Class A
$
0.15
$
0.04
$
0.30
$
0.04
Diluted net income - Class A
$
0.15
$
0.04
$
0.29
$
0.04
Consolidated Balance Sheets
($ in thousands)
June 30, 2023
December 31, 2022
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents
$
105,950
$
78,732
Voyage receivables, including unbilled of
$2,858 and $11,364, net of reserve for credit losses
10,856
19,698
Income tax receivable
694
1,914
Other receivables
3,509
5,334
Inventories, prepaid expenses and other
current assets
4,268
2,668
Total Current Assets
125,277
108,346
Vessels and other property, less
accumulated depreciation
705,380
726,179
Deferred drydock expenditures, net
38,406
38,976
Total Vessels, Other Property and Deferred
Drydock
743,786
765,155
Intangible assets, less accumulated
amortization
15,717
18,017
Operating lease right-of-use assets,
net
184,211
206,797
Investment security to be held to
maturity
14,851
14,803
Other assets
25,274
25,945
Total Assets
$
1,109,116
$
1,139,063
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable, accrued expenses and
other current liabilities
$
49,155
$
54,906
Current portion of operating lease
liabilities
63,639
63,288
Current portion of finance lease
liabilities
4,012
4,000
Current installments of long-term debt
24,918
23,733
Total Current Liabilities
141,724
145,927
Reserve for uncertain tax positions
210
175
Noncurrent operating lease liabilities
126,251
149,960
Noncurrent finance lease liabilities
15,100
16,456
Long-term debt
387,302
399,630
Deferred income taxes, net
74,803
70,233
Other liabilities
9,336
16,997
Total Liabilities
754,726
799,378
Equity:
Common stock - Class A ($0.01 par value;
166,666,666 shares authorized; 89,496,512 and 88,297,439 shares
issued; 76,903,374 and 78,297,439 shares outstanding)
895
883
Paid-in additional capital
597,937
597,455
Accumulated deficit
(208,581
)
(233,023
)
Treasury stock, 12,593,138 and 10,000,000
shares, at cost
(38,887
)
(29,040
)
351,364
336,275
Accumulated other comprehensive income
3,026
3,410
Total Equity
354,390
339,685
Total Liabilities and Equity
$
1,109,116
$
1,139,063
Consolidated Statements of Cash
Flows
($ in thousands)
Six Months Ended June
30,
2023
2022
(unaudited)
(unaudited)
Cash Flows from Operating Activities:
Net income
$
24,442
$
3,231
Items included in net income not affecting
cash flows:
Depreciation and amortization
32,497
33,156
Amortization of debt discount and other
deferred financing costs
567
554
Compensation relating to restricted stock
awards and stock option grants
1,662
2,391
Deferred income tax expense
4,606
519
Interest on finance lease liabilities
731
826
Non-cash operating lease expense
31,932
44,874
Payments for drydocking
(5,319
)
(7,386
)
Operating lease liabilities
(32,786
)
(45,935
)
Changes in operating assets and
liabilities, net
(4,922
)
(15,061
)
Net cash provided by operating
activities
53,410
17,169
Cash Flows from Investing Activities:
Expenditures for vessels and vessel
improvements
(1,404
)
(2,046
)
Net cash used in investing activities
(1,404
)
(2,046
)
Cash Flows from Financing Activities:
Payments on debt
(11,670
)
(10,930
)
Tax withholding on share-based awards
(1,168
)
(371
)
Payments on principal portion of finance
lease liabilities
(2,063
)
(2,063
)
Deferred financing costs paid for debt
amendments
(40
)
(261
)
Purchases of treasury stock
(9,847
)
(310
)
Net cash used in financing activities
(24,788
)
(13,935
)
Net increase in cash and cash
equivalents
27,218
1,188
Cash and cash equivalents at beginning of
period
78,732
83,253
Cash and cash equivalents at end of
period
$
105,950
$
84,441
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 and six months ended June 30, 2023 and the comparable periods
of 2022. Revenue days in the quarter ended June 30, 2023 totaled
1,740 compared with 1,903 in the prior year quarter. A summary
fleet list by vessel class can be found later in this press
release. Prior period amounts have been updated to conform to
current period presentation.
