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Overseas Shipholding Group Reports First Quarter 2022 Results

Overseas Shipholding Group, Inc. (NYSE: OSG) (the “Company” or “OSG”), a leading provider of energy transportation services for crude oil and petroleum products in the U.S. Flag markets, today reported results for the first quarter 2022.

  • Shipping revenues for the first quarter 2022 were $104.0 million, an increase of $8.5 million from the fourth quarter 2021. Compared to the first quarter 2021, shipping revenues increased 28.0% from $81.3 million.
  • Net loss for the first quarter 2022 was $509 thousand, or $(0.01) per diluted share, compared with net loss of $3.7 million, or ($0.03) per diluted share, in the fourth quarter 2021. Net loss was $15.9 million, or $(0.18) per diluted share, for the first quarter 2021.
  • Time charter equivalent (TCE) revenues(A), a non-GAAP measure, for the first quarter 2022 were $93.9 million, an increase of $13.9 million from fourth quarter 2021. TCE revenues were up 43.4% compared to first quarter 2021.
  • First quarter 2022 Adjusted EBITDA(B), a non-GAAP measure, was $25.4 million, an increase of $8.8 million from the fourth quarter 2021. Adjusted EBITDA increased 309.2% from $6.2 million in the first quarter 2021.
  • Total cash(C) was $76.9 million as of March 31, 2022.
  • During the quarter, we returned two vessels to service from layup. We expect the two remaining vessels in layup to return to service during the second quarter of 2022.

Sam Norton, President and CEO, offered the following comments on the quarterly results announced today: “Operating activities during the quarter generated positive free cash flow after debt service and capital expenditures, with the quarter-to-quarter change in cash balances attributable to changes in working capital. For the fourth consecutive quarter, OSG has achieved better sequential TCE and EBITDA performance, evidence of continuing progress made towards restoring our business to a normalized and financially sustainable state. These results give us renewed confidence that the condition of our balance sheet and the opportunities inherent in an improving market environment will allow us to realize the latent potential of our long-term business strategy.”

Mr. Norton added, “Our last two vessels in layup are slated to return to service before the end of June giving us a full fleet of vessels in service for the first time in nearly two years. We continue to anticipate further improvement in all important financial metrics and a gradual build in available cash balances over the next several quarters as higher utilization at stronger time charter rates is realized by substantially all of our vessels in operation.”

 

 

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 2022 Results

Shipping revenues were $104.0 million for the first quarter of 2022, an increase of $8.5 million, or 8.9%, from the fourth quarter of 2021. TCE revenues increased $13.9 million, or 17.4%, from the fourth quarter to $93.9 million in the first quarter. The increases were primarily a result of (a) a 175-day decrease in layup days, as two vessels came out of layup in January 2022 and February 2022, respectively, (b) a 30-day decrease in scheduled drydocking and (c) five Military Sealift Command voyages, which were longer international voyages, during the first quarter of 2022 compared to one such voyage during the fourth quarter of 2021.

First quarter 2022 operating income was $7.7 million compared to the fourth quarter 2021 operating loss of $1.9 million.

Quarterly adjusted EBITDA increased to $25.4 million during the first quarter of 2022, an $8.8 million increase from the fourth quarter of 2021. The increase was driven by the increased revenues for the quarter.

In comparison to the first quarter of 2021, shipping revenues were up 28.0%. TCE revenues for the first quarter of 2022 were $93.9 million, an increase of $28.4 million, or 43.4%, compared with the first quarter of 2021. The increase primarily resulted from a 369-day decrease in layup days, as we had fewer vessels in layup during the first quarter of 2022 compared to the first quarter of 2021. During the first quarter of 2022, we had two vessels in layup for the full quarter and two additional vessels that came out of layup in January 2022 and late February 2022. During the first quarter of 2021, we had seven vessels in layup. Additionally, the increase in revenues resulted from five Military Sealift Command voyages, which were longer international voyages, during the first quarter of 2022 compared to no such voyages during the same period in 2021 and an increase in Delaware Bay lightering volumes. The increase was partially offset by one less MR tanker in our fleet, Overseas Gulf Coast, which was sold during the second quarter of 2021. We continued to see an increase in demand during the first quarter of 2022 and as a result, we expect our two remaining vessels in layup to return to service during the second quarter of 2022.

