Press Release

Overseas Shipholding Group Reports First Quarter 2020 Results

Company Release - 5/8/2020 9:00 AM ET

TAMPA, Fla.--(BUSINESS WIRE)-- 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 of 2020.

Highlights

  • Net income for the first quarter 2020 was $25.1 million, or $0.28 per diluted share, compared with net income of $3.2 million, or $0.04 per diluted share, for the first quarter 2019. The increase was driven primarily by the gain on termination of a pre-existing arrangement related to the acquisition of ATC recorded during the first quarter of 2020 and an increase in revenues.
  • Shipping revenues for the first quarter 2020 were $100.9 million, up 15.0% compared with the first quarter 2019.
  • Time charter equivalent (TCE) revenues(A), a non-GAAP measure, for the first quarter 2020 were $97.1 million, up 17.3% compared with the first quarter 2019.
  • First quarter 2020 Adjusted EBITDA(B), a non-GAAP measure, was $52.8 million, up 123.7% from $23.6 million in the first quarter 2019.
  • Total cash(C) was $101.5 million as of March 31, 2020.
  • On March 12, 2020, subsidiaries of the Company completed the purchase of three U.S.-flagged crude oil carrier vessels, the Alaskan Explorer, Alaskan Legendand Alaskan Navigator, and have entered into a bareboat charter with BP for a fourth vessel, the Alaskan Frontier, currentlyin layup. In connection with these transactions, OSG also completed the acquisition of Alaska Tanker Company LLC (ATC), making ATC a wholly owned subsidiary of OSG.
  • On March 26, 2020, one of the Company's subsidiaries, OSG 204 LLC, closed on a $33.2 million 5-year term loan with Wintrust Commercial Finance and other syndicate lenders to finance a new 204,000 barrel U.S. Flag oil and chemical ATB barge, which is scheduled to be delivered in May 2020.

Sam Norton, President and CEO, stated, “We are pleased that the results we have announced today give credence to the narrative of emerging strength in our businesses that we have been speaking of in recent quarters. The deep book of time charters which we entered into at the end of last year has provided considerable insulation from exposure to the current market turmoil that has followed the outbreak of COVID-19, as well as from the extraordinary drop in transportation fuel demand affecting both crude oil and refined product pricing.”

Mr. Norton added, “Our tankers, niche businesses and remaining ATB’s operated at close to 100% utilization rates throughout the first quarter, producing solid results. With the ATC vessels also beginning to contribute, and recent financings having significantly strengthened our liquidity, OSG is now well positioned to confront the heightened uncertainty occasioned by the impact of COVID-19 on both our operations as well as on the markets that we serve.”

 

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.

First Quarter 2020 Results

Shipping revenues were $100.9 million for the quarter, up 15.0% compared with the first quarter of 2019. TCE revenues for the first quarter of 2020 were $97.1 million, an increase of $14.3 million, or 17.3%, compared with the first quarter of 2019. The increase in shipping and TCE revenues primarily resulted from (a) the addition of one MR tanker, Overseas Key West, two Marshall Islands flagged MR tankers, Overseas Gulf Coast and Overseas Sun Coast, and three crude oil tankers, which were acquired on March 12, 2020, Alaskan Explorer, Alaskan Legendand Alaskan Navigator, to our fleet (b) an increase in average daily rates earned by our fleet and (c) decreased spot market exposure. The increase was offset by two fewer ATBs in our fleet during the first quarter of 2020 compared to the first quarter of 2019.

Operating income for the first quarter of 2020 was $37.5 million compared to operating income of $9.7 million in the first quarter of 2019. The increase was driven primarily by the gain on termination of a pre-existing arrangement related to the acquisition of ATC recorded during the first quarter of 2020 and an increase in revenues.

Net income for the first quarter 2020 was $25.1 million, or $0.28 per diluted share, compared with net income of $3.2 million, or $0.04 per diluted share, for the first quarter 2019.

Adjusted EBITDA was $52.8 million for the quarter, an increase of $29.2 million compared with the first quarter of 2019.

