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 third quarter of
2023.
- Net income for the third quarter of 2023 was $17.6 million, or
$0.22 per diluted share, compared with net income of $13.2 million,
or $0.15 per diluted share, for the third quarter of 2022.
- Third quarter 2023 Adjusted EBITDA(A), a non-GAAP measure, was
$48.1 million, an increase of $5.8 million, or 13.7%, from the
third quarter of 2022.
- Shipping revenues for the third quarter of 2023 were $115.4
million, a decrease of $7.6, million, or 6.2%, from the third
quarter of 2022.
- Time charter equivalent (TCE) revenues(B), a non-GAAP measure,
for the third quarter of 2023 were $108.6 million, a decrease of
$6.5 million, or 5.6%, from the third quarter of 2022.
- Total cash and investments(C) were $112.5 million as of
September 30, 2023.
- During the third quarter of 2023, the Company repurchased
4,580,921 shares for total consideration of $18.7 million.
- During the quarter, the Company also purchased 13,851,382
warrants which were exercisable for 2,631,763 shares for total
consideration of $11.4 million.
Sam Norton, OSG's President and CEO, said. “We made progress on
all of our key objectives since our report for the second quarter.
Adjusted EBITDA increased by more than 20% from the second quarter.
We completed transactions to repurchase the equivalent of 7.2
million shares, returning nearly $30 million to our shareholders.
We took steps to add additional earning assets to our fleet through
an agreement to purchase the Alaskan Frontier, which we expect to
be in operation within the next 12 months. And, after the quarter
end, we prepaid $6.7 million of interest-bearing liabilities at a
discount, which will see us book a gain of $911,000 during the
fourth quarter.”
Mr. Norton added, “Cashflow from operations continues to meet or
exceed our expectations, giving us continuing confidence that our
business plan is working. As has been the case for most of this
year, healthy refining margins and strong international tanker
rates have supported better than expected performance from our TSP
vessels and have boosted volumes lifted in our lightering
operations. With three-year charter extensions obtained during the
quarter for both the Overseas Boston and OSG 204/Endurance, 90% of
2024 available trading days for the Jones Act fleet are now fixed
at rates that will generate TCE from fixed contracts in excess of
$30 million per month through the end of 2024. Free cashflow above
debt service and capital expenditures should thus be available to
allow us to make further progress in meeting our key capital
allocation goals.”
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.
Third Quarter 2023
Results
Shipping revenues were $115.4 million for the third quarter of
2023, a decrease of $7.6 million, or 6.2%, compared to the third
quarter of 2022. TCE revenues were $108.6 million for the third
quarter of 2023, a decrease of $6.5 million, or 5.6%, from the
third 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)
an 8-day increase in drydock days, and (c) a decrease in Delaware
Bay lightering volumes. The decrease was partially offset by an
increase in average daily rates earned by our fleet and one full
Government of Israel voyage and one partial Government of Israel
voyage that began during the third quarter of 2023 and continued in
the fourth quarter compared to two partial Government of Israel
voyages in the third quarter of 2022.
Operating income for the third quarter of 2023 was $28.2 million
compared to operating income of $22.4 million for the third quarter
of 2022. Net income for the third quarter of 2023 was $17.6
million, or $0.22 per diluted share, compared with net income of
$13.2 million, or $0.15 per diluted share, for the third quarter of
2022. The increases in operating and net income primarily reflected
decreases in voyage, vessel and charter hire expenses of $13.1
million when compared to the third quarter of 2022. The decrease in
voyage expenses was primarily due to a decrease in fuel expenses,
as our vessels performed fewer voyage charters during the third
quarter of 2023 compared to the third 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 $48.1 million for the 2023 third quarter, an
increase of $5.8 million compared with the third 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 third
quarter 2023 results at 9:30 a.m. Eastern Time (“ET”) on Monday,
November 6, 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 transportation services in the U.S.
Flag markets. 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
that participate in the U.S. Tanker Security Program.
