AP NEWS
Press release content from Business Wire. The AP news staff was not involved in its creation.
PRESS RELEASE: Paid content from Business Wire
Press release content from Business Wire. The AP news staff was not involved in its creation.

Overseas Shipholding Group Reports Third Quarter 2019 Results

November 8, 2019

TAMPA, Fla.--(BUSINESS WIRE)--Nov 8, 2019--

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 third quarter 2019.

Highlights

Mr. Sam Norton, President and CEO, stated, “Attaining key commercial targets across the second half of 2019 has stood as a defining element of whether or not the business strategy we have been pursuing for the past several years would find success. In this respect, we are pleased to have been able to secure time charter contracts for a total of 10 of our vessels since the end of the second quarter, increasing our forward revenue cover for 2020 to over 75% of available vessel days. Several of these contracts are for firm periods of more than one year, adding increased duration to our charter book in addition to higher charter rates. In both these areas, we consider the progress evidenced as particularly promising for our future financial performance.”

Mr. Norton added, “Overall, third quarter results were gratifying, showing a marked improvement in operating performance over last year’s third quarter in the context of material changes to both vessels in operation and the mix of contract revenues.”

Third Quarter 2019 Results

Shipping revenues were $80.9 million for the quarter, up 0.5% compared with the third quarter of 2018. TCE revenues for the third quarter of 2019 were $76.5 million, an increase of $4.4 million, or 6.2%, compared with the third quarter of 2018. The increase primarily resulted from (a) an increase in average daily rates earned by the Company’s fleet, (b) decreased spot market exposure, (c) a 61 day decrease in scheduled drydocking, and (d) a 78 day decrease in unplanned repair days. The increase was offset by two fewer vessels in operation during the third quarter of 2019 compared to the third quarter of 2018.

______________________________________________________________________________________________________

A, B, CReconciliations of these non-GAAP financial measures are included in the financial tables attached to this press release.

Operating income for the third quarter of 2019 was $1.2 million, compared to an operating loss of $4.1 million in the third quarter of 2018.

Net loss for the third quarter 2019 was $3.8 million, or ($0.04) per diluted share, compared with net income of $11.9 million, or $0.13 per diluted share, for the third quarter 2018 at which time we recognized $21.7 million of previously deferred tax benefits upon completion of an Internal Revenue Service examination.

Adjusted EBITDA was $16.1 million for the third quarter, an increase of $5.2 million compared with the third quarter of 2018.

Conference Call

The Company will host a conference call to discuss its 2019 third quarter results at 9:00 a.m. Eastern Time (“ET”) on Friday, November 8, 2019.

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, November 8, 2019 by dialing (877) 344-7529 for domestic callers and (412) 317-0088 for international callers, and entering Access Code 10136164.

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 21 vessel fleet consists of two conventional ATBs, two lightering ATBs, three shuttle tankers, 10 conventional MR tankers, and two non-Jones Act MR tankers that participate in the U.S. Maritime Security Program, all of which are U.S. flagged, as well as two Marshall Island flagged non-Jones Act MR tankers trading in international markets. In addition, OSG has two barges under construction in the U.S. that will be Jones Act qualified vessels, with delivery anticipated during 2020. These vessels are anticipated to be paired with the Company’s existing tugs operating in the Jones Act trade.

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. 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 our prospects, supply and demand for vessels in the markets in which we operate and the impact on market rates and vessel earnings, the expected delivery schedule of our two new barges under construction and their expected participation in the Jones Act trade, the continued stability of our niche business, and the impact of our time charter contracts on our future financial performance. 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 Annual Report on Form 10-K and in similar sections of other filings we make with the SEC from time to time. We do not assume any obligation to update or revise any forward-looking statements except as 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
September 30,

 

Nine Months Ended
September 30,

 

2019

 

2018

 

2019

 

2018

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

Shipping Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Time and bareboat charter revenues

$

63,491

 

 

$

51,033

 

 

$

188,619

 

 

$

159,113

 

Voyage charter revenues

17,435

 

 

29,503

 

 

68,503

 

 

117,820

 

 

80,926

 

 

80,536

 

 

257,122

 

 

276,933

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

Voyage expenses

4,424

 

 

8,481

 

 

15,762

 

 

30,135

 

Vessel expenses

33,993

 

 

33,865

 

 

98,960

 

 

101,025

 

Charter hire expenses

22,802

 

 

23,079

 

 

67,645

 

 

68,394

 

Depreciation and amortization

13,324

 

 

12,828

 

 

38,922

 

 

37,627

 

General and administrative

5,288

 

 

6,410

 

 

16,917

 

 

19,768

 

Bad debt expense

 

 

 

 

4,300

 

 

 

Loss on disposal of vessels and other property, including

impairments, net

36

 