Conference Call

The Company will host a conference call to discuss its first quarter 2020 results at 9:30 a.m. Eastern Time (“ET”) on Friday, May 8, 2020.

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 11:30 a.m. ET on Friday, May 8, 2020 through 10:59 p.m. ET on Friday, May 15, 2020 by dialing (877) 344-7529 for domestic callers and (412) 317-0088 for international callers, and entering Access Code 10142573.

About Overseas Shipholding Group, Inc.

Overseas Shipholding Group, Inc. (NYSE: OSG) is a publicly traded 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 22 vessel U.S. Flag fleet consists of three crude oil tankers doing business in Alaska, two conventional ATBs, two lightering ATBs, three shuttle tankers, ten MR tankers, and two non-Jones Act MR tankers that participate in the U.S. Maritime Security Program. OSG also owns and operates two Marshall Islands flagged MR tankers which trade internationally. In addition to the currently operating fleet, OSG has on order two Jones Act compliant barges which are scheduled for delivery in 2020.

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 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 businesses, 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. COVID-19 has had, and will have in the future, a profound impact on our workforce, and many aspects of our business and industry. Investors should carefully consider the risk factors outlined in more detail in our Annual Report on Form 10-K, in our upcoming Form 10-Q filing, 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 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
March 31,

 

2020

 

2019

 

(unaudited)

 

(unaudited)

Shipping Revenues:

 

 

 

 

 

 

 

Time and bareboat charter revenues

$

78,150

 

 

$

63,120

 

Voyage charter revenues

22,709

 

 

24,617

 

 

100,859

 

 

87,737

 

 

 

 

 

Operating Expenses:

 

 

 

Voyage expenses

3,786

 

 

4,984

 

Vessel expenses

35,769

 

 

32,446

 

Charter hire expenses

22,460

 

 

22,298

 

Depreciation and amortization

14,019

 

 

12,478

 

General and administrative

6,173

 

 

5,674

 

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

296

 

 

117

 

Total operating expenses

82,503

 

 

77,997

 

Income from vessel operations

18,356

 

 

9,740

 

Gain on termination of pre-existing arrangement

19,172

 

 

 

Operating income

37,528

 

 

9,740

 

Other income, net

31

 

 

355

 

Income before interest expense and income taxes

37,559

 

 

10,095

 

Interest expense

(6,074

)

 

(6,506

)

Income before income taxes

31,485

 

 

3,589

 

Income tax expense

(6,360

)

 

(392

)

Net income

$

25,125

 

 

$

3,197

 

 

 

 

 

Weighted Average Number of Common Shares Outstanding:

 

 

 

Basic - Class A

89,422,311

 

 

89,004,947

 

Diluted - Class A

90,388,988

 

 

89,421,143

 

Per Share Amounts:

 

 

 

Basic and diluted net income - Class A

$

0.28

 

 

$

0.04

 

 

Consolidated Balance Sheets

($ in thousands)

 

 

March 31,
2020

 

December 31,
2019

 

(unaudited)

 

 

ASSETS

 

 

 

Current Assets:

 

 

 

Cash and cash equivalents

$

81,359

 

 

$

41,503

 

Restricted cash

20,060

 

 

60

 

Voyage receivables, including unbilled of $6,586 and $5,611, net of reserve for doubtful accounts

7,907

 

 

9,247

 

Income tax receivable

5,776

 

 

1,192

 

Other receivables

6,108

 

 

3,037

 

Inventories, prepaid expenses and other current assets

3,473

 

 

2,470

 

Total Current Assets

124,683

 

 

57,509

 

Vessels and other property, less accumulated depreciation

823,030

 

 

737,212

 

Deferred drydock expenditures, net

23,882

 

 

23,734

 

Total Vessels, Other Property and Deferred Drydock

846,912

 

 

760,946

 

Restricted cash - non current

88

 

 

114

 

Investments in and advances to affiliated companies

 

 

3,599

 

Intangible assets, less accumulated amortization

30,667

 

 

31,817

 

Operating lease right-of-use assets

270,388

 

 

286,469

 

Other assets

18,017

 

 

35,013

 