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 and recent developments in the
Middle East. 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 September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Shipping Revenues:
Time and bareboat charter revenues
$
93,224
$
92,730
$
264,621
$
232,934
Voyage charter revenues
22,211
30,329
71,230
112,108
115,435
123,059
335,851
345,042
Operating Expenses:
Voyage expenses
6,858
7,997
22,413
32,813
Vessel expenses
39,969
45,430
123,337
130,380
Charter hire expenses
16,233
22,743
47,988
67,089
Depreciation and amortization
17,003
17,902
49,500
51,058
General and administrative
7,173
6,556
21,614
20,929
Total operating expenses
87,236
100,628
264,852
302,269
Operating income
28,199
22,431
70,999
42,773
Other income, net
1,643
568
4,184
649
Income before interest expense and income
taxes
29,842
22,999
75,183
43,422
Interest expense
(7,779
)
(8,229
)
(24,019
)
(24,869
)
Income before income taxes
22,063
14,770
51,164
18,553
Income tax expense
(4,471
)
(1,522
)
(9,131
)
(2,074
)
Net income
$
17,592
$
13,248
$
42,033
$
16,479
Weighted Average Number of Common
Shares Outstanding:
Basic - Class A
78,263,667
88,174,640
80,544,607
87,579,624
Diluted - Class A
80,700,618
90,349,567
83,233,332
89,211,983
Per Share Amounts:
Basic net income - Class A
$
0.22
$
0.15
$
0.52
$
0.19
Diluted net income - Class A
$
0.22
$
0.15
$
0.51
$
0.18
Consolidated Balance Sheets
($ in thousands)
September 30, 2023
December 31, 2022
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents
$
97,598
$
78,732
Investment security to be held to
maturity
14,900
—
Voyage receivables, including unbilled of
$4,862 and $11,364, net of reserve for credit losses
12,522
19,698
Income tax receivable
696
1,914
Other receivables
2,227
5,334
Inventories, prepaid expenses and other
current assets
3,237
2,668
Total Current Assets
131,180
108,346
Vessels and other property, less
accumulated depreciation
679,399
726,179
Deferred drydock expenditures, net
41,703
38,976
Total Vessels, Other Property and Deferred
Drydock
721,102
765,155
Intangible assets, less accumulated
amortization
14,567
18,017
Operating lease right-of-use assets,
net
187,135
206,797
Investment security to be held to
maturity
—
14,803
Other assets
27,188
25,945
Total Assets
$
1,081,172
$
1,139,063
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable, accrued expenses and
other current liabilities
$
49,061
$
54,906
Current portion of operating lease
liabilities
67,320
63,288
Current portion of finance lease
liabilities
—
4,000
Current installments of long-term debt
43,183
23,733
Total Current Liabilities
159,564
145,927
Reserve for uncertain tax positions
212
175
Noncurrent operating lease liabilities
127,266
149,960
Noncurrent finance lease liabilities
—
16,456
Long-term debt
363,327
399,630
Deferred income taxes, net
79,263
70,233
Other liabilities
8,893
16,997
Total Liabilities
738,525
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; 72,322,453 and 78,297,439 shares outstanding)
895
883
Paid-in additional capital
587,447
597,455
Accumulated deficit
(190,989
)
(233,023
)
Treasury stock, 17,174,059 and 10,000,000
shares, at cost
(57,540
)
(29,040
)
339,813
336,275
Accumulated other comprehensive income
2,834
3,410
Total Equity
342,647
339,685
Total Liabilities and Equity
$
1,081,172
$
1,139,063
Consolidated Statements of Cash
Flows
($ in thousands)
Nine Months Ended September
30,
2023
2022
(unaudited)
(unaudited)
Cash Flows from Operating Activities:
Net income
$
42,033
$
16,479
Items included in net income not affecting
cash flows:
Depreciation and amortization
49,500
51,058
Amortization of debt discount and other
deferred financing costs
855
840
Compensation relating to restricted stock
awards and stock option grants
2,556
3,237
Deferred income tax expense
9,068
1,998
Interest on finance lease liabilities
917
1,228
Non-cash operating lease expense
48,970
67,769
Payments for drydocking
(12,862
)
(13,896
)
Operating lease liabilities
(50,257
)
(69,368
)
Changes in operating assets and
liabilities, net
(7,730
)
(18,166
)
Net cash provided by operating
activities
83,050
41,179
Cash Flows from Investing Activities:
Expenditures for vessels and vessel
improvements
(2,593
)
(4,519
)
Purchase of investment security to be held
to maturity
—
(14,794