2023
2022
Three months ended June 30,
Spot Earnings
Fixed Earnings
Spot Earnings
Fixed Earnings
Jones Act Handysize Product Carriers:
Average rate
$
—
$
65,447
$
40,189
$
61,324
Revenue days
—
908
126
935
Non-Jones Act Handysize Product
Carriers:
Average rate
$
26,562
$
—
$
42,264
$
32,286
Revenue days
243
—
182
91
ATBs:
Average rate
$
—
$
43,758
$
40,462
$
35,004
Revenue days
—
225
47
181
Lightering:
Average rate
$
82,164
$
—
$
62,411
$
—
Revenue days
91
—
91
—
Alaska (a):
Average rate
$
—
$
59,977
$
—
$
60,010
Revenue days
—
273
—
266
2023
2022
Six months ended June 30,
Spot Earnings
Fixed Earnings
Spot Earnings
Fixed Earnings
Jones Act Handysize Product Carriers:
Average rate
$
58,845
$
64,874
$
54,218
$
59,864
Revenue days
40
1,755
537
1,480
Non-Jones Act Handysize Product
Carriers:
Average rate
$
33,836
$
39,677
$
43,164
$
24,909
Revenue days
488
14
362
181
ATBs:
Average rate
$
—
$
43,086
$
40,123
$
34,913
Revenue days
—
490
47
359
Lightering:
Average rate
$
93,276
$
—
$
68,449
$
—
Revenue days
181
—
181
—
Alaska (a):
Average rate
$
—
$
60,046
$
—
$
59,500
Revenue days
—
543
—
535
(a) Excludes one Alaska vessel currently
in layup.
OSG has realigned some of our vessels in the analytical tables
to reflect their current employment. The tables affected in the
press release are the TCE Spot and Fixed Rate table and the Vessel
Operating Contribution table. Prior year information has been
revised to conform with the current presentation.
Fleet Information
As of June 30, 2023, OSG’s operating fleet consisted of 21
vessels, 12 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, 2023
Vessel Type
Number
Number
Total Vessels
Total dwt (3)
Handysize Product Carriers (1)
5
8
13
619,854
Crude Oil Tankers (2)
3
1
4
772,194
Refined Product ATBs
3
—
3
99,738
Lightering ATBs
1
—
1
45,556
Total Operating Fleet
12
9
21
1,537,342
(1)
Includes two owned shuttle tankers, eight
chartered-in tankers, and three non-Jones Act MR tankers, two of
which participated in the U.S. Maritime Security Program (“MSP”)
during the first quarter of 2023. In April 2023, the three
non-Jones Act MR tankers were all accepted into the TSP. The two
non-Jones Act U.S. Flag Product Carriers that participated in the
MSP were transferred into the TSP and no longer participate in the
MSP.
(2)
Includes three crude oil tankers doing
business in Alaska and one crude oil tanker bareboat chartered-in
and in layup.
(3)
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
provide 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
follows:
($ in thousands)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Time charter equivalent revenues
$
100,127
$
103,243
$
204,861
$
197,167
Add: Voyage expenses
6,498
14,742
15,555
24,816
Shipping revenues
$
106,625
$
117,985
$
220,416
$
221,983
Vessel Operating Contribution
Vessel operating contribution, a non-GAAP measure, is TCE
revenues minus vessel expenses and charter hire expenses. The
Company changed the presentation of the table below to reflect the
current business operations of the Company's vessels. Accordingly,
prior period amounts have been updated to conform to current period
presentation.
Three Months Ended June
30,
Six Months Ended June
30,
($ in thousands)
2023
2022
2023
2022
Specialized businesses
$
26,770
$
28,590
$
56,331
$
57,647
Jones Act handysize tankers
10,725
3,608
20,159
2,120
Jones Act ATBs
5,816
4,542
13,248
8,104
Vessel operating contribution
43,311
36,740
89,738
67,871
Depreciation and amortization
16,449
16,663
32,497
33,156
General and administrative
6,595
7,435
14,438
14,373
Operating income
$
20,267
$
12,642
$
42,803
$
20,342
(B) EBITDA and Adjusted EBITDA
EBITDA represents net income/(loss) 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, loss/(gain) on disposal of vessels and other
property, including impairments, net, non-cash stock based
compensation expense and loss on repurchases and extinguishment of
debt 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 income/(loss) 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 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 measures used
by other companies due to differences in methods of calculation.
The following table reconciles net income/(loss) as reflected in
the consolidated statements of operations, to EBITDA and Adjusted
EBITDA.
Three Months Ended June
30,
Six Months Ended June
30,
($ in thousands)
2023
2022
2023
2022
Net income
$
12,303
$
3,740
$
24,442
$
3,231
Income tax expense
1,339
611
4,660
552
Interest expense, net
8,085
8,275
16,241
16,640
Depreciation and amortization
16,449
16,663
32,497
33,156
EBITDA
38,176
29,289
77,840
53,579
Amortization classified in charter hire
and vessel expenses
273
143
546
285
Interest expense classified in charter
hire expenses
156
312
322
627
Non-cash stock based compensation
expense
862
1,735
1,662
2,391
Adjusted EBITDA
$
39,467
$
31,479
$
80,370
$
56,882
(C) Total Cash and Investments
($ in thousands)
June 30, 2023
December 31, 2022
Cash and cash equivalents
$
105,912
$
78,680
Restricted cash
38
52
Investment security to be held to
maturity
14,851
14,803
Total cash and investments
$
120,801
$
93,535
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230807401746/en/
Investor Relations & Media Contact: Susan Allan,
Overseas Shipholding Group, Inc. (813) 209-0620 sallan@osg.com
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