 

 

 

87

 

 

 

Total operating expenses

79,867

 

 

84,663

 

 

242,593

 

 

256,949

 

Income/(loss) from vessel operations

1,059

 

 

(4,127

)

 

14,529

 

 

19,984

 

Equity in income/(loss) of affiliated companies

156

 

 

 

 

224

 

 

(10

)

Operating income/(loss)

1,215

 

 

(4,127

)

 

14,753

 

 

19,974

 

Other income, net

375

 

 

518

 

 

992

 

 

271

 

Income/(loss) before interest expense and income taxes

1,590

 

 

(3,609

)

 

15,745

 

 

20,245

 

Interest expense

(6,047

)

 

(7,828

)

 

(19,124

)

 

(23,401

)

Loss before income taxes

(4,457

)

 

(11,437

)

 

(3,379

)

 

(3,156

)

Income tax benefit

694

 

 

23,385

 

 

1,075

 

 

21,821

 

Net (loss)/income

$

(3,763

)

 

$

11,948

 

 

$

(2,304

)

 

$

18,665

 

 

 

 

 

 

 

 

 

Weighted Average Number of Common Shares Outstanding:

 

 

 

 

 

 

 

Basic - Class A

89,375,668

 

 

88,535,376

 

 

89,210,136

 

 

88,337,614

 

Diluted - Class A

89,375,668

 

 

89,229,282

 

 

89,210,136

 

 

89,017,866

 

Per Share Amounts:

 

 

 

 

 

 

 

Basic and diluted net (loss)/income - Class A

$

(0.04

)

 

$

0.13

 

 

$

(0.03

)

 

$

0.21

 

Consolidated Balance Sheets

($ in thousands)

 

 

September 30,
2019

 

December 31,
2018

 

(unaudited)

 

 

ASSETS

 

 

 

Current Assets:

 

 

 

Cash and cash equivalents

$

49,484

 

 

$

80,417

 

Restricted cash

60

 

 

59

 

Voyage receivables, including unbilled of $4,532 and $10,160, net of reserve for doubtful accounts

7,172

 

 

16,096

 

Income tax receivable

476

 

 

439

 

Other receivables

2,781

 

 

3,027

 

Prepaid expenses

1,130

 

 

9,886

 

Inventories and other current assets

1,998

 

 

2,456

 

Total Current Assets

63,101

 

 

112,380

 

Vessels and other property, less accumulated depreciation

732,675

 

 

597,659

 

Deferred drydock expenditures, net

26,888

 

 

26,099

 

Total Vessels, Other Property and Deferred Drydock

759,563

 

 

623,758

 

Restricted cash - non current

114

 

 

165

 

Investments in and advances to affiliated companies

272

 

 

3,585

 

Intangible assets, less accumulated amortization

32,967

 

 

36,417

 

Operating lease right-of-use assets

257,630

 

 

 

Other assets

23,312

 

 

51,425

 

Total Assets

$

1,136,959

 

 

$

827,730

 

LIABILITIES AND EQUITY

 

 

 

Current Liabilities:

 

 

 

Accounts payable, accrued expenses and other current liabilities

$

31,933

 

 

$

34,678

 

Current portion of operating lease liabilities

89,136

 

 

 

Current portion of finance lease liabilities

4,011

 

 

 

Current installments of long-term debt

30,821

 

 

23,240

 

Total Current Liabilities

155,901

 

 

57,918

 

Reserve for uncertain tax positions

218

 

 

220

 

Noncurrent operating lease liabilities

191,046

 

 

 

Noncurrent finance lease liabilities

24,075

 

 

 

Long-term debt

344,696

 

 

322,295

 

Deferred income taxes, net

71,456

 

 

73,365

 

Other liabilities

19,982

 

 

44,464

 

Total Liabilities

807,374

 

 

498,262

 

Equity:

 

 

 

Common stock - Class A ($0.01 par value; 166,666,666 shares authorized; 85,668,793 and 84,834,790

shares issued and outstanding)

857

 

 

848

 

Paid-in additional capital

589,985

 

 

587,826

 

Accumulated deficit

(254,318

)

 

(252,014

)

 

336,524

 

 

336,660

 

Accumulated other comprehensive loss

(6,939

)

 

(7,192

)

Total Equity

329,585

 

 

329,468

 

Total Liabilities and Equity

$

1,136,959

 

 

$

827,730

 

Consolidated Statements of Cash Flows

($ in thousands)

 

 

Nine Months Ended
September 30,

 

2019

 

2018

 

(unaudited)

 

(unaudited)

Cash Flows from Operating Activities:

 

 

 

Net (loss)/income

$

(2,304

)

 

$

18,665

 

Items included in net income not affecting cash flows:

 

 

 

Depreciation and amortization

38,922

 

 

37,627

 

Bad debt expense

4,300

 

 

 

Loss on disposal of vessels and other property, including impairments, net

87

 

 

 

Amortization of debt discount and other deferred financing costs

1,477

 

 

3,117

 

Compensation relating to restricted stock awards and stock option grants

1,212

 

 

2,312

 

Deferred income tax benefit

(1,851

)

 

(22,328

)

Interest on finance lease liabilities

941

 

 

 

Non-cash operating lease expense

62,058

 

 

 

Loss on extinguishment of debt, net

72

 

 

981

 

Other - net

 

 

1,575

 

Distributed earnings of affiliated companies

3,314

 

 

3,747

 

Payments for drydocking

(11,477

)

 

(9,629

)

Operating lease right-of-use assets

5,999

 

 

 

Operating lease liabilities

(61,366

)

 

 

Changes in operating assets and liabilities, net

4,368

 

 

7,630

 

Net cash provided by operating activities

45,752

 

 

43,697

 

Cash Flows from Investing Activities:

 

 

 

Proceeds from disposals of vessels and other property

3,404

 

 

 

Expenditures for vessels and vessel improvements

(105,244

)

 

(10,116

)

Expenditures for other property

(1,399

)

 

(124

)

Net cash used in investing activities

(103,239

)

 

(10,240

)

Cash Flows from Financing Activities:

 

 

 

Payments on debt

(16,667

)

 

(28,166

)

Extinguishment of debt

(3,271

)

 

(47,000

)

Tax withholding on share-based awards

(294

)

 

(359

)

Issuance of debt

50,000

 

 

 

Deferred financing costs for issuance of debt

(1,417

)

 

 

Payments on principal portion of finance lease liabilities

(1,847

)

 

 

Net cash provided by/(used in) financing activities

26,504

 

 

(75,525

)

Net decrease in cash, cash equivalents and restricted cash

(30,983

)

 

(42,068

)

Cash, cash equivalents and restricted cash at beginning of period

80,641

 

 

166,269

 

Cash, cash equivalents and restricted cash at end of period

$

49,658

 

 

$

124,201

 

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 and nine months ended September 30, 2019 and the comparable period of 2018. Revenue days in the quarter ended September 30, 2019 totaled 1,735 compared with 1,874 in the prior year quarter. A summary fleet list by vessel class can be found later in this press release.

 

2019

 

2018

Three Months Ended September 30,

Spot

Earnings

 

Fixed

Earnings

 

Spot

Earnings

 

Fixed

Earnings

Jones Act Handysize Product Carriers:

 

 

 

 

 

 

 

Average rate

$

2,825

 

 

$

57,494

 

 

$

17,133

 

 

$

56,999

 

Revenue days

184

 

 

1,009

 

 

276

 

 

797

 

Non-Jones Act Handysize Product Carriers:

 

 

 

 

 

 

 

Average rate

$

32,809

 

 

$

12,810

 

 

$

16,541

 

 

$

 

Revenue days

92

 

 

91

 

 

184

 

 

 

ATBs:

 

 

 

 

 

 

 

Average rate

$

938

 

 

$

21,507

 

 

$

15,233

 

 

$

22,171

 

Revenue days

14

 

 

166

 

 

235

 

 

224

 

Lightering:

 

 

 

 

 

 

 

Average rate

$

56,923

 

 

$

 

 

$

65,023

 

 

$

 

Revenue days

179

 

 

 

 

158

 

 

 

 

2019

 

2018

Nine Months Ended September 30,

Spot

Earnings

 

Fixed

Earnings

 

Spot

Earnings

 

Fixed

Earnings

Jones Act Handysize Product Carriers:

 

 

 

 

 

 

 

Average rate

$

20,635

 

 

$

57,192

 

 

$

30,931

 

 

$

60,759

 

Revenue days

431

 

 

2,950

 

 

894

 

 

2,315

 

Non-Jones Act Handysize Product Carriers:

 

 

 

 

 

 

 

Average rate

$

25,213

 

 

$

12,319

 

 

$

28,506

 

 

$

 

Revenue days

303

 

 

242

 

 

526

 

 

 

ATBs:

 

 

 

 

 

 

 

Average rate

$

18,573

 

 

$

21,565

 

 

$

16,620

 

 

$

22,438

 

Revenue days

188

 

 

685

 

 

764

 

 

740

 

Lightering:

 

 

 

 

 

 

 

Average rate

$

65,984

 

 

$

 

 

$

66,648

 

 

$

 

Revenue days

529

 

 

 

 

513

 

 

 

Fleet Information

As of September 30, 2019, OSG’s operating fleet consisted of 21 vessels, 10 of which were owned, with the remaining vessels chartered-in. Vessels chartered-in are on bareboat charters.

