TAMPA, Fla. –
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 2018.
Highlights
-
Net income for the first quarter was $3.7 million, or $0.04 per
diluted share, compared with net income of $5.4 million, or $0.06 per
diluted share, for the first quarter 2017. -
Shipping revenues for the first quarter 2018 were $101.0 million, down
6.6% compared with the same period in 2017. Time charter equivalent
(TCE) revenues(A), a non-GAAP measure, for the first
quarter 2018 were $88.8 million, down 13.2% compared with the first
quarter 2017. Sequentially, shipping revenues and TCE revenues
increased 8.9% and 7.3%, respectively, over the fourth quarter of 2017. -
First quarter 2018 Adjusted EBITDA(B), a non-GAAP measure,
was $26.3 million, down 27.3% from $36.2 million in the first quarter
2017. Adjusted EBITDA increased 15.6% from the 2017 fourth quarter. - Total cash(C) was $111.7 million as of March 31, 2018.
-
Prepayments of $75.2 million were made during the first quarter 2018
for the Company’s OBS Term Loan.
Mr. Sam Norton, CEO, stated, “We saw marked improvement in our financial
performance during the just completed quarter compared to the fourth
quarter of 2017. Rising spot market rates, higher utilization rates, a
renewal of time charter activity, and a rebound in our niche market
businesses to historical norms all contributed to the improved results.
We now have greater confidence that we have seen the bottom of the
market for spot and time charter rates and that a sustained recovery in
our conventional Jones Act trades is now well underway.”
First Quarter 2018 Results
Shipping revenues were $101.0 million for the quarter, down 6.6%
compared with the first quarter of 2017. TCE revenues for the first
quarter of 2018 were $88.8 million, a decrease of $13.5 million, or
13.2%, compared with the first quarter of 2017. This decrease reflected
weakened market conditions, reduction of two vessels in operation in the
first quarter of 2018 when compared to the 2017 first quarter and a
growing proportion of the Company’s fleet becoming exposed to the spot
markets.
Operating income for the first quarter of 2018 was $13.6 million,
compared to operating income of $19.4 million in the first quarter of
2017.
Net income for the first quarter was $3.7 million, or $0.04 per diluted
share, compared with net income of $5.4 million, or $0.06 per diluted
share, for the first quarter 2017.
Adjusted EBITDA was $26.3 million for the first quarter, a decrease of
$9.9 million compared with the first 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. |
During the first quarter of 2018, market conditions firmed in comparison
to the fourth quarter of 2017 resulting in higher TCE day rates for our
product tankers operating in the spot market. Similar conditions
occurred in spot market rates for ATBs; however, the benefit was reduced
as utilization remains a challenge. These factors resulted in a 7.3%
increase in TCE revenues and an increase in operating income to $13.6
million from $3.9 million compared to the fourth quarter of 2017.
Adjusted EBITDA during the current quarter increased $3.6 million or
15.6% when compared to fourth quarter of 2017.
Conference Call
The Company will host a conference call to discuss its first quarter
2018 results at 9:00 a.m. Eastern Time (“ET”) on Wednesday, May 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 Wednesday, May 9, 2018 by dialing (877) 344-7529 for
domestic callers and (412) 317-0088 for international callers, and
entering Access Code 10119908.
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 |
|||||||||||
| 2018 | 2017 | ||||||||||
| Shipping Revenues: | |||||||||||
| Time and bareboat charter revenues | $ | 53,895 | $ | 79,767 | |||||||
| Voyage charter revenues | 47,135 | 28,349 | |||||||||
| 101,030 | 108,116 | ||||||||||
| Operating Expenses: | |||||||||||
| Voyage expenses | 12,252 | 5,792 | |||||||||
| Vessel expenses | 33,505 | 35,644 | |||||||||
| Charter hire expenses | 22,547 | 22,577 | |||||||||
| Depreciation and amortization | 12,372 | 16,625 | |||||||||
| General and administrative | 6,783 | 8,095 | |||||||||
| Total operating expenses | 87,459 | 88,733 | |||||||||
| Operating income | 13,571 | 19,383 | |||||||||
| Other expense | (631 | ) | (793 | ) | |||||||
| Income before interest expense, reorganization items and income taxes | 12,940 | 18,590 | |||||||||
| Interest expense | (8,076 | ) | (9,357 | ) | |||||||
| Income before reorganization items and income taxes | 4,864 | 9,233 | |||||||||
| Reorganization items, net | – | (235 | ) | ||||||||
| Income before income taxes | 4,864 | 8,998 | |||||||||
| Income tax provision | (1,202 | ) | (3,569 | ) | |||||||