Operating income for the first quarter of 2022 was $7.7 million compared to operating loss of $15.8 million for the first quarter of 2021. Net loss for the first quarter of 2022 was $509 thousand, or $(0.01) per diluted share, compared with net loss of $15.9 million, or $(0.18) per diluted share, for the first quarter 2021.

Adjusted EBITDA was $25.4 million for the 2022 first quarter, an increase of $19.2 million compared with the first quarter of 2021, driven primarily by the increase in TCE revenues.

Conference Call

The Company will host a conference call to discuss its first quarter 2022 results at 9:30 a.m. Eastern Time (“ET”) on Monday, May 9, 2022.

To access the call, participants should dial (844) 200-6205 for U.S. and Canada callers and (929) 526-1599 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 for one week starting at 11:30 a.m. ET on Monday, May 9, 2022 by dialing (866) 813-9403 for U.S. and Canada callers and (929) 458-6194 for international callers, and entering Access Code 892890.

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 currently owns and operates one Marshall Islands flagged MR tanker which trades internationally.

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 continued stability of our niche businesses, the impact of our time charter contracts on our future financial performance, and such external events such as geopolitical conflicts such as the Russian/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. COVID-19 has had, and will continue to have, a profound impact on our workforce and many other aspects of our business and industry. 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

March 31,

 

2022

 

2021

 

(unaudited)

 

(unaudited)

Shipping Revenues:

 

 

 

 

 

Time and bareboat charter revenues

$

57,236

 

$

63,788

 

Voyage charter revenues

 

46,763

 

 

17,485

 

 

 

103,999

 

 

81,273

 

 

 

 

Operating Expenses:

 

 

Voyage expenses

 

10,074

 

 

15,760

 

Vessel expenses

 

40,798

 

 

31,807

 

Charter hire expenses

 

21,996

 

 

22,318

 

Depreciation and amortization

 

16,493

 

 

15,319

 

General and administrative

 

6,938

 

 

6,365

 

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

 

 

 

5,493

 

Total operating expenses

 

96,299

 

 

97,062

 

Operating income/(loss)

 

7,700

 

 

(15,789

)

Other income, net

 

97

 

 

122

 

Income/(loss) before interest expense and income taxes

 

7,797

 

 

(15,667

)

Interest expense

 

(8,365

)

 

(6,370

)

Loss before income taxes

 

(568

)

 

(22,037

)

Income tax benefit

 

59

 

 

6,169

 

Net loss

$

(509

)

$

(15,868

)

 

 

 

Weighted Average Number of Common Shares Outstanding:

 

 

Basic - Class A

 

90,856,688

 

 

90,111,701

 

Diluted - Class A

 

90,856,688

 

 

90,111,701

 

Per Share Amounts:

 

 

Basic and diluted net loss - Class A

$

(0.01

)

$

(0.18

)

Consolidated Balance Sheets

($ in thousands)

 

 

 

March 31, 2022

 

December 31, 2021

 

 

(unaudited)

 

 

ASSETS

 

 

 

 

Current Assets:

 

 

 

 

Cash and cash equivalents

 

$

76,903

 

 

$

83,253

 

Voyage receivables, including unbilled of $4,905 and $3,777, net of reserve for doubtful accounts

 

 

12,467

 

 

 

14,586

 

Income tax receivable

 

 

1,883

 

 

 

1,882

 

Other receivables

 

 

10,779

 

 

 

5,816

 

Inventories, prepaid expenses and other current assets

 

 

6,799

 

 

 

3,438

 

Total Current Assets

 

 

108,831

 

 

 

108,975

 

Vessels and other property, less accumulated depreciation

 

 

752,734

 

 

 

761,777

 

Deferred drydock expenditures, net

 

 

42,381

 

 

 

43,342

 

Total Vessels, Other Property and Deferred Drydock

 

 

795,115

 

 

 

805,119

 

Intangible assets, less accumulated amortization

 

 

21,467

 

 

 

22,617

 

Operating lease right-of-use assets, net

 

 

132,258

 

 

 

152,027

 

Other assets

 

 

26,864

 

 

 

26,991

 

Total Assets

 

$

1,084,535

 

 

$

1,115,729

 