Total Assets

$

1,290,755

 

 

$

1,175,467

 

LIABILITIES AND EQUITY

 

 

 

Current Liabilities:

 

 

 

Accounts payable, accrued expenses and other current liabilities

$

45,308

 

 

$

35,876

 

Current portion of operating lease liabilities

90,410

 

 

90,145

 

Current portion of finance lease liabilities

4,001

 

 

4,011

 

Current installments of long-term debt

55,745

 

 

31,512

 

Total Current Liabilities

195,464

 

 

161,544

 

Reserve for uncertain tax positions

878

 

 

864

 

Noncurrent operating lease liabilities

203,000

 

 

219,501

 

Noncurrent finance lease liabilities

23,027

 

 

23,548

 

Long-term debt

385,856

 

 

336,535

 

Deferred income taxes, net

79,066

 

 

72,833

 

Other liabilities

36,497

 

 

19,097

 

Total Liabilities

923,788

 

 

833,922

 

Equity:

 

 

 

Common stock - Class A ($0.01 par value; 166,666,666 shares authorized; 85,845,920 and 85,713,610 shares issued and outstanding)

858

 

 

857

 

Paid-in additional capital

590,674

 

 

590,436

 

Accumulated deficit

(218,214

)

 

(243,339

)

 

373,318

 

 

347,954

 

Accumulated other comprehensive loss

(6,351

)

 

(6,409

)

Total Equity

366,967

 

 

341,545

 

Total Liabilities and Equity

$

1,290,755

 

 

$

1,175,467

 

 

Consolidated Statements of Cash Flows

($ in thousands)

 

 

Three Months Ended
March 31,

 

2020

 

2019

 

(unaudited)

 

(unaudited)

Cash Flows from Operating Activities:

 

 

 

Net income

$

25,125

 

 

$

3,197

 

Items included in net income not affecting cash flows:

 

 

 

Depreciation and amortization

14,019

 

 

12,478

 

Gain on termination of pre-existing arrangement 

(19,172

)

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

296

 

 

117

 

Amortization of debt discount and other deferred financing costs

533

 

 

510

 

Compensation relating to restricted stock awards and stock option grants

438

 

 

309

 

Deferred income tax benefit

2,135

 

 

111

 

Interest on finance lease liabilities

506

 

 

 

Non-cash operating lease expense

22,811

 

 

22,176

 

Other - net

 

 

231

 

Distributed earnings of affiliated companies

3,562

 

 

3,548

 

Payments for drydocking

(3,327

)

 

(1,342

)

Operating lease liabilities

(22,969

)

 

(22,407

)

Changes in operating assets and liabilities, net

2,162

 

 

(7,809

)

Net cash provided by operating activities

26,119

 

 

11,119

 

Cash Flows from Investing Activities:

 

 

 

Acquisition, net of cash acquired

(16,973

)

 

 

Expenditures for vessels and vessel improvements

(20,871

)

 

(10,910

)

Expenditures for other property

(232

)

 

(588

)

Net cash used in investing activities

(38,076

)

 

(11,498

)

Cash Flows from Financing Activities:

 

 

 

Payments on debt

(7,865

)

 

(4,167

)

Tax withholding on share-based awards

(197

)

 

(294

)

Issuance of debt, net of issuance and deferred financing costs

80,886

 

 

 

Payments on principal portion of finance lease liabilities

(1,037

)

 

 

Net cash provided by/(used in) financing activities

71,787

 

 

(4,461

)

Net increase/(decrease) in cash, cash equivalents and restricted cash

59,830

 

 

(4,840

)

Cash, cash equivalents and restricted cash at beginning of period

41,677

 

 

80,641

 

Cash, cash equivalents and restricted cash at end of period

$

101,507

 

 

$

75,801

 

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 months ended March 31, 2020 and the comparable period of 2019. Revenue days in the quarter ended March 31, 2020 totaled 1,898 compared with 1,784 in the prior year quarter. A summary fleet list by vessel class can be found later in this press release.