| Net income | $ | 3,662 | $ | 5,429 | |||||||
| Weighted Average Number of Common Shares Outstanding: | |||||||||||
| Basic – Class A | 88,105,439 | 87,908,032 | |||||||||
| Diluted – Class A | 88,620,596 | 88,179,855 | |||||||||
| Per Share Amounts: | |||||||||||
| Basic and diluted net income – Class A | $ | 0.04 | $ | 0.06 | |||||||
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) |
|||||||||||
|
March 31, 2018 |
December 31, 2017 |
||||||||||
| (unaudited) | |||||||||||
| ASSETS | |||||||||||
| Current Assets: | |||||||||||
| Cash and cash equivalents | $ | 111,467 | $ | 165,994 | |||||||
| Restricted cash | 58 | 58 | |||||||||
| Voyage receivables, including unbilled of $6,243 and $9,919 | 24,345 | 24,209 | |||||||||
| Income tax receivable | 1,413 | 1,122 | |||||||||
| Receivable from INSW | 34 | 372 | |||||||||
| Other receivables | 1,944 | 2,184 | |||||||||
| Inventories, prepaid expenses and other current assets | 13,168 | 13,356 | |||||||||
| Total Current Assets | 152,429 | 207,295 | |||||||||
| Vessels and other property, less accumulated depreciation | 624,123 | 632,509 | |||||||||
| Deferred drydock expenditures, net | 22,966 | 23,914 | |||||||||
| Total Vessels, Other Property and Deferred Drydock | 647,089 | 656,423 | |||||||||
| Restricted cash – non current | 191 | 217 | |||||||||
| Investments in and advances to affiliated companies | 38 | 3,785 | |||||||||
| Intangible assets, less accumulated amortization | 39,867 | 41,017 | |||||||||
| Other assets | 21,348 | 23,150 | |||||||||
| Total Assets | $ | 860,962 | $ | 931,887 | |||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current Liabilities: | |||||||||||
| Accounts payable, accrued expenses and other current liabilities | $ | 34,029 | $ | 34,371 | |||||||
| Current installments of long-term debt | – | 28,160 | |||||||||
| Total Current Liabilities | 34,029 | 62,531 | |||||||||
| Reserve for uncertain tax positions | 3,224 | 3,205 | |||||||||
| Long-term debt | 375,762 | 420,776 | |||||||||
| Deferred income taxes, net | 85,104 | 83,671 | |||||||||
| Other liabilities | 45,584 | 48,466 | |||||||||
| Total Liabilities | 543,703 | 618,649 | |||||||||
| Equity: | |||||||||||
|
Common stock – Class A ($0.01 par value; 166,666,666 shares authorized; 78,733,688 and 78,277,669 shares issued and outstanding) |
787 | 783 | |||||||||
| Paid-in additional capital | 586,043 | 584,675 | |||||||||
| Accumulated deficit | (263,324 | ) | (265,758 | ) | |||||||
| 323,506 | 319,700 | ||||||||||
| Accumulated other comprehensive loss | (6,247 | ) | (6,462 | ) | |||||||
| Total Equity | 317,259 | 313,238 | |||||||||
| Total Liabilities and Equity | $ | 860,962 | $ | 931,887 | |||||||
| Consolidated Statements of Cash Flows | |||||||||||
|
($ in thousands) |
|||||||||||
|
Three Months Ended |
|||||||||||
| 2018 | 2017 | ||||||||||
| Cash Flows from Operating Activities: | |||||||||||
| Net income | $ | 3,662 | $ | 5,429 | |||||||
| Items included in net income not affecting cash flows: | |||||||||||
| Depreciation and amortization | 12,372 | 16,625 | |||||||||
| Amortization of debt discount and other deferred financing costs | 1,106 | 1,334 | |||||||||
|
Compensation relating to restricted stock awards and stock option grants |
793 | 541 | |||||||||
| Deferred income tax provision | 1,492 | 1,178 | |||||||||
| Reorganization items, non-cash | – | 214 | |||||||||
| Other – net | 645 | 616 | |||||||||
| Loss on extinguishment of debt, net | 981 | 937 | |||||||||
| Distributed earnings of affiliated companies | 3,747 | 3,657 | |||||||||
| Payments for drydocking | (2,037 | ) | (730 | ) | |||||||
| SEC, Bankruptcy and IRS claim payments | – | (5,000 | ) | ||||||||
| Changes in operating assets and liabilities | (1,789 | ) | (11,066 | ) | |||||||
| Net cash provided by operating activities | 20,972 | 13,735 | |||||||||
| Cash Flows from Financing Activities: | |||||||||||
| Payments on debt | (28,166 | ) | – | ||||||||
| Extinguishment of debt | (47,000 | ) | (15,225 | ) | |||||||
| Tax withholding on share-based awards | (359 | ) | (1,060 | ) | |||||||
| Net cash used in financing activities | (75,525 | ) | (16,285 | ) | |||||||
| Net decrease in cash, cash equivalents and restricted cash | (54,553 | ) | (2,550 | ) | |||||||
| Cash, cash equivalents and restricted cash at beginning of period | 166,269 | 206,933 | |||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 111,716 | $ | 204,383 | |||||||
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 $9,542 in net cash provided by investing
activities for the three months ended March 31, 2017, related to changes
in restricted cash amounts.