LIABILITIES AND EQUITY

 

 

 

 

Current Liabilities:

 

 

 

 

Accounts payable, accrued expenses and other current liabilities

 

$

45,995

 

 

$

49,901

 

Current installments of long-term debt

 

 

22,592

 

 

 

22,225

 

Current portion of operating lease liabilities

 

 

93,552

 

 

 

100,010

 

Current portion of finance lease liabilities

 

 

4,001

 

 

 

4,000

 

Total Current Liabilities

 

 

166,140

 

 

 

176,136

 

Reserve for uncertain tax positions

 

 

181

 

 

 

179

 

Noncurrent operating lease liabilities

 

 

59,153

 

 

 

73,150

 

Noncurrent finance lease liabilities

 

 

18,388

 

 

 

18,998

 

Long-term debt

 

 

416,740

 

 

 

422,515

 

Deferred income taxes, net

 

 

63,656

 

 

 

63,744

 

Other liabilities

 

 

22,066

 

 

 

22,393

 

Total Liabilities

 

 

746,324

 

 

 

777,115

 

Equity:

 

 

 

 

Common stock - Class A ($0.01 par value; 166,666,666 shares authorized; 87,698,624 and 87,170,463 shares issued and outstanding)

 

 

877

 

 

 

872

 

Paid-in additional capital

 

 

594,667

 

 

 

594,386

 

Accumulated deficit

 

 

(260,096

)

 

 

(259,587

)

 

 

 

335,448

 

 

 

335,671

 

Accumulated other comprehensive loss

 

 

2,763

 

 

 

2,943

 

Total Equity

 

 

338,211

 

 

 

338,614

 

Total Liabilities and Equity

 

$

1,084,535

 

 

$

1,115,729

 

Consolidated Statements of Cash Flows

($ in thousands)

 

 

 

Three Months Ended

March 31,

 

 

2022

 

2021

 

 

(unaudited)

 

(unaudited)

Cash Flows from Operating Activities:

 

 

 

 

Net loss

 

$

(509

)

 

$

(15,868

)

Items included in net income not affecting cash flows:

 

 

 

 

Depreciation and amortization

 

 

16,493

 

 

 

15,319

 

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

 

 

 

 

 

5,493

 

Amortization of debt discount and other deferred financing costs

 

 

274

 

 

 

557

 

Compensation relating to restricted stock awards and stock option grants

 

 

656

 

 

 

575

 

Deferred income tax benefit

 

 

(86

)

 

 

(6,178

)

Interest on finance lease liabilities

 

 

416

 

 

 

460

 

Non-cash operating lease expense

 

 

22,317

 

 

 

22,717

 

Payments for drydocking

 

 

(3,236

)

 

 

(8,179

)

Operating lease liabilities

 

 

(22,846

)

 

 

(22,860

)

Changes in operating assets and liabilities, net

 

 

(11,694

)

 

 

(1,217

)

Net cash provided by/(used in) operating activities

 

 

1,785

 

 

 

(9,181

)

Cash Flows from Investing Activities:

 

 

 

 

Expenditures for vessels and vessel improvements

 

 

(1,058

)

 

 

(3,227

)

Net cash used in investing activities

 

 

(1,058

)

 

 

(3,227

)

Cash Flows from Financing Activities:

 

 

 

 

Payments on debt

 

 

(5,420

)

 

 

(9,616

)

Tax withholding on share-based awards

 

 

(370

)

 

 

(402

)

Payments on principal portion of finance lease liabilities

 

 

(1,026

)

 

 

(1,026

)

Extinguishment of debt

 

 

 

 

 

(301

)

Deferred financing costs paid for debt

 

 

(261

)

 

 

(877

)

Net cash used in financing activities

 

 

(7,077

)

 

 

(12,222

)

Net decrease in cash, cash equivalents and restricted cash

 

 

(6,350

)

 

 

(24,630

)

Cash, cash equivalents and restricted cash at beginning of period

 

 

83,253

 

 

 

69,819

 

Cash, cash equivalents and restricted cash at end of period

 

$

76,903

 

 

$

45,189

 

Spot and Fixed TCE Rates Achieved and Revenue Days

The following table provides a breakdown of TCE rates achieved for spot and fixed charters and the related revenue days for the three months ended March 31, 2022 and the comparable period of 2021. Revenue days in the quarter ended March 31, 2022 totaled 1,763 compared with 1,473 in the prior year quarter. A summary fleet list by vessel class can be found later in this press release.