Vessel Type

Vessels

Owned

 

Vessels

Chartered-

In

 

Total

Vessels

 

Total dwt (2)

Handysize Product Carriers (1)

6

 

 

11

 

 

17

 

 

810,825

 

Refined Product ATBs

2

 

 

 

 

2

 

 

59,490

 

Lightering ATBs

2

 

 

 

 

2

 

 

91,112

 

Total Operating Fleet

10

 

 

11

 

 

21

 

 

961,427

 

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
September 30,

 

Nine Months Ended
September 30,

 

2019

 

2018

 

2019

 

2018

Time charter equivalent revenues

$

76,502

 

 

$

72,055

 

 

$

241,360

 

 

$

246,798

 

Add: Voyage expenses

4,424

 

 

8,481

 

 

15,762

 

 

30,135

 

Shipping revenues

$

80,926

 

 

$

80,536

 

 

$

257,122

 

 

$

276,933

 

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. We believe 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
September 30,

 

Nine Months Ended
September 30,

($ in thousands)

2019

 

2018

 

2019

 

2018

Niche market activities

$

20,435

 

 

$

19,224

 

 

$

63,786

 

 

$

71,475

 

Jones Act handysize tankers

(1,590

)

 

(6,537

)

 

3,555

 

 

(4,072

)

ATBs

862

 

 

2,424

 

 

7,414

 

 

9,976

 

Vessel operating contribution

19,707

 

 

15,111

 

 

74,755

 

 

77,379

 

Depreciation and amortization

13,324

 

 

12,828

 

 

38,922

 

 

37,627

 

General and administrative

5,288

 

 

6,410

 

 

16,917

 

 

19,768

 

Bad debt expense

 

 

 

 

4,300

 

 

 

Loss on disposal of vessels and other property, including

impairments, net

36

 

 

 

 

87

 

 

 

Equity in income/(loss) of affiliated companies

156

 

 

 

 

224

 

 

(10

)

Operating income/(loss)

$

1,215

 

 

$

(4,127

)

 

$

14,753

 

 

$

19,974

 

(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 to exclude amortization classified in charter hire expenses, interest expense classified in charter hire expenses, gain/(loss) on disposal of vessels and other property, including impairments, loss on repurchases and extinguishment of debt, non-cash stock based compensation expense 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 (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. Prior periods have been adjusted to conform to current year presentation.

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

($ in thousands)

2019

 

2018

 

2019

 

2018

Net (loss)/income

$

(3,763

)

 

$

11,948

 

 

$

(2,304

)

 

$

18,665

 

Income tax benefit

(694

)

 

(23,385

)

 

(1,075

)

 

(21,821

)

Interest expense

6,047

 

 

7,828

 

 

19,124

 

 

23,401

 

Depreciation and amortization

13,324

 

 

12,828

 

 

38,922

 

 

37,627

 

EBITDA

14,914

 

 

9,219

 

 

54,667

 

 

57,872

 

Amortization classified in charter hire expenses

231

 

 

465

 

 

692

 

 

1,394

 

Interest expense classified in charter hire expenses

398

 

 

428

 

 

1,202

 

 

1,291

 

Non-cash stock based compensation expense

450

 

 

815

 

 

1,212

 

 

2,312

 

Loss on disposal of vessels and other property, including impairments,

net

36

 

 

 

 

87

 

 

 

Loss on extinguishment of debt, net

24

 

 

 

 

72

 

 

981

 

Adjusted EBITDA

$

16,053

 

 

$

10,927

 

 

$

57,932

 

 

$

63,850

 

(C) Total Cash

 

($ in thousands)

September 30,

2019

 

December 31,

2018

Cash and cash equivalents

$

49,484

 

 

$

80,417

 

Restricted cash - current

60

 

 

59

 

Restricted cash – non-current

114

 

 

165

 

Total Cash

$

49,658

 

 

$

80,641

 

 

View source version on businesswire.com:https://www.businesswire.com/news/home/20191108005067/en/

CONTACT: Investor Relations & Media Contact:

Susan Allan, Overseas Shipholding Group, Inc.

(813) 209-0620

sallan@osg.com

KEYWORD: FLORIDA UNITED STATES NORTH AMERICA

INDUSTRY KEYWORD: OIL/GAS ENERGY OTHER TRANSPORT TRUCKING MARITIME LOGISTICS/SUPPLY CHAIN MANAGEMENT AIR TRANSPORT

SOURCE: Overseas Shipholding Group, Inc.

Copyright Business Wire 2019.

PUB: 11/08/2019 07:30 AM/DISC: 11/08/2019 07:31 AM

http://www.businesswire.com/news/home/20191108005067/en