 

 

2020

 

2019

Three Months Ended March 31,

Spot
Earnings

 

Fixed
Earnings

 

Spot
Earnings

 

Fixed
Earnings

Jones Act Handysize Product Carriers:

 

 

 

 

 

 

 

Average rate

$

61,951

 

 

$

60,260

 

 

$

27,940

 

 

$

56,863

 

Revenue days

92

 

 

1,052

 

 

90

 

 

982

 

Non-Jones Act Handysize Product Carriers:

 

 

 

 

 

 

 

Average rate

$

27,727

 

 

$

16,788

 

 

$

25,898

 

 

$

12,097

 

Revenue days

154

 

 

182

 

 

113

 

 

67

 

ATBs:

 

 

 

 

 

 

 

Average rate

$

28,332

 

 

$

24,015

 

 

$

20,992

 

 

$

21,557

 

Revenue days

93

 

 

89

 

 

86

 

 

266

 

Lightering:

 

 

 

 

 

 

 

Average rate

$

78,258

 

 

$

61,012

 

 

$

72,905

 

 

$

 

Revenue days

91

 

 

87

 

 

180

 

 

 

Alaska (a):

 

 

 

 

 

 

 

Average rate

$

 

 

$

59,015

 

 

$

 

 

$

 

Revenue days

 

 

58

 

 

 

 

 

(a) Excludes one Alaska vessel currently in layup.

Fleet Information

As of March 31, 2020, OSG’s operating fleet consisted of 25 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, 2020

Vessel Type

Number

 

Number

 

Total Vessels

 

Total dwt (3)

Handysize Product Carriers (1)

6

 

11

 

17

 

810,825

Crude Oil Tankers (2)

3

 

1

 

4

 

772,194

Refined Product ATBs

2

 

 

2

 

59,490

Lightering ATBs

2

 

 

2

 

91,112

Total Operating Fleet

13

 

12

 

25

 

1,733,621

  1. Includes two owned shuttle tankers, 11 chartered-in tankers, 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 owned Marshall Island flagged non-Jones Act MR tankers trading in international markets.
  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:

 

 

Three Months Ended
March 31,

 

2020

 

2019

Time charter equivalent revenues

$

97,073

 

 

$

82,753

 

Add: Voyage expenses

3,786

 

 

4,984

 

Shipping revenues

$

100,859

 

 

$

87,737

 

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 include 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 Ended
March 31,

($ in thousands)

2020

 

2019

Niche Market Activities

$

21,706

 

 

$

22,602

 

Jones Act Handysize Tankers

12,384

 

 

2,439

 

ATBs

2,805

 

 

2,968

 

Alaska Crude Oil Tankers

1,949

 

 

 

Vessel Operating Contribution

38,844

 

 

28,009

 

Depreciation and amortization

14,019

 

 

12,478

 

General and administrative

6,173

 

 

5,674

 

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

296

 

 

117

 

Income from vessel operations

$

18,356

 

 

$

9,740

 

(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 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) as reflected in the consolidated statements of operations, to EBITDA and Adjusted EBITDA.

 

 

Three Months Ended
March 31,

($ in thousands)

2020

 

2019

Net income

$

25,125

 

 

$

3,197

 

Income tax expense

6,360

 

 

392

 

Interest expense

6,074

 

 

6,506

 

Depreciation and amortization

14,019

 

 

12,478

 

EBITDA

51,578

 

 

22,573

 

Amortization classified in charter hire expenses

143

 

 

231

 

Interest expense classified in charter hire expenses

379

 

 

404

 

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

296

 

 

117

 

Non-cash stock based compensation expense

438

 

 

309

 

Adjusted EBITDA

$

52,834

 

 

$

23,634

 

(C) Total Cash

 

($ in thousands)

March 31,
2020

 

December 31,
2019

Cash and cash equivalents

$

81,359

 

 

$

41,503

 

Restricted cash - current

20,060

 

 

60

 

Restricted cash – non-current

88

 

 

114

 

Total Cash

$

101,507

 

 

$

41,677

 

 

Susan Allan, Overseas Shipholding Group, Inc.
(813) 209-0620
sallan@osg.com

Source: Overseas Shipholding Group, Inc.