)
Net cash used in investing activities
(2,593
)
(19,313
)
Cash Flows from Financing Activities:
Payments on debt
(17,522
)
(16,530
)
Tax withholding on share-based awards
(1,168
)
(496
)
Payments on principal portion of finance
lease liabilities
(2,964
)
(3,124
)
Deferred financing costs paid for debt
amendments
(53
)
(261
)
Purchases of treasury stock and Class A
warrants
(39,884
)
(11,026
)
Net cash used in financing activities
(61,591
)
(31,437
)
Net increase/(decrease) in cash and cash
equivalents
18,866
(9,571
)
Cash and cash equivalents at beginning of
period
78,732
83,253
Cash and cash equivalents at end of
period
$
97,598
$
73,682
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 nine months ended September 30, 2023 and the comparable
periods of 2022. Revenue days in the quarter ended September 30,
2023 totaled 1,747 compared with 2,035 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 September
30,
Spot Earnings
Fixed Earnings
Spot Earnings
Fixed Earnings
Jones Act Handysize Product Carriers:
Average rate
$
—
$
67,694
$
38,296
$
60,923
Revenue days
—
903
55
1,086
Non-Jones Act Handysize Product
Carriers:
Average rate
$
43,834
$
68,875
$
47,779
$
38,911
Revenue days
189
60
184
92
ATBs:
Average rate
$
—
$
44,354
$
41,117
$
35,590
Revenue days
—
247
85
99
Lightering:
Average rate
$
89,255
$
—
$
71,086
$
46,906
Revenue days
94
—
135
49
Alaska (a):
Average rate
$
—
$
61,016
$
—
$
60,438
Revenue days
—
254
—
250
2023
2022
Nine months ended September 30,
Spot Earnings
Fixed Earnings
Spot Earnings
Fixed Earnings
Jones Act Handysize Product Carriers:
Average rate
$
60,505
$
65,807
$
53,710
$
60,067
Revenue days
40
2,658
585
2,574
Non-Jones Act Handysize Product
Carriers:
Average rate
$
36,622
$
63,239
$
44,720
$
29,632
Revenue days
677
74
546
273
ATBs:
Average rate
$
—
$
43,511
$
41,048
$
35,059
Revenue days
—
737
85
458
Lightering:
Average rate
$
91,900
$
—
$
65,758
$
46,906
Revenue days
275
—
363
49
Alaska (a):
Average rate
$
—
$
60,355
$
—
$
59,799
Revenue days
—
797
—
785
(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 September 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 September 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 that
participate in the U.S. Tanker Security Program or are on time
charter to the U.S. Military Sealift Command.
(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 September
30,
Nine Months Ended September
30,
($ in thousands)
2023
2022
2023
2022
Time charter equivalent revenues
$
108,577
$
115,062
$
313,438
$
312,229
Add: Voyage expenses
6,858
7,997
22,413
32,813
Shipping revenues
$
115,435
$
123,059
$
335,851
$
345,042
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 September
30,
Nine Months Ended September
30,
($ in thousands)
2023
2022
2023
2022
Specialized businesses
$
31,981
$
31,739
$
88,312
$
89,385
Jones Act handysize tankers
12,709
8,046
32,868
10,166
Jones Act ATBs
7,685
7,104
20,933
15,209
Vessel operating contribution
52,375
46,889
142,113
114,760
Depreciation and amortization
17,003
17,902
49,500
51,058
General and administrative
7,173
6,556
21,614
20,929
Operating income
$
28,199
$
22,431
$
70,999
$
42,773
(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 September
30,
Nine Months Ended September
30,
($ in thousands)
2023
2022
2023
2022
Net income
$
17,592
$
13,248
$
42,033
$
16,479
Income tax expense
4,471
1,522
9,131
2,074
Interest expense, net
7,779
8,229
24,019
24,869
Depreciation and amortization
17,003
17,902
49,500
51,058
EBITDA
46,845
40,901
124,683
94,480
Amortization classified in charter hire
and vessel expenses
273
260
820
545
Interest expense classified in charter
hire expenses
104
308
426
935
Non-cash stock based compensation
expense
894
846
2,556
3,237
Adjusted EBITDA
$
48,116
$
42,315
$
128,485
$
99,197
(C) Total Cash and Investments
($ in thousands)
September 30, 2023
December 31, 2022
Cash and cash equivalents
$
97,575
$
78,680
Restricted cash
23
52
Investment security to be held to
maturity
14,900
14,803
Total cash and investments
$
112,498
$
93,535
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231106817312/en/
Investor Relations & Media Contact: Susan Allan,
Overseas Shipholding Group, Inc. (813) 209-0620 sallan@osg.com
Overseas Shipholding (NYSE:OSG)
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