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, 2018 and the comparable period of 2017. Revenue days in
the quarter ended March 31, 2018 totaled 1,932 compared with 2,125 in
the prior year quarter. A summary fleet list by vessel class can be
found later in this press release.
| 2018 | 2017 | ||||||||||||||||
| Three Months Ended March 31, |
Spot |
Fixed |
Spot |
Fixed |
|||||||||||||
| Jones Act Handysize Product Carriers: | |||||||||||||||||
| Average rate | $ | 41,227 | $ | 64,947 | $ | 45,061 | $ | 63,136 | |||||||||
| Revenue days | 337 | 720 | 72 | 989 | |||||||||||||
| Non-Jones Act Handysize Product Carriers: | |||||||||||||||||
| Average rate | $ | 35,900 | $ | 62,542 | $ | 32,132 | $ | 15,543 | |||||||||
| Revenue days | 172 | 8 | 112 | 68 | |||||||||||||
| ATBs: | |||||||||||||||||
| Average rate | $ | 12,230 | $ | 22,979 | $ | 17,057 | $ | 29,433 | |||||||||
| Revenue days | 261 | 261 | 180 | 524 | |||||||||||||
| Lightering: | |||||||||||||||||
| Average rate | $ | 70,925 | $ | – | $ | 75,124 | $ | – | |||||||||
| Revenue days | 173 | – | 180 | – | |||||||||||||
Fleet Information
As of March 31, 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 March 31, 2018 | ||||||||||||||||||||
| Vessel Type | Number |
Weighted |
Number |
Weighted |
Total |
Vessels |
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 Ended | |||||||||||||
| ($ in thousands) |
March 31, |
March 31, 2017 |
December 31, 2017 |
||||||||||
| Time charter equivalent revenues | $ | 88,778 | $ | 102,324 | $ | 82,754 | |||||||
| Add: Voyage expenses | 12,252 | 5,792 | 10,061 | ||||||||||
| Shipping revenues | $ | 101,030 | $ | 108,116 | $ | 92,815 | |||||||
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 U.S. 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 |
|||||||||
| ($ in thousands) | 2018 | 2017 | |||||||
| Niche Market Activities | $ | 27,905 | $ | 25,467 | |||||
| Jones Act Handysize Tankers | 2,306 | 8,050 | |||||||
| ATBs | 2,507 | 10,675 | |||||||
| Vessel Operating Contribution | $ | 32,718 | $ | 44,192 | |||||
(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 | ||||||||||||||
| ($ in thousands) |
March 31, 2018 |
March 31, 2017 |
December 31, 2017 |
|||||||||||
| Net income | $ | 3,662 | $ | 5,429 | $ | 53,645 | ||||||||
| Income tax provision/(benefit) | 1,202 | 3,569 | (59,679 | ) | ||||||||||
| Interest expense | 8,076 | 9,357 | 9,125 | |||||||||||
| Depreciation and amortization | 12,372 | 16,625 | 12,573 | |||||||||||
| EBITDA | 25,312 | 34,980 | 15,664 | |||||||||||
| Severance costs | – | 16 | – | |||||||||||
| Loss on disposal of vessels and other property, including impairments | – | – | 5,847 | |||||||||||
| Loss on extinguishment of debt, net | 981 | 937 | 1,238 | |||||||||||
| Reorganization items, net | – | 235 | (8 | ) | ||||||||||
| Adjusted EBITDA | $ | 26,293 | $ | 36,168 | $ | 22,741 | ||||||||
(C) Total Cash
| ($ in thousands) |
March 31, |
December 31, |
|||||||
| Cash and cash equivalents | $ | 111,467 | $ | 165,994 | |||||
| Restricted cash – current | 58 | 58 | |||||||
| Restricted cash – non-current | 191 | 217 | |||||||
| Total Cash | $ | 111,716 | $ | 166,269 | |||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20180509005329/en/
Investor Relations & Media:
Overseas Shipholding Group,
Inc.
Susan Allan, 813-209-0620
sallan@osg.com
