OSG sees less profit for the first quarter

OSG

Overseas Shipholding Group, Inc. a provider of energy transportation services for crude oil and petroleum products in the U.S. Flag markets, reported results for the first quarter 2019.

Highlights

Net income for the first quarter 2019 was $3.2 million, or $0.04 per diluted share, compared with net income of $3.7 million, or $0.04 per diluted share, for the first quarter 2018. The Company’s 2019 first quarter net income of $3.2 million compares to a $5.2 million loss in the 2018 fourth quarter.

Shipping revenues for the first quarter 2019 were $87.7 million, down 13.2% compared with the same period in 2018.

Time charter equivalent (TCE) revenues(A), a non-GAAP measure, for the first quarter 2019 were $82.8 million, down 6.8% compared with the first quarter 2018. First quarter 2019 TCE revenues exceeded fourth quarter 2018 by 3.6%.

First quarter 2019 Adjusted EBITDA(B), a non-GAAP measure, was $23.6 million, down 15.5% from $28.0 million in the first quarter 2018. Adjusted EBITDA increased 2.2% from the fourth quarter 2018.

Total cash was $75.8 million as of March 31, 2019.

In January 2019, we entered into a 10-year bareboat charter party agreement for a U.S. flagged product tanker and we exercised an option to construct a second approximately 204,000 BBL, oil and chemical tank barge for anticipated delivery to the Company during the second half of 2020.

Mr. Sam Norton, President and CEO, stated, “Our first quarter financial performance is evidence of the developing recovery of OSG’s earnings power, as improved charter terms for our conventional tanker fleet counterbalanced the retirement of aging tonnage as part of our ongoing fleet renewal efforts. Time charter contracts fixed during the second half of 2018, coupled with active interest in the few spot days available, led utilization rates for the combined conventional tanker and ATB fleet to exceed 95% of available operating days during the quarter. In line with tightening supply availability, we are seeing the benefits of both an improved rate environment and better utilization rates. In particular, conventional tanker TCE earnings have improved 5% from the 4th quarter of 2018 and more than 25% from their 3rd quarter levels. Meanwhile, our niche businesses continued to perform in-line with our expectations, providing a solid foundation of industrial business that underlies our growth and margin expansion initiatives.”

Mr. Norton added, “We are confident in the strong, tangible fundamentals underlying the Jones Act and U.S. Flag energy transportation markets in which we operate. We anticipate that the full effects of our high operating leverage will be more fully expressed in the latter part of 2019 and into 2020, alongside the additional earnings contribution we expect from our newly built ATBs and MR tankers delivering over the next 18 months. All in all, we remain extremely upbeat about the future and the promise of improving earnings in our core businesses.”

First Quarter 2019 Results

Shipping revenues were $87.7 million for the quarter, down 13.2% compared with the first quarter of 2018. TCE revenues for the first quarter of 2019 were $82.8 million, a decrease of $6.0 million, or 6.8%, compared with the first quarter of 2018. This decrease reflected two fewer vessels in operation in the first quarter of 2019 when compared to the 2018 first quarter and a decrease in spot market charters as our fleet moved to long-term time charters.

Operating income for the first quarter of 2019 was $9.7 million, compared to operating income of $13.6 million in the first quarter of 2018.

Net income for the first quarter 2019 was $3.2 million, or $0.04 per diluted share, compared with net income of $3.7 million, or $0.04 per diluted share, for the first quarter 2018.

Adjusted EBITDA was $23.6 million for the first quarter, a decrease of $4.4 million compared with the first quarter of 2018, driven primarily by the decline in TCE revenues.

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