 

2022

 

2021

Three Months Ended March 31,

Spot

Earnings

 

Fixed

Earnings

 

Spot

Earnings

 

Fixed

Earnings

Jones Act Handysize Product Carriers:

 

 

 

 

Average rate

$

57,368

$

58,228

$

24,467

$

65,165

Revenue days

 

411

 

 

545

 

 

148

 

 

477

 

Non-Jones Act Handysize Product Carriers:

 

 

 

 

Average rate

$

44,075

 

$

17,469

 

$

14,958

 

$

7,044

 

Revenue days

 

180

 

 

90

 

 

180

 

 

177

 

ATBs:

 

 

 

 

Average rate

$

 

$

34,854

 

$

 

$

32,339

 

Revenue days

 

 

 

178

 

 

 

 

180

 

Lightering:

 

 

 

 

Average rate

$

74,311

 

$

 

$

92,524

 

$

 

Revenue days

 

90

 

 

 

 

73

 

 

 

Alaska (a):

 

 

 

 

Average rate

$

 

$

58,996

 

$

 

$

58,743

 

Revenue days

 

 

 

269

 

 

 

 

238

 

 

(a) Excludes one Alaska vessel currently in layup.

Fleet Information

As of March 31, 2022, OSG’s operating fleet consisted of 24 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 March 31, 2022

Vessel Type

Number

Number

Total Vessels

Total dwt (3)

Handysize Product Carriers (1)

5

11

16

760,493

Crude Oil Tankers (2)

3

 

1

 

4

 

772,194

 

Refined Product ATBs

2

 

 

2

 

54,182

 

Lightering ATBs

2

 

 

2

 

91,112

 

Total Operating Fleet

12

 

12

 

24

 

1,677,981

 

(1)

Includes two owned shuttle tankers, 11 chartered-in 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 one owned Marshall Island flagged non-Jones Act MR tanker 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,

 

2022

 

2021

Time charter equivalent revenues

$

93,925

$

65,513

Add: Voyage expenses

 

10,074

 

 

15,760

 

Shipping revenues

$

103,999

 

$

81,273

 

Vessel Operating Contribution

Vessel operating contribution, a non-GAAP measure, is TCE revenues minus vessel expenses and charter hire expenses.

 

Three Months Ended

March 31,

($ in thousands)

2022

 

2021

Niche market activities

$

18,123

 

$

13,142

 

Jones Act handysize tankers

 

1,458

 

 

 

(12,257

)

ATBs

 

4,069

 

 

 

3,581

 

Alaska crude oil tankers

 

7,481

 

 

 

6,922

 

Vessel operating contribution

 

31,131

 

 

 

11,388

 

Depreciation and amortization

 

16,493

 

 

 

15,319

 

General and administrative

 

6,938

 

 

 

6,365

 

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

 

 

 

 

5,493

 

Operating income/(loss)

$

7,700

 

 

$

(15,789

)

(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

March 31,

($ in thousands)

2022

 

2021

Net loss

$

(509

)

 

$

(15,868

)

Income tax benefit

 

(59

)

 

 

(6,169

)

Interest expense

 

8,365

 

 

 

6,370

 

Depreciation and amortization

 

16,493

 

 

 

15,319

 

EBITDA

 

24,290

 

 

 

(348

)

Amortization classified in charter hire expenses

 

143

 

 

 

143

 

Interest expense classified in charter hire expenses

 

316

 

 

 

345

 

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

 

 

 

 

5,493

 

Non-cash stock based compensation expense

 

656

 

 

 

575

 

Adjusted EBITDA

$

25,405

 

 

$

6,208

 

(C) Total Cash

($ in thousands)

March 31,

2022

 

December 31,

2021

Cash and cash equivalents

$

76,836

 

$

83,172

Restricted cash

 

67

 

 

 

81

 

Total cash

$

76,903

 

 

$

83,253

 

Category: Earnings

Contacts

Susan Allan, Overseas Shipholding Group, Inc.

(813) 209-0620

sallan@osg.com

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